Analyst Articles – Forex News 24

USD/CAD Sellers Await BOC and FED Powell
Gold Prices Break Support Before Powell Testimony, FOMC Minutes
Oil Price Weakness to Persist as US-China Trade Negotiation Stalls
Markets Risk Averse, S&P 500 Net-Short Bets Put Support In Focus
S&P 500 Not Tumbling at Week’s Start is Significant, Market Monetary Policy Focused
GBPCAD Sports a Trend That Belies Uncertainty and High Risk of Volatility
AUD Retreats With NAB Business Confidence, Fed Likely To Drive
USD Recovery Extends, Apple Shares Eye Support on Sell Downgrade
Gaps Lurk Below, Pepsi (PEP) Earnings on Tap
China Inflation; UK GDP; BOC Meeting; FOMC Minutes; US Inflation

USD/CAD Sellers Await BOC and FED Powell

Posted: 09 Jul 2019 03:44 AM PDT

USD/CAD Price Forecast, Charts and Analysis

Eyes on Fed Chairman Powell's testimony before congress and Bank of Canada rates decision tomorrow.
USD/CAD price trading in a narrow range.

See the Q3 USD and Gold forecasts to learn what is likely to drive price action through this time of the year.

USD/CAD – Sellers Losing Momentum

On Thursday, USD/CAD continued its downtrend eying to break of 1.3000 handle. On the following day the pair bounced towards the high end of the trading zone 1.3064- 1.3126 then failed to close above.

At the start of this week, the price tested the low end and failed to close below, keeping the pair stuck within the aforementioned trading zone.

The Relative Strength Index (RSI) rebounded from the oversold territory and pointed higher towards 40, indicating that the bearish momentum is fading.

Having trouble with your trading strategy? Here's the #1 Mistake That Traders Make

USD/CAD DAILY PRICE CHART (May 30, 2017 – July 9, 2019) Zoomed Out

USD/CAD DAILY PRICE CHART (April 11 – JULy 9, 2019) Zoomed In

Looking at the daily chart we notice USD/CAD rebounded on Thursday from 1.3037 then rallied on the following days testing 1.3126 twice. Therefore, a close above this level may cause a rally towards 1.3166, however; the weekly resistance at 1.3145 needs to be monitored.

Further bullishness might require a close above 1.3166, this could mean the buyers may push the price towards 1.3224, although; the weekly resistance levels underlined on the chart (zoomed in) should be watched along the way.

In turn, a close below 1.3064 may send the price towards 1.3008, however; the weekly support highlighted on the chart would be worth monitoring. Further bearishness could come from a close below 1.3008 and may press USD/CAD towards 1.2920, nonetheless; the weekly support levels highlighted on the chart need to be kept in focus.

Just getting started? See our Beginners' Guide for FX traders

USD/CAD Four-HOUR PRICE CHART (June 20 – JuL 9, 2019)

Looking at the four-hour chart we notice yesterday USD/CAD corrected higher creating a higher low at 1.3049. The pair is eyeing a test of 1.3166 contingent on clearing the July 1 high at 1.3145.

Further break above 1.3166 may see the price even higher at 1.3224, however; the weekly resistance levels marked on the chart need to be considered.

On the other hand, a break below the daily support at 1.3099 could send the price to test yesterday's low mentioned above, although; the daily support at 1.3064 needs to be watched closely. See the chart to find out how the downtrend would continue with the key levels to know in this scenario.

Written By: Mahmoud Alkudsi

Please feel free to contact me on Twitter: @Malkudsi

2019-07-09 10:21:00

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Gold Prices Break Support Before Powell Testimony, FOMC Minutes

Posted: 09 Jul 2019 02:13 AM PDT

GOLD & CRUDE OIL TALKING POINTS:

Gold prices break 2-month support before Powell testimony, FOMC minutes
Crude oil prices pop as BP tanker ducks Iran seizure threat, but rally fizzles
EIA short-term energy outlook, API oil inventory flow figures on tap ahead

Gold prices edged lower as the US Dollar rose for a third consecutive day, sapping the appeal of anti-fiat alternatives including the yellow metal. The currency rose as stocks retreated, hinting the move reflected diminishing Fed rate cut bets following Friday's impressive US jobs report. Hopes for big-splash stimulus have both weighed on the Greenback and buoyed risk shares recently.

