Daily Technical Analysis by Capital Street FX

Daily Report on September 06, 2016

Crude prices held onto most of their gains from yesterday in the Asian trading session on Tuesday, as top producers Russia and Saudi Arabia, despite failing to announce concrete steps to limit output, agreed to cooperate on stabilizing the oil market. Russian Energy Minister Alexander Novak and his Saudi counterpart have moved toward a strategic energy partnership after a meeting at the G-20 summit in China.
Saudi energy minister Khalid al-Falih stated that he was optimistic about cooperation with other producers ahead of a meeting this month in Algiers, adding that freezing production was not the only solution to a supply glut. The oil price advance led energy stocks higher, which in turn supported Asian shares edge up on Tuesday.
A report by the British Retail Consortium (BRC) and KPMG published overnight showed that UK retail sales decreased 0.9pc in August compared to the same month last year on a like-for-like basis. The weakest performance since September 2014 was attributed to the warm weather that retrained clothing sales, and the Olympics that distracted shoppers by keeping them indoors.
Having already pulled the trigger on policy easing in May and August, the Reserve Bank of Australia (RBA) held its interest rate unchanged as expected at Tuesday's meeting. The central bank stated that it will let the stimulus measures already introduced, to percolate through the economy before deciding if yet more stimulus is needed.

Technicals
EURAUD

Fig: EURAUD H4 Technical Chart
EURAUD has fallen off the 23.6% retracement level at 1.46967 and continues to head downwards with the pressure from the two MAs placed above the price action. The MA20 has crossed over the MA50 from above, not to mention that the ADX index has soared higher. The pair is anticipated to dip lower to test the support at 1.45450.
Trade suggestion
Sell Stop at 1.46015, take profit at 1.45450, stop loss at 1.46615

USDCAD

Fig: USDCAD H4 Technical Chart
USDCAD has been on a decline since it reversed from a nearly one-month high at 1.31471 reached on Friday. The short-term MA has penetrated the long-term MA from above, signaling further slump in the market. Additionally, since the ADX has surged higher to 53.19, with a big divergence between the +DI and –DI line, the bears are expected to gain momentum and push the pair lower. However, the USDCAD is up against a strong support zone, which is an ascending trendline formed during the period from August 18 to date. To extend the down move, USDCAD needs to make a breakout through this support first.
Trade suggestion
Sell Stop at 1.29000, take profit at 1.28570, stop loss at 1.29500

USDCHF

Fig: USDCHF H4 Technical Chart
USDCHF has been moving sideways around the key 0.98000 level for the last three trading days. The pair initially breached the upper boundary of the ascending trading channel and broke out of it. But has now fallen back into the trading channel. The market has been locked under the MA20 for a while but has not been able to cross below the MA50. As the %K line is pointing down and the RSI has dipped below 50, the pair is forecast to fall further to the support at 0.97500.
Trade suggestion
Sell Stop at 0.97880, take profit at 0.97500, stop loss at 0.98200

GOLD

Fig: GOLD H4 Technical Chart
Gold has been on a rise since the beginning of September but the rally is being held back within the descending channel. While the bull is overwhelming in the market and the upcoming convergence of the two MAs placed below the price action looks likely, a breakout though the channel resistance is anticipated. However, in case the precious metal can breach this handle, the major resistance at 1330.00 will be another solid stance for gold to get through.
Trade suggestion
Buy Stop at 1328.50, take profit at 1333.20, stop loss at 1325.00

BRENT

Fig: Brent H1 Technical Chart
Brent witnessed a spike yesterday which took the commodity beyond the 23.6% retracement level to retest a nearly one-week high at 49.37. Brent pared most of its gains afterwards but failed to break below the MA20 and is currently trading above this support. The ongoing up-wave has created a bullish impulse in the market, with other indicators currently supporting the up move.
Trade suggestion
Buy Stop at 47.80, take profit at 48.45, stop loss at 47.40

DAX

Fig: DAX H4 Technical Chart
Germany's DAX30 index has been moving in an ascending triangle pattern. Higher lows have been continuously created but the index has been restrained from forming new highs due to the resistance at 10740.00. DAX seems to be trading with a sideways to downwards bias currently. However, any down move is expected to subside and the market may bounce back once it hits the MA20 and may go on to retest the 10740.00 resistance level.
Trade suggestion
Buy Limit at 10636.00, take profit at 10740.00, stop loss at 10600.00

Go Longs on Gold as Fed May Need To Stand Pat on Rates This September

Gold retested over one-week high at 1342.11 after a couple of data released on Tuesday that were not only far beyond earlier expectations but also completely dislodged any thought of a U.S economy that is “healthy enough” to withstand a rate hike as soon as later this month.
Report from the Institute for Supply Management showed that America’s service industries expanded in August at the weakest pace in six years. The ISM non-manufacturing index nose-dived to the lowest since February 2010 to 51.4, from 55.5 in July, while economists forecast the figure to come out at 55.4.
In a separate report, the Federal Reserve’s labor-market conditions index also swung back into negative territory last month after a positive reading in July, marking the seventh negative reading in the past eight months. The Fed’s gauge, which combines 19 labor market indicators, fell to minus 0.7 in August from 1.3 in one month earlier.

Trade suggestion
Buy Stop at 1340.50, Stop loss at 1333.00, Take profit at 1345.90

Copper Picks Up On Signs of Rising Demand – Traders Advised To Be Cautious As Market May Not Easily Re-Balance

Copper opened Tuesday’s trading session with a small gap down but quickly covered the gap to extend bullish momentum to a second consecutive trading day despite swelling inventories, as demand is showing signs of pick-up while cross currents in supply reduced pressure cast by worries over a market surplus.

Inventories tracked by the London Metal Exchange rose by 10,025 tons to 328,525 tons, causing stocks of copper held at LME approved warehouses to rise by more than 60 percent since Aug. 11. However, stocks held by the Shanghai Futures Exchange fell to 152,404 tons as of September 2, down eight percent compared to the previous week.

