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  1. #81

    USD/CAD: Trading the Canadian GDP

    Canadian GDP is a measurement of the production and growth of the economy. Analysts consider GDP one the most important indicators of economic activity. A reading which is better than the market forecast is bullish for the Canadian dollar.
    ndicator Background



    The Canadian GDP is released monthly, unlike most other developed countries which post GDP on a quarterly basis. The key indicator provides an excellent indication of the health and direction of the economy. Traders should pay close attention to this indicator, as an unexpected reading can quickly affect the movement of USD/CAD.

    Canadian GDP edged up to 0.3% in September, above the forecast of 0.1%. The indicator is expected to dip to 0.1% in the October report.

    Sentiments and levels

    The Canadian dollar piggybacked on stronger oil prices in early December, but the Fed rate hike has sent the Canadian currency lower. Economic sentiment remains high ahead of Donald Trump taking over in Washington, which could be bullish for the greenback. So, the overall sentiment is bullish on USD/CAD towards this release.

    Technical levels, from top to bottom: 1.3648, 1.3551, 1.3433, 1.3351 and 1.3219

    5 Scenarios

    Within expectations: -0.2% to +0.4%. In such a scenario, USD/CAD is likely to rise within range, with a small chance of breaking higher.
    Above expectations: 0.5% to 0.9%. An unexpected higher reading could send the pair below one support line.
    Well above expectations: Above 0.9%. A surge by the indicator would likely push USD/CAD downwards, and a second support level might be broken as a result.
    Below expectations: -0.7% to -0.3%. A weak reading could cause the pair to climb and break one level of resistance.
    Well below expectations: Below -0.7%. A strong contraction in economic growth would likely hurt the loonie and USD/CAD could break above a second resistance level.

  2. #82

    GBP/USD Continues To Rebound

    Pound traders are becoming increasingly bearish on the currency, with the cost of insurance against a decline versus the dollar at the highest since November." – Bloomberg
    Pair's Outlook
    The Sterling had slightly appreciated on Thursday morning against the Greenback, as the currency exchange rate traded above the 1.2350 mark. However, the pair had experienced more volatility to the upside until 7:00 GMT. Previously, during the first half of the week the currency rate fell from 1.2489 on Monday to 1.2314 during Tuesday's trading session, where it found support and rebounded. The rebound has been slowly continuing since then. Although, it is unlikely that a notable surge will occur, as the Pound is still poised for losses.
    Traders' Sentiment
    SWFX traders have not changed their opinion since Wednesday, as 63% of open positions remain long. In the meantime, 55% of trader set up orders were to sell the Sterling.

    [Only registered and activated users can see links. ]Important Forex News Daily.

  3. #83

    EUR/USD Edges Higher on ECB Bulletin in Holiday Thinned Markets

    Talking Points

    - Economic expansion expected to proceed at a moderate pace.

    - Headline inflation seen topping 1% in early 2017 on energy prices.

    The latest ECB Economic Bulletin, following on from the European Central Bank’s December 8 policy meeting, highlights the reasons behind the Governing Council’s decision to extend the quantitative easing program to the end of 2017. While inflation seems likely to pick-up early next year, growth is seen struggling in 2017 despite the ultra-loose monetary backdrop.

    The December 2016 Euro system staff macroeconomic projections for the Euro-Zone see annual real GDP increasing by 1.7% in 2016 and 2017, and by 1.6% in 2018 and 2019, broadly unchanged from the September projections. However, according to the Bulletin “the risks surrounding the euro area growth outlook remain tilted to the downside.”

    Euro area annual HICP inflation in November 2016 was 0.6%, up further from 0.5% in October and 0.4% in September, largely due to an increase in annual energy inflation. However, there are no clear sings yet of underlying inflation, despite the ECB’s accommodative actions. The ECB’s depo rate turned negative in June 2014 and remains there, while the central bank has bought in excess of EUR1.4 trillion of bonds since March 2014, including negative-yielding debt.

    “Looking ahead, on the basis of current oil futures prices, headline inflation rates are likely to pick up significantly further at the turn of the year, to rates above 1%, mainly owing to base effects in the annual rate of change of energy prices. Supported by the ECB’s monetary policy measures, the expected economic recovery and the corresponding gradual absorption of slack, inflation rates should increase further in 2018 and 2019.” The December 2016 Euro system staff macroeconomic projections for the Euro-Zone see annual HICP inflation at 1.3% in 2017, 1.5% in 2018 and 1.7% in 2019, still not close enough to the 2% target for ECB President Mario Draghi’s liking.

