Forex Profits Master: October 2014

Friday, October 31, 2014

Weekly Forecast: FX Volatility to Persist on Key Data, Rate Decisions

Currency markets are in for another week of breakneck volatility as a slew of key data releases and three high-profile monetary policy announcements cross the wires.

US Dollar Forecast- Usd Aiming Higher as Upbeat Jobs Data Fuels Fed Hike Bets

US Dollar looks poised to continue to advance for a third week as upbeat payrolls data fuels speculation that a Fed interest rate hike will arrive sooner rather than later.

Great British Pound Forecast – British Pound Holds on by a Thread- What to Watch in Week Ahead

The British pound finished the week notably lower versus the resurgent US Dollar, but a busy week of economic event risk ahead suggests the GBP/USD may see big moves and could very well stage a reversal.

Australian Dollar Forecast – AUD Poised For Intraday Volatility On Torrent Of Top-Tier Data

The Aussie is bracing for a medley of economic releases that may catalyze intraday swings, yet scope for follow-through may be limited amid steadfast RBA bets.

Gold Forecast – Gold Plummets to 4-Year Lows as Fed Ends QE- $1206 Resistance

Gold prices plummeted this week with the precious metal off by more than 5.2% to trade at $1166 ahead of the New York close on Friday.

Weekly Forecast: FX Volatility to Persist on Key Data, Rate Decisions

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Weekly Forecast: FX Volatility to Persist on Key Data, Rate Decisions

Gold Plummets to 4-Year Lows as Fed Ends QE- $1206 Resistance

Fundamental Forecast for Gold:Bearish

Gold Wave 5 Low Coming

Gold Approaching Monthly Low, US Dollar May Correct Downward

Gold prices plummeted this week with the precious metal off by more than 5.2% to trade at $1166 ahead of the New York close on Friday. The loss mark the largest single day decline since December 19th 2013 with prices now at the levels not seen since April 2010. Strength in the USD, improving US economic data and a fresh round of easing from the Bank of Japan is likely to keep gold prices under pressure with a near-term support structure coming into focus as we close out October trade.

The FOMC policy decision was central focus this week with the central bank announcing the cessation of QE operations amid an improving economic backdrop. The accompanying policy statement noted that, “The Committee judges that there has been a substantial improvement in the outlook for the labor market since the inception of its current asset purchase program,” and “Although inflation in the near term will likely be held down by lower energy prices and other factors, the Committee judges that the likelihood of inflation running persistently below 2 percent has diminished somewhat since early this year.” The remarks fueled a substantial rally in the greenback with gold breaking support at $1222 on the move. The next hit to bullion came on Friday after the BoJ announced a new round of quantitative easing. The surprise move sparked strength in risk assets with the Nikkei 225 advancing more than 4.8% on the session as gold continued lower into fresh 4-year lows.

Looking ahead to next week investors will be closely eyeing the US data flow with ISM, Factor Orders, and the highly anticipated Non-Farm Payrolls report on tap. Although the focus for Fed officials has seemingly shifted more so towards the inflation side, traders will be looking to confirm the central bank’s assertion of a substantiated recovery in the labor markets with consensus estimates calling for a print of 234K as unemployment holds at 5.9%. Look for stronger than expected US data points to continue fueling the dollar rally at the expense of gold. However, although our broader focus remains weighted to the short-side of the trade, near-term an upcoming technical feature around $1160 may offer some support for gold as we head into November trade.

From a technical standpoint, gold continues to trade within the confines of a well-defined Andrew’s pitchfork formation off the 2014 highs, with Friday’s low coming just shy of the bisector line. (note that this reaction line caught the October 6th low almost to the pip) Key support rests in the zone between $1151/60 where a longer-dating 1.618% extension off the all-time record highs stands. Subsequent support targets are eyed at $1125 and $1091/99. Initial resistance is eyed at former support at $1178/80 with key resistance now seen at $1206. We will reserve this level as our medium-term bearish invalidation level with breach above likely to prompt a period of consolidation in the bullion prices. Look for the November opening range to offer some clarity on our directional bias with our broader outlook remaining weighted to the downside sub-$1206. – MB

—Written by Michael Boutros, Currency Strategist with DailyFX

To contact Michael email or follow him on Twitter @MBForex

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Gold Plummets to 4-Year Lows as Fed Ends QE- $1206 Resistance

AUD Poised For Intraday Volatility On Torrent Of Top-Tier Data

Fundamental Forecast for Australian Dollar: Neutral

AUD/USD Swings Within Its Trading Band At The Mercy Of General Risk Trends

Top-Tier Economic Data May Catalyze Intraday Volatility Yet Limited Follow-Through

Positive Cues From Risk Sentiment May Be Offset By Elevated Volatility Expectations

The Australian Dollar kept traders in suspense over the past week as it swung at the mercy of its counterparts and broader risk appetite. The coming week will bring a medley of top-tier local economic events including the RBA decision, jobs numbers, manufacturing survey figures, building approvals and trade data.

