13 / 03 / 2017 | Weekly Report

Successful Signals 6-3-2017 to 10-3-2017

This past week saw many of our analyst’s predictions come true, with crude, gold, AUD/USD and EUR/AUD currency pairs all hitting their projected movements. Here are last week’s successful signals.

March 3rd. Crude at $53, called to $51.50, which it hit on March 8th



 

March 3rd AUD called lower from 0,76, breached 0.75 on March 9th



 

March 6th. Gold at $1235, target $1220 hit on the next day



 

March 8th. AUD/USD at 0.7590. Called down to 0.75-0.7525, level hit same afternoon


March 9th EUR/AUD at 1.4020. Called up to 1.41, level hit same afternoon



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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28 / 03 / 2016 | Weekly Report

Dollar supported by strong U.S. reports

The dollar was broadly higher against its major rivals on Friday, after upbeat U.S. economic data boosted speculation that the Fed may hike rates again this year.

An official U.S. report showed on Friday that while the economy declined in the fourth quarter, the pace of deceleration was not as sharp as initially expected. The Commerce Department reported that the gross domestic product increased from October to December at an annual rate of 1.0%, above the initial projection of 0.7%. 

Analysts had anticipated GDP growth for the fourth quarter to be downwardly revised to 0.4%. Other reports released earlier, revealed that consumer spending and inflation advanced in January, thus reinforcing the view that recovery is on track.

The greenback jumped to three-week highs against the single currency, with ERU/USD losing 0.78% to trade at 1.0931 in late trade, ending the week 1.71% down. It was also higher against the franc, with USD/CHF up 0.66% to 0.9966.

The greenback was also higher against the Japanese yen reaching one-week highs, climbing 0.9% to 114.00. It is noted that the dollar is still down 5% against the yen since the beginning of the year, with the safe haven yen being boosted by concerns over the global growth prospect and sharp declines in the price of oil and stocks.

British pound hit seven-year lows, with GBP/USD losing 0.61% to 1.3877, marking its weakest level in 7 years. Sterling was under selling pressure amid fears over the U.K.’s outlook in the E.U., ahead of the much-awaited referendum going to be held on the 23rd of June 2016.

The U.S. dollar, which tracks the greenback’s performance against a group of six other currencies, advanced 0.71% to a three-week high of 98.13. The index finished the week gaining 1.63%, its best level since November. 

In the coming week, all eyes will be turned on Friday’s U.S. nonfarm payrolls data for new signals on the condition of the labour market. Attention will also be turned on reports of manufacturing and service sector performance in the U.S. and China.
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21 / 03 / 2016 | Weekly Report

Greenback retrieved from a five-month low

The dollar retrieved from a five-month low against a basket of the other major currencies on Friday, as investors bought back greenbacks ahead of the weekend following an aggressive selloff earlier in the week. The greenback’s losses of 1.09%, came after the Federal Reserve surprised markets by cutting its rate hike projections more than expected, down from four to two in 2016.
 
The Fed scaled back forecasts for how high interest rates will rise this year following the conclusion of its policy meeting on Wednesday, citing the potential impact from weaker global growth and financial market turmoil on the U.S. economy. Investors and economists dialed back their own rate hike expectations in wake of the Fed’s surprisingly dovish outlook, with traders of interest-rate futures now seeing no rate rise before September.
 
On Friday, the greenback edged up against the Japanese yen, after Japanese Finance Minister Taro Aso said that he would closely watch foreign exchange market moves, sparking speculation that the Bank of Japan had intervened in currency markets.On the week, the dollar shed nearly 2% against the yen, its steepest fall against the Japanese currency in five weeks.
 
Elsewhere, the single currency retreated from a five-week high against the dollar on Friday, after European Central Bank Chief Economist Peter Praet said euro zone interest rates could go even lower. It was still up over 1% for the week.
 
The Canadian dollar rallied to five-month highs against its U.S. counterpart, after a reading on retail sales growth in January showed a sharp rebound from the prior month. It finished the week up 1.8%.
 
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, tacked on 0.3% on Friday to settle at 95.07, moving away from a five-month low of 94.61 hit overnight.
 
In the coming week, the focus will be on Friday’s final reading on U.S. fourth quarter gross domestic product for fresh indications on the strength of the economy, as well as Tuesday’s survey data on euro zone business activity as well as fresh readings on German economic sentiment for indications on the health of the region’s economy.
 
