Analyst Articles – Forex News 24

Bank of England Leaves Rates Unchanged, GBP Price Up on Hawkish Tilt
GBP Technical Analysis Overview: GBPUSD, EURGBP
Gold Price Nears Multi-Month Lows After Post-Fed Plunge
EURUSD & USDCHF Chart Set-ups, Dollar Strength Favored After Fed
British Pound at Key Chart Barrier Before Bank of England Meeting
SEK, NOK Eye Manufacturing PMI, Riksbank Hearing After Neutral Fed
S&P 500 Uptrend Still at Risk, Fed-Fueled Risk Aversion Cools in Asia
How Far Will Dollar, S&P 500 Reversals Run Post Fed?
NZD/USD Downtrend Resumes on Fed as Asia Markets Brace, JPY May Gain
What Have First Quarter Earnings Revealed About FX Markets?

Bank of England Leaves Rates Unchanged, GBP Price Up on Hawkish Tilt

Posted: 02 May 2019 04:48 AM PDT

Bank of England, GBP price, news and analysis:

The Bank of England has left UK monetary policy on hold, as economists had predicted, but the minutes of its latest meeting and its quarterly Inflation Report are both hawkish.
That is lifting GBP, which could yet advance further.

GBP price up on hawkish Bank of England

The Bank of England kept all its monetary policy settings unchanged Thursday, with Bank Rate left at 0.75% and its buying of UK government and corporate bonds at their previous levels.

However, GBP has been boosted by the minutes of the latest meeting of the Bank's monetary policy committee, which ended today, and by the accompanying quarterly Inflation Report.

GBPUSD Price Chart, Five-Minute Timeframe (May 1-2, 2019)

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

The Bank raised its forecasts for GDP growth while warning of the possible impact of Brexit. It now expects growth of 1.5% in 2019, up from its February forecast of 1.2%, and of 1.6% in 2020, up from 1.5%. It sees inflation increasingly above its 2% target and repeated that gradual and limited interest rate rises will be needed to meet that inflation target. It cut its forecast for unemployment sharply.

More details are expected when Bank of England Governor Mark Carney holds his regular post-meeting press conference at 1130 GMT to round off this "Super Thursday" schedule.

GBP price still sensitive to Brexit news

Looking further ahead, Brexit news will likely remain the most important factor for traders in GBP to watch. On the plus side, a "no deal" Brexit looks to have been averted for now and there are hopes of progress in the talks between the ruling Conservatives and the opposition Labour Party.

However, UK Prime Minister Theresa May has come under even more pressure this week after sacking Defense Secretary Gavin Williamson for allegedly leaking information from the National Security Council to a newspaper. In addition, local elections taking place in parts of the UK Thursday will likely punish the Conservatives for failing to deliver Brexit on time.

You can find the DailyFX forecasts for GBP in Q1 here

UK economy sluggish

As for the UK economy, the latest data suggest growth remains tepid. Wednesday's purchasing managers' index for the manufacturing sector dipped to 53.1 in April from 55.1 in March and the service-sector PMI to be released Friday is expected to show only a modest increase to 50.4.

The next important day for UK data is the following Friday, with statistics on first-quarter GDP growth, industrial production, manufacturing output and trade all on the economic calendar.

Against this background, market pricing suggests that UK interest rates will be on hold for the rest of this year, and a quarter-point increase is not fully priced in until September 2020 – nearly a year after the latest Brexit deadline of October 31, 2019.

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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2019-05-02 11:15:00

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GBP Technical Analysis Overview: GBPUSD, EURGBP

Posted: 02 May 2019 03:36 AM PDT

GBP Analysis and Talking Points

GBPUSD| 1.31 Break Needed to Fuel Further Upside
EURGBP | Risk of Wider Pullback, Support at 0.8550

See the DailyFXQ2 FX forecast to learn what will drive the currency throughout the quarter.

GBPUSD | 1.31 Break Needed to Fuel Further Upside

While the upside in the GBP has persisted, further gains has struggled at the 1.31 handle, where the 50DMA resides (1.3106). Momentum indicators are slightly bullish; however, this has eased amid the failure to make a decisive break above 1.31. Eyes will be on the BoE quarterly inflation report, in which a hawkish hold could fuel further gains in the Pound (full story). On the downside, near-term support sits at 1.3030, while a drop below exposes a move towards 1.2980 (100DMA).

