Daily Technical Analysis by Capital Street FX

Silver Loses Ground to An Unstoppable Dollar – Time To Go Short

Silver plunged to five-week lows at 18.448 on the back of a strengthening U.S dollar. The greenback reached fresh 31-year highs against the British pound amid concerns over renewed Brexit related uncertainty. In general, the U.S dollar index gained 0.5% rising across the board against most currencies.

Speaking in Charleston, West Virginia on Tuesday, Federal Reserve Bank of Richmond President Jeffrey Lacker expressed a strong desire for the central bank to raise interest rates soon to avoid risks from a likely pickup in inflation.

Lacker, who is not a voting member of the FOMC this year and has no direct influence on monetary policy currently, stated that “While inflation pressures may seem a distant and theoretical concern right now, prudent preemptive action can help us avoid the hard-to-predict emergence of a situation that requires more drastic action after the fact”.

Trade suggestion
Sell Stop at 18.470, Take profit at 18.300, Stop loss at 18.600

NZD/USD signal by Capital Street FX

From GMT 07:50 05/10/2016
Till GMT 21:00 05/10/2016

Sell at 0.71750
Take profit at 0.71400
Stop loss at 0.72200

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Daily Report on October 05, 2016

Asian markets were mixed on Wednesday after U.S stocks closed lower on Tuesday as investors worried about uncertainties triggered by the leaving of the U.K from the European Union, upcoming U.S rate hikes and a tight race between presidential candidates ahead of the Nov. 8 election.

U.S equities extended losses to the second straight session. The Dow Jones fell 0.47 percent to finish at 18,168.45, the S&P 500 lost 0.5 percent to 2,150.49, and the Nasdaq Composite dropped 0.21 percent to 5,289.66. The equity markets are expected to focus their attention towards the upcoming third-quarter results from companies over the next few weeks.

The National Retail Federation on Tuesday forecast that U.S. consumers would boost this year’s holiday sales 3.6% higher. The retail industry group believed that the growth in employment rate and disposable income will help sales in November and December to reach $655.8 billion, out of which online sales are likely to contribute as much as $117 billion, reflecting a rise of 7 percent compared to the same period last year.

Oil prices rose in early trading on Wednesday after a report by the American Petroleum Institute (API) late on Tuesday showing that U.S. crude inventories likely fell for a fifth straight week, declining by 7.6 million barrels. The U.S. government's Energy Information Administration (EIA) will report official stockpile numbers later today.

The New Zealand dollar slumped after dairy product prices fell for the first time since July at the Global Dairy Trade auction. The GDT price index declined by 3 percent to US$2,880, down from US$2,975 at the previous auction two weeks ago.

Technicals

EURUSD

Fig: EURUSD H4 technical chart

EURUSD once again bounced back from the support at 1.11500, remaining stuck within the range between the lower boundary 1.11500 and the resistance at 1.12500. The price action has crossed over two MAs but long bodies in the last four candles suggested that aggressive moves may cause the bull to get exhausted soon and force the pair pull back at the major level 1.12500.

Trade suggestion

Sell Limit at 1.12500, Stop loss at 1.12800, Take profit at 1.11890.

USDJPY

Fig: USDJPY H4 technical chart

The US dollar is struggling under the 103.000 threshold against the Japanese Yen. The pair breached the resistance at 101.850 yesterday and kept surging strongly since then. Consistent rally sent the exchange rate to reach four-week highs and opened the chance for investors to take profit. The %K line which has crossed over the %D line in the overbought zone showed the weakening of bulls. Nonetheless, two MAs are heading upwards, suggesting a continual uptrend after a period of correction.

Trade suggestion

Buy Stop at 103.000, Stop loss at 102.500, Take profit at 103.500

AUDNZD

Fig: AUDNZD H4 technical chart

AUDNZD surged high to reach nearly one-month high at 1.06322. The pair has pulled back after hitting this level as can be seen in the RSI chart, buyers have outweighed sellers and sent market into the overbought zone. However, with ADX at high level at 33.19 and the divergence between the +DI and –DI line, the pair is expected to re-attempt the 38.2% level at 1.06538.

Trade suggestion

Buy Stop at 1.06300, Stop loss at 1.05800, Take profit at 1.06530.

BRENT

Fig: BRENT H4 technical chart

Brent is facing an important resistance at 51.45 – the highest level since August 18th. Small steps in early trade on Wednesday indicated the cautiousness of traders ahead of the new released later on the day. If the data come out in favour of an uptrend, a surge above this level may trigger buy stops. Otherwise, the commodity will have to reverse lower.

Trade suggestion

Buy Stop at 51.45, Stop loss at 50.95, Take profit at 52.00

COPPER

Fig: COPPER H4 technical chart

From the chart we can see that the short-term 20-period moving average has converged with the long-term 50-period MA above the price action, which confirmed the downtrend. The pair has fallen below the 38.2% level and is expected to plunge into the trading range between 2.1440 and 2.1640.

Trade suggestion

Sell Stop at 2.1640, Stop loss at 2.1800, Take profit at 2.1440

NASDAQ

Fig: NASDAQ H1 technical chart

U.S Nasdaq 100 index seems to be on the last stage of a double top pattern as prices have fallen below the neck level at around 4847.10. The pair pulled back on the ahead of market close yesterday but is likely to resume the downtrend on Wednesday after moving past both MAs. The short-term MA20 looks set to penetrate the long-term MA50 from above, while RSI stays below 50 line, suggesting overwhelming bears in the market.

Trade suggestion

Sell Stop at 4850.00, Stop loss at 4865.00, Take profit at 4817.80

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Oil In A Historic Rally As Supply Side Dominates – Can Prices Breach One-Year Highs?

Oil prices rose on Wednesday, prolonging their rally to a sixth consecutive trading day on the back of OPEC’s decision to snap output and falling U.S crude oil stocks. The Hurricane Matthew, which hit Haiti and Cuba on Tuesday and is now heading towards the U.S east coast, has wiped out the effect of a strengthening U.S dollar on oil prices.

