Analyst Articles – Forex News 24

DAX 30 & CAC 40 Technical Outlook Weakens, More Pressure to Follow
Yen Aims Higher as Stocks Drop on US, China Trade War Escalation
Stocks, Crude Oil Drop in Asia with US-China Trade Talks at Risk
USD/MYR and USD/PHP Price Trends Face BNM, BSP and US Dollar Gains
Australian Dollar Shrugs At China Service Sector Strength, RBA Eyed
Crude Oil Prices Sink with Stocks on Trump China Tariff Threat
GBPUSD Uptrend Extends on Pressure for a Brexit Deal, Yen May Fall
AUD, NZD, CAD Fall After Trump Tweets New Tariff Threats

DAX 30 & CAC 40 Technical Outlook Weakens, More Pressure to Follow

Posted: 06 May 2019 03:05 AM PDT

DAX 30/CAC 40 Technical Highlights

DAX expected to trade lower after hitting resistance
CAC trading under December trend-line

Fresh quarterly forecasts are out, to see where our team of analysts see the Euro, DAX, and other markets are headed in the coming weeks, check out the DailyFX Q2 Trading Forecasts.

DAX expected to trade lower after hitting resistance

Last week, the focus was on the way momentum had slowed to a crawl in major European indices, with the DAX possibly having one more small move higher before hitting resistance. On Friday, price moved up to the September swing-high and closed not far of the session's best levels.

Over the weekend with Trade Wars between the U.S. and China flaring up again markets are going into 'risk-off' mode as a response. Whether it was this catalyst or another, global stock markets (as we looked at with regard to the U.S. on Friday) looked poised for a set-back.

The first meaningful level to watch as support is a swing-high from a month ago at 12029, followed up by the trend-line from the December low. There is a sizable gap-fill down to 11754 to pay attention to should selling accelerate towards the trend-line.

In the very near-term we may see an attempt to fill today's gap, but efforts could quickly fail as this may be the break-away surprise gap that will take some time to repair. With that in mind, running with a short trading bias looks to be the way to go for now given the recently extended nature of the market and sudden break.

DAX Daily Chart (may be break-away gap from high)

CAC trading under December trend-line

The CAC is in an even more precarious position than the DAX, with it having not only shown more relative weakness lately, but also gapping below the trend-line off the December low. The CAC is already near a gap fill down to 5423, with another gap to watch down to 5350 to keep an eye on. There aren't any significant swing-low levels until just above 5200 where the 200-day lies just below by a few points.

CAC Daily Chart (under trend-line support)

Want to learn more about trading the DAX? Check out 'How to Trade the DAX', and join me weekly for technical updates in the Indices and Commodities webinar.

Forex & CFD Trader Resources

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—Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

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2019-05-06 09:30:00

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Yen Aims Higher as Stocks Drop on US, China Trade War Escalation

Posted: 05 May 2019 11:47 PM PDT

TALKING POINTS – US TARIFFS, CHINA, TRUMP, TRADE WAR, YEN, US DOLLAR

Yen, US Dollar soar as Trump threatens tariff hike on China imports
Australian and New Zealand Dollars drop with Asia Pacific equities
US and European stock index futures hint risk-off trade to continue

The anti-risk Japanese Yen outperformed in Asia Pacific trade as signs of escalation in the US-China trade war sent markets scrambling. The similarly-minded US Dollar and Swiss Franc followed higher while the sentiment-linked Australian, Canadian and New Zealand Dollars sank alongside regional stocks.

Signs of progress in trade talks between Washington and Beijing had seemingly lost its capacity to brighten investors' mood over recent weeks, implying the markets were all-but priced for a deal. APAC bourses shed over 2 percent on average as the story took a hard pivot in the opposite direction.

US President Donald Trump aired frustration with the slow pace of progress via Twitter over the weekend, saying tariffs on $200 billion in Chinese imports will rise from 10 to 25 percent by Friday. He added that levies on a further $325 billion in goods from the East Asian giant may be pursued.

YEN, US DOLLAR POISED TO EXTEND GAINS IN RISK-OFF TRADE

Looking ahead, a lackluster European economic docket seems unlikely to take the spotlight away from broader sentiment trends. Revised Eurozone PMI data confirming private sector growth slowed in April is likely to dissolve into broader risk aversion without a stand-alone market response.

Futures tracking key European and US equity benchmarks are pointing sharply lower before the opening bell, hinting that the risk-off drive will probably continue. Absent a walk-back from the White House or some equally drastic about-face in the narrative, breaking this momentum is likely to prove difficult.

