Key Amendments to be Voted on by UK MPs


GBP Price Analysis and Talking Points:

  • Brexit Amendments in Focus

See our quarterly GBP forecast to learn what will drive prices throughout Q1.

Brexit Amendment Votes

Today will see yet another round of votes on a series of amendments, which typically takes place from 1900GMT. However, given yesterday’s speech by Theresa May, whereby the PM noted that there will be a series of votes on a Brexit deal, no-deal, and Brexit delay through March 12-14th, tonight’s vote has lost its importance.

List of Amendments

Amendment A: Calls for parliament to endorse Corbyn’s Brexit strategy.

Amendment B: Calls for more protections regarding the rights of EU citizens living in the UK in a no-deal scenario.

Amendment C: Sets a deadline of March 18th to have either; passed a deal, support for a no-deal or requested a Brexit delay from the EU.

Amendment F: Note’s May’s commitment to hold a vote on March 14th on whether to delay Brexit, if Parliament has rejected her deal and leave without a deal.

Amendment K: Rules out a no-deal Brexit under any and all circumstances, irrespective of the date.

Option Activity Suggests GBP Volatility

Overnight GBP vols are relatively muted ahead of today’s vote with GBPUSD straddles implying a move of under 0.5% or 60pips.

GBP TRADING RESOURCES:

— Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX





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USD/CAD Weighed by Sticky Core CPI- Canada GDP Report Up Next


Canadian Dollar Talking Points

USD/CAD remains under pressure following the updates to Canada’s Consumer Price Index (CPI), and recent price action raises the risk for a further decline in the exchange rate as it slips back below the 200-Day SMA (1.3152).

Image of daily change for major currencies

USD/CAD Weighed by Sticky Core CPI- Canada GDP Report Up Next

Image of daily change for usdcad rate

The fresh CPI print should keep the Bank of Canada (BoC) on the sidelines at the next meeting on March 6 as the headline reading narrows to 1.4% from 2.0% per annum in December, but the stickiness in the core rate of inflation may keep the central bank on track to further normalize monetary policy as trimmed-mean index holds steady at 1.9% for the third consecutive month.

Image of DailyFX economic calendar

With that said, the 4Q Gross Domestic Product (GDP) report due out later this week may do little to alter the monetary policy outlook as the ‘Governing Council continues to judge that the policy interest rate will need to rise over time into a neutral range to achieve the inflation target,’ and Governor Stephen Poloz & Co. may continue to prepare Canadian households and businesses for higher borrowing-costs as ‘indicators of demand should start to show renewed momentum in early 2019, leading to above-potential growth of 2.1 per cent in 2020.

In turn, USD/CAD may exhibit a more bearish behavior over the near-term especially as the Federal Reserve alters the forward-guidance for monetary policy, and it seems as though the Federal Open Market Committee (FOMC) will continue to change its tune in 2019 as Chairman Jerome Powell states that ‘the Committee can now evaluate the appropriate timing and approach for the end of balance sheet runoff.’ With the FOMC now preparing to taper the $50B/month in quantitative tightening (QT), the shift in Fed policy may keep USD/CAD under pressure, and price action raises the risk for a further decline in the exchange rate as it slips back below the 200-Day SMA (1.3152).

Keep in mind, the broader outlook for USD/CAD remains constructive following the break of the June-high (1.3386), while the bear-flag from earlier this year appears to have run its course amid the failed attempt to test the November-low (1.3049). The key test comes as USD/CAD bounces along the 200-Day SMA, with dollar-loonie staging a near-term rebound the last three instances the exchange rate dipped below the moving average. As a result, the monthly range is on focus for the coming days, with USD/CAD at risk of exhibiting a more bearish behavior if the exchange rate fails to respond to the moving average and ends up taking out the 2019-low (1.3068). Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

USD/CAD Daily Chart

Image of usdcad daily chart

  • The correction from the January-high (1.3663) may continue to evolve as USD/CAD bounces along the 200-Day SMA (1.3152), but a broader trend appears to be taking shape in the Relative Strength Index (RSI) as it carves a bearish formation in 2019.
  • In turn, a close below 1.3130 (61.8% retracement) may spur a more meaningful run at the November-low (1.3049), but need a break/close below the Fibonacci overlap around 1.3290 (61.8% expansion) to 1.3310 (50% retracement) to highlight a broader shift in USD/CAD behavior.
  • Next downside hurdle comes in around 1.2830 (38.2% retracement) followed by the overlap around 1.2720 (38.2% retracement) to 1.2770 (38.2% expansion), which sits just beneath the October-low (1.2780).