The abundance of domestic releases holds the potential to catalyze plenty of intraday volatility on surprise readings. However, the scope to deliver a lasting impact on the Aussie may be limited amid steadfast RBA policy expectations.

The central bank is widely anticipated to once again leave rates on hold when it meets on Thursday. Moreover, recent data suggests the Board will deliver another rehashed statement that notes the need for a ‘period of stability’ for rates.

Until we see consistent signs of improvement in the local labour market the Reserve Bank is likely to retain its highly accommodative stance over the near-term. Yet further rate cuts remain off the cards for the time-being, given the need to manage risks posed by speculative lending in the housing market. A lack of fresh insights into policy makers’ thinking is likely to leave the AUD to take its cues from elsewhere.

An improvement in general risk appetite may offer the high-yielding currency a source of support. This is amid the concerns over Ebola and slowing growth in Europe being overshadowed by healthy US economic data. Yet implied FX market volatility remains elevated near its October peaks, suggesting traders are anticipating some large swings to occur in the market over the near-term. This in turn detracts from the carry appeal of the AUD.

Heavy selling pressure remains evident at the 89 US cent barrier, which may limit the scope for a recovery for AUD/USD. Meanwhile, the downside risks remain centered on the pair’s 2014 lows near 0.8660. For insights into the US Dollar side of the equation read the weekly forecast here.

Written by David de Ferranti, Currency Analyst, DailyFX

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AUD Poised For Intraday Volatility On Torrent Of Top-Tier Data

CAD Drops vs. USD as Economy Contracts

Some Canadian dollar bills The Canadian dollar ended Friday with losses against its US counterpart as Canada’s economy unexpectedly contracted in August. At the same time, the loonie managed to end the session flat versus the euro and to jump against the Japanese yen.

Canada’s gross domestic product shrank 0.1 percent in August, following no change in the previous month. It was a frustrating result for economists, who predicted another month of stagnation. And of course it is not a good sign for investors interested in bringing their money into the country.

The loonie fell against the greenback as a result of the data, yet managed to trim losses by the end of trading. What is more, the Canadian currency was able to jump against the yen, which suffered from the surprise monetary easing by Japan’s central bank.

USD/CAD jumped from 1.1187 to 1.1332 before ending the session at 1.1264. EUR/CAD closed flat at 1.4108. CAD/JPY surged from 97.64 to 99.67.

If you have any questions, comments or opinions regarding the Canadian Dollar,

feel free to post them using the commentary form below.

CAD Drops vs. USD as Economy Contracts

China Oct Nbs Manufacturing Pmi* Decrease to 50.8 (fcast 51.2 ) Vs Prev 51.1

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China Oct Nbs Manufacturing Pmi* Decrease to 50.8 (fcast 51.2 ) Vs Prev 51.1

South Korea Oct Import Growth Prelim* Decrease to -3.0 % (fcast 0.6 %) Vs Prev 8.0 %

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South Korea Oct Import Growth Prelim* Decrease to -3.0 % (fcast 0.6 %) Vs Prev 8.0 %

South Korea Oct Export Growth Prelim* Decrease to +2.5 % (fcast 1.9 %) Vs Prev 6.8 %

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South Korea Oct Export Growth Prelim* Decrease to +2.5 % (fcast 1.9 %) Vs Prev 6.8 %

South Korea Oct Trade Balance Prelim* Increase to +7.5 Bln $ Vs Prev 3.40 Bln $

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South Korea Oct Trade Balance Prelim* Increase to +7.5 Bln $ Vs Prev 3.40 Bln $

Treasuries Move Back To The Downside On Bank Of Japan Decision

After ending the previous session modestly higher, treasuries moved back to the downside during trading on Friday.

Bond prices came under pressure in morning trading but regained some ground in the afternoon before closing moderately lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3 basis points to 2.335 percent.

The pullback by treasuries came as traders moved into riskier assets amid news of further monetary policy easing by the Bank of Japan.

By a 5-4 vote, the Bank of Japan’s Monetary Policy Board unexpectedly decided to raise the monetary base at an annual pace of about 80 trillion yen. The bank previously targeted an increase of about 60 to 70 trillion yen.

Another upbeat reading on U.S. consumer sentiment also weighed on treasuries, with a report from Thomson Reuters and the University of Michigan showing that sentiment improved by more than previously estimated in October.

The report said the final reading on the consumer sentiment index for October came in at 86.9 compared to the mid-month reading of 86.4. Economists had expected the index to be unrevised.

With the unexpected upward revision, the index rose from the final September reading of 84.6 to reach its highest level since July of 2007.

The Conference Board’s consumer confidence index also came in better than expected earlier in the week, generating some optimism about the holiday shopping season.