The decline in SHFE may be the result of a marginal rise in demand in Europe and Asia after the summer vacation has ended. “Feedback from fabricators onshore points to a pick-up in orders from the construction sector in recent weeks”, said Standard Chartered.
Elsewhere, striking workers at Codelco’s small Salvador mine (producing 49,000 tons per year) and Anglo American’s Los Bronces mine (producing 437,800 tons per year) following failed wage negotiations in Chile – the world’s top copper producing nation – could cause production to fall further in the coming months.

Meanwhile, also on the supply side, Vedanta – India’s second largest copper producer with current output of 400,000 tons a year – is harboring the ambition to dethrone its rival Hindalco (500,000 tons) from first place in terms of output. Vedanta is reported to be restarting a cooper mine on Tasmania’s west coast in 2017, three years after the mine’s operations were suspended due to the death of two workers in 2014 and another in 2013. The mine is estimated to possess 200 million tons of reserves with an annual output of 100,000 tons

Previously, CEO of Vedanta’s Copper business R Ramnath stated that the conglomerate is planning to invest up to Rs. 3,000 crore ($450 million) in its Indian copper operations to double the capacity to 800,000 tons by 2019, making the firm India’s largest producer of the metal.

In a recent meeting with the government, India’s top copper producers — Hindalco, Vedanta and Hindustan Copper — have demanded that import duty on finished copper products be raised to 7.5% from 5% now as the country’s imports are growing at an alarming rate of over 20% for the last five years. These domestic producers are afraid that copper from Asean countries and Japan which is benefitting from export incentives could take over their market share that is about 80% at around 1 million tons a year in total.

Copper has been trading sideways in a thin range between 2.0900 and 2.0695 for nearly two weeks, after stabilizing post the sharp down move between mid/late July and August 24. The metal continues to remain in the downward sloping trading channel. Bears currently seem exhausted after having continuously pushed prices lower and held the market near oversold zone. Some bullish interest has come back into the market at the lows, but bulls are facing strong resistance at 2.0900. Bears are expected to get back into the market, after a period of short-covering inspired bounce-backs, and may push copper prices back down again.

Trade suggestion
Sell Stop at 2.0900, take profit at 2.0680, Stop loss at 2.1140

https://capitalstreetfx.com/en/wp-co...ner_report.jpg

Daily Report on September 07, 2016

Asian shares rose to one-year highs on Wednesday, carrying forward the bullish momentum from the US equity markets after Wall Street had finished yesterday’s session in the green. A spate of weaker-than-anticipated data released on Tuesday has nudged investors to bet against any U.S rate hike this month and created some doubts over an interest rate increase by the end of 2016.

The Federal Reserve was handed some reasons to delay increasing rates after the Institute for Supply Management published its non-manufacturing PMI for August. The August PMI fell to 51.4. The result was far short of expectations, marking the largest one-month drop since November 2008 and the lowest PMI reading since February 2010. The Fed’s labor-market conditions index also swung back into negative territory last month after a positive reading in July, slipping to -0.7 from 1.3 one month earlier.

In response, the U.S dollar fell sharply against most of its peers. The Japanese Yen strengthened on the back of a softening greenback and was also bolstered further by a reported split between Bank of Japan officials ahead of the BOJ meeting on September 20-21. According to a report in the Sankei newspaper, BOJ policymakers are currently divided into three groups. One supports negative interest rates, another advocates more government bond purchases, while the third group opposes further stimulus.

The Australian dollar edged down 0.1 percent to $0.7681 after rising more than 1 percent on Tuesday after the Reserve Bank of Australia held interest rates steady at 1.5 percent. The Australian Bureau of Statistics reported the country’s gross domestic product (GDP) for the second quarter decelerated to 0.5%, indicating a cooling off in growth compared to the January-March period.

Technicals

GBPUSD

Fig: GBPUSD H4 Technical Chart

GBPUSD broke above the ascending trading channel that has formed since early August, after a steep up move from the key support level at 1.33000. The market has pulled back for some consolidation after bulls pushed the prices into overbought territory. However the upper boundary of the trading recent trading channel is now acting as support after the breakout from the channel, and has kept the market from falling back into the price range. This support zone is expected to push the price higher from the current levels

Trade suggestion

Buy Stop at 1.34400, Take profit at 1.34800, Stop loss at 1.34000.

EURCHF

Fig: EURCHF H4 Technical Chart

EURCHF has breached below the 50.0% retracement at 1.09090 after decisively dropping from the 61.8% level at 1.09774. A brief correction was seen yesterday but weak bulls failed to retain the bullish momentum and had to reverse lower after coming up against the short-term MA. The MA20 has just converged with the MA50 from above, signaling more declines for the pair.

Trade suggestion

Sell Stop at 1.09000, Take profit at 1.08800, Stop loss at 1.09230

USDJPY

Fig: USDJPY H4 Technical Chart

USDJPY has been on a precipitous down move which helped the pair easily move past both the long-term and short-term MAs. In general, the U.S dollar has been trading in a shrinking range against the JPY and is currently moving towards the lower boundary of the trading range. As the market has entered the oversold zone, we may witness a period of consolidation moves. More declines in USDJPY are expected since two MAs placed above the price action are casting downward pressure on the price.

Trade suggestion

Sell Stop at 101.300, Take profit at 100.850, Stop loss at 101.700

SILVER

Fig: SILVER H4 Technical Chart

Having surged more than 9.5 percent from two-month lows at 18.371 created on August 29, the grey metal retreated after the market entered a state of overblown volatility. Nonetheless, silver is forecast to extend the up wave as the two moving averages placed below the price action are exerting upward pressure which could send the price higher.

Trade suggestion

Buy Stop at 20.100, Take profit at 20.300, Stop loss at 19.910

WTI

Fig: WTI H4 Technical Chart

WTI crude prices are continuously forming lower highs and higher lows causing the commodity to move in a narrowing range. The market has failed to define a clear direction for itself and reversed regularly every time it hits the upper or lower trend lines that have marked the recent trading range, and no clear breakout or resolution of the trend has been observed. At the moment, crude prices are moving towards the 23.6% retracement at 45.55 and anticipated to reverse lower below this resistance.

