EURUSD Nosedives Post ECB’s Bond Buying Rumor

The Euro was recovering against the US Dollar until it found sellers near 1.0680. There was an increase in the bearish pressure on the economic front as well, as there was a speculation that the ECB may broaden their bond buying programme.  It ignited a downside reaction in the EURUSD pair and took it lower sharply.

There were some other economic releases in the Euro Zone that affected the trend in EURUSD. Some of them include, Italian Retail Sales, Italian Industrial orders and sales, and France consumer confidence. The outcomes were mixed due to which the EURUSD pair failed to recover the ground and traded lower. The pair even breached the 1.0600 support area and created a new weekly low.

Italian Retail Sales

The Italian Retail Sales, which is a measure of changes in sales of the Italian retail sector was released by the National Institute of Statistics. The forecast was slated for an increase of 0.5% in sales in September 2015, compared with the preceding month. However, the outcome was very disappointing, as there was a decrease in the sales by 0.1%. The only relief was the fact that the yearly change in the sales came in at 1.5% in September 2015 just as the market expected.

The report also stated that “average of the last three months compared to the previous three months increased by 0.2%”. Overall, the monthly change was disappointing, and sellers saw it as an opportunity to take the EURUSD pair.

EURUSD Nosedives Post ECB’s Bond Buying Rumor
EURUSD Nosedives Post ECB’s Bond Buying Rumor

In France, the Consumer Confidence Index, which measures the moods of the consumers, through an analysis of a sample of houses was released by INSEE. The market was expecting a decline from 96 to 95 in November 2015. However, the result was positive, as there was no decline in the index and it remained at 96.

Technically, the EURUSD pair is under a lot of bearish pressure. The pair had an important support at 1.0600, which was breached. The next level on the downside to keep an eye on is 1.0540. On the upside, the 1.0600-20 resistance area may act as a hurdle for buyers in the near term. Only a daily close above 1.0620 may reduce the amount of bearish pressure on the pair. 

Flurry of Economic Releases Lift EUR/USD

The Euro was decimated recently against the US Dollar. The main reason of the decline in the EURUSD pair was the fed interest rate decision. The fed rate decision impacted the market sentiment, as the statement was more towards the hawkish side, lifting the greenback against most major currencies.

The EURUSD pair fell sharply after the event and traded close to the 1.0900 area. Today, there were a few economic releases lined up in the Euro Zone, which managed to lift the market sentiment to some extent. The major ones include, German employment report, Euro Zone consumer confidence and the sentiment indicator. The reports were more towards the neutral side and not on the negative side, which helped the EURUSD pair to gain some ground.

German Unemployment

Earlier during the London session, the German Unemployment Rate and change report, which shows, in a percent basis, the amount of unemployed people in Germany was published by the German Statistics Office. The German Unemployment rate was expected to remain stable at 6.4% in September 2015. The outcome was in line with the forecast, as there was no change from 6.4%.

Flurry of Economic Releases Lift EUR/USD
Flurry of Economic Releases Lift EUR/USD

Speaking of the German Unemployment Change which represents a measure of the absolute change in the number of unemployed people in Germany using seasonally adjusted data posted a reading of -5K as forecasted for September 2015.

The report highlighted that “Compared with the same month a year earlier, the number of persons in employment increased by 381,000 or 0.9%. This was the highest rate of growth recorded this year. Roughly 1.8 million people were unemployed in September 2015, 223,000 fewer than a year earlier“.

Overall, the data was in line with the forecast, which came as a relief for the Euro buyers. There was a minor correction noticed in the EURUSD pair.

Technically, the EURUSD pair after trading close to the 1.0900 support area managed to gather bids. The pair is currently trading higher and attempting to recover from the fed losses.  The pair has currently managed to settle above the 1.0950 resistance area and looks like heading towards 1.10. On the upside, the most important resistance lies around 1.1020-40, and on the downside 1.0900 holds the key in the near term.

British Pound Dives Post UK Retail Sales

The British pound traded close to 1.5700 against the US dollar on many occasions, and failed to move above it. There was a major risk that the GBPUSD pair might crash down due to the failed attempts to clear the stated level. Today, there was a major release, as the UK retail sales data was published. It missed the market’s expectation, which ignited a nasty downside reaction. Almost all British Pound pairs crashed and traded lower after the release. There is a chance that the GBPUSD pair might continue to weaken moving ahead.

UK Retail Sales

Earlier during the London session, there was an important economic release scheduled in the UK. The Retail Sales, which calculates the total receipts of retail stores was released by the National Statistics. The market was excepting a gain of 0.4% in the retail sales in July 2015, compared to the preceding month. However, the outcome was lower compared with the forecast, as it increased by 0.1% in July 2015.

Looking at the year-over-year change, then the UK Retail Sales climbed by 4.2% in July 2015, compared with July 2014. This was also on the lower side, as the market was expecting an increase of 4.4%. The UK Core Retail Sales outcome was in line with the forecast. The market was expecting a rise of 0.4% in July 2015, compared to the preceding month, and the result matched the forecast. In terms of the yearly change, the UK Core Retail Sales increased 4.3% in July 2015, compared with July 2014, which was once again in line with the forecast.

