Here’s today’s notable expiries for the 14.00 GMT cut 18 Aug
– USDJPY:109.00 (USD 435m) 110.00 (390m) 110.10 (400m) 110.20 (410m)
– GBPUSD: 1.2800 (GBP 410m)
I think we can see where cable might cap if rallies extend. EURUSD in play again both sides.
Increasing risk aversion is again becoming a leading reason behind the current financial markets behavior. The positive result season in the US has encouraged the continuation of the indexes to a historic high, but there are now no new reasons to buy stocks at the current levels. With so many valuations and strong buyouts, the lack of information is no longer good information. The global investors are faced with the possibility of reducing the balance sheet total by the Fed, which over time will include the absorption of gigantic liquidity excess in the banking sector. Moreover, next week the US and South Korean will join for military maneuvers that have been carried out in North Korea in the past, which increases and geopolitical uncertainty. Finally, the rumors that Gary Cohn, the head of economic affairs in Donald Trump's administration, was about to resign. Such a decision would further reduce the probability of tax reform and the implementation of the stimulus package. The rumor was quickly denied, but it was not going to stop the decline in the US stocks yesterday, which also shows the strength of the supply side on Wall Street. This week close in the US markets might be very important for both bulls and bears.
Let's now take a look at the SPY technical picture (SP500 ETF) at the H1 time frame. The golden trend line dynamic resistance was strong enough to push the prices lower towards the unfilled gap between the levels of 244.65 - 245.54. Currently, there is only one gap left to fill, between the levels of 242.78 - 243.31 and this gap will act as a very important support zone for both bulls and bears.
The release of European Central Bank Meeting Minutes has raised some concerns. According to the statement, the were concerns over possible market overshooting, especially in the currency markets. Moreover, there were other concerns regarding favorable financing conditions, which could not be taken for granted and relied to a great extent on policy.
The tone of the minutes suggests that the ECB will indeed be cautious about the way it will communicate any future policy moves, with the dovish form of QE tapering being the most likely option. Buying assets remain the main tool for controlling monetary policy as the ECB needs more space to adjust its monetary policy. The probability of an end of the quantitative easing that might be announced at the Economic Symposium in Jackson Hole next week is really very limited. Basically, the ECB's policy makers are very cautious regarding a possible future policy tightening, although we may expect the QE to be relatively short-lived (unless central bankers try to make some changes to the structure of the program, theoretically, Mario Draghi still does not rule out its extension). The debate at the last meeting, however, raised the point that the Eurozone economy is going to get better and better all the time. Of course, as is usually the case in such debates, it has been emphasized that it is impossible to fully conclude the present conditions because they may be temporary, but they were acknowledged to be good and becoming more self-sustaining.
Let's now take a look at the EUR/CHF technical picture at the H4 time frame. The market had bounced four times from the 38%Fibo support at the level of 1.1268 already, but no new high or low was made, so it looks like the market is consolidating gains in a somewhat wide range between the levels of 1.1260 - 1.1537. Further gains are anticipated as the market conditions are starting to look oversold and the momentum indicator starts to point to the upside.
The US Dollar is losing against all major currencies. The strongest are GBP, JPY, and SEK. The global investors are shocked after yesterday's attacks in Barcelona: Gold lost 0.1%, Silver is down 0.35%. On the Asian stock market sentiment is still negative: Nikkei drops -1.2%, Hang Seng -0.55%, Shanghai Composite gains + 0.1%. In the US Nasdaq 100 falls -2.05%, the S&P 500 -1.54% and the Dow Jones -1.24%.
On Friday 18th of August, the event calendar is busy in an important news release only during the US session. During this session, Canada will release Consumer Price Index data and the US will release Preliminary UoM Consumer Sentiment and Baker Hughes U.S. Rig Count data. At the end of the trading day, there is a scheduled speech by FOMC member Robert Kaplan.
EUR/USD analysis for 18/08/2017:
The Preliminary UoM Consumer Sentiment Indicator data are scheduled for release at 02:00 pm GMT and the mid-August sentiment index is expected to climb to 94.5 from 93.4 at the end of July. The consumer sentiment index fell in June and July but still remained at relatively elevated levels. The rapid fall for two months, despite the still-improving US labor market and stock markets trading near all-time-highs, most likely mirrors political worries, both on the domestic and the international level. The political divisions are still significant, but the sentiment divergence seems to be decreasing. While supporters of the Democratic party still hold a very negative economic outlook, supporters of the Republican party have somewhat moderated their optimistic outlook. Nevertheless, none of the reforms promised during the Trump's presidential campaign (tax reform, Obamacare reform) have been completed and introduced to the US society. This event will surely weight soon on the overall sentiment levels in the US, even among the Trump supporters. In the result, the weakening in the sentiment level will directly influence the US Dollar, pushing it to even lower levels than it is now.
