Articles

Wall Street ends the week on a strong note, DJIA posts 8th straight weekly gains

February 16, 2019 05:33   FXStreet   Market News  

  • Trade optimism helps Wall Street close the week on a positive note.
  • Financials and energy lead the rally on Friday.

Major equity indexes in the U.S. started the day in the positive territory and extended their gains on renewed optimism surrounding the U.S.-China trade conflict. Reflecting the strong appetite for risk, the CBOE Volatility Index, Wall Street’s fear gauge, dropped more than 8%.

After Chinese news agency Xinhua reported that the U.S. and Chinese officials were able to reach consensus on major issues in these week’s talks, President Donald Trump confirmed this week’s progress in trade talks by saying that they were very close to having a real trade deal with China. Trump further announced that he was planning to meet his Chinese counterpart Xi following the next round of trade negotiations in Washington next week. Furthermore, President Trump signed the spending bill to avoid another government shutdown but declared a national emergency in order to receive the funds that he needs to build the border wall.

Commenting on these developments, “It’s a relief rally, now that Trump is going to sign the (spending) bill and (the) China trade (dispute) looks like its coming to a resolution. It’s going to be a long process but it’s looking positive,” Doug Cote, chief market strategist at Voya Investment Management in New York, told Reuters.

Positive market mood boosted the yields on the T-bond yields and the rate-sensitive S&P 500 Financials Index gained more than 2% on the day. Moreover, trade optimism allowed crude oil to extend its rally and allowed the S&P 500 Energy Index to close 1.6% higher.

When the closing bell rang, the Dow Jones Industrial Average was up 1.7%, the S&P 500 and the Nasdaq Composite were up 1.04% and 0.42%. For the week, these three indexes added 3.1%, 2.5%, and 2.4% respectively.

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Oil Technical Analysis: WTI breaks to a new 2019 high reaching $56.22 a barrel

February 16, 2019 05:03   FXStreet   Market News  

Oil daily chart

  • Crude oil WTI is trading in a bear trend below its 200-day simple moving average.
  • WTI broke to a new 2019 high this Friday.

Oil 4-hour chart

  • Crude oil is trading between the 100 and 200 SMA suggesting a sideways market in the medium-term. 

Oil 30-minute chart

  • WTI is trading above its main SMAs suggesting bullish momentum in the short-term. 
  • The next resistance to the upside are seen at 57.00 and 57.50 level.
  • Support is seen at 54.60 and 53.60 level.

Additional key levels

WTI

Overview:
    Today Last Price: 56.14
    Today Daily change: 128 ticks
    Today Daily change %: 2.33%
    Today Daily Open: 54.86
Trends:
    Daily SMA20: 53.75
    Daily SMA50: 51.15
    Daily SMA100: 56.06
    Daily SMA200: 62.9
Levels:
    Previous Daily High: 55.08
    Previous Daily Low: 53.53
    Previous Weekly High: 55.93
    Previous Weekly Low: 52.05
    Previous Monthly High: 55.48
    Previous Monthly Low: 44.52
    Daily Fibonacci 38.2%: 54.49
    Daily Fibonacci 61.8%: 54.12
    Daily Pivot Point S1: 53.9
    Daily Pivot Point S2: 52.94
    Daily Pivot Point S3: 52.35
    Daily Pivot Point R1: 55.45
    Daily Pivot Point R2: 56.04
    Daily Pivot Point R3: 57

 

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US Dollar Index Technical Analysis: DXY loses steam and closes below 97.00 figure

February 16, 2019 04:53   FXStreet   Market News  

DXY daily chart

  • The US Dollar Index (DXY) is trading in a bull trend above its main simple moving averages (SMAs). 

DXY 4-hour chart

  • DXY is trading above its main SMAs suggesting bullish momentum in the medium-term. 

DXY 30-minute chart

  • DXY is trading below its main SMAs suggesting a bearish bias in the short-term.
  • Bears will be trying to break below 96.70 to reach 96.40 to the downside.
  • On the way up, resistances are seen at 97.00 and 97.20 level.

