Analyst Articles – Forex News 24

GBPUSD, NZDUSD & GBPNZD Chart Set-ups to Watch
AUD May Trim Election Gains as Yen Rebounds on Powell Speech
US Dollar May Gain Versus SGD, PHP on Neutral Fed, Trade War Fears
GBP Downtrend Losing Control on Cloudy Brexit Outlook, Yen May Gain
Australian Dollar Up as Morrison Unexpectedly Triumphs in Election
Dollar and S&P 500 Still Within Range of Major Highs

GBPUSD, NZDUSD & GBPNZD Chart Set-ups to Watch

Posted: 20 May 2019 02:14 AM PDT

GBPUSD has big inflection point just below

Within less than 7 pips of one another, since August, a pair of important inflection points were created in GBPUSD. The low on August 15 was nearly matched exactly five months later on January 15 when cable was getting hammered before reversing strongly to post a key-reversal day.

The decline since popping on May 3 has been very steady, but when declines in GBPUSD are aggressive and look poised to continue on indefinitely (or rises for that matter) they are often met with reversals or strong counter-trend moves at the least.

Between this tendency and the key level just below, GBPUSD is on the radar as a reversal candidate should we see it touch the 12660s and start flexing its muscles. If not from there then pay attention to the area just below as a trend-line runs over from the October 2016 flash-crash low.

See what fundamental factors are in play for GBPUSD in the Q2 GBP Forecast.

GBPUSD Daily Chart (12660s big line)

NZDUSD stuck in bearish channel, but has support

NZDUSD has been declining in an orderly fashion within the confines of a channel running off the March high. For as long as it remains inside the channel the outlook is neutral to bearish. A break outside of it doesn't turn the picture bullish, but would be reason for pause on a bearish bias. Not far below is a long-term trend-line passing over from 2015; keep an eye on this line as a potential source of sizable support. A strong hold of this trend-line and break of the channel may offer a reason to turn constructive.

NZDUSD Daily Chart (Bearish inside channel)

GBPNZD is trading at support

GBPNZD is dropping into an area of support of varying degree; rising from the south is a trend-line off the December low and horizontal support arrives from levels created during the March/April range. A turn higher will need to develop very quickly, otherwise a larger decline could be in store. A strong shove off support here may offer up a reason to look for GBPNZD to continue its multi-month move higher. Will it be GBP or NZD or both to help or hurt this set-up? Don’t know, just focusing on the techs in the cross itself…

GBPNZD Daily Chart (watch price action here)

***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.

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—Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

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2019-05-20 08:41:00

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AUD May Trim Election Gains as Yen Rebounds on Powell Speech

Posted: 19 May 2019 11:44 PM PDT

AUD, YEN, POWELL, US DOLLAR, STOCKS – TALKING POINTS:

Markets cheer Australian election outcome, Japanese 1Q GDP data
Yen may rebound as AUD rally fizzles on Fed Chair Powell speech
S&P 500 chart setup warns recent recovery might be just corrective

The Australian Dollar outperformed at the start of the trading week after incumbent Prime Minister Scott Morrison unexpectedly prevailed a federal election over the weekend. The outcome appeared to echo as broadly supportive for market-wide risk appetite, perhaps because it spared investors yet another big uncertainty – a new G10 government with an ambitious fiscal agenda – to contend with.

The upbeat mood was reinforced by first-quarter Japanese GDP figures, where the headline reading registered meaningfully better than expected. This helped buoy sentiment despite signs of weakness in the details. In fact, similarly to US GDP for the same period, inventory build-up and a drop in imports drove the topline number upward while consumption and investment weakened.

The cycle-sensitive Canadian and New Zealand Dollars traded higher against this backdrop. The former may have enjoyed added support from a rise in crude oil prices, a somewhat frequent influence since the currency's home country is a major energy exporter. The anti-risk Japanese Yen underperformed, with the similarly-minded Swiss Franc and US Dollar also on the defensive.

YEN, USD MAY RISE AS FED CHAIR POWELL TALKS DOWN RATE CUT BETS

Looking ahead, the markets' disposition may sour anew as Federal Reserve Chair Jerome Powell steps up to the microphone. His speech at the Atlanta Fed's annual conference marks the most notable bit of scheduled event risk on an otherwise quiet economic calendar. Rhetoric echoing this month's FOMC statement is likely to reiterate that the US central bank is in no hurry to boost stimulus.

That is unlikely to sit well with investors hoping for a lifeline. They're struggling to digest a toxic cocktail of slowing global growth, US-China trade war escalation and swelling European political risks. These include Brexit and the fast-approaching European Parliament elections, which may hand a big win to eurosceptics at a most fragile time for the regional bloc.

