Analyst Articles – Forex News 24

No Mercy For GBP- Manufacturing Inflation at 33 Year Lows Adds to Brexit Woes
Gold Price Wedge Suggests Higher Soon, Silver Gunning for Breakout
Dollar Rallies as Euro and Pound Retreat, Data Versus Systemic Themes
Crude Oil Price Drop Breaks Key Support, Hints at Trend Reversal
Pound Collapse Continues Unrestrained by Brexit Uncertainty
Pound Collapse Continues Unrestrained by Brexit Uncertainty
Dollar Rallies as Euro and Pound Retreat, Data Versus Systemic Themes
AUD/USD Topping as Dollar Rallied on Trump Fueling Trade War Woes?
BAC, PNC and NFLX Up to Bat in Earnings Season
Bitcoin Price Drops Below $10,000 as Regulators Grill Facebook’s Libra

No Mercy For GBP- Manufacturing Inflation at 33 Year Lows Adds to Brexit Woes

Posted: 17 Jul 2019 03:08 AM PDT

GBP Talking Points:

Core consumer inflation picked up in June, but producer inflation turns negative amid ongoing trade war concerns
GBP suffered another slide in the morning session on the back of growing concerns that Boris Johnson could deliver a no-deal Brexit if he is elected as PM
EU inflation is revised higher but still remains cautiously low

Sterling (GBP) has suffered another plunge as the currency was trading notably lower against all other majors at the start of European trading on Wednesday morning. GBPUSD remained mostly unchanged in the overnight session but suffered a 36-pip loss in the first hour of morning trading, down to levels not seen since April 2017, before bouncing back ahead of UK inflation figures being released. The drop could have been led by the ongoing tory leadership race as front-runner Boris Johnson seems set to go through with a no-deal Brexit if the EU does not ditch the Irish backstop, diminishing investor confidence in the British currency. GBPJPY also followed suit by shedding 42 pips before fully correcting the drop and bouncing back higher to 134.402.

PRICE CHART: GBPUSD ONE-MINUTE TIME FRAME (INTRADAY)

Consumer level inflation in the UK picked up slightly in the month of June after May saw a small dip led mainly by the fall in airline and car prices. The June figure for core inflation,which excludes volatile prices for food, energy and alcohol, came in at 1.8%, up from 1.7% and in line with expectations. Headline inflation remained unchanged at 2%. At the producer level, output prices grew 1.6% in June, its lowest rate in 33 years, down from an upward revised growth of 1.9% in May and below expectations of 1.7%. Input prices fell 0.3% in the year to June, negative for the first time since June 2016, whilst the monthly change in prices was -1.4%, showing that prices for materials and fuels used in the manufacturing process are falling, mostly due to the contribution from crude oil, but the price for goods leaving the factory are increasing. Input inflation is more volatile than output inflation as it is driven mostly by commodity prices and is also sensitive to exchange rate movements, as roughly two-thirds of the inputs into the UK manufacturing sector are imported.

No Mercy For GBP- Manufacturing Inflation at 33 Year Lows Adds to Brexit Woes

Source: ONS

No Mercy For GBP- Manufacturing Inflation at 33 Year Lows Adds to Brexit Woes

Source: DailyFX, Reuters

Despite consumer inflation remaining mostly in line with the target, the need to hike rates has mostly disappeared as the BoE has aligned their forward guidance with other Central Banks that keep on turning further dovish. With trade war concerns resurfaced after Trump said that the US and China have a "long way to go" and that he could apply further tariffs on Chinese goods most Central Banks remain weary about their future growth outlooks, starving off the need for rate hikes even if domestic data is performing well. On top of global tensions, the UK also has ongoing political tensions within its borders as Boris Johnson is likely to become the new Prime Minister and seems to have no intention of backing off from a no-deal Brexit despite numerous warnings of how it would harm the British economy.

