Daily Technical Analysis by Capital Street FX

Daily Report on August 30, 2016

Asian stocks gained on Tuesday following the advance in U.S stocks overnight, with all three U.S equity benchmarks closing higher overnight. On Wall Street, the Dow Jones ended yesterday’s session up 0.58 percent to 18,502.00, the S&P 500 rose 0.52 percent to finish at 2,180.28 while the Nasdaq added 0.26 percent to 5,232.33, as bullish sentiment was fueled by evidence that the world’s largest economy is growing.

Reports from the Commerce Department released on Monday reported that U.S consumer spending rose for a fourth straight month in July at the pace of 0.3%, based on strong demand for long-lasting manufactured goods such as automobiles, and rising household income. Meanwhile, the core personal consumption expenditure (PCE) price index, which excludes the volatile food and energy components, inched up 0.1% in July, maintaining the same pace as in June.

As a result, the core PCE – the Fed's favorite barometer for inflation - increased 1.6 percent on a year-over-year basis, remaining below the fed's target of 2 percent. To fully assess the outlook for the U.S monetary policy, investors are now shifting their attention to the monthly jobs data on Friday, which is forecast to report that 180,000 more jobs were added in July.

Crude prices continued to trade in a thin range as a stronger U.S dollar and focus on surging output from the Middle East weighed down the speculation over an output cap deal next month, even after data from energy monitoring service Genscape reported a drawdown of 287,444 barrels at the Cushing, Oklahoma delivery point for U.S. crude futures during last week.



Technicals

NZDUSD
NZDUSD is trading in an upward trending price range with higher highs and higher lows. The pair has just pulled back from the lower boundary of the trading channel, at the one-week low of 0.72080. However the market keeps attempting a test of this support. The %K line reversed into a downward movement after surging close to the overbought zone and is likely to cross over the %D line from above. With the two MAs converging above the price action, the pair is expected to retreat further, but the support at 0.72080 should be broken through ideally before a short position is attempted.

Trade suggestion

Sell Stop at 0.72270, Take profit at 0.71880, Stop loss at 0.72640



GBPUSD
GBPUSD fell back into the downward sloping range after failing to reach the 1.33000 psychological level. The MA20 has penetrated the MA50 from above, consolidating the down move following a brief correction. With the divergence between the +DI line and –DI line and the low reading on the RSI, GBPUSD is much likely to dip further.

Trade suggestion

Sell Stop at 1.30587, Take profit at 1.30000, Stop loss at 1.31200.



EURAUD
After a period of moving sideways around the 23.6% retracement at 0.47741, the pair has fallen below both this level as well as the 50-period moving average, which suggests further down moves. As can be seen from the RSI chart, the index has slid to 42.84. The bear is dominating the market and the currency pair is forecast to head downwards to the 38.2% Fibonacci level.

Trade suggestion

Sell Stop at 1.47440, Take profit at 1.47035, Stop loss at 1.47750.



COPPER
Copper is trading indecisively in a narrow range after a sharp selloff last week. The commodity is retreating from the MA20 and the resistance at 2.0904, and is anticipated to gather more bearish momentum as the –DI and +DI are converging, not to mention the RSI index is witnessing higher highs and higher lows but continues to stay below 50 and is pointing lower.

Trade suggestion

Sell Stop at 2.0745, Take profit at 2.0615, Stop loss at 2.0905



WTI
U.S crude prices are experiencing a period of consolidation. Both sides are taking cautious steps which can be seen in the short bodies of recent candles. Buyers are failing to get the price action through the MA20, while sellers are not able to break through the support at the 61.8% retracement level at 46.87. The commodity is likely to drift slightly lower until updated fundamental factors provide direction later in U.S session.

Trade suggestion

Sell Stop at 46.88, Take profit at 46.40, Stop loss at 47.21



EURO50
The Euro Stoxx 50 index retains its bullish momentum and is flying higher within the upward trending range. The index has crossed over the moving average price levels, but has still been locked within the range marked by the support at 2977.50 and the resistance at 3015.00. The RSI index has soared above the 50 line, and is supporting a breakout above the 3015.00 level.

Trade suggestion

Buy Stop at 3015.00, Take profit at 3030.20, Stop loss at 3001.50

Sell Stop at 6778.00, Take profit at 6735.70, Stop loss at 6813.80.

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Boosted By Banking Stocks, FTSE100 Index Pushes Higher After Holiday

FTSE100 index reopened after closing for holiday on Monday, and left a wide gap up following two weeks of declines.

Stocks from banking sector led gainers, with HSBC Holdings climbing 2.1%, Lloyd Banking Group PLCs adding 1.34%. Shares of Bunzl rallied 1.45% after the business supplies distributor reported an increase in revenue and operating margin in its first half of 2016. Meanwhile, building material firm CRH, which reported better-than-expected half-year results last week, extended gains by surging more 2.01%.