Additional key levels

Dollar Index Spot

Overview:
    Today Last Price: 96.88
    Today Daily change: – 14 pips
    Today Daily change %: -0.14%
    Today Daily Open: 97.02
Trends:
    Daily SMA20: 96.26
    Daily SMA50: 96.4
    Daily SMA100: 96.35
    Daily SMA200: 95.49
Levels:
    Previous Daily High: 97.29
    Previous Daily Low: 96.95
    Previous Weekly High: 96.69
    Previous Weekly Low: 95.58
    Previous Monthly High: 96.96
    Previous Monthly Low: 95.03
    Daily Fibonacci 38.2%: 97.08
    Daily Fibonacci 61.8%: 97.16
    Daily Pivot Point S1: 96.88
    Daily Pivot Point S2: 96.75
    Daily Pivot Point S3: 96.54
    Daily Pivot Point R1: 97.22
    Daily Pivot Point R2: 97.43
    Daily Pivot Point R3: 97.56

 

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USD/MXN Technical Analysis: Consolidation at higher levels, still bullish but limited by 19.50

February 16, 2019 04:33   FXStreet   Market News  

  • The Mexican peso was among the worst performers over the week, but USD/MXN held below the 19.45/50 strong support area. 
  • Volatility increase over the last few days, after breaking the strong resistance at 19.20, now support. 
  • Over the next days, a consolidation between 19.20 and 19.45 seems likely. So far there are no strong signals that the rally of the US dollar ended. A firm break above 19.50 would point to more gains ahead. 
  • On the downside, under 19.20 the pair is likely to test an ascendant trendline at 19.05/08. A break lower will likely point to a test of January lows at 18.85/87.

USD/MXN Daily chart 

USD/MXN

USD/MXN

Overview:
    Today Last Price: 19.2702
    Today Daily change: 0.0125 pips
    Today Daily change %: 0.06%
    Today Daily Open: 19.2577
Trends:
    Daily SMA20: 19.1247
    Daily SMA50: 19.4618
    Daily SMA100: 19.6086
    Daily SMA200: 19.4767
Levels:
    Previous Daily High: 19.4726
    Previous Daily Low: 19.2503
    Previous Weekly High: 19.1863
    Previous Weekly Low: 19.0168
    Previous Monthly High: 19.721
    Previous Monthly Low: 18.8767
    Daily Fibonacci 38.2%: 19.3352
    Daily Fibonacci 61.8%: 19.3877
    Daily Pivot Point S1: 19.1811
    Daily Pivot Point S2: 19.1045
    Daily Pivot Point S3: 18.9588
    Daily Pivot Point R1: 19.4035
    Daily Pivot Point R2: 19.5492
    Daily Pivot Point R3: 19.6258

 

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Stocks: A retrenchment of some of the recent gains seems likely – Charles Schwab

February 16, 2019 04:03   FXStreet   Market News  

The last Schwab Market Perspective report, points out that the sharp rebound in US equity prices since the Christmas Eve low has been a welcome development for the bulls, but they warn “the pendulum may have swung a bit too far”. 

Key Quotes: 

“Equity investors have been cheering the sharp rebound seen since the end of last year, with the S&P 500 up more than 16% since the Christmas Eve low. We don’t want to be buzzkills and we enjoy rallies as much as anybody; but just like you can eat too much cake with bad results, equity gains that come rapidly after sharp corrections can have consequences as well.”

“We believed that U.S. stocks had gotten to oversold levels and were likely pricing in too great a risk of a near-term recession—so a rebound was to be expected. But some of the declines seen toward the end of last year were justified in our minds as economic growth has been slowing, trade uncertainties remain, government dysfunction persists, and corporate sentiment is deteriorating.”

“We don’t believe we’ll revisit the lows seen late last year if a recession remains a 2020 story, but a retrenchment of some of the recent gains seems likely. If a recession looks to be developing this year—and if there is no trade deal and additional tariffs kick in—those market lows could be retested (and beyond).
 

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Eurozone: Next week data includes German Ifo and EZ PMI – Danske Bank

February 16, 2019 03:53   FXStreet   Market News  

Analysts at Danske Bank expect next week data to show a decline in the Eurozone PMI on the back of weak new orders and political risk. They will be looking to German Ifo figures for signs of a rebound.

