FXTM Daily Market Analysis

Trump triumph sparks global selloff



Risk aversion swept across the financial markets during early trading on Wednesday after the unexpected Trump presidential victory soured investor risk appetite. Global sentiment was dealt a frightening blow with most major stocks sold off savagely as uncertainty repelled investors from riskier assets. The polls pointing to a Clinton victory were completely wrong, consequently catching participants off guard and this may come at a heavy price moving forward. With risk-off sentiment amid the Trump victory becoming a dominant theme across the board, stock markets could be left depressed for prolonged periods.

The S&P 500 futures have already slumped by as much as 5% following Trump's victory with the bearish contagion dragging European stocks 2% lower on Wednesday. Wall Street may be contaminated by the negativity with further declines expected in the coming days as the toxic combination of uncertainty and sliding oil prices provide a foundation for bears to install repeated rounds of selling. There is a strong possibility that today’s presidential results spark a fresh era of risk aversion with investors turning to safe-haven assets for protection against the pending chaos.

What a Trump victory means…

Uncertainty and Donald Trump seem to have a symbiotic relationship and this continues to weigh heavily on global sentiment. Concerns remain elevated over Trump potentially triggering a global and political disruption in a fragile financial landscape that is already entangled in a losing battle with investor anxiety. The persistent threats from Trump to discard major trade agreements have kept participants on edge, while his anti-Mexico rhetoric continues to pressure both the Peso and Mexican economy. Emerging markets may be in store for a nasty surprise moving forward as risk-off encourages another brutal selloff. Many questions remain unanswered in this sensitive period of uncertainty with more explosive movements expected as markets attempt to digest the Trump reality.

Dollar bears rampage

The Dollar experienced heavy losses during early trading on Wednesday with the Dollar Index sinking to the lows of 95.91 following the unexpected Trump presidential victory. Dollar weakness may be a recurrent theme moving forward as the awful combination of uncertainty and heightened concerns over the future of the US economy entices sellers to attack incessantly. In the aftermath of Trump’s victory, expectations have already diminished over the Federal Reserve raising US interest rates in December with the current odds below 50% which should pressure prices further. Despite the sharp rebound, which has taken the Dollar Index back towards 97.65 as of writing, bears remain in control with the Index sinking towards 96.00 as speculators reduce bets on a US rate hike.

Sterling scheduled for further declines

Sterling bulls received false encouragement on Wednesday with the GBPUSD lurching towards 1.2545 on the back of Dollar weakness. This technical correction simply provided a fresh opportunity for bears to install repeated rounds of selling on a currency that is heavily poisoned by hard Brexit fears. Previous talks of the high court announcing that the Brexit cannot proceed without the vote to Parliament did little to keep Sterling buoyed with further losses expected as investors come to term with the Brexit reality. The GBPUSD could be poised for steeper declines once bears conquer the 1.2350 support. From a technical standpoint, a breakdown below 1.2350 could open a path towards 1.2200.

WTI pressured by risk-off

WTI Oil fell below $44 on Wednesday as Donald Trump’s unexpected victory in the U.S presidential election sparked a wave of risk aversion. Oil prices were already pressured by the fading expectations towards OPEC securing a freeze deal in November’s meeting with this period of risk-off ensuring the commodity remains depressed. The amalgamation of oversupply woes and mounting concerns over demand diminishing amid slowing global growth could guide WTI crude back below $43. Some attention may be directed towards the pending crude oil inventories report which could send oil lower if there is a buildup in inventories.

Commodity spotlight – Gold

Gold surged with ferocity on Wednesday as Trump’s victory triggered risk aversion which encouraged investors to frantically pile into safe-haven assets. Markets have been flooded with renewed uncertainty consequently bolstering Gold’s allure. Dollar’s weakness amid dimming US rate hike expectations always played a key part which saw Gold prices clipping the highs of $1337. Buyers could be back in town with further gains expected as the mixture of Dollar weakness and uncertainty attracts investors to safe haven assets. From a technical standpoint, Gold is bullish on the daily timeframe as there have been consistently higher highs and higher lows. A breakout and decisive close above $1308 could encourage a further incline towards $1320.


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By Lukman Otunuga, Research Analyst

Forextime.com Daily Market Analysis

Markets bounce as investors accept Trump reality



Global stocks staged an awe-inspiring rebound during late trading on Wednesday as investors came to terms with the shocking Trump presidential victory. Asian shares rallied in the early sessions of Thursday with the Nikkei lurching close to 7% as participants re-evaluated the global impacts of Donald Trump’s severely mispriced election win. European markets may receive a welcome boost from Asia’s bullish momentum and the positive domino effect could support Wall Street later today. Although the short-term gains in stocks are impressive, investors should keep diligent especially when markets have been infected by jitters. Stocks remain depressed in the medium term with steeper declines expected as uncertainty grips risk sentiment.

Dollar bulls relentless…

The Dollar appreciated with aggression on Wednesday afternoon following Donald Trump’s presidential speech which effectively eased some concerns over his economic policies. Pledges of massive U.S fiscal spending have heightened expectations of Trump implementing fiscal stimulus measures, including tax cuts which may bolster profit growth consequently boosting inflation. Dollars resurgence was also complimented by the renewed speculations of the Federal Reserve raising US interest rates in December that encouraged buyers to attack. This week’s aggressive Dollar rebound may be fully Trump driven with more time needed for the Greenback to find some normality.

Some attention may be directed towards Thursday’s unemployment claims report which may reinforce some expectations of a December rate increase if unemployment claims recede.

WTI bears eye $44.00

WTI Oil lurched towards $45.92 during late trading on Wednesday as markets embraced the Trump reality. This feeling was short lived on Thursday when prices sunk back towards $45 following the ongoing oversupply fears that haunted investor attraction. Oil continues to be dogged by persistent oversupply concerns while fears over slowing global growth have sparked discussions of a potential decline in demand. This terrible combination of oversupply anxieties and tepid demand concerns may be the ingredients needed for sellers to send WTI back below $40. Investors have clearly maintained a cautious stance ahead of the November 30th pending OPEC meeting with expectations periodically diminishing over a successful freeze deal. From a technical standpoint bears need to conquer $44 for a further decline towards $43.

Currency spotlight – EURUSD

The EURUSD was explosively volatile on Wednesday with prices whipsawing within a near 400 pip trading range and the culprit was a chaotic Dollar. With the Greenback potentially strengthening further amid renewed US rate hike expectations, the EURUSD could be exposed to steeper losses as bears install repeated rounds of selling. From a technical standpoint, prices have turned extremely bearish on the daily timeframe as the candlesticks are trading below both the 20 and 200 SMA. A decisive breakdown below 1.0900 could encourage a further selloff towards 1.0850 and potentially lower.


[img]http://www.forextime.com/images/maa/eurusddaily_79.png?itok=7aL9-PUt[/img]


Commodity spotlight – Gold

The erratic movements Gold dished out on Wednesday was out of character with most investors left bewildered as the precious metal surged over $60 before crashing back down. Risk aversion amid the uncertainty should clearly support Gold but market sensitivity continues to direct investors to riskier assets consequently leaving the zero-yielding metal vulnerable to losses. Gold may maintain ground in the new trading week as participants reassess the conditions of the global financial landscape. From a technical standpoint, bulls must break back above $1285 for a further incline towards $1308.





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By Lukman Otunuga, Research Analyst

Forextime.com Daily Market Analysis

Emerging market currency sell-off accelerates




The emerging market currency sell-off has accelerated throughout trading in Asia on Friday, including the Indonesian Rupiah sinking to levels that prompted the Bank Indonesia (BI) to intervene and stabilise the market. While the Indonesian Rupiah has so far led the headlines after a plunge in currency value, the Malaysian Ringgit has also suffered from an extreme round of weakness and the offshore Chinese Yuan looks set to continue its course of hitting further historic lows against the Dollar.

While the declines seen in Asian currencies are being linked to the impact of trade throughout the continent if Donald Trump enforces protectionist trade policies, the return of expectations that the Federal Reserve will still raise US interest rates in December is strengthening the Dollar and also pressuring the emerging market currencies. If the Federal Reserve do not raise US interest rates in December as they have been preparing the markets towards for months following such a spectacular rebound in stocks after the victory by Trump, it will raise questions over credibility and concerns that they are worried about Donald Trump taking over office in January.

There is also a prolonged threat to emerging market currencies that once Donald Trump completes his inauguration early next year that he will publically encourage higher US interest rates during the course of his presidential term. While the Federal Reserve is independent to any political party or government, the expectations that Trump will encourage faster monetary policy normalization is a real threat to the emerging markets.

Overall the combination between the initial response that fiscal stimulus encouraged by Trump should provide a boost to the US economy and also encourage increased interest rates in the United States should in theory result in projections that the Dollar Index could break the psychological level at 100.



