USD/JPY Price Forecast – US dollar rallies against Japanese yen after jobs number

The US dollar rallied significantly against the Japanese yen after the jobs number came out in America. By returning to the ¥111 level, it looks as if the market is going to continue to focus on that region, so therefore I think this is a little bit difficult to trade for anything more than about 50 pips. I see resistance at the ¥111.50 level, but I also see support at the ¥110.50 level. I think that’s going to be the key going forward, simply trading back and forth in this pair as it’s going to be difficult to take off to the upside or break down significantly based upon what we have seen on the longer-term charts. At this point, I believe that scalpers will continue to go back and forth to this pair, but then again it offers a great trading environment if you have the ability to sit at your desk.

For a longer-term move, we would need to break the downtrend line of the symmetrical triangle on the weekly charts. If you’re interested in that, I have the weekly analysis uploaded as well, and it clearly shows what we are looking at from a longer-term perspective. This pair will be moving on Sino-American relations more than anything else, and although the US dollar is relatively strong against most other currencies, this has the added inflection of the trade spat as this pair is highly sensitive to it.

USD/JPY Video 10.09.18

GBP/USD Price Forecast – British pound rallies towards resistance

The British pound spiked higher during trading on Friday, but then gave back the gains after the jobs number. However, it now looks as if we are trying to find some type of support where we took off from originally, so is very likely that we will turn around and try to rally again. The psychological significance of 1.30 may have been a bit too much, but longer-term charts have a significant downtrend line just above that level that of course has its effect on the market. If we can break above that level, this will probably become a “buy-and-hold” scenario. Obviously, we need some type of good news coming out of the Brexit to push the British pound higher as we have seen it spiked higher every time there is even the slightest hint of progress.

I would not be a seller of this pair anymore, as I think we are trying to turn around longer term. These moves are always very messy, and the fact that this is so news driven is going to make it even more so. I would be cautious about trade size though, as it certainly can get you into trouble if you are not careful. Start out slow, but by all means add if we can break out above the downtrend line just above. This is a marketplace that has shown a lot of resiliency lately, and I think it’s trying to tell you something. The buyers will eventually win this argument.

GBP/USD Video 10.09.18

GBP/JPY Price Forecast – British pound jumps against Japanese yen

The British pound rallied against the Japanese yen during trading on Friday, but it looks to me as if we continue to see this market consolidate overall. However, it should be pointed out that the British pound continues to flex its muscles at the first hint of some type of Brexit deal, so keep in mind that as we fall, there seems to be a lot of value found near the ¥147.75 level. At that point, buyers have been stepping in and pushing this market much higher. All things being equal though, be cautious about a break down below there because that would send the market much lower.

To the upside, it’s difficult to gauge where the true resistance is be because of the impulsive candles that have recently formed. Although they got turned around, this was due to denials of tweets in things like that, not necessarily institutional selling. With that being the case, I look at this as a pair that could offer great range bound opportunities for those who are little bit nimbler. I do think the upside is probably the way to go longer-term though, because this pair like everything else involving the British pound wants to go so much higher. However, headlines will move this market around rather drastically so make sure you have your stop loss order in place, and you may wish to trade with a little bit smaller position than per usual. Eventually though, if we get the break out you can always add to your position then.

GBP/JPY  Video 10.09.18

EUR/USD Price Forecast – Euro falls hard during session on Friday

The Euro fell during the trading session on Friday after the jobs number came out rather strong in America. At this point though, it looks as if we are trying to find a little bit of footing and it’s not that uncommon for a nonfarm payroll number announcement to move the market around only to find it where it started to begin with. If we can break above the 1.1650 level, then we may be able to go to the 1.17 level above. Otherwise, look to the 1.15 level underneath as massive support, as it has been more than once.

Longer-term charts look slightly bearish over the last couple of weeks, but not enough to be overly concerned with yet. This is a market that should continue to be very choppy but I do think that given enough time we will probably turn right back around. I would be surprised to see the market break down below the 1.15 level in the short term, but we are starting to see liquidity pick up a bit as traders have come back from holiday. Because of this, it could make for very interesting trading. In the short term, I believe that range bound trading is probably what you’re looking at here until we get some type of resolution to the Brexit, and perhaps massage some fears of emerging-market contagion to European banks.

EUR/USD Video 10.09.18

EUR/USD Mid-Session Technical Analysis for September 7, 2018

The EUR/USD is trading lower on Friday following the release of a better-than-expected U.S. Non-Farm Payrolls report. The news stoked fears of aggressive rate hikes by the Fed, which is supportive for the U.S. Dollar.

