1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

FOREX PRO WEEKLY, October 30-03, 2017

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Oct 28, 2017.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

    Joined:
    Aug 28, 2009
    Messages:
    9,936
    Likes Received:
    10,635
    Fundamentals

    (Reuters) - The euro fell on Friday, marking its biggest weekly loss of the year a day after the European Central Bank decided to prolong its bond purchases and signaled its willingness to stick with an ultra-loose policy stance.

    The tension between Madrid and Catalonia’s secessionists also stoked selling in the single currency after the Catalan parliament on Friday declared independence from Madrid following a secret ballot. Spain Prime Minister Mariano Rajoy retaliated by sacking the Catalan government and set elections on Dec. 21.

    “The dovish surprise from the ECB was its openness to extend the duration of its bond purchase program,” said Omer Esiner, chief market strategist at Commonwealth Foreign Exchange in Washington.

    On Thursday, the ECB said it will extend its bond purchases into September 2018 while reducing its monthly purchases by half to 30 billion euros starting in January.


    The move raised bets the ECB was unlikely to raise interest rates until 2019 as the U.S. Federal Reserve has remained on its path to hike U.S. rates further.

    The Fed will hold a two-day policy meeting next Tuesday and Wednesday where policy-makers are expected to leave rates unchanged.

    The euro was down 0.5 percent at $1.1595, bringing its weekly loss against the dollar to 1.6 percent for the biggest in 11 months.

    The Catalan parliament vote revived some safe-haven demand for the yen and Swiss franc.

    Even in the aftermath of Friday’s political turmoil, “the situation in Spain seemed largely contained for now,” Eisner said.

    As the euro wobbled this week, the dollar strengthened on upbeat economic data, hopes for a tax cut and speculation about President Donald Trump’s selection of someone who favors a faster pace of rate increases than current Fed Chair Janet Yellen, whose term expires in February.

    The U.S. government reported on Friday that the economy grew at a 3.0 percent annual rate in the third quarter, faster than the 2.5 percent forecast among economists polled by Reuters.

    Earlier Friday, Bloomberg reported that Trump leans toward nominating Fed Governor Jerome Powell as the next Fed chief, but has not made up his mind.

    The dollar pared gains briefly on that report as Powell is seen less hawkish than Stanford University economist John Taylor, another potential nominee to lead the central bank.

    Trump, who is expected to announce his Fed chief candidate next week, is also considering Yellen, former Fed Governor Kevin Warsh and his economic adviser, Gary Cohn, for the Fed’s top job.

    The index that tracks the dollar against six currencies was up 0.3 percent at 94.919 after hitting a three-month high at 95.150. It gained 1.3 percent for its biggest weekly increase so far this year.


    News in Charts: ECB: rate rises still a distant prospect
    by Fathom Consulting

    Following the October monetary policy meeting, President Draghi announced the future of the ECB’s quantitative easing programme. The asset purchase programme will continue until September 2018 (nine months longer than previously announced), however the monthly purchase target will decrease from €60 billion to €30 billion – slightly less than Fathom’s expectations. Both the main refinancing rate and the deposit facility rate remained unchanged at 0.0% and -0.4% respectively.

    President Draghi stressed that the reduced rate of purchases should not be described as tapering and he left the door open for the ECB to extend, or even enlarge, the programme should the Governing Council not see a “sustained adjustment in the path of inflation”. The ECB was keen to avoid comparisons with the Federal Reserve’s monetary policy tightening, stating that the US is at a much more advanced stage of its business cycle.

    [​IMG]

    Although price pressures have strengthened over the last year, headline inflation remains comfortably below the target of 2.0%, while core inflation (which excluded the most volatile components in the headline index) has only breached 1.2% once in four years. Fathom does not forecast headline inflation returning to target in the near future.