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By Jameel Ahmad, VP of Corporate Development & Chief Market Analyst

Forextime.com Daily Market Analysis

Markets consolidate as Trump reality sinks in




Global stocks were noticeable mixed during trading on Monday as bullish investors took a break from the Trump fueled market rally. Asian shares casually floated between losses and gains, pressured by a resurgent Dollar and rising US rate hike expectations that could spark further outflows from emerging markets. European stocks were contaminated by the lack of direction in Asia with the absence of momentum potentially trickling into Wall Street later today. It is becoming clear that market participants have digested the Trump reality with most waiting for further news relating to Trump's economic team which could provide additional clarity on how he plans to lead the U.S economy.

Dollar bulls unstoppable

The market shaking Dollar appreciation has highlighted how the combination of Trump’s presidential triumph and heightened hopes of a US rate hike in December can provide the foundation needed for bulls to attack incessantly. Sentiment towards the Dollar is extremely bullish and the optimism towards Donald Trump’s presidency bolstering US economic growth has ensured the greenback remains buoyed. With economic data in the States repeatedly pointing to economic stability and Fed officials all singing a similar hawkish chorus, the Dollar has become a buyers dream. Much attention may be directed towards Wednesday’s FOMC meeting minutes which could provide the final piece of clarity needed to cement expectations of a US rate increase in December.

From a technical standpoint, the Dollar Index is bullish on the daily timeframe as there have been consistently higher highs and higher lows. Previous resistance around 100.50 could transform into a solid support which could provide bulls encouragement to send prices back towards 102.00.

Sterling bears here to stay

The ongoing Brexit episode may have irritated traders with the battle of words between financial heavyweights on how to handle the hard Brexit scenario adding to the nasty cocktail of uncertainty. Sterling remains heavily weighed down by this anchor known as Brexit with steeper declines expected if buying sentiment towards the currency continues to deteriorate. With expectations rising over the Fed raising US rates in December, the bearish combination of Sterling weakness and Dollar strength could spark a sharp decline on the GBPUSD. The weekly close below 1.240 on the GBPUSD may have sealed the deal for bears to drag prices lower towards 1.220.



WTI commences the week positively

WTI Crude staged a miraculous rebound during trading on Monday with prices rallying to $47 as expectations were revived over OPEC members securing a freeze deal at the November 30th formal meeting. Comments from Iran’s oil ministers and Russian President Vladimir Putin on their optimism of OPEC agreeing to a proposed supply cut coupled with the Trump effect has renewed some investor attraction towards oil. While the abrupt short-term gains are undeniably impressive, WTI still remains dogged by the overwhelming oversupply woes. The current technical bounce could act as an opportunity for sellers to pounce if OPEC repeats the events of Doha at the formal November meeting.

Currency spotlight – EURUSD

The EURUSD descended deeper into the abyss last week with prices closing below 1.060 as a dovish Draghi coupled with concerns revolving around political instability in Europe swiftly haunted investor attraction towards the Euro. Expectations remain elevated over the ECB extending its monetary policy amid the uncertainty while a strengthening Dollar from rising US rate hike expectations continues to enforce downside pressures on the EURUSD. Mario Draghi is due to testify before the European Parliament in Strasbourg today with any further dovish hints potentially leaving the Euro vulnerable to further losses. From a technical standpoint, the EURUSD is heavily bearish on the daily timeframe as there have been consistently lower lows and lower highs. Previous support around 1.075 could transform into a dynamic resistance which could re-open a path back below 1.060.





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By Lukman Otunuga, Research Analyst

Forextime.com Daily Market Analysis

Japanese data sets the tone for week



There has been no major moves economically speaking in the market, but there is plenty on the horizon and markets will shortly be focused on data out of Japan with household spending likely to be the main focus. Japan's ability to spend has been sharply in the microscope under Abenomics as he tries to break the culture of saving and push Japanese to be more consumer friendly with their cash to boost GDP but also to help increase tax revenue. It's likely that the market will be looking for weaker numbers here and expecting the market to rally further against the Yen, which has recently clawed back some ground against the USD.

Technically speaking the USDJPY ran out of steam at resistance at 114, as the market started to unwind some of its positions to take profit. Since then we have also seen it push down to support at 111.843 before failing to find any further legs for the bears, this is a bullish signal for the most part and the market may look to restart further moves higher as a result. If we did see further drops I would expect the 20 day moving average to finally play catch up and act as dynamic support for the USDJPY. Expectations around the bulls breaking higher will find the next level of resistance at 116.591.

On Thursday I spoke about the Canadian dollar and it continues to struggle to find any ground other than through the current OPEC meetings. There is however a number of Canadian economic events on the horizon which will have some impact, and I am expecting this to flow onto the market. It will be hard to beat the current USD strength though without some sort of major data boost or an OPEC deal (a struggle at this time). Certainly with the Trump dollar in full force and markets looking forward not backwards the USDCAD could certainly still remain in the territory of the bulls for the time being.

The obvious correlation between oil and the CAD has so far helped it not further erode anymore ground to the USD and support at 1.3402 continues to be a major level which has prevented further drops on the charts. One thing that is worth noticing is the 50 day moving average which is creeping up the charts and looking very imposing as a possible catalyst for dynamic support, after future touches on the daily chart were met with strong buying. In the even the bulls do manage to regain control the market is likely to jump back up to 1.3542, but with the USDCAD long term horizons always need to be careful as the pair is known to range.



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By Alex Gurr, Guest Analyst

I strongly suggest that traders keep an eye on the Japanese Yen. This currency, for the most part of yesterday, traded volume which exceeded that of the Euro. Only about 2 hours into New York session was the Euro able to regain its position (highest volume traded).

The volume has come in, the spread (range) is yet to be seen. Let the analysis for JPY pairs begin!

Forextime.com Daily Market Analysis

Chinese data set to move AUD & NZD



It's been a slow start to the global calendar today as the markets were relatively quiet from an economic data perspective but there was some slight selling of the USD across the major pairs which saw the commodity currencies take centre stage. None more so that the NZDUSD which had its housing data report come back showing housing sales down -6.0% (-14.2% prev), while visitor arrivals were also up 2%. This bodes somewhat well for the current state of the NZ economy which has also seen some political change in the last few weeks, and as the economy looks to pick up in the wake of the recent earthquake. But, it's not all doom and gloom over that side of the world and the NZD continues to be a strong currency in the wake of it all, even as the RBNZ made comments last week that the time for the NZD was now to fall.

The NZDUSD has not fallen, in fact today it rallied strongly on the back of USD selling to touch a strong level of resistance at 0.7180 before pausing and failing to maintain any further momentum. The net level above at 0.7222 is looking all the more cautious, but at present further USD selling could propel the kiwi much higher at this rate. Support levels are also keenly watched and none more so than 0.7113, which has held up any further movements lower. Just below this key support level is the 200 day moving average which the NZDUSD has been respecting quite frequently, and I would expect hold back any further bearish movements in the event of a swing lower.

The NZDUSD may have some of the spotlight but it's not hard to look past the AUD as well as Chinese data is due out shortly in the day and as usual it will have a large impact. Traders will be sharply focused around the Industrial Production reading at present, but also the Australian data due out on business confidence with expectations low for a strong reading given the recent turmoil that Australia has endured from an economic perspective.

On the charts the AUDUSD continues to be a mixed bag and looks very similar to the NZDUSD when it comes to patterns. So far resistance around 0.7490 has been quite strong and the market is looking for further direction from the economic events from today before looking to move either higher or lower. I would expect the 100 and 50 day moving average may look to slow traders who are quite bullish, but it's no guarantee when it comes to such important economic data. The 20 day moving average has thus far managed to act as dynamic support I would expect that to remain the case as the USD weakness continues in the marketplace. However, overall the bullish trend is pointing upwards and it may be a matter of time before the AUD looks to take charge again against the USD bulls.


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[B]By Alex Gurr, Guest Analyst[/B]

Forextime.com Daily Market Analysis

BoJ holds fire, brightens economic outlook




As widely anticipated the Bank of Japan did not surprise markets by keeping monetary policy unchanged at its final meeting for 2016. The central bank left interest rates unchanged at -0.1% and 10-year JGB’s yield target around zero, while maintain its annual holding of bonds at 80 trillion yen.

The 12% decline in the Yen and 13% surge in crude prices since BoJ last met on November 1, helped in providing a brighter economic outlook as exports and output picked up.

But the extreme divergence of U.S. monetary policy was considered a risk, as series of expected rate hikes in 2017 could see capital flight from emerging economies.

USDJPY rose 0.5% as bond yield spreads between U.S. and Japan are not expected to shrink anytime soon, but we can assume that BoJ’s next step likely to be tightening rather than easing further.