    EURUSD moved a touch higher in holiday-thinned markets after the release, but the pair seems unable to push higher. The single currency hit a spike high of 1.08591 against the US Dollar after the ECB’s December 8 meeting but has been on a gradual move lower since, with some commentators calling for parity in the not too distant future.

    [Only registered and activated users can see links. ]Important Forex News Daily.

  4. #84

    USD/JPY – Yen Steady As Markets Eye US GDP

    USD/JPY is showing limited movement in the Thursday session. Currently, the pair is trading at 117.50. On the release front, today’s highlight is US Final GDP. We’ll also get a look at Core Durable Goods Orders and unemployment claims. On Friday, there are two key indicators – New Home Sales and Revised UoM Consumer Sentiment. Japanese markets will be closed for a national holiday.
    There were no surprises from the Bank of Japan, which held a policy meeting earlier this week. The bank held rates at -0.10%, where they have been pegged since late January. At that time, the move to adopt negative rates sent shock waves in the markets and the yen plunged in February, posting sharp losses of 7.4 percent. After the December announcement, BoJ Governor Haruhiko Kuroda sounded optimistic about the economy but also went out of his way to dampen any speculation that the BoJ was planning to raise rates in the near future. Kuroda sounded unconcerned about the yen’s recent losses, stating that the weak Japanese currency has raised inflation by boosting import costs and that the BoJ would continue its program of “powerful monetary easing” as the bank tries to reach its goal of two percent inflation. It’s been a dismal fourth quarter for the Japanese currency, which has fallen 15.4 % since October 1.
    When the Federal Reserve raised interest rates in December 2015, the Fed confidently predicted a series of rate hikes in 2016 in order to keep a hot US economy in check. However, the Fed remained on the sidelines throughout 2016 and refrained from any rate hikes until last week. There were several false starts along the way, as expectations that the Fed would raise rates earlier in 2016 failed to materialize. This led to sharp criticism of Janet Yellen for failing to provide a clear monetary policy. Yellen seems to have been keenly aware of this, as the Fed did everything short of buying advertisements in daily newspapers to get out the message that it planned to raise rates in December. Indeed, a rate hike was priced in as high as 100% by some analysts. Yellen should certainly be commended for a clear message to the markets.
    Now that the Fed has finally pressed the rate trigger, what’s next for Janet Yellen & Co.? In September, Fed officials said they expected two rate hikes in 2017, but the Fed is now projecting three or even four hikes next year. However, projections need to be adjusted to economic conditions, and the markets will understandably be somewhat skeptical about Fed rate forecasts. As well, the wild card of Donald Trump could also play a critical role in monetary policy. Trump’s economic platform remains sketchy, apart from declarations that he will increase government spending and cut taxes. Still, there is growing talk about ‘Trumpflation’, with the markets predicting that Trump’s policies will increase inflation levels, which have been persistently weak. If inflation levels do heat up, there will be pressure on the Fed to step in and raise interest rates.

  5. #85

    EUR/USD – Euro Edges Higher Ahead Of US Final GDP

    The euro has posted slight gains on Thursday, as EUR/USD trades at 1.0450. On the release front, there are no major Eurozone releases. In the US, today’s highlight is US Final GDP. We’ll also get a look at Core Durable Goods Orders and unemployment claims. On Friday, there are two key indicators – New Home Sales and Revised UoM Consumer Sentiment.
    The US economy continues to expand in impressive fashion, as underscored by strong GDP forecasts for the third quarter. Preliminary GDP came in at 3.2%, beating the forecast of 3.0%. Final GDP is expected to be even stronger, with an estimate of 3.3%. If the indicator matches or beats this rosy prediction, the US dollar could respond with gains.
    December seems to be that special time of year for the Federal Reserve. When the Federal Reserve raised interest rates in December 2015, the Fed confidently predicted a series of rate hikes in 2016 in order to keep a hot US economy in check. However, the Fed remained on the sidelines throughout 2016 and refrained from any rate hikes until last week. There were several false starts along the way, as expectations that the Fed would raise rates earlier in 2016 failed to materialize. This led to sharp criticism of Janet Yellen for failing to provide a clear monetary policy. Yellen seems to have been keenly aware of this, as the Fed did everything short of buying advertisements in daily newspapers to get out the message that it planned to raise rates in December. Indeed, a rate hike was priced in as high as 100% by some analysts. Yellen should certainly be commended for sending a clear message to the markets in the weeks leading up to the December hike.
    With the Fed finally pressing the rate trigger, what’s next for Janet Yellen & Co.? In September, Fed officials said they expected two rate hikes in 2017, but the Fed is now projecting three or even four hikes next year. However, projections need to be adjusted to economic conditions, and the markets will understandably be somewhat skeptical about Fed rate forecasts. As well, the wild card of Donald Trump could also play a critical role in monetary policy. Trump’s economic platform remains sketchy, apart from declarations that he will increase government spending and cut taxes. Still, there is growing talk about ‘Trumpflation’, with the markets predicting that Trump’s policies will increase inflation levels, which have been persistently weak. If inflation levels do heat up, there will be pressure on the Fed to step in and raise interest rates.