EU Inflation ticks higher

A final reading for EU inflation showed an upward revision to both core and headline inflation. Prices rose 1.3% in the 12 months to June, revised upward from 1.2%, and the monthly change was revised higher to 0.2% from 0.1%. Monthly core inflation was revised upward from 0.3% to 0.4%. But despite the better than expected readings, inflation in the Eurozone still remains well below the ECB's target of 2%, increasing fears of possible deflationary pressure.

Gold Price/Silver Technical Outlook:

Gold price building near-term wedge after macro-wedge breakout
Silver trying to rise out of long-term wedge

For forecasts, educational content, and more, check out the DailyFX Trading Guides page.

Gold price building near-term wedge after macro-wedge breakout

Last month, gold price exploded out of a wedge formation dating back several years. This put the precious metal in good position to rally much higher, with a measured move target approaching the 1700 level. This will of course take time, but the path of least resistance is higher for as long as the breakout holds.

With that in mind, trading bullish set-ups in the shorter-term could yield good results if macro forces are to remain constructive. Currently, gold is nearing the end of a developing wedge that has been building since the last week of June.

A breakout above the top-side trend-line of the pattern and 1427 should have gold rolling again. In the event of a breakout the next targeted level will be a minor level of resistance created in 2013 around the 1488 level, with more significant resistance from 1522 up to around 1540.

The wedge needs to break, first, though, before getting too geared up for higher prices. A downside resolution or false breakdown before jamming higher, could develop. In the event of a breakdown, given the proximity of the top of the macro-wedge, it may not pay (poor risk/reward) to run with a short. In the event of a false breakdown (a common occurrence for wedges), then once price recoups back above the top-side trend-line of the pattern, then a bullish bias will reassert itself.

Gold Price Weekly Chart (strong wedge-break)

Gold Price Daily Chart (wedging up in near-term)

Silver trying to rise out of long-term wedge

Silver has been playing catch-up with gold in recent sessions. While gold consolidates in the near-term silver is trying to break the trend-line from July 2016 that makes up the top of a long-term wedge pattern. A weekly close above the top-side t-line will gear up silver for a sustained move higher along with its big sibling. If price fails back below by Friday, then a neutral bias will remain. In any event, if gold is to maintain its big-picture breakout, then silver will start to offer good-looking bullish set-ups at some point.

Check out the IG Client Sentiment page to see how changes in trader positioning can help signal the next price move in gold and other major markets and currencies.

Silver Price Weekly Chart (trying to break top of wedge formation)

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

2019-07-17 09:30:00

Dollar Rallies as Euro and Pound Retreat, Data Versus Systemic Themes

Posted: 17 Jul 2019 12:05 AM PDT

Dollar Talking Points:

Dollar posts an impressive rally despite earnings that decry Dollar strength, Powell warming to cuts and uneven data
Pound and Euro register significant retreat despite fundamental references that have recently struggled to ump start price action
US equities take a modest step lower from record highs while the rest of the risk-leaning assets remain placid

What do the DailyFX Analysts expect from the Dollar, Euro, Equities, Oil and more through the 3Q 2019? Download forecasts for these assets and more with technical and fundamental insight from the DailyFX Trading Guides page.

Earnings Touch Upon Growth, Trade Wars and Monetary Policy Themes

We would touch upon all three major themes that we have kept regular watch over this past session through various headlines, officials’ remarks and data points. However, I think it was particularly remarkable that trade wars, growth fears and monetary policy were all touched upon in US earnings. Starting with trade wars which had President Trump and Chinese media rhetoric to contend with, there was direct reference to the impact that this enormous source of uncertainty was bringing across a number of companies reporting. Perhaps more interesting was not the revenue guidance curtailed by poor relationships with the United States largest trade partners but rather more localized pressure. President Trump remarked this past session that he would advise his attorney general to look into Google’s policies regarding China – a suggestion by one of his former technology council members, Peter Thiel, who also happens to have a stake in the industry. Putting the tension on US businesses is not unusual (Harley-Davidson, Amazon and GM among others).