GBPUSD PRICE CHART: Daily Time Frame (Feb 2018 – May 2019)

Chart by IG

EURGBP | Risk of Wider Pullback, Support at 0.8550

Yesterday saw the cross close below its 50DMA (0.86), which in turn raises the risk of a wider pullback in EURGBP, momentum indicators (measured by DMI's) are tilted to downside on both the short-term and longer-term studies. As such, eyes are on for a move towards 0.8550 after dropping to a fresh 4-week low of 0.8570. Any move higher, could struggle at the 0.86 handle.

EURGBP Price Chart: Daily-Time Frame (Dec 2018 – May 2019)

Chart by IG

GBPUSD Price Outlook: More Gains Possible(Martin Essex, MSTA , Analyst and Editor)

— Written by Justin McQueen, Market Analyst

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

Follow Justin on Twitter @JMcQueenFX

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2019-05-02 10:30:00

Gold Price Nears Multi-Month Lows After Post-Fed Plunge

Posted: 02 May 2019 02:22 AM PDT

Gold (XAU) Price Analysis and Charts.

Gold reverses lower after FOMC meeting and eyes fresh yearly low.
USD firms as Federal Reserve remains in 'wait-and-see' mode.

DailyFX Q2 Forecasts and Top 2019 Trading Opportunities.

Gold (XAU) Weakens Further as Fed Stands Pat

A whippy post-FOMC session for gold after the Federal Reserve indicated that US rates would remain unchanged for the foreseeable future. A brief rally was quickly bought to an end and the precious metal ended negative on the day, nearing a fresh yearly low. The Fed indicated that US inflation remained below target but suggested that no immediate rate cutes were needed and that it would continue to monitor price pressures. Market expectations of a 2019 rate cut were pared back slightly, giving the greenback a small boost.

Friday's US Labour Report (NFPs) should now be the next driver of gold's price action. Wednesday's ADP employment report beat expectations, +275k against predictions of +180k, and while the correlation between this report and NFPs is not strongly correlated, the strength of the US jobs market remains clear. Monthly earnings and wages data will also need to be closely parsed.

The daily gold chart is looking weak and the precious metal needs a bout of risk-aversion, or a weak NFP release, to help steady or reverse the recent sell-off. The pattern of lower highs and lower lows off the mid-February high continues and if gold breaks below the April 23 low at $1,266.4/oz then the next zone of technical support, the 200-day moving average and the 50% Fibonacci retracement, is at $1,262/oz. This cluster of support may prove key in the coming days. A bullish reversal is likely to find resistance around recent highs between $1,287/oz and $1,289/oz.

How to Trade Gold: Top Gold Trading Strategies and Tips

Gold (XAU) Daily Price Chart (September 2018 – May 2, 2019)

Trading the Gold-Silver Ratio: Strategies and Tips.

IG Client Sentiment data show that retail traders are 71.5% net-long gold, a bearish contrarian indicator. However, recent daily and weekly sentiment shifts suggest that the current gold trend may reverse higher.

— Written by Nick Cawley, Market Analyst

To contact Nick, email him at nicholas.cawley@ig.com

Follow Nick on Twitter @nickcawley1

2019-05-02 09:15:00

EURUSD & USDCHF Chart Set-ups, Dollar Strength Favored After Fed

Posted: 02 May 2019 01:44 AM PDT

Yesterday, the FOMC held on rates as expected, it was the press conference with Fed Chair Powell that sparked a strong reversal in the Dollar. The reversals posted solid technical set-ups for more follow-through strength in the Dollar in the days ahead. The Euro and Swiss Franc in the spotlight…

EURUSD reversed from an important trend-line

The Euro traded up to the trend-line running down off the March high before selling off to post a sharp reversal day candle. As long as price doesn't close above 11265, then the reversal off trend resistance will remain valid. Looking lower, a run at the 11174 low looks to be in store soon with potential for a drop to fresh lows and a test of underside trend-lines near 11000.

