Daily Market Analysis by HotForex

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Today’s Currency Movers

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EURUSD, Daily

EURUSD remained weak yesterday and the pair closed below the shooting star candle from day before amidst positive US data. Yesterday US retail sales was reported to have surged 1.2% in May, with the ex-auto figure up 1.0%, close to expectations. April’s headline unchanged figure was revised up to 0.2%, and the ex-auto number was left at 0.1%. Sales excluding autos, gasoline, and building materials increased 0.6% versus 0.3% previously (revised from 0.1%). Atlanta Fed boosted its Q2 GDP forecast to 1.9%up from 1.1% previously in the wake of the firm May retail sales report, which was propped up by auto sales and gasoline prices. That closed the gap somewhat with Blue Chip economists, who have a median forecast of around 2.65%. US household net worth rose to $84.9 tln in Q1 from a revised $83.3 tln in Q4 (raised from $82.9 bln), according to the Fed, thanks to rising home values and investment gains. Household debt increased at a 2.2% annual pace, down from a revised 2.8% previously (was 2.7%). Increased returns and lower borrowing is a relatively healthy development for the outlook on consumer spending and dovetails with some of the better contemporary readings on the economy.

U.S. business inventories rose 0.4% in April, with sales up 0.6%, both higher than expected. March’s 0.1% rise in inventories was not revised, but the February gain is now 0.3% from 0.2%. The 0.4% sales increase in March was bumped up to 0.6%, with the 0.2% February drop revised to -0.3%. The inventory-sales ratio was steady at 1.36 and is just a shade below the expansionary high of 1.37 in February. The data are good news for Q2 GDP. US initial jobless claims rose 2k to 279k in the week ended June 6, from a revised 277k in the prior week (was 276k). That brought the 4-week moving average to 278.75k from 275k (revised from 274.75k). Continuing claims were up 61k to 2,265k in the week ended May 30, from a revised 2,204k (was 2,196k). US consumer comfort index sank to 40.1 for the period ended June 7, down from 40.5 the week prior and the lowest reading since November, according to Bloomberg. That’s down about 8-points from an 8-year high in mid-April. Rising gasoline prices contributed to the decline, though wage gains and firmer equities supported household sentiment.

IMF doesn’t see progress on Greece. IMF’s Rice said the IMF has major differences with Greece in key areas and doesn’t see a progress on the way to an agreement with obstacles still including pensions, taxes, financing. Markets have been buying into hopes of a deal with Greece today, but that always seemed premature, considering that comments from most officials continue to stress that talks continue, but also that Greece needs to make more commitments and that there are still differences. Even if there is a bailout extension, it would not solve the problem as any payout of funds still hinges on the implementation of reform commitments that Tsipras is unwilling to subscribe to.

Germany prepares for Grexit, according to a German newspaper Handelsblatt. Tabloid paper Bild meanwhile reported that the government is preparing for default with considerations of capital controls and a haircut on Greek debt. So far it was mainly Tsipras who threatened that a Grexit would mean the beginning of the end for the Eurozone, but after the IMF finally lost patience with the lack of progress in the talks with Greece, the reports suggest that Germany is also not willing to keep Greece in at all costs. A Bloomberg story meanwhile said creditors will give Greece less than 24 hours to come up with a serious counter-proposal to its own reform list. There may not be any real progress, but it seems the beginning of the end to the Greek crisis is finally here, even if it could still go one way or the other.

Today’s data calendar being quite thin EURUSD might not move that much today. Over the next couple of days I think that bias is still to the downside due to the shooting star candle from two days ago. Today’s price action has taken place below Wednesday’s low and yesterday’s low was also below Wednesday’s shooting star low, which is inline with the expectation that EURUSD is likely to remain weak and retest the support 1.1006 to 1.1049 region. The nearest significant daily support and resistance levels are at 1.1049 and 1.1380 while the low from Wednesday has clearly been a resistance today.

Read more HERE

 

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MSCI WORLD INDEX IS TOPPING OUT

MSCI WORLD INDEX IS TOPPING OUT

On May 7th I tweeted on MSCI World Index saying that the bull market for stocks is over. I pointed out that MSCI World etf charts (weekly and monthly) indicate that the markets have entered to a volatile topping phase. This phase typically takes place after a long move higher and leads to a severe correction or a period of bear market. Monthly chart showed an increase in volatility and a bearish shooting star candle with the next candle moving well below the shooting star low. The weekly chart showed how this MSCI World index tracking etf had moved outside the up trending regression channel, a clear sign of increased volatility and weakness. Since my tweet price action has been exactly what you’d expect of a market that is topping out.

In this report I will take a closer look at some of the main stock market indices around the world and provide an updated view on the MSCI World index.

Over the last few years the financial media has been full of people trying to figure out when the global stock market rally might be ending. Most experts and commentators focus only on fundamentals and macroeconomics as they try to figure out the most likely future course of the markets while others take the view that central bank money printing (sometimes called funny money) makes fundamental analysis obsolete. There are high level examples of very skilled people misunderstanding and misinterpreting the impact of macroeconomic developments. Probably the most famous example is the Fed president Ben Bernanke failing to see subprime crisis impacting the economy. This was of course followed by a huge downward market in stocks that lasted until March 2009.

On May 28th Bloomberg TV highlighted a big sell off that took place in Shanghai listed shares. Shanghai Composite index fell by 6.5% on one single day. Another Chinese index, Hang Seng Composite Index finished the day down by almost 3.4%. Such moves often come as a surprise for those that don’t know how to read price action and focus solely on fundamentals. Fortunately technicals and market dynamics are quite revealing when it comes to spotting the early indications of developments that often lead to increased volatility. Let’s take a look at some of the world’s most followed stock market indices.