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019.

— Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.



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GBPUSD Surges on, USD Downtrend Continues, USDCAD at Key Support


MARKET DEVELOPMENT –USD Downtrend Resumes, GBP Surges on, USDCAD at Support

GBP: The Pound continues to power on with GBPUSD reclaiming 1.33, briefly hitting highs of the 1.3336 in the European session. While clarity is still lacking in regard to whether PM May will reach an acceptable deal, markets remain GBP bullish as no-deal Brexit risks fade with a potential deal tilting on the softer side. Today will see the parliament vote on a series of MP amendments, however, following PM May’s speech yesterday, that there will be a vote on a no-deal and Brexit extension. Today’s vote is unlikely to provide much in the way of notable volatility. Elsewhere, a report in the evening standard highlighted that the EU could offer a Brexit delay of up to 2yrs if PM May’s deal fails. However, while a Brexit delay is seen as good news for the Pound, the uncertainty will continue to linger. Topside resistance at 1.3450, while EURGBP eyes a test of 0.85.

USD: The downtrend in the USD continues as uncertainties begin to ease with markets having a more constructive outlook regarding trade wars, while no-deal Brexit concerns also dissipate. Yesterday, Fed Chair Powell’s testimony failed to provide much in the way of new policy signals, thus keeping the USD rather muted, while US yields also edge lower. 10yrs yields are now looking for a move towards 260bps, whereby a break below could exacerbate USD losses. Another round of commentary from Fed Powell is unlikely to provide a meaningful move in FX, given what we saw yesterday. As such, data will take precedence with durable goods and pending home sales scheduled at 1500GMT.

CAD: The Loonie has benefitted from the gains observed in the oil complex, in which Brent crude reclaimed $66/bbl. Elsewhere, Canadian CPI slightly missed analyst forecasts with the headline weighed by the Q4 drop in energy prices, however, the BoC’s preferred core measure had been unchanged, thus keeping CAD supported. While USDCAD tests key support at 1.3120 (CAD technical analysis), near-term risks may come in the form of US-Canada trade, following reports that Canada may not ratify USMCA if the US do not lift aluminium tariffs, while USTR Lighthizer (Scheduled to speak at 1500GMT) may announce hurdles in passing USMCA through congress.

AUD: The Aussie is down under this morning, underperforming in the G10 space as weak domestic data overnight from the construction sector provides a reminder that next week’s GDP report is skewed to the downside. Alongside this, weakening iron ore prices (-3% WTD) have also added to the pressure on the Australian Dollar. As such, AUDUSD yet again failed to make a topside breach above the 0.72 handle.

JPY: Escalating geopolitical tensions between India and Pakistan after the latter shot down 2 Indian fighter jets spooked equity markets overnight with safe haven flows supporting the Yen. Eyes will be on for further escalation, which could keep JPY supported, while INR continues to weaken.

GBPUSD Surges on, USD Downtrend Continues, USDCAD at Key Support - US Market Open

Source: Thomson Reuters

DailyFX Economic Calendar: – North American Releases

GBPUSD Surges on, USD Downtrend Continues, USDCAD at Key Support - US Market Open

IG Client Sentiment

GBPUSD Surges on, USD Downtrend Continues, USDCAD at Key Support - US Market Open

