Analyst Articles – Forex News 24

Spanish Elections – How Different Coalitions May Affect the Euro
DAX Outlook: Beware of Auto Tariff Threat
ASX 200 Gains While Most Other Asian Markets Closed, Fed Focus
S&P 500 Is Due a Break, Can Apple Earnings, Stimulus Talks or the Fed Do It?
Tepid Rebound Rejected at Resistance
USD/IDR, USD/SGD May Reverse. USD/PHP Upside Breakout Fell Short
All Eyes on the Fed and US Dollar Tomorrow
NZD/USD Falls on Mixed Employment Data – Eyeing FOMC Ahead
US Dollar Price Action Setups Ahead of FOMC, NFP
AAPL Stock Soars After Earnings Beat, Looks to Bolster Nasdaq

Spanish Elections – How Different Coalitions May Affect the Euro

Posted: 01 May 2019 02:21 AM PDT

Spanish Elections – Potential Outcomes

Spanish Elections have no effect on the Euro so far, as outcome follows expectations, and the need for cross-party talks delay any decisive effect. EURUSD currently trades around post-election levels and is taking its cue more from economic data than politics, although this may change in the coming weeks and months.

Main Talking Points:

Market reaction shows the outcomes were expected.
Spanish Bond yields decrease as Spain's political turmoil stabilises.
A review on how different coalitions will affect the Euro.

Two years after being replaced as leader of the opposition party PSOE, Pedro Sanchez has managed to come back in full by winning the general elections with a comfortable margin, taking almost 29% of the votes. It is no shock to anyone that the Socialist Party has managed to come back on top, as the Centre-right People's Party (PP) has been suffering a steady decline in the public eye for the past few months, following various corruption scandals and a general discontent regarding their policies.

Market Reaction

Unlike with other general elections, Spanish Markets have not seen a big move after Sunday's vote, as the results were mostly priced, and the worst possible outcomes have been avoided. Saying this, and despite Pedro Sanchez being the clear winner in Sunday's elections, there is still uncertainty regarding the cross-party help he is going to need if he is to be elected President. The Spanish stock index – Ibex 35 – dropped below the 9400 at midnight on Sunday after the results of the election were announced but regained most of the loss at the open on Monday morning. It is worth mentioning that for the first time in its history, the Ibex 35 closed in positive territory the day after a general election had taken place, closing 0.12% higher on the day.

In an international context, the effect of the Spanish Elections on the Eurozone markets has been minor, as Spain's fragmented politics are less of a concern to investors than Italy or the European Central Bank's (ECB) monetary policies. As European Parliament and regional elections are to take place in May, talks to create a governing party could be pushed back, and even though there could be a new round of voting, the effect on the market is expected to be minimal.

Spanish government bond yields remain little changed after the election, with the yield differential between Spanish 10-year bonds and the German 10-year Bund just under the 105 basis points, slightly below the 106 points at the market close last Friday April 26. Spanish 10-year bond yields fell from 1.03% to 1.01% post-elections, which shows that investors welcome the election results as the two most likely coalition outcomes are viewed as the best for the markets. Coalitions that can be formed from the results are the most pro-European that could have taken place, as Euro-sceptic party Vox did not manage to gain as much support as initially forecast, which has put European concerns at ease.

Spanish & German 10-Year Bond Yields and Spread

Germany 10-year vs Spain Bond Yields and spread (June 2018 – April 2019)Source: investing.com

Spanish and German 10-Year Yields

German 10-year Bond Yields (Daily time-frame, May 2018 – April 2019)Source: MarketWatch

Spanish 10-year Bond Yields (Daily time-frame, May 2018 – April 2019)Source: MarketWatch

PSOE won 123 seats in Parliament, versus 66 obtained by PP who suffered a big decline from the 135 obtained in the 2016 election. The party veered further to the right under direction of the new leader Pablo Casado, but this proved to be unsuccessful as it lost support from both sides to Liberal party Ciudadanos and far-right party Vox.

The results of the election mean that no right-wing coalition can be created that will achieve enough seats to gain a majority in Parliament, which means that Pedro Sanchez's PSOE is the only party that can decide the future of Parliament by creating a majority.

The bottom line is that Pedro Sanchez has various options to ensure he is elected as President without needing the support of Catalan Separatists, which has proven to be a big reliefto investors that support the continued unity of Spain.

Possible Coalitions Review:

This possible union would be the one to most accurately represent the ideological profile in which a fragmented Spain currently finds itself in. It is also the option most highly valued by the markets.

