Month: April 2018

USD/CAD Rebound Stalls, Bearish Series Unfolds Ahead of BoC Rhetoric

FX TALKING POINTS:

  • USD/CAD Rebound Stalls, Bearish Sequence Take Shape Following Lackluster U.S. Data. Bank of Canada (BoC) Rhetoric on Tap.
  • NZD/USD Remains Under Pressure Ahead of New Zealand Employment Report. Relative Strength Index (RSI) Continues to Flirt with Oversold Territory.

Image of daily change for unfamiliar exchange

The Canadian dollar outperforms a vital counterparts, with a USD/CAD rate during risk for a incomparable pullback, while a New Zealand dollar stands during risk of confronting near-term headwinds as a region’s practice news is approaching to uncover a tardy in both pursuit and salary growth.

USD/CAD REBOUND STALLS, BEARISH SEQUENCE TAKE SHAPE FOLLOWING LACKLUSTER U.S. DATA.

Image of USDCAD Daily Change

The new miscarry in USD/CAD appears to have stalled forward of a April-high (1.2944), with a sell rate during risk of giving behind a allege from progressing this month as a bearish method takes shape.

USD/CAD struggles to reason a belligerent as a marginal pickup in a U.S. core Personal Consumption Expenditure (PCE) interconnected with a tardy in Pending Home Sales does small to boost bets for 4 rate-hikes in 2018, and a Federal Open Market Committee (FOMC) might return behind to a wait-and-see proceed during a May assembly in an bid to fight a ongoing tardy in a genuine economy.

Keep in mind, Bank of Canada (BoC) Governor Stephen Poloz is scheduled to pronounce tomorrow during a Yellowknife Chamber of Commerce, with a executive bank conduct approaching to tame conjecture for an approaching rate-hike as ‘some financial process accommodation will still be indispensable to keep acceleration on target.

However, Governor Poloz might eventually implement this eventuality to ready Canadian households and businesses for aloft borrowing-costs as ‘inflation in 2018 to be modestly aloft than a Bank approaching in a Jan Monetary Policy Report (MPR),’ and an astonishing collection of hawkish tongue might fuel serve waste in USD/CAD as spurs conjecture for another rate BoC rate-hike in 2018.

USD/CAD DAILY CHART

Image of USDCAD Daily Chart

  • Failure to exam a April-high (1.2944) raises a risk for a incomparable pullback in a USD/CAD rate as a span starts to carve a new array of reduce highs lows.
  • Another tighten subsequent 1.2830 (38.2% retracement) opens adult a 1.2720 (38.2% retracement) to 1.2770 (38.2% expansion) region, with a subsequent area of seductiveness entrance in around 1.2620 (50% retracement).

For some-more in-depth analysis, check out a Q2 Forecast for a U.S. Dollar

NZD/USD REMAINS UNDER PRESSURE AHEAD OF NEW ZEALAND EMPLOYMENT REPORT.

Image of NZDUSD daily performance

NZD/USD stays underneath vigour going into a finish of a month, and updates to New Zealand’s Employment news might beget uninformed yearly lows in a sell rate should a information prints inspire a Reserve Bank of New Zealand (RBNZ) to keep a record-low money rate via 2018.

The New Zealand dollar stands during risk of confronting near-term headwinds as pursuit enlargement is approaching to delayed to an annualized 3.3% from 3.7% in a fourth entertain of 2017, while a sign for Average Hourly Earnings is approaching to slight to 0.5% from 0.8% during a same period. Developments that underscore weaker enlargement and acceleration is approaching to keep a RBNZ on reason during Governor Arian Orr’s initial assembly on May 10, and a executive bank might continue to tame expectations for a 2018 rate-hike as ‘CPI acceleration is approaching to break serve in a nearby tenure due to density in food and appetite prices and adjustments to supervision charge.’

As a result, a allege from a November-low (0.6780) might continue to unravel, with a downside targets still on a radar for a NZD/USD rate as a Relative Strength Index (RSI) hovers around 30.

