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Andora Andrei

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Another Rout Could Be In The Wings For The AUDNZD

Another Rout Could Be In The Wings For The AUDNZD

The pair seems to have reached a turning point.
Failed to breach a very robust zone of resistance.
Stochastics are heavily overbought.



If you're looking to side step some of the headline risk of the major crosses, the AUDNZD might be worth keeping half an eye on. Specifically, the pair has been quietly climbing over the past few weeks and this has left it in a rather precarious position. Indeed, the losses seen over the prior two sessions could extend rather significantly regardless of how high the AUD tracks against the greenback.
Specifically, as is shown below, the pair has run into that robust zone of resistance around the 1.0753 handle and, once again, has failed to break through. Even on its own, this fact would tend to support the argument that we are going to see another near to medium-term downtrend take hold. However, given a number of other technical signals also reaching a consensus, rather than a brief dip, we could have another downtrend akin to the August-September rout on our hands.
Notably, Wednesday’s candle is looking distinctly like a bearish shooting star which could be a bellwether of extensive losses yet to be realised. In addition to this, we have stochastics deep in overbought territory which is also severely capping upsides and generating selling pressure. What’s more, if we have another session of similar losses, the Parabolic SAR will almost certainly invert which will also be portentous of a fresh downtrend for the AUDNZD.
Whilst a downtrend is looking fairly likely, the endpoint of the decline is somewhat less clear. However, we do have some clues as to where we are likely to encounter some strong support. Currently, the lowest point that the pair is expected to reach in the near to medium-term is around the 1.0415 handle. Primarily, this is because this point represents the intersection of the 78.6% Fibonacci level and the upside constraint of the old bearish channel. Although, we might see some support from the 100 day moving average.
Ultimately, we will just have to wait and see if the Kiwis or the Aussies are going to pull ahead in terms of the economic data as both have been having a bit of a mixed bag as of late. However, as a result of the lack of consensus in this fundamental data, we could see the above technicals play a larger role than is usual in determining the movements of this pair. As a result, monitor the pair closely, especially in the coming session.
 

Andora Andrei

Active member
EUR/JPY Bearish Momentum

EUR/JPY Bearish Momentum

EUR/JPY Trade Idea

I’ve been keeping close tabs on the pair’s long-term descending channel as price has been hovering around the resistance for quite some time. But since I’ve already got a short EUR/AUD position open (and locking in gains!), I was having second thoughts about doubling my bearish bets on the shared currency.
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Still, I did notice that price broke below its short-term range and completed its pullback recently, indicating that sellers are gaining the upper hand. Heck, the euro seems to be brushing off relatively upbeat economic reports and reacting more sensitively to political headlines as Forex Gump pointed out!

Aside from French election jitters, the shared currency is also getting dragged lower by Italian and Greek debt concerns. The European Commission gave a stern warning to the Italian government about its swelling public debt and gave it a deadline to trim the deficit by April to avoid violating EU rules. In Greece, the government is once again having trouble securing the next tranche of bailout funds since the IMF refuses to pony up the cash unless there’s some form of restructuring.

On the 1-hour time frame, I spotted a descending trend line connecting the latest highs of price action. Applying the Fib tool on the wave down shows that the 61.8% level is in line with the falling resistance and is also within an area of interest near 120.00. If any of the resistance levels hold, price could head back to the swing low near 118.50 or lower.
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It’s worth noting, though, that euro pairs suddenly popped higher in the earlier sessions when headlines suggested that pro-Frexit presidential hopeful Le Pen is facing stiff competition. The latest Opinionway poll gave the lead to rival Macron who also gained the support of influential French centrist politician Bayrou, upping their chances to beat Fillon in the first round of polls and possibly even beating Le Pen in the run-off. However, I think that this could just be noise as it doesn’t change the fact that the entire euro bloc has plenty of uncertainties to deal with.

In contrast, the lower-yielding Japanese yen is enjoying the safe-haven flows at the moment, especially since traders are still touch-and-go with the U.S. dollar. Although the FOMC minutes suggested that a rate hike could be on the table for March, they also emphasized that this hinges mostly on incoming jobs and inflation reports so any disappointments on this front could send risk-off traders scurrying back to the yen.

I’m eyeing a short position at the 120.25 mark with a stop loss past the swing high and an initial profit target at 118.75 for a 1:1 play. I’ll be ready to move my target down to the daily mid-channel area of interest and longer-term floor around 112.50-113.00 and roll my stop down if bearish momentum picks up on more headlines.

I’ll keep y’all posted on my exact entry levels once I hop in. As always, don’t risk more than 1% of your account on a single trade and make sure you read our risk disclosure if you’re thinking of taking the same setups.
 

Andora Andrei

Active member
3 Factors That Have Kept The Aussie Afloat

3 Factors That Have Kept The Aussie Afloat

G’day, forex mates! As you may or may not know, the Aussie has been trending broadly higher since the end of December 2016, shrugging off any disappointing economic reports that were thrown in its way. What’s up with that? Well, here the 3 major factors that have helped in sustaining the Aussie’s broad-based upward push.
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1. Rise in commodity prices

As you all should know by know, the Aussie dollar is known as a “comdoll” or commodity dollar because of Australia’s dependence on commodity exports (iron ore in particular) for economic growth. As such, the Aussie has a positive correlation with commodity prices.
And as you can see below, Bloomberg’s commodity index has been climbing ever higher since mid-November 2016.
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Commodity prices have been rising for various reasons since mid-November. But with regard to base metals, the most cited drivers are infrastructure spending in China and optimism (and intense speculation) over Trump’s fiscal stimulus plans, which includes investing heavily in infrastructure other than the Great Wall of Trump.

In fact, the recent rise in commodity prices has allowed Australia to print back-to-back trade surpluses in November and December, which will likely help the Australian economy to rebound from its poor performance in Q3, which is the first quarter-on-quarter contraction since Q1 2011. And as I noted in my latest Economic Snapshot, Australia’s seasonally-adjusted surplus of A$3,510 million in December is the largest trade surplus ever on record. And this trade surplus, in turn, was due to exports surging by 5.4% to a record high of $32,630 million.
2. The search for higher yield

Australia is one of the few countries that have an “AAA” rating with “stable” outlook from Moody’s and Fitch. Standard & Poor’s has a different opinion, though, since it gave Australia an “AAA” rating but a “negative” outlook. Still, that’s not so bad, and it also means that Australia is a relatively safe country for investors and lenders. At the same time, the RBA’s official cash rate of 1.50% is still one of the highest among the developed economies.

What these all mean is that Australia offers relatively high yet safe yields, which makes it quite attractive for investors. And the search for higher yet relatively safe yields in a low-yield world has benefited the Aussie in two ways.

The first is that demand for the higher-yielding Aussie itself is being sustained by this search for higher yields. And the second is that Australian bonds have been in great demand recently. In fact, a Bloomberg report from earlier, um, reported that:

“Australia’s government sold A$11 billion ($8.5 billion) of 11-year debt notes in its biggest-ever bond transaction, as investors hungry for higher yields set aside concerns stubborn budget deficits will cost the nation its AAA credit rating.”

