Daily Market Analysis from ForexMart (Fundamentals)

[Andrea ForexMart]

EUR/USD Fundamental Analysis: November 24, 2016

The euro together with the greens had bounced again on Wednesday following the strengthening of the USD as it was boosted by the positive data regarding the much reinforced economy of the United States. The pair is sailing smooth during the morning session of the Asia and Europe, however, the inevitable volatility started amid the NY trading session.

The pair tested the level of 1.0600 ahead of the announcement of the Durable Goods data which has a better-than-expected result of 1%. The positive release signaled the market to begin the USD purchase again which enabled the pair to break the 1.0600 and touched 1.0525 prior to the stabilization of the pair that settled below the 1.0550 during closing day.

According to previous readings, the regions 1.0500 and 1.0600 is considered as a stable support for the pair which is also mentioned by profuse large banks, the aforesaid level will be the expected mark for the euro as the year ends.

At present, the price movement emphasized a continuous softening and the Thanksgiving celebration in the United States will not become a driving force for the euro to edged high against the dollar. Technically, the signs bring no good for the EUR, in this way the single currency is kept intact and wait for a strong support which include the 1.0500, 1.0440 and 1.0440 marks until we found a much stable support.

The latest German Ifo Business Climate caused a short period of volatility but things as of this moment remains unaffected. The price action is still on guarded and anticipates for a test within the 1.0500 level in order to recognize the final result whether this movement will progress or not.

 

[Andrea ForexMart]

GBP/USD Fundamental Analysis: November 24, 2016

The sterling pound continues to be the sole currency that has survived the far-reaching effects of the USD’s recent surges since the GBP has continuously inched higher against the US dollar even during the US elections. The GBP/USD pair consolidated and range for the majority of yesterday’s sessions but the USD further increased during the opening of the New York session as economic releases from the US such as the Durable Goods data came out exceeding initial market expectations.

The GBP/USD pair initially plummeted towards 1.2350 points but recovered immediately and broke through 1.2400 and is currently resting just below the 1.2450 region. The GBP is currently on the strong side and should the USD exhibit weakness in the coming days, then the GBP/USD is expected to rise to 1.2600 and could possibly go higher.

The FOMC meeting minutes were released yesterday and has confirmed the possibility of a Fed rate hike this coming December especially since its members talked about the urgent need to increase interest rates as soon as possible. The minutes did not add much volatility to the market since it met initial market speculations. For today’s trading session, there are no important economic releases expected from both the US and the UK, and the currency pair is expected to further consolidate with bullish biases enabling it to sustain its position over 1.2400. Market players are slowly regaining their confidence in the sterling pound, and is expected to further increase in the coming sessions.

 

[Andrea ForexMart]

GBP/USD Fundamental Analysis: November 28, 2016

The GBP/USD exhibited a generally bullish stance last week as the sterling pound continued to counter the recent strengthening of the USD, with the GBP the lone currency that has held its ground against the ever-increasing value of the USD. The strong stance of the GBP is reflective of the currency settling as the invocation of Article 50 draws nearer and after a positive reaction from the markets after the high court has ruled that the Parliament will have to go through a debate and discussion before pushing through with the said article. This has resulted into the market receiving assurance that the UK economy will be well taken care of as the region goes through the Brexit process.

This has caused the GBP/USD pair to continuously consolidate on both sides of the 1.2500 region in spite of the added strength of the USD. The GBP did not experience much volatility for the past week as the Hammond Autumn statement predicted a somewhat negative forecast for the UK economy for the next two years, thereby meeting general market expectations.

However, for this week, the currency pair is expected to experience added volatility as currency flows are more likely to have an effect on the value of the sterling pound. The NFP employment report from the US is also expected to determine whether the Fed will be increasing the frequency of its rate hikes this coming 2017.

 

[Andrea ForexMart]

USD/CAD Fundamental Analysis: November 28, 2016

The USD/CAD pair was consolidating and trading in a tight range last week, with the strength of the USD being countered by equally-strong loonie. However, the currency pair briefly dropped at the 1.3380 trading range but closed down the week on a much higher note at 1.3600 points. The USD/CAD exhibited active fluctuations throughout the week but were quickly reversed after sellers and buyers both struggled to take control of the currency pair.