A break of 11000 would be considered a big deal given it would put EURUSD under all support lines and open up a path towards filling the 2017 French election gap at 10724. For now, carving out a fresh swing-low is the objective and I'll take it from there as low volatility conditions continue to favor booking profits once new swing lows or highs are established.

See what fundamental factors are in play for EURUSD in the Q2 Euro Forecast.

EURUSD Daily Chart (reversal candle off trend-line)

USDCHF reversed from support, has 10300s on its mind

USDCHF pulled back to the top of a broad wedging pattern and the November high before turning strongly higher yesterday. This should be enough to get the pair running towards a couple of significant swing-highs formed during 2015 and 2016, around the 10330-mark. A drop below yesterday's reversal low at 10266 will be reason for caution on bullish bets.

See what fundamental factors are in play for USD in the Q2 Dollar Forecast.

USDCHF Daily Chart (10300s resistance in focus)

***Updates will be provided on these ideas and others in the trading/technical outlook webinars held at 9 GMT on Tuesday and Friday. If you are looking for ideas and feedback on how to improve your overall approach to trading, join me on Thursday each week for the Becoming a Better Trader webinar series.

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 Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

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2019-05-02 08:18:00

British Pound at Key Chart Barrier Before Bank of England Meeting

Posted: 02 May 2019 12:23 AM PDT

TALKING POINTS – BANK OF ENGLAND, BRITISH POUND, YEN, US DOLLAR, GBP/JPY

Grim BOE may clash with hawkish shift in priced-in policy bets
Brexit uncertainty, global weakness may overshadow UK data
Downbeat tone may trigger broader risk aversion, boosting Yen

All eyes are on the Bank of England as traders brace for so-called "Super Thursday", when it will issue a rate decision as well as issue minutes from the latest meeting of the policy-setting MPC committee and publish an updated quarterly Inflation Report (QIR). Governor Mark Carney will also hold a press conference to explain what all of this means for market participants.

A meaningful change in the official policy stance – be it the current setting of the benchmark Bank Rate or the forward guidance on offer – seems unlikely. Officials are likely to remain noncommittal as Brexit uncertainty continues to cloud the near- to medium-term outlook. The updated set of economic forecasts within the QIR report may have market-moving potential however.

UK economic news-flow has markedly improved relative to baseline forecasts over recent months. The markets have noticed: a meaningful hawkish shift in the priced-in 2019 policy path since late March now puts the probability of a rate hike before year-end at over 60 percent. The global growth backdrop has remained downbeat however, to say nothing of lingering political jitters at home and abroad.

This might set the stage for disappointment. The British Pound may fall if Mr Carney and company display a more downbeat disposition than investors are positioned for. Such an outturn may also bode ill for overall sentiment trends, stoking concerns about a downturn in the global business cycle and offering an outsized lift to the anti-risk Japanese Yen and US Dollar.

What are we trading? See the DailyFX team's top trade ideas for 2019 and find out!

CHART OF THE DAY – GBP/JPY AT KEY RESISTANCE BEFORE BOE RATE DECISION

GBP/JPY seems like a natural catch-all place to look for the influence the BOE policy call on Sterling's fortunes and that of market-wide risk appetite. Tellingly, prices put in a Shooting Star candlestick at near-term trend resistance just ahead of the announcement, implying indecision after an upswing and hinting that a turn lower may be in the cards.

Needless to say, such a move would fit in neatly within the foregoing fundamental analysis framework. Initial support is in the 143.79-144.84 congestion area, with a break below that confirmed on a daily closing basis opening the door for a test below the 142.00 figure. Alternatively, a breach above resistance – now at 145.87 – puts the now-familiar range top in the 148.57-149.72 zone back in focus.

FX 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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2019-05-02 06:30:00

SEK, NOK Eye Manufacturing PMI, Riksbank Hearing After Neutral Fed

Posted: 01 May 2019 11:46 PM PDT

SEK, NOK TALKING POINTS – FOMC, RIKSBANK HEARING, SWEDISH, NORWEGIAN MANUFACTURING PMI

NOK and SEK, fell on Powell neutral commentary
Krona waiting for the Riksbank hearing in Riksdag
NOK, SEK eye upcoming manufacturing PMI data

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

POST-FOMC ANALYSIS

As anticipated, the Fed held its benchmark rate. As such, the decision resulted in a relatively muted market response. However, the subsequent commentary from Chairman Jerome Powell jolted markets. The neutrality of his comments surprised investors because it was comparatively less dovish than what they had originally priced in.