How to use IG Client Sentiment to Improve Your Trading

WHAT’S DRIVING MARKETS TODAY

  1. CAD Technical Analysis Overview: USDCAD, EURCAD, CADJPY” by Justin McQueen, Market Analyst
  2. GBPUSD Price Analysis, Chart and Pivot Points” by Nick Cawley, Market Analyst
  3. Trading Outlook for Gold Price, Crude Oil, Dow Jones, DAX & More” by Paul Robinson, Market Analyst
  4. EURUSD Still Trending Higher Despite Poor Eurozone Confidence Data” by Martin Essex, MSTA , Analyst and Editor

— Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX





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US Dollar Tests 96 Support Ahead of Day Two of Powell Testimony


US Dollar, EURUSD, USDJPY Talking Points:

The US Dollar has continued its descent following yesterday’s Humphrey Hawkins testimony from FOMC Chair, Jerome Powell, further eradicating prior February gains.

The longer-term range in EURUSD continues to hold despite a seeming lack of excitement from buyers. The pair did test the 1.1400-handle earlier but was unable to hold. USDJPY remains of interest for USD-bulls as the pair has held above the 110.30 support level that came into play earlier in the month; and a near-parabolic like move has priced into Cable (GBPUSD) as prospects of a No-Deal Brexit get further priced-out of the equation.

– DailyFX Forecasts are published on a variety of currencies such as the US Dollar or the Euroand are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment Indicator.

US Dollar Tests Through Key Support Ahead of Powell’s Day Two

The US Dollar has continued to push-lower after yesterday’s start of the Fed’s twice-annual Humphrey Hawkins testimony. That event was without any significant surprises, but the opening remarks did help the US Dollar catch a quick bid up to resistance at 96.47. But, as the Q&A began USD sellers showed-up, and prices soon pushed down to fresh near-term lows. By 2PM ET, DXY had already re-engaged with the support zone around the 96-handle, and that held for a few hours. But, around the Euro open more sellers showed up, and prices pushed below that key support zone to establish a fresh three-week-lows.

On the below four-hour chart, I’ve applied a Fibonacci retracement to the post-FOMC bullish run in DXY, and this highlights a couple areas of interest. That prior area of short-term support around the 96-handle becomes of interest for lower-high resistance potential. Given how quickly this downside move has priced-in, traders can keep aspirations for resistance as high as the 96.27 level that had previously provided support but, as of yet, hasn’t shown much for resistance. On the underside of price action, the 95.63 level is of interest, as this is the 78.6% retracement of that move at a level that had previously provided late-January swing-support and early-February swing resistance.

US Dollar Four-Hour Price Chart

us dollar usd four hour price chart

EURUSD Moves Higher, Almost Begrudgingly

The topside move over the past two weeks in EURUSD appears to be one of the least-loved themes across the FX-space at the moment. While the range in the pair has held for now more than three months, the visit to support a couple of weeks ago opened the door for the bullish side of that formation to fill-in.

EURUSD Daily Price Chart

eurusd eur/usd daily price chart

But buyers, while furnishing higher-low support throughout the period, have been very shy at fresh near-term highs, helping price action to build into a rising wedge pattern. Such patterns will often be treated for bearish reversal potential given the fact that bulls show less enthusiasm at fresh highs than what shows at the lows.

The big question around EURUSD is whether that short-term bearish reversal shows up before the longer-term range can revisit resistance. The resistance side of that range begins at 1.1448 and extends up to 1.1500. And for those that are harboring a longer-term bearish bias against the single currency, this can be an interesting time to be following the market as that range could be approached with a prior trend-side bias.

EURUSD Two-Hour Price Chart

eurusd eur/usd two hour price chart

USDJPY Re-Tests 110.30 – Revisit to Support at Prior Resistance

For bullish USD-strategies, USDJPY remains of interest, and the past 24 hours are perhaps a good illustration as to why. Despite the fact that the US Dollar has sold off over the past day, USDJPY has put in a re-check of support while holding the prior low around the 110.30 level. This comes after a false breakout at fresh 2019 highs at the beginning of this week, and this illustrates the potential of an even weaker-Yen than what’s been showing around the US Dollar.