2016 is ending with tragic incidents in Turkey and Germany, but investors have become so fast in digesting bad news, and this explains the resilience in financial markets.

The U.S. dollar is trading in narrow ranges against most of its major peers after Monday’s rally which was supported by Yellen’s public speech in Baltimore University. Although she did not comment on Monetary policy, her views that job market is strong and wage growth picking up was sufficient to provide the greenback a boost.

With only nine trading days remaining till end of year, investors are unlikely to take heavy positions, whether it’s in equity, fixed income or foreign exchange markets, suggesting that the narrow range trading is likely to remain until new year.


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By Hussein Sayed, Chief Market Strategist (Gulf & MENA)

Forextime.com Daily Market Analysis

Fed outlook turns hawkish




The US economy was thrown back into the spotlight today as the FOMC minutes were released and the dovish FED of the past certainly looked a thing of the past, with some of the most upbeat and hawkish minutes that have been seen in a long time. Almost all of the officials present in the meeting expected that with Trumps appointment growth was expected to pick up in line with his expansionary policies. One thing that also stood out was the FED's own expectation around inflation with expectations that it will increase to the magic 2% mark in the medium term, and the recent lift in quarterly inflation was further credit to this theory. Regardless of the trump effect the FED looks to be singing the same tune as the market and that can only be positive for the bulls in the short term. The real question will be around what Trump can actually do with congress in order to get the US economy moving again and the economy expanding further - even when it's almost at full capacity when it comes to employment.

Regardless of how you viewed the FOMC minutes, the recent economic data out of the US has been positive with the construction spending m/m lifting to 0.9% (0.5% exp) and ISM manufacturing PMI also lifting to 54.7 (53.8 exp). All of this has boded well for traders and the markets have responded accordingly with the S&P 500 lifting back up to a strong level of resistance in anticipation of tomorrows economic data due out on the employment sector and the services sector as well. Even with resistance currently sitting at 2272 the expectation of further highs is fresh on traders' minds and they will be looking to push the boundaries further in the current climate. A push upwards to 2300 is very much on the cards if the market sees further positive US economic data tomorrow.

One thing that is also worth watching out for in tomorrow's trading is oil markets, previously they have been moving quite rapidly in the low volume trading and volatility is certainly ever traders friend. The recent build up in private storage showed that perhaps oil markets still needed a little more time to correct and we saw prices fall accordingly down to the 20 day moving average before finding dynamic support. Expectations are for a decline in overall oil inventories, but after the recent private reading the market may have altered its expectations.

Technically speaking though oil is looking very strong with resistance sitting tight at 54.46, to get past this level we would need to see a large drawdown in crude oil inventories, and this may be a bit of an ask just after Christmas. Any further falls are also likely to struggle past the 20 day moving average, and even more so the 50 day moving average which is acting as dynamic support for market movements at present.


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By Alex Gurr, Guest Analyst

Forextime.com Daily Market Analysis

Asian equities retreat as investors shift to cautious mode


[img]http://sitekno.net/gambar/images/shuttedxd.jpg[[/img]


After a strong start for the year, equity markets started to cool down in the second trading week of 2017. Most Asian major indices are in red today, as Wall Street failed to make new highs and the Dow retreated further from the key psychological 20,000 mark, while oil suffered a steep selloff on Monday.

Investors who built their positions based on Trump’s victory are likely to start cashing out for the time being and shift their focus on fundamentals with the earning season kicking off later this week when U.S. big banks release their fourth quarter results. I’m not confident to call a correction yet, but certainly many investors got ahead of themselves betting on fiscal stimulus, and while business usually tends to under promise and over deliver, this doesn’t seem to be the case with the U.S. new President.

Although Kuwait’s Oil Minister Essam Al-Marzouk who is chairing the committee to oversee compliance of OPEC’s output assured the markets that OPEC and non-OPEC members will abide to the planned cuts, still both oil benchmarks dropped 4% on Monday. This clearly indicates that it’s not just an OPEC game, and the expected increase in U.S. and Canadian supplies are likely to threaten the oil rally. Data from the U.S. on Friday showed rig counts rose for ten consecutive weeks and it’s just about some time for this to translate into additional production, suggesting that downside risk may remain in play, and rather than just focusing on implementations of OPEC production cuts, investors should be looking at the bigger picture on whether supply will meet demand in the second half of 2017.

The U.S. dollar fell for a second day, extending its slide from the 14-year high hit on January 3. The pull back in the dollar came despite hawkish speeches from Fed officials suggesting that the central bank is getting closer to achieving its dual mandate. Both Fed presidents, Charles Evans and Patrick Harker aren’t ruling out three rate hikes in 2017, while Eric Rosengren called for stepping up the pace of interest rates hikes to prevent inflation from overshooting. However, traders are still not yet completely convinced and pricing in only two hikes for 2017 according to CME’s Fed Watch. With no tier one economic data on the calendar until Friday, U.S. bond yields will remain to be the key driver for the greenback.

The Pound remained under pressure after Monday’s steep selloff on comments from UK’s Prime Minister Theresa May which intensified fears of “Hard Brexit”. Although the pound looks undervalued, the risk of further selloff may remain in play as we get closer to triggering article 50. Meanwhile comments from Scotland’s First Minister on BBC that she’s not bluffing about her vow to hold a second referendum on Scottish independence if Britain leaves the single market is another factor to worry about on the medium-term.


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By Hussein Sayed, Chief Market Strategist (Gulf & MENA)

Forextime.com Daily Market Analysis

President-elect leaves dollar bulls unimpressed




The long-awaited first press conference by President-elect Donald Trump left many investors with more questions than answers as he failed to justify the current premium priced in the dollar and equity markets.

We already knew that Trump wants to build a border wall with Mexico, bring back U.S. production onshore, and that he’s willing to be the best job creator America ever knew, but what’s his plans on corporate tax reforms? How and when is he planning to spend on roads, bridges, and other infrastructure projects? Is he going to impose tariffs on imported goods from China, Mexico and the rest of the world? Unfortunately, no updates were revealed.

Thus, the greenback was dragged, falling against all major currencies on Wednesday with the dollar index falling to lowest levels since Dec 14 at 101.28. The selloff continued until early Thursday suggesting that dollar bulls are no more willing to price any additional premium until we get more clarity on his promised fiscal plans.

The continued fall in U.S. treasury yields is another factor dragging the dollar. U.S. 10 year yields have been in a down trend since Dec 14, losing 11.8% in value after spiking 42% since the election results were revealed.

U.S. stocks were less impacted, and managed to close higher despite the volatility and sharp selloff in pharma stocks which were attacked by Trump. Whether the rally can be sustained will depend on two factors, earning growth and actions from Trump’s administration as his words and tweets are clearly starting to show less influence.

The combination of dollar weakness, lower U.S. yields and doubts in Trump's policies offered gold a boost, with the yellow metal posting a high of 1,199. So far gold has recovered 6.8% from December lows, and trader higher in 11 out of 13 days. Fed Chair Janet Yellen’s speech will probably decide whether we’re going to see a break and hold above 1,200 today.



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By Hussein Sayed, Chief Market Strategist (Gulf & MENA)

Forextime.com Daily Market Analysis

Sterling slides on Theresa effect





The heightened hard Brexit fears have triggered a steep Sterling selloff during the early trading hours of Monday with the GBPUSD tumbling to a fresh three-month low at $1.1983. Although the cause behind the renewed selling pressures on the Pound was attributed to reports of Theresa May standing firm and moving forward with her hard Brexit plans during Tuesday's pending speech, the frightening low buying sentiment continues to play a critical part. It is becoming quite clear that the persistent Brexit woes and ongoing uncertainty have left the Pound vulnerable to extreme losses with anxiety over a rigid divorce from the European Union exposing the currency to further downside risks in the future.

Sterling bears have received ample inspiration from the visible lack of clarity the UK government has provided on the Brexit steps and this continues to grate on investor sentiment. With fears on the rise over a tougher EU exit negatively impacting the UK economy, the rising risk aversion, and diminishing buying sentiment may ensure Sterling remains depressed this month. While most anticipate Theresa May to provide some clarity on Tuesday on how the UK plans to move forward with the hard Brexit scenario, there is a threat of the Sterling sinking deeper into the abyss if investors are left empty-handed instead.

If this messy Brexit episode explodes out of control this quarter, there is a possibility of the Bank of England adopting a dovish stance which may spark a divergence in monetary policy between the Fed and BoE. As of now, Sterling weakness remains a recurrent theme with sellers exploiting the technical bounces to drag prices lower. Technical traders may observe how the GBPUSD reacts to the 1.2150 dynamic support which has the ability to transform into a resistance if the selling momentum persists.