Trade suggestion

Sell Limit at 45.55, Take profit at 44.50, Stop loss at 46.00

SP500

Fig: SP500 H4 Technical Chart

The SP500 has recorded a crossover by the MA20 through the MA50 from below, suggesting further up moves on the index after the price action broke above the 2184.00 resistance. RSI (14) that has soared to 59.74 is also supportive for the prices to retest the recent high at 2193.00 reached on August 15.

Trade suggestion

Buy Stop at 2186.00, Take profit at 2193.00, Stop loss at 2177.50

https://capitalstreetfx.com/en/wp-co...ort_footer.jpg

USD/CHF signal by Capital Street FX

From GMT 11:00 07/09/2016
Till GMT 21:00 07/09/2016

Sell at0.96850
Take profit at0.96400
Stop loss at0.97650

Comfortable Aussie Pressuring Wobbly Sterling – Selling GBPAUD Suggested

The GBP and the AUD both trimmed their streak of gains versus the greenback on Wednesday. The Sterling has witnessed relatively larger declines after a report showed that U.K manufacturing output slumped at the fastest pace in a year.

Data from the Office for National Statistics (ONS) indicated a sharp month-on-month contraction in the UK manufacturing sector in July, with activity falling by 0.9%, as factories restricted production in the immediate aftermath of the Brexit vote. Prior to today’s data, economists had forecast a 0.3 per cent decline in manufacturing production for July, on a month on month basis

Among 13 manufacturing sub-sectors, only six recorded an output increase. Transport equipment manufacturers led the gainers with a 5.7% rate of growth(monthly basis), while the largest fall was recorded in the manufacture of pharmaceuticals, which decreased by 5.3%.

The report also confirmed overall industrial production output rose 0.1% on a monthly basis in July, which defied expectations for a contraction, as the sharp decline in the manufacturing was offset by growth in the other three sectors, especially mining and quarrying with an increase of 4.7%.

Today’s report is among the first official statistics offering a broad-based view of the economy for a full month after the Brexit vote. While recent data have delivered the message that the economy has so far held up better than expected, this negative report comes at a time when hopes were building, that a softening GBP (post Brexit) would support manufacturers by making British goods more attractive to overseas buyers.

Investors are now turning their attention to Prime Minister Theresa May, who is preparing to begin negotiations with European Union leaders over the terms of the U.K.’s exit from the trading bloc. Theresa May is determined to begin EU exit negotiations early in 2017 in spite of warnings from a senior Tory MP that she should wait until French and German elections are concluded.

On the other hand, the Australian dollar was not hit much versus sterling following the Australian Bureau of Statistics’ report that the rate of GDP growth in the second quarter decelerated to 0.5%. The Aussie has been trading quite comfortable since the Reserve Bank of Australia decided to stand pat on interest rates on Tuesday.

GBPAUD had to retreat from the resistance at 1.76700 as the pair could not stand the double trouble caused by the descending trend line connecting the lower highs from the period between May 26 to date, and the MA50, which is placed above the price action. As can be seen from the stochastic chart, the %K line is falling rapidly ahead of the %D line, after having crossed it recently from above, with a large distance between two lines. The currency pair is expected to decline further.

Trade suggestion
Sell Stop at 1.73800, Take profit at 1.71000, Stop loss at 1.76700

USDCAD Pares Losses After Weak Ivey PMI Data

USDCAD reversed into an uptrend after the Bank of Canada decided to maintain the Overnight Rate on hold at 0.50% but stated that second-quarter gross domestic product was affected by a drop in exports that was “larger and more broad-based than expected.”
Although in general, the central bank delivered an optimistic attitude towards its economy, analysts claimed that weak exports would demand the BOC unleash more monetary easing to drive stronger growth.
The Loonie today was also hit by the Canadian Ivey PMI. The indicator released by the Richard Ivey School of Business, decreased from 57.0 points to 52.3 points, missing consensus estimate of 55.5 and signaling an aggressively decelerated expansion.

Trade suggestion
Buy Stop at 1.29000, Take profit at 1.29250, Stop loss at 1.28840

https://capitalstreetfx.com/en/wp-co...ner_report.jpg

Daily Report on September 08, 2016

Crude prices extended their winning streak in early trading on Thursday after data from the American Petroleum Institute on Wednesday indicated that U.S crude stocks unexpectedly dropped by 12.1 million barrels last week. Oil hit one-week highs as the report was starkly contrasting with expectations of an increase of 200,000 barrels. Official data from the U.S government will be out later today. Should the data from the EIA confirm the drawdown, it will be the largest weekly decline since April 1985.

Also on Wednesday, the U.S Labor Department published its monthly Job Openings and Labor Turnover Survey, or JOLTS, which pointed to tightening conditions in the labour market. U.S. job openings were reported to have surged to a record high in July. However, employers were having difficulty in filling vacancies with appropriately qualified workers.

The number for worker demand increased by 228,000 to a seasonally adjusted 5.9 million – the highest level since the survey was started. In theory, this situation could spur faster wage growth. But according to the Fed’s latest Beige Book report, “expectations of wage growth for the coming months were modest” as a strong labor market failed to create much upward pressure on wages and prices.

Data from Japan reported on Thursday that the Japanese economy grew by 0.7% in the second quarter compared with the same quarter last year. The reading for the annualized growth rate was revised upwards, from a preliminary reading of a 0.2% expansion. On a quarter-on-quarter basis, the world’s third biggest economy expanded by 0.2%, largely due to upbeat capital expenditure and inventories, which outpaced the decline in domestic and overseas demand caused by a strong yen.

Official data from the Customs General Administration of China reported that the country’s trade surplus in August was slightly below July’s $52.31 billion at $52.05 billion and missed estimates for a reading of $58 billion. Weakening exports continued to weigh on the world’s second-largest economy. Exports slid by 2.8 percent on a year-on-year basis, following July's 4.4 percent drop.

Investors are shifting their attention to the meeting of the European Central Bank where all main rates are expected to be left unchanged. President Mario Draghi will update growth and inflation projections in the Press Conference due after the rate decision.

