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Taking stock of 2016 in foreign exchange

Posted on January 12, 2016 at 11:03 am GMT

The first 7 trading days of 2016 have featured some very significant moves in currencies and other financial markets. The two main themes that appear to be driving markets are the weakness in the Chinese stock market and the currency (the yuan) as well as fresh record lows in the price of oil. Oil for example has already fallen by around 20% since the beginning of the year and is now challenging the $30 a barrel level – the lowest [..]

Asian Session – Dollar gives up gains as oil approaches $30 a barrel

Posted on January 12, 2016 at 8:18 am GMT

The US dollar gave up some of Monday’s gains as a sharp slide in crude oil prices reduced risk appetite. The dollar edged lower against the Japanese yen, which was firmer on safe-haven appeal. By late Asian session, the greenback fell to 117.32 yen, down from an earlier session high of 118.02 yen. The euro also got off to a stronger footing on Tuesday, climbing to 1.0894 dollars from an earlier low of 1.0840 dollars. Sterling was the exception as [..]

Technical Analysis – EURGBP regains 0.75 handle after steady rally to 1-year high

Posted on January 12, 2016 at 8:00 am GMT

EURGBP regained the 0.75 handle and is peaking above the weekly Ichimoku cloud on Tuesday after a steady rally off the key 0.7000 level in recent weeks. The pair hit a 1-year high of 0.7554. There is scope for further upside momentum as the RSI is rising and above 50 in bullish territory. Also, the tenkan-sen line has crossed above the kijun-sen line, which is a bullish signal. Near term support is at 0.7390. A break below this would see [..]

European Session – Dollar rebounds, oil languishes at 11-year lows

Posted on January 11, 2016 at 3:34 pm GMT

The broader market tone was showing signs of improvement in the European session and early in the US session, with a bit of risk appetite returning after a shaky start in early Asian trading. Asian stocks opened the week with another wave of sell-offs as China set the mood. However, a stabilization in European and US stocks helped support risk. The improvement in risk appetite led to some safe haven selling, including the yen. The dollar made a significant recovery [..]

Chinese inflation meets expectations but remains low

Posted on January 11, 2016 at 2:13 pm GMT

Chinese inflation numbers for December, released on Saturday 9 January, met expectations but remained low. Headline inflation came in at 1.6%, right in line with economists’ estimates, but producer prices fell a little more than expected at -5.9% year-on-year. As one can see from the chart, inflation has recovered from the very low rate (below 1%) that occurred at the beginning of 2015, but has also failed to move beyond 2% during the year – spending most of the year [..]

Asian Session – Dollar rebounds while China angst continues

Posted on January 11, 2016 at 8:48 am GMT

The dollar climbed higher towards the end of the Asian session, following volatile trading on Friday and today, as anxiety about China conflicted with signs of a solid labor market in the United States. The yen gained to a fresh 5-month high during Monday’s Asian trading as China’s move to push the yuan higher for a second straight day, failed to allay concerns about the country’s stock market and its economic growth prospects. Chinese stocks started the week under pressure [..]

Technical Analysis – USDCAD hits new 11-year high, bullish above 1.40

Posted on January 11, 2016 at 7:56 am GMT

USDCAD moved another leg higher after breaching the key level of 1.4000 last week. On Monday the pair hit a new 11-year high of 1.4187. The technical indicators on the daily chart are bullish, with positively aligned tenkan and kijun lines and a rising Ichimoku cloud. Also the market is above the 200-day moving average. The RSI is in bullish territory but it has reached overbought levels above 70 which suggests there could be some consolidation in the near term. [..]

European Session – Dollar weakens despite nonfarm payrolls gain, earnings growth disappoint

Posted on January 8, 2016 at 3:33 pm GMT

Markets in general rebounded slightly today, driven by gains from Chinese stocks, after China set a firmer yuan midpoint rate and suspended its market circuit breaker. This helped stabilize markets and brought a little more confidence back. In terms of economic news out of Europe today, German industrial output fell in November. Instead of rising 0.5% as forecast, it fell 0.3%. Meanwhile, Germany reported a 20.6 billion euro trade surplus in November, though imports rose more than exports, up by [..]

Week ahead highlights Bank of England, US retail sales and Australian unemployment

Posted on January 8, 2016 at 1:01 pm GMT

Following a tumultuous start to the year, next week will feature some important economic statistics and events, although these will be vying for attention with events out of China. The oil market should also continue to be a major theme, while speeches from a number of Fed officials should provide clues as to how the US central bank sees recent developments and market turbulence. Starting from the United States, the week will be relatively quiet in terms of economic data [..]

Asian session – Some calm returns after PBOC sets yuan higher, Chinese stocks rise

Posted on January 8, 2016 at 8:20 am GMT

Some semblance of calm returned to the markets after the People’s Bank of China set the value of the yuan higher and the Chinese stock market closed up by around 2%. There was nervousness on Thursday after China unveiled a huge drawdown of their foreign exchange reserves during December. The country’s reserves dropped by 107 billion dollars because of intervention to support the currency. Friday’s positive developments helped risk assets to recover as some of the losses of the previous [..]

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