Technical and Market Analysis by Vistabrokers

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Vista Brokers: Markets after ECB's Decision

Yesterday's announcement of the European Central Bank about the launch of quantitative easing in March caused strong fluctuations in the financial markets, which continues today.

In particular, stock markets are rising in Asia, the USA, Australia, South Korea etc. Vista Brokers analysts note that S&P 500 and Dow Jones indices rose by 1.5%, the Japanese Nikkei - by 1%, the MSCI Asia-Pacific - by 0.9%. In Europe stocks and eurobonds are rising.

Meanwhile, the euro against the dollar is still trading at 11-year low of about $ 1.1344, having lost 2% this week.Versus the yen the single currency fell to the 3-month low at 134.28 yen. The additional pressure on the euro have the upcoming elections in Greece, where extreme left political forces can win. Such a scenario can lead to the situation when the country will leave the euro zone.

By the way, the participation of Greece in the ECB quantitative easing program open to question. According to Mario Draghi, the regulator will buy Greek government bonds, but only if Athens will fulfill all the program conditions. The radical SYRIZA party, which may come to power in Greece intends to cancel the austerity measures prescribed by international lenders, which may lead the country to default.

In such a difficult situation, experts are wondering how the euro will behave in further. Societe Generale analysts note that the single currency can not fall without correction, but do not give specific predictions about this correction. HSBC said that the launch of the quantitative easing program should already be considered by the market, as the EUR / USD began to decline as early as mid-2014, when hints about the QE become less transparent. The Bank's experts talk about the possibility of the euro reducing to 1, but in such a case, the US Federal Reserve will begin to operate, because such a strengthening of the dollar will be not profitable for the USA.


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Vista Brokers: Saudi King's Death Feeds Oil Market Uncertainty

On Friday, oil prices rise after the news about the death of Saudi Arabia King Abdullah bin Abdul-Aziz Al Saud. Brent is traded at $ 49.30 per barrel, WTI - at $ 46.70 per barrel.

The crown of the country, which is the largest exporter of oil, goes to the Abdullah's brother, Salman. He has already said that the oil policy of the state remains unchanged, and the key in this area position of oil minister remains for Ali al-Naimi. Salman also intends to follow the OPEC policy in respect of oil production quotas.

Vista Brokers analysts note that the change of government in Saudi Arabia has added uncertainty to the already snappish oil market, which is going down over the last six months. Earlier this year, the market has been falling and with the high volatility, but this week the price rebounded slightly, and Brent was traded at around $ 47.78 - $ 50.45 per barrel.


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USD / JPY. Thorny Path up to Fuji...

It seems that the large-scale correction of the last couple of months is close to completion. The figure that can be taken as a graphical consolidation figure definitely implies the need to work with it in line. Moreover, going beyond the scope of this "triangle" it is able to lead the new trend in the direction of the breakdown impulses, whether we like it or not. Probably the most market players will remember that in fact the Bank of Japan is now carrying out an ambitious program of quantitative easing and printing money directly implies a depreciation of the national currency. This fundamental factor gives grounds to the development of a new growth wave especially amid expectations of increasing of the key interest rate in the United States.

However, in order to obtain confirmation of the objectives established at the level of multi-year highs in December (121.84) and higher, the bulls first need to overcome the next level of resistance (118.86), then the above-mentioned upper limit of the "triangle" and then the Fibonacci extension level 161.8% from the pair growth on 16-21 January (120.69). Today, the market is positively affected by the publication of the revised trade balance in Japan in November (-0.83 to -0.73 trillion of yen), while December's value has declined, reaching the highest value over the past 1.5 year (-0.71 trillion.). It is ti be recalled that after the accident at the Fukushima 1 and an almost refusal of nuclear energy, the country is forced to import energy in a much larger scale, which led the country to a trade deficit.


GBP / USD. At the crossroads...

Dynamics of the "cable" in recent months was in the footsteps of the greenback strengthening. As in the pair with single currency, here it was formed the downward trend in which investors were using some simple and in this case the best trading systems and could take large profits.
Of course, there is always a temptation to buy cheaper, but, as history shows, catching the falling knife with bare hands is not the best method. An additional fundamental factor, supported the bears, remain rather vague messages of the Bank of England about a possible rate hike. In spring this Bank was one of the first candidates for the beginning of the rising rates cycle along with the Fed. However, on its meeting the regulator made it clear that the problems in the economy still remain. At the moment, quotes have reached the support line connecting lows of 2010, 2013 and here everything will be decided.

It is recommended to fix the result on the open short positions and not to take decisive action until tomorrow's publication of quarterly GDP in the UK. These indicator can give an impetus to quotes, summing up the foundation for the future dynamics of the pair.


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Vista Brokers: Euro on Friday was Traded under Pressure

At the end of the last week, the euro against the dollar has lost about 2.5% after the announcement of the ECB's decision to launch a program of quantitative easing. On Friday, the single currency was trading at 11-year low against the US currency. Against the yen, the euro reached a 16-month low at 130.91.

