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Turkey not asking for IMF aid, Qatar to inject $15B, USD/TRY drops through 6.0

    By
    ActionForex.com
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    IMF said there is no indication that Turkey is considering to seek its financial assistance. But it urged in a statement that “in light of recent market volatility, the new administration will need to demonstrate a commitment to sound economic policies to promote macroeconomic stability and reduce imbalances.”

    Instead, Qatar has pledged USD 15B of direct investment in Turkey to help strengthen the Lira. President Recep Tayyip Erdogan’s spokesman Ibrahim Kalin tweeted: “Turkish-Qatari relations are based on solid foundations of true friendship and solidarity.”

    Turkish Lira’s rebound extended overnight and with USD/TRY hit as low as 5.8578. While downside momentum is diminishing mildly, it seems USD/TRY could now start to stabilize below 6.0 handle.

    US-China to resume low level trade talks, Asian equities pare losses

      By
      ActionForex.com
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      Asian equities open broadly lower today following US markets, but reversed losses on news that US and China are going to resume trade talks.

      China’s Ministry of Commerce said in a statement that accepting invitation by the US to resume trade discussions. Chinese Vice Commerce Minister Wang Shouwen will meet with US Secretary for International Affairs David Malpass in late August.

      In the statement, China reiterated that “it opposes unilateralism and trade protectionism and does not accept any unilateral trade restrictions”. And, “China welcomes dialogue and communication on the basis of reciprocity, equality and integrity.”

      Hong Kong HSI dipped sharply to as low as 26871.11 in initial trading by then rebounded to 27405.25 on the news. But it’s now back below 27200, down -0.5%. The news is certainly a positive. But such low level meeting shouldn’t carry much significance in the near term. The trade war is on and the meeting is more gestures than anything with substance.

      Mid-US session update: Yen surges on risk aversion, USD turns mixed, Gold extends slide

        By
        ActionForex.com
        -

        Risk aversion is back as the dominate theme while Yen surges broadly today. However, Australian Dollar is surprisingly resistent as and it’s following Yen as the second strongest. Canadian is trading as the weakest one as WTI crude oil dives after larger than expected increase in oil inventories. Dollar is trading mixed for the day. Gold drops to as low as 1175.74 so far and looks set to take out 1172.06 fibonacci level with ease.

        At the time of writing, DOW is down -0.78%, S&P 500 down -0.84%, NASDAQ down -1.28%. NASDAQ is clearly affected by the poor earnings recent of Chinese tech giant Tencent. As noted before, DOW’s strong break of 25120.07 is a strong signal of near term reversal. Focus will now be on whether it can draw support on 55 day EMA (now at 25033.) Or DOW would just go straight to channel support (now at 24412).

        European indices also suffered steep selloff today. DAX closed down -1.58%, CAC down -1.82% and FTSE down -1.49%. CAC’s strong break of 5342.29 support confirms completion of corrective rebound from 5242.64, at 5539.41. Further decline should now be seen through 5242.64 to 100% projection of 5657.44 to 5246.24 from 5539.41 at 5124.62. But, the real test is in 5038.12 key support level.

        WTI crude oil breaks 65 as inventories jumped 6.8m, USDCAD surges

          By
          ActionForex.com
          -

          WTI crude oil drops sharply after larger than expected rise in US crude oil inventories, which rose 6.8m comparing to expectation of -2.6m. WTI crude oil drops to as low as 64.60 and is currently down -3.45%.

          USD/CAD rides on the fall in oil prices, as well as Dollar’s own strength and breaches 1.3170. The development affirms our view that correction from 1.3385 has completed at 1.2961. Further rise should be seen to 1.3289 resistance next.

          Dow lost -1% at initial trading, breaks 25120 near term support

            By
            ActionForex.com
            -

            Positive economic data from the US provides no support to investors’ sentiments. US equities open sharply lower, following the global selloff. DOW falls more than -1% and hit as low as 25005.87 in initial trading. S&P 500 and NASDAQ are also down around -1%.

