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European Session – Loonie falls on oil price drop and BoC decision; dollar tests 120 yen

Posted on October 21, 2015 at 2:16 pm GMT

With the absence of any major data releases today, a drop in oil prices and anticipation ahead of tomorrow’s ECB meeting were the main currency drivers in today’s European session. Crude oil prices extended their losses for a third day after the American Petroleum Institute report showed US commercial crude stocks rising by more than expected in the week to October 16. More data on US oil inventories is released later today from the US Energy Information Administration, which is [..]

Mixed signals from Fed leaves year end rate rise in the balance

Posted on October 21, 2015 at 12:43 pm GMT

As Fed policymakers round up their speeches ahead of next week’s FOMC meeting, doubts remain whether the Federal Reserve will raise interest rates by the year end. After spending much of the year stressing the Fed’s data dependency on the timing of any decision to increase rates, Fed policymakers have yet to convince markets that the US is ready for lift-off. In the summer, a tightening labor market had pointed to a September increase in the Fed’s funds rate, but [..]

Technical Analysis – EURAUD regains upwards momentum but unable to hold above 50-DMA

Posted on October 21, 2015 at 9:09 am GMT

EURAUD jumped above the 50-day moving average today before dropping back below it. The pullback was expected as RSI and the stochastics surged into overbought territory in the intra-day chart. But they remain in positive territory in both the intra-day and daily charts so the upwards momentum should hold in the near-term. The Kijun-sen line is providing resistance at the top of the Ichimoku cloud at 1.5823. Prices need to rise above this level if EURAUD is to break out [..]

Asian Session – Yen weighed down by weak exports data

Posted on October 21, 2015 at 7:46 am GMT

Japan’s exports rose by less than expected in September, rising by just 0.6% year-on year – the lowest rate since August 2014. Estimates were for exports to rise by 3.4%. Imports were slightly better-than-expected though, declining by 11.1%, versus estimates of an 11.7% drop. With industrial production falling in both July and August, the prospects for third quarter growth are looking bleak. The Bank of Japan has so far maintained an optimistic view of the economy and on inflation but [..]

European Session – Euro rally fizzles out, dollar rises on upbeat US housing starts data

Posted on October 20, 2015 at 2:37 pm GMT

The euro rallied despite weak German PPI data and a shrinking Eurozone current account surplus. Market participants chose to react positively to the solid ECB bank lending data which suggested an improvement in financial conditions in the Eurozone and that the Bank’s QE program is working its way into the economy. This would lessen expectations of any action to be taken at the ECB’s meeting on Thursday for more QE and this was supportive for the single currency. The euro [..]

Technical Analysis – EURJPY stuck in range; outlook neutral

Posted on October 20, 2015 at 2:35 pm GMT

EURJPY tested the 136 handle on Tuesday as it attempts to close above the 50-day moving average after failing to do so in the previous two days. The intra-day bias has weakened after falling back below 136 but remains slightly positive with RSI holding above 50. The 100-day moving average is the nearest resistance at 136.44 but EURJPY needs to climb above the September 17 high of 137.43 for a more decisive reversal of trend. The pair has been in [..]

Investment themes: ‘Goldilocks’ data helps markets to stabilize

Posted on October 20, 2015 at 12:08 pm GMT

Following intense turmoil during August and September, financial markets seemed to have stabilized since the end of September. Since a low on September 29, the US stock index benchmark, the S&P 500, has rallied 8.4% by October 20th – an impressive rally. Emerging markets and other risk assets have also managed to post substantial gains. This environment has also led to less demand for safe havens such as the Japanese yen, which stayed very close to the 119 handle against [..]

Loonie in focus after Liberals election win and upcoming Bank of Canada meeting

Posted on October 20, 2015 at 10:23 am GMT

The centre-left Liberal party, led by Justin Trudeau, won the general election in Canada on Monday, ending the Conservative’s nine-year run in power. Although the Liberals had been leading in the polls, they were not expected to win a majority. With the counting now over, the Liberals have won 184 seats, compared to the Conservative’s 99 seats. The New Democratic party has shrunk to just 44 seats, dropping to third place. The size of the win means the Liberals have [..]

Asian Session – Loonie down on Conservative election defeat; Aussie up on RBA minutes

Posted on October 20, 2015 at 8:09 am GMT

Canada’s Liberal party won the elections on Monday, gaining a majority in parliament and toppling Stephen Harper’s Conservative government. Liberal leader Justin Trudeau set a record on the most seats gained from one election to the next, as the Liberals had come third in the previous election. Market reaction was not as positive with investors concerned about the party’s pledge to run a C$10 billion deficit for three years to spend on infrastructure to boost the economy. Trudeau also plans [..]

Technical Analysis – AUDNZD breaks out of range, downside bias increases

Posted on October 20, 2015 at 7:25 am GMT

AUDNZD recently broke a significant support area around 1.0900 and finally broke out of a consolidation pattern. From June through September, AUDNZD was stuck in a range between 1.0900 – 1.1400. The inability to break above 1.1400 and the fall back below the Ichimoku cloud weakened any upside momentum. The fall below the 200-day moving average on October 14 and a falling RSI strengthened the bias to the downside. The key 1.0900 level has been a strong support area which [..]

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