British Pound Dives Post UK Retail Sales
British Pound Dives Post UK Retail Sales

The report also stated that “Compared with June 2015, the quantity bought in the retail industry is estimated to have increased by 0.1%. Increases were reported by department stores, other stores, household goods stores and non-store retailing offset by falls in predominantly food stores, textile, clothing and footwear stores and petrol stations”

Technically, the GBPUSD pair is under a lot of bearish pressure, and as long as the pair is below the 1.5700 resistance area it remains at a risk of more declines. However, at the same time we cannot deny the fact that there is a major support area around 1.5600 where buyers might defend the downside in the near term.

EURUSD Slides as German IP Misses Forecast

The Euro continued to stay under pressure, as sellers were active due to tensions in Greece. The recent releases in the US were on the positive side, and on the other hand, the Euro Zone economic data was short of expectation. The Euro continued to slowly grind lower, and traded to a new weekly low today. The EURUSD pair breached the 1.1000 support area to clear the way for more losses in the near term. There was a critical release in the Euro Zone today, as the German Industrial Production report was released, which missed the mark and came below the market expectation.

German Industrial Production

Earlier during the London session, the German Industrial Production data, representing outputs of the German factories and mines was released by the Statistisches Bundesamt Deutschland. The forecast was lined up for a 0.1% rise in May 2015, compared to the preceding month. However, the outcome was lower compared with the expectation, as there was no change in the German Industrial Production. Moreover, the previous reading was revised down from 0.9% to 0.6%. 

When looking at the sector wise, then production in industry excluding energy and construction was higher by 0.4%. The production of capital goods rose 0.4%, and consumer goods by 1.3%. On the other, there were decreases in production from intermediate goods, energy by 0.2% and 3.1% respectively.

EURUSD Slides as German IP Misses Forecast
EURUSD Slides as German IP Misses Forecast

When we consider the yearly change, there was an increase of 2.1% in the German Industrial Production in May 2015, compared with the same month a year ago. There was a revision for the last reading as well, as it was brought down from 1.4% to 1.1%. Overall, the data was disappointing, and ignited a downside reaction in the EURUSD pair.

Technically, the EURUSD traded lower intraday, as Greece fears continued to play on the mind of investors. The pair broken a major support of 1.1000 and traded towards 1.0960. No doubt, the bearish pressure is immense on the shared currency, and as long as there is a fear more losses are possible. On the downside, the next level of interest might be around 1.0910, followed by 1.0850. On the upside, the most important resistance is at 1.1120-40 where buyers struggled time and again.

EURUSD – More Declines Likely as Sellers Gain Control

The Euro weakened a lot against the US Dollar, as the greenback climbed a lot recently against most major currencies. Earlier, the EURUSD pair was completely rejected around the 1.1200 area, which ignited a downtrend, which is likely to continue in the near term. The pair even settled below the 1.0900 area, which was a major pivot zone. The economic releases in the Euro Zone also failed to help the shared currency, as buyers struggled a lot to hold the ground.

German GFK Consumer Confidence

Earlier during the London session, there was a major release in Euro Area, as the German GfK Consumer Confidence, which is a leading index that measures the level of consumer confidence in economic activity was released. The forecast was lined up for a minor decline from the last reading of 10.1 to 10.0 in June 2015. However, the outcome was a positive one, as the German GfK Consumer Confidence climbed by 0.1 points to 10.2.

EURUSD – More Declines Likely as Sellers Gain Control
EURUSD – More Declines Likely as Sellers Gain Control

 

This was certainly a boost for the Euro buyers. The EURUSD downside was stalled, but there was no major upside move. The report stated that “very robust domestic demand in Germany and low inflation rates have caused economic expectations and willingness to buy to further improve again“.

There was one more positive to note from the report, as the German economic expectations of consumers also increased by 3 points to rise to 38.3 points. On the other, there was a decline noted in income expectations, as it fell by 3.1 points and now stands at 52.0 points.

There was one more release today in the Euro Area, as the French Consumer Confidence was published. It posted a decline from 94 to 93 whereas the market was expecting it to rise to 95 in May 2015.

Technically, the EURUSD pair is at a major risk of more downsides in the near term. Currently, it is trading around 1.0860, and if sellers manage to take it lower, then the next level of interest would be around 1.0810. Any further losses might take the EURUSD pair towards 1.0760. On the upside, the broken support of 1.0900 could act as a barrier for the pair moving ahead. A break above might negate the bearish view for EURUSD.

Euro under Pressure As Sellers Remain In Control

The Euro continued to trade in a broad range against the US dollar, but the momentum is mostly down. Earlier this week, the EURUSD pair managed to climb higher to test the 1.10 resistance area where sellers successfully defended the upside. The pair is now back to the bottom of the range and trading around the 1.0750-20 support area. The recent FOMC meeting minutes increased the bearish pressure and puts the pair at risk of more declines in the near term. There were a couple of release in the Euro zone recently, which affected the pair as well.

