European stocks turn mixed; London’s FTSE 100 underperforms

European stocks turned mixed on Monday, as markets stabilized following a broad based selloff in stocks and emerging market currencies on Friday.

During European afternoon trade, the EURO STOXX 50 inched up 0.4%, France’s CAC 40 added 0.2%, while Germany’s DAX 30 dipped 0.1%.

The German research institute Ifo said its business climate index rose to 110.6 in January, above forecasts for a reading of 110.0 and up from 109.5 in December, indicating that businesses in the euro zone’s largest economy had a strong start to the year.

Financial stocks were broadly higher, as French lenders BNP Paribas and Societe Generale advanced 1.6% and 1.4% respectively, while Italy's Intesa Sanpaolo climbed 1.2%.

German chemical maker Lanxess surged 8% after naming Merck Finance Chief Matthias Zachert as its new chief executive officer. Merck shares tumbled 10.2% on the news.

Elsewhere, in London, FTSE 100 tumbled 1.2%, as investors reacted to disappointing corporate news.

BG Group shares plummeted 15.5% after the natural gas producer provided weak guidance for 2013 earnings and said that it has issued force majeure notices under its LNG agreements in Egypt.

Vodafone saw shares fall 5.5% after AT&T said it has no intention of making an offer for the U.K. telecom operator. Separately, The Times reported that Vodafone has approached the private equity owners of Spanish broadband operator ONO about a potential GBP7 billion offer.

Meanwhile, in the U.S., equity markets pointed to a modestly higher open. The Dow Jones Industrial Average futures pointed to a 0.35% increase, S&P 500 futures signaled a 0.35% gain, while the Nasdaq 100 futures indicated a 0.2% rise.

Dow heavyweight Caterpillar saw shares surge 5.9% ahead of the open after reporting better-than-expected fourth quarter earnings and revenue figures.

Investors were looking ahead to the outcome of the Federal Reserve’s monthly meeting on Wednesday, amid expectations for a reduction in its bond buying program to USD65 billion from the current USD75 billion.

The policy meeting will mark the last for outgoing Fed Chairman Ben Bernanke, as current Vice Chair Janet Yellen prepares to take over.

Read More

U.S. futures edge higher ahead of Apple earnings; Dow up 0.2%

U.S. stock futures pointed to a modestly higher open on Monday, as markets stabilized following a broad based selloff in stocks and emerging market currencies on Friday.

Ahead of the open, the Dow Jones Industrial Average futures pointed to a gain of 0.2%, S&P 500 futures signaled a rise of 0.3%, while the Nasdaq 100 futures indicated an increase of 0.15%.

U.S. stocks suffered their worst weekly loss since 2011 last week, with the Dow plunging 318 points on Friday.

The selloff in financial markets was triggered after data last week pointed to a steeper than expected slowdown in Chinese manufacturing, fuelling fears that weakness could spread to other emerging market economies.

Investors were looking ahead to the outcome of the Federal Reserve’s monthly meeting on Wednesday, amid expectations for a reduction in its bond buying program to USD65 billion from the current USD75 billion.

The policy meeting will mark the last for outgoing Fed Chairman Ben Bernanke, as current Vice Chair Janet Yellen prepares to take over.

In addition, the initial estimate of U.S. fourth quarter gross domestic product is reported on Thursday.

Apple was expected to be in focus, with the iPhone maker scheduled to release quarterly earnings after Monday’s closing bell.

Across the Atlantic, European stock markets were mixed. The EURO STOXX 50 inched up 0.1%, France’s CAC 40 shed 0.1%, Germany's DAX slipped 0.3%, while Britain's FTSE 100 lost 1.4%.

The German research institute Ifo said its business climate index rose to 110.6 in January, above forecasts for a reading of 110.0 and up from 109.5 in December, indicating that businesses in the euro zone’s largest economy had a strong start to the year.

During the Asian trading session, Hong Kong's Hang Seng Index tumbled 2.12%, while Japan’s Nikkei 225 Index dropped 2.51%.

Later in the day, the U.S. was release data on new home sales.