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

CHART OF THE DAY – S&P 500 DOUBLE TOP READY TO BE CONFIRMED?

The bellwether S&P 500 stock index looks to be on the verge of confirming a double top after recoiling from critical resistance, as expected. This is marked by the 2018 swing top, the upper bound of a bearish Rising Wedge chart pattern, and the underside of support-turned-resistance established from February 2016.

Prices are now trading below the Wedge floor. If this break is confirmed on a daily closing basis, a Double Top will appear to be completed. That may set the stage for prolonged de-risking across financial markets, driving USD and JPY higher at the expense of sentiment-geared commodity bloc currencies.

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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2019-05-06 06:30:00

Stocks, Crude Oil Drop in Asia with US-China Trade Talks at Risk

Posted: 05 May 2019 10:32 PM PDT

Asian Stocks Talking Points:

Regional stock markets were firmly lower Monday
China and the US seem to have reached another trade impasse
The US has also sent more military hardware to the Persian Gulf

Find out what retail foreign exchange investors make of your favorite currency's chances right now at the DailyFX Sentiment Page

A new increase in trade tensions between China and the US took a heavy toll on regional stock markets Monday.

US President Donald Trump threatened further tariff barriers against Chinese goods on Friday, apparently frustrated by the slow pace of negotiations scheduled to resume in Washington this week. China for its part has reportedly threatened to cancel talks altogether in response.

International markets had been optimistic that May could see a deal finally inked between the two global heavyweights. It is impossible to know how much brinkmanship is entailed by this latest apparent deterioration in relations, but that optimism has certainly receded.

Crude oil prices also fell as investors worried about demand levels in a world without a trade deal. This impetus was strong enough to overcome the rising geopolitical temperature in the Middle East. Washington has dispatched a carrier strike group and other attack aircraft to the region to increase deterrence pressure on Iran.

The Shanghai mainboard was down more than 5% in the afternoon, with Australia's ASX 200 down by nearly 1%. The Sydney benchmark has retreated noticeably from its April peaks, but there seems no sign yet of any nervous selling pressure and the index remains comfortably above the psychologically crucial 6000 mark.

The index is now flirting with the highs of early April, which now come in as support. Below them the last significant low, from late March, will be eyed. It comes in in the 6100 region.

Japanese markets remain closed for an extended holiday break. Growth sensitive currencies like the Australian Dollar were unwanted at the expense of more countercyclical plays like the Japanese Yen. European markets may well lack volume with London out for a break of its own.

Monday's remaining economic data schedule is rather thinly populated. Various Purchasing Managers Index numbers will be coming from around Europe, but that is about it. The main Asian data release came in the form of one of these, from China's private service sector. It performed quite well last month but in so doing highlighted the disparity between it and the still-struggling manufacturing sphere which of course stands to be hit even harder if no trade deal can be struck.

Resources for Traders

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

— Written by David Cottle, DailyFX Research

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

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2019-05-06 04:56:00

USD/MYR and USD/PHP Price Trends Face BNM, BSP and US Dollar Gains

Posted: 05 May 2019 09:08 PM PDT

ASEAN Fundamental Outlook

US Dollar mixed performance echoes into ASEAN currencies
Malaysian Ringgit and Philippine Peso eyeing rate cuts next?
Fed Chair Jerome Powell, CPI data may boost the US Dollar

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 experienced a lackluster week, initially rallying on April's Fed rate decision. Chair Jerome Powell surprised markets by offering commentary that was less-dovish than anticipated, undermining rate cut bets. Then on Friday, a mixed US jobs report sent the Greenback lower alongside front-end government bond yields. A lower unemployment rate was somewhat offset by weaker labor force participation.

The mixed performance in USD thus translated into certain ASEAN currencies. The Philippine Peso was one of the best-performing as S&P Global Ratings raised the Philippines sovereign credit rating while offering a stable outlook. Weaker crude oil prices also eased some selling pressure in the currency as anticipated. The Singapore Dollar saw slight gains.

Meanwhile, the Indonesian Rupiah and Malaysian Ringgit underperformed. The Bank of Indonesia noted that in recent weeks rising demand for USD has weakened IDR and that it intends to maintain exchange rate stability. USD/MYR, while rising this past week, is still in consolidation mode after pausing its near-term uptrend.

Regional ASEAN Docket

Weakness in the Malaysian Ringgit could also be in an anticipation of a rate cut this week. Most economists surveyed by Bloomberg anticipate the central bank (Bank Negara Malaysia, BNM) to cut the overnight policy rate to 3.00% from 3.25%. This would be the first action from the BNM since January 2018 and the last time it cut rates was back in 2016. If more cuts are to come, MYR may weaken further.

