Analyst Articles – Forex News 24

Crude Oil Price Resumes Its Advance as Saudi Tankers Attacked
Traders Hold Their Nerve Despite Brexit Pessimism
NOK, SEK Tremble Ahead of US-China Trade War News, EU Growth Data
AUDUSD Rate Outlook Mired by Monthly Opening Range, Dovish RBA
USDSGD, USDMYR, USDIDR, USDPHP at Risk to US-China Trade Anxiety
Gold Prices Eye Yields, Dollar as US-China Trade War Escalates
USD/CAD Upside Breakout Denied by Jobs Data, Anti-Risk Yen Falls
US-China Trade War Escalation Unnerves Risk

Crude Oil Price Resumes Its Advance as Saudi Tankers Attacked

Posted: 13 May 2019 04:12 AM PDT

Crude oil price, news and analysis:

The price of US crude oil is strengthening again after news that two Saudi oil tankers have been attacked just outside the strategically-important Strait of Hormuz.
From a technical perspective, the price has now broken to the upside from a triangle pattern on the chart and looks to be heading back towards the $65/barrel mark.

Crude oil technicals positive

News that two Saudi oil tankers have been attacked off the coast of the United Arab Emirates has raised fears about oil security in the Gulf region and given crude oil prices a boost.

The US contract, which from a technical perspective has been trading in a triangle pattern on the charts since Monday last week, has now jumped above the triangle's resistance line and is drawing closer to the $63.00 high reached on May 6.

If that is breached, there is little further resistance before the $64.77 high touched on April 30.

Crude Oil Price Chart, Hourly Timeframe (April 29 – May 13, 2019)

Chart by IG (You can click on it for a larger image)

Eight Surprising crude oil facts every trader should know

Meanwhile, there is plenty of support in the $61.83 to $61.87 area, where the 20-hour, 50-hour and 100-hour moving averages are clustered, as well as at $61.40, where the triangle support line lies.

However, the 14-hour relative strength index is approaching the 70 level, suggesting that the contract is close to being overbought, and there are also warnings of a possible reaction lower from the IG Client Sentiment data.

These retail trader positioning figures show 55.0% of traders are net-long, with the ratio of traders long to short at 1.22 to 1. The number of traders net-long is 9.3% higher than yesterday and 9.8% higher from last week, while the number of traders net-short is 1.2% higher than yesterday and 0.8% lower from last week.

At DailyFX we typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests US crude prices may fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives a stronger bearish contrarian trading bias.

How to trade oil: crude oil trading strategies and tips

You can check out our free longer-term trading forecasts for oil and other assets here

Resources to help you trade the markets:

Whether you are a new or an experienced trader, at DailyFX we have many resources to help you:

— Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex

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2019-05-13 11:00:00

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Traders Hold Their Nerve Despite Brexit Pessimism

Posted: 13 May 2019 02:24 AM PDT

GBP price, news and analysis:

GBPUSD has stabilized near the 1.30 level but a breakdown in the talks between the UK Conservatives and Labour might well send it lower again.
A poor showing by the ruling Conservative Party in the upcoming European Parliament elections may not yet be fully priced in to GBPUSD and the GBP crosses.

Sterling at risk of further losses

GBPUSD has steadied close to the 1.30 level, with no sign of panic selling on the continuing lack of progress on Brexit. However, there are at least three scenarios which might lead to a further leg lower:

A breakdown in the Brexit talks between the ruling Conservative Party and the opposition Labour Party. So far both sides have said the talks are not going very well.
Large losses for the Conservatives in the European Parliament elections that begin on May 23. A YouGov poll for The Times newspaper, published Monday, showed the Conservatives in a lowly fifth place as voters turn against the two major UK parties.
A continuing refusal by UK Prime Minister Theresa May to set a departure date.

Any one of these could weaken GBP and potentially send it back down to the low at 1.2865 touched on April 25.

GBPUSD Price Chart, Daily Timeframe (February 12 – May 13, 2019)

Chart by IG (You can click on it for a larger image)

DailyFX poll: Corbyn could be best successor to PM May for GBP

On the other side of the coin, there now seems to be strong support for GBPUSD at the psychologically important 1.30 level and there is still a faint chance of an agreement at the cross-party Brexit talks. Moreover, a poor showing by the Conservatives in the upcoming elections may already be reflected in current prices.

If optimism returns, a rally back to the 1.3179 high reached on May 3 would be a possible target.

