16 / 08 / 2017 | Market News

What to Look out for Today – USD holds Strong from Retail Sales Data

Yesterday’s positive retails sales data, seems to have bolster the dollar for yet another day and even has markets kept hopes up for another Federal rate hike this year. Of course, this also depend what we be said during the FOMC’s release of their meeting minutes. Although the market is speculative whether the announcement will actually contain hawkish information.

Retail sales yesterday yielded a 0.6% increase surpassing substantially the forecasted 0.4% and doubling the previous month’s data that was 0.3%.

 But retail sales weren’t the only contributing factors to the dollar’s continued momentum – on Asian markets U.S. Treasury note rose to 2.267% up from its Tuesday US closing at 2.266% and 2.218% on Monday.
Both of these figures contributed to traders buying back much of the US currency they offloaded last week in fear of a potential armed conflict between the U.S. and N. Korea.

This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.
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16 / 08 / 2017 | Market News

Fundamental Analysis 2017.08.16 – USD is Strengthening, EU Stocks Grow

Yesterday’s trading day saw the USD gain against other G10 currencies. US Retail Sales data, which surpassed expectations at 0.6% against the estimated 0.4%, greatly benefited the dollar. Many investors ended up rapidly purchasing the currency – some even buying back the currency they sold just a few days ago – resulting in the Dollar’s rapid climb.

Correction followed closely though, but still managed to stay in the green and keep some of its gain.

EUR/USD slip by 0.35% and is currently in the region of 1.1738. Eurozone GDP publication is going to be significant even, is scheduled to be released at 11:00 GMT+2.

GBP/USD was the pair that saw the biggest drop; 0.73% stopping in the area of 1.2860. Although US Retail Sales data was positive, lackluster UK Consumer Price Index put pressure on the pair. Investors will be on the look-out for British employment data.

USD/JPY gained 0.89% and trading at 110.60. Asian markets are up, the dollar is up and market sentiment regarding the US/N. Korean frictions have calmed -all contributing to this climb.
AUD/USD lost 0.25% and is currently at 0.7830 due to a hawkish RBA and positive USD retail data.

Stability, growth and USD positive data is off-course contributing to a drop of metals. Gold is at 1270.60 after slipping 0.68%. Silver fell by 2.23% reaching 16.67.

Oil prices are increasing on the other hand, after the API’s report on Crude Oil Stocks change showed a decrease of the commercial oil reserves in the US by 9.200 mln/barrel a week. Data is hinting towards today’s EIA Crude Oil Stocks report, scheduled for 16:30 GMT+2, showing a observable depletion. This caused Brent to go up by 0.57% reaching 50.80. WTI also saw a price gain of 0.53% and is currently trading at 47.85.

US stock is currently trading in the red, while indices remained unchanged. Dow Jones lost 0.30% and is currently trading around 21980.5. NQ also lost - 0.09% and is now at the 5901.9 price level. Finally, S&P lost 0.06% reaching 2462.9.

EU Stock is trading in the green. The FTSE went up 0.52% reaching 7398.6. The CAC gained 0.48% and is currently at 5145.7. The DAX also saw an increase in the order of 0.33% and is trading in the region of 12209.8.

This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.
 
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15 / 08 / 2017 | Market News

What to Look out for Today – Some EU Markets Closed, Stocks See Gains

Something to keep in mind today is that Italian, Greek, Spanish, French and Portuguese Markets are closed due to Assumption Day.

The upcoming noteworthy events today are the UK’s CPI (YoY) and the US Retail Sales for July. Both currencies have been experiencing weakening the past week against other major currencies - the USD due to political volatility and GBP due to ongoing negative data in combination with the BoE’s ongoing dovish stance. So traders will likely be waiting to see in what direction the data will push their respective currencies.

Global stocks seem to be rally after the fears of a US/N. Korean conflict have abated when Kim Jong Un announced his intention to delay the missile tests near Guam, with Asian stock (which were the most affect) and the USD seeing the most significant benefits. Of course this effect rippled out from the two most effected trading instruments – and even the Eurostoxx 50, the FTSE and DAX futures saw a boost.