Powell expressed confidence in the fundamental outlook that he believes will continue to support the economy, with the current trajectory suggesting that it is on a healthy path. He also mentioned that risks – such as the possibility of a hard Brexit, trade wars and concerns about the resilience of the financial system – have moderated. However, he also noted that core inflation has been weaker than expected.

If the US-China trade conflict is resolved, it could lift consumption and inflation with the by-product being a uptick in activity in factories – an anticipated crucial contributor to growth according to Powell. This is why watching for tomorrow's US factory orders could now carry greater weight and may therefore warrant the attention of traders.

But what appears to have put the nail in the coffin in regard to the Chairman's neutral stance was when he said that he does not see a strong case for a rate move in either direction. This position is to a certain degree a continuation of the patient wait-and-see mode approach the Fed has taken ever since the outlook became progressively cloudier from the end of 2018 and into the new year.

Consequently, Powell's less-than-dovish outlook sent the US Dollar and its cross with the Swedish Krona and Norwegian Krone higher along with two-year government bond yields while S&P 500 futures plummeted. The fall in equities may be from Powell's confidence in the underlying strength of US economic activity, which lends credence to the notion the economy may be able to endure a rate hike in the future.

SWEDEN, NORWAY ECONOMIC DOCKET

Tomorrow, both Swedish and Norwegian manufacturing PMI data will be published anticipations of 52.8 and 56.8, respectively. In the Riksdag, Riksbank officials including Governor Stefan Ingves will be answering questions in a parliamentary hearing. There may not be any new information that would deviate from his previous message after last month's rate decision and commentary.

PMI out of Sweden and Norway may also give insight into Nordic producers' outlook for European growth. With between 70-80 percent of exports destined for Europe, employers have to adjust their output in accordance to anticipated demand from their biggest trading partner. To learn more about the unique political economy of EU-Nordic relations, you may follow me on Twitter @Zabelin.Dimitri.

CHART OF THE DAY: USD/NOK, USD/SEK, 2-YEAR US BOND YIELDS, USD INDEX, S&P500 FUTURES

NORDIC TRADING RESOURCES

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

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

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2019-05-02 06:30:00

S&P 500 Uptrend Still at Risk, Fed-Fueled Risk Aversion Cools in Asia

Posted: 01 May 2019 10:33 PM PDT

Asia Pacific Markets Wrap Talking Points

With Japan, China offline, equities trade mixed in Asia after Fed
Disappointing US initial jobless claims may fuel risk aversion
S&P 500 uptrend still undermined by bearish technical signals

Find out what retail traders' equities buy and sell decisions say about the coming price trend!

Asia Pacific markets traded mixed on Thursday, avoiding market-wide downside follow-through after pronounced declines on Wall Street. There, the S&P 500 fell after less dovish-than-expected commentary from Fed Chair Jerome Powell after May's rate decision.

As a reminder, Japanese and Chinese bourses are offline for holidays which narrows the scope for a full bird's-eye view of FOMC aftermath. Those in Australia and South Korea are open however.

In the former, the benchmark ASX 200 index traded about 0.7% lower heading into the close. Westpac Banking Corp. shares weighed against financials which account for roughly a third of the index. Meanwhile in South Korea, the KOSPI traded about 0.45% higher.

While equities were mixed, looking at foreign exchange markets revealed cautious optimism. This is because the anti-risk Japanese Yen aimed narrowly lower while its pro-risk counterparts, the Australian and New Zealand Dollars, traded little higher.

Newswires attributed the mixed mood in stocks to the latest update on US-China trade talks. A report from CNBC crossed the wires that hinted of a deal between the two nations to come by next Friday. This may have muted downside reaction to the Fed.

S&P 500 futures are now relatively flat which suggests that significant downside follow-through in European shares might be absent. Later in the day, keep an eye out for potentially soft US initial jobless claims. Last week, a disappointing outcome triggered a bout of risk aversion.