Meanwhile, traders largely shrugged off a separate Commerce Department report showing an unexpected drop in U.S. personal spending in the month of September.

Employment data is likely to move into the spotlight next week, with the Labor Department scheduled to release its closely watched monthly jobs report next Friday.

Ahead of the jobs report, trading could be impacted by data on manufacturing activity, international trade, private sector employment and labor productivity.

Published: 2014-10-31 20:41:00 UTC+00

Treasuries Move Back To The Downside On Bank Of Japan Decision

British Pound Holds on by a Thread - What to Watch in Week Ahead

Fundamental Forecast for Pound:Neutral

Sterling finishes sharply lower versus US Dollar and targets fresh lows

Bank of England Rate Decision threatens volatility on surprises, but watch US Dollar on NFPs

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Watch for any surprises out of an upcoming Bank of England Rate Decision and/or the highly-anticipated US Nonfarm Payrolls report to drive the lion’s share of Sterling/Dollar moves in the week ahead. Traders are clearly preparing for big volatility across the major FX pairs as 1-week volatility prices have hit their highest since the Scottish Referendum vote in September.

We do not expect the Sterling will see the same level of turmoil on a simple BoE rate announcement. Yet we need only look to the past week’s Bank of Japan interest rate decision to see the effects of a truly surprising central bank meeting. Analysts widely expect that the Monetary Policy Committee will leave interest rates unchanged and therefore produce no post-decision statement. To that end we’ll watch earlier-week PMI figures to gauge sentiment ahead of next week’s Bank of England Quarterly Inflation Report.

Beyond UK event risk it remains important to watch how the US Dollar and British Pound start the new month. Through September it seemed as though the US Currency was unstoppable as it hit fresh peaks against almost all major counterparts. Yet the month of October brought considerable consolidation. Late volatility suggests that November could produce a material change in market conditions. And indeed historical seasonality studies have shown that major currencies are more likely to see important reversals at the beginning and end of a given calendar period. Let’s watch and see how the Sterling starts to gauge whether a more significant breakdown is likely. – DR

British Pound Holds on by a Thread - What to Watch in Week Ahead

Usd Aiming Higher as Upbeat Jobs Data Fuels Fed Hike Bets

Fundamental Forecast for US Dollar: Bullish

US Dollar to Advance as Upbeat Payrolls Data Fuels Fed Rate Hike Bets

Softer ISM Data May Be Offset by “Fed-Speak” Pointing to Steady Outlook

Help Identify Critical Turning Points for the US Dollar Using DailyFX SSI

The US Dollar continued to reassert itself in the final days of October, rising for a second consecutive week to produce the largest advance in over a month against its leading counterparts. The move was primarily driven by a comparatively hawkish FOMC monetary policy announcement. The markets were positioned for a dovish rhetorical shift reflecting a desire to safe-guard the US recovery from knock-on effects of slowing growth in the Eurozone and Asia. As we suspected, Janet Yellen and company opted to stay the course, concluding the QE3 asset purchase program and delivering a broadly status-quo policy statement.

This makes for a data-sensitive environment going forward as speculation about when normalization will commence continues. Priced-in expectations telegraphed in Fed Funds futures shifted one month forward in the aftermath of the FOMC meeting, with investors now expecting the first rate hike by December 2015 compared with a call for January 2016 prior to the policy announcement. The week ahead will offer ample opportunities for this to evolve further as a slew of high-profile economic data points cross the wires.

Needless to say, the spotlight will be on Friday’s Employment report. Nonfarm payrolls are expected to register an increase of 235,000 in October, marking a bit of a slowdown following the 248,000 gain in September. The unemployment rate is seen holding steady at 5.9 percent. Leading surveys suggests that the pace of hiring across the manufacturing and services sectors was unchanged compared with the prior month however. Furthermore, data compiled by Citigroup shows that US economic news-flow has broadly outperformed relative to consensus forecasts since August, hinting analysts are under-appreciating the recovery’s vigor. On balance, this opens the door for an upside surprise.

A medley of activity indicators will precede the jobs report, with October’s factory- and service-sector ISM readings, September’s Factory Orders data and the leading ADP estimate of hiring activity taking top billing. The twin ISM reports may prove most problematic, reflecting a slowdown in economy-wide activity. A dip in the pace of expansion compared with the peaks seen in the second quarter is not news at this point however, emerging leading survey figures some months ago and confirmed in last week’s third-quarter GDP report.

The Fed has clearly opted to look past this deceleration and will likely tolerate a steeper slowdown still before adjusting policy considering its steady hand through a far more dismal first quarter. A packed schedule of commentary from Fed officials including Chair Yellen will probably help hammer this point home in the days ahead. With that in mind, the greenback looks poised to continue higher (albeit not in a straight line) as firmer jobs data suggests stimulus withdrawal may arrive sooner rather than later.

