Dagelijkse Markt Analyse 11 Januari 2019

DAGELIJKSE MARKT ANALYSE 25 NOVEMBER 2013

• US Dollar Moves to Challenge November Swing Top
• S&P 500 Sets New High But Reversal Risk Remains
• Gold Vulnerable to Deeper Losses, Oil May Recover


US DOLLAR TECHNICAL ANALYSIS – Prices rebounded from resistance-turned-support at the top of a falling channel set from July (now in the 10493-521 area) as expected. Near-term resistance is in the 10641-53 region, marked by the November 12 high and the 23.6% Fibonacci expansion. A push above that targets the 38.2% level at 10839.

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DAGELIJKSE MARKT ANALYSE 26 NOVEMBER 2013

• US Dollar May Pull Back from November Swing Top
• S&P 500 Downswing Hinted in Technical Positioning
• Gold Prices Move to Retest Monthly Trend Resistance


US DOLLAR TECHNICAL ANALYSIS – Prices rebounded from resistance-turned-support at the top of a falling channel set from July (now in the 10491-518 area) as expected. Near-term resistance is in the 10641-53 region, marked by the November 12 high and the 23.6% Fibonacci expansion. A push above that targets the 38.2% level at 10839. Negative RSI divergence warns a near-term pullback may be ahead, with a move below the November 20 low at 10535 eying the channel anew.

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DAGELIJKSE MARKT ANALYSE 27 NOVEMBER 2013

• Yen Falls as Soft US Data Dents QE Taper Bets, Durable Goods Ahead
• Euro Pops Higher as Germany’s CDU and SPD Reach Coalition Deal
• Pound Unlikely to Find Strength in Confirmation of Strong 3Q UK GDP


The Japanese Yen underperformed as Nikkei 225 futures advanced in overnight trade, sapping haven demand for the safety-linked currency. The move may have reflected a pickup in risk appetite on the back of ebbing concern about a near-term “tapering” of the Federal Reserve QE3 stimulus program after a disappointing set of US economic data. November’s Consumer Confidence reading fell short of economists’ forecasts (as we expected), dropping to the weakest level in seven months.

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DAGELIJKSE MARKT ANALYSE 28 NOVEMBER 2013

• Dollar Holding Pattern Tightens as Holiday Trading Sets In
• Yen Crosses Rally in Jeopardy in Loss of Risk Drive
• British Pound May Pay for Data-Driven Rally to 2-Year High

Dollar Holding Pattern Tightens as Holiday Trading Sets In
The dollar’s performance this week doesn’t look very impressive until we weigh it against other market benchmarks. For example, risk-sensitive equity indexes are surveying multi-year and record highs, while the stimulus-directed US 10-year Treasury yield is just now trying to pull itself out of a dive. These two themes will continue to d4rz7tle for influence over the greenback moving forward, but conditions through the final 48 hours of this week may further push control over to stimulus speculation. The Thanksgiving holiday will take US capital markets offline through Thursday’s session and further shorten the trading day on Friday. While the US may be only be one country, its influence over global sentiment trends is disproportionate. Over the past 10 years, the daily ranges for the majors have been significantly reduced (between 25 percent for AUDUSD to 50 percent for USDJPY) on the holiday from the already-slow Wednesday that precedes it. Given the current state of depressed implied (expected) volatility for equities, FX and other asset classes, there is little reason to expect different this year.

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DAGELIJKSE MARKT ANALYSE 29 NOVEMBER 2013

• Dollar Volatility Falls Back to Breakout Warning Levels
• Euro Pushes EURUSD to 1.3600 as Inflation Eases ECB Speculation
• Yen Crosses Ready for Data Run, Stimulus Speculation

Dollar Volatility Falls Back to Breakout Warning Levels
While EURUSD and GBPUSD offered up the dollar notable losses, the benchmark currency on a market-wide basis was little changed through this past session. That is to be expected with both risk trends and Fed Taper speculation on hold during the holiday trading period. As would be expected of this lull, we have seen activity levels (measured rudimentarily via the average true range) drop to lows not seen since October16. The comparison is an appropriate one as that previous period of quiet preceded a meaningful breakout and trend development for the benchmark currency. Yet, a ‘breakout’ in these market conditions is not enough to derive a meaningful trade from – much less develop the foundation for a lasting momentum. We need fundamental backing that may not emerge until next week.

