Vantage FX Daily Market Update

[Vantage FX]

Image: Il Corriere Italiano

Mario Draghi: The Boy who Cried Wolf:
What did you learn from the stories that you were told as a child? Do you trust people that say one thing and then do another?

If you’re interested in human behaviour, and you should be if you are a trader, then the polarising interpretations of Mario Draghi’s comments overnight between the economist notes and traders via EUR/USD price action is fascinating!

Following Draghi’s monthly speech in Frankfurt overnight, we heard once again that the ECB was ‘ready to take action’ in March (their next decision, with no February meeting) as global risks escalate and inflation goals slip further away.

“There are no limits in policy action to achieve inflation goals.”

“The ECB has the power, determination, and willingness to act.”

“Will reconsider policy stance in March.”

But aren’t these all just comments we’ve heard Draghi deliver before? Click that link and have a look at the comments after the October 22 ECB meeting when the Euro was obliterated by talk of the ECB ‘actively exploring’ ways to expand their asset purchasing program.

With the stream of headlines and economist notes screaming dovish, it would seem that traders don’t share the same trust in Mr Draghi’s rhetoric.

EUR/USD 5 Minute:

Click on chart to see a larger view.

With the ECB being largely all talk up until now and riding on the coattails of a strengthening USD, buyers soon stepped into EUR/USD and the pair saw a 130 pip round turn!

Whether Draghi was admitting the ECB’s failure to act sooner or not, it doesn’t matter because the market isn’t convinced.

EUR/USD Daily:

Click on chart to see a larger view.

Price is king.

———-

Chart of the Day:
We’ve been watching GBP drop, drop and then drop further… With some temporary relief in Cable that we’re all obviously watching, we today turn our attention to GBP/AUD.

GBP/AUD Daily:

Click on chart to see a larger view.

After breaking through trend line support, price has reached previous horizontal support at a swing low.

Do you see any merit in buying the dip at this point of confluence?

———

On the Calendar Friday:
Today’s Forex economic calendar is littered with 2nd tier PMI data from countries across the Eurozone. While the market should pay the most attention to the tier 1 releases listed here, it’s worth keeping an eye on the full calendar just in case.

EUR ECB President Draghi Speaks
EUR French Flash Manufacturing PMI
EUR German Flash Manufacturing PMI
GBP Retail Sales m/m

CAD Core CPI m/m
CAD Core Retail Sales m/m

Do you see opportunity in the Forex News Centre? Take advantage of the levels on your own free $50,000 MT4 forex demo account.

Dane Williams – @VantageFX

Risk Disclosure: In addition to the website disclaimer below, the material on this page prepared by Forex Broker Vantage FX Pty Ltd does not contain a record of our prices or solicitation to trade. All opinions, news, research, tools, prices or other information is provided as general market commentary and marketing communication – not as investment advice. Consequently any person acting on it does so entirely at their own risk. The experts writers express their personal opinions and will not assume any responsibility whatsoever for the actions of the reader. We always aim for maximum accuracy and timeliness, and Australian Forex broker Vantage FX shall not be liable for any loss or damage, consequential or otherwise, which may arise from the use or reliance on this service and its content, inaccurate information or typos. No representation is being made that any results discussed within the report will be achieved, and past performance is not indicative of future performance.

 

[Vantage FX]

Image: 6iee

Cool Cat Bounce:
Another week begins with a fresh round of calls that the Oil bottom is in.

As I’ve said each time oil prints a single daily bullish candle and the headlines roll through my stream, zero technical damage has been done to the chart. This is a small bounce in a BIG bear market. Just make sure you continue to see it for what it is.

OIL Daily:

Click on chart to see a larger view.

Not a single reclaiming of a swing high and price still capped by major trend line resistance no matter which way you draw it.

With three central bank decisions on the cards this week (US, NZ and Japan), it is the RBNZ that is most likely to move. Following last week’s CPI miss, talk of further rate cuts has intensified and a surprise move here actually wouldn’t be that much of a surprise…

As for the Bank of Japan, with the improving appetite for traders to take positions in risk currencies (at least for 1 day), the ‘safe haven trade’ in the Japanese Yen could be somewhat unwound which would see USD/JPY rally.