As expected other than the gain JPY experienced – other safe-havens slipped CHF losing 0.3% and Gold 0.7%.

Although the USD did see gains – due in part also to NY Fed President Dudley saying that the Fed would be trimming its portfolio, making an imminent rate hike still a possibility – today’s news of 3 CEO’s resigning from Trump’s American Manufacturing Council in response to violence during a white supremacy rally in Charlottesville Virginia. This could cause traders to be less “risk-on” with the USD – but at the moment it doesn’t seem to have an effect on the currency.

This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.
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15 / 08 / 2017 | Market News

Fundamental Analysis 2017.08.15 – US Dollar Rallies Safe-Havens Slip

Yesterday’s trading saw a strengthening of the US dollar opposite other major currencies. Lack of other news sans the lackluster EU Industrial Production data, that could bolster the dollar points towards the upwards trend being correctional.

Focus today will inevitably be stateside again – with July’s Retail Sales being announced. At the moments expectations are looking towards a 0.4% in July which is much better than –0.2% figures from June. This might mean a short-term support for the dollar.

EUR/USD lost 0.58% reaching 1.1753.

GBP/USD also slipped, losing 0.30% with the currency pair’s price being in the area of 1.2964 at the time of this articles writing. Of course, traders will be eagerly awaiting the UK’s CPI slated to be released at 10:30 GMT+2.
USD/JPY pair saw a boost of 1.02% and is trading the region of 110.27.
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As the market abated from their fear over USA and North Korean frictions, investors took advantage of it by closing USD positions in a profitable margin.

AUD/USD lost 0.42% with its price in the area of 0.7860.

Metals as safe-havens slipped due to the price of USD going up and the general political atmosphere quieting. Gold fell 1.21% trading at 1274.60. Silver also fell, but more significantly by 1.46% and is current at the 16.86 price point.

After a temporary move upwards, oil experienced a drop in prices. A ramp up by OPEC members oil production and an increase of production in the US contributed to this price drop. Brent lost 2.73% stopping at 50.52. WTI went down by 2.37% and is currently trading in the region of 47.70.

Both European and US stock are trading in the green. Dow Jones trading in the area of 22059.0 after gaining 0.86%. NQ went up 1.75% reaching 5938.4. S&P saw and increase of 1.31% and its price level reaching 2473.4. The FTSE also gained 1.22% finally reaching 7381.6. The CAC gained 1.65% to reach 5140.7. The German DAX went up 1.89% and is currently 12091.1. 

This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.
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14 / 08 / 2017 | Market News

What to Look Out for Today – AUD and GBP Week Ahead

After all the news released from the United States – this week should have traders looking across the Pacific and Atlantic this week.

August 14th
Today the EU will announce data regarding their industrial production for June, both MoM and YoY – although considering the German economy is in an upward trend (even though June was a slower month for Deutche production) and one of the EU’s largest economy closely tied to the Union’s – these numbers should show a very slight dip from the previous 1.3%.  At the moment forecasts are estimating a 0.4% drop for the month to month but a 2.9% year to year – which confirms that Europe is the midst of a proverbial growth spurt.
China is slated to release their industrial production and retail sales for July which is forecasted to gain 7.2% and 10.8% respectively – which may have effect on the flailing Asian markets (a side-effect of the frictions between US and N. Korea).

August 15th
Tomorrow August 15th, Australia will release its Central Bank’s meetings – which traders are hoping will yield more optimistic data, since the bank’s policy has been dovish as of late.  
Germany will also release their Gross Domestic Product (QoQ, YoY) which at least the Quarter to Quarter is expected to stay the same.

This is where the onslaught of UK relevant information will begin – starting with the CPI MoM and YoY although the month to month isn’t expected at the moment to fluctuate, the year to year is expected to see a 2.6% increase.  UK Core Price Index (MoM) is expected to increase 2.4%, PPI Core Output MoM and YoY both are expected to go up -0.2% and 2.9% respectively. The UK’s Producer Price Index Input MoM on the other hand is speculated to fall slightly by 0.4%. The Producer Price Index Input YoY on the other hand is expected to go up by 9.9%.