Crude oil prices idled. Prices briefly spiked higher intraday amid reports that a BP-operated oil tanker, the British Heritage, aborted a voyage from Iraq to Europe and sheltered in the Persian Gulf amid reports it might be seized by Iran. The move was feared to be retaliation after an Iranian tanker was detained by the British Royal Marines near Gibraltar last week. The broader risk-off mood saw gains quickly fizzle however.

FED RATE CUT BETS IN FOCUS, EIA OIL OUTPUT AND API INVENTORY DATA DUE

Looking ahead, another quiet day on the data docket may be ahead as traders withhold directional commitment before testimony from Fed Chair Powell and the release of June FOMC meeting minutes on Wednesday. Pre-positioning in the runup to these developments may be marked by de-risking amid worries about reduced scope for Fed easing however. Indeed, S&P 500 futures are pointing tellingly lower.

The EIA Short Term Energy Outlook report as well as API inventory flow data is due to cross the wires. The former may reiterate that US output remains near a record high above 12 million barrels per day while even as stockpiles hover just shy of the two-year high recorded in early June. That bodes ill prices. Last week is expected to have seen a modest 1.53-million-barrel drawdown.

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

GOLD TECHNICAL ANALYSIS

Gold prices appear to have broken support guiding them higher since late May. That appears to shift the near-term bias in the dovish direction. Support begins at 1375.15, with subsequent back-to-back levels running down through 1346.75. Critical resistance remains at 1433.85, marked by the August 2013 top and the underside of previously broken support dating back to December 2016.

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices remain pinned to support-turned-resistance in the 57.24-88 area. A daily close back above that targets the 60.39-95 zone. Alternatively, a push below support at 54.55 paves the way for another challenge of the 50.31-51.33 region.

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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2019-07-09 08:00:00

Oil Price Weakness to Persist as US-China Trade Negotiation Stalls

Posted: 08 Jul 2019 11:38 PM PDT

Oil Price Talking Points

The near-term outlook for crude remains battered even though the Organization of the Petroleum Exporting Countries (OPEC) pledge to regulate the energy market throughout 2019, and the price of oil stands at risk of extending the decline from the start of the month as a 'death-cross' formation takes shape.

Oil Price Weakness to Persist as US-China Trade Negotiation Stalls

The extension of the OPEC+ alliance has largely failed to prop up the price of crude, and the ongoing trade dispute between the US and China, the two largest consumers of oil, may continue to drag on crude prices amid the weakening outlook for global growth.

It seems as though the negotiations have once again stalled following the Group of 20 (G20) summit as the Commerce Department announces it will "instruct U.S. Customs and Border Protection to collect cash deposits from importers of fabricated structural steel from China and Mexico."

The ongoing shift in US trade policy may force OPEC and its allies to further clamp down on production especially as the most recent Monthly Oil Market Report (MOMR) indicates slower consumption for 2019, and it remains to be seen if the group may announce additional measures ahead of the next meeting in December as US crude output increases for the first time since May.

Until then, current market conditions may continue to drag on crude, with the price of oil still at risk of facing a bear market as a 'death-cross' formation takes shape.

Crude Oil Daily Chart

Keep in mind, the broader outlook for crude oil is no longer constructive as both price and the Relative Strength Index (RSI) snap the bullish trends from earlier this year.
At the same time, a 'death cross' formation has taken shape as the 50-Day SMA ($58.00) crosses below the 200-Day SMA ($58.35), with both moving averages tracking a negative slope.
The string of failed attempts to close above the Fibonacci overlap around $59.00 (61.8% retracement) to $59.70 (50% retracement) brings the $54.90 (61.8% expansion) to $55.60 (61.8% retracement) region on the radar especially as the RSI snaps the upward trend carried over from the previous month.
Next downside hurdle comes in around $51.40 (50% retracement) to $51.80 (50% expansion) followed by the Fibonacci overlap around $48.80 (38.2% expansion) to $49.80 (78.6% retracement).