Mining companies are among worst performers with Rio Tinto dropping by 3.61%, Randgold Resources Ltd. dipping 3.78% and Glencore Plc falling more than 3 percent as commodities declined on the face of a strengthening dollar.

Trade suggestion

Buy Stop at 6844.00, take profit at 6856.35, stop loss at 6835.70

GBP/USD

From GMT 15:50 30/08/2016
Till GMT 21:00 30/08/2016


Buy at 1.30600
Take profit at1.31100
Stop loss at1.30330

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Daily Report on August 31, 2016

Japanese stocks traded higher on Wednesday after sluggish domestic data and prospects of further easing by the Bank of Japan contributed to dragging down the Yen. Japan’s Nikkei 225 index added nearly 1.0% to jump to a two-week high at 16903.00, supported by comments from BOJ board member Yukitoshi Funo that the central bank would make full use of its existing policy tools to encourage spending and dislodge the “deflation mindset”.
According to data released earlier on Wednesday, Japanese industrial production was unchanged in July, defying forecasts calling for a 0.7% gain from June. Compared to July 2015, Japan’s industrial output declined 3.8%, underscoring the fragility in factory activity.

Meanwhile, upbeat U.S. data lifted the dollar overnight. Published by the Conference Board, the U.S Consumer Confidence Index for August stood at 101.1 - the highest level since September 2015. In an interview with Bloomberg last night, Fed Vice Chairman Stanley Fisher said that the country’s job market which is nearing full strength can withstand a tightening of rates while the pace of rate hikes will be based on upcoming economic data.

Data from the American Petroleum Institute showed that U.S. crude stocks rose by 942,000 barrels to 525.2 million barrels in the week to Aug. 26, topping analysts' expectations for an increase of 921,000 barrels. Official U.S. oil inventories data published by the EIA, is due later today, and is expected to show an increase of 1.1 million barrels last week.

Technical
AUDNZD

Fig: AUDNZD H4 Technical Chart
AUDNZD is on the last stages of a double-top pattern. The price surpassed the neck level at 1.04550 last week and fell deeper towards the major support at 1.04000, before pulling back to hit the 1.04550 handle. As we can see from the chart, this level has played an important part as a support zone previously, and is now returning as an important resistance at which the AUDNZD failed and was forced to reverse lower. The divergence between the +DI line and –DI line and a surging ADX index has helped the pair break through the 1.04000 level easily, and is expected to dampen the price lower.
Trade suggestion
Sell Stop at 1.03750, Take profit at 1.03350, Stop loss at 1.04000

USDCHF

Fig: USDCHF H4 Technical Chart
USDCHF has pulled back from the solid resistance at 0.98420 after soaring more than 300 pips consistently, from the low at 0.95370. As a result of an overblown market where the bulls have been exhausted after a long period of time supporting prices higher, the U.S dollar is making some corrective moves. With the two MAs placed below the price action, the pair is expected to extend the rally.
Trade suggestion
Buy Stop at 0.98520, Take profit at 0.98775, Stop loss at 0.98200

USDCAD

Fig: USDCAD H4 Technical Chart
USDCAD has been on the rise after breaking above the 23.6% Fibonacci retracement level at 1.28959. The market has once again entered overbought territory and reversed lower. Still, the directional strength index is pointing upwards, suggesting that the bull is prevailing in the market.
Trade suggestion
Buy Stop at 1.31000, Take profit at 1.31400, Stop loss at 1.30480

SILVER

Fig: SILVER H4 Technical Chart
Silver has moved past the MA20 at 18.680 from below, but has kept floating under the MA50. The moving average has deterred every attempt by the market to break above this zone of resistance for the last two weeks. The silver market has been held inside bearish territory for some time now, which has helped push prices towards the 38.2% retracement level at 18.288.
Trade suggestion
Sell Stop at 18.660, Take profit at 18.520, Stop loss at 18.775

Natural Gas

Fig: Natural Gas H4 Technical Chart
Natural gas has entered into a phase of consolidation recently, after dropping back to the 2.811 support level. The price has penetrated the MA20 from above but still has support from the 50-period moving average, which is in the same zone as the current prices. The RSI and The Stochastics are both pointing towards a bearish market. As a result, natural gas is forecast to plummet below the 2.811 threshold.
Trade suggestion
Sell Stop at 2.810, Take profit at 2.775, Stop loss at 2.853

Nasdaq100

Fig: NASDAQ100 H4 Technical Chart
The Nasdaq100 index is on the verge of falling through the recent price range between the resistance at 4835.00 and the support at 4766.00. A convergence between the two MAs has occurred above the price action, after prices broke through both MA's from above yesterday. The RSI and Stochastics are both below the average level. Further falls may be on the way.
Trade suggestion
Sell Stop at 4766.00, Take profit at 4748.25, Stop loss at 4783.10

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EUR/GBP signal

From GMT 12:00 31/08/2016
Till GMT 21:00 31/08/2016

Sell at 0.84750
Take profit at 0.84250

Will The EURUSD Sustain Its Recent Gains? Key Technical Support Broken Ahead of Non-Farm Payrolls

The euro maintained downside bias on Wednesday, heading for a monthly loss against the U.S dollar amidst rising speculation over divergent monetary policies between the U.S Federal Reserve and the European Central Bank. Both central banks are scheduled to hold their next monetary policy meeting in September, where the Fed is expected to raise rates while the ECB is likely to introduce more stimulus measures.