USD/JPY Daily:

Click on chart to see a larger view.

The above daily chart is a little bit messy, but the main feature highlighted is a possible re-test of previously broken trend line support coinciding with the 120.000 psychological level.

———-

Chart of the Day:
Nikkei225 Weekly:

Click on chart to see a larger view.

I guess the major trend line support across Indices markets have survived another week.

Compare this Nikkei chart to the one in the technical analysis post and you can see how buyers stepped in as soon as price tested the support level.

As we see from the SP500 chart in Thursday’s stocks on the brink blog, the fact that the US tested its own support level almost to the pip was a huge reason that the Japanese market rebounded like it did.

Nikkei225 Daily:

Click on chart to see a larger view.

The Nikkei daily chart shows price action off the level a lot cleaner but this was all about the US market lead.

———

On the Calendar Monday:
While the Australia Day holiday is technically tomorrow, the fact that it falls on a Tuesday this year means that a large chunk of the country will have taken today off also. Keep that in mind if you’re looking for any big moves in the Aussie during Asia.

AUD NAB Business Confidence

EUR German Ifo Business Climate
EUR ECB President Draghi Speaks

Do you see opportunity trading Japanese markets? Take advantage of potential big moves on our free $50,000 demo trading account on MT4.

Dane Williams – @VantageFX

Risk Disclosure: In addition to the website disclaimer below, the material on this page prepared by Forex Broker Vantage FX Pty Ltd does not contain a record of our prices or solicitation to trade. All opinions, news, research, tools, prices or other information is provided as general market commentary and marketing communication – not as investment advice. Consequently any person acting on it does so entirely at their own risk. The experts writers express their personal opinions and will not assume any responsibility whatsoever for the actions of the reader. We always aim for maximum accuracy and timeliness, and Australian Forex broker Vantage FX shall not be liable for any loss or damage, consequential or otherwise, which may arise from the use or reliance on this service and its content, inaccurate information or typos. No representation is being made that any results discussed within the report will be achieved, and past performance is not indicative of future performance.

 

[Vantage FX]

Image: Little Party Love

Welcome back to our local traders following the Australia Day public holiday. I hope you had a relaxing day, celebrating in whichever way you see fit.

But the show that is world markets stops for nobody and yesterday saw some of the mixed swings that we have become accustomed to in 2016. The Shanghai Composite Index (China’s major stock index) fell to a 13 month low, with a 6.4% decline at the close. The US S&P 500 put in a nice up day, continuing the market’s bounce off its weekly trend line that we have been speaking about.

Finally, a quick overnight recap wouldn’t be complete without a look at WTI Crude Oil, and yet more premature calls of a bottom. Did WTI have an up day? Yes. Did WTI break any resistance levels? No. Is there any conviction or momentum in this SINGLE DAY’s buying? No. Just make sure you continue to see these moves for what they are.

Fundamental Decoupling Between China and Risk?:
The disconnect between the falls in Chinese stock markets and the rally in US stocks combined with a continued appetite for risk currencies poses some interesting questions. Shane Oliver, head of Investment Strategy and Chief Economist at AMP Capital put it best when I was flicking through Twitter this morning:



The stock market isn’t always the best indication of the economic health of a country. And a planned, emerging economy’s stock market which is notorious for manipulation and artificial strength/weakness isn’t always the best indication of the risk appetite across Forex markets. Any removal of correlations between Chinese stocks and world market sentiment is to me common sense being shown by traders. While the sensationalism that the headlines provide is sometimes pretty to look at, taking a step back is in fact the correct approach.

The flow of capital out of the Chinese economy has become a major problem. According to Bloomberg Intelligence data, the total outflow figure of $1 trillion USD for 2014 was seven times higher than the previous year. A problem of perception as much as anything, with a snowball effect gathering over time as the perception becomes a self fulfilling prophecy if you will.

