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Forex News Timeline

Friday, November 24, 2017

Livesquawk reported the overnight headlines published in the German tabloid, Bild, the Green Party calls for Germany’s Merkel to forge a coalition wit

Livesquawk reported the overnight headlines published in the German tabloid, Bild, the Green Party calls for Germany’s Merkel to forge a coalition with SPD (Social Democrats).

The EUR/USD pair extended its overnight range-trade around the midpoint of 1.18 handle into Asia this Friday, as a lack of fresh drivers combined with

Stronger Euro area PMIs underpin. DXY in Thanksgiving resting. German Ifo surveys in focus. The EUR/USD pair extended its overnight range-trade around the midpoint of 1.18 handle into Asia this Friday, as a lack of fresh drivers combined with holiday-thinned trading now leaves the rates at the mercy of the German Ifo business surveys for some fresh trading impetus.EUR/USD: Risk remains to the upsideThe spot continues to hover near the weekly tops of 1.1856 and remains on track to book the third straight weekly gain, as the sentiment remains underpinned by the expectations of stronger economic growth prospects, especially after the Euro area manufacturing sector activity reports surprised the markets to the upside. Germany Markit Manufacturing PMI above expectations (60.4) in November: Actual (62.5) France Markit Manufacturing PMI above expectations (55.9) in November: Actual (57.5) Moreover, upbeat remarks from the ECB Governing Council member Villeroy, citing that, ‘Eurozone recovery robust and broad-based’, remains supportive of the EUR upmove. Also, markets paid little attention to the ECB monetary policy minutes, as broad-based US dollar weakness remained the main theme amid Fed’s cautious view on the US inflation and a holiday-shortened week. Meanwhile, the political developments surrounding Germany kept a lid on the common currency, leaving the EUR/USD pair largely flat-lined. Later today, all eyes remain on the German Ifo business climate surveys, as the pair is expected to extend its wobble amid slowing volumes on Thanksgiving holiday-break.EUR/USD Technical LevelsValeria Bednarik, Chief Analyst at FXStreet, explained: “in the 4 hours chart, the price is well above a now bullish 20 SMA, as the Momentum maintains its bullish slope near overbought readings, and the RSI consolidates around 68. Furthermore, the pair is holding above the key 1.1790 level, the 23.6% retracement of the latest bullish run. The pair has a strong resistance at 1.1890, where selling interest capped the advance for most of October. Beyond it, and approach to the 1.2000 thresholds becomes more than likely. Support levels: 1.1830 1.1790 1.1745. Resistance levels: 1.1860 1.1890 1.1925.”

EUR/JPY defended the 100-day MA support yesterday for the second time this week, but the bullish move appears to have weakened near 132.00 levels in A

EUR/JPY remains bid but stays below 132.00. 10Y German-Japan yield spread narrows in EUR negative manner. EUR/JPY defended the 100-day MA support yesterday for the second time this week, but the bullish move appears to have weakened near 132.00 levels in Asian session today. As of writing, the EUR/JPY pair is trading around 131.88 levels. The cross clocked a high of 131.97 earlier today. Capping the gains could be the German-Japanese 10-year yield spread which has narrowed to 31.5 basis points; its lowest level since Nov. 8.Focus on German IFO readingsThe IFO readings will indicate whether the political uncertainty in Germany is having a negative impact on the business climate in the Eurozone's strongest economy. A weaker-than-expected reading could push the cross back to 100-day MA level of 131.33.EUR/JPY Technical LevelsA break below 131.33 (100-day MA) would open up downside towards 130.60 (Sep. 15 low) and 130.40 (Aug. 16 high). On the other hand, a move above 132.00 (zero levels) would expose 132.39 (10-day MA) and 132.67 (50-day MA).  