Today has been a busy day for the Eurozone as a spate of economic data readings were published. Germany reported better than expected employment numbers, with the unemployment rate remaining steady in August at 6.1%, according to data from the German Federal Employment Agency. The result was not only in line with forecasts and but also marked a record low. The Unemployment Change figure also beat expectations by reporting a decline of 7,000, confirming a healthy labor market which is seemingly not affected by Brexit.

A low unemployment rate has helped encourage German spending, boosting retail sales by 1.7% in July compared to June, which is the largest jump since January 2014. However, other parts of the Eurozone do not seem to be as healthy economically. French consumer spending unexpectedly dropped by 0.2% in July, compared to June as households cut back on cars and home furnishing.

In other data EU data, the European Union’s statistics agency reported that Eurozone-wide consumer prices were 0.2% higher in August than during the same month a year earlier, but fell short of estimates of 0.3% price growth. The growth in the prices of services and manufactured goods could not offset the decline in energy prices. As a result, the measure of core consumer prices – which excludes volatile prices such as those for energy and food – grew by 0.8% in August – from the 0.9% rate of price growth in July.

Meanwhile, upbeat U.S. data is supporting the greenback to trade higher versus most of its peers. An earlier report from the ADP showed that the U.S private-sector added 177,000 jobs in August, virtually in line with estimates of about 180,000, from economists polled by The Wall Street Journal. Although the ADP data is not always an accurate gauge of the non-farm payrolls due on the first Friday of every month, investors still watch the report closely to get an advance indication on what to expect in the Labor Department’s employment report.

In other data of importance, The Conference Board published the the U.S Consumer Confidence Index for August yesterday. The index reading came in at 101.1 – the highest level since September 2015. In an interview with Bloomberg yesterday, Fed Vice Chairman Stanley Fisher said that the improvements in the labor market should help the economy withstand any headwinds caused by tightening of interest rates. Fisher also stressed that the pace of rate hikes will be based on upcoming economic data. Therefore, this Friday’s NFP is being considered a key factor in helping the market assess the possibility of a rate increase at the Fed’s late-September meeting.

EURUSD has been extending the slide since it hit serious resistance at the 23.6% retracement level at 1.13505. The solid support at the 38.2% level was broken easily yesterday after the pair had crossed over the MA20 at 1.12101 from above, indicating a strong bearish bias. RSI (14) is heading downwards from near the overbought zone while ADX (14) has also confirmed the downtrend by rising to as high as 32.16. A wide gap between the –DI and +DI lines is encouraging the pair to attempt a break below the psychological support at 1.11300.

Trade suggestion

Sell Stop at 1.11300, take profit 1.10580, stop loss at 1.11900

Abundant Crude Stocks Drag SP500 Down – Short Positions Suggested

U.S. stocks retreated on Wednesday morning, extending the losses to a second consecutive day. At the time of writing, the S&P500 index fell 0.36%, weighed by the weakness in energy shares.
The energy sector was the worst performer among 10 sectors making up the index, dropping 1.61% following a report from the U.S. Energy Information Administration that indicated domestic crude inventories rose by 2.3 million barrels in the week ended Aug. 26. Economists had forecast the report to show an increase of only 1.1 million barrels.

Trade suggestion

Sell Stop at 2164.00, Take profit at 2158.00, Stop loss at 2169.00

Daily Report on September 01, 2016

Asian stocks recovered from early losses on Thursday, as investors have been inspired by better than expected readings from Chinese manufacturing surveys. The slump in crude oil prices which had sapped Wall Streets confidence overnight, is temporarily losing steam. Markets remained cautious ahead of Fridays Non-farm Payrolls, which are being seen as a key deciding factor in being able to assess the possibility of the Fed hiking rates at its September meeting.

According to the China Federation of Logistics and Purchasing, the countrys official manufacturing purchasing managers index for August unexpectedly rose last month to the highest in almost two years, after dropping below the 50 threshold in July. Manufacturing purchasing managers index rose to 50.4 last month while Non-manufacturing PMI stood at 53.5, remaining above 50 which indicates improving conditions.