The USD had remarkable strength for the past three weeks ever since the results of the US elections, while the increasing value of the CAD was largely attributed to highly positive economic data from the Canadian economy, as well as the continued buoyancy of oil prices. The OPEC is set to have a meeting this coming November 30 and the organization is expected to produce a deal between oil producers with regards to production cuts, with producers expected to be in support of a production cut, which has boosted the CAD and has kept the USD/CAD pair in line.

For this week, the market is expecting the OPEC meeting and if the results of the said meeting turn out to be positive, then the USD/CAD pair could possibly go upwards to 1.3400 and could even go further at 1.3300 points. For the US, the NFP employment report is also slated to be released within the week, and if this particular data turns out to be positive, then this could be an indicator for the market as to whether the Fed would be increasing the frequency of its rate hikes for next year which could further strengthen the greenback.

 

[Andrea ForexMart]

GBP/USD Fundamental Analysis: November 29, 2016

The GBP/USD pair was subject to downward pressure during the previous trading session as monthly cash flows combined with a slight increase in the USD triggered the pair to drop from its highs of 1.2500 to just below 1.2400 points. Every month, the market always expects added selling pressure for the GBP since the UK pays its EU membership fees every month. As a result, the value of the EUR/GBP increases, and the GBP becomes subject to significant losses.

There are also some speculations that the Brexit process will be subject to a number of legal challenges which could cause the process to be delayed altogether, and the schedule of events for the Brexit process could possibly go haywire. The UK government is also questioning the decision of the High Court for a Parliament debate first before pushing through with the Brexit process, while the Parliament is already preparing for the said debate just in case that the High Court refuses to overrule its previous decision on the Brexit process. The strength of the GBP would definitely be affected by these expected delays in the Brexit process and could have an adverse effect on the UK economy in general.

For today’s trading session, there is no major economic news expected from the UK. However, the US will be releasing its Advanced GDP data and this could increase the market volatility, with a consolidation possibly happening together with a bearish stance.

 

[Andrea ForexMart]

USD/CAD Fundamental Analysis: November 29, 2016

The pair USD/CAD has been on a spree but with no direction since OPEC hasn’t reached an agreement yet. Oil prices came at a low price yesterday morning the reports came in at the afternoon with Iraq would participate alongside with other OPEC members in reducing production output but there are also reports saying the opposite where countries like Iran and Iraq have no plan of any production cuts.

Loonies are dependent to the oil market pricing as it strengthens relative the oil prices. The pair was seen to begin trading at 1.3500 level then later set in close to the support at 1.3400 after the news has been released. It ranges from 1.34 handle to 1.3450 as the market is not definite on what will happen next that makes the market undecided. What happened on September may occur again where OPEC decided on the last minute.

The Bank of Canada’s Governor Poloz had a speech this morning in a positive tone inciting the economy is improving and getting stronger. As the loonies continue to appreciate this keeps the tension up trading in this pair with high volatility while the market still awaits on the outcome of tomorrow’s OPEC meeting.

We had the BOC Governor Poloz speaking early today and he did sound generally very positive about the economy and expressed that the data is slowly getting better which means that the economy is getting stronger as time rolls on. This also added to the CAD strength and helped to keep the pair under pressure. It is expected to have ample liquidity today and tomorrow however if the reverse happens, then the pair will price higher and the Canadian dollar will depreciate.

 

[Andrea ForexMart]

EUR/USD Fundamental Analysis: November 30, 2016

According to the previous forecasts, the EURUSD persist in having a slow growth and it used the 1.0580 as its base. The pair were able to break the 1.0600 region overnight and settled down from the 1.0650 as of the moment. Later this day, the solid resistance seen at 1.0685 will be challenged and the price trend will be the basis for the possible uptrend of the pair.