And Ciudadanos' success on Sunday night, which almost overtook PP as the main centre-right party, means that this coalition would be possible as they would amass 180 seats, 4 more than the 176 needed for a majority. But the leader of Ciudadanos Albert Rivera clearly ruled out the possibility during his campaign and seems to have stood by his decision as his relationship with Pedro Sanchez has become very strained, leaving him as a main player in the opposition.

If this coalition were to happen it would be a business-friendly centrist coalition that would have the ability to implement reformative policies that would be accepted by market participants, having a positive effect on the Euro both in the short and long-term.

Some economists believe that the PSOE-Podemos coalition could implement policies that would hinder economic growth, which could lead to uncertainty about a sovereign debt crisis, similar to the one recently experienced in Italy. Despite Spain being in a better economic position than Italy, socialist measures that hinder Spain's growth could put pressure on the European Union, which is currently experiencing slowing growth itself, and would increase sovereign yields.

This coalition would lead to a left-wing party that would have a negative impact on the Euro on the short run but Sanchez' track record in the last few months could put market participants at ease in the long run. The difference between the 10-year Spanish bonds and the German Bund could increase to 110-115 basis points if investors believe that Podemos' populist influence would increase the risk of higher debt within the Spanish economy.

This right-wing coalition amassed 147 seats, which proves insufficient to debunk Pedro Sanchez from the top as they have no other viable allies to join forces with. A right-wing coalition led by PP and Ciudadanos with support from Vox would have a short-term positive effect on the Euro, but if the two centre parties failed to lead the way, their reliance on Euro-sceptic Vox could lead to issues and a drag on the Euro further down the line.

No Coalition, Second Elections

Looking back, Spanish parties have had trouble forming coalitions in the past, which could lead to new elections in the coming months, resembling what happened in the general elections of 2015. Although Pedro Sanchez' comfortable victory on Sunday makes this outcome less likely, if a second election were to be necessary, the effect on markets is not expected to be significant, as it hardly had an impact when it happened three years ago, or in other economies in the Eurozone that have faced similar situations.

2019-05-01 08:43:00

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DAX Outlook: Beware of Auto Tariff Threat

Posted: 01 May 2019 01:43 AM PDT

Equity Analysis and News

DAX Outperforms Peers in April
Focus on Threat of Auto Tariffs – EU/US Trade War
DAX 1-Month Implied move +/- 2.6%

DAX Outlook: Beware of Auto Tariff Threat - EU/US Trade War

Source: Thomson Reuters, DailyFX

DAX Outperforms Peers in April

The DAX has been the notable outperformer throughout April with the index gaining over 7%, outpacing its European peers by quite some margin, which is despite the soft data from Germany. Much of the outperformance had stemmed from the sizeable exposure that the DAX has in the auto and tech sector. Most notably stemming from SAP (largest weighted stock in the DAX at 10%) who saw its shares surge by the most in over a decade after activist investor disclosed a $1.3bln stake in the company.

Euro Drops to a Near 2yr Low

Another supportive factor behind the gains observed in the DAX had been the downside breakout in Euro, which saw the currency drop to a near 2yr low. Consequently, this provided an added boost to German exporters (auto sector), while the increased optimism that China the US could seen agree a trade deal had also helped risk appetite.

Focus on Threat of Auto Tariffs – EU/US Trade War

On February 17th, the Department of Commerce had submitted its report in regard to the potential security threat of auto imports, in which President Trump has until May 18th to announce what, if any action he will take. This means that Trump has until May 18th to decide whether he agrees that auto imports pose a national security threat, with an added 15 days to implement any action. Although, if the President chooses to begin negotiations, he will have another 180 days before he can decide whether to take other actions. As such, a step up in rhetoric will be particularly important for Volkswagen, BMW, and Daimler.

Risk of auto tariff to begin with rate of 10% (potentially rising to 25%)

1-Month implied move: The expected move in the DAX for May is a +/- 2.6% swing.

DAX Price Chart: Daily Time Frame (Nov 2017 – May 2019)

RESOURCES FOR FOREX & CFD TRADERS

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

— Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

2019-05-01 08:00:00

ASX 200 Gains While Most Other Asian Markets Closed, Fed Focus

Posted: 30 Apr 2019 10:31 PM PDT

Asian Stocks Talking Points:

Most bourses were closed for holiday, Australian shares caught a bid from the US
The New Zealand Dollar was hit by the disappointing detail of domestic employment numbers
Oil prices drifted lower but the market remains well supported

Join our analysts for live, interactive coverage of all major economic data at the DailyFX Webinars. We'd love to have you along.

Asian equity-market action was left largely to Australia on Wednesday, with most other mainboards from China and Japan though Singapore closed for holidays.