U.S crude stockpiles are likely to record the fifth straight week of declines, after the weekly report from the American Petroleum Institute (API) late on Tuesday showed that U.S. inventories dropped by 7.6 million barrels. The U.S. government’s Energy Information Administration (EIA) will report official stockpile numbers later today, which are forecast to indicate an increase following weeks of drawdowns.

Venezuelan Oil Minister Eulogio Del Pino, in an e-mailed statement Tuesday, stated that an agreement to cap output among OPEC and non-OPEC oil producers could slash global supply by 1.2 million barrels a day. According to Minister Del Pino, besides the total amount of 700,000 bpd trimmed by OPEC’s members (the maximum agreed amount under the accord worked out last week in Algiers), non-OPEC states might reduce production by another 500,000 bpd. The deal could consequently boost oil prices by $10 to $15 a barrel above the average September price, he said.

As reported by a Bloomberg survey, OPEC output was at a record of 33.75 million bpd in September, up 170,000 bad compared to the previous month. The increase stemmed from the resumption of supplies from Libya and Nigeria, along with a ramp up in production from Iran.

The Iranian State news agency Islamic Republic News Agency reported on Sunday that Iran plans to increase exports to 2.35 million bpd in coming months from about 2.2 million bpd currently. The country aims to raise output to pre-sanction levels of 4 million bpd to regain market share. But market analysts said that in order to boost export capacity to 4 million bpd from the current level of nearly 3.7 million bpd, Iran would need more assistance in the form of foreign investment into its production infrastructure.

In the next formal meeting of OPEC members in November, non-OPEC oil producers such as Russia and Azerbaijan have also been invited to discuss output curbs. Russia, the world’s largest energy exporter, is widely expected to coordinate a meeting with Saudi Arabia, some time this month, to discuss oil production.

As stated by the U.S. National Hurricane Center, Hurricane Matthew is heading for the U.S. and may hit Florida’s Atlantic coast on Thursday/Friday. The storm is likely to reach the New York Harbor – the delivery point for NYMEX contracts, and may disrupt fuel shipments.

OIL Technical Analysis


After a period of time trading around the 23.6% level at 46.73, Brent crude sky-rocketed to move past both the moving averages, the psychological $50 mark, and a major resistance level at 51.45. The commodity is heading northwards to the highest levels seen since October 2015. The high at 52.82 recorded in June is the highest the market has traded since October 2015 and is a critical mark for the market, in its attempt to create a serious breakout for the medium/long term. The stochastic chart is currently indicating that the Brent market has stepped into the overbought zone. It shall be interesting to monitor the price action to evaluate whether the market can successfully aim for and break through the near term target at 52.82.

Trade suggestion
Buy Stop at 51.85, take profit at 52.82, stop loss at 51.00

SP500 Recovers From Losses. Banks and Energy Companies Lead

U.S. stocks including Sp500 index ticked higher on Wednesday, paring losses suffered over the last two trading days, as rising oil prices and much-better-than-expected service sector data helped boost the energy and financial sectors higher.

Data from the Institute for Supply Management indicated that the U.S Non-Manufacturing PMI index jumped to 57.1 last month, which is significantly higher than the reading of 51.4 in August. The upbeat data raised expectations that the Federal Reserve will raise interest rates before the end of the year. Banking shares went up as higher interest rates improve banks’ revenue and profits.

Oil continued rallying today after the U.S. EIA reported another drawdown in domestic crude supplies. Contrasting with economist estimates calling for an increase in inventories, U.S oil stockpiles actually fell by 3 million barrels in the week ended Sept. 30.

The S&P 500 index has added 0.55% on the day, in trading thus far. Out of 11 sectors making up the index, gainers outnumbered losers by 7 to 4.

SP500 Trade suggestion
Buy Stop at 2162.00, Take profit at 2168.00, Stop loss at 2155.00

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Daily Report on October 06, 2016

Global stocks firmed on Thursday, buoyed by the rally in oil prices and stronger U.S economic data. MSCI's broadest index of Asia-Pacific shares outside Japan picked up 0.4 percent while Japan's Nikkei225 gained 0.5 percent. European markets also opened higher. Germany's DAX opened 0.4% higher at 10,624.77, and France's CAC 40 started the session 0.3% higher at 4,505.17. U.K's FTSE 100 and Stoxx Eurpe 600 added 0.1% and 0.2%, respectively.

Oil retreated in the early European session after extending its uptrend to the sixth consecutive day on Wednesday. Crude prices inched higher following U.S. government data that showed crude stockpiles fell unexpectedly for a fifth straight week.

The U.S. Energy Information Administration continued to surprise the market by reporting domestic crude supplies fell by 3 million barrels in the week ended Sept. 30th. Markets had expected an increase of two million barrels after four weeks of declines in a row.

Also on Wednesday, the ADP reported private-sector employment in the U.S only added 154,000 jobs last month, which is lower than 175,000 jobs added in August and marked the smallest increase since April.

In a separate report, the Institute for Supply Management said its services index shot up to the highest reading in 11 months at 57.1 in September from 51.4 in August. The gauge for the service sector published earlier by research group Markit also pointed to an improvement.

Finally, the Commerce Department rounded up an eventful day for the U.S with data on the country’s new orders for factory goods that indicated a slight increase in August. The manufacturing sector is showing signs of regaining some steam as orders for manufactured goods rose 0.2 percent after a downward revision to the july data. The july number was revised to 1.4 percent increase. The August reading was the second straight monthly increase following two months of weakness in May and June.

Technicals

USDCAD

Fig: USDCAD H1 technical chart

USDCAD had to give up its strength after failing to sustain the bullish momentum to break out of the resistance at 1.32000. The pair has generally been supported by the two MAs placed below the price action which has hardly let the pair fall too far below these two support levels. However, sellers seem strong as the %K line is moving a far way ahead of the %D line. USDCAD may extend the downtrend to re-attempt a test of the support at 1.31400.