  6. #86

    Gold Prices May Ignore US GDP Update as the Fed Looks Elsewhere

    Gold prices continue to mark time near a ten-month low put in last week as a lull in trend-defining news-flow leaves markets rudderless and the pre-holiday liquidity drain saps conviction. Crude oil retreated after the weekly EIA inventories report unexpectedly showed stockpiles grew last week, adding 2.26 million barrels. This result clashed with economists’ bets and a private-sector estimate from API.

    The final revision of third-quarter US GDP is on tap ahead, with a modest upgrade from 3.2 to 3.3 percent for the annualized rate expected. The outcome may not inspire much of a response however considering its limited implications for the Fed rate-hike trajectory as the 2017 fiscal policy outlook remains the central object of speculation.

  7. #87

    European stocks rise on Monte Paschi rescue hopes

    On Tuesday, European markets were poised for one last burst of action before the end of 2016, with Italy supposed to outline plans to rescue the world's oldest and currently its most troubled bank, known as Monte dei Paschi di Siena.

    With market participants in most key markets already in holiday mode, shares and metals drifted lower in thin trading, crude was steady and even the greenback eased off this week's 14-year peak.

    Stocks in Milan surged 0.3%, flanked by the common currency on hopes for government bailout for Monte dei Paschi, while European stocks followed Asian markets down.

    Sources told Reuters that on Wednesday, the bank failed to pull off a last-ditch private rescue plan, and it means that a state rescue seems inevitable with reports in Italy on Thursday, telling it could be completed in between 2 and 3 months.

    The Monte dei Paschi saga appears to be one of the reasons why Rome's government bonds have been the worst performer in the euro zone in 2016, as it lost 4%.

    [Only registered and activated users can see links. ]Important Forex News Daily.

  8. #88

    Canadian Dollar Under Pressure Ahead of Canadian CPI, Retail Sales

    The Canadian dollar continues to drop against its US counterpart. On Thursday, USD/CAD has edged higher as it trades at 1.3450. On the release front, there are a host of releases out of the US and Canada. In the US, the highlight of the day is Final GDP. We'll also get a look at Core Durable Goods Orders and unemployment claims. Canada will release CPI and retail sales reports. The action continues on Friday, as Canada releases GDP while the US publishes New Home Sales and UoM Consumer Sentiment.
    The Canadian dollar posted strong gains in early December, piggybacking on surging oil prices. However, the currency reversed directions after the Federal Reserve raised rate last week, wiping out those recent gains. USD/CAD is currently at 4-week highs, and the rally could continue if this week's key Canadian indicators fail to meet expectations.
    When the Federal Reserve raised interest rates in December 2015, the Fed confidently predicted a series of rate hikes in 2016 in order to keep a hot US economy in check. However, the Fed remained on the sidelines throughout 2016 and refrained from any rate hikes until last week. There were several false starts along the way, as expectations that the Fed would raise rates earlier in 2016 failed to materialize. This led to sharp criticism of Janet Yellen for failing to provide a clear monetary policy. Yellen seems to have been keenly aware of this, as the Fed did everything short of buying advertisements in daily newspapers to get out the message that it planned to raise rates in December. Indeed, a rate hike was priced in as high as 100% by some analysts. Yellen should certainly be commended for a clear message to the markets.
    Now that the Fed has finally pressed the rate trigger, what's next for Janet Yellen & Co.? In September, Fed officials said they expected two rate hikes in 2017, but the Fed is now projecting three or even four hikes next year. However, projections need to be adjusted to economic conditions, and the markets will understandably be somewhat skeptical about Fed rate forecasts. As well, the wild card of Donald Trump could also play a critical role in monetary policy. Trump's economic platform remains sketchy, apart from declarations that he will increase government spending and cut taxes. Still, there is growing talk about 'Trumpflation', with the markets predicting that Trump's policies will increase inflation levels, which have been persistently weak. If inflation levels do heat up, there will be pressure on the Fed to step in and raise interest rates.

  9. #89

    Bank of Canada to target three different core inflation measures

    Bank of Canada abandons its current core CPI measure

    [Only registered and activated users can see links. ]Important Forex News Daily.

