Thursday, 31 August 2017
Trading signals. Focus on US labor data
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trading signals
EURUSD - the correction of the dollar turned out to be short, focus on US labor data
On Wednesday, US dollar continued its gradual recovery, winning back its lost positions. Support for the US currency was provided by positive macroeconomic statistics. The revised GDP data showed US economy growth by 3%, against expectations of 2.7%. The number of employees from ADP grew by 237,000, although only 183,000 were forecasted. Nevertheless, today's European trades showed that the US currency is losing momentum. After the decline in the area of 1.1830-the lower boundary of the ascending channel, the pair moved back to gains.
However, tomorrow's data is already beginning to influence the markets. In this sense, if tomorrow labor data prove to be strong, the markets will again begin to seriously consider another rate hike this year. In this case, the US currency will receive strong support on all fronts.
Technically, the struggle for August close should unfold around the important level around 1.2000. The close of this month and a week above 1.20, will create conditions for further strengthening of the pair.
Recommendation: out of the market and wait for tomorrow's data
Gold-$1300 strategic support limited corrective impulse, which indicates the complete superiority of bulls
After reaching local minimums of $1300.62, and a small consolidation, today the market moved to rapid gains and recovered higher in the region of $1315. The price was able to return above the middle line of the rising channel and gain a foothold above it, and this gives reason to expect further upward movement towards 1313 and 1325. The fundamental background brings risk of increased volatility amid Non-farm data tomorrow. Technically, if the day closes at these levels (above 1305-1307), conditions are created for new test of the local maximum (1325).
Our recommendations: go long from levels $ 1308- $ 1312
Risks of Trading Forex Explained
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success tips
Not an easy topic, that is for sure. If you are reading this piece, then either you are an experienced trader, you are giving your first steps in the Forex industry or maybe you are just wondering if this business is actually right for you.
No matter really in which category you are in, you’ve all asked yourself at least once the same question: What are the risks involved in Forex trading?
While some bloggers, brokers or experts will make extensive lists about risks, at Fort Financial Services we believe these are the three most relevant risks you should keep an eye on:
Counterparty Risk:
Since Forex trading became available for retail investors, the reputation of this industry has been damaged by schemers and brokerage services that did not comply with regulations, exposing their clients to unnecessary financial risks that left many unfortunates empty handed. While criminal activities would always be part of our world, increasing regulation in the Forex industry helped to create a better articulated, safer and transparent market.
Country Risk:
Forex stands for Foreign Exchange market, which can be also described as the currency market. Each currency traded in Forex belongs to a certain country (except for crypto currencies).
The value of a currency is closely related to the economic strength of the country it belongs. If a country defaults on its debt, its national currency will plunge. If the country’s economy is facing high inflation levels, its currency will be worth less and less each day. On the contrary, if a country reports upbeat economic growth, its currency will likely move upwards against others.
Rate Risk:
Currencies are strongly affected by macroeconomic decisions, such as interest rate moves or the implementation of stimulus programs to boost economic growth. If a rising rates environments strengthens the local currency due to an influx of capital in the light of higher returns, while lower rates have an opposite effect.
What’s next? – USDJPY 31.08.17
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what’s next
USDJPY
The dollar/yen was up 0.26 percent as of 05:30 GMT on Wednesday to trade at 110.51, as the greenback extended its recovery in the light of easing geopolitical tensions and better-than-expected economic reports from the United States.
The US dollar index, which tracks the greenback against six major rivals, was trading at 92.94 by the time of this writing, adding 0.12 percent.
In economic news, ADP employment change for August showed a 237,000 jobs build against an expected increase of 185,000. This report anticipates official nonfarm payrolls figures from the Labor Department, which will be released on Friday.
In a separate report, the Commerce Department upgraded the second-quarter gross domestic product from 2.6 percent to 3.0 percent, above expectations of a 2.8 percent revision.
Japanese industrial production dropped 0.8 percent in July, above an originally estimated 0.5 percent draw. Other data in the Asian session included China’s manufacturing and non-manufacturing PMIs, which came in at 51.3 and 53.4 respectively, both below forecasts.
On Wednesday, the greenback rebounded from a two-and-a-half-year low, following the statement of the UN Security Council condemning the latest missile launch by North Korea, which violated Japan’s airspace. The UNSC did not announce actions in response to this event.