The ASX 200 duly rose, however, with the heavily-weighted financial sub-index doing much of the heavy lifting, following on from new record highs made by the S&P 500 in the previous session. The overall index added 0.8%.

US/China trade was also in focus as investors digested more encouraging noises from Washington. White House Chief of Staff Mick Mulvaney said on Tuesday that a resolution is expected within two weeks. Treasury Secretary Steve Mnuchin and Trade Representative Robert Lighthizer are currently in Beijing for talks. Hopes for a deal have kept risk appetite underpinned for much of this year.

Also on market minds of course is the Federal Reserve which will set monetary policy very early on Thursday morning Asia Pacific time. No change is expected to any of the monetary settings but the Fed's reaction to recent, stronger economic data will be closely parsed.

Foreign exchange markets were predictably short of participants. The US Dollar made small gains on the Japanese Yen, but the New Zealand Dollar was hit, and stayed down, following some decidedly mixed official employment data. The headline jobless rate actually ticked lower but the participation rate weakened sharply.

On its daily chart NZD/USD remains under severe downside pressure as markes move to price in reductions to New Zealand interest rates which are already at record lows.

The pair is holding for now, just above the year's lows, but the strength of the current downtrend suggests that it will be retested, probably quite shortly.

Crude oil prices slipped back, having risen earlier on turmoil in Venezuela and news of Saudi support for more OPEC production cuts. Gold prices inched lower as risk appetite held firm.

Wednesday's remaining economic focus will fall mainly on the US. There's the Fed, of course, but also the April manufacturing, employment and prices-paid snapshot coming up from the Institute for Supply Management. The labor-market roundup from Automated Data Processing is on the slate too, as is the manufacturing Purchasing Managers Index. Canada's equivalent to the latter is also due. Investors will also get a look at UK consumer credit and mortgage-approval data. Crude oil inventory levels from the Department of Energy will round out the session.

Resources for Traders

Whether you're new to trading or an old hand DailyFX has plenty of resources to help you. There's our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There's also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they're all free.

— Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!

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2019-05-01 04:37:00

S&P 500 Is Due a Break, Can Apple Earnings, Stimulus Talks or the Fed Do It?

Posted: 30 Apr 2019 09:55 PM PDT

Earnings, Stimulus and Fed Talking Points:

A run of growth figures was uneven (China PMI, GDP from EZ, Mexico, Canada) but reports of infrastructure spending stirred hope
The S&P 500 is due a technical break – one of necessity – will Apple earnings counter Google’s or will another theme decide its fate?
Top even risk Wednesday is the Federal Reserve’s rate decision where no change to policy is likely to still draw a market response

Do you trade on fundamental themes or event risk? See what live events we will cover on DailyFX in the week ahead (including the Fed and BOE rate decisions) as well as our regular webinar series meant to help you hone your trading.

Dueling Fundamental Themes: Earnings and Trade Wars

There was no lack of strong fundamental charge this past session, but the overlapping fields of scheduled and unscheduled event risk seemed to keep many of the benchmarks pinned down. No doubt, anticipation for what lies ahead would also keep the markets from mounting a more speculatively-based run. Closing out the 1Q US earnings season – at least for the major corporations that I regularly monitor for a global macro picture – we were left with the same mixed picture with which we entered the period. The blue-chip General Electric advanced after its report but did little to support the Dow. General Motors best expectations yet didn’t earn GM any gains, much less quiet concerns over the auto industry amid trade wars. One of the worst performing sectors in healthcare found no systemic reprieve from the run of Pfizer, Merck or Eli Lilly.

The real interest was for the performance of the FAANG members. Google’s afterhours miss Monday evening earned it a painful gap lower Tuesday – the largest I’ve seen on recent record. Yet, hope that tech may yet lead the next phase of the indices to record highs remains following Apple’s healthy earnings beat, its maintenance of forecasts near the high-end projections and its announcement of a $75 billion share buyback plan. There is a lot to like in the news from this (if share price jumps on the open) more than $1 trillion market value company. The real question is just how influential this theme is to global sentiment.

Chart of Google and Opening Gaps (Daily)

Another mixed bag theme vying for the market’s attention with an uneven status check was the balance on trade wars. On the one hand, the US said that it was rethinking information sharing with global partners that used equipment and systems from Chinese firm Huawei. That carries with the same ultimate inference of more directed sanctions that have been reinstituted against Iran. And yet, the US and China are reportedly making good progress towards finding a compromise on their trade dispute. According to sources quoted by FT, the US is willing to drop its demands to snuff out cyber theft perpetrated by Chinese nationals/businesses, a serious sticking point for the two sides. That would echo a very optimistic timeline suggested by White House Chief of Staff Mick Mulvaney who said the matter would be settled ‘one way or the other’ within two weeks.