The general health of the economy was readily reflected in earnings this past session as well. It is effectively the case that business sector earnings are a direct reflection of the overall health of an economy, but there were further particular performance figures that speak to the more overt fissures in expansion. Rail transportation firm CSX reported a miss on the quarter. When transportation of goods via rail, cargo shipping (like Maersk) or shipping solutions (such as Fedex) weaken; it can show fading expansion more tangibly then government data that is extrapolated by surveys with small sample size. Another interesting signal for the state of the economy through earnings was the Johnson & Johnson. While the consumer staple and medical devices maker beat top line, its sales weakened with a particular hit to foreign revenues for which it lamented the unfavorable exchange rate environment – something the US President may catch wind of.

Perhaps the most comprehensive view of any of the systemic themes that we cover on a regular basis was the outlook for US monetary policy. There were three major banks that posted their previous quarter performance along with guidance for the future – JPMorgan, Wells Fargo and Goldman Sachs – and all three made either direct or related reference to an anticipated hit to profit from growing speculation of rate cuts by the Federal Reserve. JPM’s CFO suggested that if there is one rate cut from the central bank this year, it could lead to income higher than $57.7 billion which would decline the deeper than cut through 2019. Not all companies benefit from an environment awash in liquidity.

Probability of Fed Rate Cuts from CME Fed Fund Futures

An Abrupt Dollar Rally the Reflection of Themes, Event Risk or Just No Place Else to Go?

Looking for activity through the past session, there was a measured movement from the traditional risk-based assets. The Dow and S&P 500 look to once again be staging a more significant course reversal, but we have a ways to go before it reaches self-sustained collapse. So far, the Dow has posted its first gap lower in five trading days and offered some modest progress in a retreat after spinning its wheels through Monday. For most of the other risk-based assets, the buoyancy of the US indices are well out of reach.

Chart of the Dow Index and Opening Gaps (Daily)

Dollar Rallies as Euro and Pound Retreat, Data Versus Systemic Themes

Far more impressive was the volatility from the top players in the FX ilk. The Dollar posted a hefty rally whether measured through trade-weighting (DXY) or on a more distributed basis. The Greenback’s charge seemed to lack for consistency in its fundamental backing. Through Fed Chairman Powell’s remarks, it was clear he was trying to commit forward guidance more explicitly to an impending rate cut while also suggesting the ‘normal’ of past cycles may not be reached again. In data, monthly retail sales rose 0.4 percent (versus 0.1 percent expected) while consumption excluding gasoline and autos offered a far more significant beat at 0.7 percent growth. That was on the favorable side of the scale. Alternative industrial production was unchanged, TIC flows expanded a scant $3.5 billion as China cut Treasury holdings a third month while export and import inflation dropped steadily. If the market is acting selectively, it could have still favored the bullish interpretation; but what we witnessed from the US currency may ultimately be the collective withdrawal from its major counterparts.

Chart of DXY Dollar Index and Rate of Change (Daily)

Dollar Rallies as Euro and Pound Retreat, Data Versus Systemic Themes

Unmistakable Weakness from the Euro and Pound

Looking for motivation for the Dollar, there are few stronger motivation than the simple equation of its most liquid counterparts succumbing to their own fundamental pressure. In addition to the Yen feeling a pinch through risk trends, the Euro dropped for a fourth consecutive session through Tuesday via an equally-weighted index. While the move lacks for unrestricted momentum, it is still a consistent drive. Behind its troubles, there is data in the form of investor sentiment which dropped the Eurozone as a whole (-20.3) and chief member Germany (-24.5 expectations and current measure flipping negative). In more systemic interests, Germany’s Ursula von der Leyen was approved by the EU Parliament to head the Union, but there was a clearly divided backdrop.