Vista Brokers analysts note that since the beginning of 2015 the EUR/USD has lost 7% and in January the pair can show the most significant monthly decrease since the crisis of 2009.

Today, the single currency may have another reason for the fall - the announcement of Greek election results. On Sunday, the country has held early parliamentary elections, and the radical left-wing party "Syriza" can come to power. In this case, Athens can stop paying public debts and review the conditions for receiving financial assistance. Although the leaders of the radical party say that a Greek exit from the eurozone is not in their plans, the market is considered in such a scenario.

Also this week, market participants will wait for the US Federal Reserve meeting, which will take place on Wednesday. After an unpleasant surprise from the Swiss National Bank and the announcement about the launch of QE from the ECB, investors want to be sure that the US central bank will not deviate from the course. Analysts remind that this year investors expect that the Fed will raise interest rates.

While the euro declines in the currency market, the dollar is rising not only against the single currency, but also against other major competitors. On Friday, the currency rose against the Australian, New Zealand and Canadian dollar amid prices for natural resources declined. It has become a factor of pressure on the resource-exporting countries.

The dollar index DXY rose from 94.26 to 94.74, reaching a new 11-year high.


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Market Pulse 26.01

On Monday, Australian markets are closed - today the country celebrates Australia Day. Several important indicators will be released in Germany and the UK. Also this day willstart Eurogroup Meetings, which in relation to the recent ECB decision may attract the attention of traders.

9:00 *** Ifo Business Climate - January (Germany)
9:00 ** IFO - Current Assessment - January (Germany)
9:00 ** IFO - Expectations - January (Germany)

Strong impact on the market (EUR). Analysts expect that these three indicators of the German IFO Institute will show the growth compared to December. Recall that these indicators are based on a survey of manufacturers, builders, wholesale and retail companies.

9:30 ** BBA Mortgage Approvals - December (UK)
9:30 ** MPC Member Kristin Forbes Speaks - December (UK)

Moderate impact on the market (GPB). The volume of mortgage lending shows the activity on the UK mortgage market. As for Kristin Forbes, her speech can influence on the pound, because it can show the mood of the Monetary Policy Committee.

14:45 ** ECB Announces Covered Bond Purchase - January (eurozone)

Moderate impact on the market (EUR). ECB announces its weekly balance sheet, from which investors conclude on the extent of buying bonds by the regulator. Expansion of purchases is a signal for greater activity of the ECB, which puts pressure on the euro.


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Vista Brokers: Euro Hit 11-year low Amid Election Results in Greece

As expected, the left radical Syriza party whose leaders are against the cooperation with international creditors swept to victory in a snap election in Greece. Against this background, on Monday, the single currency broke through the 11-year low against the dollar and fell to $ 1.1098, the lowest level since September 2003.

The "Syriza" won 36.3% which infers 149 of 300 seats in the new Greek parliament. It means a very great power for radical forces and huge uncertainty for the whole Europe. The leader of the leftist Alexis Tsipras has said that the choice made by the Greek people, would entail the end of the austerity program. "Today the Greek people overturned an agreement with creditors - they brought us only poverty and misery. Now the dictates of creditors is in the past "- said Tsipras.

Vista Brokers analysts point out that it is unclear how the new Prime Minister of Greece, Tsipras will output from the difficult economic situation. It is clear that he will be able to achieve only some concessions from creditors, but not a complete debt write-off. The country is in a vicious circle, and is unable to finance its obligations on their own, given that it does not have access to financial markets. In summer Greece may need new injections to repay debts on schedule, and if the country ceases to comply with the terms of international lenders, it will not receive the money. In this case, the default or the “Grexit” (exit from the euro zone) are possible. This uncertainty scares markets.

Today, the euro is reduced not only against the dollar. EUR/JPY is at 11-year low - 130.16 yen. Also, the single currency fell against the pound to 7-year low – 74.06.

Analysts note that the position of the euro is very unstable after the announcement of the ECB quantitative easing program launch.


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Vista Brokers: Euro Partly Reasserts itself

On Monday, the euro fell against the dollar to its lowest level since September 2003, when it became known that in Greece the opposition leftist coalition "Syriza" had won the elections. Markets concern that the new government may refuse to cooperate with international lenders or even initiate the process of exit from the eurozone. Against this background, the European currency fell by 0.3% against the dollar to $ 1.1167.

However, Vista Brokers analysts said that the market excitement about Greece had not lasted too long. At midday, the euro has already returned to the level of $ 1.1237 and continued to slowly reassert itself. Investors felt that the risks from so-called Grexit was overvalued.

According to a senior Nordea Bank analyst Niels Christensen, it is too early to worry about it, and there are no real prerequisites for the new round of debt crisis in the region development after the elections in Greece.

Meanwhile, the head of the Eurogroup Jeroen Deysselblum said that there is no plan for the Greek exit from the euro zone, and the country must adhere to budgetary rules established in the area. As for election promises of "Syriza" to reduce Greek debt, Deysselblum noted that the Eurogroup has already taken enough efforts to ease the debt burden of the country, and the debt can not be canceled.