A breakthrough on the trade war between these two superpowers would be a significant relief, but it is the removal of something that poses a greater potential threat rather than representing a genuine improvement in conditions for the global economy. What’s more, there is still a remarkable amount of tension on other fronts in this global war. Congress is threatening to reject the USMCA and there remain three open-ended threats by the White House to pursue tariffs that would disproportionately hurt Europe – and provoke their retaliation. It is little wonder these updates have not settled the course for risk assets like the S&P 500 nor conviction from the likes of the Dollar.

Chart of S&P 500 with Opening Gaps and 20-day Average True Range (Daily)

S&P 500 Is Due a Break, Can Apple Earnings, Stimulus Talks or the Fed Do It?

Remember Growth with Monetary Policy as Top Billing Owing to the Fed Decision

We are more likely to find a sense of certainty over our course through the forthcoming fundamental highlights. Top listing on the economic calendar for this week was the FOMC (Federal Open Market Committee) rate decision. The markets see very little chance that the US central bank will change policy (rates or its stimulus program) at this meeting nor does this event host the updated forecasts as we had in March. That said, speculation is such that a hypersensitive interest from the markets will find significance in what is said or not said by Chairman Jerome Powell. Fed Funds futures show a rounding error possibility for a rate cut at this meeting. The real interest though is what the intent will be through year’s end and beyond – whether the next eventual move will be a hike or cut in the group’s estimation.

That evaluation will be made through the monetary policy statement and Powell’s press conference scheduled for 30 minutes after the decision itself is issued. The markets clearly expect a rate cut sometime in the future. The probability of a 25-basis point rate cut by year’s end hovers around 66 percent according to the same derivatives through the December contract. As for what would signal such intent, a particular concern over softening inflation (the PCE deflator softened notably Monday) or an explicit fear of external financial stability risks (which would trigger far more than rate forecasts) could fuel dovish views. That said, the 1Q GDP beat last week stands large as a possible counterbalance to growing certainty of an impending cut.

Scenario Table for FOMC Rate Decision

S&P 500 Is Due a Break, Can Apple Earnings, Stimulus Talks or the Fed Do It?

It is against this backdrop of economic activity that we should evaluate the fundamental and speculative potential in the monetary policy environment. Should economic potential stall to the point of capsizing, it will draw out serious concerns about the buoyant pricing found in capital market benchmarks and draw explicit attention to what could reasonable temper the backslide into economic and financial malaise. To this point, central banks have been the primary source of salvation this past decade, but their tools have dwindled to practically nothing as a result. The Fed is one of the very few major central banks that has made any effort to return its policy balance back to neutral in order to fight future waves, but this unique position will also act as a bellwether for the rest of the financial system as to when the tsunami threatens to swamp an ill-prepared speculative base. This past session, the updates on economic health proved an troubling mix.

On the data front, China reported a disappointing turn for economic heath this past session with both the government’s and private (Caixin) PMIs printing a steeper slowdown than anticipated – undoing the very modest confidence bolstered by the 1Q figures. Europe’s official 1Q data started to cross the wires with the Eurozone figures beating expectations (0.4 versus 0.3 percent forecasted) and the region’s most troubled major Italy would also avert contraction (0.1 percent growth versus a -0.1 percent contraction expected). The real buoyancy would come from an update for external support in the form of reports that President Trump had met with Democrat Congressional leadership to move forward on a possible $2 trillion infrastructure spending program (fiscal stimulus). Where so many other developments are walking back artificial threats to growth, this could promise a new source of it.

Don’t Get Swept Up; Monitor the Euro, Pound, Peso and Loonie

As we wade into the waters of the Fed rate decision, it is easy to get caught up in the implications for the Dollar and risk-leaning assets. They will certainly feel the influence one way or the other – whether it prove a charge or anchor. However, this is only one general influence for which we need to keep track. There are many other aspects to this fundamental and speculative puzzle that we need to keep close tabs on in order to track the heaviest fundamental waves. In fact, when it comes to the Dollar, one of the most effective market moving credentials is its role as a stoic alternative to more active counterparts. From the Euro this past session, the official GDP figures were a much-needed boon for the wavering currency.

Beyond that, sentiment surveys and labor data showed some thawing, but it was the German CPI figures which returned to the ECB’s target level which offered an unexpected rebalance. EURUSD is the benchmark currency pair with an exaggerated weighting in trade-weighted measures like the ICE’s DXY Index. The Sterling carries similar clout in the ranks of Dollar liquidity. GBPUSD posted a break to the upside this past session and an equally-weighted Sterling index presented a general appetite for the Pound. That said, the prompt on the headline side seemed unreliable which would make the charge more likely a break of necessity. Brexit talks are heating up once again, but there is little reason to believe a definitive course is being set this week.