A couple of reasons why we might see one ahead, a few of weeks ago I noted headwinds that the nation is facing. Fears of capital flight have been in-part responsible for gains in USD/MYR as of late. Meanwhile, inflation levels are low and palm oil prices, a key export, just experienced their worst week since November after prolonged weakness since February. A surprise rate hold may throw off bears and boost the currency.

The Philippine Peso is also facing a similar situation with the Philippine central bank (BSP) which is also expected to ease its overnight borrowing rate on Thursday. But expectations aren't as confident as those for its Malaysian counterpart. This may be due to CPI and GDP data still to come earlier in the week as markets gauge economic conditions.

BSP Deputy Governor Diwa Guinigundo noted earlier in April that they want to see inflation near the middle of their target (3.0% +- 1 percentage point) before easing. Expectations are for CPI to clock in at 3.1% y/y in April, but recent gains in crude oil prices may result in a surprise higher which could cool rate cut bets and boost PHP. The counterargument is that Governor Benjamin Diokno noted that the S&P's decision to upgrade the nation's credit rating could hasten a rate cut.

I will be closely monitoring MYR and PHP ahead to see what the reactions will be. You may follow me on twitter here @ddubrovskyFX for timely updates on ASEAN FX.

External Risks

Be mindful of how the US Dollar performs this week as well. It has a speech from Fed Chair Jerome Powell and US CPI data to offer volatility. If Mr Powell continues to undermine rate cut bets by reiterating their tone from last week, the Greenback may find upside momentum. Meanwhile, headline inflation is anticipated to pickup from 1.9% y/y to 2.1%. This could also cool dovish expectations, boosting USD/SGD.

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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2019-05-06 03:30:00

Australian Dollar Shrugs At China Service Sector Strength, RBA Eyed

Posted: 05 May 2019 07:47 PM PDT

Australian Dollar, China Caixin Service Sector PMI Talking Points:

China's private service sector did better than expected last month
This is in contrast with manufacturing which has underwhelmed
The Australian Dollar was focused elsewhere, however

Find out what retail foreign exchange traders make of the Australian Dollar's chances right now at the DailyFX Sentiment Page.

The Australian Dollar didn't get any support Monday from news that China' private service sector performed better than expected last month.

April's Purchasing Managers Index from media group Caixin came in at 54.5, ahead of the 54.2 expected. In the logic of PMIs any reading above 50 signifies expansion for the sector under scrutiny. The service sector seems to be expanding quite robustly, in contrast to manufacturing where PMIs for the same month have underperformed expectations. The Caixin Composite reading, which combines the two, came in at 52.7.

All up the data suggest that China's economy remains split, with a more lackluster showing for global trade still weighing on its formidable manufacturing export machine.

The Australian Dollar can act as the markets' favorite liquid China bet but doesn't seem to have done so to any great extent following these data.

AUD/USD was already on the defensive thanks to news that the White House is threatening new tariffs on China in apparent frustration with the slow pace of trade talks. China has in turn reportedly considered delaying the next round of negotiations which were scheduled to take place in Washington this week. Growth-sensitive markets such as the Australian Dollar are also focused on the Middle East. The US has also upped pressure on Iran by sending a carrier strike group and bomber force to the Persian Gulf.

Australia's central bank will set monetary policy on Tuesday with the chance of an interest rate cut held to be the highest it has been for more than two years. However, according to data compiled by index provider ASX, the chance has wilted significantly from more than 60% last week to under 40% now.

On its broader, daily chart, AUD/USD remains well within the downtrend which has endured since early 2018.

Australian inflation remains stubbornly weak despite record-low interest rates and the Reserve Bank of Australia could certainly justify cutting those rates further this week. However, the global economic situation remains fluid, with that US/China trade deal still very much in the balance and the markets focused on US interest rates as the US economy seems to be picking up speed.

The RBA may judge that it could get more bang for its rate-cut buck by holding action over until later in the year.

Resources for Traders

— Written by David Cottle, DailyFX Research

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

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2019-05-06 02:15:00

Crude Oil Prices Sink with Stocks on Trump China Tariff Threat

Posted: 05 May 2019 07:12 PM PDT

CRUDE OIL & GOLD TALKING POINTS:

Crude oil prices fell with stocks on US-China trade war escalation
Trump threatened to increase China import tariffs by the week-end
US carrier deployment to check Iran eyed, Eurozone PMI data due

Crude oil prices are falling alongside S&P 500 futures and Asia Pacific stock exchanges at the start of the trading week signs of US-China trade war escalation sour market-wide sentiment. Gold prices edged up as the defensive mood weighed on bond yields, but the rally quickly stalled as haven demand buoyed the US Dollar, undermining the appeal of anti-fiat alternatives.