The pair is able to rose because of the mild weakening of the USD felt all over, the instability is considered as mild since violent movements are nowhere to be seen among any currency pair. As the end of the month approach, we expect month-end flows to prevail the money flow for today. Despite the positive results of US economic data, GDP and CCI, the dollar continues to soften for the past 24 hours. The fluctuation is caused by the fear of the market regarding President-elect Donald Trump’s unsure policies. Trump is seen posting his opinions using his Twitter account which represents a not so good habit for someone who is the leader of a state.

We are expecting for Draghi's remarks for today and we suppose that his speech won’t complicate the market or either trigger volatility. We also look forward to the EUR/USD to execute trades at higher ranges characterized with a bullish sentiment.

 

[Andrea ForexMart]

GBP/USD Fundamental Analysis: November 30, 2016

The U.S dollar has softened since Monday while the pound also endures weakness since the week starts as it edged lower because of the end-of-month flows and due to the EU membership payments plus other driving factors.

Yesterday, the sterling established further strengthening and rebounded towards 1.2400 region and reached beyond 1.2540 level before the cable pair settled down from the 1.2500 area and this increase would be better as the weakening of the dollar continues.

The instability of the greenbacks is felt globally though other currencies remains exempted dollar’s softening. The sluggish stance is not a result of weak services data or any fundamentals but more about the market’s weariness regarding the new president of the United States who has the habit of expressing his thoughts whenever he wants to. This way the markets are uncertain about what he’s going to declare any moment.

Furthermore, we are looking forward bank stress test results from the UK. In case that the bank has favorable result we expect for additional strength for the pound which would put the GBP/USD as far as the 1.2500 region. We also await for the ADP Employment data and if the result is less than the expected, the greens will suffer another round of reduction because this report is the main indicator for the NFP on Friday.

 

[Andrea ForexMart]

EUR/USD Fundamental Analysis: December 5, 2016

The EUR/USD crashed during the previous trading session after the Italian government voted “No” against the proposed constitutional reforms which led to the Italian Prime Minister resigning from his post. This has caused the Italian economy to experience major disturbances since the vote would translate into major policy reversals and could possibly lead to financial woes and could make a lot of investors lose their confidence in the eurozone currency.

These previous events has caused the EUR/USD pair to incur a widened gap, with the currency pair now testing solid support levels at 1.0550 points. Market players are now closely monitoring if the currency pair manages to sustain its hold in the current support region since a break beyond this level could lead to the pair possibly reaching 1.00 points. For this week, the ECB is expected to hold a meeting later within the week, and majority of market players are expecting Draghi to outline the QE program timeline whose conclusion is expected this coming March 2017. If Draghi refuses to have an extension of the QE program, then this could give the euro a much-needed boost. However for now, the market is mainly focused on the possible repercussions of the recently concluded Italian referendum.

For today’s trading session, market players will be mostly focusing on the reaction of the European market on the results of the Italian referendum, since this will be a determinant on the euro’s next move especially since the outlook for the EUR was mostly positive until the results of the said referendum. There are no major economic releases expected from the eurozone for today, and the European market is expected to be subject to tension as the EUR/USD pair will be undergoing significant pressure for today’s trading session.

 

[Andrea ForexMart]

GBP/USD Fundamental Analysis: December 6, 2016

The pound remains strong brought by the recent surge that conversely weakened the U.S. dollar. Traders attempting to reach between the 1.27 and 1.2750 range in today’s session. This gives a positive outlook for the pair with U.S. yields declining and greenback remaining weak.

The published results of the Services PMI gave high numbers at 54.2, even more than the expected value of 55.2. This indicates the continuous growth of Britain’s economy despite leaving the European Union. Concerns regarding Brexit especially the negotiations about Article 50 is still pending on what will E.U. gain from U.K. and what will those Euro leaders offer in return. Britain sees the free market access will continue while Euro leaders are careful with the negotiations as it might be taken advantage by other countries. Once the data will be released since negotiations then the U.K. economy can be finalized.

There is no major news to be published from U.K. then, the current price trend will continue. Traders could move the rate towards the 1.2800 level if the greenback continues to depreciate. It is quite difficult to reach the 1.30 mark with the downtrend being strong. If the rebound ends, the price could further go down.