Today, during the London session, the German Trade Balance, which is a balance between exports and imports of total goods and services was released by the Statistisches Bundesamt Deutschland. The forecast was lined up for a trade surplus of €20.0B in February 2015, compared to the preceding month. However, the outcome missed the mark, as the German Trade Balance managed to post a trade surplus of €19.7B in February 2015. There was a revision for the last reading as well, which was pulled down from €19.7B to €19.6B.  The report stated that the Germany exported goods to the value of 95.7 billion euros, which was 1.5% higher compared to the last month. Moreover, the German imported goods was up by 1.8% in February 2015 to the value of 76.5 billion euros.

Euro under Pressure As Sellers Remain In Control
Euro under Pressure As Sellers Remain In Control

The report added that the UK service sector was seen gaining pace and expanded at a marked pace during February. This was a positive note, as there was a major rise in volumes of incoming new business. There was one more important point to note that the expansion was one of the second fastest in the survey history. This solid increase was mainly due the contribution from the rise in new business amid evidence of a strength in overall economic conditions.

In additions to this, the UK service providers also rose their own average output charges compared to January 2015. This means that prices increased for three months in a row.

Euro Area Retail Sales

In the Euro area, the Retail Sales report representing changes in sales of the Euro zone retail sector was released by the Eurostat. The forecast was slated for no change in the retail sales. However, the outcome was a positive one, as it posted an increase of 1.1% in January 2015, compared to the preceding month. In terms of the yearly change, the Euro area retail sales gained by 3.7%, which was more than the expectation of 1.9%.

Technically, the GBPUSD pair fell sharply lower and traded below the 1.5350 level, which was a breach of an important support area. The next area of interest could be seen around the 1.5320 level where buyers might take a stand. On the upside, the 1.5400 level might act as a resistance in the short term.

 

GBPUSD Nosedives As Services PMI Misses Forecast

The British pound was seen trading lower this week, as the GBPUSD pair gained momentum towards the downside. There was immense pressure on the GBPUSD buyers, and it was a win-win situation for sellers in the short term. There were a couple of releases lined up in the UK this week, which were around the expectation, but failed to impress the investors. 

There was a major release lined up in the UK today, as the PMI service was released by both the Chartered Institute of Purchasing & Supply and the Markit Economics. The forecast was lined up for an increase from the last reading of 57.2 to 57.5. However, the outcome was on the lower side, as the UK services PMI came in at 56.7 in February 2015.

GBPUSD Nosedives As Services PMI Misses Forecast

The report added that the UK service sector was seen gaining pace and expanded at a marked pace during February. This was a positive note, as there was a major rise in volumes of incoming new business. There was one more important point to note that the expansion was one of the second fastest in the survey history. This solid increase was mainly due the contribution from the rise in new business amid evidence of a strength in overall economic conditions.

In additions to this, the UK service providers also rose their own average output charges compared to January 2015. This means that prices increased for three months in a row.

Euro Area Retail Sales

In the Euro area, the Retail Sales report representing changes in sales of the Euro zone retail sector was released by the Eurostat. The forecast was slated for no change in the retail sales. However, the outcome was a positive one, as it posted an increase of 1.1% in January 2015, compared to the preceding month. In terms of the yearly change, the Euro area retail sales gained by 3.7%, which was more than the expectation of 1.9%.

Technically, the GBPUSD pair fell sharply lower and traded below the 1.5350 level, which was a breach of an important support area. The next area of interest could be seen around the 1.5320 level where buyers might take a stand. On the upside, the 1.5400 level might act as a resistance in the short term.

Euro Looks Nervous And Set For More Losses

The Euro was seen trading lower recently against the US dollar and there were many reasons for the decline. One of the main reasons was impressive jobs report in the US. The EURUSD is now trading around the 1.1300 support area where buyers are fighting really hard to protect the downside. There were a couple of economic releases lined up today in the Euro zone, including the German trade balance data, which was released by the Statistisches Bundesamt Deutschland.

Euro Looks Nervous And Set For More Losses
Euro Looks Nervous And Set For More Losses

The forecast was slated for a trade surplus of €18.3B in December 2014, compared to a month ago on the seasonally adjusted basis. However, the outcome was on the positive side with trade surplus registering a value of €21.8B, and exceeded the previous peak of €195.3B achieved in 2007. Moreover, the last reading was also revised up from €17.7B to €17.9B. The report mentioned that Germany exported goods to the value of €1,133.6 billion, and imported goods value stood at €916.5 billion. In short, the exports climbed by 3.4% on November 2014 and imports dived by 0.8%. This was also impressive, but failed to lift the Euro in the near term.