Trade suggestion

Sell Stop at 1.31750, Take profit at 1.31400, Stop loss at 1.32100

AUDUSD

Fig: AUDUSD H4 technical chart

AUDUSD is on the path to complete the head and shoulders pattern after the pair breached the support at the 23.6% retracement level. Both MAs are still placed over the price action though the short term MA has crossed the long term MA from above. This is likely to create further downward pressure on the pair. With the market continuing to remain in a bearish setup, the pair is expected to fall further.

Trade suggestion

Sell Stop at 0.75880, Take profit at 0.75350, Stop loss at 0.76200

EURCHF

Fig: EURCHF H4 technical chart

EURCHF reversed higher from the 50.0% retracement level after collapsing to this level yesterday. The pair has received support from the short-term MA20 at 1.09151 and has bounced back from this zone and has also crossed over the long-term MA50 at 1.09291 from below. The Stochastics are indicating that the %K line has penetrated the %D line from below and is about to escape from the oversold zone, indicating a bounceback. The RSI index soaring above 50 is confirming the up move.

Trade suggestion

Buy Stop at 1.29350, Take profit at 1.09750, Stop loss at 1.09000

BRENT

Fig: BRENT H4 technical chart

Brent is experiencing some corrective moves after testing the 52.00 level yesterday. The commodity is expected to soon resume its uptrend as the %K line is much likely to reverse higher from near the oversold zone and cross over the %D line from below. The two MAs are placed below the price action and may boost the market to hit the highest level in one month at 52.82.

Trade suggestion

Buy Stop at 51.70, Take profit at 52.80, Stop loss at 51.00

Natural Gas

Fig: Natural Gas H4 technical chart

Natural Gas prices has been trading in an extremely thin range around 3.025. The price has entered a phase of consolidation following a sharp up move yesterday from the support at 2.935. The market is on the verge of beginning a continual uptrend as the moving averages are giving out signals supporting the upside. The short-term MA20 has converged with the long-term MA50 from south to north, and both are placed below the price action.

Trade suggestion

Buy Stop at 3.035, Take profit at 3.075, Stop loss at 3.000

FTSE

Fig: FTSE H1 technical chart

FTSE has been trading sideways to lower since the index reversed lower from the all-time record highs at 7128.75. While the RSI has dropped into the bearish territory, FTSE is finding support from the dynamic support that is the long-term MA50. In the event that the price action crosses over the MA50 from above, the support at 6954.79 may be the target.

Trade suggestion

Sell Stop at 7011.00, Take profit at 6955.00, Stop loss at 7056.00

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EUR/JPY by Capital Street FX

From GMT 07:30 06/10/2016
Till GMT 21:00 06/10/2016

Buy at 116.100
Take profit at 116.600
Stop loss at 115.600

Twitter Waging A Lonely Battle To Survive As Potential Buyers Back Off – Short Positions Suggested

Shares of Twitter Inc. fell around 17% in pre-market trading on Thursday, after nose-diving nearly 10% on Wednesday. The stock has run into rough weather after deep-pocketed buyers seem to be aborting attempts to bid for the social media company.

Without naming any sources, technology news website Recode reported on Wednesday that Google isn’t interested in buying Twitter. Unfortunately, Apple Inc. and Walt Disney Co. were also reported (again citing unnamed sources) to not have any plans to make a bid for the social communications company.

With the departure of Google, Disney and Apple, Salesforce is believed to be the only potential buyer for Twitter for now. However, the company has never confirmed publicly that it wants to go after Twitter. Salesforce CEO Marc Benioff appeared on CNBC on Wednesday and refused to comment directly on the Twitter case.

Trade suggestion
Sell Stop at 20.70, Stop loss at 22.00, Take profit at 18.00

Copper Sells Off Along With Other Metals – Chinese Support Missing

Copper continued to trade lower on Thursday, heading towards a lower finish for every trading session in the week thus far. Upbeat data from the U.S. services sector boosted the dollar, while holidays in China squeezed liquidity and trading volume in the market.

Copper prices have lost nearly 3% since the start of this week amid thin volume as Chinese markets are closed. The absence of Chinese traders due to the Golden Week holiday left the industrial metal market vulnerable to currency moves. As a result, dollar-denominated commodities including copper have been weighed down by a stronger dollar.

The U.S dollar held on to its strength as expectations over a rate hike this December are getting stronger after a spate of positive reports released recently. Further supporting the case for a rate hike is the rally in oil that started since the informal meeting between OPEC members which brought about an agreement on an output ceiling. A rise in oil prices is expected to help the Federal Reserve to partly solve its concern over U.S inflation, as higher energy prices bring about a trickle down effect through higher prices across the economy.

The Fed delayed its plans on raising rates in September, considering an economy that was growing unevenly, and low consumer prices. The central bank does not expect the personal consumption expenditure index (the bank’s favorite gauge for inflation) to hit the 2% target until 2018. However, given a rise in oil prices that will boost general costs across the economy, U.S inflation is forecast to reach 2.3% next year, the IMF said.

Markets have already turned their attention to the monthly U.S. payrolls report on Friday. The median forecast from economists is calling for an increase of 175,000 in the number of new jobs created in September. Strong jobs data is considered a sign of a strengthening economy, and will cement the case for a rate increase, especially after a spate of positive reports released recently.

One more factor contributing to the strength of the greenback is that U.S stocks ticked lower today. Perceived as a safe haven asset, investors has been flocking into the currency as cautiousness ahead of Friday’s jobs data is holding investment off risky assets.

The general strength in the US dollar coupled with across the board selling in metals including gold and silver has brought about significant weakness in the Copper market. This trend is expected to continue should the NFP data deliver a strong reading tomorrow as rising interest rates are expected to throttle the run-away demand for commodities by increasing the costs of borrowing for industrial and infrastructural projects which are a major source of industrial demand for base metals such as Copper.