The results of a consumer confidence index conducted by the polling firm YouGov and the Centre for Economics and Business Research (Cebr), a consultan

The results of a consumer confidence index conducted by the polling firm YouGov and the Centre for Economics and Business Research (Cebr), a consultancy, showed on Friday, the confidence levels in the British households have been the weakest since immediately after last year’s Brexit vote. The survey was conducted between Nov. 1 and Nov. 21 and was based on responses from 5,673 people.Key Findings (via Reuters):A consumer confidence index sank to 106.6 in November, down sharply from 109.3 in October. It was the first fall since June although it remained above the 100 level above which consumers are considered to be feeling confident. All eight of the index’s underlying measures weakened and a score for household finances over the past 30 days sank to its lowest level since January 2014. Christian Jaccarini, an economist at Cebr, noted: “With these economic headwinds set to persist, and the OBR forecasting weaker growth, households are understandably worried,” Jaccarini said, referring to a sharp cut to Britain’s economic growth outlook by the Office for Budget Responsibility, the government’s fiscal watchdog, on Wednesday.

The US-based ratings agency, Fitch ratings, is out with its latest review on the Chinese banking system, with the key points (via Reuters) found below

The US-based ratings agency, Fitch ratings, is out with its latest review on the Chinese banking system, with the key points (via Reuters) found below. Chinese banks face continued regulatory scrutiny in 2018. ‍Tight regulations on shadow, interbank activities consuming more bank capital & create drag on profitability in China. Says ‍shadow and interbank activities will continue to face greater regulatory scrutiny in 2018 in China. The rating outlook for Chinese banks remains stable. Low internal capital generation amid high rwa growth could push down capitalisation in China.

For the week, the Chinese central bank (PBOC) injected a net of CNY 150bn via Open Market Operations (OMOs) versus net CNY 810bn injection seen in t

For the week, the Chinese central bank (PBOC) injected a net of CNY 150bn via Open Market Operations (OMOs) versus net CNY 810bn injection seen in the previous week. Meanwhile, PBOC set the Yuan reference rate at 6.5810 versus 6.6021 previous.

Japanese Finance Minister Taro Aso was on the wires earlier today, via Reuters, noting that the supplementary budget will invest in infrastructure. H

Japanese Finance Minister Taro Aso was on the wires earlier today, via Reuters, noting that the supplementary budget will invest in infrastructure. His comments came after Sankei, Japanese daily, reported that the Japanese government is considering an extra budget amount of 2.2 to 2.3 tln yen, which is likely to be approved at the Dec 22 Cabinet meeting.

Reuters report says the Bank of Japan (BOJ) decreased purchases of 25-40 year Japanese Government Bonds (JGBs) to JPY 90 billion from JPY 100 billion

Reuters report says the Bank of Japan (BOJ) decreased purchases of 25-40 year Japanese Government Bonds (JGBs) to JPY 90 billion from JPY 100 billion previously.

The People's Bank of China (PBOC) sets the Yuan reference rate at 6.5810 vs. previous day's fix of 6.6021. 

The People's Bank of China (PBOC) sets the Yuan reference rate at 6.5810 vs. previous day's fix of 6.6021. 

Japanese manufacturing activity expanded at the fastest pace in more than three years in November, a preliminary survey showed today.  Key points (so

Japanese manufacturing activity expanded at the fastest pace in more than three years in November, a preliminary survey showed today. Key points (source - Reuters)Markit/Nikkei Japan Manufacturing flash Purchasing Managers Index (PMI) rose to 53.8 in November on a seasonally adjusted basis from a final reading of 52.8 in October. (fastest since March 2014).  The index for new export orders rose to 54.5 from a final 52.3 in the previous month to reach the highest since December 2013. The index for total new domestic and export orders jumped to the highest since March 2014. Input prices rose at a much faster pace than October, but sellers were above to pass only a small portion of the cost to consumers.   

The three-day winning streak in the Aussie ran out of steam at the resistance offered by the trendline sloping lower from the Sep. 20 high and Oct. 20