Ahead in the day, attention will be directed to the PCE price index for July, initial jobless claims and personal spending figures at 12:30 GMT. Pending home sales are due at 14:00 GMT. Japan will release second-quarter capital spending as of 23:50 GMT.
From a technical perspective, the 110 mark seems to be immediate target for the pair as the upwards movement strengthens on the back of the US dollar. Investors are moving back to risky assets, leaving safe-havens such as the yen or gold behind. Buyers are expected to continue using current levels to get in at competitive prices.
What’s next? – DAX 31.08.17
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what’s next
DAX
The DAX futures traded 0.66 percent lower at 12,022.5 points as of 05:20 GMT on Thursday, with renewed risk appetite calling market participants for an upside correction.
The index kicked off Wednesday’s session to the downside, but as geopolitical risks eased investors saw an opportunity to enter the market at competitive levels. Such move supported the German benchmark, pushing it again above the key psychological mark of 12,000 points.
In economic news, Germany’s consumer prices rose by 1.0 percent month-over-month in August, which is aligned with market analysts’ expectations.
German equities are experiencing complex times as Federal elections will be held on September 24 to define the members of the Bundestag which later chooses a Chancellor.
Market participants believe power is likely to be retained by status-quo parties, although the recent wave of far-right nationalist groups increased uncertainty about the result of the elections.
The German benchmark settled higher on Wednesday, adding 0.47 percent or 56.59 to end at 12,002.47 in Frankfurt, with industrials, financial services and construction leading advancers.
The best performers were Heidelbergcement, which added 1.57 percent to 78.840, followed by Adidas rising 1.36 percent to 185.70 and Deutsche Boerse up 1.16 percent to 89.230.
The worst performers were Fresenius, which dropped 0.85 percent to 70.390, Prosiebensat 1 Media fell 0.66 percent to 27.750 and Volkswagen eased 0.47 percent to close at 125.90.
Ahead in today’s session, market players will be closely following the releases of Germany’s retail sales for July at 06:00 GMT, the unemployment rate for August at 07:55 GMT and EU’s consumer price index as of 09:00 GMT.
If euro zone’s inflation beats estimates, expectations for a reduction or even suspension of the European Central Bank stimulus plan are likely to increase.
What’s next? – GOLD, OIL 31.08.17
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what’s next
GOLD
Gold futures were down in Asian hours on Thursday as market sentiment continued to improve as data showed an unexpected upturn in economic growth.
On the Comex division of the New York Mercantile Exchange, gold futures were trading 0.45 percent or $5.90 down at $1,308.20 a troy ounce as of 05:20 GMT.
The yellow metal settled lower on Wednesday, retreating from an 11-month peak in the light of easing geopolitical concerns, upbeat economic data from the United States.
Tensions in the Korean peninsula eased following a meeting of the UN Security Council late Tuesday. The fifteen members of the council condemned the latest North Korean missile launch, which violated UNSC resolutions and broke into Japan’s airspace.
Bullion prices rose sharply earlier this week as President Donald Trump said that “all options” were on the table to address the Korean crisis.
In economic news, ADP employment change for August showed a 237,000 jobs build against an expected increase of 185,000. This report anticipates official nonfarm payrolls figures from the Labor Department, which will be released on Friday.
Market players pay attention to labor data as it’s one of Fed’s key metrics to justify monetary policy adjustment, such as interest rate hikes.
According to Fed funds tracked by CME Group’s FedWatch tool, investors are pricing less than a 40 percent chance of a 25 basis points rate hike by December.
In a separate report, the Commerce Department upgraded the second-quarter gross domestic product from 2.6 percent to 3.0 percent, above expectations of a 2.8 percent revision.
A rising rate environment makes gold less attractive for investors as it increases the value of its denomination currency while dampening demand for non-yielding assets.
OIL
Crude oil prices moved to the downside in early trading hours on Thursday as concerns over a potential reduction in gasoline consumption weighed on market sentiment.
The US West Texas Intermediate crude futures traded 0.09 percent lower at $45.92 per barrel as of 05:20 GMT, while the London-based Brent contracts on the ICE Futures Exchange in London were down 0.08 percent to $50.82 a barrel.
Oil benchmarks settled in red territory on Wednesday, as the tropical storm Harvey continued to keep US refineries inoperative, while official inventories from the Energy Department showed a nine straight weekly decline in crude stockpiles.