Read More

Dollar higher vs. yen, Swiss franc; emerging market turmoil weighs

The dollar pushed higher against the yen and the Swiss franc on Monday, but safe haven demand continued to remain supported as a selloff in some emerging currencies continued into a second week.

USD/JPY hit highs of 102.77, and was last up 0.26% to 102.60, recovering from seven week lows of 101.76.

The dollar struggled to build on gains as a broad based exodus from emerging market currencies continued on Monday, amid concerns over the impact of the Federal Reserve scaling back its stimulus program and a possible slowdown in China.

Turkey’s lira spiraled to the latest in a series of record lows against the dollar, while South Africa’s rand, the Russian ruble and the Argentinian peso were trading at multi-year lows against the dollar.

Market participants were looking ahead to the outcome of the Fed’s monthly meeting on Wednesday, amid expectations for a reduction in its bond buying program to USD65 billion from the current USD75 billion.

USD/CHF was up 0.27% to 0.8967 after falling to three-week lows of 0.8902 on Friday.

Elsewhere, the euro was little changed against the dollar, with EUR/USDdipping 0.01% to 1.3674. The pair hit session highs of 1.3717 earlier after data showed that German business confidence rose to the highest level in two-and-a-half years in January.

The German research institute Ifo said its business climate index rose to 110.6 in January, above forecasts for a reading of 110.0 and up from 109.5 in December, indicating that businesses in the euro zone’s largest economy had a strong start to the year.

GBP/USD hit session highs of 1.6570 and was last up 0.49% to 1.6561. Sterling remained supported after a sharp fall in the U.K. unemployment rate heightened expectations that the Bank of England may raise interest rates sooner than previously thought.

The Australian dollar backed off three-and-a-half year lows against the U.S. dollar with AUD/USD up 0.67% to 0.8740, after falling to lows of 0.8659 on Friday, the lowest level since July 2010.

NZD/USD was up 0.29% to trade at 0.8237, ahead of Thursday’s central bank rate review, with markets split on whether the Reserve Bank will raise rates at this meeting or the next.

The Canadian dollar extended its pullback from four-and-a-half year lows against the U.S. dollar, with USD/CAD down 0.21% to 1.1064.

The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, edged up 0.01% to 80.57.

Read More

Forex - Pound pushes higher against dollar

The pound gained ground against the dollar on Monday, boosted by expectations that the Bank of England will raise interest rates sooner than anticipated, as markets stabilized following a broad based selloff in risk assets.

GBP/USD was up 0.48% to 1.6560, recovering from Friday’s lows of 1.6477.

Cable is likely to find support at 1.6300 and resistance at 1.6667, Friday’s high and a 28-month high.

Demand for sterling continued to be underpinned after data last week showed that the U.K. unemployment rate fell to 7.1% in November, to stand just above the 7% level the BoE has said is its threshold for considering raising interest rates from their current record low of 0.5%.

On Friday, BoE Governor Mark Carney said it was time for the central bank to “evolve” its forward guidance on rates, because the unemployment rate has fallen far more quickly than the bank anticipated.

The comments sparked concerns that the BoE may abandon the 7% unemployment threshold.

Carney said that even with falling unemployment, the U.K.'s economic recovery had yet to reach "escape velocity", adding that exceptional monetary policy is still relevant.

Investors remained cautious as a broad based exodus from emerging market currencies continued on Monday, amid concerns over the impact of the Federal Reserve scaling back its stimulus program and a possible slowdown in China.

Turkey’s lira spiraled to the latest in a series of record lows against the dollar, while South Africa’s rand, the Russian ruble and the Argentinian peso were trading at multi-year lows against the dollar.

Market participants were looking ahead to the outcome of the Fed’s monthly meeting on Wednesday, amid expectations for a reduction in its bond buying program to USD65 billion from the current USD75 billion.

Elsewhere, the euro fell to session lows against sterling, with EUR/GBPdown 0.48% to 0.8259 from 0.8297 on Friday.

The common currency shrugged off a report showing that German business confidence rose to the highest level in two-and-a-half years in January.

The German research institute Ifo said its business climate index rose to 110.6 this month, above forecasts for a reading of 110.0 and up from 109.5 in December, indicating that businesses in the euro zone’s largest economy had a strong start to the year.