Euro Area Sentix Investor Confidence

There was one more release lined up, as the Euro area Sentix Investor Confidence, which represents the market opinion about the current economic situation and the expectations for the next semester was released by the Sentix GmbH. The market was the index to rise from the previous reading of 0.9 to 3.0 in February 2015. However, the outcome was on the positive side with the Euro area Sentix Investor Confidence registering a reading of 12.4. The report mentioned that the 6-month expectations surged to its highest reading since February 2006.

There was one more low risk event as the Greece Industrial Production report released by the National Statistics Service. The outcome was disappointing, as it registered a decline of 3.8% in December 2014, compared with the same month of the last year.

Technically, the EURUSD pair weakened during the London session and tested the 1.1300 support area. It would be interesting to see whether the pair can break the mentioned area or not, as any further losses might take it towards the 1.1250 swing area. On the upside, the 1.1340-50 level might continue to act as a resistance for the pair.

 

US Dollar A Clear Winner As Euro And Cable Struggles

The US dollar seems to be unstoppable at the moment as other major counterparts failed to gain buyers in the near term. There was hardly any major release in the US recently, but releases in the Euro area and the UK failed to match with the expectation. A few recent released were German wholesale price index and the UK consumer price index. Both the outcomes failed to impress buyers, and instead ignited a downside reaction in the EURUSD and GBPUSD pairs. The US dollar is also performing well against the Aussie dollar as the economic releases in the Australia such as the home sales report came as a disappointment.

Today during the London session, there was an important release lined up in the UK. The Consumer Price Index was released by the National Statistics. The forecast was slated for an increase of 0.7% in the year to December 2014, compared to the last time gain of 1%. However, the report was not that good, as the UK CPI rose by 0.5% missing the mark by a fair margin. Furthermore, when we consider the monthly change, then the UK CPI remained flat at 0% in December 2014, compared with the preceding month. Moreover, the Core CPI registered a rise of 1.3% in December 2014, compared with the last year. This was also on the lower side as the market was expecting an increase of 1.4%. Furthermore, the report added that the Producer Price Index – Output also declined in December 2014 by 0.8%. The British pound was seen trading lower after the release.

US Dollar A Clear Winner As Euro And Cable Struggles
US Dollar A Clear Winner As Euro And Cable Struggles

UK Retail Price Index

The UK Retail Price Index was also released around the same time, which registered an increase of 0.2% in December 2014, compared with the preceding month. The year-over-year change stayed at 1.6% as expected by the market.

Technically, the GBPUSD pair looks like stuck in a range. However, we cannot deny the fact that there is a monster resistance around the 1.5200 area which has stalled the upside in the pair time and again. On the downside, the 1.5100-1.5080 area is acting as a support for the pair and we need to see how long the pair can continue to hold the same. A break below the mentioned support might take the pair towards the 1.5020 support area.

Dollar Retreats Post Poor NY Empire State Manufacturing Index

The US dollar surged higher against a few major currencies recently, including the Euro and the British pound. The British pound was the worst performer as it dived more than 80 pips from the Intraday high and traded below the 1.5650 support. Although, there was a relief for the US dollar sellers as there were a couple of economic releases lined up. The first one was the NY Empire State Manufacturing Survey conducted by the Federal Reserve Bank of New York. The forecast was slated for a rise this time from the previous reading of 10.16 to 12.52 in December 2014. However, the outcome was on the negative side, as the NY Empire State Manufacturing Survey index fell below the 0 level and came in at -3.58. This was the first negative reading in nearly two years.

Dollar Retreats Post Poor NY Empire State Manufacturing Index
Dollar Retreats Post Poor NY Empire State Manufacturing Index

The report mentioned that the new order’s index declined into negative territory, and registered an 11 point decline to -2.0. Moreover, the shipment’s index fell to -0.2. This was very discouraging and might weigh on the US dollar in the near term. The only relief was in the Labor market conditions. The report mentioned that the index for number of employees was steady around the 8.3 level. There was a minor increase in input prices and advanced six points to 6.3 in December.

US Industrial Production

The US Industrial Production was released by the Board of Governors of the Federal Reserve. The forecast was slated for a gain of 0.6% in November 2014, compared with the preceding month decrease of 0.1%. The outcome was way above the expectation as the US Industrial Production increased by 1.3%. Moreover, the last reading was revised up from -0.1% to 0.1%.

Technically, the USDCHF pair traded higher at the initial stage of the week. However, later the USDCHF pair came under bearish pressure and fell to 0.9650 level. The downside was very limited as the US dollar still remains the first choice of investors in the current market conditions. However, there is a strong resistance forming around the 0.9680-0.9700 area, which might continue to act as a resistance for the pair in the near term. A break above the same could take the pair towards the 0.9750 swing area where the US dollar sellers might appear again. On the downside, a break of the 0.9650 area is needed for more losses.

 

Euro Jumps post German IFO Business Climate Index

The Euro opened this week on the negative note, as it was seen trading lower against the US dollar. However, things changed a bit when the German IFO business climate index was released earlier during the London session. The market was expecting it to rise from the previous reading of 103.2 to 103.4. However, the outcome was a touch better as the German IFO business climate index jumped by more than 1 point to 104.7. The best part is that the IFO business climate index fell for six times in a row, so this rise came as a relief for the Euro buyers. The EURUSD pair also reacted in a positive way after the release.