NZD/USD DAILY CHART

Image of NZDUSD Daily Chart

  • Kiwi-dollar might carve a uninformed fibre of reduce highs lows as RSI continues to coquette with oversold territory, with a pierce subsequent 30 lifting a risk for a serve decrease in a sell rate as a bearish movement gathers pace.
  • Need a tighten subsequent a Fibonacci overlie around 0.7040 (50% retracement) to 0.7110 (38.2% expansion) to open adult a subsequent downside segment of seductiveness around 0.6940 (61.8% expansion) to 0.6990 (50% expansion).

Interested in carrying a broader contention on stream marketplace themes? Sign adult and join DailyFX Currency Analyst David Song LIVE for an event to plead intensity trade setups!

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— Written by David Song, Currency Analyst

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EURUSD and USDJPY Patterns Suggest USD Trend Remains Incomplete

US Dollar found strength final week and this trend has some-more room to grow.EURUSD and USDJPY Elliott Wave patterns indicate continued USD strength.

The video above is a recording of a US Opening Bell webinar from Apr 30, 2018.

Elliott Wave Analysis for EURUSD

For several weeks, we have been arguing that a operation in EURUSD might mangle to a downside. It appears a three-year bullish settlement in EURUSD finished in Feb 2018 and that a subsequent several months might lead to downward trade.

Carrying a tiny brief position into final week, a large growth occurred when EURUSD sentiment sealed certain for a initial time given Apr 2017, that is a bearish signal. Therefore, we were watchful to supplement to a position with a break reduce during 1.2153 that triggered on Apr 26.

It is probable a miscarry might rise behind to 1.2180-1.2280, though a trend is now resolutely planted lower. We demeanour to float a trend to reduce levels presumably as distant as 1.12. Bearish patterns sojourn while a EURUSD draft stays subsequent 1.2414.

EURUSD draft with Elliott Wave labels display bearish trend.

EURUSD Sentiment Analysis

EURUSD view continues to float nearby relation as it oscillates behind and onward between -1.1 and +1.1. A material pierce above +1.1 would be a bearish vigilance and spirit during serve waste for EURUSD.

Notice a orange trend channel on a EURUSD draft above. A pierce above a trend channel would be normal during this indicate and zero to be dumbfounded about. Strong trends need to connect from time to time. Keep an eye on 1.2180-1.2280 for insurgency should a orange channel break. To a downside, we are not expecting any clever miscarry until a revisit nearby 1.17. Of course, a Elliott Wave settlement might develop into something else, though for a time being we are looking towards reduce levels.

USDJPY Elliott Wave Chart

USDJPY has started a new trend on Mar 25 with an impulse wave. According to Elliott Wave Theory, this settlement appears deficient to a upside and might eventually exam 118. The USDJPY draft is using into some insurgency as a 2012 trend line crosses nearby a stream cost zone. Our elite Elliott Wave count is that USDJPY might eventually find a strength to persevere higher. However, if this grey trend line binds and if USDJPY falls subsequent 107.46, we are prepared to adopt a call count that this might be usually call ‘b’ of (y).

USDJPY draft with Elliott Wave labels display nearby tenure bullish trend.

Elliott Wave Theory FAQs

What are Elliott Wave incentive waves?

According to Elliott Wave Theory, a marketplace moves 5 waves in a instruction of a nearby tenure trend followed by a 3 call opposite trend wave. An incentive call is one of dual forms of ground waves that denotes trend direction. Therefore, if we see a bearish incentive waveform, afterwards after a three-wave opposite trend wave, we can expect during slightest one some-more bearish ground wave.

For those Elliott Wave technicians looking for serve study, review about a consultant tips in a beginners and modernized trade guides.

After reviewing a guides above, be certain to follow destiny Elliott Wave articles to see Elliott Wave Theory in action.

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—Written by Jeremy Wagner, CEWA-M

Jeremy Wagner is a Certified Elliott Wave Analyst with a Master’s designation. Jeremy provides Elliott Wave research on pivotal markets as good as Elliott Wave educational resources. Read some-more of Jeremy’s Elliott Wave reports around his bio page.

Communicate with Jeremy and have your scream subsequent by posting in a comments area. Feel giveaway to embody your Elliott Wave count as well.