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Market Pulse 27.01

Tuesday's economic calendar is not too saturated. The Eurogroup meeting continues In Brussels, where among other issues, the victory of radical party "Syriza" in Greece is discussed. A number of important data will be released today in the United States.

9:30 ** BBA Mortgage Approvals - December (UK)
9:30 *** Prelim GDP - Q4 (UK)

Strong impact on the market (GPB). It is expected that on a quarterly basis the UK economy slowed its growth compared to Q3, but on an annualised basis - it has accelerated. Growth or accelerate of the growth will be favorable to the pound.

13:30 *** Durable Goods Orders - December (US)
13:30 *** Core Durable Goods Orders - December (US)

Strong impact on the market (USD). Changing in the volume of orders for durable goods is a leading indicator of production trends, as well as the investment activity in the country. After the decrease in November, in December the indicator is expected to rise slightly.

15:00 *** CB Consumer Confidence - January (USA)
15:00 *** New Home Sales - December (US)

Strong impact on the market (USD). 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. The growth of the confidence in the economy favorably affects the currency.


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GOLD. As to Energy Conversation Principle...

As we noted in a previous review, the gold price had been achieved several important resistance levels. So, some technical factors in the form of the channel from the trend, which started in November 2014, prevent the global safe haven asset from growth. Then the correctional Fibonacci level 61.8% from the large-scale growth of 2008-2011 became a technical basis for the start of the trend. Also the discretion of bulls is limited by the extension level of 161.8% from the upward momentum of November-December 2014. Needless to say, that global capital markets are tied with benefits, which means that the money flow from market to market depending on overall market conditions. Thus, we may expect a decrease in quotations of the investigated asset amid rising of stock markets (which happens now amid the easing of monetary policy by some key central banks) and vice versa.

A hit of support line from the January ascending trend will become a confirmation of further reducing, and also a hit of the neckline on the graphic figure "head and shoulders", which is well seen now. In this case, we can expect to achieve the next support level in the form of correction 38.2% (1254 dollars per ounce) from the growth in January.


AUD / USD. For Connoisseurs of Beauty

The aussie in tandem with the US dollar continues a confident reduction within quite picturesque canal (connoisseurs should note). It is impossible to pay no regard to the fact that at the moment quotes have reached an important technical support - correctional Fibo level 61.8% from the growth in 2008-2011. The global financial and European debt crises, raging at the time, had a very limited negative impact on the Australian economy, allowing the RBA to raise rates. Such actions have caused a powerful trend in Australian dollar, but later quotes were affected by such factors as falling prices for iron ore, a very high rate of Aussie in the foreign market, as well as the completion of the mining industry boom in the country. All this prompted the Reserve Bank to take decisive action in the form of verbal interventions (dissatisfaction with high exchange rate), and the whole cycle of reduced rates. These fundamental factors in conjunction with the strengthening of the greenback's position were formed as a result into the AUD/USD trend.

It is recommended to close short positions (if you have them, of course) and be prepared for a possible corrective upside. It is worth noting that many pairs with the dollar had achieved significant levels, and here it's time to stay on the sidelines for a while. The goal, in the case of a breakthrough of the current interim trend clearly perceptible in the daily timeframe – is its correction by 38.2% (0.85 mark).


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Vista Brokers: Long-term Trend for EUR/USD Remains Bearish

On Tuesday, the euro strengthened against the dollar after the EUR/USD had reached the 11-year low at $ 1.1098 on Monday. Here, many investors preferred to take profits, and this eased the pressure on the single currency. Today, as Vista Brokers analysts say, the euro against the dollar trades at $ 1.1238.

Experts remind that a large-scale selling of the euro last week was caused by the decision of the European Central Bank to launch a quantitative easing program. Earlier this week, the bearish trend for the single currency was supported by the news about the victory of the radical forces in the elections in Greece. At the moment, the market has already taken a lead from these news and the pair came to the phase of correction. Most likely it will not last too long.

Greece will remain a factor of pressure on the euro. Investors will be watching Alexis Tsipras in anticipation of any statements and explanations of how he plans to fulfill his campaign promises. Also, some negotiations of the new Greek government with international creditors will attract investors' attention.

Recall that Tsipras and his party "Syriza" promised the electorate a significant reduction of debt and getting out of austerity. It is still unclear how radicals plan to achieve it. But the higher ranks of the European Union have already commented on this situation, saying that the cancellation of debt for Greece would be no question.

Meanwhile, analysts of world's leading banks rush to cut their forecasts for the euro. UOB Bank expects a decline in EUR/USD to 1.1000 in the coming weeks. Danske Bank predicts a drop below support level 1.1000 in the next 6 months.

The dollar on Tuesday fell slightly against the yen to 118.26 yen. Last week, the US currency was trading against the Japanese in a fairly wide range, from 117 to 119 yen.

The greenback this week may be strong influenced by the US Federal Reserve meeting, which starts today and will last two days. Investors are waiting for confirmation from the American regulator about the policy of monetary tightening.


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