Giving thanks on the USD

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Thursday 24th brings Thanksgiving and traders in the States will be taking a break as US markets close for the day. Followed by Black Friday, the retail weathervane of the season, and USD trading effectively finishes on 23rd this week so Wednesday is crammed with red flag events.

An optimistic Core Durable Goods is up first with analysts expecting a small rise from 0.1% to 0.2%. At the same time a less rosy Unemployment Claims will be announced and that also looks set to rise. Not such good news. Both at 8.30am GMT.

At 10.30am GMT Crude Oil Inventories will take the markets for a ride. Notoriously unpredictable, industry mutterings about overproduction haven’t stopped prices rising. It’s looking bullish and the next sticky zone is around $50.

A chart of the Brent Oil contract
Brent Oil has been climbing but it may get sticky

anticipation via GIPHY

GBPUSD chart
We might see a test of the half way back post FOMC

 

 

 

 

 

The big news of the week for USD though is the FOMC Meeting Minutes at 2pm GMT. There have been strong indications that Yellen is going to raise rates in December and traders will be agog to hear the discussions of the last meeting to see if that is reinforced or weakened.

USD week ahead 14th Nov

Softly, softly seems to be the market attitude to the dollar at the start of the week. Everyone is waiting to see what happens.

via GIPHY

With none of the usual impactful events until midweek, traders will be reacting to political news across Monday and Tuesday. POTUS-elect Trump’s attitude to all matters economical suggest a retreat from the free-trade attitude that has prevailed. This has lead analysts to bet that inflation will rise and so too interest rates. This makes the market-moving event of the week Yellen’s testimony to the Joint Economic Committee on Thursday at 10.00am GMT. She will give evidence about the economic outlook with a prepared text followed by a Q&A session. Expect major market ructions.

Leading up to Thursday we have domestically-focused events for the dollar.

  • 8.30am GMT Tuesday Core Retail Sales and Retail Sales
  • 8.30am GMT Wednesday Producer Price Index
  • 8.30am GMT Thursday Building Permits, Consumer Price Index and Core CPI, Philly Fed Manufacturing Index and Unemployment Claims

No change is expected for the retail announcements or the PPI so the market effect will be neutral or positive on Tuesday and Wednesday though the Crude Oil Inventories will dampen enthusiasm if it drops as expected at 10.30am GMT Wednesday.

Minimal changes are on the cards for Thursday’s events in the run up to Yellen’s testimony, but whatever way the general trend goes – up or down – is likely to affect traders’ attitudes as they  get ready for 10am GMT. Then it’s all systems go.

via GIPHY

It is anyone’s guess whether or not traders will finish the week feeling as positive as they do about the dollar right now so the markets are going to be a rollercoaster. And that’s the way we like it at TIQL.

There may be bears in AUD

The AUDUSD pair
The AUDUSD is near support and the 200 SMA

The Trump effect has swept the globe and knocked some currencies for six – the Aussie dollar being one of the most significant of them. This week brings more brow-furrowing events that we think will cause movement in the AUD/USD pair. But everything will be in the context of announcements from POTUS elect Trump’s corner and analysts indicate things are looking decidedly bearish Down Under.

upswing-bull-bear

Monday 14th 8.30pm GMT
The Monetary Policy Meeting Minutes for the Reserve Bank of Australia are released two weeks after cash rate was announced. The minutes explain the committee’s rationale and gives traders clues to the future direction of interest rates for the currency. However, things have changed somewhat so the impact may be more muted than usual.

Tuesday 15th 3.15am GMT
RBA Governor Philip Lowe speaks at the Committee for Economic Development of Australia Annual Dinner. Still new in the post this is his third big speech and, with the recent global economic shake up, traders will be paying very close attention. AUD loses out when things are rocky and he’s the man in charge of interest rates, so he will be likely to try and reassure and stabilise market sentiment.

And then she said they'd chosen Trump!
And then she said they’d chosen Trump!

Wednesday 16th 7.30pm GMT
Australian Employment Change figures will be released. Last month saw a shock drop of -9.8K against the predicted 15.2K rise. This month analysts suggest a significant rise of 20.3K. At the same time the Unemployment Rate will be announced. A slight increase to 5.7% is expected. Positivity in these events may give events a little bump but they’re not going to derail the general momentum if Trump’s policies become clearer.

Players in the AUD markets should also pay close attention to any new Trump announcements across the week as policies that negatively affect free trade and emerging economies may well cool things down for the Aussie dollar.

