18 / 01 / 2018 | Analisi tecnica

Technical Analysis 18.01.2018 - CAD/CHF: Ichimoku clouds

Let's look at the four-hour chart. Tenkan-sen line is below Kijun-sen, the blue line is directed downwards, while the red one remains horizontal. Confirmative line Chikou Span is below the price chart, current cloud is descending. The instrument is trading above Tenkan-sen and Kijun-sen lines; the Bullish trend is still strong. The closest support level is Kijun-sen line (0.7735). One of the previous maximums of Chikou Span line is expected to be a resistance level (0.7760).




On the daily chart Tenkan-sen line is above Kijun-sen, the lines are horizontal . Confirmative line Chikou Span is approaching the price chart from above, current cloud is ascending. The instrument is trading below Tenkan-sen and Kijun-sen lines; the Bearish trend is still strong. One of the previous minimums of Chikou Span line is expected to be a support level (0.7728). The closest resistance level is the upper border of the cloud (0.7763).




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

 
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17 / 01 / 2018 | Analisi tecnica

Technical Analysis 17.01.2018 - EUR/JPY: Ichimoku clouds

Let's look at the four-hour chart. Tenkan-sen line is above Kijun-sen, the lines are horizontal . Confirmative line Chikou Span is above the price chart, current cloud has reversed from descending to ascending. The instrument is trading above Tenkan-sen and Kijun-sen lines; the Bullish trend is still strong. The closest support level is Tenkan-sen line (135.50). One of the previous maximums of Chikou Span line is expected to be a resistance level (135.90).



On the daily chart Tenkan-sen line is above Kijun-sen, the lines are horizontal . Confirmative line Chikou Span is above the price chart, current cloud is ascending. The instrument is trading above Tenkan-sen and Kijun-sen lines; the Bullish trend is still strong. The closest support level is Tenkan-sen line (134.80). One of the previous maximums of Chikou Span line is expected to be a resistance level (136.05).




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

 
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17 / 01 / 2018 | Notizie sul mercato

Fundamental Analysis 17.01.2018 - Market Outlook

Market recap

Last night there was a sudden rise in EUR/USD in early Asian trading. The reason is unclear. It may be volatility from the crypto-currency market affecting the fiat currency market. Bitcoin has been volatile this morning.

The VIX index – the so-called “fear gauge” that measures expected volatility in US stocks – has risen. In late December 2017 it hit a record low of 8.90. It had never traded with an 8-handle before. Early this year it wasn’t far off that at 8.92. On Friday 12thJanuary 2018 it closed at 10.17, a more normal level for recently. Last night it rose up to 12.41.


The biggest mover of the day was NZD. According to press reports, it fell ahead of today’s milk auction in anticipation of a poor result. In the event, milk prices rebounded – the average winning price rose 6% to $3,310 – but the NZD didn’t. The explanation could be just technical – the failure of NZD/USD to hold above 0.7300 may have brought in some momentum traders. In that case, there could be a rebound as the market digests the better-than-expected milk auction and looks forward to tonight’s China data.

CHF was the best-performing G10 currency even though Swiss National Bank President Thomas Jordan said that negative interest rates were still needed to limit the strength of the “still highly valued” currency. The gist of his comments was to explain and support the negative interest rate policy. Indeed he pointed out that “If we were to change the interest rates, the franc would appreciate.”

Today’s market

There are no major indicators or announcements due out during the European day.

On today’s agenda is the Bank of Canada rate decision. They’re widely expected to hike rates to 1.25% from 1.0%.

As you can see from the graph, early in the year expectations were leaning towards unchanged – the market put 59% odds on unchanged vs 41% on a hike. But on January 5th 2018 that suddenly flipped to 82% hike, 18% unchanged, after the unemployment rate suddenly plunged to 5.7%, the lowest since the current data series began in 1976. Bank of Canada Governor Stephen Poloz has said that interest rate decisions will depend on the data, and the market clearly thought that that bit of data made a rate hike more likely. Today the odds are 90%.


Other data too pointed to an improving economy. Housing starts remain on an uptrend, and the Bank of Canada’s Business Outlook Survey said that “capacity and labour pressures are becoming more apparent and are stimulating firms’ employment and investment plans,” which mean less slack in the economy and less need for an emergency level of rates.

The main reason to refrain from hiking would be concerns about the negotiations over the North American Free Trade Agreement (NAFTA). But here too things seem to be improving. Press reports say US President Donald Trump is “taking more seriously” the risks of withdrawing from the agreement, for two reasons:  1) the risk to his core supporters, many of whom are farmers who rely on exports, and 2) the risks to the stock market, which he views as a barometer of his popularity.

