Analyst Articles – Forex News 24

NOK, SEK May Feel Pain From EU Elections, Trade Talks, US GDP
PHP Ready to Gain as USD Falls with Crude Oil? ASEAN FX Eye US Data
Did AUDUSD Bottom? GBPUSD Wobbled as UK PM Resigned Amidst Brexit
Dow Holds Back from Trend Reversal, Euro and Pound Pulsating

NOK, SEK May Feel Pain From EU Elections, Trade Talks, US GDP

Posted: 27 May 2019 02:02 AM PDT

NORDIC FX, NOK, SEK WEEKLY OUTLOOK

Unfolding European politics may disrupt regional markets and hurt confidence
EU trade talks will be closely watched after Trump delays tariffs on auto imports
Sweden GDP, US economic data will also likely shake Nordic financial markets

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NOK and SEK are in for a potentially volatile week ahead as the European Union concludes its parliamentary elections. Freshly-admitted lawmakers with eurosceptic leanings will weigh in on appointing new heads of key European institutions while EU leaders discuss cross-Atlantic trade talks and the future of commerce with the US. Economic data from the latter will also have a role in compounding market volatility in an already-uptight week.

US ECONOMIC DATA: VOLATILITY AHEAD OF GDP, INFLATION DATA, US JAPAN TRADE NEGOTIATIONS

Global financial markets will be closely watching the US economic data docket this week. Some of the major indicators to look out for include US GDP and core CPI. The latter is particularly important after the Fed's neutral pivot at the April 30-May 1 FOMC meeting. Fed Chairman Jerome Powell stated that the temporary lull in inflation was "transitory" and hinted that a pick up in price growth could prompt officials to become more hawkish.

May 28, Tuesday: Consumer Confidence (MAY)

May 30, Thursday: GDP, Advanced Goods Trade Balance

May 31, Friday: PCE Core (YoY) (APR)

Ever since the global outlook has become more uncertain, most central banks in developed economies have halted their rate hike cycle. One of the only exceptions to this trend is the Norges Bank, though they too may soon succumb to the pressure of their peers.

The Fed can afford a patient wait-and-see mode approach to policy because underlying inflationary conditions remain broadly symmetrical and do not warrant a cut or hike. This is why the PCE core price growth report and GDP data will carry that much more weight: it has the potential to tilt the Fed's neutrality toward a more dovish or hawkish outlook.

US President Donald Trump will be discussing bilateral trade negotiations and foreign policy in Japan with Prime Minister Shinzo Abe until May 28. This follows discussions that occurred earlier this year when officials from Tokyo visited Washington in an attempt to stave off a US-Japan trade conflict. Monitoring these trade talks will be prudent because of the potential volatility it can induce if negotiations go south.

EUROPEAN POLITICAL RISKS MOUNTING: EU ELECTIONS, TRADE TALKS

The European parliamentary elections have concluded, and while initially there appeared to be a mild reaction from local markets – in part due to thin liquidity from holidays in the UK and the US – there still is scope for volatility. Later today, EU trade ministers will be discussing future commerce relations with the US after cross-Atlantic relations soured from the White House's campaign to redesign the global trading paradigm.

EURUSD – Daily Chart

On May 28, freshly-admitted lawmakers in the new European Parliament will be discussing prospective candidates to lead key European institutions. These include the ECB, the European Commission and the European Council. This may be where the ideological dissimilarity between the various parties within parliament will become apparent and could lead to volatility in the Euro.

Economic data throughout the week may also spark some higher-than-usual price action in the Euro. Here are some reports to look out for:

May 29, Wednesday: Italian Consumer, Manufacturing Confidence. French GDP, CPI. German Unemployment Data

May 31, Friday: Italian GDP, CPI

NORDIC OUTLOOK: SWEDEN GDP, NORWAY UNEMPLOYMENT

In Sweden, the economic docket is packed with volatility-inducing data in the early-middle part of the week:

May 28, Tuesday: Financial Stability Report, Retail Sales, Consumer and Manufacturing Confidence

May 29, Wednesday: GDP

Considering economic data has been tending to underperform relative to economists' expectations, Swedish data will likely fall in-line with this trend. This would only reinforce the Riksbank's already dovish stance and would likely force central bank policymakers to hold rates at -0.25 percent. The paradigm of negative rates will only increase the risk of rising household indebtedness because the cost to borrow capital is so low.