 

[Andrea ForexMart]

USD/CAD Fundamental Analysis: December 7, 2016


The USD/CAD consolidated and tailed the direction of oil prices during the previous trading session, with the Canadian dollar slightly easing in value after oil prices displayed corrections during the trading session. The Canadian Trade Balance data also came out yesterday and exceeded initial market expectations which helped augment the value of the CAD. The currency pair mainly consolidated on both sides of the 1.3300 trading range.


The market is expecting the Federal Reserve meeting this coming mid-December, and although the Fed rate hike this December is basically minted within the market, market players are now more interested with regards to hints and guidances on the Federal Reserve’s rate hikes next year. The USD/CAD pair is expected to undergo an increase in pressure a few days prior to the Fed meeting since crude oil prices are a major factor in this issue, and another bullish stance is expected for oil prices in the coming days.


For today’s trading session, Canada is set to release a rate statement from the Bank of Canada, where the BOC is expected to maintain its rates and could give traders more insight with regards to the central bank’s stance with regards to the overall feel of the Canadian economy. Traders are expecting some hints with regards to the BOC’s views on future rate cut backs in the coming months, particularly next year.

 

[Andrea ForexMart]

GBP/USD Fundamental Analysis: December 7, 2016


The GBP/USD pair mostly consolidated and ranged on both sides of 1.2700 points since there was no major economic news release from the UK which could compel the pair to move, and this is why the currency pair had a muted session yesterday. However, since the Federal Reserve’s meeting is expected to induce volatility in the financial market, especially since the Fed is expected to announce its much-anticipated rate hike in this particular meeting. Market players are also expecting to receive hints with regards to the central bank’s future rate hikes in order to determine the USD’s direction in the short run. However, if the meeting fails to give out hints with regards to the bank’s future moves, then this could induce a weakness in the US dollar.


Meanwhile, the UK is currently bearing the brunt of the Brexit process, which is expected to last for a couple of years since this will most likely involve heated discussions with leaders from all over the eurozone in order to send out a warning to other EU countries wanting to go in the same direction as the UK.


For today’s trading session, the UK Manufacturing Production data is set to be released during the European session, and market players are expecting the data to come out as positive. If the data does come out as highly positive, then traders can expect the pair to hit 1.2800 points. Otherwise, the pair could continue consolidating on both sides of the 1.2700 region.

 

[Andrea ForexMart]

USD/CAD Fundamental Analysis: December 9, 2016


The USD/CAD is currently still subject to increased pressure after crude oil prices surged during yesterday’s trading session. The currency pair is expected to experience this particular pressure as long as oil prices continue to fluctuate and would only cease once crude oil prices reach equilibrium. If this phenomenon happens, then the strength of the USD would most likely dominate the currency pair, and the weak value of the CAD would cause the currency pair to increase in value.


Although the Canadian dollar is currently strengthening, its price is expected to drop once crude oil prices stop its fluctuations and cease from moving upwards, especially since certain issues with the NAFTA agreement will be reopened due to Trump’s re-negotiation, and any changes with this particular agreement would have a significant effect on the trade relationships between Canada and US. The CAD could also weaken due to minor market speculations that the Bank of Canada would be implementing rate cuts next year, and unless the currency pair manages to break through 1.3000, then the USD/CAD will continue to be on the upward trend with a target of 1.4000 points.


There are no major economic news releases expected from the Canadian economy for today’s trading session, and while the US will be releasing its UoM Consumer Sentiment data, this particular piece of news from the region is not expected to have a major impact on the market in general. Market players will now be shifting their focus to US yields, as well as on the scheduled Fed meeting next week, where the Fed is expected to finally implement its much-awaited interest rate hike. However, this event does not automatically translate to an increase in the value of the USD, but the market is expected to receive hints with regards to the Fed’s rate hikes this coming 2017.