In USDJPY, the big question is whether buyers remain on the sidelines until the longer-term zone of resistance comes into play for support. That prior resistance zone runs from 109.67-110.00, and this had held the highs for about a month until the pair’s bullish breakout two weeks ago. But, as yet, this zone hasn’t been tested for higher low support, so if prices can drive down there, an interesting test will be in the cards. A hold of that support keeps the door open for longer-term bullish strategies in USDJPY, targeting the 112.34 Fibonacci level.

USDJPY Four-Hour Price Chart

usdjpy usd/jpy four hour price chart

GBPUSD: Cable Goes Parabolic on Way to Fresh Seven-Month Highs

The big mover on the week so far has been the British Pound, as Brexit pessimism has been getting priced-out of the equation. The scenario was explained by our own Nick Cawley earlier this morning, and as the prospect of No-Deal Brexit diminishes, buyers have been making their mark to push the pair to fresh seven-month highs.

The big question, as is often the case with such a parabolic move, is for how long might bulls continue? Many traders will often abandon their fundamentals in such a scenario for a simple fear of missing out; hoping that the move either continues or quickly reverses to allow for a quick short-term move. But this can be dangerous way of approaching matters, particularly in a headline-driven environment that can see prices turn-on-a-dime.

For those that are looking for support potential in order to base bullish trend approaches, there isn’t much that’s nearby given how quickly this move has priced-in. On the hourly chart below, I’ve attempted to identify a few of these levels, with a nearby prior swing-high at 1.3284 being the closest to current prices. A bit-lower offered a prior price action swing around the 1.3238 area; and below that is the 1.3181 Fibonacci level which is the 38.2% Fibonacci retracement of the 2018 bearish move in the pair.

GBPUSD Hourly Price Chart

gbpusd gbp/usd hourly price chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q4 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers an abundance of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

— Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX





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Slowing Canada Consumer Price Index (CPI) to Curb USD/CAD Losses


Trading the News: Canada Consumer Price Index (CPI)

Updates to Canada’s Consumer Price Index (CPI) may curb the recent decline in USD/CAD as the headline reading is expected to slow to 1.4% from 2.0% per annum in December.

Image of DailyFX economic calendar

Signs of slowing inflation is likely drag on the Canadian dollar as it encourages the Bank of Canada (BoC) to keep the benchmark interest rate on hold, and the central bank may come under pressure to endorse a wait-and-see approach as Governor Stephen Poloz & Co. warn that the recent ‘forecast reflects a temporary slowing in the fourth quarter of 2018 and the first quarter of 2019.

In turn, a marked downtick in Canada’s CPI may encourage the BoC to endorse a wait-and-see approach at the next meeting on March 6, but another higher-than-expected reading may trigger a bullish reaction in the Canadian dollar as in fuels bets for a rate-hike in 2019. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

Impact that Canada’s CPI report has had on USD/CAD during the previous release

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

DEC

2018

01/18/2019 13:30:00 GMT

1.7%

2.0%

-7

-9

December 2018 Canada Consumer Price Index (CPI)

USD/CAD5-Minute Chart

Image of usdcad 5-minute chart

Canada’s Consumer Price Index (CPI) unexpected climbed to 2.0% from 1.7% per annum in November, while the trimmed-mean reading for core inflation held steady at 1.9% for the second month. A deeper look at the report showed food prices increasing another 1.0% in December, with Transportation costs increasing 0.7%, while prices for clothing and footwear contracted another 3.4% after slipping 1.3% in November.

The Canadian dollar struggled to hold its ground following the lackluster employment report, but the initial reaction was short-lived, with USD/CAD slipping below the 1.3400 handle to close the day at 1.3371. Review the DailyFX Advanced Guide for Trading the News to learn our 8 step strategy.