    [​IMG]
    Substantial output gaps remain in a number of euro area countries, as highlighted in Fathom’s recent Global Economic and Markets Outlook. Given the large amount of economic slack in these countries and with inflation remaining below target, the ECB likely views reduced asset purchases as a sufficient tightening in the policy stance for the near future. Consequently, Fathom forecasts the deposit facility rate to remain negative until 2019 at the earliest.
    [​IMG]

    COT Report

    Recent CFTC data doesn't show yet big changes that have happened on market recently. Here we still could see one of the technical reasons, why last weekend we were doubt on upside perspectives of EUR as net long position here stands at all time high. And from sentiment analysis point of view - this is one of the strong factors to suggest a reversal on the market.
    Second issue - position still has started to decrease slowly as last CFTC data shows that net long position has dropped slightly.
    upload_2017-10-28_12-9-35.

    So, guys, what we have at fundamental bottom line. Just to keep things simple and do not dive into sophisticated economical process, it seems that recent EUR drop is just a beginning. By putting "2+2" we have extended ECB dovish policy through 2018 and aggressive policy by Fed. By Fathom consulting analysis, markets still slightly underestimate the scale of rate increase in 2018 by Fed. I will not be surprised, if we will see EUR somewhere near parity again through 2018. By looking at price charts of basic assets - Dollar Index, US 10-year notes, Gold - everywhere we see signs of potential global shifts.

    For example, our favorite Dollar Index monthly chart bearish reversal swing and deep upside retracement to 100.0 or higher level should follow through 2018. Lows stand at monthly OS and monthly K-support. You should remember this picture as we've used it not once in our analysis:
    dxy_m_30_10_17.

    10-year notes - reverse H&S pattern that suggests strong interest rates growth above 3% or even higher:
    upload_2017-10-28_12-33-43.

    Gold - monthly "222" Sell pattern:
    upload_2017-10-28_12-38-31.

    And now - let's see what we have on EUR...

    Technical
    Monthly


    So, when our major riddle was resolved - whether EUR will show another attempt to reach 1.21 or not, we
    could turn to analysis of potential downside targets that EUR could reach. Last week we have described existed background rather well:

    "As we have estimated earlier, EUR has formed short-term bearish pattern here - wash'n'rinse of previous top. August was indecision candle and in September price has tried to move higher but failed. This is sign of weakness and it increases chances on deeper retracement on lower time frames, mostly on daily. And this retracement right now stands under way.

    Appearing of strong resistance on monthly chart, right at the moment of overloaded speculative bullish positions makes us to be careful with any bullish trades. We have two side-by-side Fib levels at 1.2160-1.2170 area on monthly chart and long-term support/resistance zone, where market stands right now.

    As you can see August month shows mostly indecision action. May be shadows of this candle are not as big to call it "high wave" pattern, but by it's nature, it's probably the same. Appearing of "indecision" sign at this moment mostly stands in favor of retracement rather than upside breakout."


    So, now we have two important moments here. First is - market has dropped below lows of both - September and August. They are "indecision" candles. It means that we probably is getting new direction right now.

    Second - there are not many tools exist here, on monthly. Beyond of all-time support/resistance zone that cuts EUR/USD history by 1.20 edge, we have - rectangle consolidation and upside reversal swing. Making parallel to DXY chart, where we have downside reversal swing, here we also should suggest deep retracement down. This, in turn will push price back inside rectangle, which will be not good sign for bulls.

    In this case of rectangle space will be open for price fluctuation and now it is impossible to say whether it will be deep retracement or real return back to lows.

    Recent action, accompanied by fundamental background and parallel analysis of key financial markets mostly shows bearish picture and suggests downside action that could take large part of 2018 action.

    eur_m_30_10_17.

    Weekly

    Last week we've discussed chances to see here DRPO "Sell" pattern. In general it's possible appearing would be logic, because it corresponds by it's nature to H&S pattern that we have on daily. But the problem with this pattern stands with strong upside action which it suggests as second top of DRPO needs to be formed here.
    Another important condition - price should not reach important Fib support of DRPO's thrust.

    Although theoretically it is still possible as price still stands above 1.1510 Fib support, but in reality, I suspect that DRPO chances looks phantom. Just because market already has got major impulse and it is mostly impossible to stop it, reverse up and return price back to 1.21 area.