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DAGELIJKSE MARKT ANALYSE 2 DECEMBER 2013

• China HSBC Manufacturing PMI Came in at 50.8 vs. 50.5 Expected, 50.9 Oct.
• Stable PMI Give China Time to Implement Policy Changes from Third Plenum
• Aussie Dollar Surgedas Firm Chinese Data Weighed on RBA Rate Cut Bets

AUD/USD rose after HSBC reported its Manufacturing PMI gauge came in at 50.8 in November, above 50.5 expected and 50.9 recorded in October. The Aussie surged from 0.9140 to 0.9160, the highest in a week. Similar price action was observed elsewhere as AUD/JPY rose from 93.50 to 93.70 and on the same note EUR/AUD slumped from 1.4878 to 1.4848. The report echoed official PMI figures released over the weekend that saw an increase to 51.4 in November versus 51.1 expected and 51.4 in the prior month.

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DAGELIJKSE MARKT ANALYSE 3 DECEMBER 2013

• Dollar Climbs as Manufacturing Data Adds to Taper Outlook
• British Pound Further Strengthens Grip after Factory Report, FLS Update
• Australian Dollar: RBA Decision Holds Key to Changing Tack

Dollar Climbs as Manufacturing Data Adds to Taper Outlook
Is the market moving to price in the probability of an earlier Fed Taper? The performance of the dollar and other key markets are offering us a barometer of speculation surrounding this important and inevitable fundamental event. Looking at the greenback’s performance to start the week; notable gains against the euro, yen and a noteworthy recovery versus the sterling sets the scale amongst the various majors that are dealing with monetary policy changes moving forward. The S&P 500’s mild slip (0.3 percent) Monday could be considered a risk-based corroboration of the QE reduction theme, but better measure comes from the performance of Fed’s targeted assets. US 10-year Treasury yields have moved back up to 2.80 percent while the iShares MBS (mortgage-backed securities) ETF dropped to a two-month low on heavy volume. The biggest spark for Taper speculation will be Friday’s NFPs, but positive data like today’s ISM factory report grinds out greater speculation.

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DAGELIJKSE MARKT ANALYSE 4 DECEMBER 2013

• Euro May Fall if Soft PMI, GDP Data Stoke ECB Easing Speculation
• Australian Dollar Falls as 3Q GDP Disappoints, Kiwi Dollar Follows
• US Dollar Eyes ISM Data, Beige Book to Shape Fed QE “Taper” Bets


All eyes are on the Euro as a round of critical economic releases sets the stage for the ECB monetary policy announcement later in the week. First, the final revision of November’s Eurozone Composite PMI is expected to confirm manufacturing- and service-sector growth slowed for a second consecutive month, yielding the weakest performance since August. Next, a second look at third-quarter Eurozone GDP is forecast to maintain that output grew 0.1 percent, a slowdown compared with the 0.3 percent increase recorded in the three months through June. Soft outcomes are likely to stoke speculation about further easing after last month’s unexpected ECB rate cut, weighing on the single currency.

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DAGELIJKSE MARKT ANALYSE 5 DECEMBER 2013

• Dollar Builds Pressure as Jobs Data, Beige Book Bolster Taper
• Euro: How Far have Markets Priced in Fresh ECB Stimulus?
• Yen Crosses Weigh Risk, Stimulus, Capital Gains Tax Hike

Dollar Builds Pressure as Jobs Data, Beige Book Bolster Taper
The focus on (or perhaps hope for) Friday’s US jobs report must be strong. The USDollar continued to carve out a narrow range through the past session despite a round of data that significantly bolsters speculation for a January or December Taper timetable for the Fed. In a crush of scheduled event risk, the most prominent fundamental updates for the greenback Wednesday were the November ADP employment report and the Fed’s Beige Book. The former is a private payrolls report aimed at front-running the official Bureau of Labor Statistics numbers. The 215,000-net increase in jobs stood out prominently as the biggest increase for the series in 12 months. And, while this may not change FOMC members’ minds, it certainly feeds speculators’ expectations.

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DAGELIJKSE MARKT ANALYSLE 6 DECEMBER 2013

• Japanese Yen Falls as Nikkei 225 Rallies on GPIF Portfolio Reallocation
• US Dollar Gains as Traders Look Ahead to November’s US Jobs Report
• Leading Economic Data Offers Mixed Clues on US Labor Market Health


The Japanese Yen fell amid ebbing haven for the safety-linked currency as the Nikkei 225 advanced. The rally followed comments from Takatoshi Ito, chairman of an advisory panel to Japan’s Government Pension Investment Fund. Ito said GPIF should cut its holding of JGBs from 58 to 52 percent of total assets and redirect capital into Japanese equities. The US Dollar rallied against all of its leading counterparts as traders looked ahead to November’s US Employment report.