Sign up and join DailyFX Currency Strategist David Song LIVE for an opportunity to discuss key themes and potential trade setups.

For more in-depth analysis, check out the 3Q 2019 Forecast for Oil

Additional Trading Resources

Are you looking to improve your trading approach? Review the 'Traits of a Successful Trader' series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other markets the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019.

— Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong.

2019-07-09 06:30:00

Markets Risk Averse, S&P 500 Net-Short Bets Put Support In Focus

Posted: 08 Jul 2019 10:22 PM PDT

Asia Pacific Markets Talking Points

Stocks trade lower in Asia after disappointing US session
Markets seem to be nervous ahead of the Powell testimony
S&P 500 fall facing roadblock, net-short positioning rises

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

Stocks traded mostly lower in Tuesday Asia Pacific trade, echoing the nervous behavior from the prior Wall Street trading session. Absent a major catalyst in a relatively quiet session, markets seemed to be anxiously awaiting this week's testimony from Fed Chair Jerome Powell and the latest FOMC meeting minutes.

China's Shanghai Composite, Australia's ASX 200 and South Korea's benchmark KOSPI declined about 0.6, 0.3 and 0.2 percent to the downside. Meanwhile, Japan's Nikkei 225 was little changed. There, underperformance in information technology was balanced by a pickup in communication services.

A cautious decline in front-end US government bond yields signaled risk aversion to a certain degree and the haven currency of choice was the highly-liquid US Dollar. On the flip side of the spectrum, the pro-risk Australian Dollar underperformed, particularly against the anti-risk Japanese Yen.

S&P 500 futures remain pointed firmly lower, hinting at a continued deterioration in sentiment to come during European and US trading hours. Countering this performance is an uptick in net-short positioning for the index which is offering a bullish contrarian trading bias.

Join me every week on Wednesday's at 00:00 GMT as I show you what market positioning is revealing about the prevailing trends in markets!

S&P 500 Technical Analysis

Amidst these competing signals, technical analysis shows that the S&P 500 could be heading for a roadblock ahead. What appears to be a potential rising trend line is aligned with former resistance which is a range between 2947 and 2961. If this area holds, there may be a retest of resistance at 3006.

S&P 500 Futures Daily Chart

Charts 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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2019-07-09 05:00:00

S&P 500 Not Tumbling at Week’s Start is Significant, Market Monetary Policy Focused

Posted: 08 Jul 2019 09:46 PM PDT

Monetary Policy Talking Points:

The S&P 500 didn’t tumble to start the week, which is more encouraging than those that don’t account for fundamentals may appreciate
Data relating to growth was poor Monday but not systemically important while trade wars are still in a holding pattern of threats
Anticipation remains top theme with some markets setting sights further out (Pound and Euro) and some much nearer (Dollar, Loonie)

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.

When Markets Not Cascading on the Open is Encouraging

We left market sentiment in a precarious state this past Friday. Despite the liquidity hangover of the US Independence Day market holiday, US capital markets shuddered in the aftermath of the US labor report. That response was particularly remarkable given that the economic implications were actually positive. When push came to shove, the market prized the appetite for external and temporary support via central bank infusions over the marginal improvement in underlying data. In other words, the tempered forecasts for aggressive rate cuts hit harder than the reassurance of steady economic growth in the world’s largest economy.