When Chinese officials start publicly challenging George Soros, you know things are about to get real. This came from a front page opinion piece by a commerce ministry researcher in the overseas edition of the People’s Daily under the headline: “Declaring war on China’s currency? Ha ha!” (Yes, that was a real headline!):

“Soros’s war on the renminbi and the Hong Kong dollar cannot possibly succeed — about this there can be no doubt.”

CHINA50 Daily:

Click on chart to see a larger view.

On the Vantage FX MT4 platform we have the China A50 stock index available for you to take some exposure on Chinese markets. The CHINA50 daily has seen price drop back down to test major daily trend line support independently of its US SP500 cousin. Just how decoupled the markets have become will be tested by this major support level that for now indicates the correlation is still there.

Next 24 Hours:
Early tomorrow morning before I will have published the Daily Market Update, we will have seen the US FOMC and RBNZ both deliver monetary policy decisions. With the Fed having started a rate raising cycle and the RBNZ’s easing cycle still in full swing, the two could not be any more different.

———-

Chart of the Day:
It is the Kiwi where the most action could be reasonably expected, with economists expecting the RBNZ to hold, but another cut a huge possibility.

NZD/USD Daily:

Click on chart to see a larger view.

Technically we are in the middle of sideways, range-bound trading, but the overall bearish trend and current re-test of short term previous support now as resistance makes me lean toward the short side into the decision.

Remember that moves around these two decisions are going to be about meeting market expectations. On which side to you see the greatest risk for a big move? Identify this and trade from the opposite.

———

On the Calendar Wednesday:
AUD CPI q/q
AUD Trimmed Mean CPI q/q

USD New Home Sales
USD Crude Oil Inventories
USD FOMC Statement
USD Federal Funds Rate

Do you see opportunity trading Forex? Take advantage on your free $50,000 MT4 forex demoaccount.

Dane Williams – @VantageFX

Risk Disclosure: In addition to the website disclaimer below, the material on this page prepared by MT4 Forex broker Vantage FX Pty Ltd does not contain a record of our prices or solicitation to trade. All opinions, news, research, tools, prices or other information is provided as general market commentary and marketing communication – not as investment advice. Consequently any person acting on it does so entirely at their own risk. The experts writers express their personal opinions and will not assume any responsibility whatsoever for the actions of the reader. We always aim for maximum accuracy and timeliness, and MT4 for Mac Forex broker Vantage FX shall not be liable for any loss or damage, consequential or otherwise, which may arise from the use or reliance on this service and its content, inaccurate information or typos. No representation is being made that any results discussed within the report will be achieved, and past performance is not indicative of future performance.

About Dane Williams
Dane Williams is a Vantage FX Market Analyst. Dane shares his thoughts and analysis in our News Centre. View all posts by Dane Williams →

 

[Vantage FX]

Image: Impassioned Cinema

Fed Updates:
As you were.

With the Federal Reserve decision this morning largely a non event, stock indices and the USD both saw some buy the rumour sell the news type price action. Think of it as markets trying to position for the possible big news spike if there were any surprises, but then snapping back into line after an as you were type of release.

The Fed was happy to take a wait and see approach on global economic issues (read China) and see how this theme will affect domestic growth outlooks.

They flagged slowing economic growth concerns, highlighting that it had slowed since their last meeting in December when we got lift-off on a new rate raising cycle. The fact that economic growth was subdued meant that inflation stayed subdued and there was no way that they were going to risk making a consecutive move in this type of environment.



Image: Glanacion

A dovish tone, but nothing unexpected and markets acted accordingly. Good central bank management!

Steady in Gondor: RBNZ:
In Wellington rather than Gondor, the Reserve Bank of New Zealand also kept interest rates on hold this morning. However, this decision was a little less cut and dry, especially followinginflation data last week.

There was a definite change in tone from the RBNZ, with today’s statement also sounding a lot more dovish from the ‘end of easing cycle’ type of rhetoric we saw out of Wellington the last time the central bank met a month ago.

“Some further policy easing may be required over the coming year to ensure that future average inflation settles near the middle of the target range.”