Read More

German Ifo business climate rises to 30-month high of 110.6 in January

German business confidence improved more-than-expected this month to hit the highest level since July 2011, industry data showed on Monday.

In a report, the German research institute, Ifo said its Business Climate Index rose to a seasonally adjusted 110.6 in January, above forecasts for 110.0 and up from a reading of 109.5 in December. 

The Current Assessment Index rose to 112.4 this month, meeting expectations and up from 111.6 in December.

The Business Expectations Index, which measures attitudes toward business prospects over the next six months, improved to 108.9 this month from 107.4 in December, above forecasts for a reading of 108.0.

The monthly index is based on a survey of around 7,000 German firms in the manufacturing, construction, wholesale and retail sectors.

Following the release of the data, the euro added to gains against the U.S. dollar, with EUR/USD inching up 0.2% to trade at 1.3704, compared to 1.3699 ahead of the data.

Meanwhile, European stock markets remained mixed. The EURO STOXX 50 rose 0.1%, France’s CAC 40 shed 0.1%, London’s FTSE 100 fell 1%, while Germany's DAX dipped 0.2%
.

Read More

USD/JPY Outlook Jan. 27-31

The Japanese yen showed some strength late in the week, and gained over two cents last week. The pair closed at the 102 line. The upcoming week has just eight releases. Here is an outlook on the major market-movers and an updated technical analysis for USD/JPY.

Japanese events were uneventful, as the BOJ held course with its monetary scheme. The yen posted strong gains late in the week, taking advantage of a disappointing US Existing Home Sales, which dropped for the fourth straight month.

Click to enlarge:  

1. Monetary Policy Meeting Minutes:Sunday, 23:50. The minutes  provide a detailed record of the previous BOJ policy meeting. At the meeting, the Bank indicated that it was holding steady with its aggressive monetary policy. Analysts will be looking for differences of opinion amongst policymakers at the meeting.
2. Trade Balance: Sunday, 23:50. Trade Balance and currency demand are closely linked because foreigners need to purchase the domestic currency to pay for Japanese exports. Japan continues to post trade deficits and the past three have been marked by deficits which were higher than the estimates. Little change is expected in the upcoming release, with an estimate of -1.33 trillion.
3. Retail Sales: Wednesday, 23:50. Retail Sales is the most important consumer spending indicator and should be treated as a market-mover. The indicator shot up in November, posting a gain of 4.0%, well above the estimate of 2.9%. The estimate for the December release stands at 3.9%. Will the indicator repeat and beat the prediction?
4. Manufacturing PMI: Thursday, 23:15.  This index continues to move higher and has been in expansion mode for about a year, with readings above the 50-point level. The markets are hoping that the upward trend continues in the December release.
5. Household Spending: Thursday, 23:30. This important consumer spending indicator has been inconsistent, making accurate forecasts difficult. The indicator posted a weak gain of 0.2% in November, well off the estimate of 1.9%. The markets are expecting a strong turnaround in the upcoming release, with an estimate of 1.3%.
6. Tokyo Core CPI: Thursday, 23:30. This is the most important inflation indicator. The index has been rising in recent readings, hitting 0.7% in the previous release. However, this is well below the BOJ inflation target of 2.0%. The estimate for the upcoming release is unchanged, at 0.7%.
7. Preliminary Industrial Production: Thursday, 23:50. This manufacturing indicator has taken dropped sharply in recent readings, posting a weak gain of 0.1% in November. The estimate stood at 0.6%. The markets are expecting much better news from the December release, with the estimate standing at 1.5%.
8. Housing Starts: Friday, 5:00. This minor release looked sharp last month, posting a gain of 14.1%. This crushed the estimate of 9.5%. Another strong reading is expected in the upcoming release, with an estimate of 13.9%.

* All times are GMT.

USD/JPY Technical Analysis

USD/JPY started the week at 104.24. The pair climbed to a high of 104.84 but then dropped sharply, dropping all the way to 102.00. breaking through support at 102.50 (discussed last week). USD/JPY closed the week at 102.19.

Live chart of USD/JPY:

Technical lines from top to bottom

With USD/JPY posting sharp losses, we start at lower ground:

108.38 has remained intact since September 2008. At that time, USD/JPY was in a downward spiral which saw it drop below the 0.90 line.