The PPI Output MoM is expected to remain at its current rate and the YoY is expected to gain 3.3%.
US Import and Export Price index (YoY), Retail Sales (MoM) and Retail Sales excluding Automobiles (MoM) are all slated to be released on the 15th and although the USD has been down recently against other G10 currencies, judge the recent NFP increase, overall growth seems to be the trend Stateside.
US NAHB Housing Market Index – which is expect only to increase by a single point, might not effected markets significantly even though it is an important index.

August 16th
Traders will most likely follow the EUs GDP (YoY and QoQ) for the second quarter – to confirm if the growth trend Europe is experiencing will continue.

With OPEC+ continuing to chastise its members to meet their lower output obligations – commodity traders will likely be looking to US EIA Crude Oil Stocks Change – which is expected to go from -2.720M to -6.451M. The US Fed is also releasing their minutes, which will likely go over without major announcements since a gradual interest rate increase was spoken about earlier in the month.

August 17th
Australia’s unemployment rate will be released, which is currently at 5.6% and Employment Change which is currently at 14K.

The same day we will receive further Euro-centric data released including CPI for July and the ECB’s Policy Meeting Accounts.

August 18th
Finally Friday will be a quiet day – at least regarding the economic calendar. Although various currencies will release data – the stability of their indices will likely not effect markets.

This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.
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14 / 08 / 2017 | Market News

Fundamental Analysis 2017.08.14 – JPY CHF Safe Havens on the Rise Again This Week?

Market recap
Markets seemed to recover slightly from last week’s war of words between the US and N. Korea. Most of Trump’s administration  tried to mediate the frictions between the two nations –Asian stocks recovered after the dip they experienced due to the N. Korean/US war of words, including South Korea, and even US Treasury bond yields saw a slight increase after sentiment calmed, pointing towards a conservative “risk-on” trading mentality.

The side-effects of this though was CHF and JPY which flourished the last week, fell significantly today while commodity currencies took the spotlight of market sentiment. If the political situation continues to settle – then safe-havens such as JPY and CHF will inevitably continue to drop.

US CPI data came in under expectation causing the USD to lose against the stronger (and possibly strengthening) EUR . A further effect of this was markets revising downwards their expectation that the Fed will increase rates.  

On Friday oil prices increased largely due to a weaker dollar, and saw a further boost when threats put oil production in jeopardy in one of Libya’s biggest oil fields. Of course oil lacks data to support its boost, which might change when IEA announces its estimates on Friday.

Today’s market
Today the Japanese GDP and Chinese data have already been released – and lack of other indicators, means a quiet trading day.

On a different hemisphere, the EU industrial production, which is unlikely to have markets clamoring to buy or sell. Its affect is generally miniscule and temporary.


 
 Tuesday will start a little earlier than usual with the German second quarter GDP data. The initial EU-wide second quarter GDP has already been released, even so, the German GDP usually has an impact on markets due its scale within the European market. German GDP is higher than EU-wide GDP suggesting toward room for acceleration of EU-wide activity.

 
 

 
 

 
 
This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.
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11 / 08 / 2017 | Market News

What to Look out for Today – Brexit Friction in May’s Cabinet

May’s cabinet seems to be split directly down the middle in regards to how the UK will proceed with its Brexit negotiations. In actuality her cabinet has been split into three camps – hard Brexit proponents that seek an expedited divorce from their EU partners, moderates and the majority group which seek a gradual Brexit to avoid abrupt economic repercussions.

Although the hard Brexiters want a rapid transitional period and immediate trade talks, as it has been shown, the EU’s Brexit committee refuses to talk trade agreements if the UK’s financial and EU citizens’ obligations aren’t covered and set.

In the midst of a mountain of recently released negative economic data – this the last thing the GBP needs. The problem is that the Brexit negotiations are closely tied, at least on a level of market sentiment, to the stability of the Euro. We have seen the one-currency’s price fluctuate with the announcement of new Brexit announcements, news or statements. Some even estimate that it could affect USD or more appropriately counter-affect; trader might retreat to USD as an alternative to the volatility seen in two of the world’s most frequently traded currencies.