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FX Markets to Focus on RBA & FOMC, Eurozone GDP & CPI, US NFPs

Talking Points:

– The RBA meets on Tuesday while a FOMC meets on Wednesday, nonetheless a latter will be considerably some-more hawkish than a former.

– Wednesday and Thursday will see a recover of a Q1’18 Eurozone GDP and rough Apr CPI reports, respectively.

– The Apr US Nonfarm Payrolls news is due on Friday, and a US stagnation rate is approaching to tumble to a new cycle low during 4.0%.

Join me on Mondays during 7:30 EDT/11:30 GMT for a FX Week Ahead webinar, where we plead tip eventuality risk over a entrance days and strategies for trade FX markets around a events listed below.

05/01 Tuesday | 04:30 GMT | AUD Reserve Bank of Australia Rate Decision

The Reserve Bank of Australia meets a few days before a quarterly Statement on Monetary Policy is expelled on Friday, and is approaching to keep a categorical overnight rate on reason during 1.50%. The timing of a assembly doesn’t accurately coincide with a new expansion and acceleration forecasts being released, though a RBA is approaching to idea marketplace participants’ in on a broader perspective of a economy. With domicile debt during all-time highs and financial marketplace conditions start to tighten, a RBA seems calm on staying pat for a foreseeable future: there is usually a 0.5% possibility of a rate travel during Tuesday’s meeting, and a 31.2% possibility of a travel by Dec 2018.

Pairs to Watch: AUD/NZD, AUD/JPY, AUD/USD

05/02 Wednesday | 09:00 GMT | EUR Eurozone Gross Domestic Product (1Q A)

The initial demeanour during Q1’18 Eurozone GDP should see expansion rates decrease somewhat from a finish of 2017, with a quarterly rate down to +0.6% from +0.8% and a yearly rate down to +2.5% from +2.7 – unconditionally unchanging with a decrease in PMI readings seen given their peaks in Dec and January. Like in a UK, there has been some conjecture about severe continue attack expansion during a tail finish of Q1’18, though a miss of a poignant miscarry in Apr PMI total when weather wasn’t a problem during a start of Q2’18 suggests there might indeed be an underlying slack in growth. Combined with a retrenchment approaching in a Apr CPI total after in a week, a emanate – a weaker Euro – of a ECB’s preference to keep rates during or subsequent 0 percent for an extended duration of time after a QE module ends will approaching go unchallenged by marketplace participants.

Pairs to Watch: EUR/GBP, EUR/JPY, EUR/USD

05/02 Wednesday | 18:00 GMT | USD Federal Reserve Rate Decision

The Federal Reserve meets this week for a assembly that will furnish a reason in a categorical seductiveness rate in a 1.50-1.75% range. Being that this assembly does not start during a month when a new Summary of Economic Projections will be released, a expectancy for any change in process is really low: Fed supports are pricing in a 6% possibility of a hike. But a assembly should be a runway for another rate liftoff in June, when markets are pricing in a 91% possibility of a 25-bps rate hike. Given a new arise in inflation, a process matter is approaching to lean to a hawkish side, assisting keep total a US Dollar’s new rise.

Pairs to Watch: EUR/USD, GBP/USD, USD/JPY, DXY Index, Gold

05/03 Thursday | 09:00 GMT | EUR Eurozone Consumer Price Index (APR P)

The rough Apr Eurozone Core CPI is due in during +0.9% from +1.0% (y/y), another pointer that a comparatively clever Euro (still adult over +8% on a trade-weighted basement over a past 12-months) is proof to be a headwind for achieving process goals. The title CPI figure is due in during +1.3% unch (y/y), well-below a ECB’s medium-term aim of +2%. In a emanate of a European Central Bank rate decision, rates markets are pricing in a 10% possibility of a rate pierce this year given a opinion for inflation.

