28 / 02 / 2018 | Technical Analysis

Technical Analysis 28.02.2018 - EUR/JPY: Ichimoku clouds

Let's look at the four-hour chart. Tenkan-sen line is below Kijun-sen, both lines are directed downwards. Confirmative line Chikou Span is below the price chart, current cloud is descending. The instrument is trading below Tenkan-sen and Kijun-sen lines; the Bearish trend is still strong. One of the previous minimums of Chikou Span line is expected to be a support level (130.60). The closest resistance level is Tenkan-sen line (131.55). 


On the daily chart Tenkan-sen line is below Kijun-sen, both lines are directed downwards. Confirmative line Chikou Span is below the price chart, current cloud is descending. The instrument is trading below Tenkan-sen and Kijun-sen lines; the Bearish trend is still strong. One of the previous minimums of Chikou Span line is expected to be a support level (129.60). The closest resistance level is Tenkan-sen line (132.00). 



The Technical Analysis is provided by Marshall Gittler, an external service provider of an independent analytical company. Any views and opinions expressed are explicitly those of the writer. Any information contained in the article, is believed to be reliable, and has not been verified by STO and is not guaranteed to be accurate. References to specific products, are for illustrative purposes only and are not a form of solicitation, recommendation or investment advice. Past performance is not a guarantee of future performance.

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28 / 02 / 2018 | Market News

Fundamental Analysis 28.02.2018 - Market Outlook

Market Recap

USD is higher after Federal Reserve Chair Jerome Powell’s testimony was perceived as relatively hawkish. The key point was when he was asked what it would take for the Federal Reserve to consider raising rates at a faster pace than what was noted in the December 2017 Federal Open Market Committee (FOMC) projections. He replied that his “personal outlook for the economy has strengthened since December.” He noted the stronger labor market, the robust global environment, and more stimulative fiscal policy

When pressed on how this improved view would affect the path of interest rates, he demurred and said he wouldn’t “want to prejudge” what conclusion the March 2018 FOMC meeting will come to when it reconsiders the forecasts, and then added, “but we’ll be taking into account everything that’s happened since December.” Nonetheless, given that his own view is more optimistic than it was back in December 2017, the market interpreted that to suggest a possible upward revision to the forecasts and rates and reacted accordingly, with US rates and the dollar moving higher.

Jerome Powell also noted that despite the several rate hikes, US financial conditions remain fairly easy, which as you can see from the graph is absolutely true. That implies that the Federal Reserve can raise rates further without unduly disrupting the economy or the stock market.


We may be in for a period of respite for the dollar as the market moves up its forecasts of where US interest rates can go. At the moment, the market has only 117 bps more total of tightening priced in – that’s around 4 ½ rate hikes. But if there’s a chance of getting four rate hikes just this year alone, then this forecast will have to be revisited.


Even the “safe haven” effect that pushed CHF and JPY higher in response to the sell-off in equities wasn’t enough to push those currencies up against the USD.

CAD did not perform well. This doesn’t seem to have been related to yesterday’s federal budget; USD/CAD was at its highest level of the year ahead of the budget and was largely unchanged after it was announced. 

Today’s market

Sometime during the day, EU chief Brexit negotiator Michel Barnier will brief the Ambassadors of EU member states to the EU on Brexit. Subsequently they’re expected to adopt and publish the draft of the Brexit withdrawal treaty.

According to the Financial Times (FT), the withdrawal text will demand that the UK accept the European Court of Justice (ECJ) as the arbiter of any treaty-related disputes. The UK could lose access to the EU market if it ignores court rulings.

Following the publication of the draft, Prime Minister Theresa May will deliver her speech on Friday 2nd March 2018, in which she is likely to set out the UK’s vision for their relationship. 

The European day starts out with German unemployment data. The number of unemployed is expected to fall once again, while the unemployment rate is forecast to remain unchanged – indicating new people coming into the workforce, which is good. The estimated fall in unemployment, 15k, is a little bit less than the recent average (-20k) but not substantially, and with the unemployment rate remaining at the lowest level for at least 27 years (the current data series only began in 1991), it suggests that Germany is reaching full employment. This could be EUR-positive.