S&P 500 Technical Analysis

Looking at futures to show after-hours trade, the S&P 500 formed a Bearish Engulfing candlestick as it failed to find follow-through on closing above the record highs in September. Given confirmation via further closes lower, this may precede a turn lower.

Furthermore, there appears to be a break under the Rising Wedge bearish formation. Meanwhile, sentiment signals still offer a bearish contrarian trading bias. In all, this places the focus on near-term support around 2900.

Want to learn more about how sentiment readings may drive the S&P 500? Tune in each week for live sessions as I cover how sentiment can be used to identify prevailing market trends!

S&P 500 Futures Daily Chart

Chart Created in TradingView

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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2019-05-02 05:00:00

How Far Will Dollar, S&P 500 Reversals Run Post Fed?

Posted: 01 May 2019 09:09 PM PDT

Fed Reversal Talking Points:

The Fed held its monetary policy settings unchanged but Chairman Powell’s remarks popped a dovish speculative bubble
A Dollar reversal post-Fed will likely struggle for a bullish trend, but the S&P 500 runs the risk of collapsing under its own weight
Top event risk Thursday is the BOE’s Super Thursday but its market moving potential is probably as uneven as Friday’s US NFPs

What do the DailyFX Analysts expect from the Dollar, Euro, Equities, Oil and more through the 2Q 2019? Download our trading guides for the FX majors, key indices and commodities on the DailyFX Trading Guides page.

How No Change from the Fed Could Cascade Into a Deeper S&P 500 Collapse

The range of systemic themes that we have kept track of these past months were present for fundamental influence this past session, but it was clear where the market’s attention was focused. The Federal Reserve’s (Fed) policy decision proved remarkably market moving, but the real question is how much follow through we can reasonably expect following an event that technically produced no change in policy nor even a serious surprise in forecasts. Following its two-day meeting the Federal Open Market Committee (FOMC) announced that it was leaving its benchmark rate range unchanged between 2.25 and 2.50 percent. Its more unorthodox efforts were similarly untouched. The market was prepared for this status quo and quickly turned to the statement that accompanied the announcement. Its language was very similar to what we had registered previously with recognition of soft inflation, concerns about external pressures and acknowledgment of soft growth. At this point, the market was content with extending the prevailing winds: tentatively bullish risk.

In speculative terms, no change to the forecast would passively support the speculative charge drawn from the growing anticipation of a rate hike into the future. That confidence would falter however little more than half an hour later when Fed Chairman Jerome Powell conducted his press conference. If you aren’t a close Fed watcher, the signal could have been too subtle to pickup, but the reference to the soft inflation data as of late as ‘transitory’ and ‘transient’ was a spark for the over-extended speculative market. It suggests that the Fed is not as confident of an impending cut as the market had become. We would see the reaction in Fed Funds futures which cut the probability of a 25 bp cut by year’s end from approximately 66 percent to 52 percent. In market terms, that would lead to a broad drop in risk assets.

Emerging market assets, junk bonds, carry trade, yields and more wavered with the recognition. Yet, it is the S&P 500 – and US indices generally – that is truly of concern. What started as a gap higher on the open Wednesday to record highs ended as a tentative break of the rising trend channel that stretches back throughout 2019. There is potential for this turning into a false breakout reversal pattern is material. However, I wouldn’t put that outcome on follow through from the Fed’s influence. Rather, if a reversal does set in, it could very well arise from the sheer weight of speculative overindulgence in this particular benchmark – collapse under its own weight. Be wary and prepared but not expectant.

Chart of S&P 500 and 1-Day Rate of Change (Daily)

How Far Will Dollar, S&P 500 Reversals Run Post Fed?

From Where Will the Dollar Draw Its Motivation Now?

The Fed’s distancing itself from a rate cut is a short-term boon for the US Dollar as it both caters to the currency’s yield advantage (for whatever that is worth) while also signaling that the Fed doesn’t believe threats like trade wars or economic lethargy should be taken too seriously. There is certainly value to the be found in this event’s turn, but follow through is likely to be seriously truncated. The carry trade advantage that the Greenback holds over major counterparts is historically minuscule and would require a fairly deep level of complacency and/or extreme sense of risk appetite to leverage into a serious climb. So, while the Dollar managed to steady from a multiday tumble and EURUSD returned to its previously critical 1.1200 support, follow through will likely have to draw from a different well.