Pairs to Watch: EUR/GBP, EUR/JPY, EUR/USD

05/04 Friday | 12:30 GMT | USD Change in Nonfarm Payrolls Unemployment Rate (APR)

The prime emanate for a US Dollar when it comes to a April US Nonfarm Payrolls news is either or not a US labor marketplace will see a miscarry in jobs expansion following a unsatisfactory Mar report. A intensity reason for a pullback in a title NFP figure final month might be due to a stating duration in that a information was collected, that coincided with severe continue opposite a vital race centers on a Atlantic Seaboard of a United States. Market participants are awaiting that Mar was a one-off decline, with a pointy miscarry in jobs expansion expected. Heading into this Friday’s information release, stream expectations for a information are job for a stagnation rate to dump to 4.0% from 4.1%, and a headline jobs figure to come in during +190K.

FX Markets to Focus on RBA amp; FOMC, Eurozone GDP amp; CPI, US NFPs

According to a Atlanta Fed Jobs Growth Calculator, a economy usually needs +107K jobs expansion per month over a subsequent 12-months in sequence to means pronounced stagnation rate during a stream 4.1% level.

Pairs to Watch: EUR/USD, GBP/USD, USD/JPY, DXY Index, Gold

Read more: Euro Forecast: EUR/USD Weakness May Persist as Inflation Rates Decline

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— Written by Christopher Vecchio, CFA, Senior Currency Strategist

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British Pound Under Pressure as Rate Hike Could be Delayed

The British bruise is solid in a Monday session, after recording pointy waste on Friday. In North American trade, a span is trade during trade during 1.3765, down 0.13% on a day. On a recover front, there are no British events on a schedule. In a US, Personal Spending softened to 0.4%, relating a forecast. This noted a 3-month high. The news was not as certain from a housing sector, as Pending Home Sales forsaken to 0.4%, down neatly from 3.1% in a prior release. On Tuesday, a both a UK and a US recover Manufacturing PMI reports.

British Preliminary GDP for a initial entertain unhappy final week, with a insignificant benefit of 0.1%. This missed a guess of 0.3%, and good brief of Final GDP for Q4, that came in during 0.4%. The bad opening of a economy in a initial entertain has dampened expectations that a BoE will lift rates during a arriving May rate meeting, with a contingency of a travel plunging to 20%, compared to 90% during a commencement of April. Most analysts design a BoE to stay pat on rate hikes until a second half of a year, with Aug or Nov being a many expected months for a rate hike. This view sent a bruise reduce on Friday and a banking declined 1.6% final week. Currently, GDP/USD is trade during a lowest turn given a finish of February.

US indicators finished a week with a initial GDP news for a initial quarter. Advance GDP posted a important benefit of 2.3% that kick a guess of 2.0 percent. Still, this was a poignant dump from GDP in a fourth entertain of 2018, that came in during 2.8 percent. Analysts also took note of a Employment Cost Index, that rose from 0.6% to 0.8%, another denote that acceleration is relocating higher. There is flourishing view that a Federal Reserve will lift seductiveness rates 4 times this year, nonetheless Fed policymakers continue to plan a sum of 3 increases in 2018. One unfolding envisions a Fed lifting rates once any entertain until a economy shows signs of negligence down. If acceleration continues to pierce aloft and mercantile conditions sojourn strong, a US dollar could continue to make advance opposite a vital rivals, including a Japanese yen.

More Hawkish Fed Eyed during May FOMC Meeting as Dollar Headed for Best Month in a Year

The Federal Open Market Committee (FOMC) starts a two-day financial process assembly on Tuesday, with a preference approaching on Wednesday during 18:00 GMT. No change to a sovereign supports rate is approaching this month, that now stands during a aim operation of 1.50-1.75%. The Committee final lifted rates in Mar and indicators for a US economy have been consistently plain given then. But with no new quarterly projections scheduled in May and policymakers committed to a light rate travel path, a Fed is not approaching to mangle a new tradition and broach a warn rate boost during a non-press discussion meeting.

Data final week showed US GDP expansion slowed during a initial 3 months of 2018, with a economy expanding during an annualized rate of 2.3% compared to 2.9% in a before quarter. However, a figure was improved than a accord forecasts of 2.0% and expansion is approaching to energise extremely in a entrance quarters. Meanwhile, a US work marketplace continues to go from strength to strength, and a country’s stagnation rate is foresee to tumble to an 18-year low of 4.0% in Apr in this week’s jobs report.