Next comes the key EU-wide Consumer Price Index (CPI). Yesterday’s German CPI was below expectations, with the inflation rate slowing to 1.2% yoy from 1.4% (1.3% expected). But Spain was much higher than expected (1.2% yoy vs 0.9% expected, 0.7% previously). The two combined are nearly 40% of the EU-wide CPI.  The EU-wide CPI is expected to show inflation slightly slower at the headline level, which could be EUR-negative, but the key here is the core CPI, and the yoy rate of change there is expected to be unchanged – i.e., no signs of accelerating inflation. Remember that this is the latest data point on inflation that the European Central Bank will have when it meets on 8 March 2018 to discuss what to do about ending its bond purchase program. 


US Q4 Gross Domestic Product is expected to be revised down slightly on the second announcement. As you can see from the graph, in recent quarters most of the revisions have been up, not down, so the direction is a bit unusual. However, the expected size of the revision is also quite small. Given that the Federal Reserve estimates growth this year will be 2.2%– 2.6%, and that the long-run potential growth rate of the US is 1.8%-1.9%, a growth rate of 2.5% would still be quite healthy – above potential and pretty close to the top range of what the Federal Reserve’s expecting. That means this figure could be positive for the dollar as long as it isn’t revised down further.



US pending home sales are expected to be up slightly. Sales of both new and existing homes fell in January 2018, contrary to expectations (-7.8% and -3.2%, respectively). Given the questions about the strength of the housing market, the figure would have to be substantially better to support the dollar. This could be USD-negative. 



The Fundamental Analysis are provided by Marshall Gittler, an external service provider of an independent analytical company. Any views and opinions expressed are explicitly those of the writer. Any information contained in the article, is believed to be reliable, and has not been verified by STO and is not guaranteed to be accurate. References to specific products, are for illustrative purposes only and are not a form of solicitation, recommendation or investment advice. Past performance is not a guarantee of future performance.

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28 / 02 / 2018 | Market News

Foreign exchange trading basics

The foreign exchange (Forex) market is one of the largest and most popular financial markets in the world. According to the last triennial survey of the Bank of International Settlement (BIS), published in December 2016, the size of the forex market was $5.2 trillion per day. BIS collects data from 1,300 banks and dealers from 52 countries across the world.

There are no centralized trading locations for the forex market. Forex is an over-the-counter (OTC) market with currencies being traded in various financial centers globally, such as New York, Frankfurt, London and Tokyo. The forex market is a 24-hour open market that closes during weekends. The market is split in three major trading sessions, the European, the Asian and the United States (US) one. This means that traders are able to execute their strategies at any time of the day, regardless of the location they live in or in which time zone they are.

What is Forex trading

In the past people were used to trading currencies when they wanted to buy merchandise from other countries or when they were travelling abroad for leisure purposes. Technological innovations in the last twenty years such as the Internet and mobile devices have opened the forex market to retail traders. Online trading platforms and specialized trading software, based on algorithms, have enabled traders to follow forex market updates and build suitable strategies depending on their targets.

Every forex trade involves the simultaneous purchase of one currency and the sale of another. The value of a currency is a rate and is determined by its comparison to another currency. The first currency listed in a currency pair is called the base currency and the second currency is called the quote currency. The currency pair shows how much of the quote currency is needed to purchase a unit of the base currency.

Major currencies

The six most traded currencies in the world are the US Dollar (USD), the Euro (EUR), the Japanese Yen (JPY), the British Pound (GBP), the Australian Dollar (AUD) and the Swiss Franc (CHF). According to a Business Insider report published on 29th December 2016, the US Dollar is the most traded currency, taking up more than 84% of worldwide forex transactions. The Euro comes second with 39% and the Japanese Yen third with 19%. Forex traders refer to the currencies that trade the most volume against the US Dollar as the major currencies. Currency pairs that are not linked with the US Dollar are called minor currencies.