Let's now take a look at the EUR/USD technical picture at the H4 time frame. The market is slowly moving lower towards the important technical support at the level of 1.1614, but the whole move looks like a part of the bullish flag pattern. The momentum is still too weak to move above its fifty level, but when it does before the support is violated, then the swing high at the level of 1.1908 will likely to be tested again ( and possibly broken).
Market Snapshot: Gold just below the key resistance
After the terrorist attack in Barcelona, the price of Gold is climbing higher towards the key technical resistance at the level of $1297. If this level if violated, then the next technical resistance is seen at the level of $1308. The increasing momentum is supporting the bullish view.
Market Snapshot: USD/JPY close to the support
The price of USD/JPY reversed from the technical resistance at the level of 111.04 and now is getting close to the technical support at the level of 108.79. The momentum points down and the stochastic oscillator is still negative, so it is likely this support will be tested and broken. The next technical support is seen at the level of 108.47.
Welcome to the easyMarkets weekly review where we look back over the results of some of the previous week’s economic indicators. It gives us the chance to reflect on how much expectations were met or missed and to examine a successful trade you could have made this week.
Event: UK Consumer Price Index
Date: Tuesday 15 August 2017 at 08:30 GMT
Markets affected: GBP/USD, EUR/GBP
Trending hashtags: #gbp, #inflation
The sterling fell on the release of the lower than expected inflation figure from the UK. The Consumer Price Index maintained its previous reading of 2.6% for the month of July, 0.1% less than what analysts were expecting. While petrol prices fell, the costs of clothing, food and utilities increased. The retail price index on the other hand came in 0.1% higher than expectations at 3.6% but this was not enough to help the struggling pound. The CPI result is lowering expectations that the Bank of England may raise the interest rate any time soon.
Event: US Retail Sales
Date: Tuesday 15 August 2017 at 12:30 GMT
Markets affected: EUR/USD, USD/JPY
Trending hashtags: #usd
Retail sales in the US increased 0.6% for July, a significant 0.2% higher than what analysts were forecasting for the month. June’s figure was also upwardly revised to from a -0.2% to a positive 0.3% increase. The result for July was a seven-month high and is increasing the outlook for the third quarter of this year for the US.
Event: EU Gross Domestic Product
Date: Wednesday 16 August 2017 at 09:00 GMT
Markets affected: EUR/USD, EUR/GBP
Trending hashtags: #eur, #gdp
GDP for the Eurozone came in at a better than expected 2.2% growth for the second quarter of 2017. The Eurozone’s economy continues to demonstrate a strong recovery. The annualised reading came in 0.3% better than the previous quarter and gave a boost to European equity markets.
Event: FOMC Meeting Minutes
Date: Wednesday 16 August 2017 at 18:00 GMT
Markets affected: EUR/USD, USD/JPY
Trending hashtags: #usd, #fomc
The Federal Market Open Committee released the minutes from their July meeting and showed a divergence amongst members attitudes to raising the interest rate. The Fed voted to keep the interest rate in the 1% – 1.25% range as the economy has yet to reach the 2% inflation target set by the central bank. The USD fell on the release of the minutes against most of its major counterparts.
Event: Australian Unemployment Rate
Date: Thursday 17 August 2017 at 01:30 GMT
Markets affected: AUD/USD, AUD/NZD
Trending hashtags: #aud, #jobs
Employment in Australia grew by 27,900 in July and June’s figure was revised upwardly to 20,000 from its initial reading of 14,000. The jobs result was a little over expectations though full-time employment dropped by just over 20,000 to 62,000. So, the positive jobs result came from part-time job gains for July. The unemployment rate fell to 5.6% from the previous month’s reading of 5.7% painting a somewhat better employment picture. However, the wages price index was the slowest on record as it showed growth of only 1.9% annualised growth for the second quarter.
Event: EU Consumer Price Index
Date: Thursday 17 August 2017 at 09:00 GMT
Markets affected: EUR/USD, EUR/GBP
Trending hashtags: #eur, #cpi
The Consumer Price Index for the Eurozone came in at an expected 1.3% on Thursday, pretty much as the markets were expecting. Later in the day the European Central Bank released their July 20 meeting minutes that showed the central bank, similar to the Fed in the US, is worried about the inflation rate meeting expectations. The euro lost ground on the day and hit a three-week low.
Trade of the Week
Time in: Wednesday 16 August 2017 at 13:00 GMT
Market : XAU/USD
Investment: $500 with 200:1 leverage
Time out: Wednesday 17 August 2017 at 02:00 GMT
If you had bought XAU/USD with a $500 margin at the price of 1,269.31 and closed the deal once after the FOMC Meeting Minutes on Wednesday at 18:00 GMT which saw the gold rise by 1.55%, you might have made $1,546. Note this example does not take into account spread.
Softer equity tones continuing as markets officially get underway 18 Aug
– FTSE -0.6%
– DAX -0.8%
– CAC40 -0.9%
– FTMIB -0.9%
– IBEX -0.9%
In China the SCI closes flat but up 1.9% for the week. Best in 4 months