With Monday’s session, we could have added liquidity to the system with a result akin to pouring fuel on a fire. A tumble for benchmark assets like the top US indices, emerging markets and carry trade would have have exposed confidence to be a facile dependence on a depleted and unreliable foundation. Such a realization given the fears for economic potential and the realities of poor returns through the foreseeable future would only risk triggering a systemic fallout. Prepared for the worst, speculators would instead hold their nerve. The S&P 500 opened to another significant gap lower on the open and eased further, but it wouldn’t stage a new lower low. Market participants are certainly more cognizant of their precarious position, but avoiding free-fall until some definitive fundamental winds sweep in can keep sentiment afloat.

Chart of S&P 500 and Daily Gaps (Daily)

Economic Activity, Trade Wars and Political Risk Are Still Important

While there are numerous fundamental themes vying for the market’s attention, monetary policy likely retains the greatest weight among the systemic themes. However, whether or not the Fed cuts rates this month is not a fundamental question that is likely to be answered through the opening 48 hours of trade this week. Come Wednesday, Chairman Powell’s first day of testimony before Congress will no rise sails to serious fundamental winds while the FOMC meeting minutes released later in the session will meet an audience with a particularly acute interest in the nuance of language following the extreme disparity in forecasts from Fed official against that of the market’s official pricing.

Chart of S&P 500 and December Fed Funds Futures Contract Price (Daily)

S&P 500 Not Tumbling at Week's Start is Significant, Market Monetary Policy Focused

In the interim, there are other fundamental rapids to monitor for their risk to take us on errant segues. Economic activity was a troubling reminder of competing attention this past session. From the docket, Japanese machinery orders recorded their worst contraction in 8 months, German industrial production growth disappointed and consumer credit failed to compensate. The official 2Q GDP run from the government doesn’t start until next week’s China update, but there is plenty to occupy concern in the meantime. What’s more, should the state of growth truly take center stage, there is little that can be expected to truly flatter bulls given the levels we find pace-setters like the Dow breaching and the many obstacles to fast expansion we are facing.

Chart of US 10-Year to 3-Month Treasury Yield Spread (Monthly)

S&P 500 Not Tumbling at Week's Start is Significant, Market Monetary Policy Focused

Another systemic theme of particular importance is the state of trade wars. We were offered no definite insight on the tenuous relationship between the United States and China to start the new week, but the G-20 freeze fire between the superpowers is still drawing the same sigh of relief. On the topic, the Bank of Japan’s Governor reiterated his warning on the ills of a global economic standoff while China repeated through its Vie President that it was not possible to cut out the country. According to recent data updates, China increased its foreign reserves this past month to $3.119 trillion versus $3.110 trillion the month before. That is not fundamental development enough to spur systemic market movement but it can easily compound moves that originate elsewhere.

Anticipation for the Euro and Pound is Not Like Anticipation for Dollar and Loonie

As we chart the key fundamental influences over the coming week and beyond, it is important to separate those assets with high level potential in the near future from those that simply have an appealing technical backdrop. The Euro and Pound fall in that latter category. For the world’s second largest aggregate currency, the Eurozone investor sentiment retrenchment (-5.8 reading from Sentix), the floundering German imports figure and German industrial production printing 0.3 percent does few favors for appetite. The Euro is still more likely to flounder until something more definite come along. For the Sterling, it is clear what that next shove would be: progress on Brexit. The deadline between the UK and EU is not until October 31st, but fear over a no-deal resolution continues to build alongside Boris Johnson’s candidacy for the Conservative Party leadership. That said, a UK auto industry group has issued the latest warning against such an outcome as a severe threat to business health.

Chart of EURGBP and Consecutive Candle Count (Weekly)

S&P 500 Not Tumbling at Week's Start is Significant, Market Monetary Policy Focused

In contrast, there is a much more proximate time frame for potential volatility when we refer to the Dollar or Loonie. For the Greenback, the focus is Fed brimstone which will start landing on Wednesday. While there are a few members due to speak today, the real heft will be shouldered by the FOMC minutes and Chairman Powell’s first day of Congressional testimony on Wednesday. While this can certainly stir volatility, be mindful of true trend anticipation. For the Canadian Dollar, the same sense of pointed interest will follow Wednesday’s Bank of Canada (BOC) rate decision. There is a clear bias behind this event which sets a mirror skew in how the market responds. We discuss all of this and more in today’s trading video..