Chart of GBPUSD (Daily)

S&P 500 Is Due a Break, Can Apple Earnings, Stimulus Talks or the Fed Do It?

Outside of the majors, I am keeping close tabs on the Dollar’s closest (geographically) neighbors. Despite the -0.1 percent contraction in February GDP from Canada, the Loonie was not only higher in USDCAD, it rose in an equally-weighted capacity. A similar story emerges for the Mexican Peso where first quarter GDP unexpectedly contracted -0.2 percent against anticipation of an acceleration in growth to the tune of 0.3 percent.

Perhaps this anti-Dollar strength is derived from the trade war improvement, but the rhetoric from Congress is one in which the President’s refusal thus far to remove tariffs on steel and aluminum (for the purpose of reversing retaliatory efforts) doesn’t come off as encouraging. Perhaps this speaks to confidence despite the negotiation stance or it is simply unshakeable enthusiasm for these trade-oriented currencies. One way or the other, it deserves a closer look from FX traders. We discuss all of this and more in today’s Trading Video.

Chart of USDMXN (Daily)

S&P 500 Is Due a Break, Can Apple Earnings, Stimulus Talks or the Fed Do It?

If you want to download my Manic-Crisis calendar, you can find the updated file here.

2019-05-01 02:40:00

Tepid Rebound Rejected at Resistance

Posted: 30 Apr 2019 09:15 PM PDT

NZD/USD Technical Strategy: BEARISH

NZ Dollar rebound capped at near-term trend line resistance
Close below 0.6591 may put prices on a path to larger selloff
Neutralizing selling pressure likely needs break above 0.6727

See our free trading guide to help build confidence in your NZD/USD trading strategy!

The New Zealand Dollar may be preparing to resume the near-term downtrend against its US counterpart. Prices are recoiling from resistance guiding the move lower form the March swing top, weighed down by disappointing employment data.

Sellers are now eyeing familiar support in the 0.6591-0.6619 area. A break below this barrier confirmed on a daily closing basis opens the door for a test of the 0.65 figure. October's swing bottom at 0.6425 follows shortly thereafter, with a break below that implying that the longer-term decline has been re-engaged.

Immediate resistance is in the 0.6699-0.6727 zone. This is marked by the confluence of trend line resistance and a congestion zone that has acted as both a top- and bottom-side barrier since June 2018. A break above that – likewise confirmed with a daily close – would probably neutralize immediate selling pressure.

NZD/USD TRADING RESOURCES:

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the Comments section below or @IlyaSpivak on Twitter

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2019-05-01 04:00:00

USD/IDR, USD/SGD May Reverse. USD/PHP Upside Breakout Fell Short

Posted: 30 Apr 2019 08:40 PM PDT

ASEAN Technical Outlook – USD/PHP, USD/SGD, USD/IDR, USD/MYR

USD/IDR, USD/SGD upside breakouts may fall short
USD/PHP testing support after false upside breakout
USD/MYR uptrend on pause with prices consolidating

Trade all the major global economic data live as it populates in the economic calendar and follow live coverage for key events listed in the DailyFX Webinars. We'd love to have you along.

USD/IDR Technical Outlook

The Indonesian Rupiah continued to depreciate against the US Dollar after clearing what was near-term resistance at 14089, as anticipated. We have now seen the best consecutive rising streak (8 days) in over a year. However, a Shooting Star candle warns of indecision after USD/IDR broke above the falling trend line from December. As such, its upside breakout should be treated with caution. It may very well turn lower tower as its next move in the near-term. Still, clearing resistance above 14255 opens the door to testing 14340.

USD/IDR Daily Chart

USD/SGD Technical Outlook

A Shooting Star is also present in USD/SGD after its false breakout above former resistance at 1.3616. In this situation, there has been follow-through via further closes to the downside which helps to confirm the indecisive candlestick pattern. As such, this means that the Singapore Dollar may appreciate against the Greenback in the near-term.

This places near-term support at 1.3575 which acted as past resistance on the chart below. May's Fed rate decision is clouding the fundamental outlook as there may be bullish implications for the US Dollar. I will be tweeting the aftermath of the Fed and the reaction in ASEAN currencies. Feel free to follow me on Twitter @ddubrovskyFXfor these updates.

