Technical and Market Analysis by Vistabrokers

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Vista Brokers: Greek Saga Continues

The situation in Greece continues to have a significant impact on all financial markets. Vista Brokers analysts say that on Wednesday it became known that Athens had agreed on almost all the conditions of international creditors. The Financial Times has published information according to which the Greek Prime Minister Alexis Tsipras was ready to accept a reform plan with only minor changes. This gives hope that the "troika" will approve a new program of financial aid, which Greece had requested on Tuesday, a few hours before a technical default (non-payment of 1.6 billion euros to IMF).

European stock market and bonds of peripheral euro zone countries reacted to the news with the growth. Thus, FTSEurofirst 300 index has increased by 1.5%, while the Euro STOXX - by 2.1%. The yield on German 10-year bonds has risen by 4.3 basis points to a day high of 0.82%. The yield on similar bonds of Spain, Italy and Portugal have declined by an average of 7 basis points to 2.22%, 2.25% and 2.90% respectively.

Meanwhile, the euro continues to fall against the dollar and other competitors. At the time of writing it is at $ 1.1105. The decline was aggravated after the International Monetary Fund officially declared that Greece had failed to make payment, so now it is included in the list of debtors and will not receive funding until paying off the debt. Thus, Greece became the first developed country in the list of debtors IMF, where previously were only non-developed countries, such as Zimbabwe.

Hope for a new loan for Athens still exists - as mentioned above, the country has requested a new bailout program and debt restructuring, but did it too late, so that the payment of the IMF has turned out to be expired. On Sunday the country will hold a referendum, after which, perhaps, the negotiations will continue. In any case, Greece - is a constant source of inconvenience in financial markets since the crisis situation casts doubt on the stability of the euro zone and its currency.

 

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Market Pulse 02.07

On Thursday, a lot of important statistics will be published during the US trading session. Data will attract investors' attention - all statistics published in the United States has an impact on terms in which the market expects the Fed's interest rate hike.

1:30 *** Trade Balance - May (Australia)

Strong impact on the market (AUD). The trade balance is the difference between exports and imports for the period. Positive values ​​are favorable for the currency.

8:30 *** Construction PMI - June (UK)

Strong impact on the market (GPB). The index of purchasing managers in the construction. It shows an improvement or deterioration in the previous month. The situation in the construction sector in Britain is closely monitored, so the publication affect markets.

11:30 ** ECB Monetary Policy Meeting Accounts - June (euro zone)

Moderate impact on the market (EUR). The report is published in 4 weeks after the meeting of the ECB monetary policy. It contains speeches of the Governing Council members.

12:30 *** Unemployment Rate - June (USA)
12:30 *** Non-Farm Employment Change - June (USA)
12:30 *** Unemployment Claims - June (USA)
12:30 ** Counting Claims - June (USA)
12:30 ** Change in Private Payrolls - June (USA)
12:30 ** Change in Manufacturing Payrolls - June (USA)
12:30 ** Average Hourly Earnings - June (USA)
12:30 ** Participation Rate - June (USA)
12:30 ** Two-Month Payroll Net Revision - June (USA)

Strong impact on the market (USD). The US trading session will be very volatile, as the data on the labor market are one of the main targets for the Fed. Note that experts expect a decline in the unemployment rate and the unemployment claims number. Forecasts for not all indicators are optimistic, but if most of data are positive, it could support the dollar.

13:30 ** RBC Manufacturing PMI - June (Canada)

Moderate impact on the market (CAD). The index of purchasing managers in manufacturing. Shows improvement (> 50) or degradation (<50) of the situation in comparison with the previous month. The rate growth or the forecast exceeding are favorable for the currency.

15:10 ** ECB President Mario Draghi Speaks - July (euro zone)

Moderate impact on the market (EUR). Draghi comments can give hints of further actions of the ECB and the sentiment in the central bank's management, so they are important for the market.

 

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Vista Brokers: Dollar Rose after Strong Statistics

On Wednesday, the dollar has strengthened after during the American trading session in the USA was published a portion of strong statistics. Vista Brokers analysts say that the tension over Greece in markets remains, but positive data from the United States set up investors that the Federal Reserve will soon raise interest rates.