COPPER Technical Analysis


Copper has fallen back into the congested trading range that has contained prices during mid-late September. However, the decisive down moves seen recently suggest that prices could break out of this range soon. The support at the 50.0% Fibonacci retracement level looks likely to be retested. As we are close to the weekend and the Chinese market is coming back next week, it is not certain that the price could decisively breach this level. The RSI is also nearing the oversold zone and therefore the market could witness a period of quiet despite the fact that both MA’s are currently placed above the price action.

Trade suggestion
Sell Stop at 2.1440, Take profit at 2.1320, Stop loss at 2.1580

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Daily Report on October 07, 2016

Asian shares fell on Friday after U.S stocks ended flat yesterday as investors act cautiously ahead of the monthly U.S Payrolls Data which will be released later today. Data on the number of new jobs added, the unemployment rate and average hourly earnings are considered as one of the keys to assess the possibility of a Fed interest rate hike at the end of this year.

The MSCI Asia Pacific Index shed 0.4 percent. New Zealand’s S&P/NZX 50 Index slipped to its lowest since July and Hong Kong’s Hang Seng Index retreated from four-week highs. The British Pound was on the path to recovery following a collapse in early Asian trade. Sterling plunged to around $1.20000 after French President Francois Hollande stated that the U.K had to suffer the consequences of a departure from the single market, otherwise, other countries would follow Britain and attempt to leave the EU.

Explaining the freefall in the market, traders supposed that it was largely due to computer-driven orders that triggered and exacerbated the plunge, especially when the market was in a period of low liquidity. No matter what the cause, sterling recorded the biggest loss among major currencies versus the U.S dollar and the steepest one-day decline since the June referendum.

Besides the closely watched jobs data, a number of Fed officials including Cleveland Fed President Loretta Mester and Fed Vice Chairman Stanley Fischer are scheduled to speak later today. The second presidential debate between Hillary Clinton and Donald Trump will take place on Sunday. The US markets shall be closed on account of the Columbus Day holiday on Monday.

Technicals

EURCAD

Fig: EURCAD H4 Technical Chart

EURCAD has been on a steady decline after consistently failed attempts to breach the key resistance at 1.48000. The pair may continue to slide deeper as the RSI is pointing downwards to the oversold zone. The short-term MA20 has just crossed the long-term MA50 from above further consolidating the downtrend towards the 23.6% retracement level. The price action broke through both the MA's from above previously and both MA's are now placed above the price action.

Trade suggestion

Sell Stop at 1.47100, Take profit at 1.46650, Stop loss at 1.47200

EURUSD

Fig: EURUSD D1 Technical Chart

EURUSD is about to break out of the shrinking trading range within which it has been stuck for five months. The pair is likely to make a breakout to the downside and could be headed towards the 50.0% retracement level at 1.10572. With the short-term MA20 converging with the long-term MA50 from north to south, and the RSI falling to as low as 37.45, the downtrend is confirmed.

Trade suggestion

Sell Stop at 1.11100, Take profit at 1.10600, Stop loss at 1.11400

USDJPY

Fig: USDJPY H4 Technical Chart

USDJPY has neared the last cycle’s high at 104.300 and may form a double bottom pattern if the pair can surpass this level. The uptrend has been supported strongly as the price action has crossed through both the MA's from below, while the RSI index has soared as high as 64.59. The next key resistance to test is the 23.6% retracement level.

Trade suggestion

Buy Stop at 104.100, Take profit at 105.000, Stop loss at 103.000

SILVER

Fig: SILVER D1 Technical Chart

Silver is set to post the biggest one-week loss since April 2003. From near the 23.6% Fibonacci retracement level, the metal has consistently broken through two more major supports at the 38.2% and 50.0% levels, and has consequently fallen into the oversold territory. Silver is expected to trade in a thin range before being affected by the fundamental side. In case of an overwhelming bearish force, the metal may hit the 61.8% support level. The RSI and the ADX are both indicating a sideways to lower move for the moment.

Trade suggestion

Sell Stop at 17.100, Take profit at 16.600, Stop loss at 17.600

WTI

Fig: WTI D1 Technical Chart

WTI crude prices have surged more than 17% since it rebounded from the support at 43.00. The rally has brought the commodity near the overbought zone and the price is attempting to retest the resistance at 51.65, which is also the highest since July 2015. The ADX has soared to a reading of 40.76, suggesting a strong uptrend. The RSI is near the overbought zone but not quite there yet suggesting room for some further up-moves.

Trade suggestion

Buy Stop at 50.60, Take profit at 51.60, Stop loss at 49.40

SP500

Fig: SP500 H4 Technical Chart

The SP500 has been trading sideways within a narrowing range. As can been from the ADX chart where the index has retreated to as low as 13.91, no clear trend is being formed in the market. The RSI is swinging back and forth around the 50 line, suggesting consistent whipsaw action in the price moves. With the job data coming out later today, the index can break out in either direction.

Trade suggestion

Sell Stop at 2148.50, Take profit at 2126.65, Stop loss at 2163.00

GBP/AUD signal by Capital Street FX

From GMT 09:25 07/10/2016
Till GMT 21:00 07/10/2016

Sell at 1.62650
Take profit at 1.60000
Stop loss at 1.64700

SP500 Falls After Non-Farm Report as December Rate Hike Remains On Course

SP500 index tumbled on Friday after the September jobs data proved that the U.S economy is strong enough for a rate hike by the end of this year, even though the results were not as good as expected.

According the Labor Department, there were 156,000 jobs added in September, with unemployment rate rising to 5% from 4.9% as more Americans entered the labour market looking for work.

Commenting on the non-farm report, Cleveland Federal Reserve President Loretta Mester said that the economy is at full employment and therefore gradual rate hikes are needed.

With the same point of view as Cleveland Fed President Mester, Federal Reserve Vice Chairman Stanley Fischer said that the result was strong enough to reflect an economy that is moving ahead but not too fast to pose risks.