Resources to help you trade the forex markets:

Whether you are a new or an experienced trader, at DailyFX we have many resources to help you:

— Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex

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2019-05-13 09:00:00

NOK, SEK Tremble Ahead of US-China Trade War News, EU Growth Data

Posted: 13 May 2019 01:11 AM PDT

NORDIC FX, NOK, SEK WEEKLY OUTLOOK

NOK watches GDP publication– SEK eyeing Riksbank, CPI reports
Nordics tremble before EU growth data – Italy and Germany in focus
Trade wars, Brexit remain headline risks as the global economy cools

See our free guide to learn how to use economic news in your trading strategy!

RECAP: LAST WEEK

Last week – much like the start of this one – markets experienced a rude awakening by the news that US-China trade relations had severely deteriorated. In Norway, the Norges Bank announced its rate decision with an eye on another "likely" hike in June. The economic docket in Sweden remained light, so SEK currency crosses found themselves being primarily driven by global fundamental themes than by Sweden-based event risk.

EUROPEAN RISK: ECONOMIC DATA

The economic docket in Europe this week is peppered with crucial growth indicators out of the aggregate Eurozone as well as key individual member states. Namely, Germany, France and Italy – the three largest economies in the Euro Area. Here are a few potentially high-risk events to keep an eye on:

May 14, Tuesday – German ZEW Surveys, CPI.

May 15, Wednesday – Eurozone GDP. German GDP, France CPI. Italy Industrial Orders, Sales

May 17, Friday – Eurozone CPI

European economies have been broadly showing weakness despite the minor improvement last week that saw better-than-expected data and Italy's ascension out of its shallow recession. However, the dominant downtrend and regional weakness still persists with looming political uncertainties accompanying the upcoming – and what some might call dreaded – European parliamentary elections.

While Germany struggles to avoid a recession, France is still contending with the Yellow Vest protestors as Emmanuel Macron attempts to appease them through bold – and potentially dangerous – fiscal measures. In a similar vein, the Italian government's resolve on keeping its regulation-violating budget deficit is angering Brussels. This comes as Italy's growth projection was revised for a third time down to 0.1 percent for 2019.

Krona and Krone traders will be closely watching the results of the data because of the implications European growth trends have on Nordic economies. This in large part has to do with the unique framework of EU-Nordic relations. Since the majority of Sweden's and Norway's exports head to Europe, reduced demand out of the Euro area could pressure the Scandinavian economies.

US EVENT RISK: ECONOMIC DATA

In the US, a slew of key indicators will be released which could induce short bursts of volatility. Here is some data to key an eye on:

May 15, Wednesday – Empire Manufacturing, Retail Sales, Industrial Production

May 16, Thursday – Housing Starts

May 17, Friday – U. of Mich. Sentiment (May P)

According to the Citi Economic Surprise Index, US data has been tending to underperform relative to economists' expectations. This might explain why the Fed pivoted from its hawkish outlook at the end of 2018 to a more neutral tone. Housing starts in particular may warrant a close eye because of the potential inflationary boost it may provide to the US economy through increased consumption that often follows from purchasing a home.

US-China trade war risks will also likely continue to dominate headlines as it remains one of the biggest fundamental themes in global markets since 2018. The recent fallout in trade relations between Beijing and Washington revived market-wide risk aversion that has resulted in equity indices, crude oil prices and other sentiment-linked assets taking a hit. To learn more, be sure to tune into my weekly webinar where I outline political risks in the week ahead.

NORDIC EVENT RISK:

In Sweden, the economic docket for the week is primarily dominated by various CPI data releases. While the latest meeting minutes and commentary from the Riksbank revealed dovish undertones, weaker price growth may further add impetus to the notion of delaying the central bank's intended rate hike. A more up-to-date outlook may be provided by various Riksbank officials who will be speaking throughout the week.

In Norway, local quarter-on-quarter GDP was recently released. Apart from that, the economic docket remains relatively light. This may leave NOK at the mercy of counter currency-based event risks and fundamental themes.

Want to stay up to date on Nordic price action? Be sure follow me on Twitter @ZabelinDimitri.

SWEDISH KRONA, NORWEGIAN KRONE TRADING RESOURCES

— Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

2019-05-13 08:00:00

AUDUSD Rate Outlook Mired by Monthly Opening Range, Dovish RBA

Posted: 12 May 2019 11:57 PM PDT

Australian Dollar Talking Points

AUD/USD holds a narrow range following the Reserve Bank of Australia (RBA) meeting, but key developments surrounding the Asia/Pacific region may influence the near-term outlook for the aussie-dollar exchange rate as the U.S. and China, Australia's largest trading partner, struggle to reach a trade agreement.