What is a Percentage in point (pip)

A “pip” stands for “percentage in point” and is a unit of measurement which expresses the change in value between two currencies. In the majority of currency pairs, a pip is the last decimal of the quotation as most pairs go out to four decimal places. However, there are exceptions such as Japanese Yen (JPY) pairs that they go out to two decimal places. Each currency has its own relative value so the trader should calculate the value of a pip for a particular currency pair, in order to know the amount of profit he gains or his losses.

STO and Forex trading

Actively trading the forex market involves various risks for the trader. An efficient risk management strategy is needed in order to avoid incuring losses as the forex market is one of the most volatile in the world. STO offers its clients over thirty currencies to choose from for a bespoke trading experience. STO provides its clients with a modern online trading platform (MT4) and a daily technical and fundamental analysis to help them form the right trading strategy.

Trading Forex and CFDs, which are leveraged products, are high risk investments and puts your capital at risk. You may sustain a loss of some or all of your invested capital. Only speculate with money you can afford to lose.
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27 / 02 / 2018 | Technical Analysis

Technical Analysis 27.02.2018 - AUD/JPY: Ichimoku clouds

Let's look at the four-hour chart. Tenkan-sen line is below Kijun-sen, the lines are horizontal . Confirmative line Chikou Span is approaching the price chart from below, current cloud is descending. The instrument is trading between Tenkan-sen and Kijun-sen lines. Tenkan-sen and Kijun-sen lines have become support (83.68) and resistance (84.05) levels respectively.


On the daily chart Tenkan-sen line is below Kijun-sen, the red line is directed downwards, while the blue one remains horizontal. Confirmative line Chikou Span is below the price chart, current cloud is descending. The instrument has been corrected to the Tenkan-sen line. One of the previous minimums of Chikou Span line is expected to be a support level (83.74). The closest resistance level is Tenkan-sen line (84.05). 




The Technical Analysis is provided by Marshall Gittler, an external service provider of an independent analytical company. Any views and opinions expressed are explicitly those of the writer. Any information contained in the article, is believed to be reliable, and has not been verified by STO and is not guaranteed to be accurate. References to specific products, are for illustrative purposes only and are not a form of solicitation, recommendation or investment advice. Past performance is not a guarantee of future performance.

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27 / 02 / 2018 | Market News

Fundamental Analysis 27.02.2018 - Market Outlook

Market Recap

Both USD and EUR gained as the market was more one of individual currency stories rather than overall USD movement. US rates were largely unchanged as investors awaited today’s testimony by Federal Reserve Chair Jerome Powell. The dollar was not affected much by the new home sales report for January 2018 (-7.8% mom vs expected +3.5% rise). This follows a similar fall in existing home sales.

It was noticeable that despite the renewed “risk on” environment, with stock prices generally higher yesterday and today in Asia, the commodity currencies are not performing well.

NZD was weak after the trade deficit came in much wider than expected (NZD -566mn instead of zero as expected, with both imports higher than expected and exports lower).

CAD was also weak (as was MXN) as the North American Free Trade Agreement (NAFTA) negotiations in Mexico on rules of origin for cars were suspended. The US called back its chief negotiator for auto-related issued to Washington to meet with US industry representatives. However, this is actually a good thing for Canada, as the US manufacturers are arguing in favor of NAFTA, or at least renegotiating it rather than abandoning it. The US auto makers have set up supply chains that reach into Canada; any attempt to require higher US-made content in autos sold in the US could be expensive for them.

CAD may also have been hit by reports that US President Donald Trump is thinking of promoting his trade advisor, Peter Navarro, to more prominent position. Peter Navarro may be promoted to assistant to the president from his current position as deputy assistant. That would give him more access to top-level strategy meetings, meaning he would have more influence on overall policy. This may be a signal of the direction in which US trade policy is moving, which could be negative for CAD.