At the time of writing, 10 out of 11 sectors of the SP500 index were trading in the red. Industrials and Materials sectors led the decline, dropping 1.48% and 1.97%, respectively.

Trade suggestion
Sell Stop at 2147.00, Stop loss at 2152.00, Take profit at 2140.00

Supported by Crashing GBP, FTSE Stable Above 7000.00 – Traders May Consider Buying

The U.K’s FTSE 100 swung between gains and losses in early European trading hours as the Sterling remained weak after a flash crash in early Asian trade. In a rather odd turn of events, a plunge in the British Pound has supported the FTSE in staying above the 7000.00 level since Tuesday.

The Cable was in a freefall at the start of the Asian session. Fears over potentially tough negotiations between the U.K and the European Union on the departure of the UK from the EU, triggered the selloff as automated sell stop orders were hit in a thin market. Sterling consequently plunged to around $1.20000 before bouncing back to around $1.24771 from where the currency again reversed lower and resumed its move downwards.

A weak pound is typically considered to be beneficial to the FTSE 100 index as many of its constituents generate a large part of their revenues abroad. A fall in the value of the pound against other major currencies means overseas revenues are worth more when they are converted back into sterling.

With most of their revenues generated in U.S dollars, mining companies were among the biggest gainers on the London Stock Exchange, on Friday. At the time of writing, Anglo American rose 2.76%, BHP Billiton PLC added 2.8%, and Rio Tinto PLC gained 2.02%. Also leading the way higher in London, Glencore Plc added 2.33%, gold miner Randgold Resources climbed 2.9% while shares of Mexico-based precious metals mining company Fresnillo PLC jumped 2.79%.
HSBC Holdings PLC also helped the FTSE higher with shares putting on 2.35%. Most of the HSBC group’s business is located outside the U.K. With a major part of its operations also based in the U.S, the bank stands to benefit from a financial environment of rising interest rates in the US.

While exporters have benefited from the fall in sterling, importers’ stocks fell off as their costs will be burdened by the exchange rate. EasyJet shares lost 4.71% so far, extending its losses from Thursday’s session when the stock was down by 6.9%. The airline said on Thursday that its full-year profit would drop as much as 29% due to terrorist attacks that slowed bookings and a plunging Sterling. Shares of International Consolidated Airlines Group PLC, parent of British Airways, also fell 3.0%.

Markets are now focusing on the monthly U.S Payrolls Data which will be released later today. Data on the number of new jobs added, the unemployment rate and average hourly earnings are considered as one of the keys to assess the possibility of a Fed interest rate hike at the end of this year. A strong report will boost the U.S dollar and further dampen the Sterling which will in turn support the FTSE index.

Technicals Analysis


Since the day the index surpassed the 7000.00 threshold, FTSE has traded in a thin range between this major level, which has turned into a firm support, and the resistance around 7122.00. Recent swings in the price have prevented the market back from entering the overbought range as two way trading has helped stabilize indicators. The two MAs are still placed below the price action, thereby consolidating the up moves.

Trade suggestion
Buy Stop at 7070.00, Stop loss at 6990.00, take profit at 7120.00

Daily Report on October 10, 2016

Asian stocks were almost unchanged on Monday after the second U.S presidential debate between Hilary Clinton and Donald Trump. Financial markets continue to retain their view that Democrat Clinton holds an edge going into presidential election against her Republican rival. With major Asian markets including Tokyo, Hong Kong and Taiwan closed on Monday on account of local holidays, the MSCI Asia Pacific index gained less than 0.1%.

Chinese stocks rallied in the first session after a-week-long break, as the local currency dipped to a six-year low against the U.S dollar. The Chinese Yuan sold off on the back of the central bank's announcement last week that the country’s foreign exchange reserves dropped more than expected in September. This drop in reserves marked a decline for the third month in a row and once again rang alarm bells over capital outflows from the world's second-largest economy.
Downward pressure on the yuan also rose because the U.S. dollar has continued to strengthen on the back of labor market data that has been officially stated by some Fed officials to be strong enough to support a possible U.S. interest rate hike later this year. The US market is also closed on account of the Columbus Day holiday today.

Oil prices are paring early losses stemming from a statement by Russia's Energy Minister Alexander Novak. Minister Novak expressed his belief in a potential deal this November when OPEC and non-OPEC oil producers gather to discuss details over a new output ceiling, but stated that he was not expecting to reach an agreement with OPEC at the World Energy Conference, which is being held from October 9th to 13th this week in Istanbul.

Elsewhere, USDJPY reversed lower following a gap up on the market open on Monday. Speaking on Saturday, Bank of Japan Governor Haruhiko Kuroda stated that the central bank “will not hesitate” on monetary easing if necessary, but based on the moderate recovery witnessed recently, which has been supported by hefty fiscal stimulus, further easing is not warranted for the time being.

Technicals
USDCHF

Fig: USDCHF H4 Technical Chart
USDCHF has trimmed some of the losses from the slide on Friday and looks to be resuming the uptrend and getting back to trade above the 38.2% retracement level at 0.97800. The short-term MA20 continues to play an important role in containing the price fall and forcing the price action to reverse higher. With the RSI index bouncing back from the 50 line, we can observe that the market was restrained from entering into bearish territory. The market is likely to attempt a test of the resistance at 0.98170.
Trade suggestion
Buy Stop at 0.97900, Take profit at 0.98170, Stop loss at 0.97650

EURJPY

Fig: EURJPY H4 Technical Chart
EURJPY failed to breach the resistance at 116.000, the same level that had prevented the price from surging higher in the first half of September. The price action has penetrated the 20-peiod moving average from above, signaling a reversal into a downtrend. The RSI index has moved past the 50 threshold but we would need the index to fall deeper to confirm the downside as the index is currently swinging back and forth around the average line.
Trade suggestion
Sell Stop at 115.000, Take profit at 114.650, Stop loss at 115.450