AUDUSD Rate Outlook Mired by Monthly Opening Range, Dovish RBA

AUD/USD extends the range-bound price action from the previous week, with the RBA interest rate decision doing little to alter the near-term outlook for the Australian dollar as the central bank sticks to the sidelines ahead of the Federal election on May 18.

However, recent comments coming out of the RBA suggest the central bank will take additional steps to insulate the region as 'inflation data for the March quarter were noticeably lower than expected and suggest subdued inflationary pressures across much of the economy.'

In turn, Governor Philip Lowe & Co. may prepare Australian households and businesses for an imminent rate-cut as 'a further improvement in the labour market was likely to be needed for inflation to be consistent with the target,' and the threat of below-target price growth may push the RBA to reestablish its easing-cycle as 'the ongoing subdued rate of inflation suggests that a lower rate of unemployment is achievable.'

With that said, updates to Australia's Employment report may impact the near-term outlook for AUD/USD as the economy is anticipated to add 15.0K jobs in April, while the Unemployment Rate is expected to hold steady at 5.0% for the second month. A positive development should prop up the Australian dollar as it dampens bets for an RBA rate-cut, but a batch of lackluster data prints may drag on AUD/USD as it boosts speculation for lower interest rates.

It remains to be seen if a reduction in the official cash rate (OCR) will spur a further improvement in the labor market as the jobless rate sits at its lowest level since 2012, but AUD/USD stands at risk of facing a more bearish fate following the RBA meeting as the dovish-hold fails to spur a break of the monthly opening range.

AUD/USD Rate Daily Chart

Keep in mind, the AUD/USD rebound following the currency market flash-crash has been capped by the 200-Day SMA (0.7160), with the exchange rate marking another failed attempt to break/close above the moving average in April.
In turn, AUD/USD may continue to give back the rebound from the 2019-low (0.6745) as the wedge/triangle formation in both price and the Relative Strength Index (RSI) unravels, with the monthly opening range in focus as the exchange struggles to push back above the 0.7020 (50% expansion) pivot.
Need a break/close below 0.6850 (78.6% expansion) to open up the Fibonacci overlap around 0.6850 (78.6% expansion) to 0.6880 (23.6% retracement), with the next area of interest coming in around 0.6730 (100% expansion).

Additional Trading Resources

Are you looking to improve your trading approach? Review the 'Traits of a Successful Trader' series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019

— Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.

2019-05-13 06:30:00

USDSGD, USDMYR, USDIDR, USDPHP at Risk to US-China Trade Anxiety

Posted: 12 May 2019 08:55 PM PDT

ASEAN Fundamental Outlook

US-China trade war fears ignite selloff in ASEAN currencies
Bank of Indonesia may step up efforts to stabilize USD/IDR
Uncertainty of trade talks to weigh against MYR, IDR, PHP

Trade all the major global economic data live and interactive at the DailyFX Webinars. We'd love to have you along.

US Dollar and ASEAN FX Recap

The revival in US-China trade war fears took its toll on ASEAN currencies despite a rather tepid week for the US Dollar on the chart below. The latter was torn between risk trends and monetary policy fundamentals, as markets weighed on how an escalation in trade wars can impact the Fed's relatively neutral stance. Meanwhile, USD's trait as the world's most liquid currency helped subdue selling pressure.

USD/SGD, USD/IDR, USD/MYR and USD/PHP all rose this past week. Central bank's in Malaysia and in the Philippines cut rates this past week (and on a side note, in New Zealand as well), with the former weakening the Ringgit while the latter temporarily boosted the Philippine Peso. The Indonesian Rupiah extended declines as USD/IDR attempted to break resistance around 14340.

Trade Wars, a Downside Risk for ASEAN Currencies. Regional ASEAN Event Risk

The disparity between the US Dollar and ASEAN currencies should ring as a warning bell. The Association of Southeast Asian Nations have key trading relationships with China. An escalation in trade wars can reignite pressure on the world's second-largest economy after it recently showed signs of improving economic activity. Then there is the vulnerability to bouts of risk aversion, sinking sentiment-linked assets.

For the Bank Negara Malaysia and Bangko Sentral ng Pilipinas, preemptive rate cuts that should help to bolster domestic economic conditions are a welcoming sign. External risks have arguably increased, but this may come at the cost of weaker currencies. The central bank of the Philippines is going to discuss cuts to reserve requirement ratios, an issue that was absent this past week as they opted to remain data-dependent.

