Month: May 2014

By HY Markets Forex Blog

Stocks – Asia

Stocks in the Asian region were lifted on Thursday, bouncing back from yesterday’s losses after the Federal Reserve’s (Fed) Chair Janet Yellen delivered her speech.

The Japanese benchmark Nikkei 225 index edged 0.82% higher to 14,148.53 points at the time of writing, while Tokyo’s Topix index climbed 0.59% to 1,158.79 points at the same time. Mitsubishi Corp gained 6.5% to 1.938 yen, after the company’s earnings came in higher than forecasted. Japanese real-estate company, Heiwa Real Estate traded 2% higher.

In China, Hong Kong’s benchmark Hang Seng gauge rose 0.46% higher to 21,847.20 points at the time of writing, while the Chinese benchmark Shanghai Composite climbed 0.14% higher to 2,012.94 points. A monthly trade report for April is due to be released later in the day and expected to show a drop in exports by 6.6% year-on-year, according to analysts.

South Korea’s Kospi index slid 0.20% lower to 1,936.02 points at the time of writing.

Yellen Speech

On Tuesday, Federal Reserve (Fed) Chair Janet Yellen delivered her speech before the Joint Economic Committee of Congress in Washington and said the US central bank is slowly on the way to ending its asset purchases by the end of the year as analysts forecasted, indicating the world’s largest economy is recovering at a steady pace. However, Yellen also warned that the stimulus program is still needed as the Fed’s economic targets are yet to be reached, especially inflation and employment.

Stocks – Europe

European stocks opened higher on Thursday as investors focus on the European Central Bank policy meeting, which will commence later in the day.

The European Euro Stoxx 50 added 0.27% higher, opening at 3,168.29, while the German DAX gained 0.30%, starting at 9,550.23 at the time of writing. At the same time the French CAC 40 edged 0.27% higher to 4,458.23, while the UK benchmark FTSE 100 advanced 0.21% to 6,810.27.

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By HY Markets Forex Blog

Gold prices were seen trading below the $1,300 threshold on Wednesday after dropping to its biggest one-day drop in three weeks as investors digest Yellen’s speech on the status of the world’s largest economy and the US central bank’s monetary stimulus.

Gold prices for immediate delivery gained 0.15% to $1,290.90 an ounce at the time of writing, while silver futures edged 0.30% lower to $19.280 an ounce at the same time.

Bullion dropped by 28% in 2013, ending a 12-year rally on worries that the Federal Reserve will reduce its asset purchases.

Yellen Speech

The yellow metal was supported by the Federal Reserve (Fed) Chair Janet Yellen’s speech on Wednesday, as she gave her speech before US lawmakers in Washington and said the world’s largest economy still needs the stimulus program as the Fed’s targets on inflation and employment are yet to be reached.

The US Federal Reserve has announced cuts to its monthly asset purchases at each of its past four meeting to $45 billion.

Ukraine

Tensions in Ukraine slightly eased on Wednesday after the German Chancellor Angela Merkel and US President Barack Obama decided to vote on whether to impose more sanctions against Russia if the country fails to withdraw its support for separatists.

The Russian President Vladimir Putin said the country will withdraw its troops from the Ukrainian border and also requested to postpone a vote on secession.

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By CentralBankNews.info
    Indonesia’s central bank held its benchmark BI rate steady at 7.50 percent, along with its other main rates, saying the policy stance was consistent with reducing inflation to the bank’s target for 2014 and 2015 as well as lowering the current account deficit “to a more healthy level.”
    Bank Indonesia (BI) raised its rate by 175 basis points last year in response to inflationary pressures from a reduction in fuel subsidies and a decline in the rupiah’s exchange rate. But this year it has maintained rates, confident that inflation will ease.
    But the BI added that “it will keep a close watch on inflation risks, including the potential for pressure adjustments in administered prices and the potential increase in food prices due to the impacts of El Nino caused drought in some areas.”
    Indonesia’s inflation rate eased to 7.25 percent in April from 7.32 percent in March, the eight consecutive month of declining inflation after rising to 8.79 percent in August last year. The BI targets 2014 inflation of 4.5 percent, plus/minus one percentage point, and 2015 inflation of 4.0 percent, also around a one percentage point tolerance band.
    The BI said inflation remains in a downward trend and the current account is also shrinking, while domestic demand is well managed though economic growth in the first quarter fell, and was lower than expected, due to a drop in exports, especially commodities mining.