Hang Seng Composite Index, Weekly

Hang Seng Composite Index, Daily

Strong rally in Chinese stock market started in March as traders and investors alike started focussing on central bank stimulus. Market participants started buying stocks not because the underlying economy was performing and economic growth accelerating but because there was hope of increased liquidity in the economy. In other words the underlying economy and the real value of Chinese companies did not go up but the expected future value money went down as it was likely to be diluted by the extra liquidity by the central bank. This is not a great basis for investments fundamentally but certainly can lift the markets higher (or push the value of money down) for a period of time.

Hang Seng Composite reached the topping formation from year 2007 and has been since facing severe challenges in trying to move higher. Week starting on April 27th created a doji candle (a sign that upside momentum was lacking) and has since failed to move to new highs. Index dived twice from the top of the range before dropping below the support area (3810 -3840). Roughly at the time of my tweet on MSCI World index etf it was also reported that institutions have significantly increased their stock liquidations in Chinese stocks. Increased volatility was supporting the report and now that Hang Seng index has topped we have the ultimate proof that validates the rumour. Price made a return move to resistance at 3812.50 while the nearest significant support level is at 3461. A new lower high would mean further confirmation to this bearish technical picture.

Read the full analysis HERE

 

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Palladium Trading At Lower Weekly Bollinger Bands

Palladium, Weekly

Palladium has been trading sideways in a wide range since October last year. In the process market has created a lower weekly high and has now moved close to support levels. This suggests that in there is weakness in the long term picture but it doesn’t mean there can’t be short term rallies. Stochastics oscillator is now oversold and price is trading at lower Bollinger bands. This highlights the fact that price trading fairly close to important higher time frame support. Nearest support level is at 723.00 while the 23.6% Fibonacci resistance level at 767 practically coincides with a resistance created by a weekly pivot low 772.10. The fact that this region coincides with a 38.2% Fibonacci level when drawn from the year 2011 low the 2014 high increases its significance as a resistance level.

Palladium, Daily

The daily down trend that has been in force since the beginning of this month has taken Palladium inside a daily pivot near the weekly support level . This has caused the downside momentum to wane a bit and lifted Stochastics oscillator slightly higher. Nearest daily support level at 723 is the same as in the weekly chart. There is some resistance right above the current prices from the sideways moved seen last week. Nearest significant resistance after the sideways move above the 739.35 is at 767.

Palladium, 240 min

Since June 8th the down trend in Palladium has been changing the slope to less bearish (black channel vs. blue and red regression channel lines). A sign that buyers are slowly stepping in and trying to create a reversal as price is getting close to a major support. Stochastics is pointing higher suggesting that price might be actually doing just that. However, there are resistance levels ahead and it probably takes some short term consolidation before price can turn higher. Nearest intraday support level is at 731.32 while the bottom of the sideways range above at 739.35 is likely to act as a resistance. The next more significant resistance level is in the region of 746 to 750 where the 23.6% Fibonacci level, 50 period SMA and the upper Bollinger bands coincide.

Conclusion

Long term picture is a sideways market with a bearish slant to it as price has just recently made lower high and the March low was a lower low especially on a closing basis. The short to medium term picture has potential turn bullish as price has moved close to levels that sent price considerably higher in March. Therefore, we are looking for momentum reversal signals above 723 resistance this week. The daily chart suggests that the short term move has potential to 767 (23.6% Fibonacci level).

Janne Muta
Chief Market Analyst
HotForex


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TODAY’S CURRENCY MOVERS

EURUSD, Daily

EURUSD has been trading sideways for week now and yesterday’s data didn’t have much impact on the pair and it moved only slightly higher in yesterday’s trading. The US NAHB homebuilder sentiment index jumped to 59 in June versus 54 in May and 56 in April. It’s the highest since September. The single family sales index popped to 65 from May’s 58 (revised from 59), the best since 2005. The future sales index rose to 69 versus 63 (revised from 64). The index of prospective buyers rose to 44 was from 39. This is a solid beat, but it may not erode the gains in Treasuries much given the weakness in equities and the flight to safety nature behind some of the demand for bonds.

It’s not likely that there will be run-away moves in EURUSD as markets are likely to be on a wait and see mode going into the FOMC meeting. No policy changes are expected from the Fed, but the statement, economic forecast revisions and it has been argued that Yellen’s press conference should leave market participants with a stronger sense that a rate hike will come in October. Forecast revisions from the FOMC on Wednesday will be one of the key results of the meeting and will be used to assess rate hike probabilities for later in the year, as well as the likely trajectory. Despite the bounce in growth optimism in recent weeks, the FOMC will likely trim the official GDP estimates for 2015. But, it is also expected to increase the 2015-16 PCE chain price projections as energy prices have partly recovered from early-2015 lows. We expect a 0.1%-0.2% downward shift in the 2015 GDP and 0.4% boosts in the 2015 PCE chain price with likely additional upward nudge of 0.1% in the low-end inflation estimates for 2016. The core price central tendencies should remain roughly unchanged. The Fed may sidestep the usual downward bumps in the jobless rate estimates, given the flat jobless rate trend since February. The aggressive high-end near-term Fed funds rate estimates should be lowered as views converge toward the market expectation of a September or October start for Fed tightening. See our policy outlook page for a table of our assumptions for the Fed’s revised forecasts.

European court clears ECB’s OMT program. Draghi’s masterplan to safeguard financial stability and limit contagion finally won the backing of the European Court of Justice today, after a lengthy way through the courts in Germany and now the EU. The ECJ said in today’s ruling the OMT program doesn’t exceed the powers of the ECB, under certain conditions, which have been met. So the ECB can count on the OMT to help contain the fallout of a possible Greek default.