AUD/USD upside capped by descending trendline hurdle. 10Y AU-US yield differential continues to narrow in the AUD negative manner. The three-day winning streak in the Aussie ran out of steam at the resistance offered by the trendline sloping lower from the Sep. 20 high and Oct. 20 high. As of writing, the spot is trading largely unchanged on the day at 0.7620. The pair tested and failed to take out the trendline hurdle of 0.7632 earlier today. The rejection at the key trendline hurdle could be associated with the narrowing of the 10-year AU-US yield spread to a 5-month low of 17.6 basis points. The narrowing yield differential is hurting the appeal of the Aussie dollar as a high yielding currency.Yield differential AUD/USD Technical OutlookJim Langlands from FX Charts writes, "with the 4 hour/daily momentum indicators looking increasingly positive, a test of the H/S neckline formation at 0.7660 would not surprise, above which would find further sellers at the 13 Nov high of 0.7665. Beyond this would then allow a run towards 0.7675/80 and possibly 0.7695/0.7700." "The downside will again find minor support at 0.7590/0.7600 and then at 0.7565 and 0.7550 ahead of the stronger 0.7530/35, area, which will continue to be strong, but below which would target Fibo support at around 0.7515. A break of this would then look towards 0.7485 and 0.7460/70 (Rising trend support) albeit this is some way off."

USD/JPY is quiet, although catching some interest in the Tokyo open after consolidating its recent rally to fresh two month highs at levels last seen

Watch sell stops below 111 handle. Spreads appear somewhat vulnerable.USD/JPY is quiet, although catching some interest in the Tokyo open after consolidating its recent rally to fresh two month highs at levels last seen in mid-September this week. Currently, USD/JPY is trading at 111.33, up 0.16% on the day, having posted a daily high at 111.38 and low at 111.14. Elsewhere, as the market is becoming more focused on the possibility of BOJ normalisation, policymakers’ comments will be important for JPY in the near term, explained analysts at Nomura who added, "there will be many BOJ board members’ speeches scheduled over the next two weeks."  US Pres. Trump promises “big, beautiful fat tax cuts" in his Thanksgiving message"Spreads appear somewhat vulnerable in the aftermath of Wednesday’s Fed minutes, as market participants consider the outlook relative central bank policy. The domestic risk is limited ahead of next week’s retail sales, and risk reversals are suggestive of a modest rise in the premium for protection against near-term JPY strength," explained analysts at Scotiabank.USD/JPY levelsMeanwhile, the technicals are bullish on the near term sticks but vs the broader tone, its hard to a see a considerable recovery beyond the daily 100 and 200 SMAs at 111.60 until a bullish catalyst revives the greenback.  To the downside, there will not be enough impetus to push below 111 either, but if there is a break, sell stops between 110.40/70 would be a risk for a breakdown to 109.55 as the mid-September low. 

Japan Nikkei Manufacturing PMI above forecasts (52.6) in November: Actual (53.8)

Analysts at Nomura offered their model projection for today's USD/CNY fix. Key Quotes: "Model1 projects the fix to be 221 pips lower than the previo

Analysts at Nomura offered their model projection for today's USD/CNY fix.Key Quotes:"Model1 projects the fix to be 221 pips lower than the previous fix (6.5800 from 6.6021) and 23 pips lower than the previous official spot USD/CNY close of 6.5823. The basket implied change is 27 pips lower than the previous official spot USD/CNY close (6.5796 from 6.5823)."

A BBC report says Chancellor Philip Hammond hopes to prove the bleak economic forecasts released in his Budget wrong. Hammond added that clarity aroun

A BBC report says Chancellor Philip Hammond hopes to prove the bleak economic forecasts released in his Budget wrong. Hammond added that clarity around Brexit would increase consumer confidence and boost the economic growth.  The Office for Budget Responsibility slashed its 2017 growth forecast from 2% to 1.5%.

Japan Foreign bond investment up to ¥231.3B in November 17 from previous ¥-105B

Japan Foreign investment in Japan stocks: ¥-324.5B (November 17) vs previous ¥182.4B

Analysts at Nomura explained that this week’s UK Budget was big and bold. Key Quotes: "The Chancellor decided to spend rather than save this year’s

Analysts at Nomura explained that this week’s UK Budget was big and bold.Key Quotes:"The Chancellor decided to spend rather than save this year’s better deficit news – in spite of warnings that weaker productivity would damage growth and the fiscal outlook further ahead. Revisions saw GDP growth being marked down by an average of 0.4pp in the coming years and, as a result, larger deficits from 2019-20 onwards. Moreover, there were plenty of big-ticket announcements that added to the deficit looking further ahead. The aggregate cost to the Treasury of the measures Mr Hammond announced was some 0.3% of GDP in 2018-19 and 0.5% the following year. Gilt issuance stands broadly unchanged this year but could rise by a total of over £50bn in the five years from 2017-18 to 2021-22 thanks to increased spending and slower economic growth."