Furthermore, US President Donald Trump himself commented that “we lose a lot [on trade] with Canada.” For the record, here’s the US merchandise trade balance with Canada. The US deficit with Canada was $17.6bn or a mere 6.2% of US exports to the country and 2.2% of the global US merchandise trade deficit. Furthermore, that’s only merchandise trade; after including trade in services, Canada is one of only two countries in the world that the US actually runs an overall trade surplus with (the other is the UK). On a balance of payments basis, the US ran a $2.6bn surplus in overall trade with Canada last year.

The ascent of Peter Navarro and the worries about NAFTA make today’s US advance trade statistics all the more important for the market (see below). 


GBP weakened, possibly due to upcoming Brexit-related news. Tomorrow the ambassadors of the EU member states will submit their draft of the Brexit withdrawal treaty. On Friday March 2nd 2018, UK Prime Minister Theresa May will set out her vision for Brexit in a speech. 

Today’s market

The big event today is the semi-annual testimony to Congress by the new Federal Reserve Chair, Jerome Powell. This is always a highlight of the calendar, and never more so than when a new person takes over the Chair.

The Federal Reserve’s report to Congress was already released last week, and Jerome Powell’s opening statement – which is usually just a rehash of the statement following the latest Federal Open Market Committee (FOMC) meeting – will be released before he starts speaking. The Federal Reserve under Janet Yellen has managed the process of normalizing policy quite successfully. It is possibel that no need for any great change in policy or emphasis right now.

The big question facing the market is whether there’s likely to be three or four rate hikes this year. It is unlikely that there will be a clear pronouncement on this subject because the FOMC has consistently said that its moves “will depend on the economic outlook as informed by incoming data.” 

Moreover, Jerome Powell is generally considered to be a centrist on the FOMC, and the consensus among the majority of the group hasn’t shifted yet to four rate hikes. They may be thinking that adding fiscal stimulus to an economy that’s already surpassed full employment could mean more inflationary pressure than they expected.

Getting back to the European day, the focus today is going to be the German Consumer Price Index (CPI), a harbinger of tomorrow’s EU-wide CPI. The day starts out with the CPI for the region of Saxony. No forecast is available. By the time the national CPI is released this afternoon, it’s kind of an anti-climax, but still moves the market. It’s expected to show a slow-down in German inflation, which could be negative for EUR. 


Next we have a few central bank speakers.

European Central Bank Executive Board member Yves Mersch will give the keynote address at a “Fintech and Digital Innovation” conference. He has recently been talking about the new EU settlement system that will be introduced in November 2018and may just stick to that topic.

Bank of England Monetary Policy Committee (MPC) member Sam Woods will speak at an insurance industry conference. Woods is the Deputy Governor for Prudential Regulation and so he may be talking about regulation and prudential matters, rather than the direction of interest rates.

Bundesbank President Jens Weidmann will present the Bundesbank’s annual report. There is no indication as to what he’ll say, but he’s often news-worthy.

When the US day gets started, we have the trade figures and the durable goods numbers. My research suggests that the trade figures are important to the market – particularly now, when the administration is focused on trade – than the durable goods figures.

The US advanced trade balance is expected to be more or less unchanged from the previous month. Another figure of that nature could be USD-negative, particularly vs the currencies where the administration has been complaining about trade, namely CAD, MXN and EUR. 


US durable goods orders are also expected to be bad, at least at the headline level – Boeing reported only 11 airplane orders in January 2018 vs 265 in December 2017. Excluding these volatile transportation orders, the figure is expected to show a modest rise of 0.4% mom,  below the six-month average of +0.9% mom. This could be slightly disappointing for the market and therefore modestly USD-negative. But my research suggests that the key point is how the headline figure comes in relative to expectations. Besides, the durable goods figure isn’t as significant for the Forex market as the trade number is. Wholesale inventories are released at the same time.


The Conference Board’s consumer confidence index is expected to rise slightly, just 0.8%. This would compare with the 4.4% jump during the month for the University of Michigan consumer confidence index, although as you can see from the graph the two do not necessarily follow along together exactly on a month-to-month basis. In any case, a further rise from the already high current level could be USD-supportive. 