EURUSD has been range bound over the last few days. Upside has been limited by the resistance levels at 1.1326 and 1.1380 while the reaction lows from resistance have been higher than before. This has created higher daily lows and suggests upward bias but the resistance above has stood firm. Stochastics is indicating poor upside momentum while price is creating a bearish wedge. Therefore the line of least resistance should be on the downside over the coming days. This should bring the 1.0819 support into play. We’ve just seen a rally to 1.1326 resistance rejected which indicates weakness intraday. Today’s price movement is more likely range bound between 1.1152 and 1.1380. It is unlikely that EURUSD will have strong directional movements before FOMC meeting is over.

Read the full analysis HERE

 

[HotForex]

TODAY’S CURRENCY MOVERS

EURUSD didn’t move much yesterday even though some positive news was received from the negotiations on financing Greece. The pair rallied to 1.1410 but failed creating both a 4h and eventually a daily rejection candles. This was very much in line with what I have been saying over the last week about EURUSD being limited on the upside to 1.1435 and with downside potential to 1.1000. The bearish wedge supported the view and now price action has confirmed this analysis with a breakout from the wedge. Today’s price action is likely downward biased with upside limited to 1.1319 while I see support between 1.1112 and 1.1148. The nearest significant daily support and resistance levels are at 1.1050 and 1.1434.

ECB has increased Emergency Lending Assistance to Greece this morning while the country has been now given 48 hours to reach a debt deal. EU leaders see progress in the Greek talks after the latest reform list showed a narrowing of the gap between creditors and the Tsipras administration and have given Greece 48 hours to finalise a deal. Eurozone Finance Ministers will meet again on Wednesday and could sign off a package if there is a staff level agreement by then. EU heads of state will then meet again on

Thursday with the aim to finalise a deal by the end of the week. It is likely that this will include an extension of the current bailout agreement and financing of upcoming ECB and IMF repayments through existing ESM funds earmarked initially for Greek bank recapitalisation. Greek debt is likely to be lengthened or re-profiled, although given the current construction of the ESM holding most of Greece’s debt, an outright write off seems less likely.

The 5.1% May US existing home sales bounce to a 5.35 mln pace yesterday beat the prior 5.31 mln four-year high to leave the strongest pace since the spike to a 5.44 mln clip back in November of 2009 with the homebuyers’ tax credit. We also saw a 4.6% median price rise to $228,700 new cycle-high, as prices now.. Read the Full Analysis HERE

 

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Today’s Currency Movers

EURUSD, Daily

Technical picture in EURUSD is bearish with price moving outside the bearish wedge I’ve had on the chart for quite some time now. Resistance area below 1.1239 is likely to turn price lower today and with no high quality support levels in proximity of current price action I am expecting to see another strong sell off today. My target for today’s move is 1.0937 as this level is likely to turn price higher again. Important daily support and resistance levels are at 1.1207 and 1.0930.

An agreement at technical level with Greece needs to be on the table today, in time for Finance Ministers to sign off the agreement at the Euro group meeting Wednesday evening ahead of Thursday’s EU summit. Even if this goes without a hitch, Tsipras will still have to get the deal through parliament in Athens and then through the German parliament. So plenty yet that could go wrong and trigger another flip in fixed income markets.

Yesterday US new home sales rose 2.2% to a 546k pace in May after rebounding 8.1% to 534k in April (revised from 517k) from the 9.4% March drop to 494k. That knocked the month’s supply to 4.5 from 4.6 (revised from 4.8). Regionally, sales were split with gains in the Northeast and West, and declines in the Midwest and South. The median sales price fell 2.9% to $282,800 from $291,100 (revised from $297,300). Prices are down 1.0% y/y versus the 6.0% y/y clip in April. Data are better than expected. The U.S. Markit flash PMI manufacturing index slipped to 53.4 in June from May’s 54.0 and is down from April’s 54.1. It’s a third straight monthly decline and is the weakest reading since October 2013. However, employment and new orders were higher, with the former at its fastest pace since November. Average cost burdens were up for a second straight month.

Read the full analysis HERE

 

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Today’s Currency Movers

EURUSD, Daily

Yesterday’s EURUSD trading was limited by the resistance level just below 1.1239. Market turned lower below this level as I expected and has since failed to push through this resistance but the selloff I anticipated didn’t materialize. Market has now formed a flag in 4h timeframe and projection from this formation suggests potential all the way down to 1.0915. The 50% Fibonacci level (measured from March low to May high) can be found at 1.0965 while my target of 1.0937 sits in between the aforementioned levels. The pair has been range bound with some effort to push the price higher but now it has moved below the 4h flag formation. I don’t expect yesterday’s high of 1.1234 to be exceeded today but look for a movement below latest pivot low at 1.1134 and towards my target. Important daily support and resistance levels are at 1.1207 and 1.0930.

Pensions remained sticking point in Greek talks, according to the FT citing leaked documents covering creditors’ counter offers to Greece’s reform plans. Creditor demands are focusing on the time line for a raise in the retirement age as well as the time contributions have to be made to benefit from full pensions. The pension system has been a key issue of controversy right from the start with creditors demanding a comprehensive overhaul of a system where costs spiraled out of control over the last decades.

There already was one reform in 2012 but costs remain too high with creditors demanding further cuts, while at the same time recommending a basic social safety net, which so far doesn’t exist in Greece, leaving the pension of parents and grandparents a fall back for many unemployed.

TsIpras’s meeting with creditor officials run into the early hours of Thursday morning, but in the end there was still no deal on the table. Eurozone Finance Ministers, which had gathered Wednesday evening, had little to discuss, and called off their meeting early, while agreeing to meet again this afternoon. Negotiators have already re-started talks this morning and the discussions with Tsipras will continue at 9 am local time. European heads of state are gathering for a 2-day summit again today and it seems Tsipras is banking once again on discussions at leaders level, where he can play Greece’s card of strategic Nato partner in the south-east of Europe and threats to forge closer ties with Russia.

