Technical and Market Analysis by Vistabrokers

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Vista Brokers: On Tuesday, the dollar rose against the Japanese yen

On Tuesday, the dollar rose to a one-week high against the yen amid the data showed the Chinese economic growth slowing. Vista Brokers analysts say that the speculation on the Chinese economy "drawdown" was in the market long time ago. And now investors are wondering whether the Bank of Japan will take some measures to limit the demand for yen.

The additional stimulus to growth the dollar received from the updated forecast of the International Monetary Fund. The IMF lowered its growth forecasts for almost all major economies, but not for the USA. The organization's experts expect that global growth in 2015-2016 will be 3.5% and 3.7% (-0.3% compared with the previous forecast). At the same time, the growth forecasts for the US economy have been increased to 3.6% in 2015 and 3.3% in 2016. The main reasons for the forecasts cutting the IMF calls reassess the prospects of economy of China, the euro zone, Russia and Japan, as well as the weakening of the petroleum exporting countries in response to falling prices for oil.

Amid the dollar rose against the yen by 0.9% at 118,615 yen after touching an earlier peak of 118.775.

Analysts note that the data on China's GDP changes in 2014 turned out to be the weakest for the last 24 years, although it is slightly stronger than profile experts expected. Over the past year, the Chinese economy grew by 7.4%, against 7.5% projected by the government and market expectations of 7.3%.

The euro against the yen rose by 0.46% to 137,190.


Vista Brokers: Bank of Japan did not Extend Stimulus Plan

On Monday morning, the yen strengthened against the dollar after the Bank of Japan did not announce additional measures to stimulate the economy. The Japanese currency has strengthened against the dollar by 1% to 117.66. EUR/JPY rose by 0.7% to 136.31 yen per euro.

Vista Brokers analysts note that Asian stock markets also received support. MSCI index (the broadest stock index for the Asia-Pacific region outside of Japan) grew by 1.1% and reached its highest level in six weeks. Against this background Australian and New Zealand currencies increased, inspired by the demand for high-risk assets. The Australian dollar rose by 0.7% to 82.26, and New Zealand kiwi - by 0.4% to 76.67.

According to experts, the decision of the Bank of Japan to retain the stimulus plan was expected, although some market participants put their a stake on belief that Haruhiko Kuroda today announces some new measures. In the new fiscal year which will start in April, the prospects for achieving the target level of inflation in Japan remain very vague. Therefore, some market participants expect new steps of stimulation from the Bank of Japan. The last time the regulator took the decision to expand the asset purchase program to 80 trillion yen in October 2014.

Euro against the dollar rose on Wednesday. The market is in anticipation of tomorrow's ECB meeting, which will determine the monetary control strategy for the near future and will have an impact on the euro.
Analysts remind that on Thursday, the European Central Bank may announce the launch of the quantitative easing program, involves 550 billion-euro ($637 billion) bond-purchase. That is according to 93 percent of respondents in a Bloomberg survey of economists.


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Gold continues to go up
GOLD

Currently quotes remain in the uptrend, as evidenced by location of prices above lines forming our trend indicator Alligator. According to the system rules, to enter the market investor should wait for a break of one of the actual at that moment fractals. Besides, the ideal time for getting of such a signal will be the absence of directed dynamics of the instrument, that is almost always accompanied by interlacing of Alligator lines, as well as proximity of our auxiliary indicators AO and AC to zero. We continue to keep an eye on the market.

Volatility in yes rises
USD/JPY

Last weeks trades showe maximum volatility levels over the recent years, which certainly should be taken into consideration from the standpoint of methods for managing capital. Thus, the recent fluctuations in USD/JPY has led to the formation of large-scale movements, thereby coming to the price fractals are already located in two hundred points from each other. Thus, a pending «buy stop» order must be placed on the level of extremum fractal upwards (118.86), while the break-down order must match the value of 116.90. It is expected that with the lack of strong fluctuations new significant levels defined by Williams fractals will form closer to the current price, and we need to move orders in accordance with their price value. Note that according to the system, pending orders must be placed lower by 1 point for sale, and higher by 1 point for purchase.

Euro falls farther
EUR/USD

At the moment, relevant pending orders to buy (1.1646) and to sale (1.1538) are actual. It is worth noting that the fractal-up corresponding to an entrance order to the long position is below the Alligator red line. At the same time it is important that the price is above the line at the time of the given level passage. Thus, we are waiting for a breakthrough of any named order to enter the market and then to consider any and all signals to "refill" the existing position that will maximize profits.