    Indonesia’s Gross Domestic Product expanded by only 0.95 percent in the first quarter of this year from the previous quarter for annual growth of 5.21 percent, down from 5.72 percent in the fourth quarter, slower than the BI had expected.
    It said the lower growth was due to a decline in real exports, such as coal and mineral concentrates, partly due to weaker demand from China and declining prices, as well as the impact of the government’s temporary ban on raw minerals.
    Government consumption also contributed to slower growth, but BI said household consumption and investments were still growth enough to sustain economic growth in the first quarter.
    Indonesia’s balance of payments also improved in the first quarter, helping reduce the current account deficit to an estimated 2.06 percent of GDP in the first quarter, down from a fourth quarter 2013 deficit of 2.12 percent, BI said.
    Inflows of foreign capital in the form of direct investment and portfolio investment to a record helped boost sentiment and foreign exchange reserves rose to US$ 105.6 billion, the equivalent of 6.1 months of imports, from $102.6 billion end-March.
    The current account deficit, however, is expected to increase in the second and third quarter due to seasonal patterns, but for the full year it is expected to remain below 3.0 percent of GDP.
    Improving economic fundamentals is supporting the rupiah’s exchange rate trend, with its exchange rate up 7.13 percent end the end of the first quarter from late 2013 though it was slightly lower in April, reflecting a “more hawkish” statement from the U.S. Federal Reserve, concerns over the slowdown in China and the escalation of geopolitical tensions in the Ukraine-Russian border.
    At the end of April the rupiah was trading at 11,562 to the U.S. dollar, down 1.74 percent from end-March for an average rate of 11.439 to the dollar in April, down 0.17 percent. Today the rupiah was quoted at 11,520.

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By CentralBankNews.info
    Serbia’s central bank cut its key policy rate by 50 basis points to 9.0 percent, clearly relieved that “no negative impact on the country’s risk premium and external trade has so far resulted from the Fed’s QE tapering and geopolitical tensions arising from the Ukrainian crises.”
    The Bank of Serbia (NBS) had maintained its rate since December last year despite falling inflation, aware of the need to keep Serbian assets attractive at a time when the U.S. Federal Reserve was pulling back from its asset purchases due to improved growth in advanced economies.
    Last month the NBS maintained rates due to the geopolitical tensions and instability in financial markets, but said the government’s plan to cut the deficit would now open the scope for easing.
    Financial markets have continued to respond positively to the government’s economic measures, which “would stabilize inflation at a low level and create the room for further monetary policy easing,” the NBS said.
     The NBS said the rate cut reflected the decline in inflation to the lower bound of its tolerance range and falling inflationary pressures.

    “Strong disinflationary pressures in the coming period will be generated by low aggregate demand, arising from, among other things, the credit downturn and adverse developments in the labour market,” the central bank said, adding low food production costs will also have a disinflationary effects while the dinar currency is stable, helped by the low current account deficit.
    Serbia’s headline inflation rate fell to 2.3 percent in March from 2.6 percent. The central bank targets inflation at a midpoint of 4.0 percent, plus/minus 1.5 percentage points and its latest inflation report will be published on May 14.
    In 2013 the NBS cut its rate by 175 basis points as inflation eased following the bank’s 150-basis-point rate hike in 2012.

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By CentralBankNews.info
    The Bank of England (BOE) maintained its bank rate at 0.5 percent and the stock of assets purchased at 375 billion pounds, as widely expected.
    But unlike its statements in recent months, the BOE omitted the phrase that the monetary policy decision was taken in the context of the guidance from August.
    This reflects the fact that the U.K. unemployment rate fell to 6.9 percent in the three months to February, below the BOE’s earlier threshold of 7.0 percent before it would consider any rate change.
    Due to faster-than-expected growth and an improvement in the labour market, the BOE in February revised its previous rate guidance from August.
    Instead of basing its monetary policy stance on a single economic indicator, such as the jobless rate, the BOE said it would only raise rates when there was less slack in the economy and pointed to 18 different economic indicators that it would be watching to gauge the slack.
    In addition, the BOE’s policy stance will also rest on keeping inflation around the bank’s 2.0 percent target. The headline inflation rate in the United Kingdom eased further to 1.6 percent in March, the sixth consecutive month of decelerating prices.