Key Quotes: 

“In the euro area, we have a busy week ahead of us. On Thursday, the February flash PMIs are due out. In January, PMIs signalled that the euro area economy is edging closer to stagnation – (indicated by PMI level around 50) – with manufacturing PMI falling to a 50-month low at 50.5 while service PMI showed signs of stabilisation.”

“Falling new orders and the ongoing political disputes still point to some downside risk for the manufacturing index, which we therefore expect to fall to 50.2 in February while we see scope for a rebound in services PMI to 51.4 in light of strengthening domestic demand.”

“Friday brings the German Ifo figures and after the economy had a disappointing growth finish in 2018, we will keep an eye out for signs of a rebound in activity following the latest encouraging signs from Chinese leadings indicators and the German car sector.”

“The final euro area inflations figures for January are due. The preliminary print saw core inflation ticking up 0.1pp to 1.1%, driven by higher services prices. However, it will be interesting to see whether it is the start of a gradual, persistent uptick in core on the back of the Phillips curve dynamics finally playing out or merely driven by one-off factors and a methodological change in the calculation of German HICP.”
 

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Saudi discipline and demand stability a catalyst for crude outperformance – TDS

February 16, 2019 03:33   FXStreet   Market News  

“The OPEC+ cartel’s promised production cuts helped WTI and Brent crudes surge as much as 30 percent above their late-December lows,” note TD Securities analysts.

Key quotes

“But the upward momentum has been on the wane, as the robust demand growth expectations are being questioned, while lingering concerns that OPEC and Russia, motivated by the loss of market share, may be working on a plan for an exit strategy also arise.”

“To see prices further their upward trajectory toward our $60/bbl WTI and $70/bbl Brent targets, OPEC+ will need further supply cuts in the coming months and evidence of tightening markets in US inventories wil have to appear. After production in January was some 1.5m b/d lower than the October benchmark level, and with Saudi Arabia continuing to show commitment to the agreement by signaling an additional 400k b/d of cuts by March, OPEC appears to be doing their part, which makes us confident that prices will reach our targets.”

“Should additional OPEC cuts be maintained throughout the balance of 2019, US shale production momentum shift into lower gear, a trade deal between US-China be struck, and no renewal of waivers for Iran sanction be issued, then there is potential for both WTI and Brent to move $5-10/bbl above above our price targets.”

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Fed’s Daly: Good chance Fed won’t raise interest rates in 2019 – The Wall Street Journal

February 16, 2019 03:03   FXStreet   Market News  

In an interview with The Wall Street Journal, the new president of the Federal Reserve Bank of San Francisco, Mary Daly, argued that the Fed may not need to raise rates in 2019.

“If the economy evolves as I just said I expect it to – 2% growth, 1.9% inflation, no sense that [price pressures are] going up, no sense that we have any acceleration – then I think the case for a rate increase isn’t there this year,” Daly explained.

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GBP/JPY Technical Analysis: Sterling breaks above 142.00 figure against JPY

February 16, 2019 02:53   FXStreet   Market News  

GBP/JPY daily chart

  • GBP/JPY is trading between the 50 and 200-day simple moving averages (SMAs) suggesting a sideways market.

GBP/JPY 4-hour chart

  • GBP/JPY is trading between the 100 and 200 SMA on the 4-hour chart suggesting a sideways market in the medium-term.

GBP/JPY 30-minute chart

  • GBP/JPY is trading above its main SMAs suggesting bullish momentum.
  • The level to beat for bulls is 142.40. Resistances to the upside are seen near 142.80 and 143.30. 
  • Supports are seen, near 142.00 and 141.40 level.