“We will continue to watch closely the emerging flow of economic data.”

After cutting 4 times last year and continued pressure on inflation data as mentioned above, the dovish tone is clear. They’re not quite done yet!

NZD/USD 4 Hourly:

Click on chart to see a larger view.

Following on from yesterday’s NZD/USD chart of the day, we see the statement putting more downward pressure on the Kiwi.

———-

Chart of the Day:
Before we take a look at a current chart, lets take a step back in time to a blog post from October 2015 which also featured AUD/NZD as the chart of the day.

AUD/NZD isn’t a chart that I spend a lot of time focusing on, but I never wipe major levels (daily/weekly/monthly) from my charts, even if price has chopped through them one way or another. While flicking through my NZD watch list following this morning’s RBNZ decision, low and behold price is back testing one such major level.

AUD/NZD Daily:

Click on chart to see a larger view.

I’ve marked the strong bounces away from the level in both directions, but the fact that when price has gone through the level, it has been strong moves that haven’t looked back is also a telling factor that the level is highly significant.

Being on the back of RBNZ related Kiwi selling, I’m not looking for the level to stop price dead in its tracks, but we’ll see how it reacts and whether we can continue to use to the level to manage our risk around in either direction.

Remember what we said above about pressure being heaped onto the NZD? The level might be there, but don’t blindly jump in front of a moving train if you don’t have to!

———

On the Calendar Thursday:
USD Federal Funds Rate (<0.50% v <0.50% expected)
NZD Official Cash Rate (2.50% v 2.50% expected)
NZD Trade Balance

GBP Prelim GDP q/q

USD Core Durable Goods Orders m/m
USD Unemployment Claims

Do you see opportunity trading Forex? Take advantage on your free $50,000 MT4 forex demoaccount.

Dane Williams – @VantageFX

Risk Disclosure: In addition to the website disclaimer below, the material on this page prepared by MT4 ECN Forex broker Vantage FX Pty Ltd does not contain a record of our prices or solicitation to trade. All opinions, news, research, tools, prices or other information is provided as general market commentary and marketing communication – not as investment advice. Consequently any person acting on it does so entirely at their own risk. The experts writers express their personal opinions and will not assume any responsibility whatsoever for the actions of the reader. We always aim for maximum accuracy and timeliness, and MT4 STP Forex broker Vantage FX shall not be liable for any loss or damage, consequential or otherwise, which may arise from the use or reliance on this service and its content, inaccurate information or typos. No representation is being made that any results discussed within the report will be achieved, and past performance is not indicative of future performance.

 

[Vantage FX]

Oil Bluff and a BoJ Preview

Image: Hollywood.com

Oil Bluff:
Crude Oil and risk assets were again top of the headlines last night, with WTI rallying on both short covering after coming off so much, and headlines hitting the newswires surrounding possible production cuts.

It all kicked off as the Forex world transitioned between the London and New York sessions, when Russia flagged the idea of cutting production in Oil by trying to drop Saudi Arabia into it. All headlines here from Reuters:

“RUSSIAN ENERGY MINISTER NOVAK SAYS SAUDI ARABIA PROPOSED TO CUT OIL PRODUCTION BY EACH COUNTRY BY UP TO 5 PCT”

“RUSSIAN ENERGY MINISTER NOVAK SAYS PROPOSAL ON OPEC AND NON-OPEC MEETING MEANT FOR ENERGY MINISTERS, NO FIRM AGREEMENT REACHED”

During the hours that passed, markets held their breath until the denials from OPEC and finally the Saudi’s came. Oil of course then spiked back down on the fact that THE WHOLE SESSION TRADED ON BASELESS HEADLINES!

“OPEC DELEGATES SAY NO PLAN YET FOR MEETING WITH RUSSIA”

“SAUDI HAS NO PROPOSAL TO CUT OUTPUT 5%: OPEC GULF DELEGATE”

Not only was there no meeting planned by OPEC delegates, in the end there wasn’t even a proposal of a cut… Seriously.

WTI 15 Minute:

Click on chart to see a larger view.