Admittedly, there is no breakdown yet on how much foreign investors bought. Moreover, the RBA prefers to see more capital inflows into business investments. Nevertheless, capital inflows towards Australia though bond purchases still benefits the Aussie.

3. Monetary policy stances
If you can still remember, both the Aussie and the Kiwi got burned in the run-up to the December FOMC statement, despite rallying commodities and the prevalence of risk appetite at the time. The rationale for this is that market players were expecting capital to flow out from Australia and New Zealand towards the U.S., thanks to the expected narrowing in interest rate differentials, as well as expectations of faster growth in the U.S., courtesy of Trump’s fiscal stimulus plans.

And when the Fed did hike and communicated the possibility of up to three rate hikes in 2017, both the Kiwi and the Aussie weakened for a couple more weeks. This time, because of expectations that interest rate differentials would narrow even more and at a faster pace than expected.

However, some of the Fed’s recent communications and recent uncertainty related to Trump have dampened rate hike expectations a bit. And to illustrate, the CME Group’s FedWatch Tool shows that by the end of the year, the market has only priced in the following:

a 95.2% probability of a single rate hike
a 74.7% probability of two rate hikes
a 41.4% probability of three rate hikes
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So, market players obviously don’t have a lot of faith that we’ll be getting three rate hikes from the Fed this year.

For the RBA’s part, it plans to keep the cash rate steady at 1.50% for a while. And the rational for this, as revealed by the latest RBA meeting minutes is that (emphasis mine):

“In considering the stance of monetary policy, members viewed the near-term prospects for global growth as being more positive, although recognised the risks from policy uncertainty in the medium term. Stronger growth had contributed to higher inflationary pressures, including higher commodity prices, which had implications for the future stance of monetary policy in the advanced economies in coming years. Long-term bond yields had moved higher in many advanced economies.”

“Domestically, the economy was continuing its transition following the end of the mining investment boom. The fall in GDP in the September quarter had reflected some temporary factors. Looking forward, resource exports were expected to make a significant contribution to growth over the forecast period and the drag on growth from falling mining investment was expected to wane. The depreciation of the exchange rate since 2013 had also assisted the economy in its transition following the mining investment boom.”

In short, there is no need to cut rates further because the contraction in Q3 GDP growth is only temporary, and GDP growth is expected to rebound and continue to grow, thanks to commodities exports.

And while the RBA reiterated its usual statement that “An appreciating exchange rate would complicate this adjustment,” RBA Governor Lowe had this to say during the Q&A portion of his February 9 speech (emphasis mine):

“It’s hard to say that the exchange rate is fundamentally too high. If the global outlook were to change and the exchange rate/interest rate combination led to growth being downgraded, then you could make the case that the exchange rate was too high. But at the moment I struggle to say the configuration is leading to growth outcomes that aren’t satisfactory.”

Final Thoughts

Too long, didn’t read? Well, you hurt my feelings. But to summarize, expectations that narrower interest rate differentials would cause capital outflows from Australia towards the U.S. has been reduced lately, because the RBA plans to keep rates steady while the market only expects two rate hikes from the Fed by the end of the year. And these, in turn, have allowed market players to shift their focus on the relatively high but safe yields that Australia and the Aussie dollar offers, as well as the upward march in commodity prices.
 

Andora Andrei

Active member
USD/CAD: Higher N-Term, Before Lower: Where To Target?

USD/CAD: Higher N-Term, Before Lower: Where To Target?

The Canadian economy’s close dependence on the US and oil industries means the ‘loonie’ has been highly vulnerable to political events regarding Trump’s presidency and OPEC’s oil supply freeze.
Our call for a near-term stronger USD should lift the cross near term, but we maintain the view that USD/CAD will end 2017 at a level lower than current as valuation and a normalizing growth outlook should work as a gravitating force on the cross.
We forecast USD/CAD at 1.32 in 1M (previously 1.33), 1.32 in 3M (unchanged), 1.30 in 6M (unchanged) and 1.28 in 12M (unchanged).

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Andora Andrei

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3 Reasons Why ECB Tapering Won’t Prevent Further EUR/USD Weakness

3 Reasons Why ECB Tapering Won’t Prevent Further EUR/USD Weakness

The European Central Bank is pondering over its next steps regarding the QE program. The team at Deutsche Bank sees weakness in any case:

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One of the pushbacks we get to our weaker euro view is that the ECB will signal tapering this year preventing EUR/USD weakness. We don’t agree.

First, tapering is not necessarily bullish for a currency. When the Fed signaled taper in mid-2013 the dollar strengthened a lot against EM but it weakened against both the euro and yen.

Second, ECB tightening is not that simple. Not only would it steepen curves but it risks a return of redenomination risk that has been conveniently compressed by the ECB’s fight against deflation.

Finally, EUR/USD is not just about the ECB but also the Fed and the level of US yields…With the dollar having transitioned to a high-yielder and even more Fed hikes to come, the greenback should be doing a good job of attracting inflows and deflecting its use as a funding currency to both the euro and the yen.

The dollar has had a tough start to start the year but we are not giving up on our bullish view for 2017.
 

Andora Andrei

Active member
US dollar unable to rally despite upbeat minutes

US dollar unable to rally despite upbeat minutes

The Federal Reserve opens the door to rate hike in March by saying it can happen “fairly soon”. This is data-dependent and not a commitment. Nevertheless, the members of the FOMC are relatively positive. The document joins public appearances by Fed officials such as Harker and Powell which say that March is on the cards outright.

Nevertheless, the greenback fails to gain. Against some currencies, the USD is unable to extend its gains, while against others, the buck is just stuck.

Here are the words from the minutes that should have sent the dollar higher:
many participants expressed the view that it might be appropriate to raise the federal funds rate again fairly soon if incoming information on the labor market and inflation was in line with or stronger than their current expectations or if the risks of overshooting the Committee’s maximum-employment and inflation objectives increased.

In addition, many Fed officials saw a modest risk of significant inflation and they judged that the Fed would have ample time to react. This is slightly less hawkish. On the other hand, they agreed that discussions about squeezing the balance sheet should begin. This is due for a later stage in the tightening cycle, but this stage is getting closer.

Maybe the dollar didn’t like the fact that “several” saw risks with the possible appreciation of the US dollar. However, this is not new.

Here is how the USD/JPY looks. Note that the pair is actually dropping. Against the euro, the dollar is fairly balanced.
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Andora Andrei

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EUR/USD: En-Route To Parity; USD/JPY En-Route To 128

EUR/USD: En-Route To Parity; USD/JPY En-Route To 128

The US dollar is reasserting itself. What’s next? The team at BNP Paribas sees big levels.

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BNP Paribas has made some adjustments to its G10 FX forecasts in tandem with its economics team’s quarterly forecast revision process.

“The most significant change to our economic forecasts this quarter is that we have added a third rate hike to our Federal Reserve profile. Our economists now anticipate Fed hikes in May, September and December of 2017, followed by four rate hikes in 2018,” BNPP argues.

“The changes this quarter are modest and mainly reflect the magnitude rather than direction of the moves we expect, as markets seem likely once again to discover the limits of policy divergence as 2017 progresses.

Our forecasts imply USDJPY rising to 128 and EURUSD falling to 1.00 by the end of 2017,” BNPP projects.
 