Market participants will also be observing a number of speeches from key Fed officials this week, including James Bullard, Dennis Lockhart, Jeffrey Lacker, Charles Evans and Patrick Harker.
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14 / 03 / 2016 | Weekly Report

Dollar fell to near one-month lows

The greenback hovered over one-month lows against the other major currencies on Friday, as sentiment was boosted following China’s central bank decision to raise yuan’s fixed rate and as the ECB highlighted that that there are still policy options available on the table.

People’s Bank of China boosted the fixed rate of the yuan, following euro’s rally a day before, after Mario Draghi commented that the European Central Bank would not reduce interest rates any further. The ECB’s move strengthened commodity prices, as well as the commodity-related currencies, sending the U.S. dollar broadly lower.

In the meantime, ECB Governing Council Member Erkki Liikanen stressed on Friday, that the central bank still had policy options available to bolster the economy, as it will continue to support it until it reached the 2% inflation target.

The comments came a day after the bank delivered a strong package of stimulus measures, trimming all three key rates to new record lows and reinforcing its quantitative easing programme. It is notable, that the euro registered its largest one-day gain in a month, after Draghi said that the central bank will probably not trim interest rates further into negative territory.

The single currency retreated from early gains on Friday, with EUR/USD losing 0.27% to trade at 1.1148 in late session. The euro, however, still finished the week higher by 1.43%.  On the contrary, the U.S. dollar index was unchanged at 96.23 during late Friday trade, hovering over one-month lows of 95.94. The index finished the week with 1.2% loss, marking its second consecutive decline.

However, the greenback was higher against the Japanese yen, as risk appetite was boosted, with USD/JPY gaining 0.56% to 133.82. Elsewhere, the Aussie and Kiwi dollars rallied, with AUD/USD jumping 1.48% to 0.7563 and NZD/USD rising 1.1.4% to trade at 0.6743. The Canadian dollar climbed to four-month highs, with USD/CAD losing 0.98% at 1.3214 in late trade, as a rally in oil prices counterbalanced a soft Canadian jobs report.

In the coming week, focus will be on Wednesday’s outcome of the Fed’s latest policy meeting, with investors anticipating to leave interest rates unchanged, after raising them in December for the first time in almost a decade. Market participants will also be observing central bank meetings going to be held in Switzerland and Japan.

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07 / 03 / 2016 | Weekly Report

U.S. Dollar Hit by Mixed U.S. Job Reports

The greenback lost ground against its other counterparts on Friday, as mixed jobs statistics for February affected expectations that the Fed would hike rates in the near term.

On a busy day in the U.S., the Labor Department said that the country’s economy created 242,000 jobs in February, well above anticipations for an addition of 190,000 new jobs. The unemployment rate was reported to remain unchanged at an eight-year low of 4.9%, in line with expectations.

However, average hourly earnings dropped by 0.1% last month, retreating from the 0.5% increase registered in January. The decline in average earnings lowered the year over year average earnings increase to 2.2% from a reading of 2.5% in January. The downbeat wage figures signaled that consumer inflation is probably to remain weak. Federal Reserve policy makers are closely looking at inflation in their attempt to hike rates once again.

Higher interest rates would stimulate the greenback by rendering it more appealing to investors looking for higher yields. The U.S. dollar which tracks the greenback’s performance against a group of six other major rivals fell to two-week lows of 97.03, before consolidating at 97.34. The dollar index finished the week with a 0.85% loss.

The single currency went up to one week highs against the greenback, with EUR/USD reaching 1.1043, before correcting to 1.1004 in late session, gaining 0.45% for the day. The U.S. dollar finished the day little changed against the Japanese yen, with USD/JPY trading at 113.76. Meanwhile, the dollar touched one-week lows against the franc right after the release of the jobs report, before retracing to the upside, with USD/CHF trading at 0.9928 on late Friday trade. 

The commodity-related currencies registered solid gains, amid a bounce in commodity prices. The Australian and New Zealand dollars gained more than 1%, whereas their Canadian counterpart advanced to three-month highs, as strong trade data lessened probabilities of a rate cut. 

Market participants will also be monitoring inflation and trade data from China over concerns that the world’s second economy is heading for a rough landing.
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22 / 02 / 2016 | Weekly Report

Dollar lower despite strong U.S. inflation data

The dollar slipped lower against the rest of the major currencies on Friday, as fresh falls in oil prices strengthened broadly the Japanese yen and equities emphasized concerns over the outlook for the global economy.

The dollar found extensive support as largely upbeat U.S. data earlier in the week reinforced the view that the Federal Reserve is likely to say on a monetary tightening path this year.
 
On Friday, the U.S. consumer data showed the price index rose at an annual rate of 1.4% in January, ahead of expectations for a 1.3% increase.