This ties in with Greece’s demands that the ESM take over Greece’s debt at the IMF and the ECB. Merkel, however, has repeatedly stressed that a deal with the institutions, including the IMF, is a prerequisite. A Greek government minister put the chances of a deal at just 50% now and Grexit is becoming a real possibility. Sticking points are reportedly mainly immediate emergency measures demanded by creditors, which want to see the government passing more reforms through parliament before handing over further cash..Read more HERE

 

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Today’s Currency Movers

EURUSD, Daily

The Swiss National Bank has confirmed it engaged in a currency intervention yesterday in EURCHF as the bank sees CHF being too expensive versus EUR (EURCHF being too low). This supported both EURCHF and to certain degree other EUR pairs in yesterday’s trading. As a result EURUSD moved through the resistance level at 1.1130 and spike up to 1.1278 before falling down again. As per EURUSD futures today’s trading has been careful with light volumes after yesterday’s strong volatility. Strong movement higher from a support suggests that there is further upside ahead in EURUSD. I am seeing intraday support between 1.1110 and 1.1140 while significant daily support and resistance levels are at 1.1006 and 1.1292.

According to ECB’s Coeure Grexit can no longer be excluded. The executive board member said in France’s les Echos that a Greek exit from the Eurozone can unfortunately no longer be excluded, even if the ECB and Eurozone institutions want Greece to stay. Coeure said the European proposals gave Greece time and autonomy to take reform steps, adding that it was Greece’s decision to end the negotiations. Coerue also said that a “No” in the referendum would make it very difficult to continue the political dialogue.

Many commentators are now asking what Greece will be voting on this Sunday. For EU Commission President, the July 5 referendum will be a vote on Greece’s future in Europe, for the Greek opposition it is a vote on EMU membership, but for Tsipras and Syriza it is a way to change bailout terms. The Greek government is still selling a “No” to the creditor’s bailout offer as a chance to get improved conditions, but in reality, the offer will likely no longer be on the table on July 5 and without a bailout program in place the ECB will have difficulties defending its ongoing ELA assistance, which effectively turns it into a lender of last resort and the financier of the Greek government, something the Eurozone treaties clearly rule out. For now Draghi just decided to freeze the amount of ELA, but with the bailout program running out tomorrow, the ECB’s review of the situation on Wednesday could not only end re-financing for Greek banks, but also the Greek government, at least within the Eurozone system.

Yesterday US Dallas Fed manufacturing index improved to -7.0 in June after falling to -20.8 in May. This is a 6th consecutive month that the regional index has been in contractionary territory (below zero), which is mainly a function of the recession in the oil sector. US pending home sales rose 0.9% to 112.6 in May, it’s a 5th straight monthly gain, from a revised 2.7% increase April to 111.6 (was 112.4). Regionally, sales were up in the Northeast (6.3%) and West (2.2%), but lower in the Midwest (-0.6%) and South (-0.8%). Compared to last year, sales are up 8.3% y/y from 12.6% y/y.

READ THE FULL ANALYSIS HERE

 

[HotForex]

Today’s Currency Movers

EURUSD, Daily
EURUSD found support at the lower end of my support range (1.1110 – 1.1140) yesterday and was moving sideways inside this range overnight. At the time of writing price is again at intraday support at 1.1100 after reacting higher from it earlier today. I have been expecting today’s trading being limited between 1.1100 support and resistance at 1.1201 as market participants wait to see how the Greek drama develops but there seems to be no momentum from this support. Therefore the emphasis will be on watching the price action at current levels in order to see if buyers are stepping in or out of the way. Weekly picture suggests that EURUSD could be range bound between 1.0955 and 1.1466 for several weeks unless something extraordinary and unexpected happens. Significant daily support and resistance levels are at 1.1006 and 1.1292.
Greece defaulted on its IMF repayment yesterday and today Tsipras is prepared to to accept bailout conditions. Greece’s latest letter to creditors says Greece is “prepared to accept this Staff Level Agreement subject to the following amendments, additions or clarifications as part of the extension of the expiring EFSF program and the new ESM Loan Agreement”. The FT reports that the two page letter was sent as a clarification to yesterday’s surprise ESM loan request. The Eurogroup will discuss it in a teleconference at 15.30GMT today. The mentioned amendments are reportedly are only a handful of minor changes. If confirmed, this will clearly help the ECB to extent ELA assistance for now and the referendum may be called off.
German Finance Minister Schaeuble is still taking tough line on Greece, saying the letter from Tsipras that accepted most of the bailout conditions lacks clarity and that Greece’s proposals still aren’t a basis for serious measures. The euro has given back most of the gains it saw following the earlier news of the Tsipras letter.
An IMF default would not have necessarily meant a cut off in ELA, which so far has only been frozen at last week’s level, as according to earlier Reuters reports citing an ECB official Greek banks could still have ruled to be solvent for up to 5 days after the non-payment to the IMF. However, without a bailout program in place and no clear hope of another one, Draghi would likely have faced growing resistance in the council with Weidmann already questioning previously if ongoing emergency assistance doesn’t violate the prohibition of direct government financing through the ECB. This will still be the case, but if both sides are at least negotiating again, Draghi will unlikely want to be the one to pull the plug, at least for now.
Yesterday US consumer confidence surged to 101.4 in June from 94.6 in May (revised down from 95.4). It ties the March reading, and is the second highest print this year, bested only by the 103.8 in January. The latter was the highest since June 2007. The present situations component rose to 111.6 from 107.1 (revised from 108.1). The expectations index was 94.6 from 86.2 previously (revised from 86.9). The labor market differential improved to -4.3 versus -6.6. The 12-month inflation gauge edged uo to 5.1% from 5.0% (revised from 5.1%).