            The strong break of 25120.07 support in DOW is a strong signal of near term reversal. That is, whole rise from 23997.21 has completed at 25692.72 already. Focus is back on 55 day EMA (now at 25030). Sustained break there will at least bring a test on channel support (now at 24412). Meanwhile, near term outlook will now stay cautiously bearish as long as 25339.51 minor resistance holds.

            In the bigger picture, DOW is in medium term correction since 26616.71. Price actions from 23360.29 are seen as the second leg of the pattern. It’s early to confirm. But firm break of near term channel support will argue that the third leg of the consolidation pattern has started. And DOW would target be targeting 23360.29 again.

            Into US session: Yen strongest against and stock extends selloff

              By
              ActionForex.com
              -

              Entering into US session, Yen is trading as the strongest one for today on risk aversion. It over takes Dollar’s position as the strongest major currencies again. But this time Swiss Franc doesn’t follow. Instead Sterling is steady as the third strongest one after CPI came in meeting expectations. Canadian Dollar is the weakest one.

              European indices are trading deep red at the time of writing. FTSE is down -1.13%, DAX down -0.94%, CAC down -1.15%. That followed broad based weakness in Asia earlier today. Nikkei closed down -0.68%, Hong Kong HSI down -1.55%, China Shanghai SSE down -2.08%, Singapore Strait times down -0.27%.

              But this time, Turkish crisis is not the one to blame. Turkey’s clashes with the US has turned into trade war. The country doubled tariffs on some US imports including alcohol, cars and tobacco, in response to US doubling of steel and aluminum tariffs. However, Lira is extending this week’s rebound with USD/TRY hitting as low as 5.9180.

              Instead, risk aversion is partly due to poor earnings report of Tencent. Also, copper and zinc prices fell to the lowest level in more than a year. And, probably more importantly, the Chinese Yuan is extending recent steep down trend. USD/CNH (offshore Yuan), surges to as high as 6.9324.

              SNB Zurbruegg: Recent developments show fragility in currency markets

                By
                ActionForex.com
                -

                SNB Vice Chairman Fritz Zurbruegg said in an even in Zurich that recent developments have shown that “the currency markets remain fragile”. And that could lead to “safe have flows in the Swiss Franc”.

                And that means, the central bank’s current ultra loose monetary policy with negative interest rate is justified. And SNB stands ready to intervene when necessary.

                Some analysts tipped 1.2 as a level where SNB would start being active in intervention.

                UK CPI rose to 2.5%, core CPI unchanged at 1.9%, Sterling steady

                  By
                  ActionForex.com
                  -

                  Sterling is steady after consumer inflation data met expectations.

                  UK headline CPI rose to 2.5% yoy in July , up from 2.4% yoy and met expectation.

                  Core CPI was unchanged at 1.9% yoy, met expectation.

                  RPI, however, slowed notably to 3.2% yoy, down from 3.4% yoy and missed expectation of 3.6% yoy.

                  PPI input rose to 10.9% yoy, up from 10.3% yoy, above expectation of 10.8% yoy.

                  PPI output slowed to 3.1% yoy, down from 3.3% yoy and missed expectation of 3.2% yoy.

                  PPI output core dropped to 2.2% yoy, down from 2.4% yoy, missed expectation of 2.2% yoy.

                  House price index slowed to 3.0% yoy in June, slowed from 3.5% yoy, above expectation of 2.8% yoy.

                  South Korea Moon: Relationship with North the driving force for denuclearization

                    By
                    ActionForex.com
                    -

                    South Korean President Moon Jae-in said today that the agreed summit with North Korea in September will be a further step towards denuclearization of the peninsula. The advancement in the relationship between the Koreas is the “driving force”.

                    Moon pledged to take “take an audacious step to proceed toward the declaration of an end to the Korean War and the signing of a peace treaty as well as the complete denuclearization of the Korean peninsula.”

                    He also emphasized that “when the deep-rooted distrust between the two Koreas and between the North and the United States is lifted, the mutual agreement can be implemented.”