    Yes, 1.14-1.15 is strong support area. It includes multiple Fib levels (and K-areas), trend line supports and OS, and upside retracement indeed could happen here. But DRPO time mostly is gone - it was much simpler to appear 2 weeks ago when market was indecision and just crossed 3x3 DMA.
    In such circumstances, it is more probable to get another bearish continuation pattern, that also suggests moderate upside retracement - this is "222" Sell. And it is very probable that it could start somewhere around 1.1450-1.15 area:
    eur_w_30_10_17.


    Daily

    Daily picture shows important details as for a bit longer perspective as directly for coming week. By looking slightly over horizon of coming week, we major AB-CD pattern that is based on our H&S shape. And it has two important targets - 1.1450 and 1.12.
    1.1450 is more important as it coincides with strong weekly support area and major 3/8 Fib support and it is very high chances that upside moderate retracement could start from there.
    1.12 is too far and is not as interesting for us.

    Speaking on coming week perspective... As you can see EUR has reached 1.16 daily K-support and price stands OS right now. But it is more important that 1.16 is upper boarder of monthly consolidation / previous tops as well - whatever description you like more.

    That's why on Monday some upside reaction is possible but it should not be too extended - just re-test broken neckline or even smaller.
    eur_d_30_10_17.

    Intraday

    On 4-hour chart we have an action that we could draw as butterfly, but of course it doesn't have clear butterfly shape. Still, 1.618 extension stands around 1.1540. This is a level where upside bounce could start:
    eur_4h_30_10_17.

    Hourly chart shows that potential target of upside bounce is 1.1675 area - 3/8 Fib resistance, WPP and neckline of H&S pattern. If market will drop slightly lower first, as we've suggested, to 1.1540 - in this case, it will be not 3/8 but 50% Fib level probably.
    As thrust here looks nice, scalp traders could watch for DiNapoli patterns. This is also will be source of potential patterns here on coming week.
    eur_1h_30_10_17.

    Conclusion:

    In the beginning of next week we suggest minor bounce, somewhere to 1.1650-1.1675 area, before price will continue action down to major 1.1450-1.15 target.
    In longer perspective, before major collapse on EUR - deep retracement up should happen to fade existed upside momentum, as EUR was standing in long term uptrend. So, this retracement has great chances to start somewhere around 1.1450 area, but probably this will happen not on coming week (only if Payrolls will accelerate this process).


    The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.
     
  2. Joh

    Joh Sergeant Major

    Joined:
    Oct 11, 2007
    Messages:
    871
    Likes Received:
    134
    Thank you Sir Sive :)
    Again an excellent report and also a relief for this little trader, for once my hunch was correct. Now we patiently wait for 6-9-12 months or so to see what the powers that be will do next.:D
     
    Sive Morten likes this.
  3. gwynfor

    gwynfor Recruit

    Joined:
    Mar 24, 2013
    Messages:
    3
    Likes Received:
    1
    Hi Sive
    Thanks for your masterful analysis as always.

    Could I ask a question about last week's trading please. On 18 October I entered short on GBP USD based on two bearish daily grabbers which printed on 16 October and 17 October.

    But the 25 October daily candle closed above pMACD. Would you have treated that as invalidating the previous grabber signals?
     
  4. Sive Morten

    Sive Morten Special Consultant to the FPA

    Joined:
    Aug 28, 2009
    Messages:
    9,936
    Likes Received:
    10,635
    Hi, not quite.
    According to DiNapoli, grabbers become invalid if price closes above it (bearish grabbers) or below (bullish). So, validity of grabbers stand in relation to top/bottom of grabbers but not to MACDP line.

    Another important tool is time. but it has relation to any pattern, actually. 3-period rule. If market doesn't show any progress in the direction of the pattern, then something is wrong.
     
  5. Sive Morten

    Sive Morten Special Consultant to the FPA

    Joined:
    Aug 28, 2009
    Messages:
    9,936
    Likes Received:
    10,635
    Good morning,

    (Reuters) - The dollar touched a one-week low versus the yen on Tuesday as investors turned cautious following news that investigators probing Russian interference in the U.S. election had charged President Donald Trump’s former campaign manager.