So, an independent organization ADP has reported yesterday that the US non-farm private employment rose by 237,000 in June instead of the expected 219,000, and more modest 203,000 in the previous month. The May figure was revised with increase - earlier ADP had reported about 201,000. Also better than expected was ISM manufacturing index, showing activity in the US manufacturing sector. In June, the index has risen from 52.8 to 53.5 vs. 53.2.

Euro was mainly declining during the day, despite the fact that European stocks and bonds were rising after it became known that the Greek Prime Minister Alexis Tsipras had agreed with almost all the lenders' conditions. Yesterday, Tsipras sent new proposals for reforms as part of a request for a new program of financial bailout. However, German Chancellor Angela Merkel said that negotiations will not continue until the results of the referendum are known. The referendum will take place in Greece on Sunday.

 

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Vista Brokers: Return of Iran Will not Have Material Impact on Oil Market

Talks on Iran's nuclear program, which should have been completed on Tuesday, were extended until July 7. Probably, the next round of negotiations will be the last, and international sanctions for Tehran will be lifted. These sanctions did not give the country an opportunity to participate the global oil market in full force. Vista Brokers analysts note that oil market participants were long speculating on the theme of sanctions lifting, but in fact, the country will need a long time to regain lost ground.

Recall that sanctions prohibited the export of crude oil from Iran in most developed countries, as well as foreign investment in local gas, oil and petrochemical industries. A preliminary agreement on the lifting of the ban was signed in April 2015, and since then the "Six" (USA, Russia, China, France, United Kingdom, Germany) and Tehran discuss the details. It is likely that Iran will reduce the number of centrifuges at two-thirds, but the country still wants to engage in research on the study of uranium and insists on it. The other side insists that this area of ​​research should be under the full external control as well as military targets in Iran.
Despite the tough stance of "six", Tehran slowly but surely inferiors, so it is likely that a long-term conflict will be really resolved soon. In this case, Iran will return to the list of full members of the oil market and everything will depend on how quickly the country will use the additional capacity to return to the onetime volumes. The Iran's Oil Minister Bijan Namdar Zanganeh has pointed that the country will immediately increase oil production to the past level after the lifting of sanctions.

According to the International Energy Agency (IEA), Iran in May was producing 2.85 million barrels per day, 1.4 million of which was exported. In early 2012, before stringent financial sanctions against Iran were imposed at the global level, the export volume was 2.2 million barrels per day.

Analysts insist that Iran will not be able to quickly rehabilitate the oil industry, which is under sanctions for more than 10 years. Probably, it will take about 1.5-2 years with a steady stream of foreign investmen to the oil industry. That is why deliveries from Iran will not immediately affect the oil market, in contrast to the speculation on this subject.

 

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GBP / USD. Bears Get Advantage prior to US Labor Market Data

Bulls, who were keeping a sufficiently important support level for several days (38.2% Fibonacci retracement from the "cable" growth in June), have finally retreated in the face of fundamental factors. Thus, according to Markit, the manufacturing PMI in the UK was the lowest since April 2013, while the Bank of England financial stability report paid attention to risks associated with the possible default of Greece regards financial markets. Thus, the Old Lady has even announced about a joint plan of the Ministry of Finance and the European authorities on any emergency. Amid this we have a breakthrough of local lows, which means the continuation of a downward correction started from June 18.

Today, the Ministry of Labour will report regarding the US employment situation, which traditionally would have a huge impact on the balance of power in the market. Given the current technical picture, it is recommended to place a pending breakthrough order at yesterday's lows with the target of 1.5560 (50% retracement of the aforementioned upward wave) and then 61.8% (1.5470).

Volatility: 46%
Trend: bearish
Fundamental background: strong

GOLD. Readiness for Action №1

It seems that sellers are willing to storm the nearest support level of 1162 (the lowest level since March 20), which attracts attention, given the expected today statisticson employment in the US agricultural sector. Now the market feels enormous pressure, given the situation with Greece in the context of the upcoming referendum and the fate of the country in the context of membership in the euro zone. It is also a very high degree of investor expectations of arguments in favor of a scenario in relation to the date of the beginning of the Fed rate hike cycle. This gives reason to expect in the near future a sharp rise in volatility and strong market movements, which can be used by traders in the gold market, traditionally sensitive to investors' sentiment towards risk changing.