[img]http://www.forextime.com/images/maa/gbpusddaily_187.png?itok=1Z-rAdD9[/img]


Dollar attempts to stabilize

The lingering impacts of last week’s market shaking Dollar selloff can still be seen on the Dollar Index with prices hovering around 101.65 as of writing. Dollar bullish investors have lost their inspiration to propel the Greenback higher following the lack of clarity on fiscal policies at Trump's news conference. With the initial driver behind the Dollar’s appreciation pinned on the hopes of Trump boosting US growth via fiscal spending, this new cloud of uncertainty could obstruct the Dollar’s upside gains in the short term. The next major event risk for the Greenback this week will be Trump’s inauguration ceremony on the 20th which could cause price sensitivity to intensify as anxious investors are kept on edge.

Commodity spotlight – Gold

The rising Trump fueled uncertainty, persistent Brexit woes and a weak Dollar have elevated Gold prices closer to $1210 during trading on Monday. This yellow metal has unexpectedly regained its safe-haven glimmer in the first trading month of the New Year with further gains expected in the short term if uncertainty becomes a dominant theme. With anxiety and risk aversion set to heighten this week ahead of the inauguration ceremony in the United States, investors may flock to safe-haven assets which should keep Gold buoyed. From a technical standpoint, Gold could explode into further gains towards $1230 if bulls manage to conquer the $1210 resistance level.




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By Lukman Otunuga, Research Analyst

Forextime.com Daily Market Analysis

Aussie dollar cracks major levels




The Australian dollar swung heavily today as US bulls finally looked to sell off in the wake of economic uncertainty around the United Kingdom. Volatility was most certainly the key player for the day, and traders took full advantage. Yesterday there were strong comments that the AUD was currently overvalued, but it would seem that the market had other ideas as it raced up the charts knocking out some key levels along the way. The market is further poised for today consumer sentiment, which will give some indication if the Trump effect has spread to Australia in the wake of recent events. Expectations have previously been very low and I would expect this to be the theme going forward but with the possibility of a surprise in economic data as we have previously seen.

For the AUDUSD traders resistance was not a problem today as it smashed through 0.7531 on the charts and looked to climb even higher, coming up just short of 0.7567. The 0.7567 level is very strong and I would expect to see some stiff resistance unless we see some positive fundamental data come out in the next few hours. In the event of a pullback I would expect that the 100 day moving average could act as dynamic resistance if it is a strong pullback, otherwise I would anticipate that former resistance level at 0.7531 looking to hold out in the long run.

One of the interesting things about a stronger USD has been the flow on effect to metals, none more so than silver which has so far seen a solid bullish trend appear in the short term and has briefly pushed through resistance at 17.133. The strong sell off today in USD certainly had a big impact in helping making this progress, but the real test is set to come as it sizes up resistance at 17.308, which I would expect to be a very strong level. The 200 day moving average is also intersecting with this strong level of resistance and has previously acted as a strong dynamic level for market movements. However, the trend is certainly your friend and this could be the case as silver looks to climb higher in the build up to Trumps inauguration on Friday.

Lastly, the NZDUSD has managed to also climb up the charts, but recent reports around the dairy auction paint a messy picture that shows that New Zealand's economy may not be as strong as recent economists had predicted. The jump higher today to resistance at 0.7222 has shown there is strong demand during patches of weakness, however this level has proved time and time again to also fight back and push prices lower.



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By Alex Gurr, Guest Analyst

Forextime.com Daily Market Analysis

Trump vs Yellen & Draghi vs Weidmann




The U.S. dollar has been on a roller-coaster this week. After dropping by more than 1% on Tuesday the dollar index recovered 0.9% from its lows. The steep drop in the currency came after comments from Donald Trump suggesting that the dollar is too strong, and this led some traders to believe the recent rally could have come to an end, but comments from Fed Chair Janet Yellen on Wednesday brought back hopes to the bulls.

Ms. Yellen did not specify the timeline or the pace of projected interest rates hikes, but she indicated the Fed will raise rates few times a year until 2019 and warned of a nasty surprise if the central refrained from acting. Although there’s no precise definition of “few” but reasonably means two to three times a year, which leave many central banks behind.

Recent economic data supports Yellen’s views as inflation rose in 2016 at fastest pace in five years. U.S. CPI jumped 0.3% in December to breach the 2% benchmark, and if oil prices held above $50 the trend is not likely to reverse. This leaves only the Fed's preferred gauges of inflation, the PCE and Core PCE Price Index below 2%. However, there is a high risk of these indices overshooting the Fed’s target if fiscal policies came into play and the Fed will be left with little options but to fasten the pace of monetary policy tightening, thus keep supporting the dollar.

On the shorter run, Trump will remain the center focus for traders and his inauguration on Friday will play a major role in the dollar’s direction. It’s highly unlikely to reiterate that the strong dollar is hurting the economy, but if his speech contains more of protectionist policies than stimulus measures, it could harm the dollar, at least in short term.

The European Central Bank is meeting today and most likely keep monetary policy unchanged after the central bank extended and reduced the monthly bond purchases to €60 from €80 in their last meeting. Although it might be considered a non-event, we’ll be carefully listening to Draghi to see if the recent improvement in Eurozone data especially when it comes to inflation, will force the ECB to start considering unwinding their QE policies.

PMI’s across the Eurozone reached 5.5 years high in December and inflation climbed to 1.12, the highest since August 2013. Meanwhile German inflation jumped to 1.7%, thanks to higher oil prices. This will undoubtedly create a battle between Bundesbank's Weidmann and Draghi on when to end the loose monetary policy. Of course, Mr. Draghi has his reasons, especially that political risks will intensify in the next couple of months with presidential elections in France, Germany and Netherland’s, but once we’re over it, I believe the ECB will start ending their untraditional QE policies. This suggests the Euro is likely to remain under pressure until probably mid-2017.


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By Hussein Sayed, Chief Market Strategist (Gulf & MENA)

Forextime.com Daily Market Analysis

Traders look to hedge in Gold




The world and the markets continue to struggle to focus on economic data as Trumps economic policies take centre stage. This should come as no surprise these days given the power one man can wield on an economies; as we saw with Abenomics. But that was just Japan and the US market is the world's largest free market and is Trump is throwing his weight around, which in turn has led to strong movements and volatility being one of the major themes of the market. Commodities have so far been a mixed bag for most traders in the market, however trending is become a key theme and the metals market is looking tradable in its present form.

Gold has been on the upside in the recent weeks as Trump continues to put pressure on the market, especially around his comments on currencies and the fact that a number of countries should stop manipulating their currency. There is further speculation that Trump may in fact also start a currency war globally, however how that would look is still unknown and also comes with large risks for the US economy - large fluctuations might be good for traders, but for an established economy it can cause a world of pain. If exports are winners in the long run, then importers and the general consumer are worse off and vice versa.

Gold has so far but in a very bullish trend for a few weeks and it looks set to continue as people look for a hedge in the event of a currency war. Resistance at 1245 held up quite nicely when pushed over the last few days, but after the quick drop gold has found support on the 100 day moving average. Any further drops for Gold are likely to find support at 1208, but even before that the 20 day moving average would also be something to consider and watch. If Gold continues to run higher then I would expect the next major level of resistance to be found at 1262 and it may look to take a breather at this key level.

Oil has also been another major player in the market that everyone is taking a tough look at, after last week's oil inventory data shocked the market coming in at 13.83M barrels (2.53M exp). This was a quite a large inventory build up and was somewhat unexpected after the recent cuts from OPEC back a few months to help bolster prices. Additionally America picking up pace was also expected to cause further increases in demand.

Technically speaking, Oil on the charts though has so far failed to breach through the resistance level at 54.46 and unless we see further cuts of even a pick-up in demand then it could actually slide further down the charts. So far the 20 day moving average and the 50 day moving average have been slowing down any bearish movements, but it's only a matter of time before it slips lower unless we see some changes.


By Alex Gurr, Guest Analyst

Forextime.com Daily Market Analysis

Global risk appetite remains strong





The Australian economy continues to be a roller coaster for any Aussie bulls, but one thing is certain the markets are not paying too much attention at present with the AUDUSD being one of the stand out performers in 2017 so far. However, markets should be paying attention to what is going on with the consumer economy with the weekly consumer confidence reading coming at 113.7 (previous 116.4). With the 3rd week of drops for the consumer economy the Reserve Bank of Australia may be starting to squirm slightly, especially as they head into a new year with an uncertain global economy focused on Trump and Brexit.