The key points to watch for are: 1) in the first paragraph, whether they repeat the December 2018’s statement that there is “considerable uncertainty, notably about geopolitical developments and trade policies,” and 2) any changes in the final assessment, which in December 2018 read “While higher interest rates will likely be required over time, Governing Council will continue to be cautious, guided by incoming data…” I think if they repeat both those lines, then CAD could fall after the announcement. 

As for the US indicators, December 2018 industrial production is forecast to rise at a faster mom pace than in November 2018. That’s pretty good, considering that the November 2017 figures still reflected a rebound in production after the hurricanes (particularly in oil and gas extraction). It would show that output is expanding nicely, which should make the Federal Reserve more confident and boost the dollar.


(The capacity utilization figures that come out as part of the industrial production (IP) figures don’t seem to have any correlation with the subsequent movement in the dollar.)




The Fundamental Analysis is provided by Marshall Gittler an external service provider of an independent analytical company. Any views and opinions expressed are explicitly those of the writer. Any information contained in the article, is believed to be reliable, and has not been verified by STO and is not guaranteed to be accurate. References to specific products, are for illustrative purposes only and are not a form of solicitation, recommendation or investment advice. Past performance is not a guarantee of future performance.
 
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16 / 01 / 2018 | Analisi tecnica

Technical Analysis 16.01.2018 - AUD/JPY: Ichimoku clouds

Let's look at the four-hour chart. Tenkan-sen line has crossed Kijun-sen from below, both lines are directed upwards. Confirmative line Chikou Span is crossing the price chart from below, current cloud is descending. The instrument is trading around lower border of the cloud. The closest support level is Tenkan-sen line (88.04). The closest resistance level is the upper border of the cloud (88.35).




On the daily chart Tenkan-sen line is above Kijun-sen, the blue line is directed upwards, while the red one remains horizontal. Confirmative line Chikou Span has crossed the price chart from below, current cloud is ascending. The instrument is trading above Tenkan-sen and Kijun-sen lines; the Bullish trend is still strong. The closest support level is Tenkan-sen line (88.14). One of the previous maximums of Chikou Span line is expected to be a resistance level (88.83).




The Technical Analysis is provided by Marshall Gittler, an external service provider of an independent analytical company. Any views and opinions expressed are explicitly those of the writer. Any information contained in the article, is believed to be reliable, and has not been verified by STO and is not guaranteed to be accurate. References to specific products, are for illustrative purposes only and are not a form of solicitation, recommendation or investment advice. Past performance is not a guarantee of future performance.
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16 / 01 / 2018 | Notizie sul mercato

Fundamental Analysis 16.01.2018 - Market Outlook

Market Recap

Dollar's weakness and euro's strength were the main themes overnight.

The main feature of the market then was the fall in JPY, the only major currency to weaken vs the weak dollar.

The 110-level for USD/JPY is an important psychological support, as is often the case for round numbers, plus the tankan showed that companies are estimating an average rate of 110.69 for the second half of FY2017 (Oct. 2017 through March 2018) is 109.66. If USD/JPY breaks that level, then companies would probably come in to cover their positions in order to make budget, which might set off a “snowball effect” as they chase the market.

However, I doubt the government is planning on doing anything about the yen at these levels. They haven’t intervened in the market since Q4 2011.



It is true that back in 2003/04, the period when Japan was intervening, USD/JPY was at or even above these levels. However, this is just an optical illusion caused by using the nominal exchange rate. USD/JPY at ¥110 now and back then were totally different. If we look at the real effective exchange rate (REER), which takes into account the difference in inflation in different countries, the yen is around the weakest it’s been since the early 1970s.


Today’s market

The day starts off with the UK inflation data.

The UK inflation indicators are expected to show inflation slowing. The main reason the inflation rate rose so high was the collapse in sterling after the Brexit vote in June 2016, which drove up the price of imports. But of course that event is now far in the past and its impact on prices is fading. Slowing inflation is in line with the Bank of England’s forecasts; the November 2017 inflation report forecast that CPI would be 3.0% yoy in Q4 2017 but drop to 2.4% yoy by Q4 2018. Nonetheless, the figures could still prove slightly negative for sterling.


The British house price index will also be released at the same time. This is published by the UK Land Registry and tracks the average price of all houses in the country. The yoy rate of increase is expected to slow notably. This too could be seen as a negative for Britain.



Next up is the Empire State manufacturing index, the first of the regional Federal Reserve's indices. It has come down substantially from its peak in October 2017, but is expected to rebound slightly.


Swiss National Bank (SNB) President Thomas Jordan will speak in Zurich on "How Money is Made by the Central Bank and the Banking System."

Overnight, we get Japan’s machinery orders. This is an important economic indicator, but the problem is that it's hard to forecast it. In any case, economists are forecasting that the pace of growth will slow down. They expect a fall on both a mom and yoy basis, which could be negative for the yen.



