Forex Daily Review: Will the US Earnings Surprise Again? AUD/JPY Holds the Answers

16 Oct 2012• Matti Williamson, FX and commodities analyst      Today's US Earnings

Strong US earnings boosted the risk sentiment in the Forex market. EUR/USD posted strong gains through Asia, attempting to break above 1.3000 at the time of this writing. Traders will focus on today's US earnings for Goldman Sachs Group, State Street Corp, Coca-Cola Co, Intel Corp, Johnson & Johnson and IBM to see whether the risk sentiment can continue for another day ahead of the key EU summit in Brussels.

EU Summit and AUD/JPY

In my opinion the recent gains are unlikely to sustain themselves throughout the week as there are many reports no major decisions will be taken at this week EU summit. There is an emergency meeting on Greece at the end of October which may have a major effect on the financial markets. Cold water will be poured on the markets' bulls, forcing them to pull their share out of EUR/USD. At the time of this writing the gains do appear to be overstretched, particularly in AUD/JPY:

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Forex Daily Review: EUR/USD Gains on Precautionary Conditioned Credit Line (PCCL)

17 Oct 2012• Matti Williamson, FX and commodities analyst      Moody's Credits the ECB

Moody's Investors Services affirmed Spain's Baa3 credit rating with a negative outlook. Moody's confirmed Spanish sovereign losing capital market access has been materially reduced as the European Central Bank (ECB) was willing to purchase Spanish bonds to limit price volatility.

EUR/USD stretched its gains above 1.3100 as the market was expecting Moody's to downgrade the Kingdom of Spain's sovereign rating. Speculations that Spain is to request a bailout via Precautionary Conditioned Credit Line (PCCL) fuelled the rally to 1.3117 but it does appear the bulls' are losing momentum ahead of the key daily resistance at 1.3140. If the daily resistance holds we may witness the formation of a double-top reversal pattern.

EUR/USD Technical Analysis

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Forex Daily Review: EU Summit Possible Effects on EUR/USD

18 Oct 2012• Matti Williamson, FX and commodities analyst      S&P Downgrades Ahead of the Summit

Today's EU Summit is expected to draw the market attention in hopes that Spain may finally request financial aid to deal with its growing debts and perhaps Torika will surprise and announce Greece's problems are being resolved at a steady pace. Let's first recap what the market has to digest aside the EU Summit in Brussels.

S&P credit rating agency downgraded Madrid and Barcelona after country downgrade. Cyprus also took a hit from the US rating agency, reasoning the country's creditworthiness has deteriorated significantly. Cyprus' credit rating was downgraded from BB to B:

"We consider that deterioration in the banking sector's domestic loan book has increased uncertainties about the final cost of Cyprus' banking crisis, and the implications of this for the government debt burden. We are therefore lowering our long-term sovereign credit rating on the Republic of Cyprus to B from BB."

Greece and China GDP

It is also important to highlight that the Greek Finance Minister said the market should not keep its hopes high on today's EU Summit as an emergency meeting is due at the end of the month about Greece. China GDP came in as expected, which does not contribute to the positive sentiment in global markets as the GDP did contract from 7.6% to 7.4%.

There are really no major headlines that can assist the current uptrend in EUR/USD. Comments from EU leaders can generate bullish spikes in Euro-dollar but I would expect it to be short-lived as profit-taking is likely to materialize once the market is disappointed.
EU Summit Full Schedule

Below is the full timetable for the EU Summit for 18/10/12 - 19/10/12:

EU Summit Schedule for Thursday:

14:15-14:45GMT Arrival of members of the European Council at the Justus Lipsius building
15:00-15:30GMT Exchange of views with the President of the European Parliament Tour-de-table before the meeting
15:45-1800GMT First working session
18:00-2000GMT Working dinner
End of meeting Van Rompuy & Barroso press conference

EU Summit Schedule for Friday

07:15-07:45GMT European Council members arrive Justus Lipsius building
08:00-11:00GMT Second working session
End of meeting Van Rompuy & Barroso press conference
Followed by Working lunch of Heads of State or Government of Eurozone
End of meeting Van Rompuy & Barroso press conference

 

Spain Bond Auction

Forex traders will focus on the upcoming debt auction from Spain. Off-the-run 3-year 4.00% 2016 Bono, 4.25% 2016 Bono and 10-year benchmark 5.85% 2022 Obligaciones will be issued for between

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Forex Daily Review: PLdot may Affirm the Downtrend in Euro-dollar

19 Oct 2012• Matti Williamson, FX and commodities analyst      EU Summit, Day II

Traders that hoped for a deeper solution for Greece may have to wait until 28 October summit that is viewed as the most important meeting this month. Yesterday's EU summit concluded a supervisor for Euro-zone banks is required and should be implemented in the upcoming year (2013). The discussions are expected to continue into today's session but no major headlines are expected.