The U.S. economy added 201,000 jobs in August, more than the expected increase of 191,000. Average hourly earnings rose 2.9 percent for the month on an annualized basis, marking the largest jump since August 2009. The Unemployment Rate held steady at 3.9%, slightly above the 3.8% forecast.

EURUSD
Daily EUR/USD

Daily Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through 1.1734 will signal a resumption of the uptrend. A trade through 1.1529 will change the main trend to down.

The minor trend is down. This is giving the momentum the downside bias. A new minor top has formed at 1.1659. This has the potential of developing into a secondary lower top. A trade through this level will change the minor trend to up and shift momentum to the upside.

The intermediate range is 1.1734 to 1.1529. Its retracement zone at 1.1631 to 1.1656 is resistance.

The minor range is 1.1529 to 1.1659. Its 50% level or pivot at 1.1594 is controlling the direction of the EUR/USD today.

The main range is 1.1301 to 1.1734. Its retracement zone at 1.1518 to 1.1466 is the primary downside target.

Daily Technical Forecast

Based on the early trade, the direction of the EUR/USD is likely to be determined by trader reaction to the pivot at 1.1594 and the uptrending Gann angle at 1.1589.

Holding above 1.1594 will indicate the presence of buyers. They could drive the Euro into a series of potential resistance levels at 1.1631, 1.1654, 1.1656 and 1.1659. The latter is the trigger point for an acceleration into 1.1694.

A sustained move under 1.1589 will signal the presence of sellers. This is followed by an uptrending Gann angle at 1.1559. If this angle fails then look for the selling to extend into 1.1529, followed by 1.1518.

Basically, the EUR/USD could strengthen over 1.1594 and weaken under 1.1589.

Technical Checks For Gold, WTI Crude Oil & US Dollar Index: 07.09.2018

GOLD

Unless defying short-term symmetrical triangle, presently occupying the region between $1206 and the $1191, Gold isn’t likely to register much moves. However, expected strength of the US Dollar is indicating brighter chances for the yellow metal’s decline than the otherwise. In that case, break of $1191 highlights the importance of $1182.50-$1181.50 horizontal-region, which if not respected can further drag the quote to $1173 and the $1160. Assuming disappointments from US employment report dragging the greenback down and helping the safe-haven to surpass $1206 upside barrier, then the $1217-18 and the $1228 could appear in the buyers’ radars to target. Given the Bullion surpasses $1228 mark, the $1235-36 and the $1245 may please the Bulls.

WTI Crude Oil

With the immediate descending trend-line restricting Crude’s near-term advances around $68.50, the energy prices may revisit the $67.30 prior to resting on the $67.00-$66.90 support-zone. Should oil bears dominate after $66.90, the $66.00, the $65.40 and the $64.60 become important to watch. Alternatively, break of $68.50 can trigger the energy instrument’s recovery towards $68.80 and the $70.00 while $71.70 might disappoint the optimists then after. If at all the quote clears $71.70 hurdle, the $72.20 and the $72.70 can act as intermediate halts during its rise to $73.10-20 region.

US Dollar Index [I.USDX]

Following its U-turn from 95.65-75 horizontal-area, the US Dollar Index is likely falling in direction to the ascending trend-line support, at 94.55, which if conquered on a D1 basis could quickly fetch the gauge to 100-day SMA level of 94.30 and then to the 93.50 mark. In case the index keep dropping past-93.50, the 93.10 and the 200-day SMA level of 92.55 may gain market attention. Meanwhile, 95.40 and the 95.65-75 can keep limiting the gauge’s nearby upside, breaking which 96.15 and the 96.80 may mark their presence on the chart. Let’s say the gauge keep rallying beyond 96.80, then the 97.00 and the 97.30 could become analysts’ favorites.

USD/CAD Daily Price Forecast – USD/CAD Drops As Trade War Woes Drag Down US Dollar

The Canadian dollar rose on Thursday after Bank of Canada (BOC) Deputy Governor Carolyn Wilkins said that a breakdown in the US-Canada trade talks would not keep the central bank from raising interest rates. The Loonie had been under pressure for majority of yesterday’s trading session as comments out of Washington were not conclusive about the fate of the NAFTA 2.0. The Canadian central bank had kept interest rates unchanged on Wednesday giving little support for the currency. The comments from Deputy Governor Wilkins are a shot in the arm for the Canadian dollar ahead of employment data out of Canada and the United States on Friday. As of writing this article, USDCAD pair is trading at 1.3135 down 0.05% on the day as the pair has consolidated near Thursday’s lows across Friday’s early market hours.