We also have the Bank of Indonesia interest rate decision on May 16, but the 7-day reverse repo rate is anticipated to be kept unchanged. Amidst selling pressure in the Rupiah and their commitment to FX stability, reiterated this past week, the central bank intervened in the bond and FX spot market and will likely step up efforts if USD/IDR climbs further.

Turning our attention back towards China, we will also get more insight into how the nation is handling. Industrial production and retail sales are up, and they may surprise higher given recent trends in economic data tending to outperform relative to economists' expectations. But, the shroud of trade uncertainty may dull much optimism on the data in the medium-term.

ASEAN FX Vulnerability to USD on US-China Trade War Fears

Chart Created in TradingView

External Risks

That is because in the end, last week the world's two largest economies failed to reach a trade accord. The US proceeded with imposing higher tariffs (25%) on about $200b in Chinese imports. The latter said it will retaliate. On Friday, US President Donald Trump gave China a month to come to an agreement as the details of what could be another $300b in levies, in case a breakdown occurs, are set to be released on Monday

The reaction in markets on Friday showed optimism that a trade deal could be reached, but like the overhang of Brexit on the Bank of England, the path forward is uncertain. Keep in mind, another risk for ASEAN currencies may stem from similar rocky relationships between the US and Europe. May 18 marks decision day for Trump on whether to raise auto import tariffs or defer on it for another 6 months.

As we saw this past week, on balance this may lead to the US Dollar cautiously rising against the Singapore Dollar, Malaysian Ringgit, Philippine Peso and Indonesian Rupiah unless it becomes more clear of where trade talks may go. I will be closely monitoring these developments and you may follow me on twitter here @ddubrovskyFX for timely updates on ASEAN FX and respective technical analysis.

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

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2019-05-13 02:00:00

Gold Prices Eye Yields, Dollar as US-China Trade War Escalates

Posted: 12 May 2019 05:49 PM PDT

GOLD & CRUDE OIL TALKING POINTS:

US-China trade war escalation setting risk-off tone to trading week start
Gold prices weighing clashing influence of bond yields and the US Dollar
Crude oil prices appear vulnerable, may extend decline from April high

Gold prices saw another intraday foray to the upside fizzle out into the close on Friday. The metal found early support as markets weighed up an increase in US tariffs on imports from China, souring sentiment and weighing on bond yields. That bolstered the appeal of non-interest-bearing alternatives.

The much-anticipated initial public offering of shares in Uber seemed to redirect investors' attention however. The company popped in its first few hours on the New York Stock Exchange, which seemingly triggered a risk-on pivot. While Uber would subsequently reverse to close lower, broader sentiment held up.

Crude oil prices largely echoed swings in the equities space, with the WTI benchmark tracking S&P 500 futures lower through the first part of the day and recovering alongside them in the afternoon. Data showing the number of active US oil rigs matched a one-year low last week seemed to go unnoticed.

US-China trade war escalation seems likely to remain in focus as the new trading week begins. A dour mood is prevailing in early Asia Pacific hours, setting the stage for a risk-off session. This may see oil on the defensive while gold probes the topside, at least until haven flows revive US Dollar demand.

Did we get it right with our crude oil and gold forecasts? Get them here to find out!

GOLD TECHNICAL ANALYSIS

Gold prices continue to tread water below support-turned-resistance at the neckline of a bearish Head and Shoulders (H&S) chart pattern, now at 1291.44. Immediate rising trend line support is at 1270.35, followed shortly thereafter by the 1260.80-63.76 inflection area.

The H&S setup implies bearish bias and a measured downside objective at 1215.00. A daily close below 1260.80 may begin to see this realized, opening the door for a move lower to challenge an interim barrier in the 1235.11-38.00 region.

Alternatively, a break above 1291.44 would neutralize the H&S pattern as well as breach the bound of the downtrend set from late-February highs. This may set the stage for a recovery above the $1300/oz threshold to take aim at the 1303.70-09.12 congestion zone.

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices remain within the confines of a narrow downward-sloping channel guiding the descent from the late-April swing top. The pullback has broken trend line support guiding the uptrend since late December, suggesting a cautiously bearish bias to overall positioning.

Immediate support is at 60.39, with a daily close below that exposing the 57.24-88 area. Alternatively, a sustained breach of the channel top – now at 61.84 – presents buyers with the arduous task of working their way through a dense resistance block running through 67.03. The $70/bbl figure is in view thereafter.