AUDUSD

Fig: AUDUSD H4 Technical Chart
The Aussie has pulled back from the resistance at 23.6% level, which has turned into a new zone of resistance after the market fell through this zone towards the end of last week. This zone has served as a firm zone of support through September and therefore the breach becomes significant. The market opened with a gap up today, but gave up the gains in early Asian trade and fell back below the MA20. With downward pressure exerted by the two MAs placed above the price action and bearish sentiment visible in the RSI as well, the pair AUDUSD is expected to extend the down moves.
Trade suggestion
Sell Stop at 0.75850, Take profit at 0.75550, Stop loss at 0.76170

GOLD

Fig: GOLD H1 Technical Chart
Gold rose back above the 38.2% retracement level at 1249.91 after dropping below this level for the first time since late-May. As can be seen on the H1 chart, the short-term MA20 has converged with the long-term MA50 from below, indicating an upmove. Other indicators are also confirming the current up-move. While RSI has soared to 59.64, ADX is surging higher in the wake of the widening distance between the +DI line and the –DI line.
Trade suggestion
Buy Stop at 1265.00, Take profit at 1275.00, Stop loss at 1255.00

BRENT

Fig: BRENT H1 Technical Chart
Brent crude has been moving within a range between 51.30 and 52.00. The price action created a gap down on the opening today, but is paring earlier losses. A sharp down move on Friday pushed the market below the moving averages. However, considering the Stochastic chart where the %K line has crossed the %D line from below and is running ahead of the %D line, Brent may attempt a test of the upper boundary of the range at 52.00
Trade suggestion
Buy Stop at 51.60, Take profit at 52.00, Stop loss at 51.20

EURO50

Fig: Euro Stoxx 50 H4 Technical Chart
From the price chart, we can see a rebound in the Euro Stoxx 50 from the 38.2% Fibonacci level at 2996.36. The market is struggling with the 50-period moving average and is likely to break through this resistance level as the %K line has crossed over the %D line from below, which indicates a potential up-move coming up.
Trade suggestion
Buy Stop at 3010.00, Take profit at 3040.00, Stop loss at 2985.00

NZD/USD signal by Capital Street FX

From GMT 07:15 10/10/2016
Till GMT 21:00 10/10/2016

Sell at0.71400
Take profit at0.71080
Stop loss at0.71700

Earnings Season Kickstarts In The U.S – Second Clinton-Trump Debate In The Spotlight

U.S stocks closed lower on Friday as a weaker-than-expected jobs report failed to wipe out expectations of a rate hike by the Federal Reserve before the end of the year. The Dow Jones slipped by 0.15 percent, to 18,240.49, the SP500 lost 0.33 percent, to 2,153.74 and the Nasdaq Composite fell 0.27 percent, to 5,292.41. All three benchmark indexes registered the first weekly drop after three consecutive weeks of gains.

According to the Labor Department’s NFP report released on Friday, there were 156,000 jobs added in the US in September. This result was not only lower than market expectations for 172,000 new jobs added in September, but also indicated a trend towards decreasing numbers over the last four months. The unemployment rate rose to 5% from 4.9% as more Americans entered the labor market looking for work. The number of workers in the labor force surged by 444,000 last month.

Commenting on the jobs report, Cleveland Federal Reserve President Loretta Mester said that the economy is at full employment and therefore gradual rate hikes are needed. Echoing the same point of view as Cleveland Fed President Mester, Federal Reserve Vice Chairman Stanley Fischer also stated on Friday that the result was strong enough to reflect an economy that is moving ahead but not too fast to pose risks.

Prior to Friday’s Non-farm Payrolls, most of the U.S economic data released earlier in the week posted much-better-than-expected results. Institute for Supply Management (ISM) said on Monday that the purchasing managers’ index for the manufacturing sector rose to 51.5 in September from 49.4 the prior month. The reading pointed to an expansion last month after shrinking in August.

In a separate report on Wednesday, the ISM’s services index was also reported to shoot up to the highest reading in 11 months at 57.1 in September from 51.4 in August. Data on the country’s new orders for factory goods, which was also released on Wednesday by the Commerce Department added further evidence of a healthy US economy. Orders for manufactured goods rose 0.2 percent in August after a downward revision to the July data, suggesting that the manufacturing sector is gradually regaining some steam.

The greenback will remain in focus in the week ahead. The FOMC minutes from the Fed’s September meeting are scheduled to be released on Wednesday. U.S. retail sales and University of Michigan Consumer Sentiment index are also on the calendar, and due to be released on Friday. Furthermore, U.S. policymakers including FED President Janet Yellen and FOMC Vice Chairman William Dudley are scheduled to speak in the coming week. The main focus will be on Yellen – who is scheduled to speak at the Boston Annual Research Conference on Friday.

Another major source of market guidance for the next four weeks until November 8th, shall be the US quarterly earnings season. This earnings season becomes even more critical given that it is coinciding with the final leg of the US presidential election season. A batch of big names including Alcoa, Citigroup and JPMorgan Chase report results in the coming week. Prior to the release of these earnings reports, the second 90-minute-long presidential debate between Democrat Hillary Clinton and Republican Donald Trump will take place at 9 pm Eastern shall become the focus of attention on Sunday night.

GBPUSD

Over in the UK, the Sterling plunged to around $1.20000 in early Asian trade on Friday after French President Francois Hollande stated that the U.K had to suffer the consequences of a departure from the single market, otherwise, other countries would follow Britain and attempt to leave the EU.
Explaining the free-fall in the market, traders supposed that it was largely due to computer-driven orders that triggered and exacerbated the plunge, especially when the market was in a period of low liquidity. No matter what the cause, sterling recorded the biggest weekly loss versus the U.S dollar, among major currencies, and the steepest one-day decline since the June referendum.

The British Pound had continued to tick lower since the start of last week, following comments by Prime Minister Theresa May that she would begin the two-year period of exit negotiations by the end of March. A fall in the Cable boosted U.K’s FTSE 100 index to surpass the 7000.00 threshold as a weaker currency tends to support exporters which account for a large part of the index.