Core inflation, which excludes food and energy, rose by a larger than forecast 2.2%.
 
The dollar fell to one-week lows of 112.29 against the safe haven yen and USD/JPY was last at 112.66, off 0.53% for the day, despite the strong U.S. inflation data.The single currency fell to two-and-a-half year lows against the firmer yen, with EUR/JPY falling lows of 125.00, before easing back to settle at 125.36.
 
However, the low yielding euro was higher against the dollar, with EUR/USD up 0.22% at 1.1130 in late trade, but the pair still ended the week down 0.83%. Thursday’s minutes of the European Central Bank’s January meeting cemented expectations for further easing next month, saying growth and inflation risks are on the rise in the euro area.

The British pound was boosted by hopes that European Union leaders would reach an agreement to help Britain remain in the bloc, with the currency, receiving an additional boost from far stronger than expected data on U.K. retail sales for January. As a result, the pound was up 0.47% against the dollar, with GBP/USD to trade at 1.4405 late Friday.
 
Elsewhere, the greenback was up against the Australian dollar, the Canadian dollar and the New Zealand dollar, due in large part to a fresh slide in oil prices.
 
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, eased 0.23% to 96.62 late Friday. The index still ended the week with gains of 0.65%.

In the week ahead, investors will be looking on today's survey data on euro zone business activity for indications on the health of the region’s economy. Also, investors will look at business sentiment in both the euro zone and the U.S. and Thursday’s report on U.S. durable goods orders for indications on the strength of the manufacturing sector.
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15 / 02 / 2016 | Weekly Report

Dollar pushed higher after strong U.S. retail sales report

The greenback pushed higher on Friday against the other major currencies, after the release of upbeat U.S. retail sales data for January, fuelled optimism over the strength of the economy, encouraging that the Federal Reserve is likely to stay on a tightening path as other world central banks ease monetary policy.
 
The U.S. Census Bureau reported that retail sales rose 0.2% in January, exceeding expectations for a 0.1% uptick. Retail sales rose 0.2% increase in December, whose figure was revised from a previously estimated 0.1% fall.
 
Core retail sales, which exclude automobiles, increased by 0.1% last month, in line with expectations and after an uptick of 0.1% in December.
 
As a result the dollar was boosted against the Japanese yen, with USD/JPY climbed 0.7% at 113.21 in late trade, off Thursday’s 15-month trough of 110.96.
 
The dollar was also higher against the euro and the Swiss franc, with EUR/USD dropped 0.6% at 1.1254 late Friday and USD/CHF gaining 0.52% to 0.9774.
 
Meanwhile, the Australian and New Zealand dollars were weaker, with AUD/USD down 0.44% at 0.7076 and with NZD/USD tumbling 1.44% to 0.6619.
 
The dollar edged down 0.14 against its Canadian counterpart, with USD/CAD to trade at 1.3915, as a rebound in oil prices lent support to the commodity-related currency.
 
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.37% at 95.99, off Thursday’s three-and-a-half month lows of 95.28. The index still ended the week down 1.1%, the second straight weekly decline.
 
In the week ahead, investors will be watching on Friday, the U.S. inflation data for indications on whether the Federal Reserve will raise rates at all this year. In focus will be also, Thursday's release of Chinese inflation data.
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08 / 02 / 2016 | Weekly Report

Dollar index gain ground against rivals

The dollar managed to curry onto gains against the rest of the major currencies on Friday, as the uncertainty continued to weigh over how much the Federal Reserve will be able to raise interest rates this year, after the release of mostly positive U.S. jobs data.

The U.S. economy added 151,000 jobs in January, missing expectations for an increase of 190,000, the lowest number since September. The economy created 262,000 jobs in December, whose figure was revised from a previously estimated 292,000 gain.

The U.S. unemployment rate ticked down to 4.9% last month from 5.0% in December, despite the slowdown in jobs growth. Analysts had expected the unemployment rate to remain unchanged in January.

The report also showed that average hourly earnings rose 0.5% in January, compared to expectations for a 0.3% gain, after a flat reading in December.
 
Elsewhere, the dollar edged higher against the Japanese yen, with USD/JPY up 0.09% to 116.88 in late trade, off lows of 116.27.

The single slipped 0.47% in late trade against the dollar, with EUR/USD to trade at 1.1154, after briefly reaching three-and-a-half month highs of 1.1246 immediately after the report.

The Sterling pound was lower against the dollar, with GBP/USD down 0.58% at 1.4502 late Friday.

Greenback felt against the Swiss franc, with USD/CHF edging down 0.12% to 0.9918.