Chart of Equally-Weighted Euro Index and Consecutive Candles (Daily)

Dollar Rallies as Euro and Pound Retreat, Data Versus Systemic Themes

While significantly less liquid than the Euro – and thereby a less pressing lever for the Dollar – the British Pound’s tumble was far more aggressive and incredibly productive. The Sterling dropped its lowest level since November 2016 while GBPUSD suffered its worst single-day performance since March 28th. UK jobless claims were a meaningful economic update with a notably poor benchmark update (38,000), but robust wage growth would seem to counter the pain. As important as this economic figure may be, it likely carries limited impact for the Sterling – and the same is true of the UK’s inflation figures ahead. The unrelenting concern remains fears of a disorderly Brexit, but what insight is building this particular risk before a conservative party leader is decided and then we eventually return to a divorce fight with the European Union. At what point is a disorderly exit fully priced?

Chart of Equally-Weighted Pound Index

Dollar Rallies as Euro and Pound Retreat, Data Versus Systemic Themes

Kiwi Dollar Fails to Leverage a Data Move, Now It’s the Canadian Dollar’s Turn

For less reliable, systemic moves than the Dollar, Euro or Pound; we have to look to scheduled event risk with enough bite to hit upon a more headline-worthy theme. The New Zealand Dollar Tuesday morning had the chance to change its cards with rate speculation as 2Q CPI crossed the wires. While the clip of price pressures accelerated modestly (1.7 from 1.5 percent), it was in-line with forecasts and still well short of the RBNZ’s tolerance band. It is no wonder the Kiwi wouldn’t mount a substantial rally on the data release.

Chart of Rate Probabilities for the Major Central Banks

Dollar Rallies as Euro and Pound Retreat, Data Versus Systemic Themes

Perhaps the circumstances for the Canadian Dollar will be different moving forward. The currency has enjoyed an impressive climb these past weeks as the threat an ongoing US trade war and speculation of a BOC policy shift akin to that of the Fed have both faded into the backdrop. While dovish pressure is slowly building, the Canadian central bank is still lagging far behind for monetary policy action relative to the likes of the Fed, ECB and BOJ. That could change with the upcoming sessions Canadian CPI data. Headline inflation is setting the bar very low for generating a surprise response with a forecast of 1.8 percent that mirrors the previous month’s clip. Technicals would better perform if the insight is dovish, but don’t let expectations get too far ahead of practical market developments. We discuss all of this and more in today’s Trading Video.

Dollar Rallies as Euro and Pound Retreat, Data Versus Systemic Themes

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

2019-07-17 03:27:00

Crude Oil Price Drop Breaks Key Support, Hints at Trend Reversal

Posted: 16 Jul 2019 11:19 PM PDT

CRUDE OIL & GOLD TALKING POINTS:

Crude oil prices fall with stocks as Trump fuels trade war fears
Gold prices swing lower on US retail sales data, USD strength
EIA oil inventory flow data, Fed Beige Book survey due ahead

Crude oil prices tumbled alongside stocks as President Donald Trump forced the spotlight back to the US-China trade war, saying more tariffs could be imposed against the East Asian giant "if he wanted". This warned that a longer-lasting spat might hurt global growth further, cooling energy demand.

Oversupply considerations probably figured into the selloff too. US Secretary of State Pompeo signaled that an opening for a diplomatic solution to tensions with Iran has emerged. Meanwhile, API data showed US stockpiles shed a mere 1.4 million barrels last week.

Official EIA inventory figures are next on tap, with analysts expecting an outflow of 3.7 million barrels. A downside surprise echoing the API report may give oil prices another downward nudge. How broader sentiment figures into the equation – boosting or countering selling pressure – is unclear for now.

GOLD AT RISK IF US DOLLAR REGAINS HAVEN BID, FED BEIGE BOOK EYED

Gold prices swung lower as US retail sales topped forecasts, narrowly trimming Fed rate cut bets and sending Treasury bond yields upward. Not surprisingly, this undermined the appeal of the non-interest-bearing metal. Receipts added 0.4 percent, topping forecasts calling for a 0.2 percent rise.

A resurgent US Dollar added to gold's woes, sapping demand for anti-fiat alternatives. The benchmark currency scored its largest daily rise in two weeks. Weakness in European currencies appeared to account for much of the move, driven by Brexit-related jitters and soggy economic data.