USD/SGD Daily Chart

USD/PHP Technical Outlook

USD/PHP's upside breakout through a trend line from March was short-lived after resistance held under 52.24. Fundamentally, the largest drop in USD/PHP in just about a month occurred after S&P Global Ratings raised the Philippines sovereign credit rating on Tuesday. This lead the Philippine Peso back towards support at just above 51.59. If this area if broken, it would open the door to testing levels not seen since February 2018. Be mindful of positive RSI divergence which may hint at ebbing downside momentum.

USD/PHP Daily Chart

USD/MYR Technical Outlook

Meanwhile, the US Dollar's uptrend against the Malaysian Ringgit has taken a pause with prices consolidating between support (4.1250) and resistance (4.1448). This follows a break above the falling trend line from November which reversed the dominant downtrend in USD/MYR since then. Inversely to the Philippine Peso, we may see negative RSI divergence emerge should there be an attempt for uptrend resumption which could be a downward risk for the pair.

USD/MYR Daily Chart

**All Charts Created in TradingView

Read this week's ASEAN fundamental outlook to learn about the underlying drivers for these currencies!

FX Trading Resources

— Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

2019-05-01 03:30:00

All Eyes on the Fed and US Dollar Tomorrow

Posted: 30 Apr 2019 04:48 PM PDT

USD CURRENCY VOLATILITY & FEDERAL RESERVE – TALKING POINTS:

USD overnight implied volatility skyrockets to its highest reading in over a month to 8.73 percent while the DXY US Dollar Index recedes from its recent top at 98.33, a price level not seen since May 2017
Traders will closely look for key insight from the Federal Reserve tomorrow as markets digest the latest FOMC interest rate decision and follow-up commentary from Chair Jerome Powell on Fed policy and the US economy
Take a look at this article for information on the How to Trade the Top 10 Most Volatile Currency Pairs or download the free DailyFX 2Q USD Forecast for comprehensive fundamental and technical insight on the US Dollar over the second quarter

Currency market volatility has begun to rebound from the unprecedented lows experienced by traders lately. Judging by the DXY US Dollar Overnight Implied Volatility Index, forex price action appears to be trending higher. In fact, the metric has jumped to 8.73 percent, its highest level since March 20, ahead of the Federal Reserve's FOMC meeting tomorrow.

DXY US DOLLAR OVERNIGHT IMPLIED VOLATILITY INDEX PRICE CHART: DAILY TIME FRAME (APRIL 02, 2018 TO APRIL 30, 2019)

If Fed Chair Powell touts Friday's US GDP report and other positive economic developments, it could reduce rate cut bets which are currently pricing a 67 percent probability that the Federal Reserve lowers its policy interest rate by 25 basis points before the end of the year.

On the contrary, if the Fed reiterates a patient approach and focuses on downside market risks, the odds that the FOMC decides to cut rates could be expected to move higher which would likely weigh negatively on the US Dollar.

DXY US DOLLAR INDEX PRICE CHART: DAILY TIME FRAME (AUGUST 30, 2018 TO APRIL 30, 2019)

The US Dollar advanced steeply throughout April and notched its highest close since May 2017 before pulling back over the last few days. Now, the greenback's next direction hinges largely on the relative dovish or hawkish tone from the Fed tomorrow.

That being said, the DXY Index is estimated to trade between 97.07 and 97.97 with a 68 percent statistical probability judging by US Dollar overnight implied volatility. Downside could be limited by trendline support, however, which happens to align with the 20-day moving average and 23.6 percent Fibonacci retracement level as well.

FOREX MARKET IMPLIED VOLATILITY AND TRADING RANGES

Implied currency market volatility EURUSD, USDJPY, GBPUSD, USDCHF, NZDUSD, AUDUSD, USDCAD Forex implied volatility USD, EUR, JPY, NZD, AUD, CHF, CAD, GBP

Currency pairs worth watching over the next 24-hours highlights EURUSD and USDJPY. The Euro just reclaimed the 1.1200 level against the US Dollar following the Eurozone's relatively upbeat GDP report released during Tuesday's session.

Looking to the Japanese Yen, USDJPY should be closely monitored as Japan's financial markets remain closed in observation of its Golden Week – the lack of liquidity raises JPY flash crash risk.

Here are some additional US Dollar Price Action Setups ahead of tomorrow's FOMC meeting and Friday's Nonfarm Payroll Report by DailyFX Currency Strategist James Stanley.

FOREX ECONOMIC CALENDAR – USD

Forex economic calendar US Dollar April 2019 Federal Reserve FOMC Meeting

Visit the DailyFX Economic Calendar for a comprehensive list of upcoming economic events and data releases affecting the global markets.