    Inflation had remained stubbornly above the BOE’s target since late 2009 but finally fell below 2 percent in January. In 2013 inflation averaged 2.6 percent, down from 2.8 percent in 2012.
    BOE officials, including Governor Mark Carney, have frequently stressed that they will not raise rates until they are absolutely sure that the recovery of the UK economy is assured.
    The U.K. Gross Domestic Product grew by 0.8 percent in the first quarter of this year from the previous quarter for annual growth of 3.1 percent, up from 2.7 percent in the fourth quarter.
    Earlier this week the Organization for Economic Cooperation and Development (OECD) raised its estimate for UK economic growth this year to 3.2 percent from 2.4 percent forecast in November, and forecast 2015 growth of 2.7 percent, up from a previous estimate of 2.5 percent.
    But the OECD also cautioned that policy makers should take action over rising house prices, with tighter monetary policy from around mid-2015 accompanied by prudential measures to tackle the risk from excessive home price inflation.
    Jon Cunliffe, one of the BOE’s deputy governors, on May 1 also pointed to the risk to financial stability from rising property prices, saying the BOE’s Financial Policy Committee – responsible for ensuring financial stability – needs to “be both vigilant and ready to act.”  
    In its brief statement, the BOE added that its latest economic projections would be published on May 14 while the minutes of its meeting would be published on May 21.
    The BOE has maintained its rate since March 2009 when it also embarked on the purchase of assets to hold down long-term rates and help stimulate economic activity.

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2014.05.08 12:30 6:30AM ET | GBPUSD Currency Pair

Here are the Pivot Points Levels with Support (S) and Resistance (R) for the GBPUSD currency pair today. Price action is currently trading right at the daily pivot point at the 1.69581 price level, according to data at 6:30 AM ET. The GBPUSD high for the day has been 1.69666 while the low of day has reached to 1.69425. The pair earlier today opened the Asian trading session below the daily pivot and has trended higher to the daily pivot area into the North American morning session.

Daily Pivot Point: 1.69621
— S1 – 1.69390
— S2 – 1.69272
— S3 – 1.69041
— R1 – 1.69739
— R2 – 1.69970
— R3 – 1.70088

Weekly Pivot Points: GBPUSD

Prices are currently trading over the weekly pivot point and between the R1 and R2 resistance levels at time of writing. The GBPUSD has been on an overall bullish trend this week after opening the trading week modestly above the weekly pivot.

Weekly Pivot Point: 1.68535
— S1 – 1.67890
— S2 – 1.67118
— S3 – 1.66473
— R1 – 1.69307
— R2 – 1.69952
— R3 – 1.70724

By CountingPips.com – Forex Trading Apps & Currency Trade Tools

Disclaimer: Foreign Currency trading and trading on margin carries a high level of risk and volatility and can result in loss of part or all of your investment. All information and opinions contained do not constitute investment advice and accuracy of prices, charts, calculations cannot be guaranteed.

2014.05.08 12:30 6:30AM ET | USDJPY Currency Pair

Here are the Pivot Points Levels with Support (S) and Resistance (R) for the USDJPY currency pair today. Price action is currently trading at the 101.774 price level and virtually on top of the daily pivot point, according to data at 6:30 AM ET. The USDJPY high for the day has been 101.948 while the low of day has reached to 101.696. The pair earlier today opened the Asian trading session above the daily pivot and has trended lower so far today.

Daily Pivot Point: 101.768
— S1 – 101.543
— S2 – 101.197
— S3 – 100.972
— R1 – 102.114
— R2 – 102.339
— R3 – 102.685

Weekly Pivot Points: USDJPY

Prices are currently trading under the weekly pivot point and right around the S1 support level at time of writing. The USDJPY has been on an overall bearish trend this week after opening the trading week below the weekly pivot.

Weekly Pivot Point: 102.399
— S1 – 101.793
— S2 – 101.414
— S3 – 100.808
— R1 – 102.778
— R2 – 103.384
— R3 – 103.763

By CountingPips.com – Forex Trading Apps & Currency Trade Tools

Disclaimer: Foreign Currency trading and trading on margin carries a high level of risk and volatility and can result in loss of part or all of your investment. All information and opinions contained do not constitute investment advice and accuracy of prices, charts, calculations cannot be guaranteed.

2014.05.08 12:30 6:30AM ET | EURUSD Currency Pair

Here are the Pivot Points Levels with Support (S) and Resistance (R) for the EURUSD currency pair today. Price action is currently trading at the 1.39397 price level and over the daily pivot point, according to data at 6:30 AM ET. The EURUSD high for the day has been 1.39397 while the low of day has reached to 1.39049. The pair earlier today opened the Asian trading session below the daily pivot and has trended higher into the North American morning session.

