USD/CAD towards 1.3300

A positive US Dollar which is opening today’s session against his Canadian cpty is continuing the green Friday’s movement  and is extending his bullish momentum after the hawkish comments from the Fed’s chair Yellen.

At the time of writing the USD/CAD cross is trading up 0,50% at 1.3093 after bouncing on a good support near 5-DMA. A strongly bid cross on the back of a decent demand of US Dollars and a weakness of both the Oil benchmarks which suffer an increasing count of the US rigs.

Besides this, the US bull continue benefitting from the hawkish comments from Janet Yellen making it over performing even against his major peers.

Canadian data expected for today’s session won’t have any effect on the CAD with the Q1 current account expected up from $15.38bn to $16.80bn and industrial product price growing to 0,4% MoM from a previous -0,6% and which would support the manufacturing sales after a declining period.

During this week however there will be released some important data for the North American currencies, with Canadian GDP and retail sales one side, and US NFP and PCE index the other side. Particularly important event will be the OPEC meeting on the 2nd of June, which would have a big effect on the Loonie price action.

USD:CAD

Looking exclusively at the chart i can see a first close resistance at 1,3100 followed by the 1,3155 one (19 May high). To the downside the first significant support is seen at 1.3032.

To notice that the US Dollar is now up almost 38,2% from the 3 May correction and this upside movement could continue with this power until the 20-day moving average won’t be broken, running out of his support function. With this in mind the expectations for the next months see the CAD target slightly over the 1,3300 level.

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USD flat move waiting for Yellen speech

After having reset the Asian session’s spike the EUR/USD cross is extending his lateral move even during the European session, while investors are waiting for the pair to take a more firm direction following the US data expected for today.

At the time of writing the EUR/USD pair is trading down 0,02% at 1,1190. Yesterday’s spike during the night was followed by strong selling pressures, on the back of the USD bid tone against his major peers. In this context investors seems to prefer having USD in the pocket waiting for the GDP data and the Yellen’s speech in late NY session. Meanwhile the Dollar Index is trading at 95,20 making a slight positive performance of +0,05%.

EUR:USD 27mag

The Fed president Yellen will be speaking in Harvard and despite his speech will be on the “transformational impact on society” and she is not supposed to speak about monetary policy, the market will remain careful about every word pronounced in that sense.

During the following hours, in absence of relevant Euro data, investors will look at the US Q1 GDP data, expected for 0,9% against previous 0,5%. Another important data will be the individual consumer expense. Considering the recent Fed’s hawkish rhetoric, an increasing GDP data would bring the market to think of a possible move by the Fed in June/July, even at the moment my expectation is for September.

Under a technical point of view, looking at the chart it’s easy to see the next resistance at 1,1200 broken which the pair could continue his movement until the 1,1250 level. On the flip side the first significant support is seen at 1,1100 (200-DMA).

Brexit fading while GBP gaining ground

The race for the Brexit decision is very close, but the polls show a “remain” majority: following a last week’s Ipsos MORI telephone pool, the “remain” vote are 55% against a 37% Brexit.

Furthermore the Q1 2016 GDP expectations, following Unicredit, should be confirmed at 0,4% QoQ despite a flat industrial production and a construction output slightly decreased. A positive GDP data should be pushed by the British household consumptions.

The EUR/GBP pair in the meantime is moving slightly low, after having touched a multi-week low on Friday at 0,7650 and after having regained ground during the weekend braking the 0,7700 level. At the time of writing the cross is trading at 0,77354 down 0,4%.

The pair price action, however, should change during the trading session with the European flash PMI on the books starting from 9:30 am.

EUR:GBP 23mag

Sterling gains even against the US Dollar with the GBP/USD which is trading at 1,4526 at the moment, up 0,15% and continuing the upper move started last week regaining the ground loss yesterday. Pushing this movement is also the USD correction against its major peers. The cross, during today’s session, should be particularly conditioned by the risk sentiment on the market, with an eye on the US manufacturing PMI and the Fed spokesmans speeches.

GBP:USD 23mag

Looking at the technical analysis for the EUR/GBP cross, the first significant support could be seen at 0,7647 (19 May low) while on the flip side the first significant resistance could be find at 0,7787.

Regarding the GBP/USD pair on the other hand, the levels to consider are seen at 1,4600 (round number) on the upside, while at 1,4477 on the downside.

AUD: the Labour non-event drives away RBA moves

The release during the night of the Australian labour data have a bit disappointed the market and revealed nothing new on the economic situation of the Country: the April Unemployment Rate was flat at 5,7% against a previous 5,8%, while the Employment Change was a slight 10,8k (12,0 previous) a lot under the expectations.

Despite not so encouraging datas, the economic situation of the Country don’t seems so negative to push the RBA to intervene on the market and a monetary policy move, in the near-term, seem to be excluded.

The overnight data moreover, didn’t helped the AUD/USD cross to regain the losses of the Yesterday’s session characterized by a drop related to the hawkish Fed minutes and at the moment the pair is trading at 0,7212 down 0,23%.