Chart of USDCAD with 20-day Moving Average (Daily)

S&P 500 Not Tumbling at Week's Start is Significant, Market Monetary Policy Focused

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

2019-07-09 04:34:00

GBPCAD Sports a Trend That Belies Uncertainty and High Risk of Volatility

Posted: 08 Jul 2019 08:26 PM PDT

GBPCAD Talking Points:

Against a backdrop of either flippant reversals or stubborn ranges, GBPCAD has extended an incredible, near-8 percent tumble
Despite clear ties to an uncertain Brexit path Pound keeps sliding, while the loonie slowly climbs without assured fundamental footing
While both currencies may draw modest event risk support for prevailing trend, the true potential is in catalysts for a reversal

See how retail traders are positioning in GBPUSD, USDCAD and Dollar-based majors usingthe DailyFX speculative positioning data on the sentiment page.

There is the Typical Market Course and Then There is GBPCAD

If you look around the financial system – from Dow to EURUSD – the predominant setting is one of uncertainty. That materializes in price action that either holds frustratingly tight ranges like the later or prompts volatility with switchbacks like the former. Trends are in short uncommon and require inordinate amount of either favorable fundamental wind or sheer speculation to sustain. Then there is a move like the GBPCAD’s which has amounted to a near-unbroken two-month dive that has covered nearly 8 percent. That may not seem extreme in the world of single-share stocks, but it is exceptional for liquid exchange rates.

Chart of GBPCAD and the Measure of the Past Two Month Decline (Daily)

A Pound Backdrop that is Singularly Brexit

It isn’t difficult to discern where the Sterling is drawing its direction. Brexit is a frequent topic in headlines and social media, a genuine reflection to the interest of the market at-large. Assessing the timeline for the negotiation between the UK’s and EU’s divorce, we are working with a current deadline of October 31st that is based on the start of the new European Union leadership. That said, the time pressure doesn’t seem to be hastening officials to a resolution. Before the talks start again in earnest, a new leader of the conservative party needs to be chosen. That is resolution seems to be two weeks out. Only then do we get back into what seems a contentious bout of negotiations. In this environment, uncertainty is inevitable while a clear trend would seem an improbable scenario. With such a backdrop, perhaps there is weight in traditional economic data. It just so happens that there is a key run of May data on Wednesday that includes GDP, trade and industrial production among other updates.

Chart of Equally-Weighted Pound Index (Daily)

GBPCAD Sports a Trend That Belies Uncertainty and High Risk of Volatility

Are Rate Expectations Truly Offering the Canadian Dollar That Much Lift?

Another currency that looks to defy the non-committal status of the financial system is the Canadian Dollar. On an equally-weighted basis, the currency has advanced steadily and heartily over the past weeks. Where is this lift originating? While there have been a few favorable economic updates these past weeks, the bulk of the traction is coming through its appeal relative to counterparts. With the Fed, ECB and BOJ all pursuing aggressive easing policies (or at least in forward guidance), the Bank of Canada still comes off as steadfast. A neutral monetary policy is a bullish influence when the rest of the system is firmly standing in the dovish tide. How practical are these expectations? We are heading into a Bank of Canada rate decision on Wednesday and expectations are certainly bound to be shaken up.

Chart of Equally-Weighted Canadian Dollar Index

GBPCAD Sports a Trend That Belies Uncertainty and High Risk of Volatility

Returning to the Imbalance of Probability and Potential

When we determine what is most influential for both the Pound and Canadian Dollar, there is perhaps little surprise that GBPCAD has found a bearish bias these past weeks. However, it is the incredible intensity of the move that seems to deviate from practical expectations. Given the circumstances between prevailing trend and principle themes, the probability of an extended trend is perhaps slightly higher than a reversal in course. However, a weak showing of UK data that creates more trouble for a ‘no-deal Brexit’ and steadfast BOC would merely ‘meet expectations’. That would not necessitate a strong market response. Alternatively, strong showing of data to offer a foothold for an economic Pound rebound and/or a Canadian monetary policy that throws in with its global counterparts would likely leverage a far more severe move owing to its sheer underpricing. Keep an eye on GBPCAD and its Wednesday sparks which we discuss in today’s quick take video.