Daily Pivot Point: 1.39188
— S1 – 1.38997
— S2 – 1.38902
— S3 – 1.38711
— R1 – 1.39283
— R2 – 1.39474
— R3 – 1.39569

Weekly Pivot Points: EURUSD

Prices are currently trading over the weekly pivot point and above the R1 resistance level at time of writing. The EURUSD has been on an overall bullish trend this week after opening the trading week above the weekly pivot.

Weekly Pivot Point: 1.38420
— S1 – 1.37957
— S2 – 1.37233
— S3 – 1.36770
— R1 – 1.39144
— R2 – 1.39607
— R3 – 1.40331

By CountingPips.com – Forex Trading Apps & Currency Trade Tools

Disclaimer: Foreign Currency trading and trading on margin carries a high level of risk and volatility and can result in loss of part or all of your investment. All information and opinions contained do not constitute investment advice and accuracy of prices, charts, calculations cannot be guaranteed.

By CentralBankNews.info
    Malaysia’s central bank held its Overnight Policy Rate (OPR) steady at 3.0 percent but warned that financial imbalances were building up and “going forward, the degree of monetary accommodation may need to be adjusted to ensure that the risks arising from the accumulation of these imbalances would not undermine the growth prospects of the Malaysian economy.”
    Bank Negara Malaysia (BNM), which has maintained its benchmark rate since May 2011, said inflation had stabilized in recent months but going forward it was expected to remain above its long-run average due to higher domestic costs.
    “Amid the firm growth prospects and inflation remaining above its long-run average, there are signs of the continued build-up of financial imbalances,” BNM said, adding that macroeconomic policies and prudential measures helped moderate growth in household debt, but the current monetary and financial conditions could lead to a broader build up in imbalances.
    Malaysia’s headline inflation rate was steady at 3.5 percent in March from February after accelerating since September.
    The central bank has often said it expects inflation to rise this year and possibly exceed the long-term average of 3.2 percent due to cuts in subsidies and changes in taxes in April. Economists expect the central bank to raise rates later this year to contain inflationary pressures.

    BNM said the domestic economy continued to expand in the first quarter of this year and domestic demand and the improved international environment, including in Asia, will support it going forward.
    “Conditions in the international financial markets have also improved following gradual and orderly policy adjustments in the major advanced economies while the impact from geopolitical developments remains contained,” the bank said.
    Malaysia’s Gross Domestic Product expanded by 2.1 percent in the fourth quarter of last year from the third quarter for annual growth of 5.1 percent, up from 5.0 percent.
    In addition to rising exports, the central bank expects private sector spending to remain robust, underpinned by stable income growth, and investment activity to be supported by broad-based capital spending, particularly in manufacturing and services.
    “The prospects are therefore for the growth momentum to be sustained,” BNM said.

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Technical Sentiment: Bullish

Key Takeaways

• Australian employers added 14.2K in April;
• Unemployment Rate remained steady at 5.8%
• Traders focus on the resistance levels ahead, as the pair will attempt to test and break 1.0909.

Positive Australian employment data gave AUD/NZD the necessary boost at a crucial location. Disappointing data would have led to the formation of a lower high at 1.0785, followed by a deeper correction back to 1.0640. Instead, traders turn their attention back to 1.0909, with a larger target around the 200-Day Moving Average if April’s resistance fails to hold.

Technical Analysis

April’s price pivot zone at 1.0825 is the last hurdle AUD/NZD needs to break in order to open up the way to 1.0909 and above. The current rally has extended far enough that we are no longer counting on a lower high being formed. A future swing low below 1.0640 appears unlikely given the current landscape.

The pair is trading above the 50, 100 and 200 Simple Moving Average on the 4H time frame. Price broke above the resistance trendline drawn on the most recent swing highs from April, as well as the 61.8% Fibonacci Retracement between 1.0909 – 1.0643. AUD/NZD is bullish towards the resistance in this situation.

Daily Stochastic is exiting oversold territory and turning bullish. The Daily chart shows yet another higher low, adding strength to the case of a trend reversal and considerably increasing chances 1.0909 will break on the next attempt. Above 1.0909, February 4^th High of 1.0941 should be crossed fairly easily, as the main target for a break-out is located much higher on the 200-Day Moving Average, currently priced at 1.1030.

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Prepared by Alexandru Z., Chief Currency Strategist at Capital Trust Markets