It is recommended to enter a short position on a breakthough of 1162 with a target of 1142 (low since December 2014), to be prepared to respond quickly to the situation during the American trading session.

Volatility: 26%
Trend: sideways
Fundamental background: strong

 

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Market Outlook According to the Method of Bill Williams: GOLD

We continue to hold the short position opened on a breakthrough of the fractal down level (1173.59). Among additional signals we have a «saucer» on АО and «2 red bars below zero» on АС. A technical picture in gold is characterized with buyers' attempts to overcome a support level, which has already caused a downward movement acceleration.

Volatility: 25%
Trend: bearish
Fundamental background: strong

Market Outlook According to the Method of Bill Williams: USD/JPY

Currently we are out of the market, and it is the best position prior to later expected US labor market data (during the American session). The nearest order to buy is at 123.99, to sale – at 121.94.

Volatility: 65%
Trend: sideways
Fundamental background: strong

Market Outlook According to the Method of Bill Williams: EUR/USD

The order to sale from 1.1110 has activated. Among additional signals we have some from a «red zone» as well as «2 red bars below zero» on АС. The situation with Greece keeps market participants in tension, that is why we should closely monitor the situation all the time and be prepare to respond System signals.

Volatility: 38%
Trend: bearish
Fundamental background: strong

Market Outlook According to the Method of Bill Williams: GBP/USD

We have entered to sale from 1.5671. During the last 24 hours there were some «red zone» signals, and we should certainly use them to increase a potential profit on the position. Also we should not forget about the US labor market data (high volatility) and tomorrow's Independence Day in the USA (low liquidity).

Volatility: 44%
Trend: bearish
Fundamental background: strong

 

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Market Pulse 07/03

On Friday, in many countries will be published index of business activity in the service sector and the PMI composite index, which usually have an average impact on the market. In the US today markets do not work because of Independence Day, so liquidity during the US trading session will be low.

1:30 *** Retail Sales - May (Australia)

Strong impact on the market (AUD). The rate growth (forecast exceeding) reflects higher consumer activity that supports the currency, suggesting a tight monetary policy in the future.

1:35 ** Services PMI - June (Japan)
1:35 ** PMI Composite - June (Japan)

Moderate impact on the market (JPY). The index of purchasing managers in the services sector. Shows improvement (> 50) or degradation (<50) of the situation in comparison with the previous month. The rate growth or the forecast exceeding are favorable for the currency. In Japan indexes are expected to decline in June.

1:45 ** HSBC Services PMI - June (China)
1:45 ** HSBC PMI Composite - June (China)

Moderate impact on the market. The index of purchasing managers in the services sector. Shows improvement (> 50) or degradation (<50) of the situation in comparison with the previous month. The rate growth or the forecast exceeding are favorable for the currency. In China indexes are expected to increase in June.

7:15 ** Services PMI - June (Spain)
7:15 ** PMI Composite - June (Spain)
7:45 ** Services PMI - June (Italy)
7:45 ** PMI Composite - June (Italy)
7:50 ** Services PMI - June (France)
7:50 ** PMI Composite - June (France)
7:55 ** Services PMI - June (Germany)
7:55 ** PMI Composite - June (Germany)
8:00 ** Services PMI - June (euro zone)
8:00 ** PMI Composite - June (euro zone)

Moderate impact on the market (EUR). Forecasts suggest that the average performance of the services sector in the euro zone in June, will remain at the level of May. In Spain a slight decrease is expected, and in Italy - a slight increase. In the current tense situation, the data are unlikely to have an impact on the market, except in the case of strongly diverge from forecasts.

8:30 *** Services PMI - June (UK)
8:30 ** PMI Composite - June (UK)

Strong impact on the market (GPB). The index of purchasing managers in the services sector. Shows improvement (> 50) or degradation (<50) of the situation in comparison with the previous month. The rate growth or the forecast exceeding are favorable for the currency. In the UK indexes are expected to increase in June.

09:00 ** Retail Sales - May (euro zone)

Moderate impact on the market (EUR). The rate growth (forecast exceeding) reflects higher consumer activity that supports the currency.

 

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Vista Brokers: US Labor Market Statistics Disappointed Traders

On Thursday, markets were looking forward to the US trading session and the US labor market release. Vista Brokers analysts note that the published statistics did not meet traders' expectations - most of indicators were below expectations.