Technicals

NZDUSD

Fig: NZDUSD H4 Technical Chart

NZDUSD has broken above the ascending channel but has currently been trading sideways below the 50.0% retracement at 0.74709. The pair is currently locked between the upwards sloping trendline, marking the boundary of the ascending channel, which is acting as a support and the resistance at the 50.0% Fibonacci level. A breakout is expected as the trading range is becoming narrower. The ADX is still pointing upwards, suggesting a continual uptrend.

Trade suggestion

Buy Stop at 0.74750, Take profit at 0.75200, Stop loss at 0.74400

CADJPY

Fig: CADJPY H4 Technical Chart

CADJPY has been moving sideways within the price range from 78.750 to 79.175. The pair is currently in a phase of consolidation, after a sharp decline from a more than one month high at 80.298. The pair is under the downward pressure heaped by the two MAs placed above the price action. The short term MA20 has been an especially strong level of resistance so far, and has forced the price to reverse lower every time CADJPY has hit this resistance. Further declines are expected.

Trade suggestion

Sell Stop at 78.750, Take profit at 78.500, Stop loss at 79.200

USDCAD

Fig: USDCAD H4 Technical Chart

USDCAD retreated after failing to break back above the support trendline underlying the price action created since August 18. After having violated the uptrend on Monday, the pair bounced back from the support at 1.28300 but could not cross back over the support trendline at around 1.29126, and was further pressured by the MA20 hovering above the price action. The market has remained in bearish territory but the near-term support at 1.28570 should be monitored carefully.

Trade suggestion

Sell Stop at 1.28570, Take profit at 1.28300, Stop loss at 1.29050

SILVER

Fig: SILVER H4 Technical Chart

Silver resumed the uptrend after retreating from the high at 20.100. While the %K line reversed higher to penetrate the %D line from below, RSI remains in the bullish zone, indicating an overwhelming bull. With two MAs placed below the price action, silver is on course to soar higher.

Trade suggestion

Buy Stop at 19.900, Take profit at 20.100, Stop loss at 19.700

COPPER

Fig: Copper H4 Technical Chart

Copper has breached the solid resistance at 2.0900 which restrained the metal for two weeks until yesterday. The RSI index has surged above the 50 line, and the MA20 has crossed over the long-term MA50 from below, preparing the stage for further advances in copper. Nonetheless, the up-move could be limited as prices are moving in an upward sloping channel and the upper boundary of the channel is foreseen to be a firm handle, where prices could be contained.

Trade suggestion

Buy Stop at 2.1050, Take profit at 2.1170, Stop loss at 2.0900

NASDAQ

Fig: NASDAQ100 H4 Technical Chart

The Nasdaq failed to surpass major resistance at 4837.00, yet again, yesterday. Bulls are overshadowing the market but also taking cautious steps when facing this key level. The two MAs placed below the price action, are continuously fueling bullish momentum in the index but a chance for a break out is still even. Any considerable force that could help the index one way or the other, would need to come from the fundamental side. Therefore traders should be patient ahead of the crude oil inventory data due later today.

Trade suggestion

Sell Limit at 4837.00, Take profit at 4811.50, Stop loss at 4851.50

https://capitalstreetfx.com/en/wp-co...ort_footer.jpg

AUD/CAD signal by Capital Street FX

From GMT 11:15 08/09/2016
Till GMT 21:00 08/09/2016

Sell at 0.99525
Take profit at 0.99000
Stop loss at 0.99970

Blockbuster Economic Dominates Political Uncertainty – USDZAR Set To Crash

USDZAR continued to drop on Thursday after a sole winning session in the month-to-date on Wednesday. News about a rebound in South Africa’s economy came at the same time as weaker-than-anticipated economic data from the the U.S. Prospects of a Federal Reserve rate hike in September worsened significantly after the weaker than expected data reading, which helped boost demand for higher-yielding emerging-market assets and in particular, helped power the Rand to rally nearly 6% in September against the background of political uncertainty.

South Africa reaped the benefits of a weak rand in the second quarter, posting an 18.5% surge in exports and a 5.1% decline in imports. The country managed to avoid a recession in the April-June period, as mining and factory output rebounded. A report from the national statistics agency on Tuesday reported that the country’s gross domestic product (GDP) grew at an annualized rate of 3.3 percent on-year, recovering from a 1.2% contraction in the first quarter.

Manufacturing, which accounts for the largest share in South Africa’s GDP at 13%, reported growth of 8.1% compared with the previous quarter, reaching the highest rate of quarterly growth in three years. Meanwhile, mining output recovered from an 18.1% decline in the first quarter to increase by 11.8% in the three months through June.

Given the positive figures released a day earlier, The South African Reserve Bank Governor Lesetja Kganyago stated on Wednesday that “the Monetary Policy Committee will be able to revise upwards its annual economic performance estimates at the September meeting”. South Africa’s Central Bank is scheduled to hold its monetary policy meeting on September 22.

The Rand added to its recent gains earlier today after an unexpected rise in Chinese imports. China’s imports rose for the first time in nearly two years in August, suggesting a pick-up in domestic demand and buoying commodity-linked currencies such as the Rand, as China is one of the biggest markets for all commodity producing countries(if not the biggest market).

However, data from Statistics South Africa indicated that manufacturing output expanded only by 0.4% year-on-year in July, well below expectations of 3% advance after rising by a revised 4.7% in June. Factory production was also down 1.5% on a monthly basis last month. The results of the nation’s Q3 business confidence survey on Friday will round up the week for the Rand. Forecasts point to a dip from a reading of 32 points to 30.

The currency has recently been under pressure due to political uncertainty after its respected Finance Minister Pravin Gordhan was summoned by a special unit of the police, in relation to an investigation over the activities of a surveillance unit set up during his time as head of South Africa’s tax agency. Gordhan has not been arrested but his case has put the country in danger of a ratings downgrade to junk level by rating agencies, as he is widely considered to be a progressive policy maker.