Canada’s federal budget will be announced. It is possible that it will be a modestly stimulatory budget, which could be CAD-positive.

Overnight, Australia releases its private credit figures. The figure is expected to be relatively healthy; the month-on-month figure is forecast to return to October 2017 and November 2017’s level, while the year-on-year rate of change is forecast to accelerate. Growth in housing credit is slowing as the housing sector cools, but business credit is generally expanding, which should leave credit growth fairly steady. This could be AUD-positive.


China’s official manufacturing purchasing managers’ index (PMI) is forecast to be fairly steady, falling only one tic from the previous month to 51.2. The non-manufacturing PMI is forecast to fall a bit more. If the manufacturing PMI does come in as expected, it may be no big deal, but if it comes in weaker, that could be significant. As you can see from the graph, 51.2 is the lowest level it’s been since October 2016. If it falls below that, then people may begin to think that it’s headed back towards the earlier levels. That could be negative for the commodity currencies, particularly AUD. 




The Fundamental Analysis are provided by Marshall Gittler, an external service provider of an independent analytical company. Any views and opinions expressed are explicitly those of the writer. Any information contained in the article, is believed to be reliable, and has not been verified by STO and is not guaranteed to be accurate. References to specific products, are for illustrative purposes only and are not a form of solicitation, recommendation or investment advice. Past performance is not a guarantee of future performance.

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27 / 02 / 2018 | Market News

Italian election main candidates and the impact on the Euro

On Sunday 4th March 2018, Italian citizens will vote to elect their next government. Italians are going to elect the 630 members of the lower chamber (Camera dei Deputati) and the 315 members of the upper house (Camera del Senato). The President of the Republic will choose the new Prime Minister, who is, most of the times, the leader of the winning party or coalition.

The 4th March 2018 Italian elections will be held under a new electoral law called “Rosatellum Bis”. The new law is inspired by the German system and requires that each party should get 3% of votes in both chambers to get into the Parliament. Coalitions should get at least 10%. It should be noted that the Five Star Movement or M5S (Movimento Cinque Stelle) and smaller left-wing parties opposed the new law. The reason behind this is that, according to M5S leadership, the new system penalizes political parties that don’t want to enter coalitions with other parties.

Who are the main candidates?

Silvio Berlusconi

Silvio Berlusconi has served three times as a Prime Minister of Italy in the past and it seems that his age hasn’t reduced his will to influence his country’s political scene. Silvio Berlusconi is the leader of the “Forza Italia”, which is a centre-right wing party. “Forza Italia” has an alliance with “Lega Nord” (Northern League) led by the eurosceptic Mateo Salvini and the national-conservative “Frattelli d’Italia” (Brothers of Italy) party.

Luigi Di Maio

Luigi Di Maio is the 32-year old leader of the Five Star Movement (M5S) political party. The M5S is considered an anti-establishment and eurosceptic party and was founded on 4th October 2009 by comedian Beppe Grillo. However, Di Maio, during his election campaign, distanced himself from Beppe Grillo’s views saying that “we don’t want a populist, extremist or anti-European Italy.”

Matteo Renzi

Matteo Renzi, who is currently the Secretary of the Democratic Party (Partito Democratico or PD) served as Italy’s Prime Minister from February 2014 until December 2016. While in power, Matteo Renzi implemented a series of reforms regarding the labour market, the electoral system and the public administration. Matteo Renzi resigned when a reform that would diminish the Senate’s powers was rejected in a constitutional referendum.

Trade with STO on the most active European shares

How their election could affect the Euro

Silvio Berlusconi faced enormous pressure during his last term as a Prime Minister in November 2011 when the Italian two-year government bond yields climbed a bit higher than 9%. Global markets had tumbled as concerns that Italy could pose a systemic risk to the global economy started to grow among investors.
One of the most ambitious plans of the Forza Italia-Lega Nord coalition is the introduction of a flat tax for individuals and businesses in order to help the economy strengthen. However, according to the last polls allowed to be published ten days before the 4th March 2018, the coalition is expected to fall short of a working majority. This would mean that further talks would have to take place with political uncertainty always being one of the main reason of the euro’s weakening.

