AUDNZD flag follows major breakout

The AUDNZD pair has been showing some signs of a reversal in recent weeks following the break above 1.103. This is showing little signs of letting up and with the flag formation currently in play, I believe we could see further upside. However, with a major resistance level at 1.119, a breakout is required to gauge direction for the week.

The daily chart shows that the pair finally broke out of a clear bottoming formation last month, following a downturn in the pair which has lasted over three years. As a result, any move to recover even a portion of that could bring about a major appreciation of the pair. Given the upside we have seen in the past weeks, the flag formation we are currently seeing is most commonly seen as a continuation pattern. That being said, the resistance level of 1.119 is clearly key, given the support seen around this time last year. Furthermore, the stochastic oscillator is currently pointing towards a possible move lower, along with a weakening momentum as shown by the lower high despite a higher high in price action (bearish divergence). Thus there is a distinct possibility that the pair is going to retrace somewhat back to the downside. On the four hour chart, the flag formation is currently being challenged. Using the fibonacci extension, it is clear that there is a significant amount of support and resistance between these levels. Despite the current downside pressure, with the stochastic oversold and the trend-line having not been broken yet, there is the potential for a move back within the flag. Either way, I am awaiting the breakout from this flag as a indicator of where the pair is going to move for the week. A daily close below 1.1126 would bring a bearish …read more

OANDA halts margin trading on precious metals in the United States

OANDA Corporation has ceased offering the trading of precious metals on its fxTrade platform to clients in the US, citing regulatory considerations as the driving factor OANDA US has taken the decision to discontinue the offering of precious metal trading on its fxTrade platform, having implemented… …read more

XE Market Analysis: North America – Sep 01, 2014

The dollar is trading near 1-year highs against the euro, boosted by U.S. economic outperformance and with the EUR also weighed down by ongoing tensions in the Ukraine, which are adding to German and Eurozone growth concerns. Australia’s dollar was pressured by the weaker than expected manufacturing PMI, while New Zealand’s dollar bounced back after a rise in the trade balance. EUR-USD is trading around 1.3134 but the EUR managed gains against the Yen, which lost ground across the board. With the U.S. and Canada on holiday today markets are likely to remain quiet.

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Euro Bears Shouldn’t Expect QE from ECB This Week

The Euro was the worst performing major currency last week, extending its losing streak against the US Dollar to seven consecutive weeks. EURUSD’s -0.84% drop last week sunk it to $1.3131, its lowest exchange rate since September 6, 2013.

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AUD Braces for Volatility on Torrent of Top-Tier Events

The Aussie Dollar is offered an abundance of event risk with Q2 GDP data, and the RBA rate decision on tap. Yet can they catalyze a break of AUD/USD’s multi-month range?

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XE Market Analysis: Asia – Aug 29, 2014

The dollar was largely steady through the morning session, showing very little reaction to slightly softer income and PCE data, and better Chicago ISM and Michigan sentiment indicators. Later though, the dollar picked up broadly. London dollar buying was noted into the weekend and month-end, perhaps exacerbated by geopolitical tensions, helped by the U.K. raising its terror warning to “severe”. Aside from the ISIS crisis, Russian president Putin appeared to ramp up rhetoric by addressing rebels directly, praising their success inside Ukraine, according to Russian press outlet RIA.

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Eurozone back in focus with further weakness expected

  • Eurozone weakness provides backdrop of the day
  • Confidence surveys expected to bring further downside
  • Inflation readings arrive ahead of tomorrow’s big release.

A somewhat hesitant start to the day expected, following what was a largely flat US session. European markets have been looking towards today as the major driver of market direction, with a whole raft of economic indicators set to bring the Eurozone back into focus once again. With the S&P500 having reached the key 2000 milestone, it is somewhat of a reality check for many and the potential overextended nature of equity markets is cause for a degree of hesitancy if only for the short term. That being said, with a whole raft of economic indicators out of the Eurozone and US today, we could yet see the next leg higher in today’s session. European markets are expected to open marginally lower, with the FTSE100 -2, CAC -5 and DAX -11 points.