CAD Gains Are Supported By Positive Sentiment Surrounding NAFTA Talks

Foreign Minister Freeland said yesterday that talks will recommence on Sep 8, 2018 and while some progress could be made during Friday’s talks it is highly unlikely that an official deal will be made. Some of US officials involved in the NAFTA talks are also of same opinion that talks which resume later today will not see a conclusive NAFTA deal.  However there is some hope for NAFTA’s future as USDCAD’s decline yesterday was triggered on comments from President Trump addressing supporters at a rally in Billings, Montana where he said US will make a fair deal with Canada on NAFTA talks which is a refreshing change from his recent speeches where he mentioned he is ready to proceed without Canada to create a bilateral trade deal.

US data was mixed, and the greenback continued moving on the global mood. A risk-averse atmosphere related to tariffs on China, Emerging Markets, and Brexit sent the dollar higher while optimism on these fronts weighed on the greenback. A steady reading of the US average hourly earnings for August is expected to add to the weight on the greenback. Apart from the US jobs data, the focus also remains on the Canadian employment report due at 1230 GMT for some trading impetus. Meanwhile, oil prices remain largely subdued amid persisting trade tensions, which is likely to have limited influence on the Loonie. When looking from technical perspective, the rising wedge breakdown, a bearish pattern, seen in the USD/CAD 15-minute chart has opened the doors to a sell-off towards 1.3025. On the way lower, the pair may encounter support at 1.3092 – trend line sloping downwards from the June 27 low and July 20 low. Expected support and resistance for the pair are at 1.3088, 1.3057, 1.3017 and 1.3143, 1.3175, 1.3200 respectively.

GBP/USD Daily Price Forecast – GBP/USD Continues Range Bound Movement Ahead of US NFP Update

The GBP/USD is heading into a dense Friday trading tightly just above the 1.2900 handle, and Sterling traders will be bracing for a London market session that will be seeing potential knock-on volatility from a top-tier GDP reading for the European Union, the UK’s closest neighbor, with the US Non-Farm Payrolls showing following closely behind. The UK has a thin showing on the economic calendar on its own today, with the low-tier Halifax Housing Prices for August at 07:30 GMT, which is also expected to come in at -0.3% m/m compared to the 1.4% previous reading. As of writing this article, the pair is trading at 1.2924 down 0.05% on the day. At 09:00 GMT the EU’s Q2 GDP will be dropping just across the Channel, and traders will be looking for the q/q non-preliminary reading to hold steady at 0.4%, , though any deviations could see some weakness build into USD-based pairs, especially if the actual figures miss the fairly-accurate preliminary reading.

Macro Data Updates To Provide Momentum For the Pair on Last Trading Session of the Week

“China and the UK had agreed to actively explore the possibility of discussing a free trade agreement after Brexit. Any act that harms China’s core interests will only put a spanner in the works,” the state-run China Daily newspaper said in an English-language editorial after a British warship made a sail-by in contested waters in the South China Sea. Britain has long courted China for a post-Brexit trade deal and talked up a “golden era” in ties, although any talks could not begin until Britain officially leaves the European Union and typically take many years to conclude. Any update that could prove to be non-beneficial to UK-China trade talks will provide bearish influence to British pound.

August’s NFP for the US, dropping at 12:30 GMT, is expected to be a good-on-the-outside jobs report, with median market forecasts calling for a print of 191 thousand jobs added in August, compared to the previous month’s 157 thousand; buried under the headline figure, Average Hourly Earnings for the year into August are expected to hold steady at 2.7%. Wage growth has been a vexing issue for the Federal Reserve, and continued sluggishness in the underlying reading could see clouds gather over the main NFP report, which has developed a habit of beating expectations recently. After catching a Brexit boost earlier in the week as investors begin to firm up hopes of a soft-Brexit scenario as the UK and Germany appear ready to begin working together, and the Sterling has managed to hold onto some of the lift experienced earlier in the week. Expected support and resistance for the pair are at 1.2890, 1.2845, 1.2800 and 1.2930, 1.2980, 1.3010 respectively.