As it stands, the markets price in the probability of at least one Fed interest rate cut before year-end at just over 73 percent. If Mr Powell's remarks bring that reading lower, a risk-off pivot in prevailing sentiment may encourage the unwinding of JPY-funded carry trades and put a premium on USD liquidity, sending both currencies higher. Pro-risk commodity bloc FX may bear the brunt of selling pressure.

Did we get it right with our latest FX market forecasts? Get them free to find out!

CHART OF THE DAY – US STOCKS REBOUND MAY PROVE TO BE FLEETING

The bellwether S&P 500 stock index found support and turned upward after hitting a two-month having confirmed a double top below the 3000 figure. The rebound tellingly stopped short of breaching back above former resistance in the 2865-2880 area however, recoiling from that barrier to suggest the upswing was merely corrective.

That may set the stage for renewed progress to the downside, a possibility that is seemingly made greater if the cues from upcoming fundamental news-flow register as expected. Immediate support is in the 2807-2824 zone, with a daily close below that exposing minor infection points at 2747 and 2677. Pushing through these sets the stage to challenge a more potent barrier in the 2603-2626 region.

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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2019-05-20 06:30:00

US Dollar May Gain Versus SGD, PHP on Neutral Fed, Trade War Fears

Posted: 19 May 2019 08:33 PM PDT

ASEAN Fundamental Outlook

ASEAN currencies depreciated against the US Dollar this past week
Focus for USD/SGD, USD/PHP remains on the US-China trade war
Neutral reiterance from the Fed risks compounding market pessimism

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 US Dollar outperformed against its major counterparts this past week, climbing alongside the S&P 500 towards the latter-half of the past 5 days. Gains in US equities occurred despite simmering US-China trade tensions. There was a bout of market optimism as the US delayed imposing auto tariffs and Walmart and Cisco delivered rosy earnings reports.

Unsurprisingly, ASEAN currencies lost ground against their US counterpart, as anticipated. A notable underperformer was the Singapore Dollar. Weakness in the Philippine Peso was compounded by the BSP cutting bank reserve requirement ratios as the Bank of Indonesia stepped up efforts to Guard the Rupiah following the latest interest rate decision.

US-China Trade War May Escalate

The focus for ASEAN currencies continues to be the threat of US-China trade wars given a relatively light regional economic calendar docket. The Singapore Dollar will likely look past local GDP data for developments in sentiment. During the final moments of last week, a report from CNBC crossed the wires noting that talks between the world's largest economies stalled.

As a reminder, US President Donald Trump threatened to impose an additional $325b in Chinese import tariffs at a rate of 25% (on top of the current $200b). For the Philippine Peso, the prospects of cheaper crude oil, due to the commodity's sentiment-linked status if stocks fall, can help curtail a PHP selloff in the event of more gains in the very liquid US Dollar.

FOMC Minutes and Fed Chair Jerome Powell

Another risk for currencies such as the Indonesian Rupiah and Malaysian Ringgit could be a speech from Fed Chair Jerome Powell and the latest FOMC meeting minutes. The former will occur towards the beginning of the week on Monday at 23:00 GMT while the latter is set for Wednesday at 18:00 GMT.

This is because the markets have been pricing in a rate cut from the Federal Reserve towards the end of this year, following a general dovish shift in policy expectations in central banks across the world. Locally, both the Philippine and Malaysian central banks delivered cuts. However, the Fed may reiterate its neutral stance. This may fuel risk aversion, boosting USD.

For more timely updates on ASEAN currencies and the impact of US-China trade wars on them, you can follow me on Twitter @ddubrovskyFX

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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2019-05-20 03:30:00

GBP Downtrend Losing Control on Cloudy Brexit Outlook, Yen May Gain

Posted: 19 May 2019 04:20 PM PDT

Asia Pacific Market Open Talking Points

GBP/USD eyeing November lows on increasingly uncertain Brexit outlook
US lifting metal tariffs on Canada & Mexico enough for CAD, not for S&P
Anti-risk Japanese Yen may gain as equities falter on stalled US-China talks

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 British Pound was the worst-performing major, not just on Friday but on the whole since early this month. Continued deterioration in hopes of a Brexit deal between UK Prime Minister Theresa May and Opposition Leader Jeremy Corbyn have been clouding the Sterling outlook. Both leaders received an increase in urgency to reach a deal following dismal outcomes in local elections a couple of weeks ago.

Negotiations between the two parties broke down as Mr Corbyn walked out of talks, saying that they have 'gone as far as they can'. He still left the door open to more down the road if Ms May makes 'significant changes'. Meanwhile, the Prime Minister, while still hoping to put a new deal through Parliament in early June, has promised to step down amidst pressure from within her party, creating uncertainty for Sterling.