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DAGELIJKSE MARKT ANALYSE 9 DECEMBER 2013


• Australian Dollar Gaps Higher to Start the Week on Chinese Exports Surge
• Japanese Yen Briefly Strengthens vs. USD After 3Q GDP is Revised Lower
• Quiet US, European Data Docket Puts Pre-FOMC “Fed-speak “ in Focus


The major currencies were little-changed against the US Dollar in late Asian trade. The Australian Dollar gapped higher at the open of the trading week following better-than-expected Chinese export figures while the Japanese Yen edged higher after revised third-quarter GDP data disappointed, but meaningful continuation proved lacking on both fronts.

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DAGELIJKSE MARKT ANALYSE 10 DECEMBER 2013

• Dollar Sees Extreme Period Quiet as Market Weighs December Taper
• Japanese Yen Crosses Extend Rally, EURJPY Gaps to 5 Year High
• British Pound Traders Should Be Careful Of Trade, Factory, GDP Updates

Dollar Sees Extreme Period Quiet as Market Weighs December Taper
There is a serious contradiction between fundamental developments and actual price action behind the dollar. Through the opening session of the new trading week, we were met with a dense round of Fed speak which stokes rate speculation already roused by last week’s NFPs. And yet, the Dow Jones FXCM Dollar Index (ticker = USDollar) has gone 14 consecutive days without a 0.3 percent or greater change – the longest period of inactivity by this measure since June 2007. This certainly fits the profile of the typical, year-end holiday liquidity drain we have come to expect; but can we avoid meaningful bouts of volatility as headlines on the top 2013 trading populate the news wires?

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DAGELIJKSE MARKT ANALYSE 11 DECEMBER 2013

• Dollar Drops but Trend Hopes are Fleeting
• Euro Rally Against Dollar Longest in a Year
• Yen Cross Slip, But Reconsider Reversal Calls

Dollar Drops but Trend Hopes are Fleeting
The Dow Jones FXCM Dollar Index (ticker = USDollar) finally cleared its 70-point range for the first time in 13 consecutive trading days. Yet, we should check the market’s temperature before we jump on a deceivingly cool trend. Backdrop market conditions are the first concern. As discussed before, December is notorious for its liquidity drain as investors shy away from establishing new, prominent positions knowing that the holidays stunt participation and momentum. The technical lurch on the day was similarly deceiving. Though the USDollar would clear its range, the decline was still less than 0.3 percent. That is the 14th consecutive trading session without a move with a meaningful magnitude change – still the longest period of low activity since June 2007.

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DAGELIJKSE MARKT ANALYSE 12 DECEMBER 2013

• SNB Rate Decision Unlikely to Yield Change in Monetary Policy Stance
• US Dollar May Rise if Upbeat Retail Sales Data Drives Fed “Taper” Bets
• Aussie Dollar Looks Past Upbeat Jobs Data, Follows Asian Stocks Lower


A monetary policy announcement from the Swiss National Bank headlines the economic calendar in European hours. Chairman Thomas Jordan and company are not expected to introduce any changes into the policy mix, keeping the baseline rate lending rate as-is and reiterating a commitment to the EURCHF floor at 1.20.

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DAGELIJKSE MARKT ANALYSE 13 DECEMBER 2013

• Dollar Back Three-Month Highs, FOMC Decision Ahead
• Yen Crosses Return to Highs Despite Nikkei’s Hesitance
• Australian Dollar Collapses as RBA Governor Stevens Expects Sub-0.90

Dollar Back Three-Month Highs, FOMC Decision Ahead
The dollar rose against all of its major counterparts this past session – even the stubborn euro – and too much credit seems to go to Taper expectations for next week. While there is certainly speculation surrounding this event and its effects on the broader markets (whether the Fed decides to reduce stimulus or not), the argument is not so finely balanced nor the event risk hearty enough to generate such frequent swells. That may change next week, however, as we close in on the meeting. Meanwhile, the S&P 500 made a provocative move as it slipped below 1,780 to trade at a one-month low. While the traditional ‘risk’ theme is as impotent at generating trend as positioning around relative monetary policy at this stage of the year, it can still generate volatility with headline-worthy developments like a ‘head-and-shoulders’ technical break.