 

USD/JPY Price Forecast – US dollar falls against Japanese yen

The US dollar has fallen against the Japanese yen during the trading session on Thursday, as we continue to see a lot of weakness in this market. I believe that the ¥111 level underneath will offer significant support though, and with the jobs number coming out today the selling will probably be somewhat limited. Ultimately, I think that this market probably continue to be very volatile, but that’s nothing new for this pair as it is so sensitive to risk appetite around the world. Beyond that, we have Sino-American trade relations that have been in this market, so ultimately this is a situation where I think we probably need to settle down a bit before placing any type of trade. The jobs number will be the next big catalyst, so between now and then this market will be very quiet unless there is some type of major news announcement. However, when I look at this chart, I can also recognize that there are plenty of reasons to think that the erratic behavior will continue.

If we did break down below the ¥111 level, that would be an opportunity to reach down to the ¥110.50 level, an area that has been important as well. I think that this market is probably best left alone because even on the longer-term charts it looks a bit confused. With that in mind, I’m leaving this pair alone for the time being.

USD/JPY Video 07.09.18

GBP/USD Price Forecast – British pound rallies against the greenback for Thursday

The British pound rallied a bit during the day on Thursday but gave back a bit as the Americans came on board. I think at this point the markets are probably a bit of verse to taking on a lot of risk, because quite frankly the jobs number will obviously throw the market around. Beyond that, the rumor that spread around the marketplace that the British and the Germans were starting to soften their stance towards each other in the negotiation has been denied by the Germans since. We ended up closing at basically the same level as the gap for the day, and now it starts look like it’s offering resistance from the beginning of the week. Ultimately, I think that we will probably drift lower in the short term but I think there is a significant amount of support near the 1.29 level as well.

I believe that some of this is probably going to be along the lines of position squaring as people are concerned about the jobs number, as it will cause the markets to go erratic. However, I would suspect that there is probably a significant amount of confusion in the market as well. After all, after that type of move a lot of people are going to be a bit nervous to short the market, but after the Germans flat out denying the rumor, would you be a buyer either? I anticipate that we will probably see this market drift a bit lower, just as we did last week. However, once there is a deal actually announced, you can already see what’s about to happen.

GBP/USD Video 07.09.18

GBP/JPY Price Forecast – British pound pulled back a bit against the Japanese yen after trying to rally on Thursday

The British pound has had a rough go of it over the last couple of weeks, as rumors coming out of the Brexit negotiations have thrown this currency around. During the session on Wednesday, there was a tweet that someone suggested perhaps the Germans and the British were softening their stance on negotiations. However, this was market manipulation as it was stated shortly afterwards by the Germans that nothing had changed. Welcome to the age of Twitter. Somebody put that out, almost certainly just after buying a ton of British pounds.

After that being said, we are now resting at the gap that kicked off the week. We are probably going to see a range bound market with a slightly negative bias between now and the jobs number in America, which of course can through the markets into a tantrum on its own. I suspect that the market is in somewhat of a holding pattern until we get a little bit more clarity. Because of this, I think range bound trading may work on short-term charts, perhaps using the ¥143.50 level as potential support, but quite frankly it wouldn’t surprise me at all to see that market level gets broken. To the upside, I suspect that the ¥144.25 level will offer resistance, and it’s probably not until we either get some headline about the US/Chinese trade spat or the jobs number that we can get a sustainable move. Obviously, Brexit headlines will help, so there’s always that threat in both directions.

GBP/JPY  Video 07.09.18

EUR/USD Price Forecast – Euro chops around on Thursday

After the brake higher during the trading session on Wednesday, the Euro has pulled back a bit during the day as it looks like traders are awaiting the jobs number for Friday. That’s not a huge surprise, there’s a lot of confusion around the Euro right now anyway. There are concerns about contagion still, as European banks are knee-deep in Turkish debt. Beyond that, the rumor that came out about the Brexit negotiation softening have been disputed by the Germans, so I think there’s a lot of confusion in the market right now.

If we can break down below the 1.16 level, we will probably drive down towards the 1.15 level again. Otherwise, we could break above the 1.1660 level, and start reaching towards 1.17 level above. This is a market that will continue to be very choppy and I think that until the jobs number come out, it’s likely that the market will continue to go back and forth in short term moves. If that’s your forte, then by all means start looking for scalping opportunity between the couple of levels that I have mentioned, as I think the markets are probably going to be rather quiet until we get that next catalyst.