On the charts the AUDUSD has been a trail blazer as of late as the bulls have taken full control to run it up the charts. This has been on the back of risk sentiment being very strong in the wake of Trumps elections, but for the fundamental side of the Australian economy it's not making a lot of sense. Either way the technical's so far have been very positive with the 20 day moving average acting as dynamic support as it pushes the AUDUSD higher. Resistance has been quite strong around 0.7730 and 0.7754 and the market will certainly have to work hard to break through these levels. Consolidation between 0.7680 and 0.7730 is likely to be the next few days of trading before the market may look to retest previous levels, it would be with a degree of caution at present as there is still not a lot of clear direction globally.

Risk sentiment is not only driving the commodity currencies, but also the US equity markets which in turn saw another sharp spike today as it continued to make record highs on the back of positive economic data. Last week's Philly manufacturing index data took the market by surprise with a very strong reading of 43.3 (exp 18.0). This large jump is in part to the market believing that the Trump administration will look to boost the US domestic economy, and is likely to stimulate it and in turn give the manufacturing sector a much needed boost. Even with the threat of further rate rises the US equity markets have so far not faltered and look ever more bullish, even as the economic data points to another one right around the corner.

For the traders looking to cash in on the S&P 500 the bulls look to be in control. How long momentum can be sustained is hard to see at this stage, but the psychological levels become important as you go up the charts into new territory. With the market now sitting just above 2350 it's likely to look for the next level higher and this is looking likely to be 2400 for resistance. Past history has shown that these levels are major points for the market, and as the bulls look to see if the sky is the limits, you can expect to see some major levels of resistance around these round numbers.



By Alex Gurr, Guest Analyst

Forextime.com Daily Market Analysis

WTI bulls struggle above $52.50





WTI Crude [/b]breached $53 during trading on Tuesday after industry data pointed to a potential ninth straight week of inventory builds which revived some oversupply concerns. Although OPEC members have made an effort to stabilizing the oil markets by cutting output, the growing threat of U.S shale ramping up production continues to limit gains on the commodity. While oil markets may be seen to be trapped in a fierce tug of war, a resurgent Dollar from the prospects of higher US rates could expose WTI to further downside shocks. From a technical standpoint, WTI Crude bulls are struggling around $52.50 with weakness below this level opening a path towards $51.50.



[b]Gold pressured by rate hike expectations

Gold was exposed to further downside losses during early trading on Wednesday as expectations heightened over the Federal Reserve raising US interest rates next week. A strengthening Dollar from the improving sentiment towards the United States has fuelled the metals selloff with prices trading around $1213 as of writing. From a technical standpoint, Gold is under pressure on the daily charts with sellers eyeing $1200. Previous support around $1220 could transform into a dynamic resistance that offers that encourages a selloff towards $1200 and potentially lower.



EURUSD bears eye 1.0500

The growing political risks in Europe have left the Euro vulnerable to sharp losses. Although the economic fundamentals of the Eurozone continue to look encouraging, it is the uncertainty revolving around the French elections that has haunted investor attraction towards the currency. Market participants may direct their attention to Thursday ECB meeting which most anticipate concluding with the central bank leaving monetary policy unchanged. From a technical standpoint, the EURUSD is bearish on the daily charts. The downside momentum could encourage bears to drag prices towards 1.0500 in the short term and 1.0350 in the medium to longer term.



GBPUSD struggles above 1.2200

Sterling remains gripped by the Brexit developments and the rising anxiety ahead of the Article 50 invoke should create a foundation for bears to install repeated rounds of selling. In a technical perspective, prices are trading below the daily 20 SMA while the MACD has crossed to the downside. With the pair creating lower lows and lower highs on the daily charts, the prerequisites of a bearish trend have been firmly achieved. Technical traders may observe how prices react below 1.2200 with further weakness opening a path towards 1.2100 and 1.2000 respectively.

[img]http://www.forextime.com/images/maa/gbpusddaily_205.png?itok=Y-sri5FW[/img]

GBPJPY breaks below 139.00

The bearish combination of Sterling weakness and Yen's resurgence from risk aversion has left the GBPJPY vulnerable to heavy losses this week. This pair may come under renewed selling pressures in the medium to longer term as uncertainty heightens from the Brexit developments. From a technical standpoint, the pair is bearish on the daily charts as prices are trading below the 20 simple moving averages. A decisive break down below 138.50 could open a path lower to the next relevant support level at 137.00.



By Lukman Otunuga, Research Analyst

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Forextime.com Daily Market Analysis

AUDUSD bears look to strike




The Australian dollar has been under a fair amount of pressure as of late, as a mixed bag out of China and recent weakness has got the Reserve Bank of Australia worked up. The weakness in China saw industrial production y/y dip to 6.5% (7.1% exp) and fixed asset investment y/y was also slip to 8.9% (9.1% exp) - worrying signs for one of the world's largest economies. This obviously has a flow on effect for the Australian economy as China is one of its largest trading partners. Additionally, the recent monetary policy meetings saw the RBA focus on the labour market and in particular growth in the jobs market and wage growth; all of which has been far too slow for the RBA and continues to be a headache. The market thus far has been accordingly putting pressure on the Australian dollar, and this will be somewhat welcomed by the RBA as a way to alleviate pressure and help stoke inflation. One of the main things to watch will be to see if this inflation flows over into wage growth to help the economy grow.





AUDUSD bears have been in control over the last month as the market enjoys a resurgence in USD bulls and plays of the weakness of the Australian economy. So far daily movements have been consolidated bullish movements followed by aggressive bearish plays to push the currency pair lower. The 20 day moving average has been tracking the movement lower and thus far has been acting as strong guidance for the direction and acting as a dynamic level on the way down. Resistance levels are currently being pressure around 0.7439 with the possibility of further out breaks touching on 0.7498 and 0.7568. However if the market does decide to follow the current trend this pressure on support levels at 0.7343 and 0.7178 are likely to be the main targets for traders on the way down. All in all though it seems that the AUDUSD is likely to find plenty of volatility in the coming months with a mixed bag from China and the US recently.

Oil has once again come under the pump, as private inventory figures have shown a build up in oil reserves. This should not be a surprise given how back and forth it is, but the market has been quick to turn its toes on the recent bullish run and drive oil prices lower. It does feel however that clean energy is starting to make its mark amongst shale oil and causing issues for oil bulls who have been betting big for some time.


[img]https://www.forextime.com/images/maa/crudedaily_16.png?itok=UQ2cJzz-[/img]


So far Oil has struggled to break through resistance at 49.32 with each push through being pulled back by the market. Support levels are likely to be the next targets if we continue to see surpluses and I would expect 47.75, 45.78 and 44.02 to be the most likely candidates for large price action movements lower.


By Alex Gurr, Guest Analyst

Forextime.com Daily Market Analysis

Greek debt negotiations cause EUR volatility




It could be a return to instability if the Greek issues rear there ugly head again. Recent reports out of Brussels over the Greeks and their handling of debt has been slightly worrisome, and markets are a little on edge over the discussions. Currently Greece needs another tranche in June in order to prop up its finances, and so far it has been working hard with some protest. But markets have not forgotten the previous ordeal when Greece almost collapse, and the turmoil it can cause on European markets. Certainly, the IMF and the EU will be looking to make sure they don't see a repeat of that and a resulting downturn in the Euro-zone, but it's always worth watching the Greek drama unfold with both eyes open as markets can be quite volatile. This has been reflective of the EURUSD which has had some large swings today on the back of rumours on Greece.





The question now for traders is if this Greek tragedy is over and the Euro can fly higher. So far it looks good for traders with a strong level of resistance likely to rear its head soon at 1.1298. The band between that level and 1.1366 will set the tone I feel for further bullish movements if there are more in store. Even if we did see a strong pull back at this level there is a bullish trend line at play in the market which is likely to add a strong layer of support which can't be ignored by any technical trader out there. I would also be quick to watch the 20 day moving average, as it managed to safe guard against some bearish movements a few weeks back and could come into play again if we do see a bounce back to earth at 1.1298.

Oil markets have also been showing great resolve recently as the bulls look to take control once again. This in part has been led by Iraq looking to extend its oil production cut by another 9 months in order to control prices. The market believes it is a done deal as it's the same as agreed originally back in December to help boost prices. However, with shale oil producers being more aggressive than ever it will be hard to tell if we will see prices look to drift into the high 60s anytime soon. Certainly not so until we see large drawdown's on current oil inventories.





On the charts it's clear that Oil is looking to rush up, but has been pushed back down by the bears at the 100 day moving average which has acted as resistance. It will be interesting to see if oil can break through resistance at 51.48 or if it will instead run out of steam and go one to retest support levels and the 20 day moving average.