    The Bank of Canada will develop three new core inflation measures as it aims to meet its 2% inflation goal.
    The headline from today's mandate announcement was that no change would be made to the 2% target but what is going to change is how 2% is measured.
    The current BOC core is called CPIX and it excludes fruit, vegetables, gasoline, fuel oil, natural gas, mortgage interest, intercity transportation and tobacco products.
    "In recent years, the usefulness of CPIX inflation as an operational guide to policy has deteriorated," the BOC writes.
    They note volatility in energy prices and counter-cyclical moves in things like auto prices.
    "Since monetary policy primarily acts on inflation through its effect on demand, measures of core inflation that move with the output gap and are largely insensitive to transitory sector-specific developments would be more effective as operational guides to policy," the BOC writes.
    That's an impressive leap. The problem is that consumers are paying for all types of inflation, not just the demand-based ones.
    In any case, the BOC evaluated different inflation measures and decided on three new ones.

    [Only registered and activated users can see links. ]Important Forex News Daily.

    Here are the BOC explanations of the three new categories:
    CPI-trim (trimmed mean) is a measure of core inflation that excludes CPI components whose rates of change in a given month are located in the tails of the distribution of price changes.
    CPI-median (weighted median) is a measure of core inflation corresponding to the price change located at the 50th percentile (in terms of CPI basket weights) of the distribution of price changes in a given month.
    CPI-common (common component) is a measure of core inflation that tracks common price changes across categories in the CPI basket.

    [Only registered and activated users can see links. ]Important Forex News Daily.

    Note that all three are beginning to roll over, especially CPI-common, which seems to be the one the BOC likes best because it says it follows the output gap and is best on persistence.

    Those recent declines may be part of the reason the BOC has shifted towards cutting rates.

  10. #90

    US Crude Moves Higher as GDP Sparkles

    US crude futures have posted strong gains in North American trade, trading at $53.09. Brent crude futures are trading at $55.06, as the Brent premium stands at $1.97. On the release front, US Final GDP posted a gain of 3.5%, above the forecast of 3.3%. Durable goods reports were a mixed bag. Core Durable Goods Orders gained 0.5%, above the forecast of 0.2%. Durable Goods Orders posted a sharp decline of 4.6%, but this was better than the forecast of -4.9%. On the employment front, unemployment claims jumped to 275 thousand, much weaker than the forecast of 255 thousand. On Friday, the US publishes New Home Sales and UoM Consumer Sentiment.
    The US economy continues to expand at a brisk clip, as underscored by the most recent revision to third quarter GDP. The Final GDP reading of 3.5% beat the estimate of 3.3%. This figure marked an upward revision of the previous GDP estimate of 3.2%. The stellar reading can be attributed to stronger consumer spending and an increase in business investment, and marked the strongest growth rate since the third quarter of 2015.
    On Wednesday, Crude Oil Inventories posted a strong gain of 2.3 million, ending a streak of four consecutive declines, each of which missed expectations. The recent cap agreements signed by OPEC and non-OPEC exporters led to significant volatility in oil prices, but the volatility has since subsided, as the markets adopt a "wait and see" attitude, especially with regard to compliance by oil exporters with the required production cuts. Analysts expect US crude to remain in the $50-54 range for the next several weeks. Higher prices would encourage US shale producers to enter the market, which could offset lower production from OPEC and other oil exporters.
    When the Federal Reserve raised interest rates in December 2015, the Fed confidently predicted a series of rate hikes in 2016 in order to keep a hot US economy in check. However, the Fed remained on the sidelines throughout 2016 and refrained from any rate hikes until last week. There were several false starts along the way, as expectations that the Fed would raise rates earlier in 2016 failed to materialize. This led to sharp criticism of Janet Yellen for failing to provide a clear monetary policy. Yellen seems to have been keenly aware of this, as the Fed did everything short of buying advertisements in daily newspapers to get out the message that it planned to raise rates in December. Indeed, a rate hike was priced in as high as 100% by some analysts. Yellen should certainly be commended for a clear message to the markets.
    With the Fed finally pressing the rate trigger last week, what can we expect from Janet Yellen & Co.? In September, Fed officials predicted two rate hikes in 2017, but the Fed is now projecting three or even four hikes next year. However, projections need to be adjusted to economic conditions, and the markets will understandably be somewhat skeptical about Fed rate forecasts. The upcoming Trump presidency is likely to shake things up in Washington, but Trump's economic stance remains unclear. Still, there is growing talk about 'Trumpflation', with the markets predicting that Trump's policies will increase inflation levels, which have been persistently weak. If inflation levels do heat up, there will be pressure on the Fed to step in and raise interest rates.

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