106.66 has held firm since November 2008.  This is followed by resistance at 105.70 which continues to provide strong resistance.

104.65 has seen a lot of activity since late December. It was briefly breached as USD/JPY moved higher before reversing directions.

The first line of support is at the round number of 104. This was a key line back in May 2008 and has reverted to a resistance role after strong gains by the yen last week.

102.50 was breached late in the week as the yen shot higher. It has reverted to a support role. As a weak line, it could be tested early in the week.

101.44 was the post-crisis high seen in April 2009, and continues to provide support.

100.85 saw activity in July as the dollar showed strength against the yen. It is protecting the key level of 100.

The round number of 100 is a key psychological level. It is providing USD/JPY with steady support.

98.80 has remained firm since early November, when the dollar began a rally which saw it climb above the 105 line.

The final support level for now is 97.75. This line marked the start of a dollar rally in October, which saw the pair break above the 105 line.

I am bullish on USD/JPY

The yen finally showed some muscle last week, but it remains to be seen if the yen can consolidate these gains. The Federal Reserve has finally started to taper QE, and if the Fed acts  again next week, the greenback could head back up. As well, the Bank of Japan is moving full steam ahead with its current aggressive monetary program, which could lead to further weakening of the Japanese currency. The yen came out of 2013 battered and bruised, as the currency lost about 17% of its value over the course of the year. With many key US releases pointing upwards, last week’s strong performance by the yen could be a temporary blip.

Read More

GBP/USD Outlook Jan. 27-31

GBP/USD posted modest gains last week. The pair climbed close to the 1.67 line last week, but was unable to consolidate at these levels and closed the week at 1.6477. This week’s highlight is Preliminary GDP. Here is an outlook for the main events moving the pound, and an updated technical analysis for GBP/USD.

US Unemployment Claims enjoyed another good week, beating the estimate. The pound shot up in mid-week as the British Unemployment Rate dropped to 7.1%, fuelling speculation about an interest rate hike.

Updates:

GBP/USD graph with support and resistance lines on it. Click to enlarge: 

1. Preliminary GDP: Tuesday, 9:30. Of the three versions of GDP, Preliminary GDP is released the earliest and has the greatest impact. The indicator is released each quarter, magnifying the importance of each reading. Preliminary GDP continues to move higher and rose to 0.8% in Q3, matching the estimate. The markets are expecting the same gain in Q4.
2. Nationwide HPI: Wednesday, 7:00. This housing inflation indicator is an important gauge of activity in the UK housing industry. The index jumped 1.4% in November, easily beating the estimate of 0.8%. The markets are expecting a weaker gain for December, with an estimate of 0.7%.
3. BOE Governor Mark Carney Speaks: Wednesday, 12:15. Carney has been busy pouring cold water on speculation about a rate hike, as the UK economy improves and unemployment has dropped close to 7.0%. Carney will address an event in Edinburgh and analysts will be looking for clues as to the BOE’s future monetary policy.
4. Net Lending To Individuals: Thursday, 9:30. This indicator is linked with consumer confidence and spending, as increased debts levels signifies that consumers are more comfortable taking upon debt in order to make purchases. The indicator came in at 1.5 billion pounds in December, a four-month low. This was well-short of the estimate of 2.0 billion. The markets are expecting an improvement in December, with the estimate standing at 1.9 billion.
5.  GfK Consumer Confidence: Friday, 12:05. With the British economy continuing to improve, it’s perhaps surprising that the indicator has been losing ground in recent releases, pointing to a lower consumer confidence. The previous release came in at -13 points, missing the estimate of  -11 points. The December reading is expected to improve, with an estimate of -10 points.

* All times are GMT

GBP/USD Technical Analysis

GBP/USD opened the week at 1.6417 and quickly touched a low of 1.6395. The pair then climbed sharply, hitting a high of 1.6668. GBP/USD then retracted, closing at 1.6477, as support at 1.6475 (discussed last week) remained intact.

Live chart of GBP/USD:

Technical lines from top to bottom

We begin with resistance at 1.6990, which is protecting the key 1.70 level. This line has remained intact since October 2008.