Andora Andrei

Active member
Brexit Bulletin: What Can By-Elections Tell Us About Brexit?

Brexit Bulletin: What Can By-Elections Tell Us About Brexit?

Labour is facing a stiff challenge in its traditional heartlands
Voters in Copeland and Stoke Central take center stage today in by-elections that will have an impact beyond the borders of the two constituencies.

Both districts have traditionally elected Labour MPs but voted for Brexit, putting it firmly on the agenda during the campaigns, alongside more granular local issues. That, coupled with timing of the polls and the positions of the parties involved, mean they matter more than the average by-election, according to Bloomberg’s Robert Hutton.
The elections were triggered by two pro-EU Labour lawmakers, who opposed party leader Jeremy Corbyn, quitting Parliament for jobs outside politics. Defeats in either seat could raise more questions about Corbyn’s future. In Stoke, the city that posted the biggest “Leave” vote in June, the U.K. Independence Party senses a chance to gain a second MP.

The Conservatives are seeking a surprise win in Copeland, which would both act as an endorsement of Theresa May’s relatively new premiership, and, according to Matt Singh of Number Cruncher Politics, be the most extraordinary by-election victory since 1878.
Trade Boost

Optimism among exporters is increasing as Brexit draws closer, according to the British Chambers of Commerce, citing a survey of manufacturing and services business. Both groups were increasingly confident that they will continue to improve revenues, and that profitability will increase or remain steady in the coming 12 months, the BCC said.

Today’s BCC report comes a day after final GDP figures released on Wednesday showed trade delivered its biggest boost to growth in almost six years, helping the U.K. continue to beat economists’ expectations. The weak pound helped spur a 4.1 percent increase in exports, while imports fell 0.4 percent, meaning net trade added 1.3 percentage points to growth.

That was the biggest single contributor to a 0.7 percent expansion in GDP in the fourth quarter of 2016, a touch higher than an initial estimate of 0.6 percent.
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Still, even after the stronger data, questions remain over whether this new economic mix can prove sustainable. Faster inflation is expected to hit shoppers, and business uncertainty could increase once Article 50 is triggered.
Brexit Bullets

French presidential candidate Marine Le Pen, who wants France out of the euro, compared herself to Theresa May yesterday, telling TF1 television the PM is “using policies that I want to run”
The finance industry is likely to fragment across Europe rather than focus on one location after Brexit, according to Irish central bank deputy governor Sharon Donnery
The European Commission’s “harsh” treatment of the U.K. isn’t good for Germany, according to a member of Chancellor Angela Merkel’s parliamentary bloc
Brexit negotiations may take longer than two years, Czech Premier Bohuslav Sobotka said
One in three manufacturing firms plan to shift some operations out of the U.K. after Brexit, the Independent reports, citing a KPMG study
The Institute of Directors and manufacturing lobby group EEF separately flagged the risks of a Brexit cliff-edge
Household products supplier McBride is meeting with retail customers to discuss price increases
British tourists could have to pay to visit Europe after Brexit as part of a U.S.-style visa waiver system, the immigration minister told MPs, according to the Telegraph
“Currency nationalism,” or requiring clearing in the jurisdiction of the currency in which instruments are denominated, could fragment global capital markets, according to Bank of England Deputy Governor Jon Cunliffe
Due today: latest migration figures from the ONS, and a report on the economy from the LSE Growth Commission.

And Finally...

University of Cambridge academics are taking steps to prevent Brexit uncertainty from prompting thousands of older expats to move back to Britain without property or pensions.

The absence of accurate information about their rights within the EU means expats could return home and add to the strains on U.K. infrastructure. The academics are therefore building a database they hope will provide fast, trustworthy advice to British citizens in EU nations throughout the negotiations.

“U.K. citizens abroad need to be empowered to make sound, informed decisions during Brexit negotiations on whether to remain in their adopted homelands or return,” Cambridge's Dr. Brendan Burchell said.
 

Andora Andrei

Active member
Next's Stock Slump Has Wolfson's Believers Sensing Opportunity

Next's Stock Slump Has Wolfson's Believers Sensing Opportunity

Shares trading at biggest discount to sector in about 12 years
Woodford, Altavista among firms to snap up retailer’s shares

After Next Plc Chief Executive Officer Simon Wolfson alarmed investors with frank assessments of the challenges facing the U.K. retailer, its bargain-basement share price has started to draw some of them back.

Funds including Altavista Investment Management U.K. LLP and Woodford Investment Management LLP have built up their holdings in the British clothing mainstay since Wolfson in January precipitated a new sell-off in Next shares by warning that Britain’s apparel spending slump would persist.
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Neil Woodford, whose fund company is Next’s sixth-largest shareholder with a stake worth about 181.4 million pounds ($226 million), said in a blog post that Next remains well-managed and cash generative. Altavista says it’s attracted to Wolfson’s track record of steering the retailer through even darker times -- which include the global financial crisis, when Next gained market share. The CEO’s mantra in such circumstances is to prioritize profit over sales.

“Next’s management is stable, disciplined and commercially savvy,” said Vinod Nair, co-chief investment officer at Altavista, which has 2 percent to 3 percent of its $200 million-plus fund in the chain’s shares.
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Brits are spending a decreasing proportion of their money on clothing and what they do spend is increasingly going online. A fall in the pound since the U.K.’s vote to leave the European Union is expected to spur inflation and squeeze disposable incomes, while a new minimum wage and higher commercial property taxes are lifting retailers’ costs.

The company’s detractors argue that Next isn’t in just another cycle this time, and some question Wolfson’s strategic moves. The CEO plans to increase store space, even as consumers shift their spending online.

“They should close some of their older stores which are a drag on profitability,” said George Mensah, an analyst at Shore Capital who has a sell rating on the shares. “We don’t believe the management team are doing the right things. Next is a value trap.”
 

Andora Andrei

Active member
Emerging-Markets Hedge-Fund Assets Reach Record in '16, HFR Says

Emerging-Markets Hedge-Fund Assets Reach Record in '16, HFR Says

Performance in Latam, Russia, Eastern Europe contributes
Assets under EM funds mark second straight quarterly record

Emerging-market hedge-fund assets reached a record at the end of last year, thanks to gains in energy prices and a strengthening dollar, according to Hedge Fund Research Inc.

Assets of developing-markets hedge funds rose to $200.7 billion as of the end of December, marking the second straight quarterly record after an increase of $9.3 billion for the entire year, according to a report from the industry researcher received Thursday. Global hedge-fund assets increased by $121.6 billion in 2016 to $3.02 trillion, it showed.
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“Strong performance gains, specifically focused in Latin America and Russia/Eastern Europe, contributed to this growth, as investors positioned for the impacts of divergent monetary policies in U.S. and Europe on emerging markets,” HFR’s President Kenneth J. Heinz in Chicago said in the statement. “Specialized hedge funds which have demonstrated the ability to navigate these trends are likely to continue to lead industry gains in 1H17.”