USDZAR penetrated both the short-term and long-term Mas from above, heading back towards the nearly one-year low at 13.19334 after a sharp spike in the second half of August. Obviously bears have taken over the market. The –DI line has already crossed over the +DI from above while the RSI has retreated to 32.14 from the high of 42.52 reached during the recent rally. A short correction yesterday has balanced the market a little and prevented a move into the oversold territory. The RSI is indicating that there is room for the pair to fall further.

Trade suggestion
Sell Stop at 13.88000, Take profit at 13.64845, Stop loss at 14.08500

Brent Rallies on Record U.S Crude Inventory Draw
Crude prices jumped more than 4 percent on Thursday after the U.S. Energy Information Administration announced a not-so-surprisingly large drawdown in the country’s oil stocks. The report was considered as a confirmation for data published by the API which indicated a decrease of 12.1 million barrels last week.
Thursday’s data showed U.S. crude stocks dropped by 14.5 million barrels in the week through September 02, to 511.6 million barrels, marking the biggest weekly drop in stockpiles since January 1999. This loss was driven by limited imports and shipping into the U.S. Gulf Coast owing to Tropical Storm Hermine last week.

Trade suggestion
Buy Stop at 50.00, Take profit at 50.25, Stop loss at 48.85

https://capitalstreetfx.com/en/wp-co...ner_report.jpg

Daily Report on September 09, 2016

The European Central Bank decided to leave interest rates unchanged on Thursday as expected but disappointed the markets with a lack of dovish statements on the Euro. With no immediate action to extend/expand the current asset purchase plan, and no explicit guidance about the central bank’s next moves, the markets were left hanging dry by the ECB. Speaking at the press conference after the rate decision, ECB President Mario Draghi stated that the bank was studying potential changes to its asset-buying program, but maintained the March 2017 end-date for the plan.

Crude prices pulled back on Friday as investors booked profits after prices rallied more than 4 percent a day earlier. U.S. Energy Information Administration confirmed a surprisingly huge draw-down in U.S. crude inventories, which had been reported first on Wednesday by the API. Government data showed that U.S. crude stocks dropped by 14.5 million barrels last week to 511.4 million barrels - the biggest weekly drop in stockpiles since January 1999.

This loss was driven by limited imports and shipping activity in the U.S. Gulf Coast owing to Tropical Storm Hermine last week. Higher oil prices powered the U.S dollar’s rally overnight, by raising U.S. inflation expectations, which led some investors to speculate that the Federal Reserve could hike interest rates sooner rather than later despite a recent spate of disappointing economic data.

Reports by China’s National Bureau of Statistics indicated that the country's consumer price inflation slowed to its weakest pace in almost a year in August. Food costs continued to abate despite unreliable agricultural production due to severe summer flooding. The consumer price index (CPI) growth posted the slowest pace of price inflation since October 2015. CPI growth was at 1.3 percent in August on a year-on-year basis, compared with a 1.8 percent increase in July. The producer price index (PPI) dropped 0.8 percent in August compared to a year earlier, virtually in line with expectations for a fall of 0.9 percent.

Technicals

EURGBP

Fig: EURGBP H4 Technical Chart

EURGBP has been on a sharp rise without a single bearish candle since it broke above the 50.0% retracement level at 1.09090. However, the aggressive and sharp up moves may have exhausted the bulls and slowed down the pace of the up-wave, which is showing up in the short bodies of the last two bullish candles (not including the current one). The pair may continue to surge higher, as the MA20 has converged with the MA50, and both are placed below the price action, thus powering the bullish momentum in EURGBP.

Trade suggestion

Buy Stop at 1.09600, Take profit at 1.09774, Stop loss at 1.09400

GBPAUD

Fig: GBPAUD H4 Technical Chart

GBPAUD crawled back from the low at 1.72600 but has been hesitant around the 1.74150 level as the pair is facing a stiff zone of resistance at the trendline marking the descending downtrend created since May 26. A pullback is expected as there is no support for further advances, with the two MAs placed above the price action. Furthermore, the %K line of the stochastics has entered the overbought zone, indicating the possibility of upcoming profit-taking.

Trade suggestion

Sell Stop at 1.72600, Take profit at 1.72600, Stop loss at 1.75070

AUDUSD

Fig: AUDUSD H4 Technical Chart

AUDUSD has entered a consolidation phase after nose-diving and moving past the 20-period moving average yesterday. The MA is now acting as a resistance and forcing the price to go down further after each attempt to gain back territory. The RSI has fallen from the overbought threshold to the neutral 50 level. AUDUSD is anticipated to retest the 23.6% retracement level at 0.76144.

Trade suggestion

Sell Stop at 0.76430, Take profit at 0.76144, Stop loss at 0.76730

GOLD

Fig: GOLD H1 Technical Chart

Gold has been trading with a sideways to upwards bias since yesterday following a steep decline which depressed the precious metal below both the two moving averages. The MA20 has penetrated the MA50 from above is casting downward pressure on current up moves. Both MA's are currently placed above the price action. While the RSI is in bearish territory, the %K line has reversed lower and crossed the %D line from above. The metal is expected to pull back lower after attempting a test of the MA20 just above the price action.

Trade suggestion

Sell Stop at 1335.90, Take profit at 1330.00, Stop loss at 1342.50

Natural gas

Fig: Natural gas H4 Technical Chart

Having surged sharply from the 23.6% retracement level, at 2.667, Natural gas’s up moves have slowed down. The two MAs placed below the price action are supporting further advances, but prices rising too far too fast have led the market into an overbought zone. The resistance from the upward sloping trendline through recent lows from early August to date is offering a strong road block to further gains currently. Natural gas is expected to reverse lower.

Trade suggestion

Sell Stop at 2.800, Take profit at 2.770, Stop loss at 2.825

SP500

Fig: SP500 H4 Technical Chart

SP500 has been restricted below the MA20 recently, even though the index is moving in an upward trending price channel, with higher highs and higher lows since early August. The price is nearing the lower boundary of the channel and is forecast to fall out of the range as bulls seem to be losing steam, with the RSI index pointing downwards and remaining below the 50 line. Prices have broken below both the MA's from above and bounce-backs have not been able to cross back above the MA's thus far.