The Five Star Movement (M5S) and its ideas about the future of Italy in the European Union (EU) had been a reason of concern among pro-EU politicians. Luigi Di Maio appears to be more moderate than his predecessor, Beppe Grillo. Di Maio told CNBC (Consumer News and Business Channel) reporters that if he becomes Prime Minister, he won’t consider having a referendum on Italy’s membership in the EU. He also said that he would be willing to discuss forming a coalition government with certain rival parties. Economists suggest that, despite the change in approach towards the EU, the euro-sceptical position of the party could make the euro weaken if the M5S wins the first place.

Matteo Renzi’s Democratic Party is not expected to be the winner in the 4th March 2018 parliamentary elections. However, Matteo Renzi and Paolo Gentiloni, who is the current Prime Minister and a member of the party, are known for their positive attitude towards reforms. The participation of the Democratic Party in a coalition government would be welcomed by the EU leadership as it could work as a guarantee for the implementation of more reforms. Such a result could be beneficial for the euro and could reduce market volatility.

Italian Elections and STO

STO enables its clients to trade on the most active shares on the Italian and German stock markets. Over 100 CFDs are at the trader’s disposal to choose from and form his trading strategy. STO also offers advanced trading tools such as Expert Advisors (EAs) and Chart Indicators in order to assist its clients in making the best possible decisions regarding trading.

Trading Forex and CFDs, which are leveraged products, are high risk investments and puts your capital at risk. You may sustain a loss of some or all of your invested capital. Only speculate with money you can afford to lose.
 
 
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26 / 02 / 2018 | Technical Analysis

Technical Analysis 26.02.2018 - EUR/JPY: Ichimoku clouds

Let's look at the four-hour chart. Tenkan-sen line is below Kijun-sen, the red line is directed downwards, while the blue one remains horizontal. Confirmative line Chikou Span is below the price chart, current cloud is descending. The instrument is trading below Tenkan-sen and Kijun-sen lines; the Bearish trend is still strong. One of the previous minimums of Chikou Span line is expected to be a support level (131.00). The closest resistance level is Tenkan-sen line (131.38).


On the daily chart Tenkan-sen line is below Kijun-sen, the red line is directed downwards, while the blue one remains horizontal. Confirmative line Chikou Span is below the price chart, current cloud is descending. The instrument is trading below Tenkan-sen and Kijun-sen lines; the Bearish trend is still strong. One of the previous minimums of Chikou Span line is expected to be a support level (130.83). The closest resistance level is Tenkan-sen line (132.13). 


The Technical Analysis is provided by Marshall Gittler, an external service provider of an independent analytical company. Any views and opinions expressed are explicitly those of the writer. Any information contained in the article, is believed to be reliable, and has not been verified by STO and is not guaranteed to be accurate. References to specific products, are for illustrative purposes only and are not a form of solicitation, recommendation or investment advice. Past performance is not a guarantee of future performance.
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26 / 02 / 2018 | Market News

Fundamental Analysis 26.02.2018 - Market Outlook

Market Recap

USD was volatile and trendless on Friday 23/02/2018 but resumed its decline as trading got under way this morning. Treasury yields were down across the curve, with the 10 years off 7 bps, as the market looked forward to tomorrow’s testimony by the new Federal Reserve System (Fed) Chair, Jerome Powell.

 CAD was the best performing currency after Friday’s 23/02/2018 higher-than-expected Consumer Price Index (CPI) data (+1.7% yoy vs +1.5% expected, +1.9% previously). In particular, the core CPI (common components) accelerated to +1.8% yoy from 1.6% previously (1.7% expected), together with higher oil prices it has put a bid into CAD.

GBP was the second-best performing currency. The Financial Times (FT) is reporting that the EU will publish a draft Brexit agreement on Wednesday 28/02/2018  that will omit key compromise language on Northern Ireland that Britain had wanted. According to the paper, the draft will leave out the phrase that “no new regulatory barriers” will be introduced between the UK mainland and Northern Ireland. That means Northern Ireland could have to accept current EU rules and any future changes to those rules.

