FXStreet (Guatemala) – While the RBA has left the cash rate unchanged at 2% yesterday, it has joined the ranks of the RBNZ and the ECB with the post-meeting statement suggesting an easing bias, highlighting a number of emerging risks on the horizon.

Key Quotes:

“The comments on the international economy were softer, and there seemed to be some scepticism about the sustainability of the recent labour market strength. For us, the language on inflation was different from its last communications, with the bank characterising inflation as “quite low” and “likely to remain low over the next year or two”.

The Bank is clearly cognisant of the emerging risks and ready to act if need be. The last paragraph reiterated the Bank’s easing bias, with the comment that “continued low inflation may provide scope for easier policy, should that be appropriate to lend support to demand.

We expect that later in the year, ongoing low inflation and a softening conditions, especially in the labour intensive housing sector, are likely to push the RBA over the line.

Both the RBA and RBNZ will, this week, be providing further colour on the domestic economic outlook and emerging global risks and what this could mean for policy.

Today, RBNZ Governor Wheeler will give a speech entitled ‘The Global Economy, New Zealand’s Economic Outlook and the Policy Targets Agreement’. On Friday the RBA will release its quarterly Statement on Monetary Policy.”

While the RBA has left the cash rate unchanged at 2% yesterday, it has joined the ranks of the RBNZ and the ECB with the post-meeting statement suggesting an easing bias, highlighting a number of emerging risks on the horizon.

(Market News Provided by FXstreet)

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FXStreet (Córdoba) – US indexes closed deep in the red, tracking European and Asian peers, weighed by a steep decline in oil prices. The energy sector plunged, offsetting earnings-driven gains by Alphabet, and Mattel.

The DJIA lost 295.64 points, or 1.80%, to close at 16,153.54. The S&P fell 36 points, or 1.87%, to 1,903.03. The Nasdaq Composite dropped 103.42, or 2.24% to 4,516.95.

DJIA technical view

“From a technical point of view, the daily chart shows that the index has stalled its decline around a horizontal 20 SMA, but remains slightly above it while the technical indicators have turned south around their mid-lines, increasing the risk of further declines”, said Valeria Bednarik, chief analyst at FXStreet. “In the 4 hours chart, the index presents now a strong bearish momentum, as the technical indicators head south below their mid-lines, while the index has broken below its 20 SMA, supporting the longer term outlook.”

Support levels: 16,105 16,049 15,982. Resistance levels: 16,223 16,301 16,378.

US indexes closed deep in the red, tracking European and Asian peers, weighed by a steep decline in oil prices. The energy sector plunged, offsetting earnings-driven gains by Alphabet, and Mattel.

(Market News Provided by FXstreet)

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U.S. stocks retreated, with the Dow Jones Industrial Average losing more than 290 points, as investors shunned risk assets across the world while oil extended a selloff amid deepening concern that global growth is weakening. The oil rout and worries a…

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NZ jobs preview – what to expect in NZD/USD?

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FXStreet (Guatemala) – NZD/USD awaits the key jobs data for Q4 today in early Asia’s morning.

The data is key and will be a high priority component to the RBNZ’s assessment of the economy when meeting next to discuss its monetary policy where a large percentage of the market is on the fence as to whether the RBNZ will act and cut interest rates for a fifth time since the start of last year where the Central Bank cut four times by 25bps each time in 2015 to 2.50%.

The Employment Change, RNZ and NZD/USD

The Employment Change in New Zealand is reported by the Statistics New Zealand and is key component to the RBNZ’s decision making process on the OCR.

The RBNZ last met on the 28th January and made no changes, but were certainly taking up more of a dovish stance and should the jobs data disappoint, it will add further evidence that the New Zealand economy is in need of further stimulus and will increase the likelihood of a rate cut this year.

Employment in New Zealand decreased by -0.40 in the third quarter of 2015 and was the first time it had fallen below zero as far back as the middle of 2012. Just for some back ground, the employment change in New Zealand averaged 0.33 percent from 1986 until 2015, reaching an all time high of 1.70 percent in the fourth quarter of 2004 and a record low of -1.70 percent in the first quarter of 2009. Markets are expecting an increase to 0.8% for 2015 Q4.

Further impetus for NZD/USD today

Today, we will also have RBNZ Gov speaking on ‘The Global Economy, New Zealand’s Economic Outlook, and the Policy Targets Agreement’ for some additional support to trading today.

Looking ahead, NZD/USD forecast

Analysts at Westpac offered a 3 month and 1 year outlook:

“We expect NZD/USD to remain under downward pressure during the next few months, targeting 0.62. Our main argument is that the Fed should raise US interest rates further this year but markets have priced little in. We expect US data is to start surprising positively during the next few months, pushing US interest rates higher. In contrast, the RBNZ should ease twice this year, but markets have priced in only once.1 year: Our 1 year ahead forecast is 0.62, based partly on the OCR being cut by another 50bp to 2.0%, but the Fed rate to rise by 100bp to 1.375%.”

NZD/USD in a bullish reversal

NZD/USD has been been technically bullish of late although the fundamentals do not support a continuation of a recovery while the upside has made a near 40% recovery in a reversal of the late December high of 0.6883 that bottomed at 0.6347 on the 25th January. 0.6558 has been the recent high scored on 31st January recovering 211 points of the 536 lost at the end of last years business.