At this point, with the Fed Minutes and the Australian labour data out, investors are waiting for the US jobless claims data and the speeches of the 2 Fed spokesman Fischer and Dudley.

AUDUSD 19mag
Looking at the chart of the pair it’s easy to see a downtrend movement, by now under the 200-day SMA, which wants to go under the 0,7200 level, the March low.
In case this will happen, the cross vulnerability would bring it to the immediate support at 0,7145 and it is not excluded it would go to 0,7100.

On the opposite side, in case the cross should remain over the 0,7200 level, a possible resistance is seen at 0,7230 but every gain attempt should be capped by the 200-day SMA which at the moment is positioned at 0,7260.

The unstoppable Oil and the mirror CAD

It seems unstoppable the Oil rally with both benchmarks, Brent and WTI, trading positively at the time of writing, respectively +0,26% and +0,45% at $49,23bbl e $48,17bbl.

The positive price action, which enables the Oil price to touch 6-months high, is correlated to Venezuela and Nigeria production stops, following economic and politic turmoil. Adding momentum to the movement, Goldman Sachs a few days ago forecasts a bullish price action for the Black Gold in the near-term.

Today is also expected an American Petroleum Institute statement regarding the Oil stockpile for last week, which could have a strong influence on the price action of both benchmarks.

Meanwhile the USD/CAD pair is extending his retracement for the second day in a row after having touched the 5-days high during yesterday’s session. At the time of writing the cross is traded at 1,2863 making a negative performance of 0,26% regaining from the low during mid Asian session at 1,2845.

The Loonie movement, as always happen, is benefitting from the Oil strength and from the news on the Oil market, while the US Dollar is suffering from the correction of the 2-weeks high. Other events that could influence the market sentiment for the two currencies would be today’s US data and the Canadian manufacturing sales.

In this situation the AUD and JPY bullish sentiment is decreasing, while the one for CHF, NZD and even CAD is going up. The increasing in the long positioning on the Canadian Dollar is on track for the 4th consecutive week, and the last time we’ve seen such a positioning has been in February 2013.

Considering the USD/CAD chart it’s pretty easy tu find the next two significant resistances at 1,2898 (50-DMA) and 1,2911. At the opposite side the first support is seen at 1,2830 (13 May low).

USD:CAD 17Mag

USD/JPY and Nikkei recovery while risk-on returns

The Asian equity extends its gains, with the Nikkei 225 trading at the moment +0,41% at 16.646, on the back of the risk-on market sentiment which brings up also the USD/JPY pair, trading at the time of writing close to the 109 level.

The Nikkei upward pressure has been particularly favored by Energy and Mining stocks and after the overnight wally of gold, copper and iron-ore. The movement however continue to be capped by the recent difficulties of Wall Street which is weighing on the investors sentiment.

The currency pair rebound, on the other hand ,seems to try to cancel yesterday’s losses, with the increasing risk-on sentiment which is favoring mainly the US Dollar, notoriously riskier than the Japanese cpty. A Yen that seems to be unconcerned about good trade balance data revealed overnight while the market seems to consider exclusively this afternoon US events such as Jobless Claims and the speech of a few Fed’s spokesman.

USD:JPY 12mag

Following the former Japanese MoF Takatoshi Ito, the BOJ is about to intervene on the market easing his monetary policy in June/July in relation to Q1 GDP data and G7 summit decisions. For sure an essential element in order to intervene on the FX market for the BOJ will be the Yen price, which could be too far from the Bank’s target level.

In terms of technical analysis, one of the hardest level to break will be 109, after which the cross could go to the 109,50 level (higher level after the recent BOJ conference). In case the pari will revert his movement, a good level in order to favor a rebound could be 108,46 (5-DMA).

 

USD: searching for the right direction

With the EUR/USD cross trading at the moment at 1,1388 gaining a slight 0,14%, the negative 6-day trend which led the pair to loss more than 200pips in less than a week, touching a 1,1369 low during the night, seems to be over.

The European currency continue to traded with a bid tone against its american peer, while the dollar is going down after the recent strength. Meanwhile the US Dollar Index is trading down 0,10% at 94,15.

Reasons for this movement could be find in the Asian investors sentiment who, after the recent news from the Asian markets, are now buying safe-haven currencies like Euro, feeding its gains.

Very important is the Fed’s situation too, which now have big doubts regards the next move to bring interest rates to a normal level: the hike expectations for June are now just 8%, while they are relatively high (50%) if we consider the end of 2016.

During today’s session we expect a consolidation of the EUR/USD cross, while the eye remains on the Friday’s retail sales data and the statements of the Fed’s speakers this week, which could give a stronger direction to the pair.

Looking at the chart, the cross could find the first immediate resistance at 1,1431 after which the streets would be free to gain the 1,1479 level (6 May high). On the flip side a first significant support in seen at 1,1350 after which the cross could test the second one at 1,1305.