AUD also did well as stock prices recovered, leading to a “risk on” environment, and iron ore prices rose 1.5%. It’s likely to continue to increase today.

Today’s market

A relatively quiet day insofar as indicators are concerned.

UK Finance announces its monthly calculation of mortgage loans. These are expected to be up a bit for the first rise in five months. 

After that, it’s pretty quiet until St. Louis Federal Reserve System (Fed) President James Bullard speaks in Washington about the US economy and monetary policy. He was last heard from just last Thursday 22/02/2018, when he appeared on TV saying that too many rate hikes this year could lead to a too restrictive policy when inflation is low. It appears that he was talking about four rate hikes, which he said would be “priced for perfection,”. He said he doesn’t expect years of below-target inflation to change rapidly. 

The Chicago Federal Reserve System (Fed) national activity index, unlike the other Fed indices, is an index of national activity rather than activity in that Fed’s particular region. Like the leading index, it’s comprised of previously announced indicators (85 in this case) but still has a definite impact on the market. It’s quite a volatile index.. The January 2018 figure is expected to be slightly lower but still positive, which means above-trend growth. This could be positive for the USD.

New home sales are expected to be higher even though last week’s existing home sales were a disaster – down 180k instead of being up 6k as expected. But there are other signs that housing is going well – mortgage applications rose to an eight-year high in January, for example.

It is unclear how much impact the Dallas Fed index has on the FX market. There are a lot of ±0.1% moves in the hour following its release. The subsequent movement of EUR/USD doesn’t have much relation to the index, which suggests that the market isn’t necessarily keying off of it. Nonetheless, the relatively modest fall that the market is forecasting would be better than what the other Fed surveys are showing, which could be positive for the dollar. 

European Central Bank (ECB) President Mario Draghi will make an introductory statement at the EU’s Committee on Economic and Monetary Affairs (ECON) hearing at the European Parliament.

A little bit later, European Parliament Committee on Economic and Monetary Affairs (ECON) holds a public hearing for Luis de Guindos, the Spanish Minister of Economy, who has been nominated to be the next ECB Vice President to replace Vitor Constancio, whose term finishes at the end of May 2018. It will be interesting to hear de Guindos’ views on the EU’s policy, notably how long it should take to taper down its bond purchase.

US Fed Governor Randal Quarles delivers an assessment of the US economy to the annual Policy Conference of the National Association for Business Economics. He noted that the economy was doing better than it has been for a long time – even before the Global Financial Crisis – and that the unemployment rate is at its lowest since the 1960s, more or less. “Against this economic backdrop, with a strong labor market and likely only temporary softness in inflation, I view it as appropriate that monetary policy should continue to be gradually normalized,” he said. 

Overnight, New Zealand announces its trade figures for January 2018. The seasonally unadjusted trade is expected to be in balance, neither a surplus nor deficit. That would imply a slightly narrower average deficit, which could be positive for NZD. 



The Fundamental Analysis are provided by Marshall Gittler, an external service provider of an independent analytical company. Any views and opinions expressed are explicitly those of the writer. Any information contained in the article, is believed to be reliable, and has not been verified by STO and is not guaranteed to be accurate. References to specific products, are for illustrative purposes only and are not a form of solicitation, recommendation or investment advice. Past performance is not a guarantee of future performance.
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26 / 02 / 2018 | Market News

US GDP growth decelerates in Q4 2017

On Wednesday 28th February 2018, the United States (US) Bureau of Economic Analysis (BEA) will publish preliminary data regarding the US Gross Domestic Product (GDP) growth rate in the fourth quarter (Q4) of 2017. The analysts’ consensus is that the US GDP grew by 2.5% in the fourth quarter of 2017, on an annualized basis.