EUR/USD Analysis

In my opinion we are likely to hear more euro-negative comments in today's meeting in regards to Spain and Greece, which may weigh on EUR/USD. Google earnings and Greek Prime Minister request to release the full tranche (EUR 31.5 billion) as soon as possible weighed on Euro-dollar through the Asian session but the pair managed to cling on to its tight range.

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Forex Daily Review: China RRR Cut Speculations are Officially Denied

12 Oct 2012• Matti Williamson, FX and commodities analyst      China RRR cut Speculation Denial

Vicious speculations flooded the market in the European session China will cut its interest rate (RRR) at 04:15. EUR/USD violated some hefty stops as it topped 1.2984 but the bullish momentum may soon fade as forex traders are considering to dismiss the speculation of an imminent rate cut. The news provider (Dow Jones wire) that said to have reported the forthcoming RRR cut by the People's Bank of China (PBOC) are denying the news at the time of this writing, what a day!!

EUR/USD Intraday Analysis

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Forex Daily Review: EUR/USD Intraday Bearish Correction

15 Oct 2012• Matti Williamson, FX and commodities analyst      Spain Bailout Request, Not Before October 21st

Forex traders dismissed the strong trade balance data from China over the weekend and sold EUR/USD through the Asian session as Spain disappointed the market by refusing to ask for a financial bailout. It is possible that Spain will wait for October 21st regional elections before requesting financial aid from the EU. Market talk suggests Angela Merkel wishes to include Spanish bailout funds with Greece's next tranche at the same time in a 'huge' financial package. Focus this week will be on the US earnings report where 80 companies traded in S&P500 are expected to publish their reports. Citigorup and Charles Schwap Corp will kick-start the US earnings for S&P500 companies in today's session.

Euro-spiked higher at the time of this writing on EU Rehn comments.

According to the news, EU Rehn confirmed that more time for Greece is being considered. It is important to highlight the market speculations from last Friday which indicated that Greece may receive a 2-year extension to meet its fiscal goals, which may be officially confirmed in this week's EU economic summit.

EUR/USD Technical Trading Strategy

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Forex Daily Review: BOJ Warns, CAD/JPY Prepares to Gain

05 Oct 2012• Matti Williamson, FX and commodities analyst      BOJ Monetary Policy

The Bank of Japan (BOJ) concluded its 2-day meeting and kept its asset purchasing program unchanged. The market was slightly disappointed and bought then the Japanese yen (JPY) in response to the muted action. However, forex traders are missing a very important detail about Japan's rate announcement. Economy minister Seiji Maehara attended the central bank's policy meeting. He is the first minister to attend the BOJ meetings in nine years. Mr. Maehara is known for criticizing the bank's actions, stating BOJ is not doing enough to ensure the 1.0% inflation goal is met and suggested the bank should buy foreign bonds as part of its easing measures.

The Japanese law must be revised to allow BOJ foreign bond purchasing by Japan, which will in effect weaken the Japanese yen against a basket of currencies, particularly EUR/JPY and USD/JPY. The BOJ will meet again on 30 October and I believe further easing measures will be taken by then. I would expect USD/JPY to sustain its bullish momentum for the medium term as presented in trading opportunities for 2012.

CAD/JPY Technical Analysis, Strategy for Non-Farm Payrolls

For today's session the main focus is the US Non-Farm Payrolls (NFP), October 2012. Many analysts predict the NFP will continue to improve but argue by how much.

The main FX pair to focus would be CAD/JPY:

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Forex Daily Review: What is the Bearish Target for GBP/AUD Correction?

08 Oct 2012• Matti Williamson, FX and commodities analyst      Non-Farm Payrolls Strategy

My technical analysis for CAD/JPY for the Non-Farm Payrolls (NFP) triggered its bullish target as the previous figure was revised higher, smothering the market with positive sentiment that weakened the Japanese yen (JPY) and US dollar (USD) against a basket of currencies. National holidays in Japan, US and Canada are likely to ensure trading volume will be extremely thin, which could inject a hefty amount of volatility as the Eurogroup meeting is expected to take place in Brussels.

GBP/AUD Technical Analysis

I am giving additional focus to GBP/AUD daily chart as there is a great risk for a corrective weakness to the strong gains made on Friday's session:

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Forex Daily Review: GBP/AUD Skimmed the Target, EUR/USD is Observed

09 Oct 2012• Matti Williamson, FX and commodities analyst      EUR/CHF 'Mysterious' Gain

What may have left certain traders puzzled is EUR/CHF unexpected bullish spike, perhaps thought to be a minor FX intervention by the Swiss National Bank (SNB):

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Forex Daily Review: EUR/USD Bullish Correction, When Will it Begin?