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

2019-07-09 02:22:00

AUD Retreats With NAB Business Confidence, Fed Likely To Drive

Posted: 08 Jul 2019 07:49 PM PDT

Australian Dollar, National Australia Bank Business Confidence Survey, Talking Points:

Business confidence fell markedly in June according to NAB
However, a repeat of May's gains always looked unlikely
AUD/USD is as focused on this week's Fed speakers as any other pair

Join our analysts for live, interactive coverage of all major economic data at the DailyFX Webinars. We'd love to have you along.

The Australian Dollar slide on Tuesday following news of weaker business confidence in its home nation.

The indicator from National Australia Bank came in for June at 2, down from 7 in May. It's probably worth pointing out that May's surge was a bit of an outlier, rooted in hopes for lower interest rates and relief at the results of that month's Federal elections. Readings in the 2-3 area have been much more common since late 2018.

Firms' assessment of current conditions limped up to 3 from 1, but there was more optimism around the employment sub-index. That rose to 5 from 2. However, there was no escaping the overall gloomy tenor of the release. NAB said that business appeared to have lost 'significant momentum' in the past year and was not at all confident that the last quarter saw any pickup.

AUDUSD was already under some pressure before the release, and duly sank a bit more after it.

On its broader, daily chart, it's clear that action is really driven by the 'USD' side of AUDUSD. The Aussie bounced from 2019's low as the market moved to price in more interest rate cuts from the Federal Reserve, only to stall again in recent days as strong US employment data forced a rethink.

Given the multitude of Fed speakers on tap this week, most notably Chair Jerome Powell, it seems likely that the Greenback will continue to drive events.

However, at some point focus will return to Australian monetary policy. This year has already seen the first back-to-back monthly rate cuts since 2012, taking the Official Cash Rate down to a new record low of 1%. Another is currently fully priced into futures markets by the middle of next year.

Given that rate differentials favor the US Dollar and are likely to do so for a long time to come, it is difficult to get bullish on the Aussie, especially given Australia's exposure to both sides of the US-China trade war.

Australian Dollar 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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2019-07-09 01:55:00

USD Recovery Extends, Apple Shares Eye Support on Sell Downgrade

Posted: 08 Jul 2019 04:03 PM PDT

Asia Pacific Market Open Talking Points

US Dollar extends advance on cooling of aggressive Fed rate cut bets
S&P 500 fell, Apple shares left vulnerable on Rosenblatt downgrade
Pro-risk AUDUSD and NZDUSD may fall if Asia equities aim lower

Not sure where equities are heading next? We recently released the third quarter equities fundamental and technical forecast!

US Dollar Keeps Climbing, Apple Shares Sink on Rosenblatt Sell Downgrade

The US Dollar extended gains from Friday in a relatively quiet trading session during the beginning of this week. The bulk of economic event risk for the currency is due later on with items such as a testimony from Fed Chair Jerome Powell and the minutes of the June FOMC meeting due to cross the wires over the next 24 hours. As such, markets likely echoed on recent fundamental developments.

One of those was last week's solid US jobs report, which resulted in the markets pricing out chances of a 50 basis point cut this month. Over the past 24 hours, we saw local front-end government bond yields rally and the S&P 500 decline as it ended the day 0.48% to the downside. This reflected the cautious cooling in bets of loser credit conditions from the United States as sentiment soured despite a US-China trade truce.