Emerging-market assets have been resilient since the start of the year amid expectations that a stronger U.S. economy will fuel growth in developing nations, bolster corporate profits and support prices for the commodity exports that many of the countries rely on. The index of developing-nation currencies is near its highest since August, while that of stocks is at its most since 2015 after suffering declines following President Donald Trump’s victory in U.S. presidential election in November.
An index measuring emerging market hedge funds gained 3.2 percent in January, after rising 7 percent in 2016. Those focused on Latin America jumped 5.6 percent last month, extending a 27.2 percent surge last year. Total capital poured in Latin American-focused funds climbed to $6.3 billion in 2016, managed by more than 100 funds, while that in Russian and Eastern European-focused funds rose by $2.5 billion to $29.3 billion under more than 170 hedge funds.

The amount of capital under emerging Asia managed by over 500 hedge funds fell by $4.4 billion last year to $48.6 billion, while that in Middle-East-focused funds gained $500 million with nearly 50 funds managing $4.6 billion, according to the report.
 

Andora Andrei

Active member
Hong Kong Property Stock Rally Gathers Pace on Earnings Outlook

Hong Kong Property Stock Rally Gathers Pace on Earnings Outlook

Shares to keep climbing if earnings remain stable: analyst
New home sales soared 48 percent in January over December

A rally by Hong Kong property developers showed little sign of faltering amid optimism rising home sales will boost earnings.
Hong Kong real estate companies were among the biggest gainers on the benchmark Hang Seng Index, which slid 0.4 percent as of 2:34 p.m. local time, down from a 1 1/2 year high. New World Development Co. topped the gauge with a 3.3 percent advance after reporting a 52 percent increase in fiscal first-half earnings Wednesday. Hang Lung Properties Ltd. added 1.4 percent, while Sun Hung Kai Properties Ltd. climbed 1.2 percent. The Shanghai Composite Index fell 0.6 percent after reaching a two-month high Wednesday.

Hong Kong buyers have piled into new homes as government attempts to cool the world’s priciest home market have nearly halted the supply of older, existing apartments. New home sales soared 48 percent in January over December, compared with a 76 percent decline in the same period last year, according to data from the government and residential property agency Midland Realty.

"Property stocks extended gains after some developers reported good earnings," said Linus Yip, Hong Kong based strategist with First Shanghai Securities Co. "As long as upcoming earnings remain stable, the rally will be sustained."
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The Hang Seng China Enterprises Index, a gauge of mainland companies traded in Hong Kong, declined 0.3 percent.

MGM China Holdings Ltd., Wynn Macau Ltd. and Galaxy Entertainment Group all gained at least 2.1%. Valuations are attractive after declines of more than 10% from a November peak, while monthly gaming revenue growth is expected to rebound to above 10% on a low base, Hong-Kong based Nomura Securities analyst Richard Huang said in an interview
Automakers declined in Hong Kong and the mainland, snapping a 3-day rising streak. Guangzhou Automobile Group Co. dropped 2.8% in Hong Kong, while Dongfeng Motor Group Co. slid 1.7%
New China Life Insurance Co. fell 1.7% in Shanghai. China’s top insurance regulator vowed Wednesday to “severely” punish short-term speculation by insurers and to curb “unreasonably” high returns of some insurance products
 

Andora Andrei

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Japan Stocks Could Surpass Key Technical Level, Nomura Says

Japan Stocks Could Surpass Key Technical Level, Nomura Says

FOMC minutes suggest Fed probably won’t raise rates in March
Exporters, large-cap shares face profit-taking: Ichiyoshi

Several failed attempts by the Topix index to climb past a key technical level have left investors nervous, even amid signs the benchmark may eventually succeed, according to Nomura Holdings Inc.

Japan’s equity gauge dropped for the first time in four days, retreating from a 14-month high reached Wednesday after U.S. shares rose to a record. Exporters and banks were the biggest drags on the Topix index after minutes of the Federal Reserve’s Feb. 1 meeting left market-implied expectations for a March rate increase below 50 percent. Ministry of Finance data showed foreign investors sold a net 127.9 billion yen ($1.1 billion) of Japan stocks last week.
“The Topix has tried the 1,560 level several times, so investors are sensitive toward that level,” said Shoichiro Yamauchi, an equity-market strategist at Nomura. But “if you look at the 13-week moving-average line, Japanese shares have been solidifying its lower range around that level, and most of the major moving averages are pointing up, so its more natural to think that we’re still in an uptrend.”
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Japanese shares have climbed faster than equities overseas since November, so they appear to be taking a rest, according to Yamauchi.

Mitsushige Akino, an executive officer at Ichiyoshi Investment Management Co. in Tokyo, said the yen’s gain Wednesday on the Fed minutes caused investors to sell exporters. Large-cap shares are more likely to face profit-taking from domestic institutional investors, he said.
Summary

Topix -0.1% at 1,556.25 at the close in Tokyo
Nikkei 225 little changed at 19,371.46
Yen +0.1% at 113.24 per dollar after rising 0.3% on Wednesday
The Nikkei Stock Average Volatility Index fell to its lowest since Aug. 2015 on Wednesday
Mitsubishi UFJ Financial Group -1%, Sumitomo Mitsui Financial Group -1.6%
Honda Motor -1.4%, Keyence -0.8%, Mazda Motor -1.2%
ANA Holdings +2.9% after Mitsubishi UFJ Morgan Stanley said recovery in overseas routes has been stronger than expected
CyberAgent +5.3% after being raised to buy from neutral at Daiwa
Mitsui Engineering & Shipbuilding +3.9% after Mizuho raises rating to neutral from underperform
Yamato Holdings +7.9% after Nikkei report indicates co. will curb delivery volume and then seek large price increases from its biggest clients

For more on Japan markets:
CLSA Says Japan’s Casino Market Will Rival Macau: Chart
Japan Renewable Developer Renova’s Shares Jump on Debut in Tokyo
Regional Underdog Shows Japanese Banks How to Beat Demographics
BOJ Said to Plan Greater Clarity on JGB Buying Operations (1)
 

Andora Andrei

Active member
Oil Sands Batter Major Explorers' Reserves as Rout Sinks Value

Oil Sands Batter Major Explorers' Reserves as Rout Sinks Value

Exxon, Conoco take massive Canadian hits to proved reserves
Pricey bitumen investments poor performers amid market slump

Oil-sands investments in Western Canada that gobbled tens of billions of dollars over the past decade are proving an Achilles heel for some of the world’s biggest energy producers.

Exxon Mobil Corp. slashed proved reserves the most in its modern history after removing the entire $16 billion, 3.5-billion-barrel Kearl oil-sands project from its books on Wednesday. That followed ConocoPhillips’ announcement a day earlier that erasing 1.15 billion oil-sands barrels plunged its reserves to a 15-year low.

While prolific shale plays in Texas and Oklahoma are going through an investment boom with oil above $50 a barrel, the oil sands have fallen out of favor. Current investments in the region amount mostly to long-planned expansions by large Canadian producers like Suncor Energy Inc., while majors like Statoil ASA have sold assets.