Australia’s home loans are expected to be unchanged from the previous month. That would be better than the falls in the previous two months, but it certainly wouldn’t show any improvement in the country’s slowing housing market. That’s why this could be negative for AUD.










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

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15 / 01 / 2018 | Analisi tecnica

Technical Analysis 15.01.2018 - EUR/JPY: Ichimoku clouds

Let's look at the four-hour chart. Tenkan-sen line is above Kijun-sen, the lines are horizontal . Confirmative line Chikou Span is crossing the price chart from below, current cloud is ascending. The instrument is trading around lower border of the cloud. The closest support level is Tenkan-sen line (134.664). The closest resistance level is the lower border of the cloud (135.805).



On the daily chart Tenkan-sen line is above Kijun-sen, the lines are horizontal . Confirmative line Chikou Span is above the price chart, current cloud is ascending. The instrument is trading above Tenkan-sen and Kijun-sen lines; the Bullish trend is still strong. The closest support level is Tenkan-sen line (134.832). One of the previous maximums of Chikou Span line is expected to be a resistance level (136.343).



The Technical Analysis is provided by Marshall Gittler, an external service provider of an independent analytical company. Any views and opinions expressed are explicitly those of the writer. Any information contained in the article, is believed to be reliable, and has not been verified by STO and is not guaranteed to be accurate. References to specific products, are for illustrative purposes only and are not a form of solicitation, recommendation or investment advice. Past performance is not a guarantee of future performance.
 
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15 / 01 / 2018 | Notizie sul mercato

Fundamental Analysis 15.01.2018 - Market Outlook

Market Recap

A decrease in the value of the dollar as the “monetary policy divergence” trade goes into reverse! This is exceptional, given the fact that Friday’s core Consumer Price Index (CPI) beat expectations. Nonetheless, the Federal Reserve’s tightening plans are well known and already discounted in the market. The change to expectations – and therefore the impetus to change in FX rates – is coming from other central banks.

Foremost of those is the European Central Bank (ECB), which appeared in last week’s minutes to be more hawkish than people had expected. Chancellor Merkel has reached a preliminary agreement with the Social Democratic Party of Germany (SPD) to form a new coalition government. Hence EUR strength and a record-long EUR position by speculators in Friday’s Commitment of Traders report.

GBP also gained to a post-Brexit vote high as the outlook for a soft Brexit seems to be improving.

The Bank of Canada is widely expected to raise rates again at tomorrow’s meeting. 
 

Today’s market

There are no major announcements due out during European time, and US stock and bond markets are closed for the Martin Luther King Jr. holiday.

Bank of England Monetary Policy Committee member Silvana Tenreyro will speak on “The Fall in Productivity Growth: Causes and Implications.” This is an interesting topic and one worth learning more about, because the slowdown in productivity growth has been a big puzzle for economists, including the Bank of England.

Overnight Japan announces its producer price index (PPI). It’s expected to show another relatively high month-on-month increase, which should in theory prove positive for the yen. The year-on-year rate of increase is forecast to slow slightly, but that’s because of a sharp jump (+0.7%) in the like year-earlier month – an increase that was quite an anomaly, as you can see from the graph.



The Japan PPI can be market-affecting, but it’s rather strange – a higher-than-expected figure (i.e., one showing the PPI rising at a faster-than-expected pace) tends to send USD/JPY higher, i.e, push the yen lower. That’s the opposite of what it should be in theory, since if anything it makes a rise in consumer prices marginally more likely and therefore should (also marginally) increase the odds of the Bank of Japan eventually reducing its extraordinary stimulus measures.



A faster-than-expected increase in producer prices might be beneficial for the stock market, and that would affect USD/JPY. But as you can see, the correlation between the PPI surprise and USD/JPY is better than that between the PPI and the TOPIX.



Another odd thing about this indicator is that although investors seem to pay more attention to the yoy figure than the mom figure (slightly more economists forecast the yoy figure and far more people pay attention to it on Bloomberg), in fact the correlation between the indicator surprise and the market reaction is far better for the mom figure than it is for the yoy figure.










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


 
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12 / 01 / 2018 | Analisi tecnica

Technical Analysis 12.01.2018 - CAD/CHF: Ichimoku clouds

Let's look at the four-hour chart. Tenkan-sen line is below Kijun-sen, the lines are horizontal . Confirmative line Chikou Span is below the price chart, current cloud has reversed from ascending to descending. The instrument has broken down the cloud and slowed down its fall. One of the previous minimums of Chikou Span line is expected to be a support level (0.7760). The closest resistance level is Tenkan-sen line (0.7795).