Read the full analysis here

 

[HotForex]

Today’s Currency Movers

EURUSD, Daily

After a smaller than previous gap opening EURUSD rallied to a resistance at Friday’s close and turned lower as the buyers failed to challenge the sellers at the resistance. Trading Greek related politics is difficult, if not impossible and that leaves us with technicals. Technically EURUSD is inside a potential support area but still relatively close to a weekly low from two weeks ago (1.1130) and is now trading outside the upward trend channel. This and the lower high in mid-June suggest that the pair might come lower this week. Current trading takes place just above a support (1.0948) but there isn’t much upside momentum and the nearest resistance at 1.1032 isrelatively close. This should may dampen the bulls’ readiness to bid the prices higher. This could lead to sideways trading today. Daily support and resistance levels: 1.0930 and 1.1135.

European markets in general are holding their breath ahead of today’s Eurogroup and EU leaders meetings. Bund and Gilt yields continue to decline as stocks remain under pressure, although losses on FTSE and DAX remain limited so far and peripheral Eurozone 10-year yields outside of Greece came off yesterday’s highs. Officials stress that they want to keep Greece in the Eurozone, but also that that still requires firm reform commitments from Greece. So all eyes are once again on Tsipras and his new Finance Minister.

The latter may represent more of a change in style than substance, however, and it remains unclear what proposals both will bring to Brussels. What is clear is that with the ECB tightening the pressure by raising the haircut on Greek collateral substantially today’s round of meetings really represent Greece’s last chance to prevent default and Grexit.

Greece’s last chance to come to an agreementand avoid bankruptcy is a quick deal or at least the firm progress of one at today’s Eurogroup meeting that will be followed by an EU summit in the evening. Hollande and Merkel stressed again yesterday that time is running out and the ECB tightened the pressure on banks by raising the haircut on Greek collateral – reportedly to 45%. Banks will remain closed today and tomorrow, but without a deal it will be almost impossible to open them again quickly and the government will likely face troubles at tomorrow’s T-bill auction. Grexit will almost become inevitable. If there is a deal, ECB’s Nowotny suggested that the ECB could provide bridge financing. So once again all hinges on Greece’s proposals and its willingness to compromise.

ECB also lifted haircut on Greek collateral, while maintaining ELA assistance to Greek banks for now. The decision will increase pressure on Greece ahead of today’s Eurogroup meeting and EU summit. It will also but local banks in a difficult position ahead of Wednesday’s T-Bill sale. The Greek government has been relying on rolling over T-bills to keep afloat, with Greek banks and institutions the only takers. With the fresh increase on the haircut, it will be increasingly costly for Greek banks to hold Greek government debt.

US June ISM services index edged up to 56.0 from May’s 55.7 as per yesterday’s release. However the 57.8 in April is still the highest of the year, while the 58.8 in November was cycle high since November 2005. However, components were mixed. The employment index fell to 52.7 from 55.3. New orders rose to 58.3 from 57.9, while new export orders declined to 52.0 from 55.0. Prices paid slid to 53.0 from 55.9. Also, US Markit services PMI fell to 54.8 in the final June print versus May’s 56.2 (and 54.8 June preliminary). It’s the lowest since January’s 54.2 and reflects continued slowing in the expansion. A year ago the reading was 61.0. Employment slid to 54.1 versus 55.5 in May, though the expansion in the job sector has persisted for 64 straight months. The composite index dropped to 54.6 from 56.0 in May (and 54.6 for the June preliminary). It is also the lowest since January.

Read the full analysis HERE

 

[HotForex]

Today’s Currency Movers

EURUSD, Daily

EURUSD traded between the nearest support and resistance levels yesterday as was expected. The 1.0930 support attracted buyers and after printing a low of 1.0916 price rallied to 1.1052. Weekly pivot bar from end of May has been providing support but at the time of writing there are no definite signs of price reversing the current downtrend. Price is trending lower in a 4h 2 stdv regression channel and is at the time of writing near channel high and not that far from 1.1048 resistance level. The nearest support and resistance levels are at 1.0930 and 1.1048.

Greece gets until Sunday to reach a deal. Euro group and EU leaders meeting yesterday once again failed to reach an agreement with Greece amid a lack of concrete proposals from Tsipras. Greece is expected to present a formal request for ESM aid today and Euro group ministers will hold a conference call to discuss the proposals that are expected to be laid out in the request. The final deadline to reach an agreement at technical level seems to be Friday and a deal must be reached at a summit on Sunday. German Chancellor Merkel said she was not particularly optimistic and EU Commission President Juncker said Grexit scenarios have been prepared in detail. The ECB meanwhile stands ready to try and limit contagion. It seems this time the game really will be up Sunday if there is no miracle.

Eurogroup and EU summit yesterday once again didn’t get very far amid the lack of new proposals from Greece. EU President Tusk was left to say that a formal request for ESM aid was expected today, Thursday at the latest, while stressing the strict conditionality of ESM treaties. So if Tsipras thought by not extending the bailout and going to the ESM instead he would get more leeway he will have been disappointed. Greece said it will send a formal request for ESM aid today, while EU’s Dombrovkis said Greece was ready to present reform proposals tomorrow.

In an unusually clear way Tusk set Sunday as the very last deadline for a deal with Greece, while urging both sides to work together to come to an agreement. German Chancellor Merkel was not very optimistic however and EU Commission President Juncker said detailed Grexit scenarios have been prepared. The ECB meanwhile continues to stand ready to limit the fallout from the Greek crisis.

U.S. JOLTS report showed job rose 29k in May after a 225k increase in April to 5,363k (revised from 267k to 5,376k). The job openings rate was steady at 3.6 (April was nudged down from 3.7%). Hirings fell 34k following a revised 54k drop in April (was -81k). The rate fell to 3.5% from 3.6% (April revised up from 3.5%). There was a 10k decline in quitters after a 60k drop previously (revised from -100k). The quit rate was unchanged at 1.9%. The May data won’t have market impact.