Additional key levels

GBP/JPY

Overview:
    Today Last Price: 142.27
    Today Daily change: 89 pips
    Today Daily change %: 0.63%
    Today Daily Open: 141.38
Trends:
    Daily SMA20: 142.6
    Daily SMA50: 141.29
    Daily SMA100: 143.8
    Daily SMA200: 144.79
Levels:
    Previous Daily High: 143.04
    Previous Daily Low: 141.3
    Previous Weekly High: 144.18
    Previous Weekly Low: 141.12
    Previous Monthly High: 144.85
    Previous Monthly Low: 131.79
    Daily Fibonacci 38.2%: 141.96
    Daily Fibonacci 61.8%: 142.37
    Daily Pivot Point S1: 140.77
    Daily Pivot Point S2: 140.16
    Daily Pivot Point S3: 139.03
    Daily Pivot Point R1: 142.51
    Daily Pivot Point R2: 143.65
    Daily Pivot Point R3: 144.26

 

Full Article

US Week Ahead: China, PMI and FOMC minutes – Danske Bank

February 16, 2019 02:33   FXStreet   Market News  

Next week, the key reports in the US include the PMI, capital goods and existing home sales data and the FOMC minutes. Analysts from Danske Bank explain that US-China trade talks are set to continue with apparently more flexibility ahead. 

Key Quotes: 

“Markit PMIs for February (preliminary) are due out on Thursday. We still expect Markit manufacturing PMI to stabilise around the current level of 54.9. While the US is not immune to the global slowdown, expansionary fiscal policy is pulling in the other direction.”

“Thursday also brings capital goods data for December. New capital goods orders fell unexpectedly in November, which shows a slowdown in investments as the end of 2018. We expect investments to continue growing in 2019 but probably not at the same pace as in 2017 and 2018.”

“On Thursday, existing home sales numbers are due out. The housing market has begun to show some weakness, likely to driven by higher mortgage rates.”

“On Wednesday, FOMC meeting minutes are due out. We will be interested to hear the different stances within the Fed on further hikes now it has hinted it is ‘patient’ about raising rates again. Furthermore, we will monitor any insights it might have on how it plans the balance sheet reduction.”

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USD/CHF Technical Analysis: Swissy sidelined near 1.0060 level

February 16, 2019 02:03   FXStreet   Market News  

USD/CHF daily chart

  • USD/CHF is trading in a sideways trend above the 50, 100 and 200-day simple moving averages (SMAs).

USD/CHF 4-hour chart

  • USD/CHF is trading above its main SMAs suggesting bullish momentum in the medium-term.

USD/CHF 30-minute chart

  • USD/CHF is trading between the 100 and 200 SMA suggesting a sideways market, however, bears will most likely regain control in the coming sessions.
  • To the downside, support is seen at 1.0040 and 0.9990 levels. 
  • Resistance is at 1.0090 and 1.0120. 

Additional key levels

USD/CHF

Overview:
    Today Last Price: 1.0063
    Today Daily change: 10 pips
    Today Daily change %: 0.10%
    Today Daily Open: 1.0053
Trends:
    Daily SMA20: 0.9986
    Daily SMA50: 0.9924
    Daily SMA100: 0.9947
    Daily SMA200: 0.9909
Levels:
    Previous Daily High: 1.0099
    Previous Daily Low: 1.0044
    Previous Weekly High: 1.003
    Previous Weekly Low: 0.9943
    Previous Monthly High: 0.9996
    Previous Monthly Low: 0.9716
    Daily Fibonacci 38.2%: 1.0065
    Daily Fibonacci 61.8%: 1.0078
    Daily Pivot Point S1: 1.0032
    Daily Pivot Point S2: 1.001
    Daily Pivot Point S3: 0.9977
    Daily Pivot Point R1: 1.0087
    Daily Pivot Point R2: 1.012
    Daily Pivot Point R3: 1.0142

 

Full Article

US Industrial Production: Manufacturing under pressure – Wells Fargo

February 16, 2019 01:53   FXStreet   Market News  

Data released today showed that Industrial Production in January dropped 0.6% unexpectedly. Analysts at Wells Fargo explained that not only did industrial production declined, the already modest 0.3% gain in December. They added that in both months, the weakness was in manufacturing

Key quotes: 

“Manufacturing production fell 0.9% in January amid an 8.8% drop-off in motor vehicles. Broad declines were also evident in other categories.”

“Silver linings are tough to find in this report, although a separately-reported increase this morning in the NY Fed’s Empire Index for February offers hope for a near-term rebound.”

“With January temperatures close to normal, utilities production was up just 0.4% in January. The polar vortex rolled in at the very end of the month, but mostly occurred in February suggesting this category could be a big factor in next month’s report.”
 

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