On the daily chart Tenkan-sen line is above Kijun-sen, the red line is directed upwards, while the blue one remains horizontal. Confirmative line Chikou Span is above the price chart, current cloud is ascending. The instrument is trading between Tenkan-sen and Kijun-sen lines. The closest support level is Kijun-sen line (0.7770). The closest resistance level is Tenkan-sen line (0.7820).



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


 
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12 / 01 / 2018 | Notizie sul mercato

Fundamental Analysis 12.01.2018 - Market Outlook

Market Recap

EUR rose and USD fell on a combination of a hawkish reading of the European Central Bank (ECB) minutes plus an unexpected decline in US producer prices and rise in jobless claims.

The minutes of the December 2017 ECB meeting hinted that the Bank could adjust its forward guidance language early this year if the economic and inflation picture improves. They also noted that the recent higher oil prices are likely to push inflation higher. Brent yesterday briefly went above $70/bbl, the highest it’s been since July 2015.

As for the US, the Producer Price Index (PPI) for final demand fell 0.1% on the month vs an expected rise of +0.2%. This was the first decline in around 1 ½ years. This unexpected decline may explain why the market largely ignored some hawkish comments by New York Federal Reserve President William Dudley, who said the Federal Reserver may have to “press harder on the brakes at some point over the next few years.”

The fall in PPI only increases the importance of today’s US CPI. That’s expected to show no acceleration in inflation, which could further weaken USD (see below).

AUD weakened after China’s trade data for December 2017 showed a sharp slowdown in imports, which rose only 4.5% yoy, as compared to 17.6% yoy in the previous month. China takes 35% of Australia’s exports. Furthermore, New Zealand’s exports are mostly food, demand for which tends to change less than for Australia’s iron ore and coal exports. 

The collapse in import growth sent China’s trade surplus soaring to $54.7bn versus an expected $37.0bn. The rising Chinese trade surplus is also negative for the dollar, since it increases the likelihood that US President Donald Trump will announce tariffs or other restrictions on imports from China in his State of the Union address later this month.


Today’s market

The week’s two key US economic indicators come out today:  the consumer price index (CPI) and retail sales.

Although the US CPI isn’t the inflation measure that the Federal targets, the market pays more attention to the CPI than to the Federal’s preferred gauge, the personal consumption expenditure (PCE) deflator. Moreover, although the Federal targets the core PCE deflator, the FX market reacts more to the headline CPI than to the core CPI.

The yoy rate of growth of the headline figure is forecast to slow slightly, while the yoy rate of growth of the core index is expected to remain unchanged. In other words, no sign of any acceleration in inflation.


With the US retail sales figure, the FX market’s subsequent movement is most strongly correlated with the headline figure, the “advance” number. The other two figures - sales ex-gasoline and autos and the “control” figure, which is the one that goes into calculating GDP -- have less impact. A big miss in any one of them can attract attention.

In any event, growth in retail sales is expected to slow after the sharp 0.8% mom rise in November 2017, when sales were still being boosted by the aftermath of the hurricanes (a lot of stuff got destroyed in the storms and had to be replaced). A slowdown in sales and no signs of accelerating inflation are likely to be negative for the dollar.



Philadelphia Federal President Patrick Harker and Boston Federal President Eric Rosengren also spoke quite recently (Friday 5th January 2018 and Monday 8th January 2018, respectively).

Harker expressed concern about rushing to raise rates in a way that would invert the yield curve, and said he expects only two rate hikes this year, rather than the median Federal Open Market Committee (FOMC) call for three. Harker isn’t a voting member of the Committee this year.




Rosengren hasn’t spoken specifically on the outlook for rates in some time. Earlier this week he was speaking on a panel discussion concerning inflation targeting, while in late December 2017 he warned of financial stability risks this year. The last comments he made about the pace of rate hikes was back in mid-November 2017, when he referred to “the need to continue to gradually remove monetary policy accommodation.” His comments could give USD a push upwards.








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

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11 / 01 / 2018 | Analisi tecnica

Technical Analysis 11.01.2018 - AUD/CAD: Ichimoku clouds

Let's look at the four-hour chart. Tenkan-sen line is above Kijun-sen, both lines are directed upwards. Confirmative line Chikou Span is above the price chart, current cloud has reversed from descending to ascending. The instrument has broken through Tenkan-sen and Kijun-sen lines. The closest support level is Tenkan-sen line (0.9806). The closest resistance level is Tenkan-sen line (0.9879).



On the daily chart Tenkan-sen line is above Kijun-sen, the red line is directed upwards, while the blue one remains horizontal. Confirmative line Chikou Span is above the price chart, current cloud is ascending. The instrument is trading above Tenkan-sen and Kijun-sen lines; the Bullish trend is still strong. The closest support level is Tenkan-sen line (0.9794). One of the previous maximums of Chikou Span line is expected to be a resistance level (0.9878).




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


 
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