Looking at the longer-term charts, we still remain within a consolidation area defined by the 1.18 level on the top, with the 1.15 level underneath offering a significant support. However, I think that the market will continue to struggle for direction.

EURUSD analysis Video 07.09.18

AUD/USD Price Forecast – Australian dollar range bound

The Australian dollar has rallied a bit during trading on Thursday after initially falling. However, we may remain range bound, and the daily candles continue to be very unimpressive. The hourly chart looks as if it is defining a resistance barrier near the 0.7225 level, with an obvious support level near the 0.7150 level. Because of this, it’s likely that the market will continue to chop around in this area, as we just don’t have anywhere to go. With this type of range, it’s best to look for short-term charts in the meantime, because quite frankly we just won’t have much in the way of a catalyst.

This will all change today though, because the jobs number of course will move the US dollar. I would anticipate that by the end of the day we will probably end up somewhere around here though, because ultimately this pair will focus on Chinese trade spats with the United States more than anything else. The Australian economy is highly sensitive to China, so at this point it’s a bit held hostage to the Sino-American problems. Overall, I believe that the market will continue to be one that is very noisy, but a good opportunity for short-term traders. As far as a long-term trade is concerned, we would need to close below the 0.7150 level on the daily chart to begin the next leg lower to the 0.70 level. Otherwise, if we can break above the 0.7225 handle on a daily close, then we could be looking at the 0.7350 level above.

AUD/USD Video 07.09.18

EUR/USD Daily Price Forecast – EUR/USD Stable above 1.161 Handle Ahead of US NFP Update

The EUR/USD rose to a high of 1.1659 yesterday on the back of a drop in the 10-year Italy-German yield differential. However, the bullish mood turned sour on reports that the Trump administration is now steering towards imposing additional tariffs on $200 billion worth of Chinese imports, having put a 25 percent levy on $50 billion worth of Chinese goods in July. As a result, the currency pair surrendered gains and closed at 1.1622. The common currency could pick up a bid today if the Italy-German yield spread continues to slide, implying that the market pessimism over the Italian budget is receding. As of writing this article, the pair is trading at 1.1629 up 0.06% on the day and recent price action in 1 hour and 4 hour chart indicates that pair has consolidated above 1.161 Handle.

Sino-U.S. Trade War Updates Remain Main Focus of Investors

However, a break above the previous day’s high of 1.1659 may remain elusive, courtesy of escalating US-China trade tensions. Moreover, China is likely to retaliate in kind if the US goes ahead with the fresh round of tariffs. That said, a big rally towards 1.1733 (recent high) could be in the offing if the US average weekly earnings and non-farm payrolls figure for August, scheduled for release at 12:30 GMT, misses estimates by a wide margin, adding credence to the argument put forward by the likes of Fed’s Bullard that the central bank should stop raising rates now.

On the other hand, a big beat on the wage growth figure would reinforce hawkish Fed expectations, driving the US dollar higher across the board. While the Eurozone second-quarter GDP, due for release at 09:00 GMT could move the EUR pairs. When looking from technical perspective, corrective rebound from support near the 1.13 figure has given way to consolidation below resistance capping gains since early June. Moving forward, a close above 1.1704 opens the door for a test of the 1.1840-52 area. Alternatively, a push back below support in the 1.1530-54 zone paves the way for a decline back to Augusts swing bottom and unless either of these price levels are breached the pair is expected move in range bound pattern trapped inside mentioned price levels.

AUD/USD Forex Technical Analysis – Could Regain Strength Over .7159, Weakens Under .7145

The Australian Dollar is trading lower early Friday amid fears of additional tariffs from the U.S. on its largest trading partner China. Traders are also paring positions ahead of Friday’s U.S. Non-Farm Payrolls report, due to be released at 1230 GMT.

At 0337 GMT, the AUD/USD is trading .7158, down 0.0039 or -0.56%.

AUDUSD
Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .7145 will signal a resumption of the downtrend.

The minor trend is also down. A trade through .7235 will change the minor trend to up. This will also shift momentum to the upside.

On September 5, the AUD/USD formed a closing price reversal bottom at .7145. However, it hasn’t been confirmed. A trade through .7218 will confirm the chart pattern.

The main range is .7363 to .7145. Its retracement zone at .7254 to .7280 is the primary upside target. Since the main trend is down, sellers are likely to come in on a test of this area.

Daily Swing Chart Technical Forecast

Early Friday, the AUD/USD is testing a previous bottom at .7159. If it fails then the Forex pair is likely to continue into the May 24, 2016 bottom and this week’s low at .7145.