Next, there is resistance at 1.6705, which has held firm since May 2011. This line remained intact as the pound posted sharp gains during the week. This is followed by the round number of 1.6600.

1.6475 continues to be active and was breached again week. The line is providing support just below where the pair closed the week, and could be tested early this week.

This is followed by 1.6343, which continues to provide support line. It has some breathing room as the pair trades at higher levels.

1.6247 is providing the pair with strong support. This was a key resistance line in October and November 2012.

1.6125 is the next support level. This line has held steady since late November.

The round number of 1.60, a key psychological barrier, is providing the pair with strong support.

The final support level for now is 1.5893, which last saw action in November.

I am neutral on GBP/USD.

GBP/USD posted modest gains last week, but the pound is now longer running roughshod over the US dollar. Additional QE tapering is expected this week, and such a move would likely bolster confidence in the US economy and provide a boost to the dollar. The BOE continues to reiterate that it has no plans to raise interest rates, as it does not want to see the pound gain ground too quickly.

Read More

EUR/USD Forecast Jan. 27-31

EUR/USD had an exciting week, dropping to new lows only to rally to high ground. Is it set to continue gaining or is it still looking for a direction? German business data, Eurogroup meetings, German inflation and employment data as well as the Eurozone’s unemployment rate. Here is an outlook on the major events and an updated technical analysis for EUR/USD.

Talk about deflation is still prevalent in the old continent, with the IMF warning about it again. Nevertheless, the euro seemed to focus on positive news. The euro zone’s manufacturing and services sectors surprised to the upside. Germany continued to advance, remaining well above the 50 mark. While France remained below these levels, it still beat expectations. This helped the euro advance. In the US, adisappointing housing figure was enough to give the pair another push higher. However, it closed well below the highs. Let’s start:

Updates:

• EUR/USD: Reverses Losses, Set To Extend Gains: EURUSD: With EUR reversing its previous week losses to return above its broken trendline, further recovery gains are likely in...
• Stability returns after turbulent days: After the carnage seen in emerging markets and equities towards at the end of last week, we are at least...

EUR/USD daily chart with support and resistance lines on it. Click to enlarge:

1.  German Ifo Business Climate: Monday, 9:00. German business confidence improved mildly in December, rising to 109.5 from 109.3 in November, slightly below the 109.7 forecast. Rising optimism regarding future growth might have spurred this festive mood. A further rise to 110.2 is expected this time.
2. Eurogroup meeting: Monday. The Eurogroup meeting is comprised of Finance Ministers from the Eurozone countries.  It has political control over the euro and the Euro-area monetary issues.  One of the issues is the next funding for Greece, which has a funding hole. The meetings take place in Brussels. The meetings will be followed by the wider full EU meetings.
3. German Buba Monthly Report: Monday, 11:00. In the last Deutsche Bundesbank  report the bank projected that German economy will grow in coming months due to a boost in industrial activity and in residential construction. The fourth quarter GDP is expected to expand considerably. The central bank also increased its predictions to a 1.7% growth rate in 2014 from a 1.5%rise in its earlier estimate in June. The bank also addressed the proposed financial transaction tax in parts of the European Union, saying it will harm the repo market.
4. GfK German Consumer Climate: Wednesday, 7:00. Consumer sentiment in Germany climbed in December reaching 7.6 after posting 7.4 points in November. Optimism regarding future outlook, increased while producer prices continued to drop. Economists expected the index to remain at 7.4. The combination of prosperous job market as well as low inflation, spur growth in German domestic economy. Consumer sentiment  is expected to climb to 7.8.
5. Jens Weidmann speaks: Monday, 18:00. Deutsche Bundesbank President Jens Weidmann will speak in Germany. His institution denied the dangers of deflation, but the topic refuses to fall from the agenda.
6. M3 Money Supply: Wednesday, 9:00. Eurozone’s money supply advanced in November to an annual growth rate of 1.5%, compared with 1.4% in October. Loans extended to the private sector dropped 2.3% on a yearly base in November, following a 2.2% fall in October. However, loans to households increased 0.1% annually following 0.2% rise in the previous month. A rise of 1.7%  is expected now.
7. German Prelim CPI: Thursday. Annual inflation in Germany increased 0.4% in December pushing annual inflation up to 1.4%, after posting 1.3% in November, The reading was in line with analysts’ expectations. The main cause for this rise was higher food prices. Inflation in Germany remains contained below the European Central Bank’s target of close to but below 2%, leaving room for accommodative monetary policy steps if required. A decline of 0.4% is forecasted this time.
8. Spanish Flash GDP: Thursday, 8:00. Spain has returned to growth in the third quarter, with GDP rising 0.1% ending nine quarters of economic downturn on a quarter-to-quarter basis and the second recession since 2008. A rise in private consumption and in exports caused this rise. GDP in the second quarter contracted 0.1% reaching an annual contraction of 1.7% compared to a 2.0% decline in the previous quarter. 2013 is expected to remain in recession, due to massive unemployment, low economic output, and service sector contraction. Spain GDP is expected to gain 0.3% in the final quarter of 2013.
9. German Unemployment Change: Thursday, 8:55. German unemployment declined in December by 15,000, but jobless rate remained unchanged at 6.9%, close to a record low level. In 2013 there were 2.95 million registered as unemployed, 45,000 less than in 2012 maintaining the lowest unemployment rate in the Eurozone. Germany’s strong economy and stable job market maintains robust domestic consumption and growth. Private consumption is expected to grow by 1.7% in 2014. Another decline of 5,000 in the number of unemployed is expected.
10. German Retail Sales: Friday, 7:00. German retail sales, edged up by 1.5% following a 0.8% decline in the previous month. The reading was higher than the 0.5% rise anticipated by analysts, indicating strong consumer confidence. Despite the climb in November, average sales in October and November were unchanged from the third quarter. However the holiday season shopping spree is expected to contribute to retail sales growth in December. A small gain of 0.2% is expected now.
11. French Consumer Spending: Friday, 7:45. French consumer spending edged up 1.4% in November due to the cold weather boosting energy consumption, however spending on other goods remained subdued. High unemployment of 10.9%, leaves no room for domestic expansion. In a separate report on third-quarter economic output, INSEE said households’ real gross disposable income fell 0.1% in the third quarter. The government expects the public debt to reach 93.4% of GDP in 2013 before peaking at 95.1% this year. A decline -0.2% is expected.
12. CPI Flash Estimate: Friday, 10:00. The inflation rate In the Eurozone reached 0.8% in Decemberfollowing 0.9% in November. Economists expected a higher rate of 0.9%. All in all, Eurozone inflation remained below the ECB’s target of near 0.2% for the eleventh consecutive month. Core inflation ,excluding energy, food, alcohol and tobacco, weakened to 0.7% from 0.9% in November. Inflation rate is expected to reach 0.9%.
13. Unemployment Rate: Friday, 10:00 Europe’s job market did not improve in November, with no change in the unemployment rate. The reading was in line with market consensus. The stubbornly high unemployment rate of 12.1% was maintained since April. The Eurozone’s recovery remains fragile in 2013 but recent data showed stronger growth in the last part of 2013 as the 1.4% rise in retail sales as well as growth in German manufacturing sector suggesting modest recovery. Furthermore, economists believe growth rate will rise 0.3% in the first quarter of 2014 which will also have an effect on the Job market condition. No change is expected this time.

* All times are GMT

EUR/USD Technical Analysis

Euro/dollar started the week with a downwards move, and reached a low of 1.3508. From there it managed to recover, eventually making it up all the way to 1.3739 before closing at 1.3676..

Technical lines from top to bottom:

1.3940 was a peak in September 2011, over two years ago, and is just before the round number of 1.40. 1.3832 was the 2013 peak (excluding the post-Christmas break). The failure of the pair to get close to this line for a second time might make it a top for a long time, despite the false break.

1.38 is a round number and also worked as a temporary cap during that period of time and also in October 2013. Another round number, 1.37, is another resistance line after capping the pair in December.

1.3650 provided support in December and worked as resistance in September 2013, and is also a significant line.  Below, 1.3580 worked in both direction in the winter of 2013-14.