EUR:USD 11mag

Neutral Sterling, traders waiting for BoE

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A Sterling move which at the moment seems to be perfectly lateral and which can last until Thursday, when the BoE will take the decision about its interest rate and the Inflation data will be revealed.

These are the 2 events the investors are looking at, while traders still continue to search for an entry point for their shorts on the Sterling. In this general waiting context the two pairs GBP/USD and EUR/GBP are making a flat movement on the chart, trading respectively at 1,4408 and 0,7901 and collecting a perfectly neutral performance.

The market sentiment continues not to favor a strong direction to the crosses and the lack of significant fundamentals is not encouraging a possible price action.

Despite the market have already excluded an interest rate increase (at least until the end of 2016) and the Thursday’s BoE decision seem to be clear, the general uncertainty and concern climate related to the Brexit referendum are bringing the meeting to a different level and unexpected surprises are not excluded. In addition the expectation for the Q1 GDP growth confirm a slowdown of the English economy, despite the service sector remains the best performer. It will be very interesting to se wether the Central Bank will include in his statement any change in his expectations and any rumors for the post-vote, even if the investors are convinced that the tone will be extremely neutral.

 

Today’s data regarding the trade balance could have a little effect on the Sterling even if i don’t expect any strong move, while the Dudely’s speech in Zurich could affect the USD and consequently the Cable.

Looking at the pairs from a technical point of view the immediate resistance for the GBP/USD pair is positioned at 1,4500 over which we could find the 1,4538 one. On the flip side the first significant support is seen at 1,4356 (100 DMA).

GBP:USD 20mag

Regarding the EUR/GBP on the other hand, the 4th May high at 0,7947 could be the first resistance, while at the downside the 20 days SMA at 0,7860 could favor a possible rebound.

EUR:GBP 20mag

Geopolitical difficulties bring Turkish Lira down

A difficult period for the Turkish Lira which last week made the worst performance against American Dollar in more than a year, and whose difficulties bring the price down against EM currencies too on the back of the increasing possibility of new elections which inevitably fuel the concerns about the Turkish economy and the credit rating of the country (recently increased).

Concerns about the Turkish economy were favored by the resignation of his prime minister, in a very hard week for the Emerging countries too, with the MSCI index down for six consecutive sessions.

The prime minister Ahmet Davutoglu retirement left the government in the hands of the president Tayyip Erdogan despite the rating agency S&P Friday changed the credit rating of the country in BB+ from negative to stable.

A Turkish lira which is now extremely vulnerable to both domestic or external shocks and which at the moment is trading against the Greenback at 2,9187 with the USD/TRY down 0,30% after last week’s big gains.

USD:TRY

Even the Turkish equity index, the XU100, is moving down at the time of writing, making a negative performance of 0,42%, while the Turkish 10-year Bond continue to have the higher yields in a month. If we take a look at the CDS (Credit default swaps) market, another important indicator of the market sentiment, we can see that the yield of the 5-year CDS has increased to 270bps, making a 2 month high and indicating that the perception of the market regarding the Turkish economic situation has changed.

Despite the increasing in the credit rating, however, the Country continue to have clear problems, mainly related to the Geo-Political situation, which continue to have a big impact to both FX and Equity market.

The Turkish path to get out of a difficult economic situation looks increasingly long and complicated..

Turkish Prime Minister Ahmet Davutoglu a

CAD again at the mercy of Oil

Rebound for the CAD, which at the moment is trading at 1,2826 against his American counterparty bringing the USD/CAD cross down 0,33%.

A Canadian Dollar which have interrupted his 2-day decline and is limiting the 12-days peak for the USD/CAD at 1,29 gained during yesterday’s session. Rumors from the main operators point out this behavior as the main reversal for the cross which reach his peak during last few days following the Canadian economic conditions, growing at an unsustainable level, and the general optimism following the oil price action.

USDCAD

The Loonie however is still benefitting from the solid rebound in the Oil price on both sides of the Atlantic, which is currently clearing the losses of the beginning of this week and is extending the gain also in relation to the concerns coming from Canada and Libya.

While in the first Country it was declared a state of emergency following a fire that stopped the extraction of the raw material, in Libya the geo-politics tension persists  between the eastern and the western party, which have recently blocked a cargo belonging to the giant Glencore preventing him to load.

All those concerns regarding a stop in the supply bring investors to ignore the umpteenth rising in the US Oil stock, as indicated in the weekly EIA report. The stock has increased by 2.8 million of barrels last week, much more above expectations.

At the moment both Oil benchmarks are rising, with WTI +1,31% at $44,69bbl and Brent up 1,06% at $45,40bbl.

Looking ahead, the market focus will be on the US NFP data and the rig count expected for tomorrow, which could influence the Black Gold’s price action, without counting news coming from Canada and Libya.

The USD/CAD cross on the other hand will continue to be at the mercy of the Oil price.

Important levels for the cross are 1,2800 and 1,2750 to the downside (mainly psychological levels), while if the cross would reverse his price action, the first resistance is seen at 1,2900.