Quiet before the storm
GBP/USD

Perhaps the most favorable for the potential deal is a situation for the "cable". Thus, the achievement of the last year and a half minimum price levels led to the formation of lateral trend that offers the potential to carry out a successful transaction. So, the Alligator lines are intertwined, indicator AO and AC values are close to zero. Pending orders at the moment are located at 1.5199 (buy) and 1.5054 (sell). We are waiting for a breakthrough of one of them or the formation of a new, more contemporary fractal.

 

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EUR / USD. Waiting for Miracle

We can say that the current changes in the EUR / USD market reflect the solemnity of the moment - the market is frozen, awaiting. So, today the results of the ECB meeting will definitely "sadden" someone. Accordingly, someone it will vice versa make happy, and it will depend on the chosen direction, (guessed / not guessed), nerves and strategy. In such days, it is the right thing not to do anything until the news is coming, and then to be ready to enter the next breakthrough levels of support / resistance. Quotes are under the long-term downtrend near the channel line. As for the more recent movements, the value is now testing the medium-term trend line.

So, after the release of today's data, we recommend to put opening stop-orders to break values of 1.1680 up and 1.1458 down. The goal, in the case of the resistance line breakthrough is the correctional Fibo level of 38.2% (1.1880). If prices fall below the 11-year minimum at 1.1458 setting reduction targets will be technically baseless. Here it will be best to work on the scenario.

USD / JPY. Japanese Minister's Arrows Hit Targets

The long-term trend in the pair remains relevant. We note that back in 2012 Shinzo Abe took the helm of the Japanese economy once again and announced upcoming changes to combat the main problem of the Japanese economy – deflation. Then he put his man in charge of the Bank of Japan to successfully implement these plans. Thus, the regulator has started an ambitious program of assets purchase, flooding the economy with money. Since then, the Japanese currency has lost about 50% of its value, causing trading partners' murmurs and unofficial charges of waging foreign wars. Anyway, the long-term trend remains relevant.

Last upward impulse of October-November 2014 at the moment is corrected by the price of 38.2%. The price came up to this level twice and consecutively bounced off him. Thus, the risks currently biased towards the possible growth of the pair, but for the purchase we should wait for more clear upward impulse forming, as well as for some evidence from trend indicators. The graph shows two moving averages 3 with a shift 3 and 25 with a shift 5.

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Vista Brokers: Stock Markets are Rising in ECB Meeting Expectations

On Thursday morning, the euro was trading near 11-year low against the dollar. Today is the day when the ECB should announce the launch of the quantitative easing program, and the market remains highly volatile. Amid named expectations American, Asian and European stock markets are rising.

While trading in London euro against the dollar has weakened by 0.2%, reaching $ 1.1588. Vista Brokers analysts point out that for the pair it is a minimum since November 2003, after the ECB was said to propose 50 billion euros of asset purchases. Now we are talking about much larger amounts - 550, or even 600 billion euros. That is the amount that market participants want to hear today from Mario Draghi.

Yields on 10-year bonds in Japan rose by 8 points, up to a maximum of 2013. Futures on the Euro Stoxx 50 rose by 0.3%, while the Standard & Poor's 500 index – by 0.2%. Hang Seng Index gained 0.6%.

Although more than 90% of the experts participating in the Bloomberg survey believe in such a decision of the European Central Bank, it is always the possibility that the actions of the regulator will go counter to the market expectations. If the bank announces its plan to stimulate the economy today, large-scale asset purchases will begin on the 1st of March.


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Market Pulse 22.01

The long-awaited day of the ECB meeting came, and all investors' attention will be riveted to this event. It is expected during the traditional ECB Press Conference Mario Draghi will announce the launch of the quantitative easing program.

8:00 ** Unemployment rate - Q4 (Spain)

Moderate impact on the market (EUR). The Spanish indicator usually has a low impact, as the country is relatively small to affect the performance of the entire euro zone.

9:00 ** MPC Member David Miles Speaks - January (UK)
9:25 ** BOE Executive Director Paul Fisher Speaks - January (UK)

Moderate impact on the market (GPB). Comments of David Miles and Paul Fischer about the prospects for credit, inflation and the economy as a whole, can have an impact on the pound.