U.S. trade deficit widened 2.9% to $41.9 bln in May, after narrowing 19.5% to -$40.7 bln in April (revised from -$40.9 bln). Imports dipped 0.1% following the 3.3% April decline. Exports slid 0.8% after the 1.1% gain in April (revised from 1.0%). Excluding petroleum, the trade balance fell to -$36.1 bln from -$33.9 bln in April (revised from -$34.1 bln).

Main Macro Events Today

EU Extraordinary Economic Summit: Greece is expected to present a formal request for ESM aid today and Eurogroup ministers will hold a conference call to discuss the proposals that are expected to be laid out in the request.
FOMC Minutes: The Fed is expected to be more optimistic about the US economy reaching their 2% inflation target. We are also likely to see some optimism on personal consumption.
US Consumer Credit: The May consumer credit report is out on today and should reveal a $18 bln (median $18.5 bln) increase for the month following a $20.5 bln increase in April and a $21.3 bln gain in March. Over the past year the headline has averaged $18.2 bln, about in line with our forecast.

Read the full analysis : HERE

 

[HotForex]

Today’s Currency Movers

EURUSD, Daily

EURUSD is yet once again trading at the same resistance it failed to penetrate yesterday. After moving lower the pair found support at 1.1000 support. Earlier on the day the disappointing US jobless claims figures failed to move market significantly but later in the US session buyers stepped in at around 1.1000 support and sent EUR higher. Higher low formed yesterday suggests that EURUSD will try to push higher today. At the time of writing the pair has reacted lower from the daily resistance created by rising trend channel and 1.1135 resistance. However the pair has also made a high print of 1.1134 (yesterday’s high was 1.1125) and found support from 1.1080 while the next significant intraday resistance level is at 1.1188. I am expecting EURUSD to move higher and towards the 1.1188 intraday resistance today. The nearest daily support and resistance levels are at 1.0930 and 1.1135.

Greece submitted its reform proposals at the 11th hour as it seeks an additional EUR 53.5 bln ($59 bln) in bailouts. The 10-page document included many reform measures which had been sought by the EU, including government spending cuts for pensions. PM Tsipras also agreed to shift a variety of goods and services into higher sales tax categories. In return for accepting even harsher measures than previously proposed, the government wants a commitment from creditors to further negotiate long-term debt conditions. Officials, including those from the IMF, will analyze the proposals prior to Saturday’s EU finance ministers meeting, prior to the EU summit on Sunday. Risk appetite is likely to extend higher into the weekend on this news.

Greece’s concessions could save the day. The last minute reform proposals are similar creditor’s proposal from June 24, which voters rejected in a referendum last Sunday. The new proposals are to be checked for feasibility and sustainability by ECB, European Commission and IMF prior to the Eurogroup meeting Saturday and the summit on Sunday, according to newspaper reports, but initial reviews suggest Tsipras made more concessions, while also asking for a review of debt sustainability. The important part here is to stress that this doesn’t need to be haircuts, which no-one is asking for, but could also be a further extension of the debt schedule and lower interest rates, something finance ministers already discussed last year. Although officials will likely want to see signs that reforms are not just promised but actually implemented, before committing to such a move.

ECB ultimatum may have aided reform concessions. A dutch newspaper reported that the ECB will terminate ELA as of 6 am Monday morning if Greek reform proposals are deemed too light and Greece is unwilling to cooperate with withdrawal from the Eurozone. The reports cites an unidentified EU official and the ECB’s final ultimatum may have helped to produce somewhat of a turnaround in Greece, which seems to have finally ended the posturing and put meat on the reform proposals.

U.S. initial jobless claims surged 15k to 297k in the July 4 week, following the 11k jump to 282k in the prior week (revised from 281k). This brought the 4-week moving average to 279.5k versus 275k (revised from 274.75k. Continuing claims jumped 69k to 2,334k in the week ended June 27 from 2,265k in the prior week (revised from 2,264k). The larger than expected increase in jobless claims is likely more a function of the July 4 holiday than a change in the labor market, even though the BLS said there was nothing unusual in the data.

Currency Pairs, Grouped Performance (percentage change from previous day’s close)

This morning EUR is trading higher while JPY is down again as the need for safe haven dissipates. Other currencies’ performance remains mixed and without strong directional bias. USDJPY has rallied to a resistance at 122.08 while EURJPY battles with a resistance level at 135.72. CADJPY is nicely up from the support at 94.83 and same applies to GBPJPY that has rallied from 185.02 support. NZDJPY has rallied to a resistance at 82.51.

Read the full analysis HERE

 

[HotForex]

Today's Currency Movers by HotForex's Senior Currency Strategist John Knobel.

EURUSD, Daily

EURUSD price, now having touched the lower end of my initial 1.0970’s corrective bounce target, should open up the way for a 1.1030’s lower top on any clean break of the 1.0970’s. Daily chart price action is still well contained within my downward sloping bear channel; Stochastic Oscillator analysis supports a further corrective bounce before any resumption of the daily chart downtrend. Traders may look to open new short positions within the 1.1030’s for a measured move (March lows – May highs) that may extend price lower towards a retest of the 1.0840’s.

Standard & Poor’s on Tuesday upgraded Greece’s sovereign credit rating by two notches and revised its outlook to stable from negative, citing euro zone countries initial agreement to start negotiations with the country on a third bailout. The probability of Greece leaving the Eurozone is less than 50% , however the country may still face shrinking GDP.

U.S. Fed’s annual industrial production revisions showed production knocked down to 0.2% in June, versus the prior 0.3% print, while May was left at -0.2%, with April revised up to a -0.3% pace from -0.5% previously. Capacity utilization for June was revised down sharply to 77.8% from 78.4%, while May was nudged to 77.7% from 78.2%, with April at 78.0% versus 78.5%. At the margin, the data add to the argument for the FOMC to delay a September rate hike.