Where do traders go when the world’s gone mad?

Sometimes we just know the markets are going to be volatile and that’s exactly what we want. Smart players made significant gains during Brexit and the US election by predicting the currency and stock market nose-dives. But if you want to play and your usual markets are giving you the jitters, where can you go to find a more reliable return, a safe haven, a port in the storm?

 

You could do worse than turn to gold. When the markets are spooked, it usually rises. Many see it as a reliable investment over the longer term so short-term uncertainty can boost prices even if they sink back in the medium-term. Gold rose nearly 5 percent to $1,337.40 on Wednesday, its highest in six weeks. This short-term increase can give TIQL players an opportunity to cash in as long as they’re ready to jump out again if the mood changes as it did after Trump’s speech when prices fell back fairly rapidly as the dollar rose.

gold-week

Another investment vying for the title of safe haven is the bitcoin. Though there is still some disagreement about its status, recent events give credence to the fact that it’s becoming healthy competition for gold. This gives investors a chance to cast their nets a little wider and spread their risk in uncertain times. Look at the chart for election week. The bump may have settled down but there was a massive opportunity for gains midweek. Notice the opposite patterns in bitcoin and the dollar index around Wednesday. This all adds grist to the case for bitcoin’s safe haven status and may be something you should have up your sleeve when the dollar next bucks expectations.

coindesk-bpi-chart dollar-index-xhart-111116

US played its trump card

orange-is-the-new-black

In the immediate aftermath of the shock news that Trump won the US election, financial markets reeled around the world. It looked like Brexit XXL was going to to play out and everyone’s worst fears had come true. The dollar dived against the Euro, and markets across Europe and the UK plunged. But Trump’s presidential-sounding speech helped calm traders fears so it seems like the full-on market meltdown everyone feared hasn’t materialised. A few days on and markets are rallying. What’s going on?

via GIPHY – what’s going on?

American optimism during trading has possibly encouraged other markets to shrug off their fears. There are thoughts that Trump’s business focus, intentions to bin free-trade agreements and lower business taxes could be good for the US business economy. Additionally, analysts are now suggesting Yellen still likely to raise rates despite Trump’s win as stock markets start to climb again. Now the initial shockwaves that reverberated through world markets are fading, things are starting to look more positive.

But that isn’t to say markets will be calm and predictable. Expect volatility as Trump reveals more of his economic plans. It looks likely he will pare back monetary policy and ease regulatory curbs on energy companies amongst others, which will affect oil. Ditching the international trade agreements and his overall stance on free trade will affection inflation, employment and could lead to recession. Only time will tell whether, for once, the markets have made a molehill out of a mountain instead of a mountain out of a molehill.

molehill

US election global market impact

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Not a duet

From now until the end of next week nothing is going to affect the dollar more than next Tuesday’s election. Not even increasing speculation about a December Fed rate rise can stop the dollar’s fall at this point. The markets are holding their breath to see if Trump can pull it out of the bag or if Clinton can fend him off.

US citizens go to the polls on Tuesday 8th and the US dollar index has dropped 5 days in a row in anticipation. Traders are nervous that Hilary’s narrow lead will disappear and a US upset on a Brexit scale will become reality. No-one quite believes the electorate will do it, but that’s what everyone thought about the UK voters too and look what happened there.

GBPUSD post brexit
The GBPUSD after the Brexit shock. An example of a shock move

Despite the majority of speculators (78%) predicting a rate rise, which would usually have an inflationary effect, the dollar is being hammered by a surge in opinion polls for U.S. Republican presidential candidate Donald Trump. Many investors believe his election may prevent the U.S. Federal Reserve from raising interest rates next month despite strong arguments around inflation and stagnant wages.

EURUSD
The USD has been sold on fears of an uncertain outcome next week

After English voters chose Brexit in a move that left markets stunned and eventually took the pound over a cliff, many traders are aiming to reduce their exposure in the event that Trump turns his POTUS dream into a reality. This has led to global stocks reaching their lowest levels since July on Friday 4th November and should affect your decision about which way to predict the market direction in the next week.