Another batch of dovish comments from Fed Chair Powell failed to lift gold prices, as expected. This adds the sense that dovish policy bets have lost the ability to drive USD selling. That might allow haven demand to drive USD gains – punishing gold – if the incoming Fed Beige Book survey warns of sluggish growth.

Get the latest gold and crude oil forecasts to see what will drive prices in the third quarter!

GOLD TECHNICAL ANALYSIS

Gold prices continue to mark time in an increasingly narrow range below resistance clustered around the August 2013 high at 1433.85. A break upward opens the door for a foray to test above the $1500/oz figure. Back-to-back support levels run down through 1346.75, with a push below that probably needed to neutralize the near-term bullish bias.

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices broke through support guiding them higher since mid-June, painting last week's attempted uptrend resumption as a false breakout. The setup now suggests sellers have retaken the initiative, with a daily close below the support block running through 54.84 exposing the $50/bbl figure anew. Immediate resistance is in the 60.04-84 area.

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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2019-07-17 03:30:00

Pound Collapse Continues Unrestrained by Brexit Uncertainty

Posted: 16 Jul 2019 10:37 PM PDT

Pound Talking Points:

Pound took another aggressive drop this past session, pushing an equally-weighted measure of the currency to its lowest since September 2017
While UK jobless claims served up fresh disappointment for an already troubled economic forecast, that hasn’t proved a reliable mover
Brexit focus both draws attention forward as we await key milestones, but it seems to also feed a steady slide in confidence

See how retail traders are positioning in GBPUSD, EURGBP, GBPJPY and other liquid FX crossesusing the DailyFX speculative positioning data on the sentiment page.

An Unrelenting Slide for the Sterling Pushes the Currency to Multi-Year Lows

Among a few, strong FX moves this past session, the Sterling’s drop was contributing to one of the most remarkable overall performances we have seen among the majors in some time. The Pound tumbled across the market Tuesday and would ultimately drop to its lowest level on an equally-weighted basis (against the majors) since September 2017. Among its more recognizable pairings, the benchmark GBPUSD dropped back below 1.2500 helped along by the Dollar’s unusual climb through the session.

Chart of Equally-Weighted Pound Index (Daily)

Brexit is the Chief Concern and Its Influence is as Much a Break as Accelerator

It is hard to discern what is more remarkable about the Sterling’s weakness: technicals or fundamentals. While the five week drop from the equally-weighted GBP measure matches the worst stretch going back to the flash crash low back in November 2016, certain pairs like the EURGBP are driving a more exceptional move with a record-breaking 11 consecutive week advance through Friday. Nevertheless, confidence should depend as much on the fundamentals as the mere chart patterns. There was some event risk that would seem to support a bearish view – UK unemployment claims were weightier than expected with 38,000 jobs shed; but that is not where the market’s top concerns rest. The true fear is in Brexit uncertainty, which is still more thoroughly anticipation than realized influence. The new leader of the conservative party is due to be announced on July 23rd, and then we will dive into the PM designate’s comfort in dealing with a ‘no deal’ outcome.

Chart of GBPUSD Overlaid with Inverted DXY Dollar Index (Daily)

My Perspective On the Pound’s Tradability

For those that are comfortable sitting with a trend through weeks of chop, the Sterling has worked out well on the short side. However, few traders are comfortable pushing for a trend in a market that seems to seriously lack for productive charges regardless of the region or asset class. To overcome an inherent conditional restraint on the market like stunted trends, a reliable and overwhelming fundamental charge is the best motivation. That said, the Pound seems to lack for that overt catalyst as readily as most other markets do. Brexit is the most pressing theme when it comes to the GBP, but there is a very overt lack of progress on this UK-EU divorce until key milestones set out into the future are met. The next Tory leader will be announced on the 23rd and only then will we find a clear mandate from the government on what the UK government’s strategy will look like. While risks are growing, it is unusual to see markets run on sentiment alone. I remain skeptical of this progress – not direction, just traction.