COMMODITY 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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2019-05-13 00:30:00

USD/CAD Upside Breakout Denied by Jobs Data, Anti-Risk Yen Falls

Posted: 12 May 2019 04:32 PM PDT

Asia Pacific Market Open Talking Points

USD/CAD seemed to have a false upside breakout after solid Canadian jobs data
US-China trade deal optimism fueled 'risk on' trade on Wall Street, Yen weakened
Will Asia Pacific equities find upside follow-through? AUD/USD eyes home loans

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

FX News Friday

The Canadian Dollar was the best-performing major on Friday, supported by a better-than-expected local employment report. The nation added the most jobs in a month (+106.5k) on record in April as the unemployment rate fell and labor force participation rose. Domestic front-end government bond yields rallied, signaling ebbing Bank of Canada rate cut expectations.

USD/CAD Technical Analysis

Looking at the USD/CAD daily chart, the turn lower in the pair appears to validate a false breakout attempt above former resistance at 1.3469. This places near-term support at 1.3390, with the Canadian Dollar potentially eyeing the psychological barrier between 1.3251 and 1.3291 thereafter. If that is the case, we may be due for more consolidation in the medium-term, as has been the case since March.

USD/CAD Daily Chart

Chart Created in TradingView

US-China Trade War News

Meanwhile, the anti-risk Japanese Yen was one of the worst-performing majors on Friday. Market optimism generally pickup up during the latter half of the day despite the US and China failing to reach a trade accord. This resulted in the former nation increasing tariffs on about $200b in Chinese imports from 10% to 25%. The latter said that it had no choice but to retaliate.

The 'risk-on' trade on Wall Street seemed to be due to hopes that the two nations could still reach a deal in a month. That was how much US President Donald Trump gave China time before potentially adding on about an extra $300b in levies, which would capture almost all remaining imports. Later today, the US is expected to release the details on the remaining amount of potential tariffs.

The US Dollar traded sideways. Initial risk aversion on trade war fears likely weighed against the currency as the markets focused on increasingly dovish Fed monetary policy expectations. Then, gains in the S&P 500 later in the day were accompanied by rising front-end government bond yields. That signaled rising confidence which bolstered the Greenback. It is facing another potentially volatile week.

Monday's Asia Pacific Trading Session

With that in mind, while Asia Pacific benchmark stock indexes might rise after cautious optimism on Wall Street, follow-through might be lacking given the uncertainty of where negotiations may go next. Meanwhile, the Australian Dollar, having lost most upside momentum after an unexpected RBA rate hold last week, eyes local home loans data.

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

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2019-05-12 23:00:00

US-China Trade War Escalation Unnerves Risk

Posted: 12 May 2019 09:28 AM PDT

This past week closed to a dramatic increase in the US-China trade war terms…and yet the markets seemed to simply shrug the news off. Complacency is increasingly dangerous with growth signals flagging and Trump considering another course trade conflict via autos.

Check out our Economic Calendar for upcoming economic data and central bank events.

AUD Forecast: Australian Dollar Could Get Some Respite If Employment Keeps Revving

The Australian Dollar is stuck between global risk appetite and domestic monetary policy. Official Australian employment data may offer some temporary diversion.

Crude Oil Forecast: Prices Under Pressure From Souring Global Sentiment

Crude oil prices will likely continue to find themselves jerked between oscillations in market sentiment as fundamental themes increase pressure on investors.

USD Forecast: Torn Between S&P 500 Outlook, Dovish Fed as US Dollar Ranges

The US Dollar is facing competing fundamental forces as DXY eyes potential congestion. While USD may gain on US auto tariff fears, European data and US retail sales could be a risk.

Gold Forecast: Prices Susceptible to Upbeat US Data Despite Threat of Trade War

The current environment may continue to drag on the price of gold as the Federal Reserve remains in no rush to alter the outlook for monetary policy.

Equity Forecast: Dow Jones, DAX 30 and Nikkei 225 Fundamental Forecast

Trade wars were the dominant theme last week and could be again next week for the Dow Jones, DAX 30 and Nikkei 225 as President Trump weighs the option to impose auto tariffs.

See what live coverage is scheduled to cover key event risk for the FX and capital markets on the DailyFX Webinar Calendar.

See how retail traders are positioning in the majors using the IG Client Sentiment readings on the sentiment page.

2019-05-12 16:00:00