Looking at the 15 minute oil chart with daily dividers in place, was this ‘headline driven price action’ really that different from any other day this week?

Bank of Japan Preview:
Consensus is that the Bank of Japan will hold steady on any further increases to their stimulus package tonight. Most recently the Yen has strengthened (shown by the USD/JPY rally) but a whole plethora of economic data has been bad news for Kuroda and his men could today be the day that they jump at the opportunity?

Popular opinion has the BoJ always wanting to get the biggest bang for their buck and taking a look at where the technicals and COT data sit on the Nikkei and USD/JPY sit, the door could be seen as being left slightly ajar. Either way, this possibility means day traders will get some price action to run off following the release.

———-

Chart of the Day:
Further to the Bank of Japan decision today, lets take a look at USD/JPY chart.

USD/JPY 4 Hourly:

Click on chart to see a larger view.

Price has coiled nicely in an ascending triangle, with each higher low off the trend line representing the diminishing number of sellers coming into the market each time they try to wrangle control.

When there are no more sellers left to be absorbed, the supply/demand imbalance is what causes breakouts from the horizontal, upside resistance of the tri.

Before, after, or not at all? Tweet @VantageFX.

———

On the Calendar Friday:
JPY Monetary Policy Statement
JPY BOJ Outlook Report
JPY BOJ Press Conference

EUR CPI Flash Estimate y/y

CAD GDP m/m
USD Advance GDP q/q

Do you see opportunity in Forex trading? Take advantage on your free $50,000 MT4 MT4 Forex demo account.

Dane Williams – @VantageFX

Risk Disclosure: In addition to the website disclaimer below, the material on this page prepared by ECN Forex broker Vantage FX Pty Ltd does not contain a record of our prices or solicitation to trade. All opinions, news, research, tools, prices or other information is provided as general market commentary and marketing communication – not as investment advice. Consequently any person acting on it does so entirely at their own risk. The experts writers express their personal opinions and will not assume any responsibility whatsoever for the actions of the reader. We always aim for maximum accuracy and timeliness, and STP Forex broker Vantage FX shall not be liable for any loss or damage, consequential or otherwise, which may arise from the use or reliance on this service and its content, inaccurate information or typos. No representation is being made that any results discussed within the report will be achieved, and past performance is not indicative of future performance.

 

[Vantage FX]

BoJ Negative Rates Seeping Through + More
February 1, 2016Dane Williams


Image: Guardian

BoJ Negative Rates Seeping Through:
Confession: I wasn’t in the office for the Bank of Japan negative interest rate decision. It was Friday afternoon in Sydney, I had some errands I had to run and thought what was the harm of giving myself an early mark…

BOOM!

This piece from MarketWatch is a great overview piece explaining the decision, why it was made and what negative interest rates are meant to achieve.

“The Bank of Japan announced it had cut the rate on excess reserves to minus 0.1%, meaning institutions will have to pay the central bank for the privilege of parking reserves that exceed those required by regulators.”

Stock markets around the world of course enjoyed the stimulus that ‘cheap’ money (free money? I’m still not sure how to express this) provides, with the opposite being said for the Japanese Yen. Both charts we take a look at below.

Elsewhere:
Greece is back in the headlines, with fresh rounds of talks between Athens and creditors starting Monday in Europe.

Lenders are returning to Greece to start evaluating the next step of the bailout program implementation in the coming weeks. The talks will include Athens and the heads of international lending institutions: the European Commission, the IMF, the European Stability Mechanism and the ECB. This is not expected to have the impact it once did but it is here once again.

In Oil markets, Saudi Arabia has publicly stated to Al Arabiya television that contrary to earlier reports, they are actually looking to cooperate with other oil producing nations to support the market. There are plenty more legs in this story I’m sure, but there are also plenty of legless headline spikes to come. Don’t get caught with your pants down!

Wrapping up, we today see a bit of a Manufacturing PMI data dump out of China while tomorrow sees the Reserve Bank of Australia come back from their little Christmas/New Years break. Better than expected jobs figures and a consistently low Australian dollar has helped the Australian economy over Christmas and nobody is expecting any big surprises from the notoriously conservative Glenn Stevens.