A trade through .7145 could create the downside momentum needed to challenge the February 29, 2016 main bottom at .7107.

Aggressive counter-trend buyers may be trying to build a support base between .7159 and .7145. If this move is able to generate enough upside momentum then buyers may make a run at .7218, followed by the minor top at .7235. The latter is a potential trigger point for an acceleration into .7254 to .7280.

Important NZD Pairs’ Technical Update: 06.09.2018

NZD/USD

While the 0.6615-20 is likely immediate upside barrier for the NZDUSD, the 0.6560 and the 0.6525 could confine the pair’s near-term downside. As a result, the 0.6620 and the 0.6525 could act as triggers to the quote’s following moves. In case the pair dips beneath 0.6525, which has higher probabilities, the 61.8% FE level of 0.6490 and the 0.6430 can please the sellers. Alternatively, pair’s successful trading beyond 0.6620 can avail 0.6670 as an intermediate halt before challenging the 0.6695 trend-line, which if broken might not hesitate fueling prices to the 0.6720-25 resistance-region.

EUR/NZD

In spite of conquering 32-month long ascending trend-line resistance, the EURNZD needs to close above 1.7600 in order to extend its north-run towards 1.7730 and the 1.7900 levels. Should the pair continue rising past-1.7900, the 1.8000 round-figure could hold the door for its surge in direction to the 1.8130 and the 1.8300 marks. Assuming that the pair fails to maintain its stand above 1.7600 on a weekly closing basis, then it can witness pullbacks to 1.7485 and the 1.7380 levels. Moreover, pair’s extended profit-booking after 1.7380 highlights the importance of 1.7230 and the 1.7110 rest-points.

GBP/NZD

GBPNZD also has to cross the 1.9700 TL on a D1 closing basis if it is to aim for the 1.9760 and the 1.9835 resistances. Though,  break of 1.9835 might flash 2.0000 and the 61.8% FE level of 2.0120 on the Bulls’ radar. Meanwhile, the 1.9460 and the 50-day SMA level of 1.9365 may entertain counter-trend traders, breaking which 1.9150 and an upward slanting TL, at 1.9080, seems crucial. If at all the pair drops beneath 1.9080, the 1.9000 and the 1.8910 can be targeted if having short positions.

NZD/JPY

Even after bouncing off the immediate TL support, the NZDJPY couldn’t clear the 73.70 hurdle to north and may revisit the 72.80 support-line, which if broken might drag the quote to 72.30 and the 71.60 mark, including 61.8% FE. Given the pessimists rule sentiment past-71.60, then the 71.00 and the 70.00 could appear on the chart. On the upside, pair’s advances above 73.70 can look for 74.10 and the 50-day SMA level of 74.75 but the five-month old descending TL, at 75.40 could disappoint the optimists afterwards. Should prices rally beyond 75.40, the 76.30 and the 200-day SMA level of 77.10 might face the limelight.

MiFID II – What You Need to Know

Trading online is highly fluid, not just because of the dynamic nature of the global markets and economies, but also the constantly evolving laws and regulations. At AvaTrade, our clients are our top priority and as part of our commitment to our traders, we are always staying abreast of these regulatory changes to ensure that we remain fully compliant.

Fundamentals of MiFID

The first version of MiFID (Markets in Financial Instruments Directive) came into effect across the EU in 2007 and it is the cornerstone of the EU’s financial markets regulation. The aim of MiFID was to improve competitiveness for investment services and provide protection for investors in financial instruments by establishing:

  • A code of conduct and organizational requirements for investment firms
  • Authorisation requirements for regulated markets
  • Reporting to prevent market abuse
  • Trade transparency for shares
  • Rules on the admission of financial instruments for trading

Over the years, there have been various proposals and debates around the revision of MiFID, and the final legislative texts were finally adopted by the EU Parliament in June 2014. This revised version, which includes MiFIR (Markets in Financial Instruments Regulation), became collectively known as MiFID II and it came into effect in January 2018.

Assisting in the technical standards, advice, and implementation of the regulation is ESMA (European Securities and Markets Authority), an independent EU Authority. ESMA continues to play an active role by creating a supervisory culture and practices, including the development of Q&A’s (questions and answers) to help organizations in the implementation of MiFID II. ESMA, while independent, reports to various EU bodies, including the EU Parliament.