The ADP Challenger Layoffs report on Wednesday showed that the U.S private-sector added 177,000 jobs in August, virtually in line with estimates of about 180,000, from economists polled by The Wall Street Journal. But the dollars gains were deterred after the Institute for Supply Management-Chicago announced that its Business Barometer dropped to 51.5 points in August and failed to match expectations.

Crude prices climbed back after sliding on news from the U.S. Energy Information Administration that indicated domestic crude inventories rose by 2.3 million barrels in the week ended Aug. 26. Economists had forecast the report to show an increase of only 1.1 million barrels.
The U.S. Institute for Supply Management's (ISM) manufacturing activity PMI is due later today, and is forecast to come out at 52.0 points.

Technicals
AUDCHF

Fig: AUDCHF H4 Technical Chart
AUDCHF is struggling below the resistance at 0.74240 on the one hand, but on the other hand, it is receiving support from the two moving averages placed below the price action. In the last two failed attempts, the rally was torn apart as the market reversed after hitting the overbought area. This time, the market has gradually built up momentum, taking a longer period of time to push prices back towards the 0.74240 level, indicating that the bulls are riding a steadier up-wave. The pair, therefore, is expected to break above this solid handle.
Trade suggestion
Buy Stop at 0.74240, Take profit at 0.74500, Stop loss at 0.74000

EURGBP

Fig: EURGBP H4 Technical Chart
EURGBP is moving in a triangle pattern and seemingly trying to break out of the triangle towards the downside, having gradually slid from the highs. The price has breached major support at 0.85000 but failed to fall further below the support trendline connecting the recent lows. As the market sentiment is still bearish, the pair is anticipated to extend its slide.
Trade suggestion
Sell Stop at 0.84680, Take profit at 0.84265, Stop loss at 0.85000

NZDUSD

Fig: NZDUSD H4 Technical Chart
NZDUSD remains in an upward trending price range with higher highs and higher lows. The pair could not break above the moving average yet again, and had to retreat back to the lower boundary of the trading range. However, as RSI is pointing upwards, the bull seems to be getting stronger and the market may attempt another break through the MA's to climb higher.
Trade suggestion
Buy Stop at 0.72640, Take profit at 0.72900, Stop loss at 0.72400

GOLD

Fig: GOLD H4 Technical Chart
The yellow metal continued to retreat and is plateauing around 1305.27. We havent seen any steep plunge since the slide started on August 18. Cautious sentiment has prevented gold from falling too far too fast, but bearish sentiment has continuously depressed the precious metal lower. That is the reason why the gold market has not fallen into the oversold area and still has room for further declines.
Trade suggestion
Sell Stop at 1305.25, Take profit at 1300.00, Stop loss at 1308.95

BRENT

Fig: BRENT H4 Technical Chart
Brent bounced back from the 23.6% retracement after plummeting steeply yesterday. The sharp slump has pushed the commodity into the oversold territory, and we are witnessing a period of correction and consolidation. Brent prices are expected to break below the near term support at 46.72 as the two MAs placed above the price action are creating downward pressure on prices.
Trade suggestion
Sell Stop at 46.72, Take profit at 45.70, Stop loss at 47.95

Dow Jones

Fig: Dow Jones H1 Technical Chart
Dow Jones created a wide up on the opening and crossed over the MA50 at 18441.21. The index is highly likely to form a double bottom as it is heading for a retest of the resistance at 18521.00, after falling to as low as 18330.05. The RSI index has surpassed the 50 line and is confirming the up-move
Trade suggestion
Buy Stop at 18470.00, Take profit at 18521.00, Stop loss at 18435.18

Banking Sector Merger Talks Push DAX30 Higher – Long Positions Favored

European stocks rose on Thursday morning, boosted by advances in the financial and mining sectors. In Frankfurt, the DAX 30 index opened the first trading day of the new month with a gap up, as Chinese manufacturing data released earlier pointed to an expansion in the world’s second largest economy, thus refueling investor confidence after it had been sapped by falling crude prices.

According to the China Federation of Logistics and Purchasing, the country’s official manufacturing purchasing managers index for August unexpectedly rose last month to the highest in almost two years, after dropping below the 50 threshold in July. The Manufacturing PMI rose to 50.4 last month while Non-manufacturing PMI stood at 53.5, remaining above 50 – which indicates improving conditions.

Bank shares are the best performers currently, with Deutsche Bank adding 3.75% and Commerzbank surging 4.92%. The two institutions – among Germany’s biggest lenders are still supported by speculation of a potential merger between the two, even though the plan has been postponed to allow both banks to focus on their own internal reorganization before proceeding with a merger.

The two top German banks coming together is expected to create a bigger European lender that would be able to cut costs and compete more effectively, against the backdrop of a fall in the revenues and profitability of banks. Banks worldwide have been affected significantly due to low interest rates and high competition. According to the European Central Bank, Germany has the least consolidated banking sector in the Eurozone. The five biggest banks in Germany only make up one-third of market share in 2014. A consolidation within the banking sector could help improve efficiency and performance in the financial services sector as well as set the stage for further consolidation within the sector, which could help improve balance sheets as well as profitability within the sector.