Key Pound Pairs to Watch

Whether someone intends to trade the Pound or not, there are a host of key crosses to consider. GBPUSD is certainly a must-watch given it is the most liquid pair in the Sterling’s ecosystem. Until the Dollar put in for its own aggressive rally this past session, this pair proved to be one of the more restrained landslides. Competing fundamental themes can speak show just how motivated the Sterling’s bearish bearing may be, but this could also prove one of the few pairs where its weakness is not fully stretched.

EURGBP is perhaps one of the most battered Sterling crosses in the mix, which is astounding given both the Euro and Pound on are on the hook for the Brexit. Nevertheless, the cross is advancing for an 11th straight week as it took out further important resistance this past week. A close relative, GBPCHF finds the Swiss Franc often treated as proxy for the Euro; but in fact, it is a less active currency on its own. That makes it far more useful as a foundation to the Pound’s own movements.

Chart of EURGBP and Consecutive Candles (Weekly)

Chart of GBPCHF (Daily)

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

2019-07-17 04:26:00

Pound Collapse Continues Unrestrained by Brexit Uncertainty

Posted: 16 Jul 2019 09:58 PM PDT

Pound Talking Points:

Pound took another aggressive drop this past session, pushing an equally-weighted measure of the currency to its lowest since September 2017
While UK jobless claims served up fresh disappointment for an already troubled economic forecast, that hasn’t proved a reliable mover
Brexit focus both draws attention forward as we await key milestones, but it seems to also feed a steady slide in confidence

See how retail traders are positioning in GBPUSD, EURGBP, GBPJPY and other liquid FX crossesusing the DailyFX speculative positioning data on the sentiment page.

An Unrelenting Slide for the Sterling Pushes the Currency to Multi-Year Lows

Chart of Equally-Weighted Pound Index (Daily)

Brexit is the Chief Concern and Its Influence is as Much a Break as Accelerator

Chart of GBPUSD Overlaid with Inverted DXY Dollar Index (Daily)

My Perspective On the Pound’s Tradability

Key Pound Pairs to Watch

Chart of EURGBP and Consecutive Candles (Weekly)

Chart of GBPCHF (Daily)

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

2019-07-17 04:26:00

Dollar Rallies as Euro and Pound Retreat, Data Versus Systemic Themes

Posted: 16 Jul 2019 09:20 PM PDT

Dollar Talking Points:

Dollar posts an impressive rally despite earnings that decry Dollar strength, Powell warming to cuts and uneven data
Pound and Euro register significant retreat despite fundamental references that have recently struggled to ump start price action
US equities take a modest step lower from record highs while the rest of the risk-leaning assets remain placid

Earnings Touch Upon Growth, Trade Wars and Monetary Policy Themes

Probability of Fed Rate Cuts from CME Fed Fund Futures

Dollar Rallies as Euro and Pound Retreat, Data Versus Systemic Themes

An Abrupt Dollar Rally the Reflection of Themes, Event Risk or Just No Place Else to Go?

Chart of the Dow Index and Opening Gaps (Daily)

Dollar Rallies as Euro and Pound Retreat, Data Versus Systemic Themes

Chart of DXY Dollar Index and Rate of Change (Daily)

Dollar Rallies as Euro and Pound Retreat, Data Versus Systemic Themes

Unmistakable Weakness from the Euro and Pound

Chart of Equally-Weighted Euro Index and Consecutive Candles (Daily)

Dollar Rallies as Euro and Pound Retreat, Data Versus Systemic Themes

Chart of Equally-Weighted Pound Index

Dollar Rallies as Euro and Pound Retreat, Data Versus Systemic Themes

Kiwi Dollar Fails to Leverage a Data Move, Now It’s the Canadian Dollar’s Turn

Chart of Rate Probabilities for the Major Central Banks

Dollar Rallies as Euro and Pound Retreat, Data Versus Systemic Themes

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

2019-07-17 03:27:00

AUD/USD Topping as Dollar Rallied on Trump Fueling Trade War Woes?