By Alex Gurr, Guest Analyst

Forextime Daily Market Analysis

UK poll results lift cable



The UK has been most of the talk today, as Theresa May continues to talk up Brexit in the face of looming UK elections. Both sides have thus far presented some of the arguments, but there is still a large amount of the unknown which is causing issues for the market and politicians as well. Some of the negative economic costs for leaving the free-market are starting to weight on the currency despite the resurgence. And with every whisper about it out of Brussels we will continue to see the cable jumping to the tune of the Euro-zone, as the UK looks to head to the negotiating table and get a deal that will provide some benefit despite the steps that are being taken. One gleaming hope for cable traders is that recent polls have shown Theresa May as being in a comfortable lead still and this has lead in turn to some bullish sentiment in the market thus far - despite all the negative talk.




For the cable bulls there is two key levels of resistance slowing them down at this stage, as 1.2861 and 1.3042 continue to be major bearish points. Support can be also found around 1.2743 but for the bulls, the key here as if we do see the Tories continuing to dominate polls in the coming week, then we will see further bullish movements and targeting of key resistance levels. The question will be, how high can we go and how long until Brexit takes its toll again.

Gold has been an interesting play in the market as of late. With equity markets lifting higher, it's unusual to see gold move in the same direction, but in this instance that is exactly what we are seeing. It's quite clear that parts of the market are hedging quite hard, while the bulls in other areas believe the rally will continue. Who is going to be wrong is impossible to tell, but there is certainly a lot of volatility on the horizon over the next four years with a Trump government. For me, what is interesting to see for gold movements, is that the bulls have started to slow down as they approach the long term trend line - so it will be interesting to see if they respect the bearish nature of it, or try and push through.



When it comes to key support levels in the event that the trend line does hold, I would expect to see it drop to 1256.35, with further potential to drop even lower to 1227.00 if the bears can truly take hold of the gold market. The 20 day moving average between the two is also one to watch as gold has a habit of using it as dynamic support and resistance on the daily chart.


By Alex Gurr, Guest Analyst

Forextime Daily Market Analysis

Oil nears key levels





Oil continues to struggle on the charts as last week's expectation for oil failed to show any real signs that there was a drain on the US oil inventories. While there was at least some drain on the inventories of -1.66M the expectation of a drop to -2.74M led many to continue to be bearish on oil markets. This has also been further pushed by recent developments in the US market, namely shale continuing to produce a large surplus of oil for the US economy despite the fact many wrote it off after the price drops. OPEC as well has struggled to reign in prices as the market sees it as less of a threat now days given the move to renewables and also the fact that economies are not consuming oil at any great speed anymore.


[img]https://www.forextime.com/images/maa/crudedaily_19.png?itok=cssr-DDp[/img]


For oil markets the bears are looking very much in control. Most pull-backs we have seen thus far on the daily chart instead look more like unwinding in the marketplace and traders looking to take profit. What is also very clear is that the trend is strong and does not look like it has run of steam and support at 44.01 is looking very close. Further support at 43.10 is a very strong level and could be the line in the sand that traders are looking to hit before we see any bulls come back into the market. In the event we do see them swing back in (and they will)expectations for resistance can be found at 45.80 and 47.75. In the event the market does finally turn and we see a strong bullish run in oil I would also be aware of the long term trend line on the daily chart which will be a hard ask in present times.

The Australian economy is not having a good day to day, with Moody's downgrading it's banking sector, sighting weakness in the local economy and over supply in iron ore at present to the Chinese market. Last week's Westpac consumer sentiment report also showed strong weakness in the Australian economy at -1.8%. And even while unemployment may have shifted lower to 5.5%, the jitters are certainly still there for any Aussie bulls left in the market. One thing is clear is that the market will be heavily focused on the Reserve Bank of Australia minutes which are due out shortly.





Traders so far have struggled to break through at resistance at 0.7622, and all daily candles looking to move higher have started to look weaker and weaker. If the AUDUSD can move higher, then a next level target at 0.7677 would be ideal. If the market does look to push lower then strong levels of support can be found at 0.7556 and 0.7502. I would also look to focus on the 20 day moving average as potential, given that the market has looked to use it as dynamic support/resistance previously as well.


By Alex Gurr, Guest Analyst

Daily Fundamental ForexTime ( FXTM )

The week ahead: Draghi’s turn to drag the Euro?




Last week the greenback was the biggest loser among all major currencies. The dollar index slipped to a 10-month low, while the Euro, the Pound, the Lonnie, and the Aussie all posted new 2017 highs.

The dollar has been falling since the beginning of 2017 despite the two rate hikes which occurred in March and June, and the many hawkish comments from FOMC members. Part of the blame falls upon the delay of President Trump’s economic agenda. However, most recently it was the poor economic data that led investors to question the trajectory and speed of interest rates hikes.

Janet Yellen’s testimony to Congress on Wednesday and Thursday did not help the dollar either. She did not seem confident that inflation is on the right path and Friday’s flat consumer price index raised concerns that the Fed may be done with hiking rates this year. U.S. retail sales figures added salt to the wound after recording the biggest drop in more than a year in May falling by 0.3%. The sluggishness in consumer spending, wage growth and inflation will likely to worry Fed officials. Furthermore, if the weakness persists in the next couple of month, it will prove that the slowdown in the economy is not due to transitory factors but probably structural problems. Until data takes a U-turn, dollar bulls will remain reluctant to jump in and the dollar weakness may resume in Q3.

Next week investors will shift their focus to the European Central Bank and Bank of Japan. It has been almost three weeks since Mr. Draghi said, “Deflationary forces have been replaced by reflationary ones.” His confidence and bullish assessment of the euro zone recovery sent the Euro above 1.13 and despite the ECB officials attempts to dampen investors’ expectations over tightening policy the Euro still appreciated by more than 2.5% since June 27.

I think Mario Draghi will choose his words more carefully when the ECB meets on Thursday. The last thing he wants is a strong Euro and tightened financial conditions for now. Since no changes are expected on current monetary policy the tweaks in the statement and Draghi’s tone are all what matters to traders. It is a complicated process to start normalizing policy without disrupting markets and so while the ECB wants to prepare investors for gradual wind-down of asset purchases, policy makers are likely to hint that rate hikes will remain low for a prolonged period. However, I prefer buying the Euro on dips then selling on rallies with end year target around 1.18.

The dollar’s weakness drove Sterling to a 10-month high to trade above 1.31 for the first time this year. The pound also found support from BoE’s Ian McCafferty who said the central bank should consider unwinding its 435-billion-pound quantitative easing program earlier than planned and he’s looking to vote for a rate rise again in August. It seems that monetary policy is having more weight than the Brexit talks and if Tuesday’s inflation figures from the U.K. surprised to the upside, expect GBP to continue rallying. However, traders should also keep a close eye on Brexit negotiations which are going to resume on Monday.

China’s GDP release on Monday will be monitored very closely by Aussie traders. Markets are expecting a 1.7% rise in Q2 from 1.3% in Q1. The RBA minutes are scheduled for release on Tuesday followed by the employment report on Thursday. It requires another set of positive reports to further widen the differentials in bond yields; however, without a shift in monetary policy stance the Aussie gains are likely to be limited.

Forextime Daily Market Analysis

Dollar gasps for air while Euro bulls take a breather




The Greenback received a thorough pummelling on Tuesday after reports of Republican legislators failing to pass a revised healthcare bill rekindled concerns over Trump’s ability to implement tax cuts and infrastructure spending. Sentiment was already turning increasingly bearish towards the Dollar following last week’s soft US inflation reading, with sellers swiftly exploiting the fresh setback to Trump’s domestic agenda, in order to attack prices further. With the Greenback displaying signs of sensitivity to monetary policy speculations and the probability of a 25-basis-point rate increase in December dropping to 43% according to CME FedWatch Tool, further downside could be on the cards.

As the US economic calendar is fairly thin today, with only US building permits and housing starts in focus, price action is likely to dictate where the Dollar Index trades. Technical traders could be tempted to utilize the technical bounce on the daily time frame to drive the Index lower. A solid breakdown and daily close below 94.60 may encourage a further selloff towards 94.00.

Euro bulls wait for Draghi

Thursday’s main risk event for the Euro will be the European Central Bank meeting, which is widely expected to conclude with monetary policy left unchanged in July. Investors will closely scrutinize the meeting and press conference for clues on whether the central bank may announce plans to reduce its bond-buying program in September. With ECB President Mario Draghi’s optimistic speech in Sintra sparking speculations of QE tapering and also playing a role in the current Euro rally, he may choose his words carefully on Thursday. Although the economic conditions in Europe continue to stabilize, inflation is still far from the 2% target and it will be interesting to hear Draghi’s thoughts on this. While the improving macro-fundamentals and absence of political risk in Europe have heavily supported the Euro, bulls may need further inspiration in the form of QE tapering expectations. It becomes a question of whether Draghi will offer the bulls what they crave or will end up clipping their wings.

From a technical standpoint, the EURUSD is heavily bullish on the daily charts. The breakout and daily close above 1.1500 could encourage a further incline higher towards 1.1615.