But hey, we said that on Friday. Lets just say that I won’t be ducking away from my desk tomorrow!

———-

Chart of the Day:
Following on from our indices analysis post in the Technical Analysis section of the Vantage FX News Centre, Friday’s BoJ move gave us an interesting technical point which we feature in today’s chart of the day.

The economics of negative interest rates and how the theory will actually transfer into the real world economy is something the jury is still out on, but the Japanese stock market liked the idea behind it anyway…

Nikkei225 Daily:

Click on chart to see a larger view.

Look at what the bottom of Friday’s Nikkei 225 daily candle wick lines up with.

How about Friday’s USD/JPY setup we were watching?

USD/JPY 4 Hourly:

Click on chart to see a larger view.

“When there are no more sellers left to be absorbed, the supply/demand imbalance is what causes breakouts from the horizontal, upside resistance of the tri.”

Fundamentals and Technicals in full harmony.

———

On the Calendar Monday:
CNY Manufacturing PMI
CNY Non-Manufacturing PMI
CNY Caixin Manufacturing PMI

GBP Manufacturing PMI

USD ISM Manufacturing PMI
EUR ECB President Draghi Speaks

Do you see opportunity in Forex trading? Take advantage on your free $50,000 Forex MT4 demoaccount.

Dane Williams – @VantageFX

Risk Disclosure: In addition to the website disclaimer below, the material on this page prepared by ECN Forex broker Vantage FX Pty Ltd does not contain a record of our prices or solicitation to trade. All opinions, news, research, tools, prices or other information is provided as general market commentary and marketing communication – not as investment advice. Consequently any person acting on it does so entirely at their own risk. The experts writers express their personal opinions and will not assume any responsibility whatsoever for the actions of the reader. We always aim for maximum accuracy and timeliness, and STP Forex broker Vantage FX shall not be liable for any loss or damage, consequential or otherwise, which may arise from the use or reliance on this service and its content, inaccurate information or typos. No representation is being made that any results discussed within the report will be achieved, and past performance is not indicative of future performance.

 

[Vantage FX]

Image: Macquarie

First RBA Tuesday of 2016:
In not a great sign for both the Australian and world economies, yesterday saw the Chinese manufacturing sector expand at its slowest pace in 3 years.

“CNY Manufacturing PMI (49.4 v 49.6 expected)”

With both the primary manufacturing number as well as the second tier non-manufacturing reading both missing market expectations, RBA Governor Stevens and his board will have had a little cringe thinking about future effects that the continued Chinese slowdown will have, but it shouldn’t have changed their thinking about today’s decision.

Keeping rates on hold at 2.00% for another month is all but a sure thing, but the real juice will once again be in the accompanying monetary policy statement. Just how much of an easing bias will the RBA go with?

AUD/USD Daily:

Click on chart to see a larger view.

Taking a look at the AUD/USD daily chart, price is well above the 70c psychological level again and bouncing nicely out of the weekly support zone we have been keeping an eye on.

We know that markets are currently pricing in around a 4% chance of a rate cut this week (with just the 1 dissenting economist trying to get his name up in lights no doubt), but by the time we get to July, a ‘final’ cut is fully priced in.

With the market seeming to have all but assured itself that the RBA will sound dovish leading into the middle of 2016 when a cut is expected to come, any disappointment on this front has the potential to see a fairly decent re-pricing in AUD/USD to the upside. We’re at the bottom of a daily range and on weekly trend line support after all. As a trader, this is the most important aspect for you to be considering when you are doing your analysis today.

The boys over at ForexLive have a good RBA preview discussing the nitty-gritty of the Australian economy which is also worth reading here.

———-

Chart of the Day:
A few Aussie related charts here today as we head into this afternoon’s RBA decision.

AUD/JPY Daily:

Click on chart to see a larger view.