Out of 30 stocks on the list of the index, only 10 companies’ shares were trading lower including German personal-care company Beiersdorf and Europe’s largest sportswear manufacturer Adidas.

The DAX is trading comfortably above the 50.0% Fibonacci retracement level after breaking through the resistance created by the downward sloping trend line in early August. The index has been moving in an ascending trading range and is heading towards the upper boundary of the range. The market sentiment is strongly bullish, but the market has not yet entered into overbought territory. Further advances are expected. The market could attempt a retest of the eight-month high at 10805.50 created on August 15.

Trade suggestion
Buy Stop at 10654.25, Stop loss at 10541.00, Take profit at 10805.50

AUD/USD Signal

From GMT 17:00 01/09/2016
Till GMT 21:00 01/09/2016

Buy at 0.75500
Take profit at 0.75530
Stop loss at 0.75352

U.S Manufacturing Gauge Swings Into Contraction – Long Positions Suggested on EURUSD

EURUSD skyrocketed to three-day high at above $1.12000, after a report from the Institute of Supply Management showed U.S. factory activity in August contracted for the first time since February. The drop in new orders and production dragged the index down by 3.2 percentage points to a reading of 49.4.
Disappointing manufacturing number is believed to weaken the case of a rate hike later this month. According to the CME Group’s Fed Watch tool, there is only 24 percent chance of a hike in September, down from 30 percent before the ISM data was released, while the odds for a hike in December fell to 53.6 percent from 57.2 percent.

Trade suggestion
Buy Stop at 1.12000, Take profit at 1.12440, Stop loss at 1.11720

Daily Report on September 02, 2016

Asian markets were flat on Friday as investors are nervously waiting for the U.S Non-farm Payrolls report, which is due later in day. Overnight, U.S shares fluctuated in a wide range, but finished mostly higher, with advances in the tech sector outweighing disappointing factory activity data and lower oil prices. The Dow Jones rose 0.1 percent to 18,419.3, the S&P500 was almost unchanged at 2,170.86, and the Nasdaq100 added 0.27 percent, to finish at 5,227.21.

Crude prices extended their losses, heading for the worst weekly slump since mid-January. Declining on worries over a supply glut, WTI crude settled down 3.5 percent at $43.16 a barrel, while Brent settled 3.1 percent lower at $45.45. The end of the U.S. driving season and the prospects of a global glut due to the recent buildup in U.S inventories have exerted downward pressure on oil prices.

A report from the Institute of Supply Management reported that U.S. factory activity in August contracted for the first time since February. The drop in new orders and production dragged the index down by 3.2 percentage points to a reading of 49.4.

However, solid performance in the labor market which has spurred hawkish comments from some Fed officials in recent weeks, probably could still act as a valid reason for a rate hike this month. Cleveland Fed President Loretta Mester on Thursday said that the U.S. labor market is at full strength and the Federal Reserve needs to embark on a path of gradual interest rate increases.

Technical

EURAUD

Failing to breaking out the 38.2% retracement at 1.48779, EURAUD is moving in sideways fashion, below this level. Recently, the pair has been locked between the 50-period moving average and the resistance at 1.48500. Both buyers and sellers are not gathering enough momentum to define a clear direction within the market. As the price is heading towards a test of the MA20, the pair is expected to witness a bounce back.

Trade suggestion

Buy Limit at 1.48000, Take profit 1.48500, Stop loss at 1.47700.

GBPCAD

GBPCAD bounced back from the low at 1.66068 and is still retaining the bullish momentum to jump higher. The pair is highly likely to retest the high at 1.75441 before attempting a breach of the near term resistance at 1.76215 to complete the double-bottom pattern. The prices have moved past both the long-term and short-term MAs, while the RSI (14) has only surged to 60.91. There is still room for further advances.

Trade suggestion

Buy Stop at 1.73900, Take profit at 1.75441, Stop loss at 1.73500

USDCHF

USDCHF peeked beyond the 0.98420 handle yesterday but could not sustain the up-move and had to fall back to trade under this level. The pair has turned its past resistance (purple line) into a new support zone and is crawling along this boundary. The pair is anticipated to inch up further as the market has fallen into the oversold zone and is signaling a bounce back.

Trade suggestion

Buy Stop at 0.98050, Take profit 0.98420, Stop loss at 0.97815

WTI

The slump in the WTI crude prices has not yet come to an end as the convergence between the two MAs is signaling further declines in the commodity. The RSI (14) has dipped to 40.39, consolidating the downtrend. A short-term target that the market could aim for would be the 38.2% Fibonacci retracement at around 41.83.