    The yen showed limited reaction after the Bank of Japan kept its monetary policy steady on Tuesday as widely expected, even as it slightly cut its inflation forecast for the current fiscal year.


    The dollar held steady at 113.17 yen, having slipped to as low as 112.97 yen in early Asian trade, its lowest level since Oct. 20.

    Federal investigators probing Russian interference in the 2016 U.S. election charged Trump’s former campaign manager, Paul Manafort, and another aide, Rick Gates, with money laundering on Monday.


    Neither Trump nor his campaign was mentioned in the indictment against Manafort and Gates. But the latest developments in the investigation pressured the dollar, said Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore.

    The dollar also struggled in the wake of reports that Trump was likely to pick Federal Reserve Governor Jerome Powell as the next head of the U.S. central bank.

    Powell is seen as being more dovish on monetary policy than other contenders for the post, especially compared to Stanford University economist John Taylor, who has been regarded as another top challenger for the position.

    Against a basket of six major currencies, the dollar was steady at 94.583, down from a three-month high of 95.150 scaled on Friday.

    The euro eased 0.1 percent to $1.1635, but held above a three-month low of $1.1574 touched on Friday.


    Elsewhere, the Australian dollar was weighed down after China’s official factory PMI showed growth in its manufacturing sector cooled more than expected in October.

    The Aussie, which is sensitive to Chinese economic data due to Australia's strong trade ties with the Asian giant, was down 0.1 percent on the day at $0.7677. Beijing's crackdown on winter air pollution could curb imports of resources from Australia such as iron ore and coking coal.
    “It’s weighing on dollar/yen a little bit. I think there’s a little bit of uncertainty,” Innes said.


    Today guys, we will take a look at EUR again. The first stage of our trading plan is working as price starts smooth upside bounce. Actually, on daily chart we have DiNapoli "Stretch" pattern as combination of daily OS and K-support.
    At the same time we do not want to see too deep retracement - just to re-test neckline, somewhere to 1.1675-1.17 area:
    eur_d_31_10_17.

    On hourly chart we have two different patterns that point at the same are. First one is potential 3-Drive "sell" that has final destination accurately around 1.1675. And AB=CD pattern (not shown here) that also point on the same area.
    So, today we are watching for 1.1675. Scalp traders could try to trade it long, but this is not major task for us, as we mostly deal with daily chart and these patterns are interesting for us, just because they show definite point where we could take short position...
    eur_1h_31_10_17.
     
  6. gwynfor

    gwynfor Recruit

    Joined:
    Mar 24, 2013
    Messages:
    3
    Likes Received:
    1
    Thank you Sive for the tip on the grabbers and your daily efforts to educate us.
     
    Sive Morten likes this.
  7. Sive Morten

    Sive Morten Special Consultant to the FPA

    Joined:
    Aug 28, 2009
    Messages:
    9,936
    Likes Received:
    10,635
    Good morning,

    (Reuters) - The dollar edged higher on Wednesday as investors awaited the outcome of the Federal Reserve’s policy meeting for clues about future tightening, while the beleaguered New Zealand dollar came roaring back to life on strong jobs data.

    The dollar index, which tracks the greenback against a basket of six major rivals, added 0.1 percent to 94.680, though it remained shy of Friday’s three-month high of 95.150.


    The New Zealand dollar stole the Asian spotlight, soaring 0.9 percent to $0.6906 after touching a one-week high of $0.6915, boosted by data showing the country’s jobless rate sank more than expected to a nine-year low of 4.6 percent.

    The kiwi had come under pressure in recent weeks on fears of the new Labour-led coalition government’s left-leaning policies, including a clamp down on foreign investment and migration.

    “The kiwi was oversold on fiscal uncertainty and about what the Labour-led government would be enacting, so the market was short, and prone to squeezes,” said Sue Trinh, head of Asia FX strategy at RBC Capital Markets in Hong Kong.

    “The reality is that the government is far from the kind of extreme ideology that you see in some places, like in Europe,” she said.