Chart of the DXY Dollar Index (Daily)

How Far Will Dollar, S&P 500 Reversals Run Post Fed?

Among the other systemic themes, the earnings season has likely rendered what it will from US assets and the Dollar. The Apple gap Wednesday morning following the previous evening’s earnings and $75 billion share buyback plan was a welcome offset to the poor response to Google’s numbers and other dull spots to the corporate reporting this past quarter. That said, what momentum we would have expected is likely already in place. Another theme of some greater significance is the progression on trade wars rhetoric.

Chart of Apple, FAANG Aggregate and S&P 500 (Daily)

How Far Will Dollar, S&P 500 Reversals Run Post Fed?

Yet another news report would come out – this time from CNBC – suggesting the US and China are on the verge of a compromise on their year-long trade war. We have seen this from a few other reports quoting unnamed sources but Chief of Staff Mick Mulvaney already established the practicality of this scenario some days ago. That draws a real concern on just how much lift confirmation can afford for the S&P 500 or Dollar.

The true potential for refreshed growth and market potential would come through the growth implications of a realization of the proposed $2 trillion infrastructure spending program that Congressional Democrat leaders and President Trump reportedly are working towards. That could offer genuine lift and fuel an advantage to US growth and assets. Yet, its implementation likely depends directly on the political environment going forward, and that is clearly fraught.

BOE is Top Event Risk With Limited Potential, Some Other Areas to Watch as Consolation

Looking further ahead, the combination of the April NFPs and ISM’s service sector activity report on Friday is a significant combination of event risk. Anticipation alone will pull our attention forward and work as an anchor to productive drift until we reach the release. In the interim, top event risk Thursday will go to the British Pound. The Bank of England (BOE) rate decision scheduled for release at 11:00 GMT is of greater influence than typical owing to the Quarterly Inflation Report (QIR) that will accompany the decision to hold rates as well as Governor Carney’s press conference to follow a half hour later.

Chart of GBPUSD (Daily)

How Far Will Dollar, S&P 500 Reversals Run Post Fed?

There is little chance that the central bank will be clear on its course for monetary policy given that the path of Brexit is still obscured. Between a no-deal, a split with unexpected access or second referendum outcomes, the implications for the UK are dramatically different. Where we are likely to see genuine progress is the accumulated economic and sentiment pain over the uncertainty in the future.

As the Dollar and Sterling struggle for traction, there are different bearings for the other majors. The Euro is without a clear bead for fundamental influence, which can open the door to themes that are otherwise victim to distraction – like political stability and monetary policy speculation. The Japanese Yen is another currency without a known spark over the next 48 hours, but its thinned liquidity during Golden Week can charge unexpected and extreme volatility.

The Canadian Dollar stirred to life this past session, but the disappointing turn from the manufacturing PMI and lacking enthusiasm from BOC Governor Poloz for a second half economic rebound probably didn’t secure much conviction one way or the other. Pairs like AUDCAD, NZDCAD and CADCHF should be considered for their clear technicals. I am also keeping very close tabs on the Swiss Franc. The Dollar’s rebound stalled a very interesting USDCHF reversal, but the potential behind the Swissie runs deeper. We discuss all of this and more in today’s Trading Video.

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

2019-05-02 01:15:00

NZD/USD Downtrend Resumes on Fed as Asia Markets Brace, JPY May Gain

Posted: 01 May 2019 04:48 PM PDT

Asia Pacific Market Open Talking Points

Neutral Fed undermines dovish bets as S&P 500 sinks, US Dollar gains
NZD/USD downtrend may be resuming in well-defined falling channel
Asia Pacific markets bracing for potential risk aversion, Yen may rise

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 Wednesday

The initial reaction to the FOMC monetary policy announcement took its toll on the US Dollar. Markets focused on an unexpected cut in the interest rate on excess reserves as every other setting was left unchanged. But things soon quickly turned around 30 minutes later once Fed Chair Jerome Powell held his press conference.