Euro Jumps post German IFO Business Climate Index
Euro Jumps post German IFO Business Climate Index

There were some other parameters as well, including the German IFO current assessments and expectations. Overall, the outcome was on the encouraging side, as both registered a rise in November 2014. The German IFO current assessments climbed from the previous reading of 108.4 to 110.0. The report mentioned that manufacturers are more satisfied with their current business situation. Similarly, the German IFO expectations rose from 98.3 to 99.7. So, the end result was positive, which helped the EURUSD pair to recover the lost ground. The pair opened this week with a gap lower and later managed to close the gap. However, this does not mean that the downside pressure is removed from the pair, as it is still trading in the bearish zone and any correction can be an opportunity to sell the Euro.

German GDP

There is an important release lined up during the coming sessions, as the German Gross Domestic Product will be released by the Statistisches Bundesamt Deutschland. The market is expecting it to rise by 0.1% this time, compared with the last time decline of 0.1%. We need to see how the outcome shapes out and affects the shared currency moving ahead.

Technically, the EURUSD might continue to remain sell rallies unless we see some solid bullish signs on the higher timeframes such as the weekly. On the upside, the most important resistance is around the 1.2580 area, which is likely to act as a pivot for the pair. As long as the pair is trading below the same it might continue heading lower. On the downside, the 1.2350 level is where the Euro sellers might struggle. Let us see how the pair trades in the near term.

 

 

 

US ADP Employment Change Impresses Again; Dollar Higher

There is no stopping the US dollar as it continued to move higher against almost all major currencies, including the Euro, British pound and the Swiss franc. The worst performer against the US dollar was the Japanese yen, which traded above the 114.50 level today. The main reason for the US dollar rise was recent economic releases. The US ADP Employment Change was released by the Automatic Data Processing, Inc. earlier during the NY session. The market was expecting the US ADP Employment Change to register an increase of 220K, up from the last time gain of 213K.

US ADP Employment Change Impresses Again; Dollar Higher
US ADP Employment Change Impresses Again; Dollar Higher

However, the outcome was very positive as the US Private-sector employment increased by 230K from September to October 2014. Moreover, there was a revision in the September’s reading as well, which was revised up 213K to 225K. So, there was an overall gain of 17K. This was definitely positive for the US dollar. The US dollar was seen trading higher after the release as expected. There was an acknowledgement from the president and chief executive officer of ADP Carlos Rodriguez, as he mentioned in the report that “Employment continues to trend upward as we begin the last quarter of 2014, driven mostly by small to mid-sized companies. October’s job growth is the highest since June and the second highest gain of 2014”. This matches the view of the fed, as they recently closed their QE program.

UK Services PMI

 

Earlier during the London session the UK Services Purchasing Managers Index (PMI) which was by both the Chartered Institute of Purchasing & Supply and the Markit Economics. The market was expecting a decline in the UK services PMI from the last reading of 58.7 to 58.5. However, the outcome was a touch lower with a reading of 56.2. There was an important point to note from the report, which highlighted the fact that this was the slowest rate in the last seventeen months amid reports of some market uncertainty creeping into client decision-making. The British pound buyers somehow did not like the outcome as the GBPUSD pair was seen trading lower. The pair traded to a new low of 1.5867 where it managed to find buyers.

Technically, the GBPUSD pair has a major support around the 1.5860-50 levels, which might continue to act as a support. On the upside, the 1.5950 level might act as a resistance moving ah

No Relief for Swiss Franc Post Inflation Report

The Swiss Franc was one of the biggest losers against the US dollar, as it continued to decline and traded towards the 0.9680 level during this past week. The USDCHF pair managed to correct lower yesterday, but any hope of further strength in the Swiss franc was diminished post economic releases. There were a few important economic releases lined up during the London session, including the Swiss inflation and retail sales data. The first in the line was the Swiss Consumer Price Index, which was released by the Swiss Federal Statistical Office.

The market was expecting the Swiss CPI to register an increase of 0.2% in September 2014, compared to the previous month. However, the outcome was a touch lower, as the Swiss CPI rose only 0.1%. In terms of yearly change, the Swiss CPI was even worse as it registered a decline of 0.1%, compared with the same month in the previous year. This was on the disappointing side, and the impact on the Swiss franc was obvious, as it traded lower. The surprise part as the EURCHF pair, which traded lower and marked resiliency of the Swiss franc.

Swiss Retail Sales

There was one more important release lined up during the London session i.e. the Swiss retail sales data was published by the Swiss Federal Statistical Office. The market was expecting the Swiss retail sales to register a gain of 0.7% in August, compared with the same month in the previous year. However, the outcome was very positive, as the Swiss retail sector grew by 1.9%. One more important point to note was that the previous reading was also revised up from -0.6% to -0.3%. The report published added that the real and nominal the retail sector rose by 2.3% in August 2014 compared with July 2014 when we consider seasonally adjusted data.