EUR/USD was gunned down by the bears as Bloomberg mistakenly posted the wrong yields for Spain 10-year benchmark, causing heavy selling in EUR/USD. The weakness continued into the US session despite Bloomberg notifying all its clients of the error. Euro-dollar neared its support at 1.2830, implying a bullish correction may be seen in today's session as mentioned in yesterday's market review (GBP/AUD analysis acquired its bearish target).

The economic calendar is relatively light for today's session but the center of attention will be the Spanish Prime Minister, Rajoy's meeting with French President Hollande in Paris. The G7 meeting tomorrow in Tokyo should also support the risk sentiment in global markets aside the strong US earnings data released in yesterday's session. Alcoa Q3 sales were $5.83 billion versus $5.54 billion (market expectations). Yum! also topped expectations and posted strong Q3 results, which favors a scenario where the market bulls sweep the markets through the European and US session.

The Deutsche Finanzagentur

European traders will focus on the German auction where the Deutsche Finanzagentur is expected to re-open its 5-year benchmark, 0.50% October 2017 for up to

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Forex Daily Review: Back to Commodities, Soybean is Observed for Gains

01 Oct 2012• Matti Williamson, FX and commodities analyst      Spain Stress Test Results

Friday's session affirmed what I have suspected. Strong weakness in AUD/USD gunned the bulls' stops as the pair continued to head lower with EUR/USD with end of month FX flows assisting the declines. Speculations flooded the market that Spain stress test results will be far higher than the expected

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Forex Daily Review: New Japanese Finance Minister, Risk for FX Intervention Rises

02 Oct 2012• Matti Williamson, FX and commodities analyst      The RBA Cuts Rate

As expected from early daily reviews, the Reserve Bank of Australia (RBA) slashed its cash rate by 25bps (0.25%) on global slowdown, particularly in China. AUD/USD dropped immediately and is expected to continue its downtrend although the current intraday indicators are in oversold territories at the time of this writing. There is a fair chance we may witness another cut by the end of 2012. The market will begin pricing in the probability for the RBA to continue its monetary easing, which will weigh on the Australian dollar throughout October.

 

EUR/USD

The US ISM Manufacturing PMI was a positive surprise for the markets as it blasted above 50.0, taking the US indices for a snappy bullish ride. There appears to be positive momentum through Europe, also noted in EUR/USD despite recent weakness. There is faint talk that Spain may ask for bank aid any time, which the market views as a positive act. Moody's credit rating agency warned that the banks recapitalisation may be insufficient and can publish their rating review for Spain at any time may counter any strong gains in Euro-dollar and the leading European indices. The bullish trend may be sustained through today's session in EUR/USD but it is likely to be short-lived. Beware of bullish spikes.

Koriki Jojima

Japan has a new Finance Minister, Koriki Jojima. I believe he may be employ a more aggressive stance regarding FX rates for JPY pairs and crosses. The risk for FX intervention may intensify in October, USD/JPY should remain fairly supported unless Jojima supported. All JPY pairs and crosses will be affected should the Ministry of Finance (MOF) fire the signal to push the 'red button.'

AUD/USD Technical Trading Strategy



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Forex Daily Review: Aussie Bears are Forgetting PBOC Could Ease

03 Oct 2012• Matti Williamson, FX and commodities analyst      Currency War Recap

Why am I not surprised that AUD/USD is trading at 1.0200? I wrote in earlier market reviews that the strong Aussie (as a result of Fed QE3) will only harm the Australian economy as expensive exports and a continued slowdown in China will ultimately lead to rate cuts and perhaps unconventional measures to ensure that Australia remains competitive in the markets. We are likely to witness central banks across the world battling in the virtual world of finance. The Bank of Japan (BOJ) and Swiss National Bank (SNB) may be next to act so careful analysis should be applied to JPY and CHF pairs and crosses.

PBOC Easing

For those that are currently shorting the Aussie please note that the People's Bank of China (PBOC) cut rates several months ago at the same time that the Bank of England (BOE) announced its monetary policy. An interest rate cut from China tends to strengthen AUD against a basket of currencies and the bullish spike could easily exceed 60 pips in less than one minute. The BOE is due to announce its monetary policy for October 4, (Thursday) at 11:00am GMT.

Spain Financial Bailout

Spain's refusal to ask for imminent financial aid from the EU is not appealing to the markets' bulls. EUR/USD has shed some of its gains as we enter the European session. Main focus for today is clearly on the ADP non-farm employment change and the ISM non-manufacturing PMI. The US ISM Manufacturing PMI released Monday surprised the markets as the data confirmed the US is out of the contraction zone for the manufacturing sector. More surprises to the upside in today's session and we may see a strong rally in the leading American indices.

SP500 Technical Analysis


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Forex Daily Review: Don't be Fooled by EUR/USD Ambiguous Trend

Academy > Trading Basics > Seasoned Trader > Currency Insights > Special Insights for Traders > Trading Tips > Currency Pairs > Recommended Resources > 5 Insights

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