Read the full analysis http://analysis.hotforex.com/blog/2015/07/22/todays-currency-movers-48/

 

[HotForex]

TODAY’S CURRENCY MOVERS

EURUSD, Daily

EURUSD price, continues to bounce from the May lows near 1.0820. This corrective bounce has attempted, but so far failed, to print a new lower top from the previous 1.1216 high. Yesterday’s high of near 1.1018 was a good attempt at the 1.1030’s, my previous article forecasted lower top. Traders should expect for the market to range between the 1.1030’s and 1.0870’s, now that the previous resistance turned support 1.0970’s area has been deemed invalid, as price has tested the 1.0970’s area both from below and above. Relevant support levels are now observed at 1.0920, 1.0870 and 1.0820, while resistance levels are spotted at 1.1030, 1.1087 and 1.1216. Given that the EURUSD price action is still firmly within the downward slopping price channel, as well as the fact that bullish momentum is observed within the Stochastic Oscillator analysis, I continue to be on alert for sellers to emerge around the 1.1020’s-30’s for a re-test of the 1.0820’s; any breach of the 1.0820’s will open up the way towards the 1.0750’s.

Eurozone Jul PMIs disappointed today, with readings falling slightly from June. The manufacturing PMI dipped to 52.2 from 52.5 and the services to 53.8 from 54.4. However, data continues to show ongoing expansion across the Eurozone manufacturing sectors, which supports the ECB’s view that the recovery remains intact and is broadening if not accelerating.

As for next week’s U.S. Fed policy statement, it should support Fed Chair Yellen’s testimony where she said that the “FOMC is likely to begin liftoff this year, provided the economy continues to improve as forecast.” Traders should prepare for a relatively positive assessment of the U.S. economy.

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[HotForex]

S&P 500 TRADING NEAR LEVELS THAT SHOULD ATTRACT BUYERS

S&P 500, Weekly

At the time of writing Asian shares are on decline with Nikkei down by 1.2%, Nifty 0.97% and Hang Seng Composite down by over 3% and according to Bloomberg Shanghai Composite is down by 8% even in the government managed market. The US stock market finished Friday in the red, with S&P500 index losing 1.07%. Apart from the Fed expressing their commitment to raise interest rates market participants have been worried about valuations getting dear. S&P 500 P/E is getting close to 18 and disappointments with Caterpillar, 3M, IBM and Biogen Ideg’s earnings reports added to the worries of this market not being healthy enough to push into new highs. Additionally we had Apple publishing a record high quarterly result but the stock was hammered down by 9% the next trading day. This is not a sign of a bullish market but rather indicates that the willingness and commitment to pay higher prices and keep the uptrend intact is weak. China PMI being negative and a 6.8% drop in the US June New Home Sales report added to the negative sentiment. A look at the sectors reveals weakness in key sectors. All sectors came down last week but Industrials, Semiconductors, Basic Materials and Energy Stocks show signs of technical weakness.

S&P 500 e-mini future (ES) fell down from the resistance as expected and finished Friday’s trading inside the supportive range published in my previous reports. It is now trading near levels that should attract buyers .The price is at weekly pivot and fairly close to the lower Bollinger Bands and a 50 week SMA. Last week’s high was a lower high and suggests technical weakness in this index and price has now opened outside the up trending regression channel after wedging and then breaking out of the wedge.

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[HotForex]

TODAY’S CURRENCY MOVERS

EURUSD, Daily

EURUSD price, at the time of writing, price has penetrated the higher channel line within the above daily chart to clear the higher end of the 1.1080’s resistance levels. When a market has a breakout, we look for it to make an initial move beyond nearby support and resistance. Those traders that have been following my daily analysis of the EURUSD, would not be surprised by the recent surge in price, as I have been writing about the possibility of the pair printing out a new lower top below the 1.1220’s within the above chart downward price channel. I now remain on the watch for a breach above the 1.1210’s – 1.1220’s area for clues of a daily chart trend reversal, otherwise I would expect for price to halt its three month corrective bounce and resume its move lower towards a retest of the 1.0870’s with the possibility of reaching my 1.0750’s target area.

The EUR received a boost in early European market trading as the German July Ifo Business Climate unexpectedly bounced back with the overall reading rising to 108.0 from 107.5 in the previous month. The expectations reading rose for the first time since March and it seems the Greek bailout deal has boosted future optimism. The retail trade index meanwhile fell back slightly, as did the construction index. All in all, a positive number, which together with the effective stabilization in German ZEW and PMI readings confirms that the German economy remains on track.

Traders should expect further EURUSD price action later today as the U.S. June Durable Goods Orders are due. June durable goods orders are expected to grow by 2.0%., Shipments and Inventories are expected to remain unchanged.

Currency Pairs, Grouped Performance (% change)

The new Currency Movers Charts show the percentage change from previous day’s close to the current moment against the other major currencies.

Over the last five trading day’s the EUR is trading higher across the board. The AUD remains weaker across the board against most pairs, while the JPY is stronger against the AUD.

Significant daily support and resistance levels for these pairs are:

Main Macro Events Today

• EUR Eurozone M3 money supply: growth steady at 5.0%, against expectations for a marginal acceleration in the annual number. The three months moving average, the ECB’s preferred target, moved up to 5.1%, clearly above the reference value of 4.5%, although with the ECB focused on loan growth and headline inflation, M3 data has effectively been degraded in its importance for monetary policy decision.

• U.S. Core Durable Goods Orders: Forecast risk: upward, as there was an increase in Boeing orders in June. Market risk: downward, as weaker data could impact rate hike timelines.

Please note that times displayed based on local time zone and are from time of writing this report.

Click here to access the full HotForex Economic calendar.