The oil-sands mines in northern Alberta are among the costliest types of petroleum projects to develop because the raw bitumen extracted from the region must be processed and converted to a thick, synthetic crude oil. In addition, Canadian crude sells for less than benchmark U.S. crude because of the added cost to ship it to American refineries and an abundance of competing supplies from shale fields. That’s why the oil sands have been particularly hard hit by the worst oil slump in a generation.
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The combined 4.65 billion barrels of oil-sands crude removed from Exxon’s and Conoco’s books are worth $183 billion, based on current prices for the Western Canada Select benchmark. The revisions hit as both U.S. companies, along with the rest of the oil industry, strove to recover from a 2 1/2-year market slump that collapsed cash flows, wiped out hundreds of thousands of jobs and prompted many explorers to cancel their most ambitious drilling programs.
SEC Rules

Under U.S. Securities and Exchange Commission rules, proved reserves can only include oil and gas fields that can be produced economically within the next half decade. Price trends from the previous 12 months are compared against the estimated cost to harvest crude and gas in determining which reserves are counted.

The revisions of what qualifies as proved reserves are not expected to affect the operation of the underlying projects or to alter the company’s outlook for future production volumes, Exxon said.
 

Andora Andrei

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Old Coal Is King of DAX as Investors Look Beyond RWE Writedowns

Old Coal Is King of DAX as Investors Look Beyond RWE Writedowns

Shares gain 13 percent in 2017 as power prices recover
Utility plans to resume dividend payment for this year

RWE AG, with some of its legacy coal plants dating back to the 1950s, is this year outperforming new green rivals that are supposed to be the future of the energy industry -- as well as every other company on Germany’s main stock index.

With investors brushing aside Wednesday’s news of a scrapped dividend to most shareholders for a second consecutive year and another multi-billion-euro writedown on its conventional power plants, the Essen, Germany-based company gained 13 percent this year through Wednesday. Reasons for the utility’s best start to the year since 2012 can be found in October’s initial public offering of Innogy SE as well as a long-awaited recovery in wholesale electricity prices.

To save itself from an outdated utility model operating in the brave new world where green energy gets most of the favors, RWE shifted its renewables, grid and retail arms into Innogy. The proceeds of 2.64 billion euros ($2.78 billion) was a welcome boost to its balance sheet -- until last year savaged by a power-price rout lasting half a decade.
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Benchmark power contracts have gained more than 20 percent since September. The market has started to notice the recovery, while it hasn’t been fully priced in yet, Ahmed Farman, an analyst at Jefferies International Ltd., said by phone from London.

By contrast, Innogy and EON SE, which spun off its fossil-fuel business last year, have little exposure to the daily swings of energy markets.

RWE, which dates back to the 19th century, gets a majority of its electricity from hard coal and lignite. Lothar Lambertz, a company spokesman, declined to comment on the performance of its shares this year.

By comparison, Innogy gained 3 percent this year, while EON rose 7.5 percent. Enel SpA, Europe’s biggest utility by market value which has bought back its renewable subsidiary, dropped 5.5 percent.
 

Andora Andrei

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Money Talks Louder Than Trump for Iran as It Builds Gas Business

Money Talks Louder Than Trump for Iran as It Builds Gas Business

Country is ready to ship fuel through first pipeline to Iraq
Iran could export 5 to 6 billion cubic feet of gas a day

Iran is hard at work gaining a foothold in the global energy market, and it’s not letting U.S. President Donald Trump’s confrontational tone stop it from trying.

Political rhetoric is unlikely to turn into tangible impediments for its ambition to join Russia and Norway in the ranks of major gas exporters, according to Deputy Iranian Oil Minister Amir Hossein Zamaninia.

The nation has about $7 trillion worth of gas reserves sitting underground, based on European benchmark prices, and its doors are open to those who will help it cash in on the fortune. Zamaninia thinks those sorts of figures mean the business case for Iranian energy is too tempting for the world to pass up, even as its supreme leader Ayatollah Ali Khamenei and Trump exchange barbs.
The country may need as much as $100 billion to develop its gas business, but estimates vary widely. Majors from Royal Dutch Shell to Total SA agreed to assess oil or gas fields in Iran last year, but no deals have been signed yet. Total plans to sign a contract if Iran respects an international nuclear treaty and if the U.S. sticks to it, Chief Executive Officer Patrick Pouyanne said Tuesday in an interview. Austria’s OMV AG has said Iran’s gas market is “a big opportunity.”

“There are concerns and the international capital is scarce, but our projects and our environment are so attractive that we don’t think we will face a great deal of difficulty,” Zamaninia said in an interview last week at the CWC Iran LNG & Gas Summit in Frankfurt. “We don’t think that the new administration in the U.S. will pose a big problem in this department, in the oil and gas business.”
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While Iran has the largest commercial volumes of natural gas in the world, the country is a smaller exporter than Bolivia. But that may soon change. Last year, U.S. President Barack Obama lifted a decade of economic sanctions in exchange for greater access to facilities Iran may use to make nuclear weapons. Growing populations and economies in nearby countries, including Turkey and India, mean gas demand is also set to rise.

But there’s also reason for doubt. Competition from other suppliers is intensifying, European prices have dropped 25 percent in the past five years and Iran consumes almost as much as it pumps. There’s an election around the corner and political challenges have forced the country to delay some gas projects for years.

“Iran’s got just a huge amount of potential but I don’t see anything major happening for some time,” said Christopher Haines, head of oil and gas at BMI Research in London. “We need a lot more trust between operators and the government and confidence in the political environment.”
Trump Impact

Then there’s Trump. Through an executive order, the new U.S. president banned Iranians from entering the country for 90 days, citing the threat of terrorism. While that order was blocked by a court, he has said he will sign another one this week. He also put Iran “on notice” after it performed a missile test on Feb. 29, without clarifying what that meant.

Read here on what to watch in Trump’s escalating confrontation with Iran

International politicking is delivering a “temporary hiccup” to investment, but Iran’s gas prize is big enough to motivate people to overcome their differences, Zamaninia said. The country has 56 gas fields with reserves of 33.7 trillion cubic meters, of which 40 are still undeveloped as a result of sanctions.

With additional technology, Iran could export as much as 6 billion cubic feet (170 million cubic meters) of gas a day by 2030, mostly to Mideast countries, according to Siamak Adibi, head of Middle East gas at consultant FGE. That would make it the fifth largest gas exporter in the world behind Russia and Norway, Canada and Qatar, according to 2015 figures in the BP Statistical Review.

Iran needs $70 billion to develop proposed oil and gas projects, and half of that could come through in a “few short months,” according to Zamaninia. The first pipeline to Iraq is “ready” to ship natural gas and a second to Basra is expected to start in two or three months, Zamaninia said. Haines of BMI Research agreed that timeline was possible.

“Iran has huge potential to export due to its resources,” said Adibi. “The question is only where the market is.”
Iran’s Gas Trade Projects
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Most Asia Stocks Fall After Fed Minutes; Oil Gains: Markets Wrap

Most Asia Stocks Fall After Fed Minutes; Oil Gains: Markets Wrap

S&P 500 drops for second time in 11 sessions after record high
Dollar gains after Wednesday’s loss while Treasuries steady

Most Asian equities fell, following declines in U.S. stocks after minutes from the Federal Reserve’s latest meeting showed officials confident they can raise rates gradually. Oil rallied.