The situation in the Gulf Coast remains critical due to continuous heavy flooding affecting key refineries. Ten oil plants along the coast were forced to shut down operations to date.
Experts noted that shutting down refineries could have a cascade effect on production as oil companies would face a hard time finding other places to send their crude for processing.
To prevent shortage, the Environmental Protection Agency said on Wednesday it will allow sale of gasoline that does not comply with the Clean Air Act in a dozen states.
The Energy Information Administration said crude inventories dropped 5.4 million barrels in the week ended August 25, outperforming expectations of a 1.9 million barrels decline.
The report also showed gasoline supplies rising by 35,000 barrels against a forecasted drop of 989,000 bls. Distillates added 748,000 bls while analysts predicted a 846,000 barrels draw.
A day earlier, the American Petroleum Institute said crude inventories fell by 5.8 million barrels. Now traders will be looking ahead to a fresh oil rig count from Baker Hughes on Friday.
Asian stocks mixed as data weighs on sentiment
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Wall Street
Asian stocks were mixed in early trading, with downbeat economic reports from Japan and China weighing on market sentiment despite improvements in the geopolitical side.
Australia ASX +40.30 +0.70% 5,774.10 05:20 GMT - OPEN
Shanghai Composite Index -13.14 -0.39% 3,350.49 05:20 GMT - OPEN
Hang Seng Index -181.05 -0.64% 27,913.56 05:20 GMT - OPEN
Nikkei 225 +161.02 +0.83% 19,667.56 05:20 GMT - OPEN
TSEC 50 Index -9.65 -0.09% 10,559.75 05:20 GMT - OPEN
On Wednesday, Asian markets ended in green territory, marching Wall Street’s renewed optimism after the UN Security Council decided not to adopt new sanctions against North Korea.
However, the 15-member council condemned in the strongest terms the latest missile launched by Pyongyang, which crossed Japanese airspace before falling in the Pacific Ocean.
Stocks came under pressure on Tuesday following US President Donald Trump assurance that “all options are on the table” to deal with increased tensions in the Korean peninsula.
US Ambassador to the UN Nikki Haley said “North Koreans should understand the risks they are putting themselves in” by moving forward with their ballistic and nuclear programs.
Japan's Nikkei 225 closed 0.74 percent higher at 19,506.54 and the South Korean Kospi rose 0.32 percent to end the 2,372.29, with tech sector contributing most gains. Hong Kong’s Hang Seng added 0.98 percent, while the Shanghai Composite eased 0.07 percent to 3,362.9947.
The midweek session served to reawaken demand for equities and other high-yielding assets as the risk-on mode progressively gained supporters.
As for currencies, the US dollar rebounded from a four-and-a-half-month low against the Japanese yen as fears of a military escalation in the Korean conflict reduced.
In economic news, ADP nonfarm employment came in above expectations, reporting a 237,000 jobs build in August. The revision on the second-quarter gross domestic product cheered investors by showing a 3.0 percent growth rate against a previous 2.6 percent.
Japanese industrial production fell 0.8 percent in July, more than the original estimation of a 0.5 percent draw. In other news, China’s manufacturing and non-manufacturing PMIs, which came in at 51.3 and 53.4 respectively, both below forecasts.
Key economic events for Thursday, 31 August 2017:
06:00 GMT EUR Germany's Retail Sales (MoM) (Jul) Forecast: -0.4%
07:55 GMT EUR Germany's Unemployment Rate (Aug) Forecast: 5.7%
08:00 GMT EUR Germany's Unemployment Change (Aug) Forecast: -6K
09:00 GMT EUR EU Core CPI (YoY) Forecast: 1.2%
09:00 GMT EUR EU CPI (YoY) (Aug) Forecast: 1.4%
09:00 GMT EUR EU Unemployment Rate (Jul) Forecast: 9.1%
12:30 GMT USD US Core PCE Price Index (YoY) (Jul) Forecast: 1.4%
12:30 GMT USD US Core PCE Price Index (MoM) (Jul) Forecast: 0.1%
12:30 GMT USD US Initial Jobless Claims Forecast: 237K
12:30 GMT USD US Personal Spending (MoM) (Jul) Forecast: 0.4%
14:00 GMT USD US Pending Home Sales (MoM) (Jul) Forecast: 0.5%
23:50 GMT JPY Japan's Capital Spending (YoY) (Q2) Forecast: 8.3%
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