Usd Aiming Higher as Upbeat Jobs Data Fuels Fed Hike Bets

USD Jumps against ZAR, PLN, & HUF Post FOMC Meeting

Talking Points:

FOMC press release contains more hawkish rhetoric

Outlook on labor market substantially improved

EM currencies face pressure as bullish engulfing pattern singles continuation of strong up-trend

The statement from Wednesday’s FOMC meeting was riddled with more hawkish rhetoric, indicating an increasingly optimistic outlook on the US economy. With risks to economic activity balanced and substantial improvements observed in the labor market, the Federal Reserve confirmed October’s conclusion of their asset purchase program while simultaneously reiterating the need to maintain interest rates between 0- ¼ percent for a considerable amount of time. The change in policy is likely to renew confidence in the US dollar while concurrently placing pressure on the emerging market currencies.

In review of economic activity, the FOMC noted the following improvements and obstacles:

With Fiscal Policy no longer cited as a drag on economic growth and risks to the labor market balanced out, bond yields rose slightly allowing the dollar to maintain its upward momentum.

Conversely, in emerging markets a tightening of monetary policy in the US is likely to slow capital inflows and in some cases even create a reversal. While adjustments moving forward may be more gradual the initial announcement on October 29th resulted in a jump in the dollar’s value against the rand, forint, and zloty. The currency pairs exhibited a bullish engulfing pattern on the 29th, indicating a strong continuation of the up-trend.

Daily Charts for: USD/HUF, USD/PLN, & USD/ZAR

Charts Created Using MarketScope2.0

USD Jumps against ZAR, PLN, & HUF Post FOMC Meeting

Intraday technical levels and trading recommendations on EUR/USD for October 31, 2014

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Two weeks ago, the EUR/USD pair looked oversold before the bullish engulfing daily candlestick emerged off price level of 1.2500 one month ago.

The upper limit of the movement channel (1.2880-1.2900) was targeted. However, bearish pressure was applied earlier around 1.2800-1.2840.

A bearish breakout off the bullish channel took place shortly after. Thus, confirming a Flag continuation pattern. Initial daily target level was located around 1.2490.

Since no fixation above 1.2760-1.2780 took place on a daily basis,the EUR/USD pair remained under bearish pressure.

Now we can see another possible continuation pattern. A Head and Shoulders pattern to be watched on daily basis. Obvious daily closure below 1.2490 ( the origin of the previous bullish swing expressed one month ago ) can theoretically extend the bearish targets towards price level of 1.2200.

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Last week on Wednesday, the market expressed quite strong bearish momentum that pushed below the lower limit of the previous bullish channel.

As depicted on the chart, the EUR/USD pair has respected the limits of the current bearish channel.

As anticipated, Price levels around 1.2750 ( upper limit of the channel ) provided a valid SELL entry. Quick decline took place towards price level of 1.2500 where the lower limit and the origin of the recent bullish swing is located.

Recommendation:

The SELL entry anticipated around 1.2730-1.2760 is running in profits now. Stop Loss can be lowered to 1.2640 and partial exit can be considered to secure some of the achieved profits.

Daily closure below 1.2500 can give another SELL signal for risky traders. Stop Loss to be set as daily closure again above the entry levels with target levels located at 1.2440 then 1.2370.

Performed by Michael Becker, Analytical expert
InstaForex Group © 2007-2014

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Intraday technical levels and trading recommendations on EUR/USD for October 31, 2014

EUR/NZD analysis for October 31, 2014

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EUR/NZD analysis for October 31, 2014

Gold : analysis for October 31, 2014

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Gold : analysis for October 31, 2014

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Gold : analysis for October 31, 2014

Elliott wave analysis of EUR/NZD for October 31 - 2014

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Today’s support and resistance levels:

R3: 1.6164

R2: 1.6120

R1: 1.6059

Current spot: 1.6031

S1: 1.6000

S2: 1.5958

S3: 1.5932

Technical summary:

The failure to break above resistance at 1.6263 and the following break below support at 1.6000 is very disappointing and frustrating. We still prefer the bullish picture, but at this point there is no clear-cut short-term count. We do think, that red wave ii has taken on the shape of an expanded flat correction, but a break above resistance at 1.6107 is needed to confirm this count. Under no circumstances can a break below support at 1.5903 be allowed as the will immediately shift the count to the expanded diagonal.

Trading recommendation:

Our stop at 1.6000 was hit for a small loss. We will await a more clear-cut picture before getting exposed.