Under downward pressure from the uncertainty tied to the departure of the U.K from the European Union, the Pound could not find support from encouraging economic data that reflected an expansion in all three core sectors – manufacturing, construction and services. Economists claimed that consequences of the hard “exit” are yet to come, as the U.K is expected to experience a tough negotiation process with the EU vis-a-vis its departure from the bloc. In the week ahead, there is no important data on the U.K economy that could cause any significant data driven moves in the GBP.

EURUSD

Out on the mainland, the Euro ended higher against the dollar on Friday, but finished the week in the red. Bloomberg reported on Tuesday that the ECB will probably gradually taper down the asset-buying program before the conclusion of its quantitative easing program. That triggered a jump in EURUSD but the effect did not last long as the European Central Bank President Mario Draghi was quick to deny the statement. Draghi said that there had not been such discussion within the ECB. The next policy meeting of the ECB is scheduled to be held on September 20th.

German ZEW Economic Sentiment for October is the highlight of the upcoming week. Economists expect a rebound to 4.2 point after three months in a row that the number has disappointed markets.

USDCAD

Moving onto Canada, the USDCAD rose strongly in the past week despite rising oil prices and strong Canadian jobs data. According to Statistics Canada, more than 67k jobs were created in September, the largest increase since April 2012. The unemployment rate was unchanged at 7.0%, as more people participated in the labor market, boosting the participation rate to 65.7%.

As stated by the Richard Ivey School of Business’s report, manufacturing activity also accelerated with the IVEY PMI index jumping to 58.4 from 52.3, the highest level since January. Considering these reports, the weakness in the Canadian dollar is considered to have resulted partly from the fall in oil prices on Friday, but was mostly due to the strength of the U.S dollar even after the weaker than expected payrolls report. With no Canadian economic reports scheduled for release next week, CAD flows will dictated by oil.

AUDUSD

Out in Australia, The RBA, led by new Governor Philip Lowe, maintained the benchmark rate at an unchanged level, at a record-low of 1.5 percent at its monetary policy meeting in the early part of last week. The bank cited an unexpected rebound in commodity prices as a boost to the economy, helping it grow at an above-average pace. Additionally, the housing boom in Australia is an area of rising concern and the real estate sector is in a situation that may not be suitable for further cuts, especially when the unemployment rate is falling and international trading conditions are favorable for Australia.

Next week is expected to be a quiet one for the AUD as there is no important data release scheduled, except the NAB Business Confidence Index on Tuesday. AUD/USD will be taking its cue from general risk appetite and the moves in the U.S dollar, as well as an increase in trading volumes as the Chinese markets reopen after a week of holiday. China’s trade balance will be out on Thursday and may have a significant impact on the AUD – given the size and significance of China-Australia trade flows.

NZDUSD

To round up on the markets, the New Zealand dollar reversed lower in the past week, as stumbling dairy prices added pressure on the commodity dependent currency. Composite Dairy Prices fell for the first time since July at the Global Dairy Trade auction on Wednesday. The GDT price index declined by 3 percent to US$2,880, down from US$2,975 at the previous auction two weeks ago. In the coming week, the New Zealand Business manufacturing index is scheduled for release on Thursday. NZD/USD is currently forecast to remain under downward pressure.

Nasdaq 100 Hits New Peak – Mylan And Crude Oil Power Market – Buying Looks Promising

In an interesting and rare coincidence today, U.S Presidential Candidate Hillary Clinton and Incumbent Russian President Vladimir Putin came together to support Wall Street higher. U.S stocks including Nasdaq 100 index registered gains today as bulls were powered by the rally in oil prices and brightening prospects of Hillary Clinton becoming the 45th president of the U.S.

Crude prices took off after president Putin, delivered a speech at the energy conference in Istanbul, pledging Russia’s participation in international efforts to limit oil production to stabilize the market and prop up prices.

The Nasdaq 100 index recorded a new record high at 4905.17, led by a 9% increase in Mylan N.V shares. The pharmaceuticals company stated that its subsidiary Mylan Inc. had reached a $465 million settlement with the Justice Department and other government agencies in the case related to its mis-classification and mis-pricing of anti-allergy treatment EpiPen.
Advancing issues outnumbered declining issues by 70 to 30. Maxim Integrated Products Inc topped the list of worst performers, losing over 3%.

Trade suggestion
Buy Stop at 4897.50, Take profit at 4907.00, Stop loss at 4885.00
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Natural Gas Corrects After Last Week’s Powerful Rally – Whats Next?

Natural gas tumbled on Monday on profit taking by traders, after NG reached the highest levels since June 2015. Supported by news from the demand side, natural gas closed higher in every single session last week and rallied over 12%.

Bullish sentiment was partly buoyed by weather forecasts that have predicted unseasonably warm weather in most parts of the U.S from October 12th to 21st, which is anticipated to increase air-conditioning usage and boost natural gas demand for power generation as a result.

The U.S Energy Information Administration on Thursday reported that net supplies of the commodity added 80 billion cubic feet (bcf) for the week ended September 30th, topping analysts’ forecasts for a rise of 69 bcf. Total natural gas stocks in storage rose to 3.68 trillion cubic feet (Tcf), up 74 bcf from a year ago and 205 bcf above the five-year average.

Another possible factor behind the recent rise rise in natural gas can be found in the report from the World Energy Council which has forecast that global per capita demand for energy would continue rising and peak in 2030. The findings are part of a larger report on energy production and consumption, which was released ahead of the 23rd World Energy Congress in Istanbul. The report predicts that technological innovation and government policies will have a significant impact on the demand for energy including transport fuels, heating and electricity.

