Category: Daily Look

Trying to fend off deflation



Markets looks to be making an inauspicious start to the second quarter after a first quarter that ended on a risk averse note, certainly for equity markets and to some degree the Yen. The stand out from Q1 was the euro which suffered its worst quarter on record against the dollar for many reasons that we have been discussing throughout the course of 2015 so far. The decline will be widely welcomed by many parts of the Eurozone and in particular the ECB which had been working hard to try and prevent further deflationary pressures and help peripheral nations boost exports and growth. We’ve been seeing even before the formal commencement of quantitative easing from the ECB tentative signs economic conditions in the Eurozone were improving with unemployment peaking in the peripheral nations and now the rate of falling inflation is slowing down. The Eurozone economy looks to be turning a corner and all this has boosted European equities, but these improvements are from a very low base and further weakness for the euro cannot be ruled out especially as the Greece issue rumbles on and on.

Today the focus will be on manufacturing data from across Europe and later in the day from the US as PMI surveys are released. This morning EURUSD is trading at 1.0775 still 300 points off the multi-year lows set in the middle of last month. Also, keep an eye on Iranian nuclear and sanction negotiations which have been extended by a day in a positive sign that there is a strong appetite to reach some sort of agreement. Even if there isn’t a formal agreement today there is the next target of June when further talks are due to take place, but this meeting has the potential to influence movements in both crude prices and the dollar.

Further reading:

USD is nobody’s fool on April 1st – surges across the board

UK Manufacturing PMI hits 54.4 – within expectations – GBP/USD falls

EUR/USD, GBP/USD, USD/JPY Apr. 1 2015 – Technical Analysis, Pivot Points

EUR/USD, GBP/USD, USD/JPY Apr. 1 2015 – Technical Analysis, Pivot Points

EURUSD Daily Pivots R3 1.0945 R2 1.0894 R1 1.0812 Pivot 1.0762 S1 1.068 S2 1.063 S3 1.0548   EURUSD eventually reached the target of 1.07302 yesterday, the measured move from the break out of the rising wedge pattern. Price has now formed a falling price channel and looks to be currently testing the upper end

Markets await US consumer confidence

Markets await US consumer confidence

The dollar is just about regaining the upper hand and certainly in the case of the Aussie, AUDUSD has retraced all the way back from above 0.7900 just a week ago to 0.7630 at the time of writing, not all that far off testing a near six year low. Downward pressure on the Aussie is

Greece awaits EU’s consent

Greece awaits EU’s consent

A shortened week but despite it being Good Friday this week with most markets closed for a long holiday week end (apart from FX which remain open), the US nonfarm payroll figures are still due to be released. Ahead of then pressure continues to grow on Greece to submit a meaningful plan for economic reform

EURUSD, GBPUSD, USDJPY Pivot Points, TA – Mar. 30 2015

EURUSD, GBPUSD, USDJPY Pivot Points, TA – Mar. 30 2015

EURUSD Daily Pivots R3 1.1110 R2 1.1029 R1 1.0963 Pivot 1.0881 S1 1.0815 S2 1.0733 S3 1.0667   EURUSD is currently testing the lower trend line of the price channel and looks very likely to break this trend line. If successful, it would test all the way to the lows of 1.0632 levels on break

Eurozone uncertainty thwarts gains in currency

Eurozone uncertainty thwarts gains in currency

Sterling came under pressure this week following news that inflation posted flat year-over-year in February, the worst result on record. Driven by sliding oil prices, the Consumer Price Index (CPI) in the UK has flat lined as food and motor costs contracted. The CPI number helped reinforce the idea that interest rates in the Britain

Of Mice and Yemen

Of Mice and Yemen

“War”, the satirist Ambrose Bierce once said, “is God’s way of teaching Americans geography”. The average investor certainly knows a little more about Yemen today, after yesterday’s Saudi-led airstrikes on targets across the failed state sent global shares down, and oil prices up almost six percent. Markets remain unsettled this morning, with the prospect of

This week in the markets: Pound drops on zero inflation rate

This week in the markets: Pound drops on zero inflation rate

The dollar started the week on the back foot, with investors continuing to sell after last week’s dovish statement from the Federal Reserve. EUR/USD quickly pushed through both 1.08 and 1.09 on Monday as the markets pushed back the estimated date of the Fed’s first rate hike. The euro found further support from a better

Markets await US GDP

Markets await US GDP

Yesterday was a strong indicator of the changing dynamic in FX markets, in that we saw the dollar weaker even when stocks were on the back-foot and political tensions in the Middle East were escalating. We moved away from the “risk-on/risk-off” world seen in the wake of the global financial crisis and the dollar was

Dollar on defensive

Dollar on defensive

The dollar is on the defensive in the early part of the European session. This is most noticeable on USDJPY, which is now below the 118.50 level. The price action is not more indicative of a dollar correction after the volatility seen in the wake of the Fed decision, rather than a pause in the