No Relief for Swiss Franc Post Inflation Report
No Relief for Swiss Franc Post Inflation Report

In terms of monthly change, it registered an increase of 2.4% in August 2014, compared with July 2014 in nominal terms. The non-food sector showed positive growth of 3.0%, according to the report.

The USDCHF pair was seen trading higher after the release. There is an important support around the 0.9580-70 area. However, the pair is trading around overbought readings on the higher timeframe, and that is the reason that there is a chance of one more low in the coming sessions. On the upside, 0.8640 is a hurdle for buyers.

Dollar Surges as US CPI Increased 0.1 percent

The US dollar is trading higher against most of its counterparts, including the Euro, the British pound and the Swiss franc. One of the main reasons for the rise is the US Consumer Price Index which was released by the US Bureau of Labor Statistics earlier during the New York session. The market was expecting all items CPI index to be around 2% over the last 12 months. The outcome was in line with the expectations, as the US CPI year-over-year increased 2% before seasonal adjustment. Moreover, in terms of monthly change (MoM), the US CPI increased by 0.1 percent in July, which is down from 0.3% in June.

 

Dollar Surges as US CPI Increased 0.1 percent
Dollar Surges as US CPI Increased 0.1 percent

Moreover, the US consumer price index for all items less food and energy registered an increase of 0.1% in July, which was below the expectation of 0.2%. However, over the last 12 months the US core CPI jumped by 1.9%, which was in line with the market expectation. The highlight of the release was the food index, which climbed by 0.4% in July, which is the fifth increase at least that large in the last 6 months, according to the report published.

Positive US housing Starts

The US Housing Starts data was also released by the US Census Bureau, at the Department of Commerce around the same time. The forecast was an increase of 8.3%. However, the outcome was way above the expectation, as the US Housing Starts rose by 15.7%. Moreover, the previous reading was also revised up from -9.3% to -4.0%. So, overall the economic data was on the positive side of the US dollar. The pairs such as the EURUSD and GBPUSD traded lower after the release.

Technically, the EURUSD pair traded below the 1.3332 support level, which was the previous low. So, this particular break can be considered as very critical, as there is a chance of a further downside acceleration towards the 1.3280 support area. However, just before the mentioned level lies a physiological support level i.e. the 1.3300 level. It would be very interesting to see how the Euro buyers react around the 1.3300-1.3280 support area, as the stated area holds a lot of importance in the near term. A daily close below the same might ignite more losses in the EURUSD pair moving ahead towards the 1.3200 level.

Euro: Lower Inflation Likely To Fuel More Downside

Today, an important economic release was scheduled during the London session. The Euro zone consumer price index (CPI) was released by the Eurostat. The forecast was of no change in the CPI from the previous reading of 0.5%. The outcome was a bit on the lower side, as the Euro zone annual inflation is expected to be 0.4% in July 2014, down from 0.5% in June. This was just below the market’s expectation, but somehow in the line with the European central bank’s expectation. Probably, that was the reason that the Euro managed to retain ground. One more thing which protected the downside in the pair was the oversold readings on all major timeframes for the EURUSD pair.

The report mentioned that the service sector is expected to register its highest annual rate i.e. 1.3% in July. All non-energy industrial goods inflation rate is expected to remain flat in July. Food, alcohol & tobacco annual rate is expected to fall by 0.3%, followed by the energy with a decline of 1%. Moreover, the Italian CPI was also released. The report stated that the Italian CPI fell by 0.1% compared with the previous month and rose by 0.1%. This again was on the disappointing side.

Euro: Lower Inflation Likely To Fuel More Downside
Euro: Lower Inflation Likely To Fuel More Downside

German Employment Data

However, not all was on the negative side, as the German employment data which was released by the German Statistics Office exceeded the expectation. The highlight was that the number of persons in employment increased by 12K, which was above the forecast of 5K. The unemployment rate remained at 6.7% in June 2014. So, there was something to cheer for the Euro bulls. Moreover, the Italian unemployment rate fell to 12.3% from 12.6%, which was again on the positive side.

Technically, the EURUSD pair approaching towards yesterday low as of writing. It would be very interesting to see how the pair reacts around the 1.3360-50 support area. The mentioned area holds a lot of importance in the short term, as a break of the same might open the doors for a downside acceleration towards the 1.3310 support level. Alternatively, if the Euro buyers manage to hold the pair, then a move back towards the 1.3420 level is possible. There are a lot of support levels on the way down for the pair, so the chance of pair gaining bids is more moving ahead.

Higher Inflation Likely To Put More Pressure On BOE

Earlier during the London session, the UK Consumer Price Index was released by the National Statistics. The forecast was of a 1.6% rise in the CPI in the year to June 2014. However, the outcome surprised the investors and market, as the UK CPI registered a rise of 1.9% in June, up from 1.5% in May 2014. This can be seen on the positive sign, as the CPI inches closer to the Bank of England’s target of 2%. Moreover, the Core Consumer Price Index was expected to be around 1.7%, which also climbed and registered a rise of 2%. These higher than expected inflation numbers boosted the British pound against most of its major counterparts, including the US dollar and the Euro.