In Norway, the economic docket remains relatively light. Here are some Norway-based event risks that could jolt the Krone:

May 28, Tuesday: Consumer Confidence

May 29, Wednesday: Norges Bank Governor Oystein Olsen Speaks in Stavanger

May 31, Friday: Unemployment Rate

However, most of NOK's price action will likely be from shifts in global sentiment from external risks ranging from European politics to US trade relations with China and the EU. Norway's economy strongly relies on the petroleum sector, and as such, the Krone is sensitive to changes in global sentiment. To learn more about trading SEK and NOK, you may 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

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2019-05-27 09:00:00

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PHP Ready to Gain as USD Falls with Crude Oil? ASEAN FX Eye US Data

Posted: 26 May 2019 10:14 PM PDT

ASEAN Fundamental Outlook

US Dollar fades on soft PMI data, with Philippine Peso also gaining on oil declines
Chinese Manufacturing PMI next, with sentiment-linked FX eyeing US-China talks
More dismal US data may sink Greenback, USD/PHP may also fall with crude oil

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US Dollar and ASEAN FX Recap

The US Dollar succumbed to selling pressure this past week, weighed down by increased expectations that the Federal Reserve could deliver a cut this year. Disappointing US Manufacturing PMI data helped drive this dynamic, pointing to the weakest expansion in a decade. As a result, most ASEAN currencies outperformed against the Greenback this past week.

The Philippine Peso easily took the top spot, also benefiting from a drop in crude oil prices as anticipated. USD/PHP tends to have a close relationship to the commodity given that it is a key import for the nation and aggressive gains in oil last year helped to fuel a selloff in PHP. Meanwhile, the Singapore Dollar also performed well as it tends to closely follow DXY.

Softer-than-expected Malaysian CPI data (0.2% versus 0.4% y/y anticipated in April) may have held back the Malaysian Ringgit this past week after the central bank recently cut rates to bolster economic activity. USD/IDR fell on the other hand as the Bank of Indonesia reiterated that it will remain in the market to stabilize the Rupiah.

Week Ahead: Chinese PMIs in the Context of Trade Wars

The regional ASEAN economic calendar docket is relatively thin, with the top-tier event-risk nearby from China where we will get Manufacturing PMI data. China's manufacturing sector could be looking at contraction (49.9 expected) after two months of expansion. Lately, local data has been tending to underperform relative to economists' expectations, opening the door to a downside surprise.

This comes after US-China trade wars have seen an escalation. The former nation has imposed a higher tariff rate of 25% on about $200b in Chinese imports while threatening to potentially add an extra $325b on top of that. China has retaliated, imposing about $60b in levies on the US. This is arguably why stock market volatility risk has been elevated as of late and it leaves some ASEAN currencies at risk.

Chinese newspapers have stepped up efforts to criticize the US for the stall in negotiations, and market sentiment can easily sour if talks take a turn for the worse. Malaysia, Singapore, the Philippines and Indonesia all have key trading relationship with the world's second-largest economy. Blowback can make its way into their economies, and soft Chinese data can amplify global growth concerns.

US Data on Tap

Despite this, there is the possibility that the US Dollar could depreciate in the week ahead, offering the Singapore Dollar more room to rally. This is because we have a slew of data due: consumer confidence, GDP and core PCE (the Fed's preferred measure of inflation). As in China, US economic data has been tending to underperform relative to expectations.