    Later on Wednesday, the U.S. central bank is expected to leave interest rates unchanged. But investors will be watching for any new indications that the Fed will resume raising rates next month as expected, and the timing of any moves in 2018.


    “Market expectations are pretty much in line with the Committee’s own projections of one last rate hike this year so there isn’t much need for them to wave any flags or otherwise alert people to impending action,” Marshall Gittler, chief strategist at ACLS Global said in a report.

    Later on Wednesday, Republican lawmakers could also introduce a bill to cut taxes, and the Treasury Department will release its refunding plans. The government is expected to increase the size of its regular auctions as it faces higher funding needs from a widening deficit and as the Fed reduces its balance sheet.

    Ahead of U.S. employment data on Friday, other figures gave credence to the view that the economy is gaining momentum.

    Consumer confidence jumped to a near 17-year high last month, with households upbeat about the labour market and business conditions, which could underpin consumer spending and boost the economy in the final three months of the year. Other data showed wage growth accelerated in the third quarter.

    Ahead of a trip to Asia, President Donald Trump is expected to announce his choice for new Fed chair on Thursday, with news reports tipping Fed Governor Jerome Powell as likely to be nominated to take over when current Fed Chair Janet Yellen’s term expires in February.

    The dollar added 0.2 percent to 113.85, though it remained shy of its three-month high of 114.45 yen on Friday.

    Japanese markets will be closed for a national holiday on Friday, with many investors in Tokyo positioning ahead of that, market participants said, though most were wary of taking aggressive bets before the U.S. jobs data.

    As widely expected, the Bank of Japan held policy steady on Tuesday, with inflation still distant from its 2 percent target. BOJ Governor Haruhiko Kuroda stressed that he saw no immediate need to exit its ultra-easy policy even as the Fed and the European Central Bank have started to unwind their stimulus.

    The euro edged down 0.1 percent to $1.1632, still nursing its losses after tumbling to a three-month low of $1.1574 on Friday, a day after the ECB said it will extend its bond purchases into September 2018.

    The ECB will also trim its monthly purchases by half to 30 billion euros starting in January, leading investors to bet that it won’t begin raising interest rates until 2019.


    The Bank of England will issue a rate decision on Thursday, that many expect will bring its the first rate hike in more than a decade.

    Most economists polled by Reuters expect the central bank to raise its official cost of borrowing to 0.5 percent after last year’s 25-basis-point cut in the aftermath of the vote for Brexit.

    Sterling edged down 0.1 percent against the dollar to $1.3274, after hitting a more than two-week high of $1.3293.

    Bitcoin scaled a record high after CME Group Inc, the world’s largest derivatives exchange operator, said on Tuesday it will launch a futures contract for the cryptocurrency later this year.

    Today, guys we just can't ignore coming BoE decision. As you can see from text above, market mostly expects 0.5% rate increase. But, as we've talked and seen many times previously - BoE is very unreliable authority in question of rate change. To be honest, we have doubts that rate will be changed. Last session voting was dovish and worse than expected. Besides, as economical activity in UK, as Sentiment analysis show downside direction. Yes, UK has reached 3.0% beacon inflation value, but as economy will slow down - inflation will start to decrease. So, 3% is temporal level. That's why, we have big suspisions that no rate increase could happen...


    Technically, on daily chart we have some bullish signs. Indeed, market mostly cancelled our setup with daily grabbers, trend has turned bullish and we have tail close in last 2 sessions. Also price has not reached major K-support level and turned up from minor 5/8 support. All these moments point on some upside continuation here:
    gbp_01_11_17.

    Mostly we will be watching for “222” Sell pattern here around 1.34, as triangle has been broken. If you would like to trade boE decision – it will be tough. There are two major tool that you can use for this. First is - taking very small position with very far stop, more than 100 pips. This will give you freedom for reversal (if it will be necessary), and give you appropriate result in case of success. Bears could watch for 1.34 area where “222” will be completed, while bulls should watch for minor retracement now.

    Second way – using of stop entry orders for breakout of important levels. For example, 1.34 breakout will happen probably only, if rate will be increased. While drop down inside triangle and especially breakout of 1.31 lows will happen only if rate will stand the same…
    gbp_4h_01_11_17.
     