Stocks in Hong Kong led declines in Asia after the S&P 500 index slipped from an all-time high. Japan’s Topix pared earlier losses, while the Bloomberg Dollar Spot Index strengthened to recover some of Wednesday’s retreat. Treasuries maintained the previous session’s advance. Crude rebounded ahead of government data on stockpiles, while metals declined for a third day.
Fed policy makers expressed confidence they can take their time raising rates as there’s little threat inflation will suddenly accelerate, according to the minutes. Officials wrestled with uncertainty on issues ranging from the Trump administration’s fiscal stimulus plans to the headwinds a rising dollar may pose. The odds for an increase in March retreated to 36 percent. Allianz SE chief economic adviser Mohamed El-Erian said that seems “too low.”

Read our Markets Live blog here.

What traders are likely to be watching out for:

Glencore Plc reports 2016 earnings that may be buoyed by asset sales and cost cuts, coupled with higher commodity prices. Reinvestment or return of excess cash will be a key value driver, and analysts will be looking for more detail on the Rosneft oil deal.

Here are the main moves in markets:

Currencies

The Bloomberg Dollar Spot Index rose 0.1 percent as of 3:29 p.m. in Tokyo, after falling 0.2 percent on Wednesday. The yen climbed less than 0.1 percent to 113.25 per dollar, extending a 0.3 percent gain from the previous day.
The Korean won rose 0.4 percent, climbing for a third day. The central bank kept its policy interest rate unchanged for an eighth month as improvements in exports and inflation offset concerns over a political scandal that’s hurt domestic confidence.
The euro was little changed at $1.0556 after gaining 0.2 percent on Wednesday.

Stocks

The MSCI Asia Pacific Index was little changed, with slightly more stocks declining than advancing.
Japan’s Topix declined less than 0.1 percent, following three days of gains that took it to the highest since December 2015. The index pared an earlier loss of as much as 0.6 percent.
Australia’s S&P/ASX 200 Index slid 0.4 percent, while New Zealand’s S&P/NZX 50 Index advanced 0.4 percent. South Korea’s Kospi added 0.1 percent.
The Hang Seng China Enterprises Index dropped 0.3 percent, after a 1.2 percent jump on Wednesday, while the Shanghai Composite Index fell 0.7 percent.
Futures on the S&P 500 were flat after the benchmark index lost 0.1 percent. The Stoxx Europe 600 Index gave up earlier gains to end little changed.

Bonds

The yield on 10-year Treasuries was little changed at 2.41 percent, after sliding two basis points on Wednesday.
Australian 10-year yields dropped five basis points to 2.79 percent.

Commodities

Oil climbed 0.8 percent to $54.03 a barrel, erasing a 0.9 percent drop in the previous session. An industry report showed U.S. crude stockpiles fell, in a sign that government data due Thursday may show the first contraction this year.
Copper fell 1.1 percent in London, dropping for a third day, while aluminum slipped amid increasing stockpiles in China.
 

Andora Andrei

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OPEC Still Waiting for Evidence Oil Cuts Are Doing Their Job

OPEC Still Waiting for Evidence Oil Cuts Are Doing Their Job

Stockpiles, seen as key gauge of success, still rising in U.S.
OPEC committee sees group’s compliance at 90%, allies at 60%

OPEC officials this week hailed the “excellent” and “unprecedented” implementation of their agreement to cut oil production, but were still waiting for solid evidence that the deal was fulfilling their key measure of success and shrinking the global glut.

A reduction in the amount of oil held in storage around the world is the most important factor for the Organization of Petroleum Exporting Countries, Qatar’s Energy Minister Mohammed Al Sada said at the IP Week conference in London Wednesday. The pace of that decline will determine the group’s next move, including whether to extend the accord beyond its initial six-month term, said OPEC Secretary-General Mohammad Barkindo.
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The most reliable data available so far on inventories -- crude held in commercial storage in the U.S. -- is going in the opposite direction. Stockpiles in the world’s largest oil consumer have risen every week since OPEC began cutting on Jan. 1, while data on global storage levels has yet to be published.

“The market has been positively surprised by the high levels of compliance to this deal,” Jens Pedersen, senior analyst at Danske Bank A/S, said by phone. “The trend in inventories recently has been upwards and quite relentless. The market will be a bit careful to rally further if inventories are still building.”
Brent crude has risen more than 20 percent since OPEC agreed last year to cut production, a deal that was joined later by Russia, Mexico and several other non-members. Even as the group’s initial compliance with the accord exceeded expectations, the price rally stalled in the mid-$50s as U.S. crude stockpiles surged to the highest level in more than three decades and oil drillers deployed the most rigs since October 2015. Brent fell 1.6 percent to $55.73 a barrel at 4:56 p.m. in London Wednesday.

Higher Compliance

A five-nation technical committee meeting in Vienna on Wednesday concluded that OPEC had achieved more than 90 percent of its promised cutbacks in January, and that the group’s partners implemented almost 60 percent, according to delegates familiar with the matter who asked not to be identified.

The OPEC agreement is working, compliance will increase to 100 percent and oil inventories will drop this year, Barkindo said.

“We are going to go for much higher levels of compliance because of the very high level of stocks that we have brought over with us from 2016,” Barkindo said in a Bloomberg Television interview in London on Tuesday. Oil is still far from an “equilibrium price” and inventories remained very high in January, but OPEC’s not disappointed by the market reaction to its agreement.

U.S. crude inventories have expanded by more than 39 million barrels this year to 518 million, the highest level in data going back to August 1982, according to the Energy Information Administration. A further 3.25 million barrels were added last week, according to a Bloomberg survey before government data to be published Thursday.
Extended Cuts

That’s only a partial picture of the state of global oil supply, but the International Energy Agency has yet to publish an estimate of how the first month of OPEC cuts affected international inventories.

Stocks held in rich industrialized countries -- including the U.S. -- were falling through the fourth quarter of 2016 and dropped below 3 billion barrels in December for the first time in a year. Meanwhile, stockpiles in China and other emerging economies, plus volumes of fuel held at sea were still growing, the IEA said on Feb. 10.

While solid supply data may be lacking, changes in benchmark oil prices do suggest OPEC is succeeding. A pricing structure in Brent and West Texas Intermediate futures called contango -- an indicator of oversupply where short-term prices are lower than long-term -- is weakening and shifting toward the opposite condition known as backwardation -- a sign of tighter supply.

Global oil stockpiles are starting to decline, but it’s “truly premature” to say whether OPEC will extend its output cuts into the second half, Qatar’s Al Sada said in a Bloomberg Television interview in London.

Patrick Pouyanne, chief executive officer of French oil and gas producer Total SA, said OPEC needs to do more if it really wants to eliminate the glut.

“If they want really to have an impact on the market, which means to have the inventories going down because inventories are quite high, it will have to be extended,” Pouyanne said Tuesday in a Bloomberg Television interview in New York. “I’m convinced that they will do it.”
 

Andora Andrei

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Now Even the Fed's Worried That Stock Volatility Is Too Low

Now Even the Fed's Worried That Stock Volatility Is Too Low

VIX sits near 2 1/2-month bottom reached in late January
Reduced volatility is "inconsistent" with uncertainty: FOMC

Add the Federal Reserve to the list of worriers about investor complacency as stocks set new records almost daily.

A few officials at the central bank “expressed concern that the low level of implied volatility in equity markets appeared inconsistent with the considerable uncertainty attending the outlook” for Donald Trump to deliver on pro-growth campaign policies, according to the minutes from the Fed’s meeting three weeks ago, which were released Wednesday.