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DAGELIJKSE MARKT ANALYSE 16 DECEMBER 2013

• Euro May Fall if a Disappointing PMI Data Set Drives ECB Stimulus
• Yen Rallies, Aussie Falls as Pre-FOMC Jitters Trigger Risk Aversion
• Fundamental Support for “Tapering” Fed QE Appears to be in Place


The preliminary set of December’s Eurozone PMI figures headlines the economic calendar in European hours. The region-wide composite gauge is expected to edge slightly higher to 51.9 compared with 51.7 in the prior month. Euro-area economic news flow has underperformed relative to consensus forecasts over recent weeks (according to data from Citigroup), opening the door for downside surprises. Such an outcome is likely to weigh on the Euro as traders build out expectations for an expansion of ECB stimulus in 2014. We are holding short EUR/USD.

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DAGELIJKSE MARKT ANALYSE 17 DECEMBER 2013

• Pound May Not Find Lasting Upside Momentum if CPI Tops Expectations
• Stronger German ZEW Data Unlikely to Offer Substantial Boost to the Euro
• NZ Dollar Gains as the Government Cuts Bond Sale Plans, Projects Surplus


November’s UK CPI report is expected to show the headline year-on-year inflation rate held unchanged from the prior month at 2.2 percent. Last month’s PMI reports pointed to broad-based price growth acceleration however. Indeed, output prices in the service sector – the largest component of the overall economy – grew at the fastest pace in two-and-a-half years. That opens the door for an upside surprise on today’s reading. Such an outcome may lead the British Pound higher in the near term, but meaningful follow-through seems unlikely.

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DAGELIJKSE MARKT ANALYSE 18 DECEMBER 2013

• Dollar: Set Your Expectations for FOMC Volatility, Trend
• British Pound Slips after Uneven Inflation Update Unnerves Rate Watches
• Australian Dollar: RBA Governor Says May Cut Further, Even Intervene

Dollar: Set Your Expectations for FOMC Volatility, Trend
The dollar is close enough to significant reversals with EURUSD, GBPUSD, AUDUSD and USDJPY that the upcoming FOMC rate decision has the market’s focus completely locked in. Yet, Taper speculation doesn’t carry the level of market sway it leveraged 6 months ago; and the outcome’s influence on general risk themes has grown more ambiguous. Yet, most important of all for those looking at to this important economic event as a catalyst for something more prolific, immediate liquidity conditions associated to the year-end holiday drain will work against the development of a meaningful and persistent trend. This event can easily tap volatility, but much more than that will be difficult.

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DAGELIJKSE MARKT ANALYSE 19 DECEMBER 2013

• The Federal Reserve surprised most market participants with a $10 bln Taper and warning of further moves
• With the central bank turning a corner on its ever-expanding stimulus program, the dollar rallied
• Risk trends (like S&P 500) didn't drop though as the liquidity drain curbs volatility...but it will


The Fed surprised many with a Taper to end the year. We were met with a swell in price volatility and an eventual dollar rally - as expected. Yet, many were perplexed to also see a significant rally for the S&P 500 and generally robust position on risk trends. Is the Fed's support simply not important to driving markets higher anymore? Did the upgraded growth forecasts handily replace optimism amongst investors? Or perhaps this jump in risk is simply a side effect of seasonal fade in liquidity. We discuss this important event, the implications for dollar and risk trends, as well as the trade options in today's Trading Video.

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DAGELIJKSE MARKT ANALYSE 20 DECEMBER 2013

• Though the Fed announced a serious shift in policy just a day ago, volatility is quickly fading
• The last major event this week is the morning BoJ decision, but expectations for impact are limited
• Looking for medium-term swings on pairs like EURUSD is dangerous with volatility at a 6 year low


Volume and volatility are dropping off quickly in the wake of the Fed's taper announcement. While the fundamental backdrop for risk trends and the stimulus wars has changed significantly this week, the repercussions are unlikely to be realized until liquidity fully returns and market participants are more willing to make serious changes to their portfolios. This curb on volatility and trend development has a distinct influence on FX trading. Where traders may be anxious to jump on a short-term EURUSD trendline break, await a completed GBPUSD head-and-shoulders pattern or drive AUDUSD after its break to multi-year lows; expectations must be set by reasonable assumptions. We discuss these majors, USDJPY and gold in today's Trading Video.

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