USD/CAD Daily Chart

Image of usdcad daily chart

  • Keep in mind, broader outlook for USD/CAD remains constructive following the break of the June-high (1.3386), and the failed attempts to test the November-low (1.3049) may keep the exchange rate afloat as the near-term correction stalls ahead of the 1.2980 (61.8% retracement) to 1.3030 (50% expansion) region.
  • In turn, the 2019-range is in focus, with the Fibonacci overlap around 1.3290 (61.8% expansion) to 1.3310 (50% retracement) back on the radar, but need a break/close above the stated region to open up the 1.3420 (78.6% retracement) to 1.3460 (61.8% retracement) area.

Additional Trading Resources

New to the currency market? Want a better understanding of the different approaches for trading? Start by downloading and reviewing the DailyFX Beginners Guide.

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader series on how to effectively use leverage along with other best practices that any trader can follow.

— Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.



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CAD Technical Analysis Overview: USDCAD, EURCAD, CADJPY


CAD Analysis and Talking Points

  • USDCAD | Key Fibo Support in Focus
  • EURCAD | Momentum and Trend Signals Weak, Descending Channel Holds
  • CADJPY | Topside Resistance May Limit Upside

See the DailyFX Q1 FX forecast to learn what will drive the currency throughout the quarter.

USDCAD | Key Fibo Support in Focus

USDCAD has continued to edge lower amid the dip below the 200DMA (1.3159) and now eyes key support at 1.3130 (61.8% Fibo from 2017 high to low) and 1.3120 (61.8% Fibo from Oct 2018 rise to 2019 peak). Previous attempts to break below have failed, as such, focus is on for a closing break below, which could extend a move towards 1.3070 before the 1.3000 handle. However, momentum indicators (DMI’s) are somewhat mixed, while ADX trend signals are also muted, which in turn may see USDCAD remain within its 2-month range. Topside resistance seen at 1.3225 and 1.3330.

USDCAD PRICE CHART: Daily Time Frame (Aug 2018 – Feb 2019)

CAD Technical Analysis Overview: USDCAD, EURCAD, CADJPY

Chart by IG

EURCAD | Momentum and Trend Signals Weak, Descending Channel Holds

EURCAD remains within its descending channel, however, momentum indicators are struggling to show signs of much in the way of firm direction, alongside this trend signals are also weak, keeping the outlook neutral. Near-term support situated at the 1.49 handle, whereby a break below opens up a room towards 1.48. Downside risks to EURCAD likely to recede, provided there is a closing break above 1.5050.

EURCAD PRICE CHART: Daily Time Frame (Sep 2018– Feb 2019)

CAD Technical Analysis Overview: USDCAD, EURCAD, CADJPY

Chart by IG

CADJPY | Topside Resistance May Limit Upside

CADJPY continues to hover around the 84.00 handle as support at 83.72 underpins. Topside resistance may curb gains with the 200DMA at 84.58, while the 61.8% Fibo resides at the 85.00. Momentum indicators suggest that further upside is likely however, as trend signals weakening, this reinforces the viewpoint that further upside may be somewhat limited.

CADJPY PRICE CHART: Daily Time Frame (Jul 2018–Feb 2019)

CAD Technical Analysis Overview: USDCAD, EURCAD, CADJPY

Chart by IG

— Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX





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Gold & Silver Price Charts – Test of Trend Support Nearing


Gold/Silver Technical Highlights:

  • Test of November trend-line in gold approaching
  • Silver has a couple of degrees of support it may soon test

See what drivers DailyFX analysts expect to move Gold in the coming weeks in the Q1 Gold Forecast.

Test of November trend-line in gold approaching

The reversal in gold last week has quickly come to a grinding halt, with the past few days sporting very little activity. That looks set to change perhaps as soon as today, and on that may come a testing of the important November trend-line/lower parallel.

After getting rejected from around long-term resistance, holding the Nov trend-line will be important as a break could lead to a pick up in selling. The trend-line has numerous inflection points also adding weight to its importance. One of these times it may not hold, but until it doesn’t it is viewed as support.

A move higher doesn’t leave a lot of room for a good long trade with resistance not far ahead. One scenario that may offer up some ‘juice’, is for a bounce off the trend-line then lower-high and break of the trend-line, furthering along last week’s key reversal. For now, though, in ‘wait-and-see’ mode.