12:45 *** ECB Interest Rate Decision - January (euro zone)
12:45 ** Deposit Facility Rate - January (euro zone)
12:45 ** Marginal Lending Facility - January (euro zone)

Strong impact on the market (EUR). Changes in the rates are extremely important, and the quotes usually take a lead from it in advance. At this meeting, the ECB will unlikely make changes in rates.

13:30 *** ECB Press Conference - January (euro zone)

Strong impact on the market (EUR). It is expected that Mario Draghi will announce an extensive quantitative easing program on this press conference. Although the market was taking a lead from this decision for about a week, the ECB's decision both appropriate and not appropriate to the forecast, may have a strong influence on the euro.

13:30 *** Unemployment Claims - January (USA)
13:30 ** Continuing Claims - January (USA)

Strong impact on the market (EUR). Analysts expect positive data for the reporting week, although on news from the ECB, investors can leave these statistics without attention.

15:00 ** Flash Consumer Confidence - January (euro zone)

Moderate impact on the market (EUR). The consumer confidence index is based on a survey of households on the level of confidence in the current state of the economy and its development in the future. Analysts expect the decline of the indicator in January.


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Vista Brokers: Waiting for ECB Decision Influences on Metals

Gold in global markets falls for a second day. Investors expect that the expansion of the ECB stimulation program will increase the demand for risky assets. Vista Brokers analysts point out that in 2015, gold has already increased by 8.8% on numerous signals of slowdown in the global economy.

On Wednesday, gold was traded at a five-month high of $ 1,300 an ounce. Today in London gold for immediate delivery has fallen in price by 0.5% to $ 1,286.73. February futures fell on the Comex by 0.6% to $ 1,286.10.

Silver for immediate delivery fell by 0.4% to $ 18.0582 an ounce and palladium - by 0.5% to $ 763.75. Platinum added 0.2% to $ 1,275.88 an ounce.

Analysts reminde that with high probability, today ECB President Mario Draghi will announce the launch of the quantitative easing program, which means a monthly asset purchasing by 50 billion euros (58 billion dollars).

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Vista Brokers: ECB Stimulation Program Can Support Oil

Oil prices reduction continues to be one of the most debated topics, giving way, perhaps, only to the ECB quantitative easing program. Oil companies and exporters expect the market tests the bottom and start to rise. At the same time, many experts say that oil prices may fall to 30 dollars a barrel, because there are no economic justification for a high price, and there is a clear oversupply and falling demand in the market.

This situation lays mainly to the charge of North America, which is steadily increasing its production. The global economy, which is experiencing a period of deceleration, does not need oil in such quantities.
The report of the International Energy Agency in January indicated that in the IV quarter of 2014 excess supply (the difference between supply and demand) amounted to 890 thousand barrels. In comparison with the previous quarter, it's 170 thousand barrels more oversupply a day. For the first half of 2015 the IEA predicts reduction in demand by 900 thousand barrels per day compared to the IV quarter 2014. The agency expects growth in demand not earlier than in the III quarter of this year, and to this this lays forecast the IEA lays a decline of North America production.
Analysts say that at the moment it is difficult to predict the movement of the oil market, because during the past year oil prices were almost always supported by geopolitical risks. This year, such a situation is also possible - in case of such risks, the price can quickly grow by $ 20 a barrel or even more.

Also, the price can depend on the OPEC decisions about the decline in production. Note that some of the exporting countries were ready to change the quota, but others expressed strong protest against it, with the fear to lose the market share.
Vista Brokers analysts note that on Wednesday the price of oil on world markets is growing on the information that the ECB is close to the adoption of more aggressive measures to stimulate the economy. If Mario Draghi today will announce the launch of quantitative easing, it can support oil. Today, March futures for WTI crude oil on the Comex rose by 2.8% to $ 47.78 per barrel. March futures for Brent in London rose by 2.2% to $ 49.03 a barrel.


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Vista Brokers: Euro Fell against Major Competitors

As markets had expected, on Thursday the ECB announced the launch of the quantitative easing program. Against this background, the EUR / USD broke the 1.14 level, and continued to decline, stopping only at the level of 1.1380.

Vista Brokers analysts point out thatthe large-scale program of bonds purchasing will become the long term factor of pressure for the euro. Yesterday, the single currency was trading at 11-year low against the dollar, 3-month low against the yen, and 7-year low against the pound.

QE starting was the anticipated event for the markets. As experts predicted, the ECB will buy bonds from March 2015 until September 2016. Thus, the euro zone economy will regularly be supported by new liquidity, and by the end of the program, it will receive € 1 trillion. The volume of monthly purchases will be 60 billion euros.