In addition to the internal political turmoil surrounding the Brexit negotiations, the climate between the UK and its EU counterparts has been at best combative. Since the beginning before the enacting of Article 50, Theresa May took a hard-line to the process of leaving the EU – Brexit means Brexit. This unfortunately set the tone since then, with both parties treating the negotiations as a hostile take-over instead of an attempt to find mutually beneficial compromises.

This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.
 
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11 / 08 / 2017 | Market News

Fundamental Analysis 2017.08.11 – Safe Havens Still Growing

Market recap
The market seems to be in risk averse mood, not without reason in lieu of recent events – as a result CHF and JPY as go-to safe-havens continued moving up, as commodity currencies continued slipping. Joining the growth of safe-haven currencies where of course metals silver and gold. Oil experienced and abrupt drop mostly likely due to fundamental data release with the conclusion of the two-day OPEC meeting and US reports noting and increase in refinery output (even though the latest commercial crude reports showed shrinking reserves). Global stocks also saw a slight dip, the stocks that saw a boost where Jamaica and Argentina, Asian markets on the other hand saw a observable dip. The US PPI came in under expectation resulting in bond yield drop. Of course the N. Korean diplomatic fallout is on traders mind, and the dropping prices are proof of this.

William Dudley, New York Fed President, stated that weakening the USD should assist inflation, with the expected period for this affect to take place between 6-10 months – which of course is anything but a sign toward an impending interest rate hike in the near future. He further stated that Fed the US weak inflation rate to see an increase due to the weaker dollar and consistently tightening labor market… The Fed President also mentioned wage inequality an opinion which might actually be the reasons behind Fed futures dropping and the weakening of the dollar. The dollar’s price at the moment is tightly correlated with inflation recovery at the moment – This is why CPI is extremely important

 GBP as also experienced a dip after the industrial production came in under forecasts and and the trade deficit continued to grow, even though analyst expected this to shrink. Finally the GBP is definitely not benefiting from the ongoing Brexit negotiations.
 
Today’s market
EU markets have been quiet for the most part, which inevitably benefits a strong EUR. Japan’s holiday also means that one of Asia’s primary markets was left without news – the only relatively significant news is the German CPI, but considering the stability of the country’s economy in general – it usually goes under most traders’ radar.

US CPI is going to be a noteworthy report on the other hand. Although it can’t be considered a measure or forecaster of Federal inflation targets it manages to gauge inflation rate in a general context. Ultimately the consumer price index and inflation rate count the same metric but just with different means.
The forecast is for an accelerated CPI, even though the core CPI is expected to hold its previous rate. 


 




 
 This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.
 
 
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10 / 08 / 2017 | Market News

What to Look out for Today 2017.08.10 – A Busy Economic Calendar

It seems that America can’t go a week without political scandal – in the last few weeks we have seen Trump’s son and son-in-law being subpoenaed for Russian assisted interference with 2016 election, a new series of sanction against Russia (even though Trump resisted the bill – at least verbally) and the most recent chapter is Trump’s promise of retaliation if N. Korea aggresses against US territories (in this case specifically Guam). A side-note to this was Trump advisors stating that the comments of “fire and fury” caught them by suprise.

This political volatility is likely to scare investors away from USD – at least until more positive economic data is released to quiet their risk-averse sentiment.

Today seems like a heavily populated with economic calendar events, most of medium importance so the effect might be seen impacting market sentiment than actual currency prices initially:
  • Australia – Consumer Inflation Expectation
  • N. Zealand – RBNZ Governor Wheeler Speech
  • Japan – Tertiary Industry Index (MoM)
These UK events might be of significant impact – even though they are of medium importance – especially if investors take them as indicators of Pre-Brexit UK economic health.
  • UK – Industrial Production (MoM)
  • UK – Industrial Production (YoY)
  • UK – Manufacturing Production (MoM)
  • UK – Manufacturing Production (YoY)
  • UK – NIESR GDP Estimate (3M)
  • US – Continuing Jobless Claims
  • US – Initial Jobless Claims
  • US – Speech by Fed’s William Dudley
  • US – Monthly Budget Statement
  • Australia – Reserve Bank’s Governor Philip Lowe Speech (this is also the only high importance item of the day)
This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.
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10 / 08 / 2017 | Market News

Fundamental Analysis 2017.08.10 – Safe Havens and Geopolitical Volatility

Market recap
Analysts often say that this week historically is the least volatile, and yesterday proved them correct with most major currencies staying within ±0.3% of the previous trading day’s price. Commodities on the other hand are a different story all together.