Commodity Spotlight – WTI Crude

WTI Crude Oil edged slightly lower on Tuesday after API reported US inventories increased by 1.63 million barrels last week. Although prices ventured towards $46.55 during Wednesday’s trading session this had nothing to do with a change of bias, but rather profit taking, as sentiment remained bearish. Recent reports of Ecuador publicly admitting that it will not meet OPEC’s cut commitments, presents a threat to the production cut deal, with fears of a domino effect exposing oil prices to further downside risks. The bias towards oil remains bearish and further downside may be expected as the supply overhang erodes investor attraction towards the commodity. Much attention will be directed towards the pending report from the US Energy Information Administration (EIA) this afternoon, which could compound to oils woes if there is a build in crude inventories.

Daily Fundamental ForexTime ( FXTM )

FOMC disappoints US bulls




It's been another round of FOMC today and the USD bulls have been left disappointed again by Yellen as the hawkish comments they had hoped for were not forthcoming at all. The FED is looking to unwind its balance sheet in the near future, but market expectations are that a rate hike is sometime off - most likely in December at the present rate. Additionally, the FED believes inflation to be rising to the magic 2% mark, but that it may slack off as food prices and fuel have been stagnating over the past few months. So it looks like the FED wants to raise rates in the future, and has strong business demand and a robust labour market, but is missing the last magical ingredient which is inflation. If we see stronger readings in the near future then we could see expectations increase that a potential rate rise could take us off the current 1.25% and help drive the USD bulls again.




When it comes to markets that benefit from the USD weakness look no further than the EURUSD which has been steadily climbing the charts for some time now. I spoke a while back about how well it has been doing in recent times in its bullish channel, and the fact opportunities still remain. Well today's push through resistance at 1.1719 are very positive and the market will be looking to see if this candle can close above. At present it's slightly above and we could see it look to treat that resistance level as support. If we do see that hold above 1.1719 I would look for the potential of a further move higher to 1.1915 which is likely to be a key level for traders to target. I would also pay attention to the 20 day moving average, which has been looking very strong for bullish support as of late as well.

Another big benefactor of the USD weakness has been commodity currencies and in particular the AUDUSD cross which has been rising high for some time. Yesterdays inflation reading was in line with the trimmed reading forecasts so there was a slight dip, but this has been shrugged off in trading today. The market will now be looking at Australian export and import forecasts due out shortly to see if they can beat estimates and send the AUD higher. A boost in import prices would certainly help the case for further inflation which has been Australia's weakness thus far; but also more so a global problem.





AUDUSD has been trending in a bullish manner for some time and there is still plenty of room for it to move upwards. At present its struggling to break through the 80 cent mark which is a psychological level, but it looks poised to make the move if it ever will. If we do see a push through here I would expect to see a battle between the bears and bulls, and if we do see the bulls take control then a potential run to 0.8154 at the 50.0 fib level.



[IMG]https://i.imgur.com/OXr3rUQ.jpg[/IMG]

FXTM Daily Market Analysis

European currencies dominate trading



European currencies have dominated in today's trading as the EURUSD was crowned king of volatility amongst the major pairs, when North American traders came into the fray, while at the same time the GBPUSD continued to take a beating in the currency markets. It's somewhat remarkable to have two currencies intertwined yet going in opposite directions based on the current political events, but for traders it's just another day in the field.

The EURUSD continues to be a big favourite of mine and despite the pullback we saw on Friday it has failed to stimulate the USD bulls to come back into the marketplace. Currently, the Trump effect has faded and despite some outlets of media saying otherwise there seems to be movements to try and investigate further the Russian influence in the US elections. All of this is weighing down on the markets which believed that a Trump administration would be pro-business. Additionally, the FED continues to send mixed messages unless we see inflation lifting and has even cut back growth forecasts going into 2018 and 2019. US PPI and CPI will be a major focus this week and I would expect the markets to look gleefully on those figures in the long run, but at present the focus is very much on dollar selling based of the current market information and the EURUSD has been one of the largest benefactors.




Chart wise the EURUSD is still in its bullish trend. Fridays sell-off was on the back of some positive fundamental news, but it has not managed to carry through into the new week thus far. Support was quick to hold any downward momentum at 1.1719 and continues to look like a strong level, this was further reinforced by the 20 day moving average warding off the dollars bulls in the EURUSD. So far however momentum has stalled as trading has been light with the Monday opening, and it's held up at resistance at 1.1799, but not before testing it today. There is potential to slide further down, but also plenty of potential to climb higher on the back of the US political mess. If we do see a strong push through resistance I would anticipate further climbing to 1.1915 in the current market environment.



The GBPUSD has been the other mover today after recently looking stronger against the USD, it has struggled to gain any momentum in the last three trading days and looks to be sliding back down the charts again. Support levels will be key here and 1.2972 is looking like a key level to be focused on as well as 1.2843 to see if this is really a strong sell off. If we do see a big jump in the charts for the GBPUSD you can be sure that resistance at 1.3224 will be the target, and we could potentially see a double top if the bears look to strike there again.

Daily Fundamental ForexTime ( FXTM )

RBA poised to act in current market




The Australian dollar continues to be in a bit of a freefall as traders rally on the back of a resurging USD as well as a risk-off attitude when it comes to commodity currencies as of late. One of the major developments though around the Australian economy has been the rise in household debt which is being fed by low interest rates in Australia. Now the Reserve Bank of Australia (RBA) is getting a bit worried and today's wage growth figures are likely to be quite major, on the basis that if the figures are showing sluggish growth then the RBA may be forced to act in the market. If the RBA does act it will be in the form of a rate rise and this would certainly be a double edged sword for the AUDUSD. It could be the case that it does help reduce debt levels, but fixed interest rate traders would look to jump back on board the AUDUSD train in a hurry, and a weak result today with wage growth could actually trigger a jump for the pair.



On the charts the AUDUSD has cruised lower recently as the bears take hold, and it's looking very much like a classic retracement on the charts. So far it has pushed through the 20 day moving average and is looking like it will test support at 0.7761 and 0.7657 in the future if this slide continues. In the event it does look to push back upwards resistance levels can be found at 0.7901 and 0.8000, but a push through the psychological 80 cent level would be a very hard ask for the AUDUSD unless we saw a major turn in its economic good fortunes in the near future.

One of the more interesting developments has been the movements of the S&P 500 which had a large pull back in the previous week, but has managed to find some legs this week on the chart. American data was positive today on the basis that retail sales jumped to 0.6% m/m (0.3% exp) which is a positive for the US economy. However, there is still a large amount of worry in the markets around the current state of American politics which can swing on a day to day basis. This in turn has seen equity markets a little coy, and also a resurgence in speculative metal markets where traders are looking to hedge.



The S&P 500 though has struggled to gain momentum today after a strong Monday opening. The push upwards today to come through the trend line was met with resistance and the likelihood of pushing through resistance at 2484 continues to be problematic as the market has show time and time again that any movements to this region seem to encounter bears who believe that we need a lot more information to go higher. If it does fall I'm still watching for that 100 day moving average to act as the first target level for traders and support levels at 2406 and 2353.

Daily Fundamental ForexTime ( FXTM )

Equity markets struggle to hold off the bears




The markets have been in minor turmoil today as US equities continued to dip on each rise. This in part was brought on by more bearish weakness in the US economy over the last few days, but also disappointing economic surveys carried out by the New York Fed, which showed that there were more people looking for work, and wage growth was not picking up at all. This comes at a somewhat interesting time, as the labour market has been the cornerstone of the US rebound after the financial crisis, so markets are fearful of anything bad happening to it - especially with a consumer based economy. The trump effect is also continuing to wear off, with neither congress or the administration working together it seems it's very hard for Trumps economic policies to be advanced at present.



This in turn has spilled over into equity markets in a rather ferocious way, the concern with many is that if the market does indeed start to turn and pull-back we could in turn see more aggressive bearish behaviour - as a number of analysts continue to feel it's overbought. On the charts at present the only thing holding back the S&P 500 is continuing to be the 100 day moving average, which has so far slowed down the bears on two occasions now. The clear rejection is a good sign if you're bullish, however I am still expecting the bears to strike as Trumps grip looks to weaken (unless anything drastic changes). Support levels below the current 100 day moving average can be found at 2406 and 2353 and I would expect to see a lot of volatility around these levels as it moves lower, so expect big swings. Also, the 200 day moving average is trending up the charts and this will be a key target as well for bears.