The story for the Eurozone is becoming particularly worrying, where almost every indicator coming out of the region painting a picture of yet more weakness. The most important figure for Mario Draghi is the CPI measure of inflation, which whilst languishing at 0.4%, provides significant room for further action from the ECB. However, unlike the monetary measures undertaken by the likes of the US, UK and Japan, the outcomes of ECB action so far has been somewhat muted. Thus there is a feeling that whilst we have seen substantial measures in place from Draghi as a means to bring growth and inflation higher, this could not yet be enough given the size of the problem at hand. One such problem comes in the form of Russian sanctions, some imposed out of choice and others in the form of retaliation. Whatever the validity of such measures, the decision to …read more

XE Market Analysis: Asia – Aug 28, 2014

The dollar moved mostly higher in N.Y. trade on Thursday, helped by an upgraded GDP revision, and a sub-300k jobless claim print. The euro stayed under 1.3200, as Russia/Ukraine uncertainty persisted, though failed to take out noted 1.3150 barrier options, while USD-JPY was supported into Friday’s large batch of Japanese data and month end. Wall Street took some profits, while Treasury yields remained low. Overall, a very quiet session, with more of the same to be expected into month-end, and a long North American weekend.

[EUR, USD]

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Futures edge higher after another record breaking session

US futures are pointing marginally higher on Wednesday, on what is expected to be a fairly quiet session. They’re not getting much direction from Europe, where indices are treading water, which is something we also saw in Asia overnight.

It’s looking a little light on the economic data front, which may explain why we’re not seeing much movement in Europe so far, or US futures as we approach the open. The only notable release this morning has been the Gfk consumer confidence survey for Germany and even that didn’t really attract much attention. Given the slightly weaker than expected number, the 20 pip rally in EURUSD around the time of the release can probably just be attributed to normal trading early in the European session.

The number itself doesn’t change anything. Confidence is still clearly dented as a result of the crisis in eastern Ukraine, while the overall slowdown in the euro area is probably itself starting to weigh on consumer and business confidence. With this fact pretty much priced in, we couldn’t really have expected much from this number unless the decline seen was far more significant.

The US economic calendar isn’t looking much more exciting, with only a couple of pieces of data being released. Of these, the EIA crude oil stocks figure is probably the most notable as this always has the potential to impact crude prices. We’ve seen plenty of volatility in oil prices recently, with geopolitical events putting upward pressure on prices and falling global demand driving them in the other direction. The latter is winning the battle at this stage, despite the occasional spikes, and if we see further evidence today that demand is on the decline, we could see that continue.

Aside from this, we have MBA mortgage applications data. The problem with this is …read more

Bitcoin to Continue Downtrend Says Citi

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Nothing new on the price front for everyone’s favorite cryptocurrency. Bitcoin rallied to a high of $517.85 today but toward the close BTC/USD fell back down to the $510 figure. We are still trading well inside the $50 range mentioned in our daily roundup yesterday. Until we break either of these extremes, prices will likely remain unpredictable. Here’s an updated chart.

Bitcoin will continue the downtrend, according to a research note by finance giant Citi. The two main factors that the Bank blames for the price going down are miners and merchants. Citi estimates that mining adds around 3,500 new bitcoins ($1.75 million) every day. Because of the ever increasing difficulty of mining, the majority of these coins are quickly liquidated on the market to cover electricity, cooling and other costs.

”If the miners are a steady source of supply and there is no increase in final demand, we have this overhang of bitcoin being sold in the market. In consequence, we have downward price pressures.”

Citi also thinks that the large merchants that have recently adopted bitcoin (DELL, DISH) will be a net negative for the cryptocurrency. Due to regulatory and accounting rules, these corporations can’t hold the bitcoins they receive, even if they wanted to do so. They have to sell them as soon as possible to avoid taking on ”speculative risk”, thus contributing to lower prices.

The Bank has a ”mixed” record when it comes to predicting bitcoin prices. On June 29th, in anticipation of the results for the US Marshall Auction, Citifx said that:

”Pumping such a large quantity into the market should weigh on prices. The terms of the auction make it difficult for small bidders ($200k deposit, each of the nine …read more