Analysts are expecting a drop in the S&P on fears of a Trump win
Analysts are expecting a drop in the S&P on fears of a Trump win

Which ever way these markets go, you can trade them with TIQL. You can start trading with a deposit of just $5. With minimum trade sizes starting at 1¢; that’s 500 × 1¢ trades, and most likely a lot more. At up to 20× returns on any trade there’s certainly a lot of fun available…

Non-Farm Employment Change and other USD stories

eurusd31oct
Will the EURUSD retest 1.10 this week with NFP and going into US election?

Who has a job is the question of the week for USD traders with some key work-related events sure to stimulate the markets towards the end of the week.

Wednesday 8.15am GMT

Computer programmes can do a lot these days, even give traders a heads up on the Non-Farm Employment Change due on Friday. Two days ahead of the main event, the ADP (Automatic Data Processing) Non-Farm Employment Change on Wednesday uses the latest technology to make its prediction.

Last month was way off target.

People, we are still ahead of the machines (for now) and that may be why the actual figures on Friday are more important.

via GIPHY

Thursday 3pm GMT

Currently standing at 258K the US Unemployment Claims records how many new claimants there were in the month. October’s figures were a slight move in the right direction, but is that the start of a positive trend or a mere blip? This data may make you change your mind about which way you think Friday’s main event is going to send the dollar so watch closely.

Friday 8.30am GMT

Average Hourly Earnings
Non-Farm Employment Change
Unemployment Rate

The S&P futures has risen so far this week going into NFP and election
The S&P futures has risen so far this week going into NFP and election

Three big sets of data after a week of major events – it is Friday that makes or breaks your USD play this week. Pundits predict a small rise in the rate of increase in Earnings to 0.3% as well as a solid step up for the Non-Farm from 156K to 175K predicted. So it figures that they also expect a drop in Unemployment by 0.1% to 4.9%. Do you agree?

Riding the rates with 4 major currencies

jpy-yen-sign us-dollar british-pound-symbol australian-dollar-3d

Monday

11.30pm GMT

August saw the AUD interest rate drop from 1.75% to 1.50% where it has remained ever since. This month’s forecast predicts no change so traders will be focused on the Rate Statement, also at 11.30pm GMT, to pick over the Reserve Bank’s views on the economy and reasons for their decision.

??? GMT we don’t know; nobody knows, so maybe Tuesday

Some time after the Australian Rate Statement look out for the Bank of Japan’s Outlook Report. There’s a good chance they’re going to try and steal Australia’s thunder as they’ve been known to time announcements for media advantage in the past so it could happen any time around 11.30pm GMT. But then again, as there’s no indication it might not be for hours after! Also watch out for the BoJ Policy Rate and Monetary Policy Statement. All three events will cause volatility in the JPY markets. They will be followed by a BoJ Press Conference and this is not to be missed. Questions from the audience could cause a bit of a splash. Look I had to get this wriggling turtle butt in somehow. It’s too cute!

via GIPHY

Wednesday

2pm GMT

The US joins in this week’s interest rate bonanza with the FOMC Statement. The Federal Open Market Committee likes to tweak their comments even if the USD rate isn’t changing, and this can give the markets a bit of action. This is issued at the same time as the Federal Funds Rate but traders prefer the news from the statement. Why did they make that decision? Is there the sniff of a hint that changes might come soon? This is the sort of thing traders hunger for.

Thursday

8am GMT

GBP has taken a nose-dive over the last few weeks so there should be lots of competing interest in the 4 big announcements at 8am connected to the Bank of England’s interest rate decision.

* Bank of England Inflation Report
* Monetary Policy Committee Official Bank Rate Votes
* Monetary Policy Summary
* Official Bank Rate

With inflationary pressures and a tanking currency, it might be fair to expect the 0-0-9 vote pattern of the last few months to change. But who and how many on the committee will want to change GBP interest rates? Traders will be agog and the currency will probably experience turmoil during this event.

via GIPHY

8.30pm GMT

Australia isn’t finished with market-moving events this week. Oh no. The RBA Monetary Policy Statement gives traders lots to chew over for AUD FX pairs so players should have their strategy set up and a tinnie on hand.

 

AUD mid-week hit

Even the wildlife packs a punch Down Under
Even the wildlife packs a punch Down Under

The most significant AUD event of the week is the Consumer Price Index released at 1.30am GMT on Wednesday 26th October. It is the main way inflation is assessed and if it keeps going up, that could spell an interest rate rise. Australia’s data may be released late in comparison with other countries but its importance means it hits the markets whichever way it goes. A slight rise is indicated from 0.4% to 0.5% which is good for the Aussie dollar if it comes true.