Trading news

Crude oil consolidates ahead of Doha meeting, BoE rate decision against a backdrop of likely Brexit, Unexpected policy easing in Singapore

- Buying pressure on crude should remain limited over the next few days as traders await a potential output freeze agreement between main oil producers in Doha on April 17

- NZD/USD: Given the clear easing bias of the RBNZ and the faltering global demand for NZ goods, we expect the Kiwi to continue moving lower, with 0.66 level as next target

- BoE rate decision is also due later this afternoon but will surely be a non-event as the central bank will remain on the sidelines ahead of the Brexit vote later in June

- GBP/USD is on its way to testing the bottom, at around 1.40, as the bias remains on the downside with the next support at 1.3836 

- We also believe that no change in the monetary policy will happen this year and the chance of a rate cut exists

- UK needs to remain competitive as the ECB is largely easing while the Fed is showing an increasingly dovish stance at each FOMC meeting

- Right now, there is a massive consensus that in case of Brexit the EUR/USD will reach parity

- As a result, the Swiss franc is not out of the woods yet and a sharp euro decline will push the SNB to react. We think that there will be some action in Switzerland before the referendum date on the 23rd of June as anxious anticipation is the key emotion being felt here at present 

Crude oil extended losses in Asia amid rising US stockpiles. The US gauge, the West Texas Intermediate, fell more than 2.5% to $41.25 a barrel as US crude inventories rose 6.6 million barrel, while the market was expecting an increase of 1 million barrels. Similarly, the international gauge, the Brent crude, fell 3% to $43.60. However, the price found a strong support at $43.39 (200dma). Buying pressure on crude should remain limited over the next few days as traders await a potential output freeze agreement between main oil producers in Doha on April 17.

The New Zealand dollar got slammed during the Asian session as traders brace themselves for this afternoon's inflation data from the US. Moreover, the market’s response to the release of the disappointing March manufacturing PMI from New Zealand was muted. The Business NZ manufacturing gauge contracted to 54.7 from a downwardly revised figure of 55.9 in the previous month, reaching the lowest level in five months. The employment gauge remained below the 50 mark, indicating contraction, while all the other components also contracted but remained above the 50 mark, suggesting that the sector will have to deal with slower growth. NZD/USD hit 0.6826 in Wellington, down 1.25% over the session. From a technical standpoint, the pair has lacked the required strength to break the key $0.70 resistance (Fibonacci 50% on March 2009 - July 2011, high from late March) and printed a double top. Given the clear easing bias of the RBNZ and the faltering global demand for NZ goods, we expect the Kiwi to continue moving lower, with 0.66 level as the next target.

After a period of stabilisation, GBP/USD has started to reverse the gains from last week as negative momentum returns. The pound sterling fell 0.58% against the US dollar in Tokyo as the US dollar gained momentum. The BoE rate decision is also due later this afternoon but will surely be a non-event as the central bank will remain on the sidelines ahead of the Brexit vote later in June. GBP/USD is on its way to testing the bottom of its 1-month range at around 1.40. The bias remains on the downside with the next support at 1.3836 (low from February 29).

 

Yann Quelenn, market analyst: “BoE rate decision against a backdrop of likely Brexit: Markets expect the Bank of England to hold its bank rate unchanged at 0.5%, a record low, this early afternoon. Rates have been at this level for the past seven years. We also believe that no change in the monetary policy will happen this year and the chance of a rate cut exists. The UK needs to remain competitive as the ECB continues to ease while the Fed shows an increasingly dovish stance at each FOMC meeting. For the time being, Brexit is the number one key issue for the UK (and Europe!) and recent polls are very mixed. Massive debt, austerity policies, deflation, loss of sovereignty are massive drawbacks for Europe. David Cameron is running a campaign to remain and he has decided to spend a £9-million on an EU propaganda leaflet explaining “Why the Government believes that voting to remain in the European Union is the best decision for the UK”. Testimonies from Portugal or Greece would have been welcomed additions to this leaflet but are regrettably missing. Currency-wise, downside pressures on the GBP against the EUR are still lively and the sterling is approaching a 28-month low at around £0.80 for one euro. Right now, there is a massive consensus that in case of Brexit the EUR/USD will reach parity. As a result, the Swiss franc is not out of the woods yet and a sharp euro decline will push the SNB to react. The history of pro-activity from the Swiss National Bank, which always tries to be ahead of the ECB, makes us believe that there will be action in Switzerland before the referendum date on the 23rd of June as anxious anticipation is the key emotion being felt here at present ” ---

On the equity market, Asian shares kept rallying on Thursday following the positive lead from Wall Street. Japanese equities rallied the most among Asian market, with the Nikkei rising 3.23%, while the broader Topix index surged 2.92%. Elsewhere, equities also took advantage of the upbeat mood, as the Shanghai Composite rose 0.41%, Australian shares jumped 1.27%, while in South Korea the Kospi index gained 1.75%.

 

Peter Rosenstreich, head of market strategy, Swissquote: “In an unexpected easing move, the Monetary Authority of Singapore (MAS) flattened their policy slope of the SGD nominal effective rate (NEER) to zero% (or neutral) from a modest appreciation policy. A zero slope policy has not been used in Singapore since the financial crisis. Despite the dramatic change in FX easing the MAS provided no change in the bank’s forecasts. The MAS only mentioned that labor markets had weakened and inflation and growth were likely to come in below projections. Data released today indicated that Singapore GDP stagnated in 1Q 2016 as q/q came in at 0.0% from 6.2% (y/y 1.8% unchanged) as services declined. Outside the softer domestic backdrop, the MAS sighted weaker growth in US, China, Japan and Europe as a rational for the surprise move. Prolonged sluggish global growth, despite our expectations for a slight improvement in Chinese economic activity indicates risk of further policy easing and downside to official forecasts. Asia regional equity indices rallied as the policy move was seen as a reaction to unwanted regional currency strength. However, the MAS strategy is clearly part of the ongoing currency wars (or competitive devaluation if you want to be PC) and likely negative for other Asian currencies, until they individually activate counter measures. For broader risk sentiment additional easing should be positive for risky asset and reinforce our constructive view on EM and commodity linked currencies against the G10.” —

Today traders will be watching producer & import prices from Switzerland; CPI from Italy and the euro zone; BoE rate decision from UK; initial jobless claims, CPI and Fed’s Lockhart speech from the US.

Thursday, 14 Apr, 2016 / 9:19

Note: Company News is a promotional service of the Directory and the content isn't created by Finance Magnates.

Source : http://en.swissquote.com/fx/news

Trading news

 

The USD Remains Under Pressure

By Dmitriy Gurkovskiy, Chief Analyst at RoboForex   EURUSD continues [...]

Posted on Monday, 24 Jun, 2019 / 11:50 under

Weekly Outlook: June 24 – June 28: G20 Summit Takes Center Stage, RBNZ Decision Also in Focus

This week, market participants are likely to be sitting on the edge of their [...]

Posted on Monday, 24 Jun, 2019 / 7:00 under

Oil added almost 5% against the backdrop of the possible conflict in Middle East

Brent crude has got over the important mark of $65 per barrel and added about [...]

Posted on Friday, 21 Jun, 2019 / 3:58 under