Happy Monday Y’all! We are back to NYC and back to business.
European investors took risk off the table on Friday, breaking a three day recovery, ahead of the results of bank stress tests and assets quality review published by the ECB this weekend.
Other positive news comes from Ukraine, where early polls suggest a decidedly pro-western outcome for parliamentary elections. The elections didn’t include Crimea and a couple of rebel held Eastern states, but the remainder seem to be banging the pro-European drum. A strong outcome should lend much more support to Petro Poroshenko from the international community, particularly when it comes to financing the pro-forma gas bill that Ukraine needs to pay Russia to keep the heating on this winter.
In Russia, the government has approved laws to reduce the number of individuals and companies holding assets offshore – a practice that virtually every Russian with any notable wealth observes – The “deoffshorisation” is designed to bring wealth back into Russia, which has seen amplified outflows since the Ukraine conflict and subsequent sanctions, but will have everyone nervous about holding too many of their eggs in one basket – a basket into which they fear Putin may well dip his hand.
In the UK, the BBC reported over the weekend that corporate profit warnings are at their highest level since 2008.
Meanwhile Bank of England member McCafferty wrote in the Sunday Times that they need to raise interest rates now, arguing that “starting to raise Bank rate now makes it more likely that the increase required over the coming years to deliver our inflation target can be kept gradual and limited”.
In Brazil, incumbent president Dilma Rousseff has won the tightest election race for decades to stay in office. The outcome is being reported as a business negative for Brazil as Ms Rousseff’s Worker’s Party strives to tackle inequality over economic expansion through big business.
Looking to the week ahead; the big news will be the Federal Reserve’s meeting and the likely announcement that QE will come to an end. The monthly taper has seen notable asset purchases reduction this month. The question then falls to when an actual rate rise will occur and Fed-head Janet Yellen will be keen to emphasise a cautious tone to try and comfort investors as they come down of their monthly QE fix.
As well as the Fed, we’ll see Q3 GDP readings from the US and a number of European countries. The UK economic calendar is particularly light, but there will still be opportunities for movement, as investors use the Pound to trade against other economic data and also month end flows on Thursday/Friday move things around.
Intraday Forex Technical Levels
EUR/USD 4-hour: Consolidating.
Invest Diva Likes: Short positions below 1.2661 with targets at 1.2586 ad 1.2511 in extension.
If Pair Goes Nuts: Above 1.2661 look for further upside towards 1.2753 and 1.2828.
What’s up on the Forex Dance Floor: The pair continues consolidating below the 23% Fibonacci level at 1.2661 below the Ichimoku’s cloud. The RSI is heading down from the neutrality area.
Supports and Resistances
1.2828
1.2753
1.2661 Pivot Point
1.2753
1.2511
NZD/USD 4-hour: Consolidating.
Invest Diva Likes: Short positions below 0.7902 with targets at 0.7797 ad 0.7707 in extension.
If Pair Goes Nuts: Above 0.7902 look for further upside towards 0.7969 and 0.8131.
What’s up on the Forex Dance Floor: The pair is consolidating between our pivot point and a key support level at 0.7797, below theIchimoku’s cloud. The RSI remains atthe neutrality area.
Supports and Resistances
0.8131
0.7969
0.7902 Pivot Point
0.7797
0.7707
USD/JPY 4-hour: Consolidating.
Invest Diva Likes: Long positions above 108 with targets at 109.17 and 110.08 in extension.
If Pair Goes Nuts: Below 108 look for further downside towards 106.71 and 105.67.
What’s up on the Forex Dance Floor: The pair is consolidating at the previous bullish target and 23% Fibonacci level at 108 above the Ichimoku’s cloud. The RSI is above the neutrality area.
Supports and Resistances
110.08
109.17
108 Pivot Point
105.67
104.63
USD/CHF 4-hour: Consolidating.
Invest Diva Likes: Long positions above 0.9491 with targets at 0.9573 and 0.9689 in extension.
If Pair Goes Nuts: Below 0.9491 look for further downside towards 0.9392 and 0.9336.
What’s up on the Forex Dance Floor: The pair is teasing the pivot level at 0.9491 after completing the double bottom pattern above the Ichimoku’s cloud. The RSI is just around the neutrality area.
Supports and Resistances
0.9689
0.9573
0.949 Pivot Point
0.9392
0.9336