While this contributed to the sour mood on Wall Street, Apple shares were left particularily vulnerable after Rosenblatt Securities downgraded the stock to a "sell" from "neutral". Prior to market open, the research and investment brokerage firm did so on expectations of a "fundamental deterioration" in the next six to twelve months. Apple shares gapped 1.67% to the downside at open, compared to -0.35% for the S&P 500.

Apple Stock Technical Analysis

The drop in Apple shares on Monday solidified near-term resistance around 204.50 as prices struggle climbing above the rising trend line from June 2016. Immediate support appears to be at 195.71 which if broken, exposes March 2018 highs at 183.50. Otherwise, resuming the uptrend from late May opens the door to eventually testing the April high at 215.31.

Apple Stock Daily Chart

*Charts Created in TradingView

Tuesday's Asia Pacific Trading Session

Another relatively quiet Asia Pacific trading session ahead of the aforementioned event risk places the focus for foreign exchange markets on market mood which is looking sour. S&P 500 futures are pointing notably lower heading into Tuesday trade. This may result in a rosy session for the anti-risk Japanese Yen at the expense of the sentiment-linked Australian and New Zealand Dollars.

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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2019-07-08 23:00:00

Gaps Lurk Below, Pepsi (PEP) Earnings on Tap

Posted: 08 Jul 2019 03:27 PM PDT

Nasdaq 100 Outlook:

The Nasdaq 100 trades near all-time highs but a gap below leaves the Index vulnerable to short-term declines
Pepsi (PEP) is the Nasdaq's 10th largest constituent by weight, accounting for roughly 2.2% of the Index
The consumer-defensive beverage stock has outperformed the S&P 500 in the year-to-date, boasting a 20% return in the period

Nasdaq 100 Outlook: Gaps Lurk Below, Pepsi (PEP) Earnings on Tap

The Nasdaq 100 traded lower after a price target downgrade on Apple weighed on the tech-heavy Index. With Monday trading concluded, the Index will now look to quarterly earnings from Pepsi (PEP) to influence sentiment and guide price on Tuesday. While the consumer-defensive stock is not typically viewed as an influential member of the Nasdaq, it is the 10th largest component on the Index by weight at roughly 2.2% – beating out tech stocks like Netflix and Nvidia.

Source: Bloomberg

Consequently, PEP has the potential to be a significant catalyst for the Index on Tuesday trading, with little on the calendar by way of earnings or economic events ahead of Wednesday's FOMC meeting minutes. The company is expected to report earnings of $1.49 per share on revenue of $16.42 billion. Pepsi has beat EPS estimates in 11 of the past 12 quarters and shares have climbed after 8 of the past 12 earnings announcements.

Data: Bloomberg

That said, the implied 1-day earnings-related share change is muted at just 2% – significantly less than other Nasdaq names like Micron (MU) which saw an earnings-related implied move of 8.5%. Therefore, the resultant price range is a mere $5 from $129.63 to $134.91. Despite the tight range, the pop-producer has nearby technical levels to negotiate if it is to post a substantial move in either direction.

Trading at $132.3, PEP is within reach of all-time highs around $135.2 – narrowly outside the earnings-implied price move. That said, no clear-cut resistance exists between the two levels which could encourage bulls to push higher on the back of an earnings beat. On the other hand, Pepsi enjoys nearby support within the implied range at $131. The level offered resistance in May, while more-recently supporting prices in June and July.

Pepsi (PEP) Price Chart: Daily Time Frame (June 2018 – June 2019)

With that in mind, topside targets look attractive from a technical perspective but do not exist without risk. Regardless, Pepsi looks poised to drive sentiment for the Nasdaq 100 on Tuesday – a role that carries greater weight than a single stock move could hope to control.

Nasdaq 100 Price Chart: 4 – Hour Time Frame (April – July) (Chart 2)

When exploring positions on the Index, traders should be wary of a gap beneath the current trading price – which could exacerbate declines if bearish price action takes hold – from 7,738 to 7,678. Moderate technical support exists beneath the gap at 7,660. For updates and analysis on Pepsi and other stocks during earnings season, follow @PeterHanksFX on Twitter.