Prior to the Fed tomorrow, the ADP Change in Employment and ISM Manufacturing Index will be released at 12:15 GMT and 14:00 GMT respectively.Although the market's reaction to the Fed will largely dictate tomorrow's price action, these economic indicators have potential of setting the tone for trader sentiment and risk appetite during Wednesday's session.

TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

– Written by Rich Dvorak, Junior Analyst for DailyFX

– Follow @RichDvorakFX on Twitter

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2019-04-30 23:30:00

NZD/USD Falls on Mixed Employment Data – Eyeing FOMC Ahead

Posted: 30 Apr 2019 04:11 PM PDT

The New Zealand Dollar fell after mixed unemployment data crossed the wires. Up next, NZD will be tensely watching the FOMC meeting.

2019-04-30 22:50:00

US Dollar Price Action Setups Ahead of FOMC, NFP

Posted: 30 Apr 2019 03:35 PM PDT

Forex Talking Points:

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If you'd like to sign up for our webinars, we host an event on Tuesday and Thursday, each of which can be accessed from the below links:

Tuesday: Tuesday, 1PM ET

Thursday: Thursday 1PM ET

US Dollar: Stage Set for FOMC, NFP

This is one of the more exciting backdrops that we've had around the US Dollar in some time. The currency put in a bullish breakout last week to set a fresh 22-month high. And potential for bullish continuation even looked attractive coming into this morning, but bears have continued to push and prices have put in the makings of a reversal from a false breakout, setting the stage for a fairly exciting three-day-span on the economic calendar.

Tomorrow brings the FOMC, Thursday brings the Bank of England's Super Thursday rate decision, and Friday brings the big one with Non-Farm Payrolls. The big question is whether USD-bulls can get back in the driver's seat after this week's pullback, and I looked into that along with quite a bit more in this price action webinar.

US Dollar Pulls Back to S2 Zone as Bulls Pull Back from the Bid

Perhaps its just some position squaring after last week's breakout, but bulls have continued to step back from the bid so far in this week's trade. The first support zone followed in DXY helped to hold yesterday's low, and the 's2' zone has come into play to help mark today's low. But, as looked at on shorter-term charts, sellers have continued to push and it looks as though there may be a continued pullback ahead of tomorrow's FOMC rate decision.

This highlights support potential around the 97.20-97.30 area on the charts. A bit deeper offers another zone of potential around 96.75-97.90.

US Dollar Four-Hour Price Chart

Chart prepared by James Stanley

EUR/USD Tests Key 1.1212 Level

This is a big item of interest across FX markets at the moment, as EUR/USD has also pulled back from last week's breakout. The primary difference is one of context, as EUR/USD is testing resistance around the prior area of support. A hold of resistance here, with a daily close inside of the Fibonacci level at 1.1212 can keep the door open for short-side continuation strategies. There are another two areas of resistance potential above, although the bearish trend theme wouldn't be as attractive; but those exist around 1.1250-1.1262 and the area around 1.1325.

EUR/USD Four-Hour Price Chart

Chart prepared by James Stanley

GBP/USD Bulls Make Their Mark

Similarly, last week's bearish breakout in GBP/USD has come into question, and the big difference from EUR/USD above is the fact that buyers have continued to push beyond resistance potential at that prior area of support. This can make the pair a bit more attractive for short-USD thesis, and traders looking to institute bearish strategies should be a bit more cautious given the aggressiveness with which buyers have been pushing so far today. But – there is resistance potential at prior areas of interest around 1.3087-1.3117 and 1.3181-1.3187. A bullish break back-above 1.3200 puts the bearish theme into question.

GBP/USD Four-Hour Price Chart

Chart prepared by James Stanley

USDCAD Continued Reversal Potential

On the short side of the US Dollar, USD/CAD remains compelling. The pair posted up to resistance last week around the 1.3500 handle, and that's since come into help hold the highs. The complication at this point would be chasing the move lower after bearish price action has begun to build. In the webinar, I look at how traders could play short-term pullbacks to re-open the door for bearish setups.

USDCAD Four-Hour Price Chart

Chart prepared by James Stanley

USD/CHF: Time to Flip?

I had looked at the short-side of USD/CHF coming into this week, trying to catch a reversal off of two-year-highs. But, as we were looking at this in the webinar, I started to ponder an early exit, which is abnormal for me. The issue here is that the US Dollar has put an impressive pullback. But USD/CHF is just blinking while remaining near resistance, highlighting a really weak Swiss Franc. This doesn't seem the most opportune spot to look for USD-reversals given the lack of movement that's shown so far, dissimilar to USD/CAD above.