The January 2014 low of 1.3515 provides minor support on the way down. 1.3450 worked as resistance in August 2013 and as support in September and October. The round number of 1.34 worked as resistance several times in 2013, and is strengthening now.

1.3320 worked as a double top in early September and it was crossed only with a Sunday gap. It remains a clear separator of ranges. It is followed by 1.3240, which capped the pair in April and also had a role in August. It worked as support in September.

1.3175 capped the pair during July 2013. 1.3100 is worked as temporary resistance in December 2012 and is becoming more important once again, after capping a recovery attempt in June and then in July and providing support in September.

Long term uptrend support works well

A line beginning in the lows of early September that was connected to a line in November gave support to EUR/USD. After testing the line, the pair bounced nicely higher.

I am bearish on EUR/USD

The danger of deflation still hasn’t made it to center stage, despite increased talk. The initial inflation numbers for Germany and the euro-zone could weigh on the pair and even trigger a negative deposit rate as early as March.

In the US, the FOMC is expected to announce a second taper of $10 billion. Even if this is mostly priced in, the actual announcement, coupled by solid GDP, could give the dollar a boost after the recent slide.

Read More

Forex Weekly Outlook Jan. 27-31

The Japanese yen was the big winner of a volatile week that saw new levels for a few currency pairs, and ended with risk off sentiment. The Fed decision is naturally the most important event, and is accompanied by the first releases of GDP in the US and the UK, as well as other events. Here is an outlook on the main highlights on the coming days.

US existing home sales disappointed with 4.87 million. Even though the next taper is on the way, it served as an opportunity to sell the USD against the recovering pound (lower UK unemployment rate)  and euro (strong German PMIs). It was a different story against the Aussie and the CAD, as both were hit by their central banks. A talk about AUD/USD at 0.80 in Australia and relatively dovish comments in Canada sent these currencies to multi-year lows. And towards the end of the exciting week, the crisis in Argentina together with fears about China boosted the safe haven yen. Let’s start,

Updates:

• Stability returns after turbulent days: After the carnage seen in emerging markets and equities towards at the end of last week, we are at least...