The Australian and New Zealand dollars were weaker, with AUD/USD down 0.33% at 0.7176 and with NZD/USD sliding 0.30% to 0.6705.

Meanwhile, USD/CAD was little changed at 1.3745, after data showed that the number of employed people in Canada fell by 5,700 in January, disappointing expectations for an increase of 5,500 and after a revised 1,300 gain the previous month. Canada’s unemployment rate ticked up to 7.2% last month from 7.1% in December, compared to expectations for an unchanged reading.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.48% at 96.98 late Friday, off three-and-a-half month lows of 96.04 struck earlier in the session. The index still ended the week down 2.61%, the largest weekly percentage decline since October 2011.
 
Ahead of the coming week, investors are turning heads to Wednesday’s testimony by Federal Reserves Chair Janet Yellen and Friday’s data on U.S. retail sales for further indications on the strength of the world’s largest economy. Friday’s preliminary report on euro zone fourth quarter growth will also be closely watched amid heightened expectations for more easing by the European Central Bank in the coming months.
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01 / 02 / 2016 | Weekly Report

Dollar rises against yen after BoJ announcement

A significant rose of the dollar against the rest of the major currencies took place on Friday, as the BoJ shocked the markets by announcing an unexpected decision to adopt negative interest rate policy.
The Bank of Japan announced at the conclusion of its meeting on Friday, that it will employ a negative interest rate of -0.1% and that it will trim rates further if necessary. On the announcement of the decision, the USD/JPY pair advanced 1.95% to 121.12, after touching session highs of 121.68, the most since December 18.
Furthermore, the dollar moves highlighted by the diverging monetary policy path between the Federal Reserve and other world central banks and the U.S. gross domestic product data which broadly matched economists’ expectations. Once again, the Fed failed to provide any signals on the pace of future rate hikes in its remarks on Wednesday.  The U.S. central bank left rates unchanged at the conclusion of its two-day meeting, after hiking rates in December.
Higher interest rates make the dollar more attractive to yield seeking investors and as a result the dollar strengthened against the euro, Sterling pound and the Swiss franc.
 
The single currency was down 0.98% against the dollar, with EUR/USD  at 1.0832 late Friday. The sterling was off 0.82% for the day, with GBP/USD  at 1.4242, while USD/CHF advanced 0.93% to 1.0230.
 
The dollar received an additional boost after data on Friday showed that the
 
Based on the U.S. economy data findings, the Commerce Department said that it proves an annual rate grew by 0.7% in the fourth quarter, compared to forecasts for growth of 0.8% after 2% growth in the third quarter. The U.S. economy grew 2.4% in 2015, matching similar growth in 2014.
 
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose to 99.88, the most since January 21 and was last at 99.6, up 0.99% for the day.
 
In the week ahead, investors will be awaiting Friday’s U.S. jobs report for January for fresh indications of the strength of the labor market, but also central bank meetings in the U.K. and Australia will also be in focus.
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18 / 01 / 2016 | Weekly Report

Dollar falls against euro and yen

The single currency and Japanese yen advance against the dollar on Friday, after a weak U.S. economic data and fresh lows in oil prices.

On Friday, oil prices fell through the $30 a barrel level, pressured lower by expectations that Iran will resume exports as soon as international sanctions are lifted, amid a global supply glut.

Prices for industrial metals, such as copper and nickel also fell. The renewed drop in oil and commodity prices sent global equity markets tumbling amid fears of a global economic slowdown.
 
The dollar also came under pressure after data showing that U.S. retail sales unexpectedly fell in December while U.S. industrial production also fell last month, down for the third consecutive month.
 
The greenback dropped against the Japanese yen, hitting the weakest level since August 24, with USD/JPY to trade at 116.50 and settled at 117.04 in late trade, off 0.86% for the day.
 
The low yielding euro gained ground against the dollar, with EUR/USD at 1.0915 in late trade.
 
The Australia dollar tumbled, with AUD/USD hitting lows of 0.6828, the weakest since May 2009, before settling at 0.6862, down 1.73% for the day.
 
The New Zealand dollar fell to three-and-a-half month lows against the greenback, with NZD/USD at 0.6459 late Friday.
 
The Canadian dollar fell to fresh 12-year lows against its U.S. counterpart, with USD/CAD rallying 1.22% to 1.4540 in late trade.
 
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last at 98.99, off 0.13% for the day, as gains against the currencies of commodity producing countries with limited losses.

Ahead of the coming week, investors will be awaiting data on Chinese fourth quarter growth, amid concerns over the outlook for the world’s number two economy, while Friday’s data on euro zone private sector growth will also be in focus.
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