Introduction of MiFID II

At the beginning of 2018, MiFID II came into effect for investments firms. This new legislative framework was designed to not only strengthen investors protection but to provide additional transparency; the fairer, safer, more resilient, and efficient functioning of the financial markets.

In summary, some of the key issues that MiFID II addresses:

  • Removal of trading bonuses – under the new regulation, brokers cannot offer trading bonus incentives to clients.
  • Professional trader classification – based on a questionnaire that clients complete and other criteria, clients must be classified as either retail or professional traders. Depending on the client’s classification, they are entitled to different features and benefits. For example, the amount of leverage.
  • Reduction in leverage for retail clients – while leverage can be a great tool to maximize profits, it can also magnify losses. Overall, the amount of leverage that can be given to clients who are classified as ‘retail clients’, has been reduced.
  • Avoiding conflict of interest – one of the key concerns that MiFID addresses is the avoidance of conflict of interest between brokers and their clients. The aim is to ensure that brokers continuously act in the best interest of their clients.
  • Registering of automated trading algorithms – under the new regulation, algorithms used for automated trading have to be tested, registered and have protection measures built-in.
  • Greater transparency and reporting – brokers must provide more detailed reporting on trades, including volume and price, as well as keep records of all communications and conversations with their clients.
  • Communication simplicity and clarity – all communications, especially marketing communications, must be clear, fair and not misleading. Plus, the risks of investing in financial instruments must also be clearly stated.

In conclusion

The new regulation has been in the making for many years, with many iterations and will continue to adapt and evolve. The entire MiFID document is almost 7,000 pages, but the essence of this framework is to ensure a fair, transparent and more secure environment for all stakeholders, especially investors. The above is a highlight of just some key areas that MiFID II deals with. AvaTrade clients can have complete peace of mind knowing that AvaTrade complies with these regulations and will always act in their clients’ best interests.

For more information detailed information on MiFID, please visit: https://www.esma.europa.eu/policy-rules/mifid-ii-and-mifir

USD/CAD Daily Price Forecast – USD/CAD Continues Range bound Momentum Ahead of US NFP Update

The USD/CAD pair extended its consolidative price action through the early European session on Thursday and remained confined in a narrow trading range, just below the 1.3200 handle. Yesterday’s BOC monetary policy update turned out to be a non-event for the major, with a combination of factors holding investors back from placing any aggressive bets and leading to a range-bound price action on Thursday. As of writing this article, the pair is trading flat at 1.3175 down by 0.02% on the day. The US Dollar lacked any firm directional bias and was seen consolidating in a range around the key 95.00 psychological mark.

Investors Look to US Macro Data For Short Term Opportunities

Investors also seemed to wait for any fresh update over the progress in talks to revise the North American Free Trade Agreement (NAFTA) before positioning for the next leg of directional move. Meanwhile, a mildly positive tone around crude oil prices extended some support to the commodity-linked currency – Loonie and turned out to be the only factor behind a modest down-tick, back closer to overnight swing lows. Traders now look forward to the US economic docket, highlighting the release of ADP report and ISM non-manufacturing PMI, in order to grab some short-term opportunities. The key focus, however remains on Friday’s keenly watched employment details, both from the US and Canada.

When looking from a technical perspective, The bearish divergence of the hourly chart relative strength index is signaling bullish exhaustion in the USD/CAD, however, pull back, if any, will likely be short-lived as the stacking order of the 50-hour moving average (MA), above the 100-hour MA, above the 200-hour MA, a classic bullish setup, indicates the path of least resistance is on the higher side.The 1.3155-50 zone might continue to act as an immediate support, which if broken is likely to accelerate the fall back towards 50-day SMA support, currently near the 1.3100-1.3095 region. On the flip side, bulls will be eyeing for a sustained move beyond the 1.3200 handle, above which the pair is likely to aim towards testing the 1.3265-70 supply zone ahead of the 1.3300 round figure mark.

 

GBP/USD Bullish Above 1.2850

The GBP/USD has formed a strong marubozu candle, retesting 1.2980 zone. At this point we might see another bounce as the POC zone is just below the current price. Potential buyers are within 1.2860-1.2885 but pay attention to 1.2905 too. First target us 1.2959 followed by 1.2980 and 1.3015. Only a 4h close above 1.3015 should target 1.3073. However, if 1.2850 is lost bears might dominate, targeting 1.2796.