Trade suggestion

Sell Stop at 43.30, Take profit at 42.50, Stop loss at 43.85

SUGAR

Sugar pulled back after nose-diving steeply yesterday. The commodity easily broke through both the short-term MA and the long-term MA from above and is officially under the downward pressure created by these two MAs. The bear is prevailing in the market and has pushed the RSI index lower to 35.32.

Trade suggestion

Sell Stop at 19.53, Take profit at 19.15, Stop loss at 19.90

EUROSTOXX50

Since the early part of this week, the EuroStoxx50 index has surpassed the 3015.00 resistance the level had restrained the indexs rally for 2 weeks before the breakout. The Euro50 is trading in a new trading channel between 3015.00 the old resistance which becomes the new support, and the upper boundary at 3049.45. With the support from two MAs placed below the price action, and a higher-than-average RSI, the index is forecast to attempt a retest of yesterdays high at 3052.70.

Trade suggestion

Buy Stop at 3036.50, Take profit at 3052.70, Stop loss at 3015.00

Caution Holds USDCAD Around Key Level 1.31000 – How To Trade The USDCAD From Here?

USDCAD has been nearly flat over the past three days, against the backdrop of all major markets bracing for the monthly jobs report which is due for release later on Friday. Disappointing factory activity data from the U.S yesterday, helped offset the effect of the sharp decline in crude prices on the CAD, easing the divergence between two currencies which has pushed the pair up nearly 3 percent in the past couple of weeks.
The Canadian dollar has been weakened recently due to renewed concerns over the global oil surplus, as well as a train of negative economic data from the Canadian economy.

Regardless of recent positive signals showing the good-will of the world’s major producers and exporters to cooperate and stabilize the oil market, the fear over U.S producers coming back to benefit from higher prices has cast downward pressure on oil prices. U.K benchmark Brent crude fell back to below $46 per barrel while U.S WTI crude prices also slumped to below $43 per barrel.

The U.S. Energy Information Administration on Wednesday indicated that domestic crude inventories rose by 2.3 million barrels in the week ended Aug. 26, while economists had forecast the report to show an increase of only 1.1 million barrels. Last week’s buildup has been the fifth jump in the last 6 weeks. The rise in inventories, after a period of decreases, is indicating that more U.S supply is pouring into an already imbalanced market

In an interview with Bloomberg on Thursday, Russian President Vladimir Putin stated that he expected that an output freeze deal could be reached at an informal meeting later this month in Algeria. The president stated that “it was the right decision for world energy.” In spite of calling on key oil-producing countries to cap output together, Putin argued that Iran could be granted an exemption and any agreement could be reached with the Saudi side, complimenting Saudi Arabia’s Deputy Crown Prince, Mohammed bin Salman, as “a very reliable partner”.

On Friday, Saudi Arabia’s Foreign Minister Adel al-Jubeir said that he was optimistic about producers moving to a common position on oil production. “We are beginning to have a meeting of the minds but it is a work in progress and we’ll see what happens in the meeting in Algeria. And I’m hopefully optimistic,” he told reporters.
Members of the Organization of the Petroleum Exporting Countries and other non-OPEC oil exporters are due to meet on the sidelines of the International Energy Forum late in September, and are expected to set a new celling on oil output.

In terms of economic data which is the second factor going against the CAD, Canadian Trade Balance is the latest data release being watched. It is set for release at the opening of the U.S session, and is forecast to show a deficit of 3.2 million dollars, while Canadian Labor Productivity for second quarter probably rose 0.2% compared to the June period. Recent data releases have painted a gloomy picture regarding the prospects of the commodity-based economy. Recent reports from Statistics Canada indicated that retail sales fell 0.1 percent in June while Core retail sales that strip out automobiles reported an even worse performance – reporting a 0.8 percent contraction.

The drop in energy prices caused prices to fall by 0.2 percent in July compared to June. According to Statistics Canada, domestic annual inflation slowed to 1.3 percent last month, led by a 14% slump in gasoline prices in July from a year ago.

On the other hand, the U.S dollar looks set to benefit from the second rate hike since December 2015 despite much-worse-than-expected manufacturing data published on Thursday. A report from the Institute of Supply Management reported that U.S. factory activity in August contracted for the first time since February. The drop in new orders and production dragged the index down by 3.2 percentage points to a reading of 49.4.

However, solid performance in the labor market which has spurred hawkish comments from some Fed officials in recent weeks, probably could still act as a valid reason for a rate hike this month. Therefore, the NFP report out later today is being closely watched and is being considered a key factor in helping the market assess the possibility of a rate increase at the Fed’s late-September meeting.

As can be seen from the stochastic chart, the market has been remained in the overbought zone for almost a week and the bull seems to be getting exhausted as it has not been able to support prices tick higher for the last three days. Despite having been supported by the two MAs placed below the price action, cautious sentiment has pinned the price around the 1.31000 psychological level. We may need a real push from the fundamental side to define a clear direction for the market.