If this trend continues, we may see declines in USD/IDR and USD/MYR. Sentiment-linked crude oil prices are also vulnerable to trade wars, and USD/PHP may again benefit from that and a weaker Greenback. 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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2019-05-27 05:00:00

Did AUDUSD Bottom? GBPUSD Wobbled as UK PM Resigned Amidst Brexit

Posted: 26 May 2019 04:07 PM PDT

Asia Pacific Market Open Talking Points

US Dollar depreciation prolonged into a second day, is AUD/USD bottoming?
GBP/USD wobbled, UK PM Theresa May resigned with Brexit talks ongoing
Euro vulnerable to European Parliamentary Election results in thin Asia trade

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US Dollar Weakens for a Second Day

The US Dollar underperformed against its major counterparts, extending its decline into a second day. Some point to a set of softer-than-expected US durable goods orders data as a catalyst, but weakness in the Greenback was gradual and occurred throughout the session. This could be as a result of positioning ahead of a loaded week for US economic data and the threat it poses to USD via Fed rate cut bets.

As a result, the pro-risk Australian and New Zealand Dollars outperformed, also benefiting from a cautious uptick in sentiment as equities began rising in Asia before trimming gains during the Wall Street trading session. This resulted in the Euro Stoxx 50 ending the day about 0.71% to the upside while the S&P 500 only finished 0.14% higher.

Australian Dollar Technical Analysis

Taking a closer look at the AUD/USD daily chart reveals a bottom that could be in the works. The pair formed a bullish Morning Star candlestick pattern while simultaneously pushing above the near-term falling resistance line from the middle of April. Another confirmatory close to the upside may be the momentum needed to overturn the dominant downtrend, exposing resistance at 0.6982.

AUD/USD Daily Chart

Chart Created in TradingView

British Pound Wobbles as Theresa May Resigns

It was long coming and speculation of it sent the British Pound tumbling in recent weeks, but UK Prime Minister Theresa May announced on Friday that she will be stepping down and a new leader is anticipated by the end of July. Being official, this will complicate Brexit negotiations depending on what agenda the new PM takes. GBP/USD was volatile, being pushed and pulled between that and US Dollar weakness.

Monday's Asia Pacific Trading Session

The Euro could be volatile to the European Election results, with a greater share of Eurosceptic parties a fundamental political threat to the currency. EUR/USD technical signals do point to potential weakness down the road. This may be compounded by lower-than-normal liquidity levels with US markets offline until Tuesday for the Memorial Day holiday with a relatively quiet economic docket in Monday Asia trade.

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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2019-05-26 23:00:00

Dow Holds Back from Trend Reversal, Euro and Pound Pulsating

Posted: 26 May 2019 09:24 AM PDT

Weekly Technical Forecast: Dow Holds Back from Trend Reversal, Euro and Pound Pulsating

While volatility readings are still remarkably restrained, we are seeing a host of critical markets pressuring or overtaking key technical levels. Whether the Dow's eyeing 25,200, the Sterling on the verge of reversing its longest tumble on record or looking to leverage its biggest single-day loss of 2019, there is remarkable technical risk and opportunity in our markets.

Gold Price Weekly Outlook – Looking to Break a Tightening Range

Gold is trapped in a short-term range and price action is building for a potential breakout next week.

EUR/USD, EUR/NZD Chart Outlook Bearish with EUR./JPY Bottoming

EUR/USD and EUR/NZD may find themselves aiming lower in the medium-term as the Euro depreciates. Against the Japanese Yen, EUR/JPY is facing key support and bullish reversal warnings.

Dow Jones, FTSE 100, DAX Technical Forecast

The Dow Jones is on course for its longest weekly losing streak in 8-years, while losses in the FTSE 100 is eased by the drop in the Pound.

Pound Collapse Building Pressure for Reversal or Mere Liquidity Pause?

After a near-relentless dive from the British Pound these past three weeks, there was a break in the clouds Friday with a Sterling bounce on the same day the Prime Minister announced her resignation. Is this the first step for a reversal?

Oil Weekly Price Outlook: Crude Collapses as WTI Searches for Support

Crude prices posted an outside weekly reversal off the monthly highs and risk further losses into the May close. These are the levels that matter on the WTI weekly chart.

US Dollar Forecast: Can Volatility Rise Alongside Trade Weighted USD?

A sharp turn lower in the US Dollar may provide a short reprieve to the strangling of a strong US Dollar on the global economy, but the long-term trends continue to favor a stronger US Dollar Index.

2019-05-26 16:00:00