Overall, Mr Powell delivered a neutral and balanced tone as he mentioned that policymakers 'don't see a strong case for a rate move either way'. Comments on weaker inflation were offset by confidence that the economy is continuing on a healthy path. More importantly, external risks seemed to have cooled as he noted improvements in Chinese and European data with Brexit concerns having been subsided.

At that moment, the US Dollar made a U-turn as it climbed with government bond yields. The S&P 500 then tumbled, experiencing its worst day in almost 6 weeks. It was not that there was an increase in Fed rate hike bets. It was that exceptionally dovish expectations were cooled, as anticipated. Fed funds futures now show a 55% probability of a cut by year-end, down from 67% yesterday.

NZD/USD Technical Analysis

One of the worst-performing currencies on Wednesday was the New Zealand Dollar, which was already weighed down by dismal employment data. On the daily chart below, NZD/USD aimed lower after testing descending channel resistance. With its downtrend now further solidified, it is eyeing near-term support at 0.6592 which if cleared, opens the door to October lows.

NZD/USD Daily Chart

Chart Created in TradingView

The Canadian Dollar had an overall mixed day with the day's focus on the Fed. However, after Powell's press conference, Bank of Canada's Governor Stephen Poloz had another speech after the one from yesterday boosted the Loonie. He reiterated much of Tuesday's commentary, saying that if headwinds dissipate that rates would naturally rise. This may boost CAD down the road as forecasted in my top trading opportunities for this year.

Thursday's Asia Pacific Trading Session

Once again the Asia Pacific economic calendar docket is thin, placing the focus for currencies on risk trends. S&P 500 futures are pointing lower, hinting at weakness in equities to come after most regional bourses were offline for a holiday yesterday. Risk aversion could permeate throughout markets after the Fed and boost the anti-risk Japanese Yen. This may come at the expense of the sentiment-geared Australian and New Zealand Dollars.

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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2019-05-01 23:00:00

What Have First Quarter Earnings Revealed About FX Markets?

Posted: 01 May 2019 02:59 PM PDT

First Quarter Earnings and FX:

Apple has cited increased competition in China, contributing to waning iPhone sales
Elsewhere, Google has warned a stronger US Dollar will weigh on revenue
See how IG Clients are positioned on the S&P 500 with Retail Sentiment Data

What Have First Quarter Earnings Revealed About FX Markets?

With earnings season entering the latter half, investors and traders have already heard from some of the country's largest and most influential corporations. Aside from their immediate stock price reaction and influence over the index on which they trade, anecdotal evidence from some key players highlight themes that US stocks will face heading into the second quarter.

Apple's Problems in China

After delivering results above expectations, Apple's share price climbed – but not everything in the report was quite as rosy. As with prior quarters, Apple highlighted waning demand in China and increased competition. In turn, total iPhone sales slipped to $31.05 billion. In China specifically, iPhone sales slumped to $10.2 billion compared to $13 billion in 1Q 2018. That said, Apple CEO Tim Cook was optimistic.

"I believe that the trade relationship — I don't mean the tariff, I mean the tone — is much better today than it was in the November-December time frame. That affects consumer confidence in a positive way," Cook said. The CEO's comments align with progress cited by US and Chinese officials as the US-China trade war looks to be winding down. While Apple's situation shows signs of improvement, Google may find itself in deeper trouble.

Google and a Strong US Dollar

In their first quarter report, Google blamed a strong US Dollar as one of the headline reasons behind their earnings miss. Company officials listed several foreign currencies that have weakened versus the Dollar including the British Pound, Euro, Brazilian Real and Indian Rupee. Further, Google said earnings were dented $1.2 billion by a strong USD in the quarter alone – which was larger than their $1 billion miss on revenue. The company said it expects foreign currency to be an issue again in the current quarter.

After Wednesday's FOMC decision revealed that Fed officials do not see a case for a rate move either way, the Dollar could look to continue higher on the back of its range breakout last week. As earnings season begins to wind down, follow @PeterHanksFX on Twitter for equity insight.

–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.

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2019-05-01 21:45:00