Performed by Torben Melsted, Analytical expert
InstaForex Group © 2007-2014

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Elliott wave analysis of EUR/NZD for October 31 - 2014

Elliott wave analysis of EUR/JPY for October 31 - 2014

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Today’s support and resistance levels:

R3: 141.22

R2: 140.20

R1: 139.70

Current spot: 13939

S1: 139.10

S2: 138.82

S3: 138.40

Technical summary:

BOJ unexpectedly announced its decision to expand the stimulus with additional 80 trillion JPY, which has propelled the JPY higher. Now, the rally from the 134.14 low is having all signs of an impulsive rally. We expect resistance at 141.22 to be broken to confirm that an important bottom is in place at 134.14. However, if resistance at 141.22 is broken, then the entire correction from the 145.69 high must be regarded as being over and a new impulsive rally higher to 186.04 as the next long-term upside target. For now, we expect support near 139.10, which ideally will protect the downside to test important resistance at 141.22, but only above here, will call for more upside in a longer term.

Trading recommendation:

Our stop at 138.10 was hit for a little loss. We will await stronger clues, whether the correction from 145.69 finally comes to and end at 134.14

Performed by Torben Melsted, Analytical expert
InstaForex Group © 2007-2014

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Elliott wave analysis of EUR/JPY for October 31 - 2014

CBR Drastically Raises Key Rate to 9.5%: USDRUB Respects Resistance

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CBR Drastically Raises Key Rate to 9.5%: USDRUB Respects Resistance

Talking Points:

CBR raises key rate to 9.5%

Rising inflation and depreciating ruble cited as reasons for rate increase

USD/RUB closes the week under resistance

To mitigate the effects of external shocks on Russia’s income, output and currency The CBR sharply raised interest rates today by 150 bps. The larger than expected move follows a series of sanctions and counter sanctions, that when combined with falling oil prices derailed consumer confidence and destabilized the ruble. The drasticchange however is expected to restore macroeconomic stability through containing the price level and stabilizing the ruble.

Since entering Crimea in February, the Ruble has depreciated nearly 28% against the dollar while inflation has grown rapidly reaching 8.4% as of October 27th. Total impact on CPI for the year is projected to be 2.5 percentage points driven equally by the effects from trade restrictions (1.3) and ruble depreciation (1.2). With USoil prices 26 % off their June highs, exports expected to contract 1.2% this year, and a series of FX interventions doing little to defend the ruble, the CBR deemed it necessary to raise interest rates to 9.5%.

While the tighter policy yields downside risk, the positive net externalities are expected to be greater. While fixed capital investments may contract due to higher borrowing costs, an increased propensity to save is expected to create wealth effects. Furthermore, as real wages decline more rapidly demand will fall and place downward pressure on the price level. In addition to October’s repurchase agreement a higher interest rate will likely aide in stabilizing the ruble without further depleting international reserves.

USD/RUB 8 Hour Chart

Chart Created by Walker England Using MarketScope2.0

CBR Drastically Raises Key Rate to 9.5%: USDRUB Respects Resistance

USD Range Expansion Levels at 113.10 and 115.00

USDJPY range expansion level is 115

EURUSD 5th wave underway then big reversal risk

USDCAD outside week provides reference point for breakout

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EUR/USD

Weekly

USD Range Expansion Levels at 113.10 and 115.00

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

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-BIG picture, monthly RSI has broken out of a triangle pattern. Sometimes, a pattern breakout in momentum (or OBV) precedes the breakout in price. The development’s implications are obviously significant.

-“Near term, price action since the October low likely composes a 4th wave correction within a 5 wave decline from the May high. Allow for additional sideways trading in order to complete wave 4 before a new low in wave 5 targets 1.2400 or 1.2315.” EURUSD is at a new low and focus shifts to identifying possible reversal points for the end of wave 5. Wave 5 (from 1.2886) would equal wave (1.3993-1.3502) at 1.2395. Equality between waves 5 and 1 is a common relationship.

GBP/USD

Weekly

USD Range Expansion Levels at 113.10 and 115.00

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

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-“GBPUSD is at a crossroads. The trend is down against 1.6184 but recent activity warns of a turn. The rate carved a key reversal last week and action since the low is constructive (decline from 1.6184 found low at the 61.8% of prior rally). Exceeding 1.6184 would confirm a 3 week bottoming pattern and yield an objective near 1.65.”

-The rate traded 1.6181 this week before sinking to new lows. Favor the downside as long as price is below trendline resistance. The next major support is 1.5720/50.

AUD/USD

Weekly

USD Range Expansion Levels at 113.10 and 115.00

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

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-“The combination of the .9400 figure and weekly RSI failing near 60 indicates a lot of overhead to punch through. Since the 2011 top, each RSI failure near 60 has led to a top or topping process (range for several weeks then a breakdown…that may be the case now).”

-Weakness has extended below the line that extends off of the 2008 and 2014 lows, warning of something much more significant on the downside. The 10/29 outside day reversal keeps me looking lower. A new low would expose expansion objectives at .8476 and .8373. Below .8744 should open the spigot.

NZD/USD

Weekly

USD Range Expansion Levels at 113.10 and 115.00

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

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-“Don’t forget about the line that extends off of the 1996 and 2007 highs. That line crosses through the 2008, 2011, and highs as well. In 2011 (record free float high), the rate surged through the line in late July before topping on August 1st. The rate reversed this week from pips below the record high and above the mentioned line.”