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Gold traders are having a field day at present on the back of this uncertainty, and it's clear that with any weakness in the equity markets we will see people look to hedge against the bad times in speculative metals and of course safety currencies. Gold has thus far trended strongly, with the bulls looking very strong with the potential to breakout. Previous movements where hindered by strong resistance at 1295 and a double top sent gold tumbling for some time. Fridays test though showed there is certainly a large amount of resolve to push through and look to touch higher resistance levels at 1313 and 1338, all of which are looking strong targets - 1338 being the strongest level at present. If Gold does a reversal then certainly support at 1258 and 1233 are likely to be where the bears look to aim, however the bulls have thus far been quite promising and the trend is generally every traders friend.

Daily Fundamental ForexTime ( FXTM )

Oil set to turn on data




Crude oil has been doing the rounds on media as it sits at a key turning point according to various analysts, and it's easy to see why given that market trending seems to have slowed down. Many in the market now believe that we are going to see the bulls make some sort of resurgence and they point at the current drawdown's from private and public data as the catalyst for further surges in the future. Tonight's drawdown of -3.5M barrels was to be expected by most, however the surge in gasoline is still a little worrying at this stage and it will be interesting to see how markets treat that tomorrow with the Department of Energy (DOE) figures. I also believe that in the long run oil prices are likely to rebound given OPEC's recent efforts, but it will come about when the US shale industry actually slows down, and does not keep boosting production further. Many believed that shale would die off with low prices; nevertheless they become more efficient, meaner and aggressive than ever before and have survived thus far as a result.





Crude on the charts has seriously slowed down and the DOE data due out tomorrow will give it some serious movement as usual. Today's market is responding to a weak US dollar, and if we do see a strong US dollar well you can expect that to impact oil as well with further tests on support at 46.50 and 45.47. When the bulls do come back into the market and they will, I expect to see large tests on resistance at 48.82 and of course the level to beat which is 50.21, but encompasses that psychological 50 dollars a barrel zone. With a large push on here markets could quickly rally behind the bulls in the short term, especially if the US continues to post drawdown's with its crude oil inventory.

The Canadian dollar has been a strong against the USD in Q2 and is looking to further extend that going into Q3 this year. This has been underpinned by USD weakness, but also by a resurgence in the Canadian economy as of late with retail sales lifting to 0.7% m/m (0.1% exp) - a positive sign for an economy so underpinned by its resources and the fluctuations in the markets. While the Trump effect wearing off will have a positive effect and oil prices starting to look a little more bullish, it could be a good chance for the CAD to claw back further ground against the USD.





Chart wise the USDCAD has been in a bearish trend for some time, and the trend is always your friend. After a brief pull-back led in part by USD shorts being oversold, the CAD looks poised to make some strong moves again and is currently held up at support at 1.2553, with the potential to extend further to 1.2429. Given the recent movements we could see a bounce higher to resistance, but the potential for a double top certainly exists at 1.2757 in the current market environment.

Daily Fundamental ForexTime ( FXTM )

Risk aversion reigns supreme in markets




Markets continue to be risk off today, as commodity currencies took a beating - no more so than the NZD. Recently markets had been piling into fixed interest rate currencies as economic optimism boomed, however that has recently turned as Trumps allure has worn off, and the markets remain more cautious than ever. The Reserve Bank of New Zealand has not helped as they attempted to jawbone the NZDUSD last week as well; this is not really much of a surprise though anymore as the governor tends to every chance he gets. However, it's not all doom and gloom for the pair with trading balance data due out shortly and markets expecting to see -200M (NZD) as a reading, which will certainly be negative compared to the previous surplus. A fall here would be bearish signal, however trade balance data has shown in recent times to be quite resilient and could easily surprise the markets here as well. Exports will also be a key focus for traders, as a jump here would also boost the case for a stronger NZD.



So far the NZDUSD has had a very rough day with a sharp fall on today's attack on anything risky. At present it's held up on support at 0.7219 ahead of today's trade balance data reading. If we see a negative result, I would expect it to drop down to 0.7157 over the course of the evening. If we do see a positive result them a jump higher to 0.7323 would not be far off and even the possibility of further extensions to resistance at 0.7400. A push past the 74 cent mark may be a bit of a struggle though with the current conditions and the Jackson Hole meeting giving the potential to cause surprises in the markets.

Crude oil I touched on yesterday and for good cause as Department of Energy data came through and showed another drawdown of -3.33M barrels, just under expectations of -3.48M. However, it also showed a drawdown in gasoline reserves of -1.22M barrels as well, so the market has taken this as a positive. It's likely that analysts will take this as a positive sign and that OPEC which has imposed production cuts efforts are likely to be working. I am inclined to agree, but at the same time US production is increasing, and if it does taper off then we could see markets naturally relax a little more and the bulls take control.

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For crude bulls resistance at 48.82 is the target to look to break with further extension at 50.21 likely to be the strong point and key area to break into going forward. If we do see USD strengthening however this could slow things down and even force oil down lower. In that event support levels at 46.50 and 45.47 are likely to be the key targets here and would most likely be the line in the sand for bulls with the recent trends.

Daily Fundamental ForexTime ( FXTM )

Gold surges on U.S. hurricane woes




It's been a quiet day today globally, with little in the way of movements on the currency markets and in equities. However, gold has jumped into action and broken through the 1300 barrier for the first time since November. This is quite unusual given it's a bank holiday in the UK and that the market has been quiet, but it could be a case of traders hedging their bets on further issues with the hurricane, which is causing so much damage to Texas at present. What is abundantly clear, is that there has been a double top in the gold market and for some time and it has been itching to get higher on the charts; and after breaking through it looks like the upside may actually win here. The only way I can really see it being pulled back down is by either a stronger USD in the market, or the next FOMC being hawkish on the possibility of a rate rise.



Either way gold is looking remarkably bullish on the charts and was shortly stopped by resistance at 1313. Tomorrow with London and NY open will be the real test to see if gold can sustain above the 1300 mark, but I am certainly a believer in it with all the uncertainty. For bullish traders looking for new targets then 1338 is likely to be the next big line in the sand to target, but it may take some time or worsening economic information to push it that high. If the bears do take back some control and look to push it lower and I would be focused on the 20 day moving average. Thus far it has acted as dynamic support on a number of occasions and there is every reason for this to continue in the long run given traders bullish temperament in the market.

Oil has also been one to watch today with the hurricane causing issues in Huston, well known as an important oil region where a large amount of oil is refined the flooding has caused oil prices to drop. As a result traders are now expecting to see a rise in oil surpluses in the upcoming Department of Energy (DOE) inventory data over the next few weeks, and a likely possibility of a drawdown in gasoline supplies.



On the charts oil has certainly been pushed lower and is showing continuing signs of a bearish trend despite the recent drawdown's from the DOE. Thus far the push through the bearish level at 46.50 has failed and pulled back slightly, however if the current trend is anything to go by we could indeed see another movement lower and the possibility of a further extension to 45.47.

Daily Fundamental ForexTime ( FXTM )

US markets surge on GDP figures





US markets clawed back ground today as the hurricane started to let up in Texas and move across to Louisiana giving some reprieve for the embattled state. This was further boosted by GDP figures out today, which showed the annual rate q/q jumping to 3.0% (2.7% exp) - a strong result in for the US economy despite the recent turmoil. There will be question marks now about the economy and if it can growth further though with the Trump effect wearing off, but this lends strong weight to a potential December rate hike from the FED. There will now also be strong bets on a positive initial jobless claims report tomorrow, however the month to come may see it boosted by the damage caused by the hurricane.

For the market, turning heads today, the EURUSD was like no other, after recently hitting a high not seen since 2015 it has done an about turn after some stiff resistance. This is not to say the EUR is losing ground, it certainly has been making up plenty against the ever weaker GBP. For me though the EUR is likely to continue to be a strong currency in the foreseeable future as data continues to be positive and some of the weaker countries are now starting to show strong signs of growth with the accommodative monetary policy laid out by the European Central Bank.



The EURUSD hit stiff resistance at 1.2060 and the market is looking to jump higher on the charts in the near future as it travels up the bullish channel. Today's announcement has certainly given the bears a good swipe, and allowed traders to unwind positions. It's likely we could see further trending down and the 20 day moving average will be interesting to watch to see if the bears have really taken hold, a push through would confirm some bearish sentiment with a target at support at 1.1800. Further support can be found at 1.1798 and 1.1621 with the likelihood that these levels will be key to stopping further falls. The reality is that the USD could strengthen and push things lower, but with Germany recently recording a record trade surplus it seems that any weakness in the Euro may be a temporary thing.



Back on US soil and with the storm slowly subduing it's clear that the S&P500 is back in business when it comes to volatility with some strong movements over the last two days as traders once again defended bearish swipes on the 100 day moving average. This bullish sentiment around the moving average lends weight to the idea that we could see a resurgence and eager traders will be wanting to see if they can take another crack at the 2484 level which has acted as strong resistance recently. I would be surprised to see a push through however unless US economic data does improve a bit more, which could take some time after the impact in one the US's most