Trade suggestion

Sell Stop at 2177.50, Take profit at 2172.40, Stop loss at 2182.83

https://capitalstreetfx.com/en/wp-co...ort_footer.jpg

EURUSD Longs In Play As ECB Powers Market Higher – Upside Limited

EURUSD rose in the early European trading session on Friday, heading for a higher weekly closing for the first time in the last three weeks. The burden of a widely expected extension to the Eurozone’s asset purchasing program was taken off the Euro, which seems to be outweighing any negative impact from today’s weaker-than-expected data on the single currency.

German Trade Balance Data for July that was reported earlier, came out with a lower than expected reading. According to the Federal Statistical Office, Destatis, Germany’s trade surplus for July fell to 19.4 billion euros ($21.9 billion) from a revised 21.4 billion euros in June, missing the forecasts for a surplus of 22.7 billion euros.

In seasonally-adjusted terms, exports slipped by 2.6% from one month earlier and 10% compared to a year ago, while imports dropped by 0.7%. Subsequently, Germany’s current account balance showed a surplus of only 18.6 billion euros in July, well below expectations for a reading of 22.9 billion euros. The large contraction in July 2016’s data compared to the same month last year was in part because of July 2015 being among the strongest months of the entire 2015 for German exporters.

Today, France’s National Institute of Statistics and Economic Studies (INSEE) reported that the country’s industrial production dropped unexpectedly in July. Industrial production in the EU’s second-largest economy fell by 0.6% in July, following a 0.7% decline in June. In particular, manufacturing of equipment skid by 3.3% on a month on month basis, in July, and production of transport materials lost by 1.4%.

The euro seemed resilient after the data releases, as at the moment, the shared currency is not under any threat of rate cuts or any other upcoming stimulus measures. The European Central Bank decided to leave interest rates unchanged on Thursday as expected but disappointed the markets with no explicit guidance about the central bank’s next moves.

Speaking at the press conference after the rate decision, ECB President Mario Draghi stated that the bank was studying potential changes to its asset-buying program, and maintained the March 2017 end-date for the ongoing program. However, he also reiterated the current risk to inflation and reassured markets that “If warranted, we will act by using all the instruments available within our mandate.”

Investors are shifting their focus now to the meeting of the U.S Federal Reserve later this month. Despite a chorus of Fed officials including President Janet Yellen and her top Deputy Stanley Fisher signalling that the time to hike rates is approaching as the economy is at or near the full-employment level, investors have trimmed bets that the Fed would be raising rates as early as this month, especially after recent data echoing the disappointment of a smaller-than-expected NFP last Friday.

EURUSD has been receiving huge support from both the 20-day and 50-day MA’s that were intercepted by the price action from below, earlier in the week. Both the MA’s are now placed below the price action and underpinning the current up-move. While the long-term moving average played an important role in supporting the market last week, the short term MA is currently acting as a handle that forces the euro to reverse higher, on every attempt to test it. The market has entered the bullish zone and set the stage for further advances. Nonetheless, the uptrend seems to be limited as a downward sloping trendline connecting the highs from earlier in the year, is currently weighing on the price action.

Trade suggestion
Buy Stop at 1.12740, Stop loss at 1.12278, take profit at 1.13100

AUD/USD signal by Capital Stree FX

FromGMT 14:00 09/09/2016
TillGMT 21:00 09/09/2016

Buy at 0.75810
Take profit at 0.76140
Stop loss at 0.75610

U.S Stocks Nose-dive, Weighed By Fears of Rate Increase and Tumbling Crude Prices

Sp500 index has witnessed the biggest losing session on Friday since June 27 when the benchmark dropped more than 1%. Investors were rattled by hawkish comments by Federal Reserve officials that backed a U.S. interest rate hike while a slump in crude prices dragged down energy sector.

Boston Fed President Eric Rosengren, who is a voting member of the Fed’s policy committee and therefore will have a vote in the Fed’s decision, stated on Friday that “based on data that we have received to date…a reasonable case can be made for continuing to pursue a gradual normalization of monetary policy”.

None of 10 S&P500 sectors traded in the green. Two worst performers are utilities and telecoms that were both down around 3%. Energy shares, dropped 2.1 percent, due to more than 3% decline in crude prices.

Trade suggestion

Buy Limit at 2120.00, Take profit at 2125.30 , Stop loss at 2104.15

Fed Speak Causes Friday SellOff, BOE Under Spotlight In Coming Week

The past week, especially Friday, was good for the U.S dollar on the one hand, but on the other hand, turned out to be a nightmare for the equity and bond markets. While the greenback advanced against most of its peers, fueling the dollar index to a higher close, settling at 95.38, up 0.38% on the day. European and U.S stocks however, posted their biggest daily losses since the Brexit selloff.

The Dow Jones fell 2.1%, to 18085.45, S&P 500 declined 2.45% to 2127.81, and Nasdaq Composite lost 2.54% to close at 5215.91, after European shares finished the week lower. The U.K.’s FTSE 100 was down 1.19% over the week, while the French CAC index and the German DAX ended the Friday session around 1% lower.

Revived speculation over a U.S interest rate increase as soon as this month helped boost the dollar and created fears of a trend towards tightening monetary policy that would negatively impact investors holding shares in general and shares of dividend payers like utilities and telecommunications companies, as the opportunity cost of holding shares increases.

Among comments made by Fed officials on Friday, statements by Boston Fed President Eric Rosengren, heightened market volatility the most. Rosengren is a voting member of the Fed’s policy committee and therefore will have a say in the Fed’s decision.

Having advocated low rates in the recent past, and widely considered to be a dovish member, Rosengren stated that “based on data that we have received to date…a reasonable case can be made for continuing to pursue a gradual normalization of monetary policy”. The FOMC voter echoed hawkish statements by other Fed Members recently, by warning over the risks of waiting too long to tighten and confirmed that the economy is performing quite well with the labor market nearing full-employment and inflation slowly returning towards the 2% target.

Until the monetary policy meeting scheduled on September 20-21, there will be only one more speech by any Fed Member ahead of the blackout period for public comments by Fed Members. The central bank’s most dovish official, Governor Lael Brainard, will be delivering a previously unannounced speech on Monday at The Chicago Council on Global Affairs.