The acceleration design has also been improving, with all pivotal cost gauges jumping aloft in March. The 12-month consumer cost index rose to a one-year high of 2.4%, while a Fed’s elite measure, a core PCE cost index modernized to 1.9% – a top given Feb 2017 and only bashful of a Fed’s 2% target. The acceleration in cost expansion is approaching to be acquire news for a Fed, that some have indicted of relocating too quick with rate hikes amid fugitive inflationary pressures.

The new run of upbeat information might lean a tinge of Wednesday’s process matter to a somewhat some-more hawkish one, with some probable tweaks to a denunciation to illustrate a some-more assured acceleration opinion and/or improving expansion prospects.

A some-more hawkish-than-anticipated matter could expostulate a US dollar to mangle above a pivotal 110 turn opposite a yen, that during a impulse is being capped by a 109.50 insurgency level. The dollar is on lane to suffer a strongest month given Feb 2017 in April, following a pointy miscarry during a finish of March. However, if a Fed disappoints by not creation any alteration to a wording, a greenback’s convene could remove some steam and dollar/yen could onslaught to reason above a 109 level. A crack of a 109 hoop would open a approach towards a 108 level.

A bigger exam for a dollar yet will substantially be Friday’s nonfarm payrolls report, and in particular, a salary expansion data. The Fed is penetrating to see a pick-up in gain in sequence to be assured that acceleration is on a postulated trail upwards. Growth in normal hourly gain is approaching to reason solid during 2.7% in April. A near-term plea of a 110-yen turn looks formidable as prolonged as compensate increases sojourn next 3% as a Fed is doubtful to change out of ‘gradual’ mode but transparent signs that salary pressures are building up.

Eurozone’s GDP and Jobs Data Gather Attention forward of Inflation Prints

The Eurozone will see a redeem of a rough GDP for Q1 as good as a stagnation rate for March, both on Wednesday during 0900 GMT. Forecasts indicate to a slack in mercantile growth, something that would approaching absolve a European Central Bank’s (ECB) new change to a some-more discreet stance.

It’s no tip that mercantile expansion in a Eurozone substantially slowed in a initial entertain of a year. Business surveys such as a Purchasing Managers Indices (PMIs) have been indicating to a slack for months now, and even ECB President Draghi concurred as most during final week’s process meeting, when he remarkable mercantile information have moderated recently. Still, investors will substantially keep a tighten eye on a redeem of a central GDP figures, in sequence to sign either a slack was some-more or reduction conspicuous than creatively thought, and to what border that will impact a ECB’s thinking.

In terms of forecasts, a bloc’s rough GDP guess for Q1 is projected to uncover that a economy grew by 0.4% on a quarterly basis, a most slower gait than a 0.6% available in Q4. In yearly terms, expansion is approaching to have slowed to 2.5%, from 2.7% in Q4. Meanwhile, a stagnation rate is approaching to have hold solid during 8.5%, after ticking down in February.

While a ECB still looks set to start scaling behind a large impulse module after this year, with some signaling of that approaching to come in a summer meetings, mercantile information will be vicious to watch as continued decrease could make a Bank some-more discreet to conduct towards a exit door.

Thus, in box these information defect – for instance if expansion slows by some-more than approaching – that could strengthen conjecture that a Bank might select to check a normalization skeleton until a economy rebounds, potentially bringing a euro underneath renewed offered pressure. Looking during euro/dollar, in box of serve declines support might be found nearby a 1.2030 hurdle, noted by a rise of Sep 20. A downside mangle of that section could open a approach for a 1.1960 area, tangible by a tip of Nov 27.

On a flip side, should these total – and quite a GDP imitation – come in improved than expected, that could diffuse some concerns that a ECB will be wavering to normalize a process and thereby, assistance a euro to redeem some of a latest losses. Advances in euro/dollar could primarily case nearby 1.2140, a Apr 30 high. If buyers overcome that barrier, a subsequent domain to offer insurgency might be nearby 1.2245, a jump that capped a convene on Apr 24.

Finally, besides a GDP and stagnation prints, a other pivotal information redeem from Eurozone this week will be a rough acceleration information for April, that are due out on Thursday.




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