                    And, when peace is established, “economic cooperation can be carried out in earnest.” The first step could be “unification economic zones” along border provinces.

                    Gold extends decline on Dollar strength, breaks 1190

                      By
                      ActionForex.com
                      -

                      On the back of broad based strength in Dollar, Gold’s decline continues today and breaks 1190 handle to as low as 1188.42 so far. The down trend from 1365.24 is on track for 1172.06 fibonacci level. Daily RSI may indicate Gold is in oversold condition again. But based on current acceleration, RSI indeed suggests solid downside momentum. 1172.06 could be taken out without much hesitation and the next real hurdle is probably 1122.81 support. And in any case, near term outlook will remain bearish as long as 1217.20 resistance holds.

                      In the bigger picture, currently decline from 1365.24 is viewed as part of the long term sideway pattern from 1046.54 (2015 low). Sustained break of 61.8% retracement of 1046.64 to 1375.15 at 1172.06 will pave the way to 1046.54/1122.81 support zone. At this point, we’re not expecting a break there to resume long term down trend yet. Hence, we’ll look for bottoming signal below 1122.81.

                      Chinese Yuan in decline again, USDCNH heading to 7?

                        By
                        ActionForex.com
                        -

                        The Chinese Yuan is under renewed selling pressure again today. USD/CNH (offshore Yuan) rises to as high as 6.921 so far and breaks 6.912 resistance. The development is apparently dragging down Chinese stocks, with Shanghai SSE down -1.32% at the time of writing. Asian indices are all affected, with Nikkei down -0.38%, HK HSI down -1.52% and Singapore Strait Times down -0.21%. Australian Dollar also suggests deep selling, partly due to such development.

                        USD/CNH has been in steep rise since hitting a low at 6.2359, as trade tension between the US and China escalated. The next batches of tariffs will start next week and more are coming. The Chinese National Development and Reform Commission pledged today to work on meeting this year’s 6.5% growth target. With usual way of interpreting Chinese rhetorics, it means they found it difficult to meet that target.

                        Now USD/CNH is on course to have a test on key resistance level at 6.9871, 2017 high. It remains to be seen if the government will intervene more aggressively. If the Yuan is solely moved by market forces, we see no reason why USD/CNH will not break 7 handle.

                         

                        Australia consumer sentiment dipped -2.3% mom, wage price grew 0.6% qoq

                          By
                          ActionForex.com
                          -

                          Australia Westpac Melbourne Institute consumer sentiment dropped -2.3% to 103.6 in August, down from 106.1. The index pared back half of the “surprisingly strong gains in June to Jule” as the impact of government’s tax cuts faded. The decline also came against the backdrop of rising global trade tension and housing markets correction in Sydney and Melbourne.

                          Westpac pointed out RBA’s projection that inflation will hit 2.25% by 2020 and expects next move is up. It noted an “obvious headwind” for RBA is “the impact that five years of underperformance in inflation will have on households’ and firms’ expectations.” And, “lower expectations will make it that much more difficult to lift inflation back into the band”.

                          Westpac also noted that “certainly it will be quite some time before the Bank has a case to adjust the cash rate.” And it maintains the view that RBA will be on whole in both 2018 and 2019.

                          Full release here.

                          Also from Australia, Wage price index rose 0.6% qoq, 2.1% yoy in Q2, in line with expectation. Private sector wage price grew 0.5% qoq, 2.0% yoy. Public sector wage grew 0.6% qoq, 2.4% yoy.

                          Full release here.

                          Mid-US Session Update: Dollar resumes rally against EUR, GBP, AUD; European Indices closed in red

                            By
                            ActionForex.com
                            -

                            Dollar surges broadly in the first half of US session. EUR/USD, GBP/USD and AUD/USD all resumes recent fall after brief consolidations. Dollar is trading in red against Canadian and New Zealand Dollar. But we can disregard Kiwi as it’s just merely digesting recent loss.

                            The key is whether USD/CAD has completed the rebound from 1.2961. With 1.3035 minor support intact, we’re staying bullish in the pair and expect another rise through 1.3170 to 1.3289 resistance.