After breaking a major weekly trend line last year, AUD/JPY has been consistently channelling down for a while now. As we spoke about back in December in our last AUD/JPY chart of the day price was at the top of this channel and it was make or break. Well here we are over a month later and the channel is still intact.

Technical analysis!

Bonus Chart of the Day:
SPI200 Daily:

Click on chart to see a larger view.

I couldn’t leave the SPI out of today’s morning blog, with price testing short term, counter trend line resistance heading into the decision. As price has coiled up so tightly and we are heading into a major news release, I am not expecting this level to hold or break cleanly, but its worth looking at.

The overall technical pattern on Indices has turned/remained bullish depending on how you treated those weekly trend line support levels we have been speaking about in the technical analysis section of the blog.

I wanted them to break for the potential carnage factor that would have presented plenty of trading opportunities, but it looks like it’s not to be.

———

On the Calendar Tuesday:
AUD Cash Rate
AUD RBA Rate Statement

GBP Construction PMI

Do you see opportunity in Indices trading? Take advantage on your free $50,000 Forex demo MT4 account.

Dane Williams – @VantageFX

Read more about trading indicies the Vantage FX news centre

 

[Vantage FX]

CAD’s Slow Reaction to Oil Weakness:
Something slightly different this morning, with a look at a comparison between OIL and USD/CAD.

The last two OIL daily candles have been big, red, bearish candles. Price once again couldn’t crack long term trend line resistance which just happened to line up with a short term swing low that was previous support and now acting as resistance, meaning that the positive Oil headlines talking about buying have been yet more hot air.

OIL Daily:

Click on chart to see a larger view.

What caught my attention was that over these last two days, the normally highly correlated Canadian Dollar hasn’t exactly followed suit.

USD/CAD Daily:

Click on chart to see a larger view.

Price didn’t quite reach trend line support, but did come into the previous area of consolidation just before it and buyers entered the market.

How much more this correlated move has to run is the question. You have your major levels. Now Tweet @VantageFX some of your trading ideas on the shorter term charts.

———-

Chart of the Day:
With the RBA keeping interest rates on hold at 2.00% for another month yesterday, Governor Glenn Stevens’ accompanying statement was dovish enough to warn off the traders waiting to pounce on any perceived weakness in the RBA’s guidance.

“At today’s meeting, the Board judged that there were reasonable prospects for continued growth in the economy, with inflation close to target. The Board therefore decided that the current setting of monetary policy remained appropriate.”

“Over the period ahead, new information should allow the Board to judge whether the recent improvement in labour market conditions is continuing and whether the recent financial turbulence portends weaker global and domestic demand. Continued low inflation may provide scope for easier policy, should that be appropriate to lend support to demand.”

These were the all important last two paragraphs from the statement. Read over them, then look at where the AUD/USD market sat beforehand and where it headed throughout yesterday’s entire session.








AUD/USD 5 Minute:

Click on chart to see a larger view.

Try to take something about market positioning and perceptions out of your study. As a trader, it isn’t about what happened and why, it’s about what markets thought would happen and how close they were.

Once again, feel free to Tweet your thoughts to @VantageFX.

———

On the Calendar Wednesday:
NZD RBNZ Gov Wheeler Speaks
AUD Building Approvals m/m
AUD Trade Balance
JPY BOJ Gov Kuroda Speaks

GBP Services PMI

USD ADP Non-Farm Employment Change
USD ISM Non-Manufacturing PMI
USD Crude Oil Inventories

Do you see opportunity trading Forex on MT4? Take advantage on your free $50,000 Forex demo account.

Dane Williams – @VantageFX

Check out Vantage FX for daily forex analysis

 

[Vantage FX]

USD Dumped:
A big night for Forex markets overnight, with some HUGE moves across the board in US Dollar pairs. The USD was dumped left right and centre with most of the majors posting close to 2% gains since yesterday’s trading session began.

“USD ADP Non-Farm Employment Change (205K v 193K expected)”

“USD ISM Non-Manufacturing PMI (53.5 v 55.1 expected)”

A slight beat in the notoriously unreliable ADP employment number was overshadowed by non-manufacturing ISM missing expectations. The ISM is viewed as a leading indicator for Friday’s NFP number and historically when this reading drops, so does the subsequent payrolls number.