Posted: 16 Jul 2019 04:15 PM PDT

Asia Pacific Market Open Talking Points

US Dollar outperformed as British Pound, Euro weakened during European trade
USD gains accelerated on rosy retail sales and risk aversion on trade war worries
AUD/USD may reverse on bearish technical warning signs, eyeing rising support

Not sure where the US Dollar is heading next? We recently released the third quarter US Dollar fundamental and technical forecast!

US Dollar Rallies as Retail Sales, Trump Trade War Threat Sank Stocks

The US Dollar had multiple fundamental themes to propel its best performance in a day since July 5. During the European session, British Pound and Euro weakness in disappointing UK employment and German ZEW Survey data – respectively – likely drove traders into the Greenback. "No-deal" Brexit fears seemed to have compounded Sterling declines as UK Conservative Lawmaker Grieve noted the difficulty of blocking one.

Better-than-expected US retail sales then fueled a cautious tone of risk aversion as local front-end government bond yields rallied. The data printed 0.4% m/m in June versus 0.2% expected, still weaker than May's 0.5% growth. Then, the S&P 500 accelerated its selloff when US President Donald Trump said that he could still impose further tariffs on China "if he wanted", undermining last month's G20 Summit truce.

What is interesting is that by the end of the day, looking at Fed funds futures, odds of a 50 basis point rate cut later this month actually rose slightly to a nearly 30% chance from 25% yesterday. This is a reminder that more aggressive easing from the Fed may not necessarily bolster sentiment if the underlying reasons for such actions are dire. The markets are already anticipating perhaps three rate cuts by year-end.

Moreover, this speaks to concerns over the health and vigor of the global economy where you could see this impact on crude oil prices. The commodity tumbled nearly three percent on Tuesday in its worst performance in two weeks, taking out rising support from early June and opening the door to perhaps testing 56.11 ahead.

Wednesday's Asia Pacific Trading Session

Turning my focus towards Asia Pacific markets, S&P 500 futures are pointing cautiously lower which hints at a tepidly pessimistic session ahead. A lack of critical economic event risk does place the focus for forex on sentiment. If the highly-liquid US Dollar continues its rise ahead, this could bode ill for the pro-risk Australian and New Zealand Dollars.

AUD/USD Technical Analysis

Taking a closer look at AUD/USD technically shows early warning signs of a reversal that could potentially be in the cards. After range resistance held (0.7022 – 0.7048), Tuesday's candle formed a Bearish Engulfing. This is coupled with negative RSI divergence, showing fading upside momentum. A confirmation close to the downside opens the door to testing potential rising support from mid-June.

AUD/USD Daily Chart

Chart Created in TradingView

FX Trading Resources

— Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

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2019-07-16 23:00:00

BAC, PNC and NFLX Up to Bat in Earnings Season

Posted: 16 Jul 2019 02:22 PM PDT

S&P 500 Outlook:

S&P 500 Outlook: BAC, PNC and NFLX Up to Bat in Earnings Season

The S&P 500 closed Tuesday trading -0.38% lower after mixed earnings from the big banks and healthcare giant Johnson & Johnson (JNJ). Impressive retail sales also clouded the Index's outlook as the odds of future rate cuts was called into question – although pricing reveals the market remains nearly certain July's meeting will be joined by a 25-basis point reduction to the Federal Funds rate. As Wednesday trading approaches, equity traders will shift their focus to Bank of America (BAC), PNC Financial Services (PNC) and Netflix (NFLX).

S&P 500 Earnings to Watch

Bank of America (BAC)

Scheduled to report before the open, Bank of America shares trade around $29 ahead of their quarterly results and rest narrowly above a nearby Fibonacci level at $28.85. Options-derived implied volatility suggests BAC shares could trade as high as $29.98 or as low as $28.31 following the report. Within the implied price range exists ascending support from December – which enjoys proximity to the 200-day moving average. If Bank of America is to follow their industry peers that have already reported this week, investors may expect subdued trading revenue due to poor market conditions.