Stock turbulence has been all but banished from the market. The Chicago Board Options Exchange Volatility Index, a gauge of investor anxiety also known as the VIX, has been unusually calm in recent months. It’s less than two points above its 15-year low, even as the S&P 500 Index catapults to new highs. The measure rose 1.5 percent Wednesday, the first time it’s posted back-to back gains this month.
Fed members join a choir of market observers who are scratching their heads over a consistently suppressed VIX. Sure, optimism for economic fundamentals could be putting a cap on market volatility. But others see more credence in the Fed’s explanation, where stocks appear to be plotting their own trajectory based on policy expectations under President Donald Trump.

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Take Trump’s upcoming address to Congress on Feb. 28, where he’s expected to reveal details of his tax reform plans. It’s possible that any delays in implementing the program could shake the market from its calm, said John Canally, chief economic strategist at LPL Financial in Boston, particularly in light of the questions surrounding U.S. relations with global trade partners.

“I would agree with the Fed,” Canally said. “Everyone is wondering why equity market volatility is so low given the uncertainty out there. Take your pick. There’s the potential tax policies, overseas concerns, China.”
Rude Awakening

All of the quiet could make for a rude awakening, according to Paul Britton, founder of the $3.4 billion volatility hedge fund Capstone Investment Advisors.
In the minutes, central bank officials voiced concern about the pace at which the U.S. equity market has advanced. Some believe that fast rising stock prices might “reflect investors’ anticipation of a boost to earnings from a cut in corporate taxes or more expansionary fiscal policy, which might not materialize,” according to the minutes. The S&P 500 has gained 3.7 percent this month, posting seven record closes in the process.

While it isn’t unusual for the Fed to comment on financial market conditions, taking a such a hyper-specific look at the stock market and volatility is notable, Canally said. Still, even if policy doesn’t play out to investors’ expectations, healthy market fundamentals should support any momentary pullback, he added.
Britton points to the disconnect in expected volatility for stocks versus other asset classes. The VIX fell to a 19-month low against a gauge of Treasury price swings in late January, while the current ratio between the two remains 15 percent below its average since the start of 2014, data compiled by Bloomberg show.
 

Andora Andrei

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Usd/chf:

Usd/chf:

USD/CHF: Switzerland's ZEW Economic Expectations Index Advanced To Its Highest Level Since June

For the 24 hours to 23:00 GMT, the USD marginally rose against the CHF and closed at 1.0102.
In economic news, data indicated that Switzerland's ZEW economic expectations index registered a rise to a level of 19.4 in February, advancing for the sixth consecutive month and marking its highest level since June 2016, compared to a level of 18.5 in the prior month.
In the Asian session, at GMT0400, the pair is trading at 1.0096, with the USD trading 0.06% lower against the CHF from yesterday's close.
The pair is expected to find support at 1.0069, and a fall through could take it to the next support level of 1.0041. The pair is expected to find its first resistance at 1.0132, and a rise through could take it to the next resistance level of 1.0167.
Market participants will look forward to the release of Switzerland's industrial production data for 4Q 2016, scheduled to release later today.
The currency pair is trading below its 20 Hr moving average and showing convergence with its 50 Hr moving average.
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Andora Andrei

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GBP/USD: Britain's Economic Growth Picked Up In The Fourth Quarter Of 2016

GBP/USD: Britain's Economic Growth Picked Up In The Fourth Quarter Of 2016

For the 24 hours to 23:00 GMT, the GBP declined 0.16% against the USD and closed at 1.2456, after Britain's gross domestic product (GDP) data indicated that UK's annual growth rate was revised down in the final three-months of 2016.
The second estimate of GDP revealed that UK's economy expanded less-than-expected by 2.0% on an annual basis in the fourth quarter, compared to an advance of 2.2% in the preliminary figures and after recording an expansion of 2.2% in the prior quarter. Meanwhile, on a quarterly basis, the GDP grew 0.7% in the fourth quarter of 2016, revised up from the preliminary estimate of 0.6%, mainly due to a stronger performance by the manufacturing industry. GDP had advanced by 0.6% in the previous quarter.
In the Asian session, at GMT0400, the pair is trading at 1.2449, with the GBP trading 0.06% lower against the USD from yesterday's close.
The pair is expected to find support at 1.2411, and a fall through could take it to the next support level of 1.2373. The pair is expected to find its first resistance at 1.2497, and a rise through could take it to the next resistance level of 1.2545.
With no major economic releases in UK today, investor sentiment would be governed by global macroeconomic factors.
The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.
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Andora Andrei

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USD/JPY: Japan's Leading Economic And Coincident Indices Revised Down In December

USD/JPY: Japan's Leading Economic And Coincident Indices Revised Down In December

For the 24 hours to 23:00 GMT, the USD declined 0.35% against the JPY and closed at 113.3.
In the Asian session, at GMT0400, the pair is trading at 113.24, with the USD trading slightly lower against the JPY from yesterday's close.
Early morning data indicated that Japan's final leading economic index was revised down to a level of 104.8 in December, compared to a preliminary print of 105.2 and following a level of 102.8 in the previous month. On the other hand, the nation's final coincident index dropped to a level of 114.8 in December, compared to a reading of 115.0 in the prior month. The preliminary figures had indicated an advance to 115.2.
The pair is expected to find support at 112.87, and a fall through could take it to the next support level of 112.49. The pair is expected to find its first resistance at 113.63, and a rise through could take it to the next resistance level of 114.01.
The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.
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Andora Andrei

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FOMC Minutes Weighs On USD, Oil Is Set To Rally Further

FOMC Minutes Weighs On USD, Oil Is Set To Rally Further

News and Events:

Less hawkish Fed minutes confuse markets (by Arnaud Masset)
The minutes of the January FOMC meeting did not provide ground breaking information as the essence of the Fed’s message did not change since the previous meeting. Investors were left a little disappointed on reading the transcript as the minutes did not provide further clarity on the institution's thinking about the US outlook under Trump's presidency. The Committee reiterated its view that “it might be appropriate to raise the federal funds rate again fairly soon”, should the current trends in the both the labour market and inflation prove sustainable. Nothing new here. The Committee appeared concerned about the current strength of the dollar that could hamper a still fragile economic recovery.
All in all, the slight retracement of the dollar amid the release of the minutes suggests that investors are still unconvinced about a rate hike at the March meeting. In our opinion, the market is overly optimistic about the real state of the US economy. The election of Donald Trump has boosted confidence and sentiment across the board, sending equities to record levels. However, the true nature of this success has yet to reveal itself. The FX market treaded water on Thursday as market participants were still digesting the minutes. Given today’s light economic calendar, further dollar gains appear unlikely; the dollar index should continue to trade within the 101.00-50 area.
Crude prices are pushing higher on declining inventories (by Yann Quelenn)
The WTI crude oil price is still on the rise. The barrel price has gone up above $54 and is almost at its highest level in less than two years. Recent data has shown a decrease in US crude stocks due to less imports. Indeed, inventories have declined by 884k barrels when consensus expected an increase of 3.5M barrels.
There is definitely a clear trend here. The US rigs count is now topping at 751 which is 46% higher than during the same week last year when it was at 597. It is the fifth consecutive straight week. Moreover, markets seem more optimistic since the OPEC confirmed that the output production deal was on track.
We should not forget that it is a plan of the United States to become energetically independent and that the shale gas industry will certainly benefit from upcoming protectionist measures. Trump seems to try to deliver what he promised, which will have a strong impact on crude oil prices.
We target the WTI to reach $60 within the next few months.
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Today's Key Issues (time in GMT):