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

Contact and follow Peter on Twitter @PeterHanksFX

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2019-07-08 21:35:00

China Inflation; UK GDP; BOC Meeting; FOMC Minutes; US Inflation

Posted: 08 Jul 2019 12:38 PM PDT

FOREX ECONOMIC CALENDAR TALKING POINTS:

The second week of July will largely focus on the counterparties in the US-China trade war: of the ten 'high' rated events on the DailyFX forex economic calendar this week, half are due from either China or the United States.
Volatility should build into midweek as four of the top five events for the week ahead are due out on Wednesday, July 10.
Retail trader positioning is hinting at an improved environment for higher yielding currencies and risk-correlated assets in the coming days.

Join me on Mondays at 7:30 EDT/11:30 GMT for the FX Week Ahead webinar, where we discuss top event risk over the coming days and strategies for trading FX markets around the events listed below.

07/10 WEDNESDAY | 01:30 GMT | CNY Consumer Price Index (JUN)

Despite the détente declared in the US-China trade war after the G20 summit in Osaka, Japan, traders will want to keep on eye on USDCNH prices for the foreseeable future. Plainly,China has used devaluation as a tool to ward off the effects of the tariffs, so Chinese Yuan strength (USDCNH weakness) may be interpreted as a sign that the trade talks are nearing a positive resolution; Chinese Yuan weakness (USDCNH strength) may be interpreted as a sign that the trade talks are nearing a negative resolution. Indeed, the 7.000 exchange rate for USDCNH may be the most important level for currency markets.

07/10 WEDNESDAY | 08:30 GMT | GBP Gross Domestic Product (MAY)

The lack of clarity over Brexit, thanks in part to the ongoing Tory party leadership election, is proving to weigh on UK consumer and business confidence, and in turn, weigh on UK growth expectations. Recent UK PMI readings have been declining across the board, and rates markets are quickly shifting into discounting an interest rate cut by the Bank of England. Now that the June UK Composite PMI has moved into contraction territory, traders should be on the lookout for more deceleration in UK growth rates in the coming months.

07/10 WEDNESDAY | 14:00 GMT | CAD Bank of Canada Rate Decision

The Bank of Canada's July policy meeting will likely come and go without making too many waves. While its neighbor to the south in the Federal Reserve has been raising expectations for a series of interest rate cuts this year, the BOC has been able to fend off dovish calls amid a surprisingly resilient Canadian economy (despite volatile swings in oil prices). Odds of a BOC rate cut at the July meeting are less than 3%, and odds of a 25-bps rate cut by the end of the year remain below 25%, according to overnight index swaps.

07/10 WEDNESDAY | 18:00 GMT | USD June FOMC Meeting Minutes

An environment marked by the uncertainty of the US-China trade war is filtering through into uncertainty over monetary policy. To wit: when asked about Fed policy and the US-China trade war at the June Fed meeting press conference, Fed Chair Powell took a roundabout way of saying that a US-China trade deal could eliminate the need for a Fed rate cut. Inherently, then, while rates markets are heavily leaning towards rate cuts now, it also appears that there is a significant risk of the Fed's bias swinging back towards hawkish very quickly if a US-China trade deal materializes.

07/11 THURSDAY | 12:30 GMT | USD Consumer Price Index (JUN)

According to Bloomberg News, headline CPI is expected in at +1.6% from +1.8%, and Core CPI is due in to hold at 2.0% (y/y). The June US inflation report on Thursday will keep expectations elevated that the start of the rate cut cycle is going to begin shortly; Fed funds futures are pricing in a 100% chance of a 25-bps rate cut in July and, overall, a 51% chance of a 75-bps rate cuts (three 25-bps rate cuts) by December.

FX TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher, email him at cvecchio@dailyfx.com

Follow him in the DailyFX Real Time News feed and Twitter at @CVecchioFX

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2019-07-08 19:20:00