Check out the IG Client Sentiment page to see how changes in trader positioning can help signal the next price move in gold and other major markets.

Gold Daily Chart (Watch the Nov t-line)

Gold daily chart, watch the Nov t-line

Gold Weekly Chart (Reversal around big long-term resistance)

Gold weekly chart, reversal around big long-term resistance

Silver has a couple of degrees of support it may soon test

Silver’s outlook is even worse on the upside, due to it not only lagging gold but also have a good deal of resistance by way of several trend-lines: 2003, July 2016, and April 2017 t-lines all run in the same vicinity. Keeping it supported trend-lines from December and last month, but both aren’t off the highest quality given the number of touch points. A break of these, though, will further validate resistance, and if gold fails to hold the November trend-line – selling could pick up quickly for this long-time laggard.

Silver Daily Chart (Lots of resistance)

Silver daily chart, lots of resistance

Resources for Forex & CFD Traders

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

—Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX





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GBPUSD Price Continues To Push Ahead Strongly, Brexit Debate in Focus


GBP price, news and analysis:

  • Yet more debate in the Westminster Parliament will take place today on Brexit, with bullish traders hoping that Brexit will be delayed and a no-deal Brexit will be avoided.
  • However, the so-called “meaningful vote” on Brexit is unlikely to take place before March 12.

Sterling in favor ahead of more Brexit votes in Parliament

GBPUSD continues to climb higher and its advance could yet extend further as traders long the pair pin their hopes on a delay in the UK leaving the EU and that leaving without a deal can be avoided.

GBPUSD Price Chart, Daily Timeframe (July 4, 2018 – February 27, 2019)

Latest GBPUSD price chart.

Chart by IG (You can click on it for a larger image)

This session, UK Members of Parliament will again debate Brexit, starting at 1300 GMT, and the focus will be on any amendments selected by Speaker John Bercow. Voting on the non-binding amendments will start at 1900 GMT, followed by a vote on a bland government motion that reads: “This House notes the Prime Minister’s statement on EU exit of 26 February; and further notes that discussion between the UK and the EU are ongoing”.

Prime Minister Theresa May has promised to bring back her departure deal for Parliament to approve or dismiss by March 12 at the latest. However, there have been inevitable claims that she has again “kicked the can down the road” and that means the day of reckoning for the British Pound has been postponed.

In the meantime, GBPUSD has risen to its highest level since September 20 last year and shows few signs yet of a correction lower. To the upside, the next level in focus is the July 9 high at 1.3363.

MORE TO READ:

DailyFX Poll: Which Successor to PM May Would be Most Positive for GBP?

Brexit and the Pound: Why EU Might Spurn a Last-Minute Deal With the UK

Resources to help you trade the forex markets:

Whether you are a new or an experienced trader, at DailyFX we have many resources to help you:

— Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex





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Yen Jumps as Pakistan Downs Two Indian Jets, Spooking Markets


Japanese Yen, Pakistan, India, Kashmir – Talking Points:

  • Risk assets slipped a little as news of increased military action in Kashmir filtered out
  • Pakistan claims to have shot down two Indian jet fighters and to have arrested a pilot
  • The Japanese Yen assumed its customary haven role

Join DailyFX analysts for live coverage of all major market-moving data at the DailyFX Webinars.

The Japanese Yen gained late in Wednesday’s Asia session, with US stock futures lower as tensions between India and Pakistan in the disputed territory usually known as Kashmir reportedly spilled over again into military action.

News agencies report that Pakistan has shot down two Indian Air Force jets and has arrested one of the pilots. Pakistan reports that it struck the targets from their own airspace, on the Pakistani side of the Line Of Control (LOC) which splits the territory between the two countries.

Indian aircraft struck what its government said were terrorist encampments on Tuesday, in what it also said were retaliatory attacks for a terrorist strike in Pulwana, on the Indian side of the LOC on February 14. It left dozens of Indian police personnel dead. New Delhi accused Islamabad of harboring the Jaish-e-Mohammed miltiant group which claimed responsibility.