1. German Ifo Business Climate: Monday, 9:00. German business sentiment edged up in December to 109.5 up from 109.3 in November, reaching its highest level since April 2012. The reading was broadly in line with market consensus. Analysts are optimistic concerning economic growth in 2014 unlike most of its neighbors in the Eurozone. Both domestic demand and exports are expected to further this year. German business climate is expected to reach 110.2, despite the disappointment in ZEW.
2. US New Home Sales: Monday, 15:00. Sales of new single-family homes declined mildly in November to an adjusted annual rate of 464,000 units, down from a five-year high of 474,000 posted in October. Economists expected new home sales to fall lower to 449,000. However compared with November last year, sales increased 16.6%. Despite higher mortgage rates, the housing market is expected to expand further this year. New home sales is expected to decline to 457,000.
3. UK GDP: Tuesday, 9:30. Britain’s economy expanded to a three-year high of 0.8% in the third quarter, showing economic activity has increased across the board, a sign the country is on the right path to prosperity. Service sector activity edged up 75% climbing above its pre-recession peak, but production is still 12% lower. However this improvement gives further confirmation that the UK has shaken off years of economic stagnation. Another 0.8% gain is expected this time.
4. US Durable Goods Orders: Tuesday, 13:30. Orders for long-lasting products jumped 3.5% in November as demand increased. The increased was preceded by a 0.4% rise in October. Economists forecasted a lower increase of 0.9%. Meanwhile Core goods orders excluding the volatile transportation items surged 4.5% rebounding from two straight months of declines. The positive readings give further proof that US economic activity continues to strengthen. Durable Goods Orders is expected to climb 2.0% while core Durable Goods Orders is predicted to increase0.7%.
5. US CB Consumer Confidence: Tuesday, 15:00. US consumer sentiment improved at the close of 2013, reaching 78.1 from 72 in November, more optimistic about future job prospects as well as present situation, suggesting the US economic activity is on strong footing. Economists believe the housing market and the manufacturing sector will continue to expand this year. US consumer sentiment is expected to remain unchanged.
6. US FOMC Statement: Wednesday, 19:00. The Federal Reserve is expected to taper bond buys for a second time in a row, by another $10 to $65. Bernanke and his colleagues successfully delivered the first taper in December after months of preparation. Unless something materially changes, they are expected to continuously deliver small reductions to bond buys in the next meetings, thus avoiding surprises to the markets. While the recent jobs report was weak, it can certainly be regarded as a one off, given other positive figures. A no-taper decision now would trigger unwanted speculation, and the Fed would probably like to communicate continuity, especially as the figure at the top position changes.
7. NZ rate decision: Wednesday, 20:00. Reserve Bank of New Zealand  kept its official cash rate at 2.5% since a 50-basis point cut in March 2011. Governor Wheeler, concerned with rising inflation stated the bank will raise rates in the first half of 2014 to keep inflation around 2.0%. Wheeler set limits on low-deposit mortgage lending in October to tackle rising house prices, and fuel demand for the dollar. The RBNZ forecasts growth will average 3% in 2014 before starting to slow raised its growth forecast for the year through March 2015 to 2.8% from 2.3%, saying NZ economic activity is gathering momentum. No change in rates is expected now, but higher inflation can lead to a more hawkish statement.
8. Mark Carney speaks: Wednesday, 0:15. BOE Governor Mark Carney is scheduled to speak in  in Edinburgh. Carney and his colleagues are making a big effort to convince markets that the 7% unemployment level is not a trigger for raising rates, but rather a threshold. With lower inflation, this certainly seems achievable. Market volatility is expected.
9. US Advance GDP: Thursday, 13:30. The U.S. economy advanced an annualized rate of 4.1% in the third quarter according to the final release, much better than initially reported and expected. The main reason for this expansion was a buildup of inventory among businesses. For the fourth quarter, the debt ceiling issue and the partial shutdown weighed only partially on manufacturers’ business investments and on domestic demand. However the housing recovery and the ongoing improvement in the job market and manufacturing sector are expected to push GDP up in the fourth quarter. U.S. economy is expected to expand 3.2% in the fourth quarter.
10. US Unemployment Claims: Thursday, 13:30. The number of Americans filing initial claims for unemployment benefits increased mildly by 1,000 last week to a seasonally adjusted 326,000, indicating steady job gains. The four-week average fell for the third straight week to 331,500 close to pre-recession levels. However 1.4 million people stopped receiving payments since an emergency program that prolonged benefits expired in Dec. 28. Analysts expect unemployment rate will fall due to the expired benefit program. Nevertheless, there are positive signs for economic growth with a rise in consumer confidence and retail sales as well as manufacturing output in the final quarter of 2013. A small rise of 331,000 is anticipated now.
11. US Pending Home Sales: Thursday, 15:00. Contracts to purchase existing U.S. homes climbed 0.2% in November, posting the first increase in six months. Economists expected a more substantial increase of 1.0%. However this climb may suggest the housing market is stabilizing after rising mortgage rates pushed existing home sales down. Nevertheless, continued growth in the US job market and improvement in manufacturing are good signs for a stronger growth in 2014. A decline of 0.1% is predicted now.
12. Canadian GDP: Friday, 13:30.  The Canadian economy expanded by 0.3% in October, posting the fourth consecutive month-to-month rise, following the same increase in the previous month. Growth in the manufacturing and services sectors picked up sustaining the growth trend in the Canadian economy. Canadian economy  is expected to expand 0.2% in November.

*All times are GMT.

That’s it for the major events this week. Stay tuned for coverage on specific currencies.

Read More

Forex Trading Signal for 27th January 2014

                                                                                


Japan (Tokyo)                               United Kingdon (London)                        USA (New York)

For more easy access,,,,,,Download our mobile application on your mobile :   Click Fxsignals 

EUR/USD

 Down Trend :

 (1) SELL

E/P: 1.36881

T/P: 1.36681

S/L: 1.37181

GBP/USD

Up Trend:

(1) SELL

E/P: 1.65373

T/P: 1.65170

S/L: 1.65673

NOTE: The above posted Signals are delayed 2 - 4 hours after it has been  generated.
Daily forex signals are sent ontime to only our subcribers.

To subcribe: click here

Read More