Outside of the data sphere (which I hope some of you took advantage of with the instant release via instant access to the news terminal), it was the Fed’s Dudley who sent the USD into a spiralling nosedive with comments made to MNI.

“One thing I think we can say with more confidence is that financial conditions are considerably tighter than they were at the time of the December meeting.”

“So if those financial conditions were to remain in place by the time we get to the March meeting, we would have to take that into consideration in terms of that monetary policy decision.”

The 4 interest rate rises in 2016 are being reassessed and repriced quick-smart by the market and that’s what we are seeing across USD Forex pairs.

The age old struggle between central banks and the free market:

USD/JPY Hourly:

Click on chart to see a larger view.

Do we feel sorry for the Bank of Japan? Following the BOJ’s negative rates policy change, the central bank got some depreciation in the Yen with that 300 or so pip hourly candle.

But since that day, USD weakness has chipped away any currency benefits that the BoJ had gained. Yesterday’s price action would have been excruciating to watch.

———-

Chart of the Day:
Moving across to EUR/USD, the story here is a similar one.

EUR/USD Daily:

Click on chart to see a larger view.

A couple of weeks ago we spoke about Mario Draghi: The Boy Who Cried Wolf, alluding to the fact that markets possibly didn’t share the same trust that the ECB will actually back up their talk about ‘taking action’.

How’s that race to the bottom going for you…?

———

On the Calendar Thursday:
AUD NAB Quarterly Business Confidence

EUR ECB President Draghi Speaks
GBP BOE Inflation Report
GBP MPC Official Bank Rate Votes
GBP Monetary Policy Summary
GBP Official Bank Rate
GBP BOE Gov Carney Speaks

USD Unemployment Claims

Do you see opportunity trading Forex on MT4? Take advantage on your free $50,000 Forex demo account.

Dane Williams – @VantageFX

Get the latest Forex news & analysis at Vantage FX

 

[Vantage FX]

NFP Friday:
Heading into US Non-Farm Payrolls tonight, the pain for USD longs hasn’t eased. The USD was dumped courtesy of the Fed’s Dudley’s comments which were way more dovish than the market has positioned for. Dudley’s comments hit home with markets and were interpreted that things just got real in terms of the Fed delaying future rate hikes if the domestic and global economies didn’t pick up from their current trajectory.

According to Bloomberg News, economists are expecting Non-Farm Payrolls to rise by 189K, for the Unemployment Rate to remain steady at 5% and the Average Hourly Earnings to increase to 0.3%.

December’s NFP number saw a spike of +292,000 jobs. With a slowdown in jobs expected, the fact that the Average Hourly Earnings number is expected to increase is huge for the Fed who I’m sure will pounce on any piece of good news that it can get its hands on.

This isn’t every technical trader’s cup of tea but if you are interested, I definitely recommend checking out the CME’s FedWatch Tool.

“Based on CME Group 30-Day Fed Fund futures prices, which have long been used to express the market’s views on the likelihood of changes in U.S. monetary policy, the CME Group FedWatch tool allows market participants to view the probability of an upcoming Fed Rate hike.”

Month Probability
March 8%
April 12%
June 19%
July 21%
September 25%
November 27%
December 34%
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Chart of the Day:
Which of the majors do you see as the best place to take advantage of these USD moves?

GBP/USD Daily:

Click on chart to see a larger view.

Cable is an interesting one, with price having pulled back into previous support that is now possibly acting as resistance.

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On the Calendar Friday:
AUD RBA Monetary Policy Statement
AUD Retail Sales m/m

CAD Employment Change
CAD Trade Balance
CAD Unemployment Rate
USD Average Hourly Earnings m/m
USD Non-Farm Employment Change
USD Unemployment Rate

Do you see opportunity trading around NFP on the MT4 platform? Take advantage on your free $50,000 Forex demo account.

Dane Williams – @VantageFX

Non Farm Payrolls & more at VantageFX