Bonds, metals and other havens where boosted by global diplomatic tensions. The US trading hours though showed that markets turned their focus away from these events, a decisive factor was also that the Trump administration scrambled to diffuse the political situation during these times. Rex Tillerson US Secretary of State stated that the public should have “no concerns” in regards to the political fallout. Even with reassurances though most Asian stock markets opened lower this morning.

CHF was the winner of this turmoil – once again proving the most stable amongst global safe havens. Due to the weakened dollar the bulk of trading was EUR/CHF which was weakened by the heavy buy-ins.
NZD also weakened as markets responded to the Reserve Bank of New Zealand (RBNZ) policy to hold rates – even in lieu of strengthening currency (or could it possibly be due to a strengthen currency?).  The RBNZ said, “The trade-weighted exchange rate has increased since the May Statement, partly in response to a weaker US dollar.  A lower New Zealand dollar is needed to increase tradable inflation and help deliver more balanced growth.” The current 0.9% YoY is just under the central bank’s target of 1-3%.Even in lieu of a dovish policy NZD experienced an abrupt price influx upon the release of the statement..

RBNZ Gov. Graeme Wheeler pointed out while testifying in front of parliamentary committee that the central bank had purposefully weakened the dollar in the past – and this was still and option..  If the BusinessNZ PMI, released tonight, is weak, it could result in a drop in the NZD price.

https://media.clawshorns.com/uploads/files/e08fd07ac4f661be9b1a093f39cabeef.png
 
Oil was boosted largely due to the US Dept of Energy and American Petroleum Institute’s report of a significant drop in commercial oil reserves, exceeding forecasts.

Today’s market
Japanese markets will be observing “Mountain Day”  That shouldn’t effect markets largely but traders should be aware that instruments tied to Japanese markets will be temporarily unavailable. The European trading day should begin with the UK’s output for construction, industrial, manufacturing and manufacturing production. These are shorter term indicators and construction is seldom an market effecting indicator.

Its not easy to correlate how a currency will be affected by trade and industrial production data. Lower currency prices usually means higher exports (as a weakened GBP means buyers can purchase more, technically, with their local currency) in turn increase demand for products and increasing production. Unfortunately because of other fundamental factors, namely Brexit and its negotiations (which Britain hasn’t been on the winning side of according to reports) – this correlation hasn’t materialized, the last data regarding net trade shrunk 0.2% from the country’s growth rate.  Without the pound’s  price drop exports might have contracted even further but they didn’t skyrocket – the benefit of a weakened pound - , even though Brexit proponent claimed they would.

This month’s outlook isn’t looking much more optimistic for output. Industrial and manufacturing production (including mining and energy including manufacturing) is forecasted at this point to not deviate from the last month. Manufacturing on a YoY is expected to increase, but conservatively. The manufacturing PMI experienced a slight boost – banded between to levels of 57.0 and 54.2 in April   and June.


 
 On a more positive note, Analysists are expecting the trade deficit shrink both overall and in visible trade.


 
 Markets are likely to react more significantly to PMI than industrial production and luckily for the GBP is slightly higher at the moment.  
 
William Dudley NY Fed President, is scheduled at 2.00 pm (GMT) and although he isn’t expected to reference anything related to currencies – traders will be listening incase he mentions anything related to FOMC policies. US producer prices are expected experience a relative increase in pace. This would mark the ninth consecutive core goods PPI increase which has been climbing due to elevated import prices because of the recently weakened dollar. In June the increased import prices started affecting consumer prices in June. It would be considered extremely positive if the PPI another boost as this will likely also bolster  CPI inflation.


 

 

 
This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.
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