    Lolly Tripathy likes this.
  8. Sive Morten

    Sive Morten Special Consultant to the FPA

    Joined:
    Aug 28, 2009
    Messages:
    9,936
    Likes Received:
    10,635
    Good morning,

    (Reuters) - The dollar pulled back from a 3-1/2-month high versus the yen, sagging ahead of a U.S. tax bill that will be unveiled after a one-day delay.

    The dollar slipped 0.15 percent to 114.030 yen.

    It had gained about 0.5 percent overnight and approached 114.450, its highest level since July 11 set on Friday, underpinned by upbeat U.S. data and enhanced prospects for a December interest rate hike by the Federal Reserve following its two-day policy meeting on Thursday.

    The Fed left interest rates unchanged as widely expected, but further sharpened expectations for year-end rate hike by highlighting “solid” economic growth and a strengthening labour market.

    Thursday’s robust U.S. ADP private employment report was the latest in a list of strong indicators that have backed the Fed’s quest to normalise monetary policy.

    The dollar’s advance, however, was curtailed as other factors pertaining to U.S. fiscal and monetary policy came into focus.

    “The dollar was buoyed by the Fed’s statement but the impact was limited as the decision and its statements produced little surprises,” said Shin Kadota, senior strategist at Barclays in Tokyo.

    “The likelihood of (Fed Governor Jerome) Powell being nominated as the next Fed chair is capping the dollar. The delay in the tax bill announcement is also a potential sign of internal squabbles.”

    After an embarrassing one-day postponement of the bill’s unveiling on Wednesday, U.S. lawmakers have made plans for a measure that will seek up to $6 trillion in tax cuts over 10 years but likely not spell out completely how to offset them.

    The dollar has drawn support since September on tax hopes and some of the “tax reform trades” that lifted the currency could be unwound if the bill reveals discord among lawmakers, Kadota at Barclays said.

    U.S. President Donald Trump plans to nominate current Fed Governor Jerome Powell, seen as less hawkish compared to other candidates, as the next chair of the Federal Reserve, a source familiar with the matter said on Wednesday. The announcement is expected on Thursday.

    The euro was 0.1 percent higher at $1.1631.

    Sterling nudged up 0.1 percent to $1.3265 ahead of a Bank of England policy decision due at 1230 GMT.

    The BoE is widely expected to raise interest rates for the first time since July 2007 and investors will be focused on the degree of unity among policy makers as they gauge the likelihood of further increases.


    Against the euro, the pound was at 87.75 pence after advancing to 87.33 pence overnight, its strongest since mid-June.

    The dollar index against a basket of six major currencies slipped 0.15 percent to 94.685 after gaining 0.3 percent the previous day.

    The New Zealand dollar extended the previous day’s rally, when it soared after data showed the nation’s jobless rate fell to a nine-year low.

    The kiwi was up 0.3 percent at $0.6903. It had fallen to $0.6818 on Friday, its lowest since May, having come under pressure on fears of the New Zealand’s new Labour-led coalition government’s left-leaning policies.


    Since we've discussed GBP yesterday and prepared for today's BoE meeting, now it makes sense to take a look at EUR again. Here price has completed first step of our trading plan - AB=CD retracement back to the neckline of H&S pattern.
    Although guys, here we have two directional bullish DiNapoli patterns - Stretch, as combination of K-support and daily OS level and "Oops!" - existence of K-support right below neckline of H&S, I still think that sentiment and fundamental backround mostly stands in favor of downside action. If, of course, tomorrow's NFP will not break overall plan. As you remember our nearest target on daily chart stands at 1.1450:
    eur_d_02_11_17.

    In fact, market now is forming a kind of bearish flag pattern. But it seems that price could spend a bit more time inside as recent Fed statement was not as hawkish as investors would like it to be and this has led to upside retracement on US dollar:
    eur_4h_02_11_17.