The Indian bombing runs were the first time since 1971 that its jets have ventured into Pakistani airspace. There have also been reports of artillery exchanges between the two countries at the LOC.

United Nations Security Council members and others have urged restraint but clearly a military exchange between two antagonistic nuclear powers represents a vast potential geopolitical and economic risk.

Market reaction so far has been modest but clear. The haven Yen caught a bid, US stock futures headed South and some shine was taken off an Asia Pacific equity trading session which had been quite bullish all around.

US Dollar vs Japanese Yen chart - 5 minute

US President Donald Trump will meet North Korean leader in Hanoi later, but this escalation threatens to overshadow those talks. Markets will remain vulnerable to headlines from India and Pakistan

Resources for Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

— Written by David Cottle, DailyFX Research

Follow David on Twitter @DavidCottleFX or use the Comments section below to get in touch!





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Gold Price Chart Hints at Topping as Powell Testimony Continues


GOLD & CRUDE OIL TALKING POINTS:

  • Gold prices fail to capitalize as US Dollar falls on Day 1 of Powell testimony
  • Technical positioning hints at topping ahead of Powell’s 2nd day in Congress
  • Crude oil prices eye EIA inventory data, sentiment trends for direction cues

Gold prices edged up, but the move higher was surprisingly muted even as comments from Fed Chair Jerome Powell weighed on the US Dollar. That might have been expected to offer a lift to the standby anti-fiat alternative. As happened, the metal idled in a narrow congestion range carved out since minutes from January’s FOMC meeting sent prices sharply lower.

That seems appropriate enough: Mr Powell stuck to the same “wait-and-see” rhetoric featured in the FOMC minutes, leaving priced-in policy outlook implied in Fed Funds futures and its immediate reflection – Treasury bond yields – essentially unchanged. That makes the Greenback’s decline appear to be more incongruous than gold’s indecision.

Looking ahead, another day of testimony from the Fed Chair is ahead. Having dispensed with the Senate yesterday, he is now due in the House of Representatives. His opening remarks ought to be broadly unchanged from the prior outing, but the Q&A that follows may tease out more market-moving tidbits. It remains to be seen whether a clear directional signal is to be had therein however.

CRUDE OIL PRICES EYE EIA INVENTORY DATA, SENTIMENT TRENDS

Meanwhile, crude oil prices corrected gently higher as financial markets digested yesterday’s outsized drop. From here, official EIA inventory flow data is expected to show stockpiles added 2.94 million barrels last week. A leading estimate from API revealed a 4.2-million-barrel drawdown however. If that proves to foreshadow a supportive surprise on the incoming release, prices may be pressured higher.

Broad-based sentiment trends remain important as well. Indeed, the correlation between the benchmark WTI contract and S&P 500 futures – a bellwether for global risk appetite – looks firm at 0.75 (on rolling 20-day studies). That means a perceived dovish streak from Mr Powell might brighten investors’ mood and thereby lift crude prices alongside stocks, while a seemingly hawkish tone could send both lower in tandem.

Learn what other traders’ gold buy/sell decisions say about the price trend!

GOLD TECHNICAL ANALYSIS

Gold prices are marking time above rising trend support guiding the move higher from mid-November, with a bearish Evening Star candlestick pattern and negative RSI divergence hinting that a top is taking shape. A dense layer of support runs through 1249.10, with a breach below that confirmed on a daily closing basis exposing 1276.50. Alternatively, a move above the February 20 high at 1346.75 sets the stage to challenge trend-defining resistance in the 1357.50-66.06 area.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices paused at support in the 55.37-75 area after retreating from resistance in the 57.96-59.05 zone, as expected. Support is reinforced by a trend line set from late December, now at 54.59. A daily close below that would suggest the dominant decline from early October 2018 has resumed. Initial support thereafter is in the 50.15-51.33 zone. Alternatively, a push above 59.05 region targets trend line support-turned-resistance from February 2016, presently at 61.98.

Crude oil price chart - daily

COMMODITY TRADING RESOURCES

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter





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