USD/CHF Four-Hour Price Chart

Chart prepared by James Stanley

AUD/USD Range Potential Remains

Also of interest for short-USD scenarios is a continued hold of support in AUD/USD. The .7000 big figure came into play last week and, since then, buyers have helped to hold the lows in the pair. Prices are currently struggling in the prior support zone from .7050-.7075, and this could be a theme to watch ahead of FOMC tomorrow as a push above that .7075 level can re-open the door to short-term bullish trend strategies, looking to fill-in the longer-term range. This could offer target potential in the zones from .7125-.7150 and again from .7185-.7206.

AUD/USD Four-Hour Price Chart

Chart prepared by James Stanley

US Oil Rallies and Turns on Venezuelan Coup Attempt

It's been a really busy day for Oil traders. WTI came into the week holding a zone of support around the 's1' area that I've been following. Prices soon started to rally and that theme hit fever pitch this morning on news of a reported coup in Venezuela, at which point prices soon jumped towards resistance. But, the same 64.77 level that was in play earlier this month came back into the picture, and prices soon pushed-lower, making for a volatile showing so far today.

This sets the stage for the rest of the week, in which considerable motive will remain on both sides of the matter given the heavy economic calendar outlay. Support potential could be sought from 61.58-61.87 and a bit-lower, from 60-60.35.

US Oil Four-Hour Price Chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q4 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers an abundance of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you're looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we're looking at what we're looking at.

If you're looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

— Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

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2019-04-30 19:57:00

AAPL Stock Soars After Earnings Beat, Looks to Bolster Nasdaq

Posted: 30 Apr 2019 03:00 PM PDT

AAPL, AMD Earnings Talking Points:

Apple (AAPL) announced a substantial buyback plan, continuing the trend from recent quarters
Advanced Micro Devices (AMD) narrowly beat expectations but saw its stock price pop 7%
Wednesday's FOMC rate decision will now be the focus of traders as the central bank looks to offer insight on its policy path after strong US GDP in the first quarter

Stock Market Update: GE, GM Earnings Recap, AAPL and AMD Ahead

Apple delivered strong quarterly results after Tuesday's close, avoiding another miss from a FAANG member after Google missed the day prior. Similarly, AMD beat out Wall Street estimates. As a key player in the semiconductor space, AMD will look to join AAPL in bolstering the Nasdaq after it slumped in Tuesday trading compared to its more diversified counterparts.

AAPL Earnings Recap

After a cut to their earnings outlook caused a USDJPY Flash Crash, Apple looks to have righted the ship. Despite lower forecasts, traders were thrilled to see the strong performance and pushed the stock 5% higher in after-hours trading. Earnings per share read in at $2.46 on $58 billion in revenue – higher than the expected $2.37 EPS on $57.5 billion in revenue expected.

Apple (AAPL) Stock Price Chart: Daily Time Frame (January – 2019) (Chart 1)

Outside of the two headline figures, an announcement to buyback $75 billion worth of shares likely buoyed price – but could be indicative of broader economic illness. Buybacks have been a point of contention in recent months, ranging from economists who are wary of current stock market valuations to politicians in Washington that question their economic fairness.

Either way, one thing is clear. Flush with cash, Apple has shelled out considerable capital on share repurchases and is now responsible for 12 of the 20 record-quarter buybacks according to data from S&P Global. Apple's actions play into the larger theme of growth concerns as companies are frequently unable to find efficient uses of capital and invest in themselves, effectively inflating stock valuations. While the ramifications of elevated share repurchases may eventually weigh on investor sentiment, Wednesday's session will look to more immediate developments.

Check out our Second Quarter forecasts for the S&P 500, Dow Jones, Gold and more.

AMD Earnings Recap

Contributing another strong performance to the season, AMD offered $0.06 EPS on $1.27 billion in revenue – compared to analyst expectations of $0.05 and $1.26 billion respectively. Although narrow, the beat was accompanied by a rally in AMD's share price. Immediately following the release, AMD jumped 7% but remained within its implied price range – probing trendline resistance around $29.25.

AMD Stock Price Chart: Daily Time Frame (December 2018 – April 2019) (Chart 2)

Check out the Technical Forecast for the S&P 500, Dow Jones, DAX 30, and FTSE 100.

With the risk of an abysmal report from AAPL in the rearview, traders will now await Wednesday's FOMC rate decision. Ahead of the event, check out a variety US Dollar trade set ups and view our Economic Calendar for all upcoming events in the week ahead.

–Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

DailyFX forecasts on a variety of currencies such as the US Dollar or the Euro are available from the DailyFX Trading Guides page. If you're looking to improve your trading approach, check out Traits of Successful Traders. And if you're looking for an introductory primer to the Forex market, check out our New to FX Guide.

2019-04-30 21:45:00