    As a result, intially we were watching 1.1675 area as potential reversal point. This is 3/8 Fib level, WPP and neckline, but right now, as we have clear AB-CD pattern inside the flag, it seems that EUR could rise a bit higher, to 1.1690-1.17.
    Anyway, this will not break overall scenario and is just some minor technical adjustments. If our suggestion will be correct, we should get "222" Sell pattern on hourly chart and downside reversal point around 1.17 area:
    eur_1h_02_11_17.
     
    FreddyFX and Robban68 like this.
  9. Sive Morten

    Sive Morten Special Consultant to the FPA

    Joined:
    Aug 28, 2009
    Messages:
    9,936
    Likes Received:
    10,635
    Good morning,

    (Reuters) - The dollar fell to its lowest in a week against a basket of major currencies on Thursday after Republicans in the U.S. House of Representatives released proposals to overhaul the tax code.

    The greenback recovered some of its losses in afternoon U.S. trading, but remained lower and had minimal reaction to the announcement Federal Reserve Governor Jerome Powell was President Donald Trump’s pick to be the next chair of the Fed.

    The dollar edged up against the yen and the dollar index, which tracks the currency against six major rivals, during Powell’s comments, but ultimately surrendered those gains and remained in the red for the day.

    The tax reform legislation called for slashing corporate tax rates to 20 percent from 35 percent and reducing the number of tax brackets for individuals, according to a summary document.

    Analysts said the proposals put forth were both unlikely to gather sufficient support in Congress or to have significant impact on the U.S. economy. “Massive” tax cuts had been a major Trump campaign promise.

    “The market believes that the likelihood of tax reform passing quickly is diminished,” said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange. “The market believes that it’s not enough to be meaningful. It’s doubtful that it’ll be meaningful for the overall GDP of the country.”

    Cutting taxes is expected to increase spending and drive inflation and U.S. interest rates higher, making the dollar more attractive.

    The dollar index fell to 94.411, its lowest since Oct. 26. It had earlier risen, almost touching its highest since mid-July.

    The euro hit its highest in a week against the dollar, rising to $1.1687.

    The dollar also hit a session low against the Japanese yen after the tax cut proposal’s release, falling to 113.55 yen.


    The greenback posted major gains against the British pound . Sterling had its largest one-day fall against the dollar since June after the Bank of England raised interest rates for the first time in more than a decade but said it sees only gradual rises ahead.

    Against the euro, sterling fell almost 2 percent for its biggest one-day loss since October 2016.

    The BoE voted 7-2 to increase its benchmark Bank Rate to 0.50 percent from 0.25 percent, but it expected only “very gradual” further increases would be needed over the next three years.


    Today we briefly will take a look at EUR setup. As we have long-term expectation, it will be very important wether EUR will show drop today or not. The first step of our trading plan has been completed perfectly. EUR indeed has shown retracement up and this one was really small, just to neckline of H&S pattern. Now factor of uncertainty is coming - NFP release. Our second step suggests drop to 1.1450 and completion of H&S AB=CD target:
    eur_d_03_11_17.
    Yesterday our suggestion was correct, that market should move slightly higher - to 1.1690-1.17 area and spend a bit more time inside the flag that we have on 4-hour chart:
    eur_4h_03_11_17.

    As a result, our AB=CD pattern mostly has been completed. We do not exclude that minor spike up could happen right before NFP release, as EUR has not quite completed AB-CD for 5-7 pips. So minor spike up is possible. After that our technical view suggests drop. Thus, now all eyes on NFP data
    eur_1h_03_11_17.

    NZD setup is also coming to culmination as price is climbing to our 0.6970 area. Minor butterfly is forming on hourly chart, that particularly could complete short entry setup. If, of course, NFP will be positive...
     
    Synchronicity likes this.
  10. DevTrader

    DevTrader Private, 1st Class

    Joined:
    Jul 19, 2011
    Messages:
    52
    Likes Received:
    16
    NFP expectation is quite high this time infact highest since 2008 crash.
    Don’t know what solid reason against such high expectation of 310k .
    May be its because of last month NFP affected due to hurricanes.
     
    Sive Morten likes this.

Share This Page