In a separate report by the U.S EIA, natural gas production and consumption in the U.S were reported to have increased in 2015. According to the EIA’s 2015 Natural Gas Annual Report, the market for natural gas continues to grow as the U.S. currently produces and consumes more gas than ever before.
Domestic production reached 27.1 Tcf, a 4.5 percent increase above 2014 levels, while total demand increased 2.8 percent to 25.1 Tcf in 2015. Net imports also continued their steady downward trend as higher imports were offset by higher exports, the report said.

Another factor contributing to the short term pull-back in natural gas today can be attributed to Hurricane Matthew. The category-1 hurricane had been expected to cause massive disruptions to the areas under its coverage with potential effects on Natural Gas production, supply and transportation, helping push natural gas futures up on Friday, before the hurricane made landfall in the US, over the weekend. The hurricane did cause significant power outages which reduced demand by power plants for NG. However, the damage caused was significantly lower than expected and the supply side seems to bee unaffected for the most part. The markets have subsequently cooled off somewhat.

Natural Gas Technical Analysis

As can be observed from the daily chart, natural gas prices pulled back after failing to break out of the 38.2% retracement on Friday. Bullish sentiment that fueled the commodity for five trading days in a row pushed the market into the overbought zone and sellers stepped in to cool the market, as indicated in the stochastic chart. The %D line and the %K lines have caught up with each other and whether the market corrects much further from here or continues the up-move after a brief correction remains to be seen. With the two MAs placed below the price action, currently prices are expected to re-attempt a test of the 38.2% resistance at the 3.210 level.

Trade suggestion
Buy Stop at 3.210, Take profit at 3.330, Stop loss at 3.000

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Daily Report on October 11, 2016

Having rallied sharply on Monday, crude price went sideways in the morning session of Asian trade. Brent crude price hit one-year high at $53.72 per barrel, while U.S light, sweet crude WTI re-attempted the highest in six months at $51.58 per barrel. The rally came from comments from top leaders of Saudi Arabia and Russia, who reinforced the possibility of a global deal to curb production being reached in the next OPEC’s formal meeting in November.

However, Goldman Sachs, in a note to clients dated October 10th, supposed that the oil market is not likely to re-balance in 2017, even OPEC and other oil exporters can unleash an agreement to freeze or cut output. It is not only because any reduction will not be deep enough to trim the currently global surplus, but also since higher prices would allow U.S. shale drillers to raise output.
Moving on to China, Premier Li Keqiang said on Tuesday that Chinese economy had shown positive changes in last quarter, and the country's debt risks have been under control. Li also claimed that the world’s second largest economy is fully capable of maintaining medium- to high-speed growth and the government will take action to stabilize the property market.

Commenting on the case of the U.S Federal Reserve to raise rate in December, Fed Chicago President Charles Evans said on Tuesday he "could be fine", but he would prefer to see more evidences of the economy and especially inflation making progress before deciding. Evans said last Friday's non-farm payrolls report was a "pretty good number", which indicated the U.S. economy was on a solid footing, therefore, a hike in December would not be a surprise.

Technicals
EURCHF

Fig: EURCHF H4 technical chart
EURCHF has generally been on a steady rally as the pair has been supported by two moving averages placed below the price action. As can be observed from the price chart, since the start of this month, the pair has never dropped below the lower dynamic support which is the long-term MA50. The market remains in the bullish zone with RSI once again rebounding from the 50-line. The target at 61.8% level is within the sight.
Trade suggestion
Buy Stop at 1.09500, Take profit at 1.09775, Stop loss at 1.09300

USDCAD

Fig: USDCAD H4 technical chart
USDCAD has just pulled back from the upwards slopping trend line that has connecting higher lows since September 07th. The pair peek out of the support yesterday but failed to sustain the bearish momentum. The U.S dollar is anticipated to surge back above the two moving averages. As can be seen from the stochastic chart, the % K line penetrating the %D line from below has consolidated the upside.
Trade suggestion
Buy Stop at 1.32000, Take profit at 1.32310, Stop loss at 1.31750

USDCHF

Fig: USDCHF H4 technical chart
For the third time of this month, USDCHF surpassed the resistance at 0.98170. The currency pair had to give up its rally and reversed downwards back below this level two times before as market had been close or in the oversold territory. This time, even the U.S dollar has already made a breakout, RSI index has only surged to 65.44, which indicated that there is more room for the pair to soar higher. Higher lows and higher highs also reflects stronger bulls, not to mention the divergence between +DI and –DI lines of the ADX chart.
Trade suggestion
Buy Stop at 0.98400, Take profit at 0.98840, Stop loss at 0.98000

SILVER

Fig: SILVER H4 technical chart
Silver has been trading under indecisive mood following some corrective moves last Friday. Silver market has escaped from the overbought zone but is still in favor of sellers, as indicated by the RSI chart. The grey metal is expected to return to the downtrend as it remains challenging for silver price action to cross over the short-term MA20.
Trade suggestion
Sell Stop at 17.600, Take profit at 17.400, Stop loss at 17.800

COPPER

Fig: COPPER H4 technical chart
Copper has fell into a consolidation after soaring strongly since last Friday. Recent candles that showed short bodies suggested an equal force between buyers and sellers. However, bulls are expected to regain strength to boost price higher. Not only does RSI remain above 50 but the large gap between +DI and –DI line suggest upbeat moves.
Trade suggestion
Buy Stop at 2.1980, Take profit at 2.2150, Stop loss at 2.1845

DOW JONES

Fig: DOW JONES H4 technical chart
For the last month, U.S Dow Jones index has been moving in a shrinking range with lower highs and higher lows. The index breached the upper boundary yesterday but could not go far from the down trend line and eventually fell back into the range. As consolidated by stochastic indicator with %K line crossed over the %D line southwards, Dow Jones may fall further.
Trade suggestion
Sell Stop at 18.29500, Take profit at 18.20000, Stop loss at 18.40000

GBP/JPY signal by Capital Street FX

From GMT 07:45 11/10/2016
Till GMT 21:00 11/10/2016

Sell at 127.950
Take profit at 126.800
Stop loss at 129.000