On the 26th January 2018, the BEA had released a first-estimate report which had shown that the US GDP had grown 2.6% in the last quarter of 2017. The GDP Q4 figure was considerably lower than the third quarter’s reading which came in at 3.2%. According to the BEA “the deceleration in real GDP growth in the fourth quarter of 2017 reflected a downturn in private inventory investment that was partly offset by accelerations in Personal Consumption Expenditures (PCE), exports and an upturn in residential fixed investment.”

Federal Open Market Committee confident in economic outlook

The Federal Open Market Committee (FOMC) of the US Federal Reserve (Fed) is confident in the US economic outlook. This was revealed after the release of the FOMC’s 30th January 2018 meeting minutes. According to the FOMC’s minutes, “a majority of participants noted that a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate.”

Randal Quarles, the Vice-Chairman of the Federal Reserve, delivered a speech on 22nd February 2018 at a symposium dedicated to monetary policy in Tokyo. Randal Quarles said that “I believe that a further gradual increase in interest rates will be appropriate for maintaining the health of the labour market and stabilizing US inflation near the target level of 2%.” Market analysts are trying to determine whether the expression “further gradual increase” means a faster pace of benchmark interest rate hikes or that the Federal Reserve will continue increasing rates according to its current plan. In its 13th December 2017 meeting, the Federal Reserve governing board signaled its intention to raise borrowing costs three times during 2018 and two times more in 2019.

Analysts disagree over 2018 US GDP growth

A J.P. Morgan report, released on 14th February 2018, revealed that the bank slashed its expectations regarding the US economic growth in the first quarter of 2018. J.P. Morgan’s economists wrote that “while it’s still early going, we are taking down our outlook for first quarter 2018 Gross Domestic Product from 3% to 2.5%. the inflation reading should probably cement in place the Federal Reserve’s intent to hike interest rates at the March 2018 FOMC meeting.”

However, Kevin Hassett, the chairman of the Council of Economic Advisors and one of the top advisors to US President Donald Trump doesn’t share the same opinion with J.P. Morgan analysts. Hassett told CNBC (Consumer News and Business Channel) reporters on Wednesday 21st February 2018 that “the US economy is not in a new normal of low economic growth, but we are just in a normal period again where we can go back to growing about 3% that we always expected.” Hassett noted that the tax cut plan approved on December 2017 will add an extra $2 trillion to the US GDP in the next ten years.

STO and US GDP data

In general, a better than expected US GDP growth figure could make the US Dollar strengthen. On the contrary, a lower than expected figure could weaken the US Dollar. STO enables its clients to trade on the most active shares in global markets. STO provides traders with advanced trading tools which can help them shape a beneficial trading strategy.

Trading Forex and CFDs, which are leveraged products, are high risk investments and puts your capital at risk. You may sustain a loss of some or all of your invested capital. Only speculate with money you can afford to lose.
 
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23 / 02 / 2018 | Technical Analysis

Technical Analysis 23.02.2018 - AUD/JPY: Ichimoku clouds

Let's look at the four-hour chart. Tenkan-sen line is below Kijun-sen, the lines are horizontal . Confirmative line Chikou Span is below the price chart, current cloud is descending. The instrument is trading below Tenkan-sen and Kijun-sen lines; the Bearish trend is still strong. One of the previous minimums of Chikou Span line is expected to be a support level (83.50). The closest resistance level is Tenkan-sen line (84.05). 


On the daily chart Tenkan-sen line is below Kijun-sen, the lines are horizontal . Confirmative line Chikou Span is below the price chart, current cloud is descending. The instrument is trading below Tenkan-sen and Kijun-sen lines; the Bearish trend is still strong. One of the previous minimums of Chikou Span line is expected to be a support level (83.30). The closest resistance level is Tenkan-sen line (84.40).

The Technical Analysis is provided by Marshall Gittler, an external service provider of an independent analytical company. Any views and opinions expressed are explicitly those of the writer. Any information contained in the article, is believed to be reliable, and has not been verified by STO and is not guaranteed to be accurate. References to specific products, are for illustrative purposes only and are not a form of solicitation, recommendation or investment advice. Past performance is not a guarantee of future performance.

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