-“The gap from Labor Day 2013 has held as support but last week’s spike into .8034 (just shy of the February low at .8050) probably completed 3 weeks of consolidation. In other words, start looking lower again. Ultimately, weakness below .7370 would confirm a double top with an objective of .5898.”

USD/JPY

Monthly

USD Range Expansion Levels at 113.10 and 115.00

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

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-Today’s USDJPY move is the 3rd largest one day rally since the 2011 low (all 3 moves are BoJ moves). In fact, the all-time low was exactly 3 years ago today. Where to now? The biggest (and most obvious) level that sticks out is 115.00/50 (range expansion level and inflection points in 2002 and 2007). 113.10 is a possible pausing point (61.8% of prior range added to breakout level).

USD/CAD

Weekly

USD Range Expansion Levels at 113.10 and 115.00

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

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-“USDCAD traded to its best levels since July 2009 this week but finished in the middle of its range for the week. The close and weak momentum profile casts doubt regarding the validity of the breakout but continue to look higher as long as price is above 1.1080. The rate also encounters potential resistance near 1.1450 from the upward sloping line that connects the October and 2011 and March 2014 highs.” Risk can be moved up to 1.1120.

USD/CHF

Weekly

USD Range Expansion Levels at 113.10 and 115.00

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

Automate trades with Mirror Trader

-“USDCHF weakness has reset the market for another rally attempt. Remember, USDCHF broke above the trendline that extends off of the 2001 and 2010 highs. Like EURUSD, USDCHF monthly RSI broke from a potentially long term basing pattern. As long as .9358 holds, look higher.” .9740 could serve as resistance for the next top.

USD Range Expansion Levels at 113.10 and 115.00

USD/ZAR Finds Support with an Upside Target

Talking Points:

South African Finance Minister downgrades economic growth forecast by 1.3%

Natural pressures from industrial action and sliding oil prices have kept prices down

Following a correction, prices have found support with an upside target of 11.39

After experiencing an 0.8% increase in the composite leading business cycle indicator in August, the South African economy appears to be reversing course as Finance Minister, Nhlanhla Nene downgraded the country’s economic growth forecast from 2.7% to 1.4% during a budget statement last week. Reasons cited include: reductions in output, falling oil prices, and subdued price levels in September. In contrast the US economic outlook has improved, renewing confidence in the dollar and preventing the currency pair from crossing the midpoint in a downward channel.

Industrial action in the world’s largest palladium mine, the Bushvel Complex, reduced revenue flowing to South Africa by 2 billion dollars. The five month strike reduced mining production by 24.75% in Q1 and 9.4% in Q2, resulting in less real disposable income. Negative effects were further compounded by a four month decline in the price of USoil which threatened South Africa’s price stability. Constituting 5.7% of the inflation basket, a 7% slide in USoil prices from August to September resulted in a 0.5% decline in CPI over the same time period from 6.4% to 5.9%. The producer price index, which tracks the change in prices charged on goods, also fell from 7.2 to 6.9 percent.

Meanwhile, Wednesday’s FOMC statement proved a more optimistic outlook on the US economy. In addition to announcing the end of their asset purchase program the committee noted substantial improvements in the labor market, with consistent job gains and unemployment nearing robust levels. Confidence in the economy continues to improve as third quarter GDP estimates increased at an annual rate of 3.5%, well above the 3.0% consensus.

Following the reversal in economic outlooks, prices have been correcting from the October 3 high and appear to have found support. From a technical perspective, the red corrective channel lower has contained prices and the first clue of a potential bounce came earlier this week when prices failed to drop below the grey mid-line of the channel. This is taking place near a 3 year support trend line (black line).

The break above the top side of the trend channel is our confirmation a turn is likely to have legs to it. First target to the upside would be the former swing highs of 11.39.

USD/ZAR 4 Hour Chart

Chart Created by Jeremy Wagner Using MarketScope2.0

USD/ZAR Finds Support with an Upside Target

The Weekly Volume Report: USD Surges, Volume Begins to Come Back

Talking Points

EUR/USD trades at a new low for the year

USD/JPY surges past 112.00

USD/CHF OBV at new highs, spot is not

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Daily Volume Chart: EUR/USD

The Weekly Volume Report: USD Surges, Volume Begins to Come Back

Charts Created using Marketscope – Prepared by Kristian Kerr

EUR/USD broke below the early October low this week to trade at its lowest level since August of 2012

Above average volume over the past couple of days indicates the broader downtrend is attempting to reassert itself

New yearly low in On-Balance-Volume (OBV) is also supportive of a broader downside resumption