 

[Andrea ForexMart]

GBP/USD Fundamental Analysis: December 9, 2016


The GBP/USD pair consolidated poorly during yesterday’s trading session after the sterling pound was adversely affected by the recent sharp drop in the value of the euro. The previous trading session initially started on a positive note for the GBP after it managed to regain some of its previous losses, causing the currency pair to hit 1.2700 points during the Tokyo and European trading session. However, the release of the ECB announcement caused the euro to incur massive losses, with the EUR/GBP pair experiencing devaluation. This then triggered the GBP/USD to retreat from 1.2700 and is currently hovering at the 1.2600 region.


The GBP/USD is expected to consolidate further with a somewhat bearish note as the euro tries to recover from this very significant loss of value. The Federal Reserve will be meeting at the start of next week, and the market currently has rate hike expectations of up to 0.25%. The dollar is then expected to exhibit weakness once the announcement from the Fed is released, and market liquidity is also expected to be relatively low during this particular period.


For today’s trading session, there are no major economic news releases from the UK, and the GBP/USD would most likely consolidate further along with a bearish stance and will be subject to added downward pressure due to the recent weakness in the value of the EUR.

 

[Andrea ForexMart]

GBP/USD Fundamental Analysis: December 12, 2016

The GBP/USD pair had a lackluster performance during the entirety of last week’s trading sessions since the sterling pound experienced constant pressure from the much stronger euro. The EUR plummeted last week after the ECB announced its plans to extend its quantitative easing program, and the EUR/GBP lost a significant amount of its value, causing the sterling pound to be affected as well. Prior to this sudden drop in value, the GBP has previously exhibited remarkable resiliency in spite of the confusion caused by the Brexit process. The GBP rose during the first part of last week and was even able to go through 1.2700 points before eventually reaching 1.2800 points before the announcement from the ECB dragged the GBP down.

The GBP was also subject to added pressure due to delays in the implementation of the Brexit strategies as the Parliament is in the middle of heated debates regarding the implementation of Article 50 on the region. Since the timeline for the Brexit remains uncertain in spite of numerous meetings and debates within the Parliament, the sterling pound is expected to remain under pressure and any form of reversion should be immediately seen as a sell-off opportunity for the currency pair.

For this week, the market is expecting the release of the CPI data as well as the Claimant count change data from the from the UK. The Bank of England is also expected to make a statement on whether the central bank would be maintaining its current interest rate of 0.25%, and the Fed is also scheduled to make an announcement regarding its interest rate hike, as well as a statement on whether the central bank will be adding up the frequency of its rate hikes next year. Due to the large number of economic data scheduled to be released this week, the market is expected to undergo an especially high level of volatility within the week.

 

[Andrea ForexMart]

USD/CAD Fundamental Analysis: December 12, 2016


The USD/CAD was subject to pressure for the majority of last week’s trading sessions due to the continued buoyancy of oil prices despite a short drop in the commodity’s price. Since the Canadian dollar is hugely reliant on crude oil prices and with the fluctuations in oil prices, the CAD has been subject to wildly erratic activity during the past week as well. Presently, market players are expecting that oil prices would experience further surges during this week and the USD/CAD is expected to be subject to more pressure for this week as well.


The economic releases from Canada last week turned out to be pretty positive, with the Canadian trade balance data clinching the string of positive economic data from the region. The Bank of Canada has also decided last week that it will be sustaining its rates at 0.5%, signalling remarkable improvements in the Canadian economy and is expected to further improve due to future increases in oil prices. The currency pair is now forming strong support bases at the 1.3180 trading region.


For this week, the Federal Reserve is set to release its statement with regards to its long-anticipated interest rate hike, and the market currently has expectations of a 0.25% interest rate hike, plus hints on whether the central bank would be increasing the frequency of its hikes this coming 2017. The US is also set to release its retail sales data, while Canada will be releasing its Manufacturing Sales data, and these are expected to induce volatility for the USD/CAD this week. Analysts are speculating that if the pair manages to sustain its place at the 1.3000 region, then the currency pair would be able to continue its upward direction especially since crude oil prices could become tapered in the near future.