Trade suggestion
Sell Stop at 1.31000, take profit at 1.30000, stop loss at 1.315000

NZD/USD signal by Capital Street FX

From GMT 15:30 01/09/2016
Till GMT 21:00 02/09/2016

Buy at0.73300
Take profit at0.73550
Stop loss at0.73175

Gold Gains on Smaller-Than-Expected NFP – But Be Careful, September Hike Has Not Been Off The Table

Gold traded higher on Friday, supported by a weakening U.S dollar. Following a 255,000 gain in July that bulldozed all forecasts, the U.S Labor Department slightly disappointed the financial markets with only 151,000 rise in the headline non-farm payrolls number for August. The result missed analysts’ estimate of an 180,000 jobs increase last month.

Average hourly earnings rose by 0.1% to $25.73, falling shy of expectations, while the participation rate and unemployment rate were unchanged at 62.8 percent and 4.9 percent, respectively. Regardless of a weaker-than-expected monthly jobs report, the possibility of an interest rate hike later this month has not been completely ruled out as August payrolls are usually affected by seasonal factors in terms of vacation period and school calendars.
Given the labor market near full employment, Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with population growth. According to CME Group’s Fed Watch tool, the odds of a Fed move in September lowered to 21% after the jobs report, while the possibility of a change in December posted at 43.6 percent.

Trade suggestion
Sell Limit at 1325.00, Take profit at 1320.00, Stop loss at 1327.00

Daily Report on September 05, 2016
Asian stocks took their cue from the rally in U.S shares on Friday, after weaker-than-expected U.S. jobs reduced the chances of the Federal Reserve raising interest rates this month. MSCI's broadest index of Asia-Pacific shares outside Japan added 1.3% in early trade. Japan's Nikkei stock index surged 1 percent to three-month highs while Hong Kong’s Hang Seng Index climbed to its highest in a year.
The Caixin survey published by Markit on Monday reported that China’s services purchasing managers' index (PMI) picked up to 52.1 in August on a seasonally adjusted basis, from 51.7 in July. Growth in the service sector was powered by modest gains in new orders and a stable labor market. Despite being in line with expectations, the rate of expansion remained well below the average and was considered as “relatively underwhelming".
Speaking at the Kyodo News event, in Tokyo on Monday, Bank of Japan Governor Haruhiko Kuroda stated that “there is ample room for further monetary easing ... and other new ideas should not be off the table,". Further cuts in interest rates and increased purchases of assets are expected to be made full use of by the BOJ to achieve the policy mandate of bringing inflation closer towards the target of 2%, at the earliest possible.
Crude prices continued to slump in the Asian trading session as concerns over a supply glut are mounting after news from a Yemeni industry official said the country’s 150,000 barrels-per-day Aden oil refinery resumed operations on Sunday. The refinery had previously been shut down for more than a year as the conflict in the country worsened.
With the US Markets closed in observance of the Labour Day holiday in the US, the markets are expected to be relatively quiet and thin today.

Technicals
EURUSD
EURUSD seemingly could not stand the heat of the 50-period moving average and has been moving lower after coming up against this moving resistance. The short-term MA has just crossed over the long-term MA from above, signaling a reversal into a downtrend. In the stochastic chart, the %K line has pulled back from the overbought area and is about to cross the %D line from above.
Trade suggestion
Sell Stop at 1.11685, Take profit at 1.11300, Stop loss at 1.11920

NZDUSD
NZDUSD is on course to retest the major resistance at 0.73420 after peeking through this level on Friday. The pair could not retain the bullish momentum to surge above this handle and pulled back to hit the support at 0.72639. Having been supported by the two moving averages placed below the price action, the New Zealand dollar has been pushing to get into rally mode. Nevertheless, the price is expected to give up the gains once more, and retreat from the resistance.
Trade suggestion
Sell Limit at 0.73420, Take profit at 0.72940, Stop loss at 0.73600

AUDNZD
AUDNZD resumed its slide after some corrective moves from the one-month low at 1.03140. The pair fell back from the resistance at 1.03950 – the level that forced the price to reverse lower on Thursday. The market has remained in a bearish setup for almost a month and is expected to extend the downtrend as the RSI index is still pointing downwards, and is still below the 50 line.
Trade suggestion
Sell Stop at 1.03530, Take profit at 1.03140, Stop loss at 1.03950

SILVER
Silver has been skidding since the market open on Monday following a sharp surge that boosted the grey metal to surpass the 23.6% retracement at 19.369. Ongoing losses are a result of a correction that may last sometime, as can be seen from the indicators. The market has entered the overbought zone. With the MA20 crossing the MA50 from below, Silver could reattempt a surge after a test of the support at 19.200
Trade suggestion
Buy Limit at 19.200, Take profit at 19.430, Stop loss at 19.040