Last week, three central bank meetings were concluded with no new policy changes announced. Reserve Bank of Australia decided to stand pat on interest rates on Tuesday and Bank of Canada maintained its overnight rate at 0.5% as anticipated, but the European Central Bank disappointed markets even though it left the rates unchanged.

The ECB had been expected to extend its asset purchase program of buying €80 billion worth of bonds a month, beyond the March 2017 end-date, but ECB President Draghi stated that policy makers didn’t even discuss any fresh stimulus measures and gave no explicit guidance about the central bank’s next moves.

Eurozone data released in the past week was disappointing – with service-sector activity stagnating around a 19-month low, industrial production plunging and inflation being stuck near zero and showing no signs of coming close to the central bank’s target of 2%. In the coming week, the German ZEW Economic Sentiment survey, Eurozone trade balance and EU CPI(August Final) are on the calendar of data releases, but none of these releases are expected to be major market movers for the euro.

The British Pound will be in focus next week with a chain of data being released before the Bank of England’s monetary policy announcement. Most of the data released recently are considered to be broadly indicative of the outlook for the British economy, for a full month after the Brexit vote. The data readings, especially readings from the service sector that have pointed to an expansion, have mostly been above expectations, indicating the limited impact of Brexit on the country’s economy.

Data on inflation, employment and retail sales is due to be reported in the coming week. The U.K. Office for National Statistics will publish data on consumer price inflation for August on Tuesday, monthly jobs report on Wednesday, and data on retail sales on Thursday.
Chinese industrial production and retail sales data by the National Bureau of Statistics is scheduled to be released on Tuesday. Markets expect factory output to have risen by 6.1% last month, after increasing by 6.0% in July, while August’s retail sales are forecast to report a growth rate similar to the July rate of growth at 10.2%.

These numbers could impact the AUD and NZD, as China is their largest trading partner. Dairy prices continue to rise helping the Kiwi to outperform the Aussie and are creating pressure on the AUD/NZD cross, taking it to the lowest level since late April 2015.

In the week ahead, the main focus for the New Zealand dollar will be second-quarter GDP data, which is expected to report the strongest performance since the last quarter of 2013. A positive reading will push the NZD higher across the board, and pave the way for the AUD/NZD pair to retreat further.
The Swiss National Bank’s quarterly policy assessment is due on Thursday with most economists expecting the central bank’s benchmark interest rate to remain unchanged at -0.75%. According to Reuters, the SNB will stick to its commitment towards foreign currency interventions in order to reduce demand for the franc.

In the energy markets the focus remains on Oil. Oil prices tumbled on Friday but closed the week higher, fueled by Russia and Saudi Arabia’s commitment to work together to help rebalance the markets and a surprisingly large drawdown in U.S. crude stocks.
U.S. Energy Information Administration confirmed a huge draw-down in U.S. crude inventories on Thursday. The surprise development had been reported first on Wednesday by the API. Government data showed that U.S. crude stocks dropped by 14.5 million barrels last week to 511.4 million barrels – the biggest weekly drop in stockpiles since January 1999.

Crude prices may receive further support next week, as U.S oil producers could be hit by a delay in the North Dakota oil pipeline construction. Following ongoing protests from environmentalists and Native American tribes, the U.S. Justice Department asked operators of the Dakota Access pipeline to suspend construction along a 40-mile (64 km) stretch in North Dakota on Friday. With the suspension, local oil producers and shippers are facing the possibility of greater delays in setting up a quick route to ship oil to the Gulf of Mexico.

For the week ahead, oil traders will be focusing on U.S. oil supplies data on Tuesday by the American Petroleum Institute, data on stockpiles by the U.S. Energy Information Administration on Wednesday, and U.S. oil rig count by Baker Hughes on Friday for fresh supply-and-demand balance signals.

Daily Report on September 12, 2016

The global equity selloff resumed in Asia after clouding European and U.S markets on Friday. Investor confidence in equities was shattered by slumping oil prices and concerns that the world’s biggest central banks are slowing down the pace of unleashing aggressive easing measures, while the U.S Federal Reserve may start increasing its benchmark rates as soon as next week.

MSCI's broadest index of Asia-Pacific shares outside Japan fell by 1.9 percent, followed by Shanghai with a fall of 1.5 percent, while Australian stocks sank 2 percent, marking the largest daily drop since the selloff in late June following the Brexit vote. Japan’s Nikkei 225 lost 1.5 percent as the yen gained ground, thanks to rising demand for safe-haven assets and surprise gains in Japanese core machinery orders.

According to Japan’s Cabinet Office data reported on Monday, the country’s core machinery orders increased unexpectedly by 4.9% in July (seasonally adjusted), contrasting with estimates calling for a decline of 2.8%. The gauge for mid-term capital spending rose for a second straight month after spiking 8.3% in June, easing some pessimism over negative effects of a stronger yen on business investment.

Oil prices extended losses after falling nearly 4% on Friday as a result of an increase in the number of rigs drilling for crude oil last week and an upcoming output ceiling instead of a freeze deal at current levels. U.S drillers increased the number of oil rigs for a 10th week out of the past 11 weeks to 414, the most since February, said Baker Hughes Inc. Meanwhile, OPEC and other producers are mulling over a voluntary a deal involving each country committing that its production quantities shall not surpass a certain ceiling.

These voluntary oil output caps are to accommodate the demand of Iran, Libya and Nigeria to raise their output. Even though this solution seems not to be as effective as an output freeze agreement, it still promises to prevent a collapse which had happened previously in Doha, due to Iran’s bid to regain its pre-sanctions market share while Nigeria and Libya are looking to increase production after political turmoil restricted output.

The market focus on this quiet Monday is on the speech by the most dovish Fed Governor Lael Brainard. She will make the last scheduled appearance by a U.S. central banker before the traditional pre-meeting quiet period until Fed officials gather in Washington on September 21.