 

[Andrea ForexMart]

GBP/USD Fundamental Analysis: December 13, 2016


The GBP traded on a more positive note during Tuesday’s trading session due to the release of the UK inflation data, which came out better than the initial market expectations. The GBP/USD rose in value and was able to reach 1.2723 points before settling at 1.2710 points after increasing by +0.31% or 0.0040 points.


The inflation data from the UK exhibited a 1.2% increase last November, going well above the market expectation of 1.1%. The report also showed that the main catalysts for inflation in the region were culture, recreation, and clothing. The Core CPI data came in at 1.4%, again exceeding expectations of a 1.3% data release. Due to the positive economic data from the region, analysts are now saying that UK inflation could possibly reach the initial 2% goal during the first few months of 2017. However, this improvement might not be able to have much of an impact to the Bank of England’s impending decision-making this coming Thursday with regards to its adjustments in interest rates. BoE governor Mark Carney has also previously stated that the central bank would be willing to endure inflation overshoots if this would mean an increased economic support.


Wednesday’s trading session is expected to be somewhat light and muted as the Fed meeting looms close. However, since the GBP/USD had mostly positive reactions with regards to the shadow of the expected Fed rate hike, the present inflation data from the UK should be able to underpin the currency pair.

 

[Andrea ForexMart]

EUR/USD Fundamental Analysis: December 13, 2016


The pair EUR/USD traded lower this day with a tight range and low volume of trading. The major players are on the sidelines waiting for Fed’s final announcement.


The final CPI resulted lower than the expected 0.3% from the actual 0.1% reading. This shows the inflations date for wholesalers. The most recent German ZEW survey indicates augmentation with an expectation at 14.2 higher than the prior 13.8. It is predicted to come in at 16.5.


The market is now focus on Fed’s data with the NFIB Small Business Index forecasted at 96.7 higher than the former 94.9. The prices are anticipated to reach 0.3% compared to last month’s 0.5%. The U.S. Treasury 30-year bond should also be looked out for by traders with interest rates anticipated to be higher than the 2.90% on November 10 as it closed at 3.1748% yesterday.

 

[Andrea ForexMart]

NZD/USD Fundamental Analysis: December 15, 2016


The New Zealand dollar depreciated as more investors go for safe haven assets since commodity prices dropped in spite of the tension brought by the Federal Reserve's interest rate decision this week. The pair NZD/USD weakened by 17 points to 0.6698 after the greenback rebounded since the decline on Friday influencing the cross trades while the commodity prices remain low.


Currencies that are heavily influenced by commodities dropped to its lowest recorded rate for more than six years because of a drop in oil prices. Concerns in U.S. Junk bonds reemerged while majority are feeling pressured by the Fed's policy meeting this week. It is anticipated that the Federal Reserve Open Committee (FROMC) will proceed with the rate hike since the close to zero policy in December 2008 as the traders rely on hints for future changes.


The New Zealand's BNZ-BusinessNZ performance of services index for November will be announce today. While, Industrial production will also be released today from both Europe and Japan, as well as Tankan manufacturing index will be publicized by Japan.

 

[Andrea ForexMart]

USD/JPY Fundamental Analysis: December 20, 2016


The Bank of Japan is expected to maintain its previous monetary policies and give more positive economic expectations, thereby cementing speculations that the central bank could possibly induce an interest rate increase instead of a rate cutback. Because of the lack of policy adjustments, USD/JPY traders will now be shifting their focus on BoJ’s Kuroda’s statement regarding the increase in Japanese yields. There are speculations that Kuroda could either talk about economic expectations for 2017 or the risks involved with a sudden surge in bond yields. However, it is more definite that Kuroda will be treading carefully with regards to increasing market expectations of an interest rate hike.


The Bank of Japan could possibly sustain its present pledge-to-guide short term rates at -0.1% and 10-year Japanese Government bond yields at around 0% in spite of a somewhat positive sentiment for the Japanese economy. However, traders are advised to be careful with regards to holding Japanese bond yields at 0%, since long-term interest rates have now increased due to speculations of a steadier US rate hikes and an inflation surge under the Trump administration. The Bank of Japan is now under pressure due to calls for the central bank to add

up its 10-year yields target.