                            Besides, USD/JPY remains an interesting pair to watch. We’re treading the fall from 113.17 as a corrective. That is, we’re bullish in the pair. A break of 111.17 resistance will affirm our view and bring a test on 112.14 resistance. That would also indicate that Dollar is finally taking the control back from Yen.

                            In other markets:

                            • DAX closed flat at 12358.87, up 0.13 pts, 0.00%
                            • CAC closed at 5403.41, down -8.891 pts, -0.16%
                            • FTSE closed at 7611.634, down -30.81 pts, -0.40%.

                            US indices perform well. At the time of writing

                            • DOW is up 0.46%
                            • S&P 500 is up 0.68%
                            • NASDAQ is up 0.72%
                            • 10 year yield up 0.0073 at 2.889

                            UK Foreign Minister Hunt: Risk of no-deal Brexit has been increasing recently

                              By
                              ActionForex.com
                              -

                              UK Foreign Minister Jeremy Hunt told reports in Helsinki that the risk of no-deal Brexit has been “increasing recently”. But he emphasized that it’s not what anyone wants and I hope very much that we’ll find a way to avoid that”. He urged that “everyone needs to prepare for the possibility of a chaotic no-deal Brexit”. He also called for “a change in approach by the European Commission”.

                              Hunt is on a three-day European tour. He will meet Foreign Ministers of Finland, Latvia, Denmark and the Netherlands. In a quote released by the Foreign Office, Hunt said “we want to safeguard our operational capacity as we leave the EU, and so we have put forward precise, credible proposals that ensure our ability to act is maintained.” And, “we are now at the point where the EU also faces strategic choices: with the option to move the negotiations forward and achieve a deal that works in our mutual interests. My simple message is that we need to take that opportunity.”

                              Into US session: AUD weakest, CAD strongest; Nikkei rebounded strongly on Yen’s pull back

                                By
                                ActionForex.com
                                -

                                Entering US session, Australian Dollar is trading as the weakest one for today as weighed down by a batch of weaker than expected economic data from China. While European equities opened generally higher, it should be noted that Asian indices ended in red, except for Nikkei. Yen follows as the second weakest one, digesting the steep rally since late last week. On the other hand, Canadian Dollar is the strongest one, followed by Swiss Franc and New Zealand Dollar.

                                A number of important economic data are released during the European session. But they provide little inspirations to the forex markets. UK employment data are mixed. While unemployment dropped to lowest since 1975, the positive effect is offset by slowdown in wage growth. German ZEW economic sentiment beat markets expectations but still point to less favorable environment ahead. Eurozone industrial production. also contracted more than expected. So, Euro and Sterling are only give a very brief and weak lift.

                                In other markets, Gold hit as low as 1192.40 as medium term down trend resumed. And it’s now consolidation at around 1195. WTI crude oil recovers and is pressing 68 handle. But there is no sign of regaining 70 yet. DAX is trading up 0.16% at the time of writing, CAC up 0.14%, but FTSE is down -0.08%. Earlier in Asia, Hong Kong HSI closed down -0.66%, China Shanghai SSE dropped 0.18%. Singapore Strait Times dropped -0.08%.

                                However, Nikkei staged a strong and impressive rebound. It closed up 498.65 pts or 2.28%. The development re-affirmed near term bullish outlook and the last week’s selloff just delay an upside breakout. Price actions from 23050.39 should be forming just a consolidation pattern. And rise fro 20347.49 should resume later when such consolidation completes. The index should target a test on 24129.34 high at least.

                                German ZEW improved after EU-US trade agreement, but outlook significantly less favorable than 6 months ago

                                  By
                                  ActionForex.com
                                  -

                                  German ZEW Economic Sentiment rose to -13.7 in August, up from -24.7, beat expectation of -20.1. Current Situation rose to 72.6, up from 72.4 and beat expectation of 72.3

                                  Eurozone ZEW Economic Sentiment rose to -11.1, up from -18.7 and beat expectation of -16.4. Current Situation dropped to 30.0, down from 36.2.