 

Higher Inflation Likely To Put More Pressure On BOE
Higher Inflation Likely To Put More Pressure On BOE

 

One of the most important points to note from the report was that this is only the second time since June 2013 that the inflation rate has risen compared with the previous month. Moreover, the recent rise is one of the largest increases between two months. The last time the UK inflation rose this much was between September and October 2012, when it climbed from 2.2% to 2.7%. The largest upward contributions came from clothing & footwear, which rose by 0.6% between May and June this year, and transport prices also rose by 0.6%. The next in line was the furniture, household equipment & maintenance, which rose by 0.2%.

Carney’s Testimony

The Bank of England Governor Mark Carney testified today before the British Parliament. He insisted again that the rise in the interest rate would largely depend on the incoming data. However, the fact remains that the incoming data is continuing to impress, which puts a lot of pressure on the central bank to deliver. He added that the forward guidance on the interest rates will be over the medium term, and it would be hard to comment on the timing of the first rate rise.

Technically, the British pound after falling close to the 1.7050 level against the US dollar found buyers and post the inflation data release, the GBPUSD pair climbed above the 1.7140 level to challenge the 1.7170 high. The pair looks set for a break above the recent high and challenge the 1.7200 level where sellers might reappear. However, any sustained downside in the pair looks difficult considering the current market sentiment.

 

Awful US GDP Gives Sellers A Reason To Cheer

Disappointing Numbers Behind US GDP Gives Chance

Yesterday during the New York session, there were few key economic releases scheduled in the US, including the GDP figures, durable goods orders data and services PMI. First in the line was the US Gross Domestic Product (GDP) which was released by the US Bureau of Economic Analysis. The forecast was slated for a 1.7% decline in the output of goods and services produced by labor and property in the US. However, the outcome was very disappointing, as the US GDP registered a massive decline of 2.9% in the first quarter of 2014. This was not at all expected by the economists and investors. As a result, the US dollar was immediately seen trading lower against most of its counterparts, including the Euro, the British pound and the Japanese yen.

The report pointed out that the negative contributors in the US GDP were mainly private inventory investment, exports and local government spending. The US export sector declined in first-quarter by 8.9%, compared to 6% previously. It is important to note that this is one of the worst paces in the last four years. This will obstruct the hopes of recovery moving ahead, and will make the investors think one more time.

The US durable goods orders data was also released at the same time by the US Census Bureau. The market was expecting new orders for manufactured durable goods to remain stable in May at 0%. However, the outcome was again softer-than-expected, as the US durable goods orders decreased by 1% to $238.0 billion. According to the report, this was the first decrease in the last four months. This added further pressure on the US dollar, as sellers saw this as an opportunity to take the dollar down.

 

US Services PMI

Awful US GDP Gives Sellers A Reason To Cheer
Awful US GDP Gives Sellers A Reason To Cheer
 

Later, the US Services Purchasing Managers Index (PMI) was released by Markit Economics. The market was expecting a minor 0.5 point rise in the US services PMI from 58.1 to 58.6. The outcome was on the positive side, as the US services PMI jumped to 61.2. This is the best reading since October 2009. This helped the US dollar to pause any further decline against the Euro and the British pound.

Overall, the US GDP did not bring any good news for the investors and might weigh on the greenback in the medium term. The EURUSD and GBPUSD pair could gain in the coming days if the greenback continues to struggle.

Euro Zone Inflation Data Fails To Impress The Market

Market not Impressed with CPI Data

Today during the London session, the Euro zone Consumer Price Index (CPI) data was released by Eurostat. The forecast was slated for a decline in the inflation from the 0.7% to 0.5%. The report confirmed the forecast, as the Euro area annual inflation fell to 0.5% in May 2014, down by 0.2% in April. The core Consumer Price Index remained unchanged in May 2014 at 0.7%. Moreover, the monthly inflation was -0.1% in May 2014. The outcome was broadly in line with the expectations. However, there was a hope for a relief, which was set aside. Furthermore, the European Union annual inflation was 0.6% in May 2014, down from 0.8% in April.

The biggest contributor to the slide in the inflation was observed in Greece, which registered a reading of -2.1%, followed by the Bulgaria with a rate of -1.8%.  The highest rise in the inflation was registered in Austria with a jump of 1.5%, followed by the Luxemburg with a rise of 1.4%.

 

Euro Zone Inflation Data Fails To Impress The Market
Euro Zone Inflation Data Fails To Impress The Market

ECB’s Fear Of Deflation

The Euro zone inflation remains a concern for the European central bank, as the fear of deflation increases. It is important to note that the central bank recently decreased the key interest rates from 0.25% to 0.15% in an attempt to fight the sliding inflation. The central bank also mentioned that they would use all available tools to fight deflation in the months to come if required. The recent inflation data release might relieve some pressure from the ECB, as the CPI managed to stay away from a major slide. However, the market might not be impressed by the outcome, as it did not encourage the Euro buyers in the short term.