 

[HotForex]

TODAY’S CURRENCY MOVERS

EURUSD, Daily

EURUSD price, after breaking out of the six week downward sloping price channel, looks set to continue to bounce off of May’s low at 1.0820. Price action during Monday’s trading sessions was supported by the German Ifo report; the market viewed the results as strong enough to allow the pair to confirm a new short term resistance level at 1.1129. Technically, I now seek a return move towards the previous day’s low near the 1.0970’s, before we see a retest of the 1.1120’s.

The euro outperformed as more Grexit risk premium was unwound. Further, the July German Ifo survey beat expectations and boosted EUR longs. Market participants, as it seems, are adjusting expectations on the performance of the Chinese economy as the Chinese stock market closed down 8.5% on Monday. It is yet to remain seen, if the Chinese slowdown is a domestic issue or if it will spread into the global economy.

The dollar shrugged off the better durables report, which was beefed up by Boeing orders. The U.S. Dallas Fed’s manufacturing index improved to -4.6 in July versus -7.0 in June. It’s been in negative territory for 7 straight months given the region’s exposure to the oil recession.

Currency Pairs, Grouped Performance (% change)

The new Currency Movers Charts show the percentage change from previous day’s close to the current moment against the other major currencies.

The GBP is trading firmer against the EUR and the JPY ahead of the GBP GDP data.

The JPY trades lower against most pairs, as the USDJPY recovered most of the losses from yesterday’s decline.

Significant daily support and resistance levels for these pairs are:

Main Macro Events Today

• GBP Prelim GDP: Preliminary Q2 GDP data is expecting a 0.7% q/q rise, up from 0.6% in Q1, With robust growth the BoE can afford to lay the ground for rate hikes ahead and a recent Bloomberg poll suggests that most economists expect the first MPC members to start voting for a hike next month.

• USD CB Consumer Confidence: The July consumer confidence is out later today and should reveal a decline to 100.0 (median 100.0) from 101.4 in June. This would come along side a decline in Michigan Sentiment to 93.3 in the first July release from 96.1 in June. The IBD/TIPP poll for the month managed to hold steady at 48.1 for a second month.

Please note that times displayed based on local time zone and are from time of writing this report.

Click here to access the full HotForex Economic calendar.

 

[HotForex]

TODAY’S CURRENCY MOVERS

EURUSD, Daily

EURUSD, Since the recent advance through the upper daily chart channel line was penetrated, and the fact that price remains within a 12 month decline, a further corrective bounce for medium term traders towards the 1.1220’s should not be ruled out. We will likely witness a potential breakdown back towards the 1.0870’s, ahead of my longer term price projection near the 1.0750’s. Swing traders with a short term view may look for price to return towards the 1.0970’s before flipping to the long side for a retest of the 1.1120’s.

The EUR has been trading off of the back of positive data this week, as German business and consumer confidence data came in firmer than expected; earlier today the German July Gfk held unchanged from June at 10.1. The consensus had been for a slight dip, to 10.0. High employment and expectations for higher pay underpinned the report. The EURUSD price advanced from Monday’s solid German Ifo results may consolidate ahead of today’s U.S. FOMC Statement.

Traders are waiting on the FOMC in the U.S., which concludes its two-day meeting today. No surprises are likely, and while the overall tone is expected to be more upbeat than the previous FOMC in June, the Fed is not likely to commit to a September rate lift-off. This is due to key data releases, concerns about China’s financial markets and Greece, and given recent oil price declines.

Currency Pairs, Grouped Performance (% change)

The new Currency Movers Charts show the percentage change from previous day’s close to the current moment against the other major currencies.

The GBP is trading firmer against the AUD, CAD and the NZD after better than forecast GBP Net Lending to Individuals’ data were released today.

The AUD and the CAD trade lower against most pairs, as commodity prices continue to seek a bottom.

Significant daily support and resistance levels for these pairs are:

Main Macro Events Today

• EUR Gfk German Consumer Climate : The July Gfk consumer confidence came in firmer than expected, holding unchanged from June at 10.1,though concerns about Greece’s potential impact on the German economy remained a negative, according to Gfk.

• USD FOMC Statement: No surprises are likely, and while the overall tone is likely to be more upbeat than the previous FOMC in June, it’s widely anticipated that the FOMC will be moderately net bullish for the dollar.

Please note that times displayed based on local time zone and are from time of writing this report.

Click here to access the full HotForex Economic calendar.

 

[HotForex]

GERMAN UNEMPLOYMENT CHANGE ROSE AT 9K VS -5K (EXP)

German jobless numbers unexpectedly rose in July, with the seasonally adjusted total up 9K over the month, leaving the jobless rate at a very low 6.4%. Jobless numbers remain down 99K over the year. The German labour market still looks tight and this has contributed to a wave of industrial action this year and wage gains will be sizeable, which adds support to consumption trends in the short run, but will also boost inflation pressures, while undermining German competitiveness in the medium term.

 

[HotForex]

TODAY’S CURRENCY MOVERS

EURUSD, Daily

EURUSD, continues to seek support from buyers as price remains above the downward channel line. The EUR found support around the 1.0920’s, as the USD dropped on Friday following weaker than expected U.S. Q2 ECI data. In my July 29th analysis, I reported that EURUSD price “may return towards the 1.0970’s, before flipping to the long side for a re-test of the 1.1120’s.” The fact that recent price action has exceeded the 1.0970’s to test and establish a higher low at 1.0920 from the July 20th low of 1.0808, opens up a renewed recovery towards the July 27th 1.1120’s resistance area. Price may now attempt to extend the recovery to the 1.1220’s before resumption of the multi-week decline.

Friday saw better EU inflation data as inflation remained stable at 0.2%, although, it was weaker than U.S. employment data, which sent the EURUSD sharply lower. The move was seen by the market as overdone and the EURUSD quickly made it back to test the 1.10’s.

The U.S. Fed funds median still shows a 25 bp rate hike in September, Key reports are on tap this week, including payrolls, PMIs, income, and spending.

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