                                  ZEW President Professor Achim Wambach said in the statement that “the recent agreement in the trade dispute between the EU and the United States has led to a considerable rise in expectations for Germany and also, to a lesser degree, for the Eurozone. However, the economic outlook for Germany is now significantly less favourable than it was six months ago.”

                                  Full release here.

                                  Also released, Eurozone GDP grew 0.4% qoq in Q2, above expectation of 0.3% qoq. Industrial production dropped -0.7% mom in June, below expectation of -0.3% mom.

                                  UK unemployment rate dropped to 43-year low, but wage growth slowed

                                    By
                                    ActionForex.com
                                    -

                                    Sterling recovers mildly after mixed job data, but upside is limited so far.

                                    Unemployment rate dropped to 4.0% in the 3 months to June, down from 4.2% and beat expectation of 4.2%. That’s also the lowest level in 43 years since the quarter to February 1972.

                                    However, average weekly earnings including bonus slowed to 2.4% 3moy, down from 2.5% and missed expectation of 2.5%.

                                    Average weekly earnings excluding bonus also slowed to 2.7%, down from 2.8% even though it beat expectation of 2.6%.

                                    In July, claimant counts rose 6.2k, above expectation of 3.8k.

                                    Full release here.

                                    German GDP grew 0.5% in Q3, upswing remains robust despite trade-related uncertainties

                                      By
                                      ActionForex.com
                                      -

                                      Euro is lifted mildly by better than expected German growth data and outlook.

                                      German Q2 GDP rose 0.5% qoq in Q2, up from prior quarter’s 0.3% qoq and beat expectation of 0.4% qoq. Also, CPI was finalized at 0.3% mom, 2.0% yoy, unrevised.

                                      German Economy Ministry also said its money report that “the German upswing remains robust despite trade-related uncertainties.” Though, It also emphasized that “risks from the external economic environment remain high. This can also be seen in the Ifo business sentiment survey”.

                                      An update on EUR/JPY short

                                        By
                                        ActionForex.com
                                        -

                                        Following up on EUR/JPY short (sold at 128.60, stop at 127.45). Last post here.

                                        We put a target at 126.00 before the dip to 125.96. The short position was closed with 260 pips profit.

                                        As mentioned before, price actions from 125.13 could be a wave four corrective pattern in a five way sequence. It will probably takes some more time to develop. There will likely be a wave five decline through 125.13. But considering that it’s close to 124.61 key support level, downside potential might be limited.

                                        So, we’ll keep our hands off EUR/JPY for now.

                                        Yen stablized for now, but S&P 500 reversal could push it higher again later

                                          By
                                          ActionForex.com
                                          -

                                          The forex markets have stabilized from Turkish turmoil. Swiss Franc is trading as the weakest one in Asian session so far, followed by Yen, as risk aversion receded. New Zealand Dollar, Canadian Dollar and Australian Dollar are the relatively stronger one. Rally in Yen and Swiss Franc could has passed the near term climax. But the lack of strength in recovery in EUR/USD, GBP/USD and AUD/USD suggests that the greenback might be taking over.

                                          Nikkei clearly benefits from the pull back in Yen as it’s trading up more than 400pts, or 1.85% at the time of writing. Monday’s gap is nearly closed. But stocks stay generally weak elsewhere. Hong Kong HSI is down -0.89%, China Shanghai SSE is down -0.50% and Singapore Strait Times is down -0.17%. That followed -050% decline in DOW overnight. S&P 500 lost -0.40% while NASDAQ also dropped -0.25%.

                                          It’s looking increasing likely that SPX is ready for a near term reversal. Momentum is clearly diminishing just ahead of 2872.87 high, as seen in bearish divergence condition in daily MACD. At this point, we’re not seeing any momentum for an upside breakout yet. Break of 2795.14 will instead indicate short term topping. When that happens, it could be the time for another round of selloff in Yen crosses.

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