Analysts at ANZ noted that the US FOMC minutes were out yesterday, and the ECB minutes overnight.  Key Quotes: "The Fed minutes were interpreted as

Analysts at ANZ noted that the US FOMC minutes were out yesterday, and the ECB minutes overnight. Key Quotes:"The Fed minutes were interpreted as more dovish than expected, with “some” participants expressing concern about inflation not persisting. The market appeared to discount the “some” qualifier, with US yields and the USD coming under pressure, though a December hike remains a done deal as far as market pricing is concerned." "The ECB minutes overnight showed the majority on the governing council believe it is appropriate to proceed very gradually with forward guidance in relation to QE, but that opposition is rising to extending the program: “Some concerns were also expressed that the open-ended nature of the asset purchase programme might generate expectations of further extensions,” while others felt “an end date was... well justified in anticipation of further progress towards a sustained adjustment in the path of inflation on the basis of the better than expected growth momentum, diminishing risks and continued favourable financing conditions”. Europe is enjoying its strongest growth since 2011, and US growth is accelerating. But the missing ingredient remains inflation."

NZD/USD is consolidated in thin markets and without impetus although the borader picture is for a gradual squeeze higher in Kiwi continues while short

NZ trade's seasonal trade to improve? NZD/USD consolidates between key support/resistance.NZD/USD is consolidated in thin markets and without impetus although the borader picture is for a gradual squeeze higher in Kiwi continues while short positioning is unwound. Currently, NZD/USD is trading at 0.6887, down -0.07% on the day, having posted a daily high at 0.6896 and low at 0.6886. However, in early Asia, we had New Zealand's trade deficit released that narrowed to $871m in October. Excluding the import of a large aircraft, the result was close to our forecast of a $600m deficit. NZD trade's seasonal adjustmentsAnalysts at Westpac explained that in seasonally adjusted terms, export earnings rose by 5% for the month. "We expect some improvement in the trade balance over the next year. Dairy export volumes have been held back by poor weather in the early part of the dairy season. But with milk collections now up on last year's pace, we expect this to flow through into stronger export shipments by early next year," the analysts added.NZD/USD levelsWith markest in consolidation, the technical picture remains the same and the daily RSI is unwinding oversold conditions while the monthly technicals are bearish pointing to a period of consolidation. Key support comes at 0.6780 while resistance is located at 0.6920 above the 100 4-hr SMA at 0.6886. 0.6980 as the 9th Nov top opens 11th Oct support level of 0.7054 as a key target.

Analysts at Westpac explained that in a week that was cut short by Thanksgiving in the US, policymakers again took centre stage - sating, that, on the

Analysts at Westpac explained that in a week that was cut short by Thanksgiving in the US, policymakers again took centre stage - sating, that, on the whole, their tone was cautious.Key Quotes:"For Australia, there was an increased focus on the minutes of the November RBA board meeting following the downward revision to their inflation forecasts in the November Statement on Monetary Policy. Consistent with these revised forecasts (underlying inflation of 1.75%yr at end-2018 and 2.0%yr at end-2019), the minutes cited an expectation that inflation will pick up “only gradually.”"

Analysts at Westpac explained that Amazon has confirmed its Australian retail operations will launch on Nov 24. Key Quotes: "While key aspects of th

Analysts at Westpac explained that Amazon has confirmed its Australian retail operations will launch on Nov 24.Key Quotes:"While key aspects of the rollout and the response of existing retailers remain highly uncertain, the experience abroad suggests Amazon's entry will result in significant downward pressure on retail margins.  The response from other retailers abroad have been varied but typically includes some industry consolidation (e.g. mergers/closures), increased efforts to reduce costs (e.g. more effective use of retail space), and a greater focus on developing online sales channels (e.g. through loyalty schemes). Overall, while the disruption to the retail sector may well be large, many of the macro level effects are likely to be marginal and come through gradually – the peak impact is likely several years away."