Bank of America (BAC) Price Chart: Daily Time Frame (April 2018 – July 2019) (Chart 1)

S&P 500 Outlook: BAC, PNC and NFLX Up to Bat in Earnings Season

PNC Financial Services (PNC)

To that end, PNC may find itself in a similar situation. Trading profits have been deteriorating across the industry and concerns have arisen regarding a lower Federal Funds rate weighing on margins. Perhaps due to their relative size, PNC shares are expected to be more volatile than Bank of America – albeit slightly. The elevated volatility has expanded the earnings implied price range to include two Fib levels and an ascending trendline. Recent price action suggests each of the levels carry technical influence which could see PNC shares trade between $136 and $142.50 despite the larger implied range.

PNC Financial Services (PNC) Price Chart: Daily Time Frame (January – July) (Chart 2)

S&P 500 Outlook: BAC, PNC and NFLX Up to Bat in Earnings Season

Netflix (NFLX)

As the first FAANG member and leading tech company to report, Netflix's earnings will be widely watched as an early indicator of tech sentiment in earnings season. Given its industry and price to earnings multiple, implied volatility is expectedly higher than the financials.

Earnings season has arrived! Check out our Third Quarter Equity Forecast to read about the outlook for the S&P 500 as the season unfolds.

With an earnings-implied volatility of 8.43%, the resultant price range could see NFLX trade anywhere from $335 to $398 – an area that encompasses multiple technical levels. To the topside, resistance looks to reside at $382 and $385 which have effectively capped the share price in the year-to-date. A bullish break above these levels could open the door for a continuation higher.

Netflix (NFLX) Price Chart: Daily Time Frame (January – July) (Chart 3)

S&P 500 Outlook: BAC, PNC and NFLX Up to Bat in Earnings Season

On the other hand, support is apparent near the $360, $350 and $338 levels. Each possesses varying degrees of influence, but the nearer forms of support could be quickly dispatched of given the risk and volatility that accompanies an earnings event. That said, the more robust technical support could be critical given the fundamental headwinds offered by the flurry of new entrants to the streaming space. Follow @PeterHanksFXon Twitter for updates and analysis on key themes during earnings season.

–Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

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2019-07-16 21:05:00

Bitcoin Price Drops Below $10,000 as Regulators Grill Facebook’s Libra

Posted: 16 Jul 2019 01:03 PM PDT

Bitcoin Price Outlook:

Bitcoin Price Drops Below $10,000 as Regulators Grill Facebook’s Libra

Bitcoin slid beneath $10,000 for the first time since July 2 as Facebook's David Marcus testifies before a US congressional committee this week. David Marcus is the head of Calibra, Facebook's digital wallet, and his testimony has revealed widespread concern and criticism toward the digital asset space from US regulators. Although Libra is not yet a tradeable cryptocurrency, the comments toward the asset type have seemingly rattled other coins from Bitcoin to Litecoin.

Consequently, Bitcoin traded from $10,800 to $9,700 in Tuesday's session after probing support around $9,545. The 38.2% Fibonacci level has held for the time being, but the prospect of increased regulation on cryptocurrency may continue to weigh on BTCUSD. Should the pressure continue, the largest crypto by market capitalization will look to subsequent trendline support marked by the lows in May and June.

Bitcoin Price Chart: 4 – Hour Time Frame (May – July)

Conversely, bullish traders looking to drive the coin higher will first have to reclaim the psychological $10,000 level before they can test an ascending trendline from June and the 50% Fib around $11,525. Although the bullish trend witnessed throughout 2019 remains intact, fundamental drivers may continue to pressure BTC in the near-term.

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To that end, a gathering of G-7 finance ministers is set to cover digital assets in Chantilly, France on Wednesday and Thursday. Similarly, IMF Managing Director David Lipton recently issued a string of comments regarding the dangers of the emerging asset class. That said, the cryptocurrency space appears to be under fire from multiple fronts as regulators look to clamp down on untraceable currency flows. As regulators attempt to reel in Bitcoin and Libra, follow @PeterHanksFXon Twitter for updates.

–Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

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2019-07-16 19:30:00