Technically, the Euro was seen trading a touch higher against a few of its counterparts. It is important to note that the Euro has been trading a lot lower against the currencies like the US dollar and the British pound. So, the chances of a correction or retracement increases in the medium term. Both the EURUSD and EURGBP pairs are trading around critical support areas. One of the biggest looser is the EURGBP pair, which has been hit hard by the slide in the Euro and rise in the British pound. The pair broke the 0.80 support level during this past week, and now struggling to find a meaningful support level. Let’s wait and see whether the Euro can manage to recover some ground or not in the near term.  

Prepare For a New Surge in Gold Prices on 2014

2013 has been a rather bad year for gold prices, with the precious metal losing $200 in April alone, following a suspicious dip. Even though a correction occurred soon after, overall, gold is trading at less than $1300 per ounce, almost $500 short of the values of 2012. After the optimists were proven wrong by the market and those who expected gold to surge above $2000 this year were disappointed, there are finally some good reasons to be confident in a new gold prices surge next year.

Potential Gold Drivers For 2014

Mining companies are trying to increase their output but just as some people fear that the so-called “peak oil” has been hit, there are some who worry that gold miners are becoming unprofitable. The truth is that if the gold price stays below $1250 for too long, mining companies can no longer afford to extract the precious metal. As a result, many of them will go bust and as they close down some of their operations, it is only fair to expect that demand will surpass the offer in 2014.

Speaking of which, the Chinese are purchasing gold at the same accelerated pace they did one year ago and it is most unlikely for the communist government to change its attitude in 2014. The bottom line is that with China being one of the biggest gold buyer in the world, the demand for the precious metal will remain the same while mining companies would have a hard time to provide. The Chinese are purchasing gold companies at a frantic pace and as they lose confidence in fiat currency, they will be willing to buy gold even if the prices spike.

Japan and India to Play a Big Part

When trying to determine whether gold prices will surge in 2014, analysts instinctively look at the current major buyers but tend to overlook potential customers. India for instance is purchasing much more gold than it did one year ago and even though the amounts are yet to reach the same levels as those recorded in China, this is a change to take seriously. The import tax on gold is higher than anywhere else, but the Indians are undeterred by the obstacle and purchase gold whenever they can lay their hands on it.

The fiscal policy in Japan has changed dramatically since Shinzo Abe became prime minister and inflation has crossed the 2% threshold. With Bank of Japan planning on printing more currency, the elderly citizens are concerned about the prospect of seeing their reserves losing their worth. Private and government pensions are at the highest levels ever and many of the retirees regard gold as a smart hedge against inflation.

Apple Ventures into Uncharted Territory

Apple share prices are finally rising but the company’s gamble to release a cheaper version of the iPhone could backfire and send the stock tumbling down.

Apple likes to be associated with innovation, but over the last couple of years the company failed to provide its loyal customers with something truly revolutionary. As they’re trying to come up with something new and offset the recent losses in terms of stock price, they’ve made a surprising statement. It’s very likely that in a not so distant future, Apple will release a new smart phone that will go by the name of iPhone 5C. It is anyone’s guess what the C in the name stands for, with the company claiming that it is the initial of “color” while others speculate that it has more to do with its price.

Stock Heading To $500 per Share

One year ago, the most optimistic forecasts said that the stock price could surge above $1000 per share by the end of December and they were proven wrong big time. Now shareholders would be thrilled to see the prices climbing above $500 and given the recent surge, this prognosis is not far-fetched. Apple is now valued at $468, for the first time since February but it still has a long way to go to hit the top values recorded in October. Analysts proclaim that if the company walks down the same path this will never happen, but nobody is sure whether the release of a cheaper smartphone will help in any way.

Tim Cook didn’t say a great deal about the technical specifications of the iPhone 5C, but the rumors that transpired to the media claimed that this would be a budget version of the flagship smartphone. It would probably look very similar to iPhone 5 but it will feature a plastic cover which will come in different colors, hence the name of the device. The truth is that the phone needs to look terrific, to convince the fans that it is worth settling for second best for the sake of saving money.

The Peril of Cannibalization

The sooner the iPhone 5C gets released, the better the effects will be on the stock, because soon after the new smart phone hits the stores the prices are expected to rise. Assuming Apple would release the new device now, the impact on the shares would be considerable and the prices will surely surpass $500. The problem is that if they postpone it too much and release it just a month or two before the next premium smartphone, cannibalization could defeat the purpose.

Most Apple fans are still hooked on the expensive smartphones because they value the quality of the materials and sleek design above anything else. There are two potential risks to releasing a cheap device, one being that iPhone owners won’t have any reason to make the transition to iPhone 5C, as this wouldn’t be a true upgrade. The other peril is that if prospective customers get used with the idea of buying less expensive phones, they might start considering Samsung or HTC for low prices and superior performance.