GBP/USD Bullish Above 1.2850

  • W L3 – Weekly Camarilla Pivot (Weekly Interim Support)
  • W H3 – Weekly Camarilla Pivot (Weekly Interim Resistance)
  • W H4 – Weekly Camarilla Pivot (Strong Weekly Resistance)
  • D H4 – Monthly Camarilla Pivot (Very Strong Daily Resistance)
  • D L3 – Monthly Camarilla Pivot (Daily Support)
  • D L4 – Monthly H4 Camarilla (Very Strong Daily Support)
  • POC – Point Of Confluence (The zone where we expect the price to react – aka the entry zone)

Best wishes,

Nenad

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AUD/USD and NZD/USD Fundamental Daily Forecast – Narrowing of Trade Surplus Weighing on Australian Dollar

The Australian and New Zealand Dollars are trading lower early Thursday. The Aussie is showing no reaction to positive economic data. The Kiwi followed through to the upside, following Wednesday’s potentially bullish chart pattern, however, the buying wasn’t strong enough to sustain the gains.

The Australian Dollar is trading slightly above its lowest level since May 2016, which was reached on Wednesday. The market plunged to this level despite strong gross domestic product data. Today’s better-than-expected trade balance data also failed to provide a lift for the currency.

The rally in the New Zealand Dollar on Wednesday was fueled by short-covering and oversold technical conditions, following yesterday’s dramatic closing price reversal bottom from the Kiwi’s lowest level since February 2016.

At 0815 GMT, the AUD/USD is trading .7174, down 0.0019 or -0.26% and the NZD/USD is at .6584, down 0.0007 or -0.10%.

Both currencies are being pressured by the divergence in monetary policy between the hawkish U.S. Federal Reserve and the dovish Reserve Banks of Australia and New Zealand. Earlier in the week, the RBA left interest rates unchanged for a 24th month. Although RBA Governor Philip Lowe said the next move in rates would likely be up, financial futures market traders have priced in the next rate hike for late 2019 or early 2020.

Additionally, an uncertain economic outlook for China, Australia’s and New Zealand’s key trading partner, has also weighed on the Aussie and Kiwi.

In economic news, Australia’s trade surplus narrowed to $1.6 billion as exports dipped and imports rose. In seasonally adjusted terms, the surplus in July fell to $1.55 billion from $1.9 billion in June.

The value of exports dropped by 1 percent, or $362 million, from June’s record $36.4 billion effort. At the same time, higher fuel costs nudged up imports by 1 percent to $34.6 billion.

In U.S. economic news on Wednesday, new data showed the U.S. trade deficit in July widened at its fastest rate since 2015 as monthly deficits with China and the European Union both hit new records. According to the data, in 2018, the U.S.’s overall goods and services deficit is up by $22 billion, or 7 percent, versus the same period last year.

According to the Commerce Department, in July, the U.S. trade deficit soared by 9.5 percent to $50.1 billion, putting America on pace for tis largest annual gap in a decade. The U.S. trade deficit with China swelled to a record $36.8 billion.

In other news, several Fed speakers offered their opinions on the direction of interest rates. Early in the session, St. Louis Fed President James Bullard said Wednesday that the central bank ought to pause further interest rate increases because its stance is already neutral or restrictive. FOMC Member Bostic delivered a hawkish speech, while FOMC Member Kashkari sounded dovish in his speech.

Atlanta Federal Reserve Bank President Raphael Bostic said on Wednesday with the U.S. economy at full employment, inflation at the Federal Reserve’s 2-percent goal, and the economic risks balanced, the U.S. central bank needs to keep raising interest rates.

Also on Wednesday, Minneapolis Federal Reserve Bank President Neel Kashkari, a noted dove, offered his assessment of the economy and his opinion on Fed policy. Kashkari said that he still believes the economy is not overheating yet, prompting him to continue his objection to rate increases.

Forecast

Fed speakers and fresh U.S. economic data will be watched closely on Thursday along with potential surprise events pertaining to tariffs and trade disputes.

The major U.S. reports are ADP Non-Farm Employment Change and ISM Non-Manufacturing PMI. The ADP report is expected to show the private sector added 195K jobs in August. The services PMI report is expected to come in at 56.8, up from 55.7.

Oversold technical conditions could drive the Aussie and Kiwi higher if this leads to aggressive short-covering, or position-squaring ahead of Friday’s U.S. Non-Farm Payrolls report. However, don’t mistake this for a bullish move or the start of an uptrend. The major fundamentals are still overwhelmingly bearish so any reasonable rallies should be treated as selling opportunities.