This has given the euro the opportunity to recover against the US dollar. Recall that this Sunday Greece will hold a referendum, the results of which can significantly affect the dynamics of financial markets. Thus, EUR / USD finished the day with a small plus (+ 0.30%) at $ 1.1086. Prior to that, a couple was traded in the range of 1.1033 - 1.1121.

Thus, statistics on the US labor market did not meet expectations, except only the unemployment rate, which actually fell in June, and even as much as 0.2%, not 0.1% as expected. Non-farm payrolls rose by 223,000, rather than the 231 000. The data on changes in private and industrial sectors also were worse than expected. Disappointing was data on average hourly wage, which has started to grow only in the last few months, but in June the growth was zero. And as a control shot ... the number of initial applications for unemployment benefits rose for the reporting week by 10 000 to 281 000.

Relatively weak data on the labor market could again move the timeline of Fed rate hike, which market participants expect in September. Last month, the Fed chief Janet Yellen said that the central bank wants to see a stable growth of GDP, inflation and wages before taking measures to tighten monetary policy.

 

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Vista Brokers: Oil Falls after Yesterday's Baker Hughes Data

During the Asian session of Friday, oil was falling in price. Vista Brokers analysts note that recent data from the United States fall short of expectations about the decline of oil production in the country. In addition, investors are showing excitement prior to a referendum in Greece, the results of which are quite unpredictable and can greatly affect the dynamics of financial markets. Today, on the New York Mercantile Exchange futures for WTI crude oil for August delivery were down by 0.66% to $ 56.56 per barrel.

After the past few months, production volumes and stocks in the US have shown a steady decline, last week the number of drilling rigs according to Baker Hughes has increased as well as crude oil inventories according to EIA. As you can see, hopes that the oversupply in the oil market will decline due to the narrowing of the US market, are not met.

So, according to the Baker Hughes report, released yesterday, last week, the number of drilling rigs operating in the US has risen by 12 to 640, breaking the 29-week cycle of decline (since the beginning of December 2014). A week earlier, the number of rigs has fallen to its lowest level since August 2010 - 628.

Even more unpleasant surprise for traders was the fact that, according to EIA (Information Agency under the US Energy Department) over the past week crude oil inventories in the country have increased by 2.4 million barrels, after 8 consecutive weeks of steadily declining. After the publication of this information, WTI crude futures have lost more than 4%, dropping below $ 57 a barrel.

It should be noted that forecasts have assumed decline in stocks by 2.5 million barrels, so that the actual data differs a lot. Currently, crude oil inventories in the United States are at 465.4 million barrels - the highest level in 80 years.

 

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GBP / USD. US Data Keep Investors Honest

Long-awaited data on employment in the United States, contrary to expectations, did not make any visible change in the balance of market forces. However, this is more due to the today's holiday (in the United States is celebrated Independence Day), and that the main reaction (based on the published statistics, it is not in a favor of the US currency) should be the next week. So, we have an achievement of a 50% correction in GBP / USD from the upward impulse in June, as well as the proximity of the support line of a higher temporal scale, which currently connects the April and the June local lows.

It is recommended to wait for a rebound from current levels (it is desirable to confirm it with trend indicators) before you consider cautious buying in the range of the resistance line of the current short-term downtrend. It is likely, that some movements we will see today, because in 08.30 GMT Markit will publish the level of business activity in the UK services sector.

Volatility: 38%
Trend: bearish
Fundamental background: moderate
USD / CAD bounces from the line of resistance

Looney in recent days has lost ground against the US dollar, the strength of which, in turn, was derived from expectations of the Federal Reserve interest rate hike (then the US would become the first who tightens the monetary policy among developed economies). Another factor that continues to put pressure on the Canadian economy (and with it on the national currency) remain low oil prices - a key export item of the country. On the other hand, we have at the moment the achievement of the upward trend channel line of the last couple of weeks, and at the same time the growth of pessimism in relation to the US dollar after yesterday's relatively weak employment data in the country.

The current situation suggests a corrective USD / CAD downward movement (that we can use) to the range of the support line of the above-mentioned short-term ascending channel with possible subsequent resumption of growth.

Volatility: 74%
Trend: sideways
Fundamental background: weak