forex eurusd daily analysis
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by Henry Liu on September 21, 2012
(EU) Euro was spurred higher after FT Deutschland speculated Spain was drawing near to a formal rescue plan that may be unveiled as early as next week. Press report also indicated Spanish govt has formulated a specific economic reform program that was being discussed behind the scenes among EC and Spanish govt officials.
(EU) During the session some Euro weakness being attributed to the SNB selling EUR/AUD (this is part of diversification from maintaining the EUR/CHF peg); AUD/USD for its part was up +0.8% above $1.05.
(EU) There was also a report that a Hedge fund was taking off a hedge on a large fixed income play, the single currency dipped to a low of $1.2955. There was also some chatter that Middle East Central Banks were in the market as buyers, this took the currency higher above $1.3035.
(EU) IMF’s Lagarde speculated Spanish banking recapitalization would be somewhere in €40-80B range, below the €100B secured from European officials;
(GR) Greece official: Approx 95% of aid package to be agreed on by Sunday 23rd Sept; troika to leave by end of week – financial press – IMF pushing creditors to accept a new haircut that would not involve the ECB or the IMF
(GR) Press reported that the troika may put off its report on Greece until after the November US election to avoid roiling the global economy.
How to interpret these headlines?
Recent EURUSD consolidation is obviously due to the correction of the gains from Fed’s surprise QE3 announcement last week and the launch of OMT by the ECB the week before. Of course, today’s report out of SNB on their diversification into AUD also provided some clarity as to how EURUSD dropped to the low-end of 1.2900 against on such a short notice, but it is important to note that the overall trend for further bullish breakout remains unchanged, in my opinion…
Considering that Spain may request a bailout as early as next week, the current Spanish Banking Aid is more than adequate, and the fact that Greece may get a stay of execution until November, we have now a good recipe for EURUSD upward breakout in the coming weeks. Traders who have gotten out of EURUSD longs are now looking for areas to re-enter, as a below 1.3000 EURUSD exchange rate is not only attractive, but relatively safer than 1.3150 entry. I believe we’ll see EUR resuming its bullish trend soon, capitalizing on both U.S. QE3 and ECB’s OMT promises; I’ll be shooting for 1.3475 target on the EURUSD in the next few weeks…
Risk Aversion Sentiment Dominates Global Markets
by Henry Liu on July 9, 2012
Risk Aversion Sentiment Intensified Early Week As A Slew Of Data And Comments Hit The Wire:
(CN) CHINA JUN CONSUMER PRICE INDEX (CPI) M/M: -0.2% V -0.3% PRIOR; Y/Y: 2.2% V 2.3%E (lowest since Jan 2010)
(CN) CHINA JUN PRODUCER PRICE INDEX (PPI) M/M: -0.7% V -0.4% PRIOR; Y/Y: -2.1% V -2.0%E (biggest decline since Nov 2009)
(JP) Japan’s May Trade Balance came in worse than expected at a deficit of ¥848B (versus -¥837B expectation), Machine Orders for the month saw their biggest decline since April 2005 (-14.8% versus -2.4% expectation)
(EU) Credit rating agency Moody’s noted the ECB’s restriction of using government backed bank bonds is a credit negative for some banks in the region. With regards to Italy, spending cuts are credit negative for the regional and local governments. The ECB rate cut was a negative for euro money funds.
(EU) ECB’s Draghi: Reiterates some downside risks to the growth outlook have materialized in his address to EU parliament.
- ECB tools support transmission of policy to the real economy
- ECB retains full capacity to act in a firm, timely manner.
- Indicators point to weakening growth and greater uncertainty in Q2, continue to expect gradual recovery.
- Reiterates risks to inflation outlook remain broadly balanced, inflation to be below 2% in 2013.
- Downside inflation risks include weaker than expected growth.
- Global central banks have cooperated very closely.
- Comparisons to what different central banks have done over last several years has limits.
- To a certain degree the size of ECB balance sheet is not related to monetary policy.
- ECB’s experience in the troika structure, cooperation with EU and IMF, has been very good.
- Governments and citizens must show ownership of reform programs.
- There is a consensus to adjust Spain’s deficit target, Spain remains fully committed to reforms.
- Need to move toward more shared sovereignty.
Upcoming News Releases That May Fuel Risk Aversion Sentiment:
- US FOMC Meeting Minutes – Reminds the market why FOMC decided to forego QE3 and only extended Operation Twist
- BOJ Interest Rate Decision – This could be a case of too little too late as BOJ has now lost all credibility to fight deflation. Market will not be easily impressed unless BOJ increases their Asset Purchasing Scheme significantly.