A move over 1.2765 on above average volume is required to refocus higher

Daily Volume Chart: USD/JPY

The Weekly Volume Report: USD Surges, Volume Begins to Come Back

Charts Created using Marketscope – Prepared by Kristian Kerr

USD/JPY exploded higher on Friday to trade at its highest level since December of 2007

Increase in volume over past couple of days is supportive on the uptrend

New high in OBV also very supportive of the broader advance

A close under 110.10 on above average volume would turn us negative on USD/JPY

Daily Volume Chart: USD/CHF

The Weekly Volume Report: USD Surges, Volume Begins to Come Back

Charts Created using Marketscope – Prepared by Kristian Kerr

USD/CHF has moved steadily higher over the past few days, but so far has been unable to surpass the early October yearly high

Rise in daily volume over past couple of days is potentially supportive of a broader upside resumption

New yearly highs in OBV is also potentially positive

A daily close under .9440 would turn us negative on USD/CHF

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— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX

The Weekly Volume Report: USD Surges, Volume Begins to Come Back

GBPNZD Resistance Update

Talking Points

GBPNZD Opens in a 105 pip range

Range Resistance Sits at 2.0446

Bearish Reversals Signaled Under 2.0289

GBPNZD 30Minute Chart

GBPNZD Resistance Update

(Created using FXCM’s Marketscope 2.0 charts)

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The GBPNZD has opened the US Trading session traversing inside of a 105 pip range. Price has moved across the range twice so far, and the GBPNZD is currently sitting near range resistance found at the R3 pivot at 2.0446. In the event that price moves back inside of the trading range, reversal traders can begin to target lines of support. Today’s S3 pivot completes the 105 pip range seen above, and can be found at 2.0341.

In the event that price does not move back into the range, but instead reaches the R4 pivot at 2.0498, the GBPNZD would be considered a prime candidate for a breakout. A breakout above this value would signal the creation of a higher high, along with a shift in the market towards bullish momentum. Likewise a reversal in price, under the S4 support pivot at 2.0289, would show an increase in bearish momentum towards a lower low. In either breakout scenario, range trades should be concluded and traders can begin to identify positioning based off of the markets given direction.

GBPNZD Resistance Update

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Bank of Russia Surprises, Ruble Doesn’t Respond

Top view on various RUB bills Russia’s central bank surprised the Forex market today by a huge interest rate hike aimed at cooling inflation and slowing the ruble’s depreciation. Yet the Russian currency did not respond to the announcement, extending its massive slump.

The Bank of Russia raised its main interest rate by as much as 1.5 percent to 9.5 percent at today’s meeting, a move completely unexpected by market analysts. The central bank said in the statement:

During September-October significant changes in external conditions have taken place: considerable fall in oil prices and stricter sanctions imposed by certain countries against several large Russian companies. As a result the ruble depreciated that together with restrictions on the import of certain food items imposed in August resulted in further acceleration in consumer prices growth.

Indeed, the ruble has depreciated greatly after the United States and the European Union imposed sanctions on Russia due to its perceived involvement in the Ukrainian crisis. The central bank was attempting to support the currency but has been unsuccessful so far. The bank predicted that inflation will remain above 8 percent till the first quarter of the next year, but voiced hope that growth of consumer prices will slow to 4 percent later.

USD/RUB rose from 41.6103 to 43.0401 as of 18:45 GMT today. EUR/RUB advanced from 52.3140 to 53.8820, reaching the high of 54.1670 intraday.

If you have any questions, comments or opinions regarding the Russian Ruble,

feel free to post them using the commentary form below.

Bank of Russia Surprises, Ruble Doesn’t Respond

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The dollar strength pushes gold lower

The US Federal Reserve ended the asset purchases as expected just two days ago and now Bank of Japan, against all expectations, has increased its stimulus program. This has caused Gold (priced in USD) to fall further. According to Bloomberg, the Bank of Japan is now targeting an 80 trillion yen ($726 billion) expansion in the monetary base. This move together with expected stimulus from the ECB supports the US dollar. Investors have been buying gold over recent years mainly as a hedge against the unprecedented expansion of the Fed’s balance sheet. Now that the Fed has wound down their Quantitative Easing program and is not signaling that it would be ready to initiate a new one, investors seem to be turning away from gold to other, better yielding assets classes.

Gold, Weekly

The Fed’s hawkishness is causing dollar strength against the major currencies and gold is not an exception in this regard. Many people think of gold as a currency and because it is priced in USD, the dollar strength means weakness for gold. Gold is at the time of writing breaking the weekly level that supported the price since June 2013. Last week the price formed a weekly shooting star right below a resistance level and has moved substantially lower turning the technical picture bearish for gold. I was expecting the price to form a trading range below that weekly resistance and then move higher from there. This scenario was based on the collection of fear factors in the world (which would translate into support gold on safe haven basis) and the fact that the last time gold moved up from the same support it was at first range bound for a while under a similar weekly resistance level before eventually moving higher. However, as this scenario didn’t play out, we need to find the current resistance and support levels for gold. The weekly low (1156) from July from 2010 is a very potential candidate for a support. As for a resistance, it is likely that the former support at 1183 will now act as resistance.