Technicals

AUDUSD

AUDUSD has fallen back into the descending trading channel following a decisive slide last week. The pair also attempted to surpass the 38.2% level but exhausted bears could not retain the momentum and had to let go of the milestone and the pair has pulled back. Nonetheless, the Aussie is expected to breach this support as the MA20 has crossed through the MA50 from above. The crossover has signaled further retreat in the AUDUSD. The upside is limited as the prices are contained in the channel.
Trade suggestion
Sell Stop at 0.75250, take profit at 0.74880, stop loss at 0.75550

USDCAD

USDCAD has broken out of the triangle formation, trading higher for the fourth trading day in a row. Bulls have pushed the market into an overextended state as RSI index is lingering around the 70 threshold. Profit taking has depressed the price from the highs around key level 1.30800 but the two MAs have converged below the price action, supporting further advances.
Trade suggestion
Buy Stop at 1.30800, take profit at 1.31460, stop loss at 1.30187

EURCHF

EURCHF is once again heading for the 61.8% Fibonacci retracement at 1.09774 and attempting to break above this level. Looking back at the previous failed attempts in the past, we can see that every time the pair tried to make a breakout, the market had already entered the overbought zone. As a result, the bulls failed to maintain their momentum, and had to let the bears step in. This time, the pair is on the rise after a correction with %K line penetrating the %D line from below and pointing up from the current level at around 50. With support from the two MAs placed below the price action, EURCHF is likely to retest the high at 1.09995 created on September 01.
Trade suggestion
Buy Stop at 1.09775, take profit at 1.09995, stop loss at 1.09585

GOLD

Gold slid back below the 1330.00 threshold as a result of a steep drop from more than three-week highs at around 1352.50 which were reached last week. The yellow metal had reached the overbought zone as a result of this sharp spike. As can be seen from the stochastic chart, the %K line has crossed over the %D line and gold is experiencing some corrective moves. Coupled with the fact that 1330.00 is a firm zone of resistance, and that the market remains in bearish territory, the current up moves are not expected to last long.
Trade suggestion
Sell Limit at 1330.00, take profit at 1324.55, stop loss at 1333.10

BRENT

Brent opened the new week with a gap down and continued to head downwards to the 23.6% retracement level at 46.47. The crude price has crossed over the 50-period moving average from above, which has consolidated the downtrend. The RSI index that has only fallen to 38.28 thus far, suggests that there is further room for a retreat.
Trade suggestion
Sell Stop at 47.20, take profit at 46.47, stop loss at 47.83

FTSE

Having declined more than 1% on Friday, the FTSE is on the verge of falling into a downward slopping trading channel. Sellers have reigned through the trading session on Friday, and ramped up the selloff so hastily that it didn’t give the index any chance of a bounce-back or consolidation. The market has fallen into the oversold zone but the wide gap between the %K line and the %D lines indicate little chances of a bounce-back. The index looks set to dip lower today.
Trade suggestion
Sell Stop at 6732.00, take profit at 6660.00, stop loss at 6767.60

AUD/JPY signal by Capital Street FX

From GMT 11:15 12/09/2016
Till GMT 21:00 12/09/2016

Sell at76.500
Take profit at76.100
Stop loss at76.800

U.S Stocks Get A Boost As The Case for September Rate Hike Eases

U.S. stocks rose on Monday morning after Atlanta Fed Bank President Dennis Lockhart and his Minneapolis counterpart Neel Kashkari, on separate speeches, stated that there was no “urgency” to take action given the state of the economy.
Adding to the buying pressure was the remarks by Fed Governor Lael Brainard to the Chicago Council on Global Affairs. Ms. Brainard kept her stance as a dovish Fed member by arguing that potential weakness in the labor market and risks of foreign economic downturns cause the U.S economy not to be ready for leaving the its monetary stimulus too quickly.
S&P500 index was up 0.7%, led by 1.21% increase in Telecommunication Services and 1.03% advance in Comsumer Staples.

Trade suggestion
Buy Stop at 2141.00, Take profit at 2150.30 , Stop loss at 2136.00

U.S Treasury Notes Tick Lower As Markets Brace for Higher U.S Rates

U.S. government bonds fell further on Monday, sending yields to their highest levels since late June amid concerns that major central banks in Europe and Japan are reaching the limits of policy easing measures, and mounting speculation over this month’s rate hike by the U.S Federal Reserve.
The bond market resumed its selloff on Thursday after the policy meeting of the European Central Bank when it disappointed investors by not extending the asset purchase program in which it is buying €80 billion worth of bonds a month, beyond the March 2017 end-date. Lower demand dampened bond prices and drove yields higher in return.

Consequently, Treasuries no longer appear as attractive to foreign investors compared to local currency bonds as they did earlier this year, as the spike in other government bond yields has wiped out the “yield pick-up”. This is the amount foreign investors expect to earn when they sell local government bonds in their respective countries to invest the proceeds into buying 10-year U.S. Treasuries.

Topping up the selling pressure were hawkish comments from the Federal Reserve Bank of Boston President Eric Rosengren, a Fed Member widely considered to be a dove. In a speech delivered on Friday, Rosengren discussed the risks of waiting too long to raise interest rates as the labor market has been near or at full employment, while inflation is slowly returning towards the central bank’s 2% target.

Another Fed governor who has maintained a dovish stance on monetary policy will be speaking later on Monday. Lael Brainard has generally been advocating maintaining low rates in the current economic climate, and will round up the appearances by U.S. central bankers until they gather for the FOMC meeting on September 21 in Washington.

Therefore, if a different argument, or hints of a change in opinion are delivered tonight, the possibility of a rate hike this month will shoot up, and in turn, pave the way for a further rise in bond yields. The Treasury Department is scheduled to auction the benchmark 10-year notes before Ms. Brainard’s speech. The uptake from the auction combined with the effects of the speech could magnify the volatility in the 10-year notes.
The 10 year T-notes have been on a slide since early June. The price once again fell below the 38.2% retracement level after a spike last week. With the downward pressure which being cast by the two moving averages placed above the price action, U.S 10-year treasury prices are anticipated to continue the downtrend and may retest the 50% fibonacci retracement level.


Trade suggestion
Sell Stop at 130.20, Take profit 129.90, Stop loss at 130.50