GBP/USD Technical Analysis

On the daily GBP/USD chart below, you can see the aggressive selloff in the British Pound. The pair cleared key support areas at 1.2866 and then 1.2773. It is now facing 1.2696 which is the October 2018 low. It may establish itself as support which is just above August 2018 lows. In the event of a turn higher, watch the near-term falling resistance line from early May.

GBP/USD Daily Chart

Chart Created in TradingView

On the flip side of the spectrum, the US and Canadian Dollars had rosier sessions. The former appeared to enjoy an uptick in sentiment as the US confirmed delayed imposing auto tariffs. The latter found support as Donald Trump announced the removal of steel and aluminum tariffs on Canada and Mexico to bolster support for Congress to approve the USMCA, the supposed successor of NAFTA.

Monday's Asia Pacific Trading Session

However, not all things were rosy on Friday. A report from the CNBC crossed the wires that US-China trade talks stalled towards the end of the day. By market close, the S&P 500 and Dow Jones fell 0.58% and 0.38% respectively. Yet, the Greenback held onto its gains. This highlights how during times of risk aversion, there is no rival to the highly-liquid US Dollar.

With that in mind, equities may struggle finding upside momentum as we begin the week. This may end up as a boon for the anti-risk Japanese Yen, which will likely look past local GDP data. The pro-risk Australian and New Zealand Dollars may weaken. The Aussie is expected to be the most-active major versus the US Dollar this week, partially due to its reaction to the weekend 2019 Australian federal election.

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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2019-05-19 23:00:00

Australian Dollar Up as Morrison Unexpectedly Triumphs in Election

Posted: 19 May 2019 02:21 PM PDT

AUSTRALIAN DOLLAR, FEDERAL ELECTION, MORRISON – TALKING POINTS:

Australian Dollar sharply higher as Morrison holds on to power in election
Yen down, Kiwi Dollar up as vote outcome boosts market-wide risk appetite
US-China trade war, slowing economic growth might limit follow-through

The Australian Dollar traded sharply higher against its G10 FX counterparts as Prime Minister Scott Morrison unexpectedly clung to power in the country's federal election over the weekend. The incumbent leader of the Liberal/National coalition even managed to pick up 3 more seats in the legislature.

The opposition Labor party had consistently led in opinion polls ahead of the vote, albeit by a narrow margin. It had proposed an agenda of tilting tax cuts toward lower-income Australians while increasing the take from higher and more investment-leaning incomes. That was meant to fund an increase in social spending.

The anti-risk Japanese Yen edged lower while the sentiment-geared New Zealand Dollar followed its Aussie cousin upward, albeit more timidly. That seems to suggest that election outcome has extended beyond domestic markets to boost market-wide risk appetite more broadly.

In all, these moves may reflect investors' relief at not having to deal with yet another uncertainty – a new government with an ambitious agenda – at a time when economic growth is slowing and the US-China trade war rages on. These worries remain of course, which may limit scope for follow-through.

Join our weekly AUD/USD outlook webinar to discuss strategies for trading the Aussie Dollar!

AUD/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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2019-05-19 21:14:00

Dollar and S&P 500 Still Within Range of Major Highs

Posted: 19 May 2019 09:21 AM PDT

Check out our Economic Calendar for upcoming economic data and central bank events.Australian Forecast: Australian Dollar Targets 2009 Lows, AUD/CAD and EUR/AUD Follow?

Will the Australian Dollar sustain its aggressive selloff across the board? AUD/USD is facing 2009 lows. AUD/CAD looks to lows from 2013 and 2015 as the EUR/AUD uptrend faces resistance.

Crude Oil Forecast:Drifting Towards Technical Support

The ongoing battle between supply and demand is keeping crude oil constrained within a trading range and this is likely to remain the case for the days ahead.

US Dollar Forecast:

The US Dollar ended a remarkably strong week through this past Friday. While the move did not secure the coveted historical reference to a fresh two-year high, the rally proved an especially bright spot against the contradiction of fundamental troubles that seemed to be cast aside with the performance.

Gold Forecast:The Better Precious Metal Shows Its Mettle

Gold has continued to rally in non-US Dollar terms, and even against the price of Silver. While ultimate upside may be limited in USD terms, the environment continues to ripen for further XAU strength.

Euro Forecast:Euro Weakness to Remain the Theme

The Euro is poised to trade down to last month's low or lower in the days ahead as the Dollar looks to reassert itself, however; expect some bumps along the way.

EquityForecast:Dow Jones, DAX 30 and FTSE 100 Technical Forecast

The Dow Jones, DAX 30 and FTSE 100 faced a week filled with volatility. As fundamental themes continue to simmer, technical levels will become all the more critical.

2019-05-19 16:00:00