Key levels to monitor in NZD/USD

The 100 dma is located at 0.6591 while the 20 dma is located at 0.6498. The pivot is located at 0.6518 as a key upside target ahead of R1 at 0.6588, R2 at 0.6627 and R3 at 0.6697.

To the downside, below the market at time of writing that is 0.6480 spot, S1 is located at 0.6479, S2 at 0.6409 and S3 at 0.6370. RSI on the daily sticks is in neutral at 48 offering a neutral outlook with the price recently sold off from recent highs of 0.6553 on the back of risk-off markets and, “NZD/USD edges lower after Fonterra’s dairy auction“.

NZD/USD awaits the key jobs data for Q4 today in early Asia’s morning. The data is key and will be a high priority component to the RBNZ’s assessment of the economy when meeting next to discuss its monetary policy where a large percentage of the market is on the fence as to whether the RBNZ will act and cut interest rates for a fifth time since the start of last year.

(Market News Provided by FXstreet)

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FXStreet (Córdoba) – Analysts from Wells Fargo noted that currently there is a divergence between the FOMC and markets expectations. According to them the latest FOMC projections are too aggressive.

Key Quotes:

“In the dot plot published following the December FOMC meeting, the median participant indicated four fed funds rate hikes during 2016 followed by another four hikes during 2017. Given recent financial market developments, futures are currently pricing in only one rate hike for 2016. We will not receive updated FOMC projections until the March meeting, but we believe that their latest projections are too aggressive.”

“That said, we believe our forecast for the funds rate will roughly balance the risks in the eyes of the FOMC. To the downside, which is what financial markets seem to be weighing more heavily than the FOMC and our own forecasts, there are the risks that lower commodities prices, financial market volatility and/or a slowdown in global growth destabilize the U.S. economy and force the Fed to backpedal. In addition, the Fed’s concern with credibility could slow its tightening further if longer-term inflation expectations remain depressed.”

“On the flip side, there is the risk that inflation will outpace what many expect, leading the Fed to tighten faster than our forecast. Any stabilization in energy prices, let alone a rebound, would support the headline figure. Core inflation should also continue to firm. Tightening in the labor market is already supporting wages and the disinflationary effects from healthcare on the core PCE should lessen.

“The Fed has also acknowledged the lags and imprecision of monetary policy. That is, trying to “fine-tune” the unemployment rate toward full employment once it has fallen below full employment is a risky proposition. By tightening sooner, the Fed hopes to avoid overheating the labor market to prevent a significant overshoot of inflation. We believe the Fed will view these risks as largely offsetting with the path of tightening that we forecast.”

Analysts from Wells Fargo noted that currently there is a divergence between the FOMC and markets expectations. According to them the latest FOMC projections are too aggressive.

(Market News Provided by FXstreet)

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FXStreet (Córdoba) – Gold prices advanced during the New York session amid increasing demand for safe havens, although the upside was capped by a 3-month peak of $1,130 an ounce. Having pulled back from over the last hours, spot finished the day around $1,127, virtually unchanged, after two consecutive daily gains.

Gold technical view

Indicators point to increasing upward momentum of the bright metal, and support an even stronger rally. “Daily basis, the 20 DMA is crossing above the 100 DMA, supporting the positive bias, although the technical indicators have turned flat, well above their mid-lines”, said Valeria Bednarik, chief analyst at FXStreet. “In the 4 hours chart, the price recovered sharply on an approach to a bullish 20 SMA, but the technical indicators are also losing upward strength within positive territory. This 20 SMA stands at 1,120.80, and as long as the level holds, the downside will remain limited, while the price needs to extend beyond 1,134.90 to confirm a new leg higher”.

Support levels: 1,120.80 1,115.70 1,109.60. Resistance levels: 1,134.90 1,142.50 1,151.00.

Gold prices advanced during the New York session amid increasing demand for safe havens, although the upside was capped by a 3-month peak of $1,130 an ounce. Having pulled back from over the last hours, spot finished the day around $1,127, virtually unchanged, after two consecutive daily gains.

(Market News Provided by FXstreet)

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FXStreet (Córdoba) – The Mexican peso is falling for the second day in a row against the US dollar, following the decline in crude oil prices. The WTI barrel is trading around $30.00, down 5% while stocks in Wall Street are falling 2% on average.

USD/MXN opened the week trading at the lowest level in almost two weeks at 18.09 but bounced to the upside. Yesterday finished at 18.25 and today moved with an upside bias since the beginning of the day and accelerated toward 18.50 on American hours.

Recently peaked at 18.54, the highest level since last Wednesday. It was trading around 18.50, 2.25% up for the week so far.

USD/MXN to test record highs?

According to analysts from Brown Brothers Harriman the weakens in the Mexican peso reflects the use of MXN as a proxy for Emerging Markets. “While other EM currencies were retracing 50-62% of their December-January drops, the peso only got as far as its 38% retracement objective. With this latest slide in oil, a break above 18.5360 for USD/MXN would signal a test of the all-time high near 18.80 from January 21.”

The Mexican peso is falling for the second day in a row against the US dollar, following the decline in crude oil prices. The WTI barrel is trading around $30.00, down 5% while stocks in Wall Street are falling 2% on average.

(Market News Provided by FXstreet)

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FXStreet (Guatemala) – Valeria Bednarik, chief analyst at FXStreet explained that the USD/JPY pair sunk in the American session, as risk sentiment picked up following a triple digit decline in the DJIA. Key Quotes:”Crude oil prices fell towards $30.00 …

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