Looking ahead, risk trends are likely to overshadow a quiet offering on the economic data front. A revised set of April's Eurozone PMI data takes top billing and is expected to confirm flash estimates showing manufacturing- and service-sector growth slowed after a shallow uptick in March. Any such outcome is likely to dissolve into broader risk-off dynamics.

Geopolitical complications may muddy crude oil price action after the US deployed an aircraft carrier strike group to the Middle East to counter any would-be aggression from Iran. National security adviser John Bolton said the move was meant to tell Tehran that any attack on US interests or its allies will be met with "unrelenting force". Washington is expected to hit Iran with additional sanctions within a week.

See the latest gold and crude oil forecasts to learn what will drive prices in the second quarter!

GOLD TECHNICAL ANALYSIS

Gold prices continue to oscillate above support in the 1260.80-63.76 area. A break below this barrier confirmed on a daily closing basis would overturn the rising trend from mid-August 2018, initially exposing the next downside barrier in the 1235.11-38.00 zone. Immediate resistance runs through 1295.37, with a break above that targeting the 1303.70-09.12 region.

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices dropped to test minor support at 60.39. A break below that confirmed on a daily closing basis targets the 57.24-88 area next. A dense layer of resistance extends up through 67.03. Reversing back above this barrier opens the door for another challenge of the $70/bbl figure.

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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2019-05-06 00:30:00

GBPUSD Uptrend Extends on Pressure for a Brexit Deal, Yen May Fall

Posted: 05 May 2019 04:33 PM PDT

Asia Pacific Market Open Talking Points

GBP/USD surged towards resistance on increased pressure for a Brexit deal
US Dollar fell on mixed jobs report, S&P 500 rejoiced as bond yields dropped
Asia Pacific equities may follow Wall Street higher as anti-risk Yen weakens

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 easily took the spot as the best-performing major on Friday, experiencing a sudden burst of gains towards the end of the day. Puzzlingly, a clear catalyst seemed absent. Taking a look at the immediate chart below, we can see that GBP/USD gains accelerated once the last major event risk had passed ahead of the weekend, US ISM Non-Manufacturing PMI (which followed the jobs report).

GBP/USD Gains With BoE Rate Hike Bets

Chart Created in TradingView

Meanwhile, we know that earlier in the day the UK Conservative and Labour Parties lost seats in local elections, perhaps because of frustrated voters due to Brexit being delayed until October. On Thursday, Sterling largely brushed aside a hawkish Bank of England rate decision given the uncertainties of Brexit.

Perhaps the local elections served as a wake up call for both parties to reach an agreement on Brexit as soon as possible. This can boost the odds of a BoE rate hike and make GBP a relatively attractive currency in the context of a neutral Fed and what could be rate cuts from the RBA and RBNZ this week.

GBP/USD Technical Analysis

With that in mind, GBP/USD had its best day since March as the pair rose above the trend line that guided it higher from December to the middle of March. This also comes after clearing the near-term falling resistance line from March which sets GBP/USD up for another retest of the psychological barrier between 1.3363 and 1.3301 next.

GBP/USD Daily Chart

Chart Created in TradingView

Monday's Asia Pacific Trading Session

There may be some market optimism to be had at the start of this week if Asia Pacific equities follow Wall Street higher. There, the S&P 500 saw gains in the aftermath of a mixed jobs report. While the nation added more jobs than expected and the unemployment rate ticked lower, the labor force participation rate softened. Perhaps discouraged workers exited the market, thereby pushing down unemployment.

Moreover, average hourly earnings disappointed relative to expectations. Given recent softer signals from the Fed's preferred measure of inflation, the jobs report might have underlined a neutral Fed that isn't ready to hike soon. The US Dollar fell alongside front-end government bond yields. With that in mind, don't be too surprised if regional equities rise and the anti-risk Japanese Yen weakens.

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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2019-05-05 23:00:00

AUD, NZD, CAD Fall After Trump Tweets New Tariff Threats

Posted: 05 May 2019 03:19 PM PDT

Cycle-sensitive assets found themselves in the red early on Monday’s trading session after President Trump tweeted new tariff impositions and threats of additional measures.

2019-05-05 21:37:00