4Q Industry & Construction Output WDA YoY, last 1,10%, rev 1,00% CHF / 08:15
4Q Industrial Output WDA YoY, last 0,40%, rev 0,20% CHF / 08:15
4Q Total No. of Employees YoY, last 2,50% SEK / 08:30
ECB's Praet Speaks in London EUR / 08:55
Dec Retail Sales MoM, exp 0,20%, last -0,70% EUR / 09:00
Dec Retail Sales YoY, exp 0,90%, last 0,80% EUR / 09:00
Jan PPI MoM, exp 1,00%, last 0,50% ZAR / 09:30
Jan PPI YoY, exp 6,60%, last 7,10% ZAR / 09:30
Bundesbank Press Conference on Financial Accounts EUR / 10:00
Feb 22 FGV CPI IPC-S, exp 0,41%, last 0,49% BRL / 11:00
Feb FGV Inflation IGPM MoM, exp 0,01%, last 0,64% BRL / 11:00
Feb FGV Inflation IGPM YoY, exp 5,30%, last 6,65% BRL / 11:00
Feb CBI Retailing Reported Sales, exp 4, last -8 GBP / 11:00
Feb CBI Total Dist. Reported Sales, exp 24, last 26 GBP / 11:00
ECB's Praet Speaks in London EUR / 11:00
Feb 17 Foreigners Net Bond Invest, last -$262m TRY / 11:30
Feb 17 Foreigners Net Stock Invest, last $121m TRY / 11:30
ECB's Praet Speaks in London EUR / 13:00
Jan Outstanding Loans MoM, last 0,10% BRL / 13:30
Jan Total Outstanding Loans, last 3107b, rev 3106b BRL / 13:30
Jan Personal Loan Default Rate, last 6,00% BRL / 13:30
Jan Chicago Fed Nat Activity Index, exp 0, last 0,14 USD / 13:30
Feb 18 Initial Jobless Claims, exp 240k, last 239k USD / 13:30
Feb 11 Continuing Claims, exp 2068k, last 2076k USD / 13:30
Fed's Lockhart to Speak on His 10-Year Tenure at the Fed USD / 13:35
4Q House Price Purchase Index QoQ, last 1,50% USD / 14:00
Dec FHFA House Price Index MoM, exp 0,50%, last 0,50% USD / 14:00
Feb 19 Bloomberg Consumer Comfort, last 48,1 USD / 14:45
Feb Kansas City Fed Manf. Activity, exp 9, last 9 USD / 16:00
Feb 17 DOE U.S. Crude Oil Inventories, exp 3250k, last 9527k USD / 16:00
Feb 17 DOE Cushing OK Crude Inventory, exp -50k, last -702k USD / 16:00
Jan Central Govt Budget Balance, exp 7.9b, last -60.1b BRL / 17:30
Fed's Kaplan Speaks in Fort Worth USD / 18:00
Feb Consumer Confidence, last 93,3 KRW / 21:00
RBA's Lowe Testifies to Parliament Committee in Sydney AUD / 22:30
Jan Formal Job Creation Total, exp -35149, last -462366 BRL / 23:00


The Risk Today:

EUR/USD is back below 1.0600. Hourly resistance is given at 1.0679 (16/02/2017 high) while hourly support can be found at 1.0521 (15/02/2017 low). The technical structure suggests that the current underlying move is a bearish consolidation. In the longer term, the death cross late October indicated a further bearish bias. The pair has broken key support given at 1.0458 (16/03/2015 low). Key resistance holds at 1.1714 (24/08/2015 high). Expected to head towards parity.
GBP/USD has exited symmetrical triangle. However, the pair is still lying below strong resistance given at 1.2771 (05/10/2016 high). Key support is given at 1.2254 (19/01/2016 low) while hourly support is given around 1.2400. The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline. Long-term support given at 1.0520 (01/03/85) represents a decent target. Long-term resistance is given at 1.5018 (24/06/2015) and would indicate a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.
USD/JPY's demand is fading after its increase from support given at 111.36 (28/11/2016 low). Bearish pressures arise around hourly resistance given at 115.62 (19/01/2016 high). The technical structure suggests further weakness around former resistance given at 112.57 (17/01/2017 low). We favor a long-term bearish bias. Support is now given at 96.57 (10/08/2013 low). A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems absolutely unlikely. Expected to decline further support at 93.79 (13/06/2013 low).
USD/CHF's short-term bullish momentum is definitely bullish. The pair lies within an uptrend channel. Hourly resistance is implied by upper bound of the uptrend channel. Key resistance is given at a distance at 1.0344 (15/12/2016 high). We believe that the pair is likely to strengthen again above parity. In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015.
1.1300 1.3445 1.1731 121.69
1.0954 1.3121 1.0652 118.66
1.0874 1.2771 1.0344 115.62
1.0545 1.2479 1.0106 113.20
1.0454 1.2254 0.9967 111.36
1.0341 1.1986 0.9862 106.04
 

Andora Andrei

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Gold Still Near 1,235

Gold Still Near 1,235

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'Gold continues to tread water post the Federal Open Market Committee minutes, probably the highlight of a very light data week.' – Jeffrey Halley, OANDA (based on Reuters)
Pair's Outlook
The yellow metal remains near the 1,235 mark, and near that level the bullion has been fluctuating for the past six consecutive trading sessions. However, the flat trading is consistent with the forecasts, as the bullion continued to be squeezed in a medium term triangle pattern. A breakout to the upside is expected in the upcoming trading sessions, and it is most likely to occur at the start of next week. In such case it is highly likely that the metal's price would reach the 1,250 mark.
Traders' Sentiment
SWFX traders remain bullish on the metal, as 56% of open positions are long on Thursday. In addition, 62% of trader set up orders are to buy the metal.
 

Andora Andrei

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GBP/USD In Limbo Above The Weekly PP

GBP/USD In Limbo Above The Weekly PP

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'There may well be a case to say investors are still looking for the weaker aspect of data and focusing on that - the Brexit trade is an easy one to hang on now, as is the euro political risk trade ... over the last couple of days.' – BMO Capital Markets (based on Business Recorder)
Pair's Outlook
The British Pound remained rather muted against the US Dollar during the last three days, with the tough support area circa 1.24 keeping the pair afloat. Even though there is some room for another leg down, same as yesterday, assuming the weekly pivot point at 1.2449 manages to hold the Cable—a positive development would not be a surprise. However, the main target, namely the resistance around 1.25, is unlikely to be breached due to lack of potential market movers. Meanwhile, technical indicators also keep giving bullish signals in the daily timeframe, unable to confirm the possibility of the positive outcome.
Traders' Sentiment
There are 57% of traders being long the Sterling today, whereas 53% of all pending orders are to sell the British currency.
 
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