Gold and DXY, 4h

Over the course of this year gold has reacted higher each time the US Dollar index (DXY) has reacted lower from a resistance, and vice versa. The Dollar index is a measure of the dollar value of USD against a basket of major currencies. The weights of these currencies in the index are as follows: EUR 57.6%, JPY 13.6%, GBP 11.9%, CAD 9.1%, SEK 4.2% and CHF 3.6%. DXY is now approaching a reaction high while Gold is well below the coinciding reaction low. Therefore it is possible that the timing of gold reaching the support DXY trading at the reaction high could coincide. Should this happen simultaneously there would be an increased likelihood that we could see a reaction higher from the 1156 support. But what might be the trend in the price of gold after that reaction? Now that the Bank of Japan is even more aggressive with their QE than anticipated and the ECB is expected go along the same route it seems likely that the DXY will keep on moving higher. This would mean further weakness for gold.

Gold, 4h

Apart from the penetrated weekly support (at 1183, now resistance) the next resistance levels are at 1195 and 1208. Should the price rally to these levels I would be looking to short the signs of momentum reversals (in lower timeframe charts) with a tight stop and reasonable leverage. The latest low and the weekly support at 1156 could work as targets for these trades. However, please remember that these are just guidelines for you on how to do your own analysis. You should never trade blindly on someone else’s ideas but rather see if the price action at suggested levels supports the idea given to you.

Conclusion

The weekly shooting star candle from last week and the breaking of major support suggests further weakness and rallies to resistances should provide shorting opportunities. The current central bank policies support the USD and therefore increase the likelihood of DXY moving into new highs and gold moving lower. A very sharp reversal with a weekly close above the 1183 level would mean a revaluation of the current analysis would be necessary.

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

Janne Muta

Chief Market Analyst

HotForex

The dollar strength pushes gold lower

German Fin Min Schaeuble SaysÂ Believes Britain Will Remain in Eu, Would be a Disaster if They Leave

Exclusive newsline by InstaForex is your reliable assistant in the Forex world.

German Fin Min Schaeuble SaysÂ Believes Britain Will Remain in Eu, Would be a Disaster if They Leave

U.s. Consumers Cut Spending in September: Td Economics

Quotes from TD Economics:
- Today’s personal spending numbers were already baked into yesterday’s advance estimate of third quarter real GDP that showed decent-but-not-strong private consumption growth. Nonetheless, the monthly pattern points to a deceleration in spending momentum as Q3 came to a close, which, because of a weak hand-off, suggests downside risk to fourth quarter GDP.
- The fact that the savings rate has edged up suggests that a rebound in spending may be around the corner. However, the lack of any real income growth is a concern. We remain confident that a tightening labor market will eventually lead to faster income growth, but clearly this has yet to manifest itself, and may take several more months to occur.
- Inflationary pressures continue to remain particularly subdued. In its statement this week, the Fed claimed that even if inflation is held down temporarily by lower energy prices and other factors, as is currently the case, the risk that inflation run persistently below 2% had diminished relative to earlier this year.
- If oil prices remain at current levels and the dollar continues to appreciate, inflation is likely to continue to drift downward and stay below target for an extended period of time. The odds of a first rate hike in a sub-2% inflation environment are slim, which is why we expect the Federal Reserve to remain on the sidelines until at least Q3 2015.

Published: 2014-10-31 15:54:00 UTC+00

U.s. Consumers Cut Spending in September: Td Economics

Fitch- Potentially Higher Fiscal Deficits and Monetization of Those Deficits Could Further Weaken Argentina's Economy

Exclusive newsline by InstaForex is your reliable assistant in the Forex world.

Fitch- Potentially Higher Fiscal Deficits and Monetization of Those Deficits Could Further Weaken Argentina's Economy

#USDX Technical analysis for October 31, 2014

The Dollar index after back testing the break out area at 86 yesterday, has managed to stage another rally towards previous highs which are now being tested. The trend is bullish and I remain bullish following the bullish flag pattern I have posted several times before.

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The Dollar index has moved back above the Ichimoku cloud and after back testing the 85.20 support it bounced strongly upwards with the FOMC on Wednesday. Thursday, we saw a consolidation of this strong break out and a pull back to test the 86 break out level. Today, we see the Dollar index challenging the highs at 86.75. I remain bullish the Dollar targetig 91.

Show full picture

Once again, I post the daily chart with the clear bullish flag formation targeting 91. The trend is clearly bullish as price is above the Ichimoku cloud and is making higher highs and higher lows. This upward move is expected to continue higher towards 91 which is my 1st target. Stop for long positions should be the 85.20 level.

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#USDX Technical analysis for October 31, 2014