BRENT
Brent crude descended from the 23.6% Fibonacci retracement level, after the price came up against two solid hurdles at the same time. Coupled with the resistance at the 23.6% level, the MA20 is another zone of resistance that restrained the price action and sent the market back down. The bear is overwhelming in the market currrently, which is further consolidated by two MAs placed above the price action.
Trade suggestion
Sell Stop at 46.40, Take profit at 45.50, Stop loss at 47.00

FTSE
FTSE100 index victoriously broke out of the descending price channel on Friday, and is comfortably trading around two-week highs at 6899.90. While the RSI index is moving near the overbought zone, the short-term MA is much likely to penetrate the long-term MA from below. The index is anticipated to advance higher towards the record high at 6959.21, with both MA's now placed below the price action.
Trade suggestion
Buy Stop at 6900.00, Take profit at 6959.21, Stop loss at 6865.00

Natural Gas Weighed Down By Stocks – Is This A Good Time To Pick A Bottom?

Natural gas prices have been in a down-move since last Tuesday and are currently suffering a fourth session of losses in the last five trading days. August witnessed prices dropping by more than 3%, and the market opened September with large losses on Thursday after data from the U.S. Energy Information Administration showed a larger-than-expected storage addition during the week through August 26th. However, the natural gas market’s surplus is expected to be nearing its end, as cheap prices are discouraging production but stoking consumption.

Reports from the U.S EIA showed that natural gas stockpiles rose by 51 billion cubic feet (bcf) for the week ended August 26. The figure was far beyond expectations of a 43 bcf increase, taking total stocks to 3.401 trillion cubic feet, up 238 bcf from a year ago and 334 bcf above the five-year average.
High temperatures have been the main driver for the rally in natural gas this summer. Consistently intense heat powered consumption of air conditioning, and raised demand for electricity. Although weather forecasts are still reporting hotter-than-normal weather across the eastern half of the country for the next two weeks, September has stepped in with less extreme heat and cooled down the usage of air conditioners.

Additionally, according to market sources, wind-power generation also increased enough during the week ended August 26th to have caused a reduction in power plants’ gas consumption by 1.6 bcf a day. These two factors could have helped cause the larger-than-expected storage number.
Nonetheless, the current surplus could be erased in upcoming months as onshore natural-gas production has been falling in June for the fourth consecutive month. According to Bakes Hughes, the number of rotary rigs drilling for gas in North America hit an all-time low at 81 last week.

Along with the reduction in drilling rigs, the cheapness of gas has nudged U.S power producers to replace coal with natural gas. Last year, the U.S electricity sector used 1.4 times as much coal by energy value as compared to natural gas. This is a huge contraction compared to a ratio of 4.5 times 20 years ago. The EIA had forecast in March that gas use would overtake coal for the first time ever, in 2016.

As financial markets in Canada and the U.S. are shut on Monday for the Labour Day holiday, the natural gas market is expected to be relatively quiet and thin today.

Natural gas prices created a wide gap down on the market open and also broke below the ascending trend line which connects the higher lows for the period August 2nd to September 2nd. Lower lows being formed by the recent price action (over the last 1 week) and lower lows being created in the indicator window suggest that the bear is getting stronger. The 20-period MA has converged with the 50-period MA, signaling further declines.

Trade suggestion
Sell Stop at 2.750, Take profit at 2.730, Stop loss at 2.765

AUDCAD Trading Signal for September 05, 2016 #CapitalStreetFX#TradingSignal

From GMT 15:00 05/09/2016
Till GMT 21:00 05/09/2016

Buy at0.98100
Take profit at0.98235
Stop loss at0.98000

Oil Pares Early Gains As Magnified Speculation Dissipates

The crude oil market was in a state of overblown volatility in thin liquidity on Monday, amidst rising speculation that the world’s two largest oil producers would agree on an output cap deal at the G-20 summit in China, after Reuters had reported that Saudi Arabia’s Energy Minister Khalid al-Falih was set to make a “significant announcement” at a news conference at the summit being held in Hangzhou.

Nonetheless, the outcome of Al-Falih’s speech disappointed markets as what was delivered failed to meet market expectations. According to reports, Al-Falih and his Russian counterpart Alexander Novak will set up a working group to monitor the oil market and come up with recommendations to promote market stability. Besides the meeting in Algeria in late September, the two leaders will also meet in Vienna in November to discuss how to cooperate under the new agreement.
Oil prices immediately trimmed sharp gains made earlier, falling off from the nearly one week high at 46.51 per barrel to as low as 44.74 per barrel after the statement.

Trade suggestion
Sell Stop at 44.90, Take profit at 44.50, Stop loss at 45.20

#CapitalStreetFX #TradeIdea

EUR/CHF signal by Capital Street FX

From GMT 10:15 06/09/2016
Till GMT 21:00 06/09/2016
Buy at 1.09315
Take profit at 1.09450
Stop loss at 1.09200