- Chinese GDP – Market is expecting below 7.9% of release and if the actual figure is much worse than expectation, we should see strong risk aversion momentum.
How to interpret these headlines?
It seems that risk aversion is the name of the game today as news out of China kick off the week showing that Chinese Economy went to deflationary territory in June, combined with a very disappointing Trade Balance in Japan, it is no surprise that the market showed little consolidation from last week’s sharp sell-offs.
Considering that there are still uncertainties in Europe, as the optimism over the EU Summit wanes, and the fact that credit rating agencies are ready to cut Spain’s sovereign credit ratings, I believe the risk aversion momentum is likely to dominate the market… therefore, we should be looking to BUY USD and JPY, at least during early week. I am looking at either SELL EURUSD or EURJPY as both trades have strong potentials for huge profits.
Saya jangkakan price akan buat correction up ke salah satu level fibonacci seprti pada gambar di atas pada hari ini atau esok sebelum FOMC.Akan ttapi analisa ini invalid jika price break up-trendline yang saya telah lukiskan.
HINT: Jika price bounce/ranging pada level fibonacci tersebut sebelum news, itu petanda price akan membuat spike pada waktu news dan saya menjangkakan(sekiranya analisa ini valid), EU dan EJ akan jatuh melebihi 100pips(atau lebih) dalam masa 1 jam.
Kita mulakan analysis dari TF yg lebih besar..
Pada Euro summit minggu lepas, eurusd telah bullish dan kini sedang mengalami proses ‘correction’ dan dijangka akan terus bullish menjejaki 1.3000 level.
Akan tetapi semua itu hanyalah jangkaan sahaja. Sekiranya trading plan tersebut gagal, maka saya jangkakan situasi berikut pula akan berlaku;
Entry pada harga sekarang atau, buy limit pada level 76.4 @ 78.6.
Sekiranya semua trade telah stopout kerana terkena SL, saya akan perhatikan trendline tersebut, jika price close semula di atas trendline(rejection), maka saya akan re-enter buy semula.
Semua kebarangkalian ini bergantung pada news-news penting yang akan diumumkan harini. sila rujuk www.forexfactory.com untuk melihat senarai lengkap calendar news untuk minggu ini atau ke www.henryliuforex.com untuk mendapatkan analisa terperinci mengenai news-news yang bakal diumumkan hari ini.
by Henry Liu on July 2, 2012
(ES) Spain Econ Min de Guindos: Reiterates view that Q2 GDP contracted slightly more than -0.3% in Q1.
(FR) France Fin Min Moscovici: To lower 2013 GDP target to 1.0-1.3% range vs 1.7% prior target; Sees 2012 GDP at 0.4% or less vs 0.5% prior target.
(EU) Finland Govt: Both Finland and Netherlands plan to block ESM bond purchases in the secondary market- Netherlands Finance Ministry: To decide on ESM bond purchases on a case-by-case basis.
(DE) German Government spokesperson: EU Council did not create a new instrument to save banks directly; wrong to say that there will not be conditionality on aid.
How to interpret these headlines?
Market started out today positively with momentum from last Friday’s EU Summit on the surprise agreement of using ESM to recapitalize banks directly, which effectively limited the effects of any potential contagion fear in the future, thus brought demand back to the Euro… However, it is obvious that the overall market ignored Germany’s warning on the conditionality of the agreement on Friday due to the initial adrenaline rush, but after a weekend of cool down, today’s objection from Finland and the Netherlands carried more weight and reminded the market that the ESM bond purchases might not be as straight forward as it sounded, especially now with the Netherlands and Germany putting road blocks along the way, reminding the market that the European Economic Crisis is far from over…
Of course, the comments out of Spain and France didn’t help much either, with Spain once again reiterating Q2 GDP contraction worse than 0.3% and France lowering GDP target for both 2012 and 2013 below previous targets. EURO seems to be facing an upward hill battle moving forward, and let’s not forget the potential for ECB to cut rates beyond the 1.00% market this week, EUR is definitely not looking too good for the short-term.
However, that being said, I believe EURUSD could experience ‘some’ consolidation, but the road-map provided by the EU Summit last week is extremely positive, and I believe it has changed market perception for the EURO for the long-term already… Considering the fundamental outlook of U.S. with today’s Manufacturing PMI below 50 and the fact that NFP is scheduled for Friday, I believe EUR will remain resilient and has a potential for rebound back towards the 1.3000 level, should the employment condition worsens in the U.S. In conclusion, I would be looking to take advantage of these consolidations and BUY EUR at the low.
Buy eurusd with two set of target mark with ‘X’.