Note that the Bundesbank, the central bank of the eurozone's largest economy, was against such aggressive measures to stimulate the economy of the region. They said about the illegality of such measures in terms of the European Union legislation and also claimed that the weak eurozone economy in such conditions will not have an incentive to carry out important economic reforms.

Analysts say that amid the aggressive ECB actions, the US economy currently looks like an island of stability, and it will support the US currency. The dollar index on Thursday rose from 92.78 to 94.02 points.


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Market Pulse 23.01

On Friday, the ECB's decision to launch the stimulation program will still impact on the market. Therefore, the actions of its members may be contrary to the outgoing news. Nevertheless, some important publications in European countries and Canada should be noted .

8:00 *** Flash Manufacturing PMI - January (France)
8:00 ** Flash Services PMI - January (France)
8:00 ** Flash PMI Composite - January (France)

Strong impact on the market (EUR). Flash manufacturing PMI is considered to be the most important of these indices. It is currently below 50, which is considered to be the deterioration of the overall situation. Nevertheless, analysts expect a slight growth of these three indicators in January.

8:30 *** Flash Manufacturing PMI - January (Germany)
8:30 ** Flash Services PMI - January (Germany)
8:30 ** Flash PMI Composite - January (Germany)

Strong impact on the market (EUR). In Germany, the indices are slightly higher than 50. Analysts expect a slight growth of these three indicators.

9:00 ** Flash Manufacturing PMI - January (euro zone)
9:00 ** Survey of Professional Forecasters - Q1 (euro zone)
9:00 ** Flash Services PMI - January (euro zone)
9:00 ** Flash PMI Composite - January (euro zone)

Strong impact on the market (EUR). Given the high market volatility caused by the decision of the ECB it is unlikely that these publications will have a strong impact on the euro, even if the values of indices will exceed forecasts.

9:30 *** Retail Sales With Auto Fuel - December (UK)
9:30 ** Retail Sales Ex Auto Fuel - December (UK)

Strong impact on the market (GPB). Growth of these indices (or the forecast excessing) reflects the upturn of consumer activity that strengthens the currency. This important indicator during the release can seriously affect the pound.

13:30 *** Consumer Price Index - December (Canada)
13:30 *** Core CPI - December (Canada)
13:30 *** Retail Sales - December (Canada)
13:30 *** Core Retail Sales - December (Canada)

Strong impact on the market (CAD). The portion of important statistics can have a significant impact on the Canadian dollar. It is expected that inflation in Canada will again show a decrease, while the volume of retail sales will rise slightly.



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EUR / USD. Bears are Back on Bike

The loss of the single currency in relation to the US dollar yesterday equaled 3 figures – the pair set a new 11-year low at around 1.1313. The reason of it was the proclamation of the long-awaited quantitative easing program. Many market participants were surprised with the determination showed by the European regulator. The European QE will begin in March and will be completed in September 2016. The volume of monthly purchases will be 60 billions euros. Now bears hold all the cards as evidenced by the clear trend acceleration in the form of quotes consolidation outside the long-term trend (see fig.).

Now the highest priority has the work for the rebound from the boundaries of trading channel formed in recent weeks with the expected results, when it is recommended to sell when approaching the line of resistance and then when confirming the rebound from it with the help of indicators. At the moment, the opposite boundary of the channel is reached, and here it would be appropriate to fix the result of the short position. Also today, it is impossible not to draw attention to the publication of data on the business activity in manufacturing and service sector.


GOLD. Fibonacci Decides most Everything

After gold price has reached the minimum over the past 4 year, it finally started to grow. Whether market participants were so sensitive to correction in global stock markets (they needed to settle in their money somewhere for not to keeping them in cache), or whether the achievement of the important Fibo level 61.8% from the large-scale rally observed in the period 2008-2011 has done its work. We note that in 2011 the historical maximum (1920 dollars per ounce) was established. Currently we see the previous downward movement breaking and the development of the upward movement within the channel. By itself, the turning point was by the classical scheme when at first the "head and shoulders" reversal pattern was formed, and then it was a breakthrough of its graphical boundaries (neck) upward.

Anyway, there are some problems in the uprise development (which does not change the general direction), because on the one hand quotes reached the channel line of the current upward trend, and on the other the level of expansion 161.8% of the initial pulse of November-December 2014 was achieved. Thus, it is recommended to take profits on long positions, waiting for lawful correction of the January upward impulse.


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