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Market Outlook by Capital Street FX

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Re: Market Outlook by Capital Street FX

Postby CSFX.Support » Tue Oct 25, 2016 10:00 am

Third-Quarter GDP Reports in Focus, Will U.S Dollar Sustain Its Strength Next Week?

The U.S dollar was a star last week, as the monetary policy divergence between the U.S Federal Reserve and other major central banks sent the greenback higher against most of its peers.

The dollar strengthened after New York Fed President William Dudley on Wednesday said that the U.S. central bank will likely raise interest rates later this year if the economy remains on its current trajectory. Furthermore, expectations that Hillary Clinton will win the U.S. presidential election grew strongly after her victory in the third and final U.S presidential debate. This also added to the view that a December rate hike is likely. Fed will hold its next meeting in November. Still, a rate hike ahead of the presidential election is considered as unlikely.

Expectations for higher rates typically boost the dollar by making it more attractive to yield seeking investors. However, it would be misjudged if we didn’t mention the slump of the euro when it comes to the greenback’s strength.

The euro plunged sharply on Friday following comments by the European Central Bank President Mario Draghi that the quantitative easing program would not end before March 2017. President Draghi stated that the central bank had not discuss about tapering its 1.7 trillion euro ($1.86 trillion) asset-buying program, regarding a slow rise in inflation and risks from foreign weak demand.

A string of data for the Euro area will be released next week. The single currency will start its volatility on Monday with Markit flash PMIs for key Eurozone countries (Germany and France) as well as for the whole region. The German Ifo survey out on Tuesday is expected to show a slight improvement in the current conditions index. More economic data for the 28-nation bloc will follow on Friday with the Eurozone’s economic sentiment index and preliminary German inflation numbers.

Following a conference following the policy reviews last Thursday, ECB President Mario Draghi will have another speech about “Stability, Equality and Monetary Policy” on Tuesday.

In the U.S, the most important statistic is probably the release of third quarter growth on Friday. However, other economic parameters such as durable goods orders, housing data and business surveys will keep traders occupied until the key Friday’s Advance GDP, which is forecast to post at the highest since the last quarter of 2014.

If the preliminary third quarter GDP data meets economists’ expectation of a substantial growth rate of 2.5% in the third quarter, the US economy will have a well performance during the second half of the year given the weakness that occurred during the first six months of 2016. Strong economic growth and an improving labor market will give the Fed fewer reasons to delay a rate increase in December.

The Pound ended last week higher versus the U.S dollar thanks to the U.K inflation data, which was reported to have jumped to its highest in nearly two years.

Data from the Office for National Statistics reported that U.K consumer prices added 1% in September compared to the same month a year ago, following a 0.6% rise in the year to August. The reading outstripped expectations of a rise to 0.9%, and reached the 1% rate for the first time since November 2014. ONS said it did not see explicit evidence of the pound’s weakness in consumer-price changes, but it is affecting producer prices as a cheaper local currency pushes up the price of imported goods in the UK.

The rise in the U.K’s inflationary pressures may drive the Bank of England away from its plan to cut rates in order to protect the economy from headwinds created by the departure of the U.K from the single market.

For next week, like the U.S., the U.K. will also announce its preliminary growth estimate for the third quarter, which is due on Thursday. The data will be of more importance than usual as they are for the three months immediately following the Brexit referendum on June 23. . Growth is expected to slow to 0.3% quarter-on-quarter in the three months to September from the previous quarter’s 0.7% rate. Consensus data suggested that the impact of Brexit may not be felt much, as strong consumer spending and a weaker pound have kept the UK economy in a better mood than initially expected . A strong number would damp the need for further easing by the BOE.

The Australian dollar was almost unchanged compared to the level at the start of last week after the market close on Friday. The Aussie stayed strong on the first half of the week through October 21st after the release of the minutes from the RBA’s last meeting. According to the minutes, economic expansion is forecast to continue and stimulate job creation which will eventually result in higher wages and reasonable inflation. The Reserve Bank of Australia held rates unchanged at 1.5% in its October meeting and is widely expected to temporarily pause its rate cut plans at its next meeting on November 1st.

However, the bullish sentiment left the Aussie on Thursday after jobs data showed an unexpected decline in the labour market. In early Asian trading hours, the Australian Bureau of Statistics reported that job creation fell by 9,800 in Australia in September, completely contrasting with forecasts by economists which had called for an increase of 15,200 new jobs added last month.

The jobless rate fell to 5.6% from a revised 5.7% in August as a result of the fact that fewer people participated in the labor force. According to the report, Australia’s participation rate for September dropped from 64.7% to 64.5%, the lowest level in almost two years.

Next week, AUD investors will put their focus on the inflation data due on Wednesday as it could determine whether the Reserve Bank of Australia decides to cut rates anytime soon. CPI in the third quarter is expected to pick up slightly to 0.5% on a quarterly basis and to 1.1% on a yearly basis.

The New Zealand dollar also traded lower against the greenback last week. However, the Kiwi outperformed its Australian counterpart due to upbeat inflation and consumer prices. Next week will be quiet for the currency as only New Zealand’s trade balance is on the calendar.

Canadian dollar plunged the most in the trio of commodity currencies. Retail sales continued to decline while consumer prices grew less than expected. Bank of Canada Governor Stephen Poloz stated that the central bank had “actively” discussed the possibility of injecting more stimulus into the economy.

The Bank of Canada decided to hold its benchmark interest rate at 0.5 percent at its monetary policy meeting on Wednesday, but further stimulus were taken consideration in order to “speed up the return of the economy to full capacity”, Poloz said.

With the lack of Canadian data next week, oil will continue to be a key driver of the currency’s flows.
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Re: Market Outlook by Capital Street FX

Postby CSFX.Support » Tue Oct 25, 2016 10:05 am

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Daily Report on October 25, 2016

The U.S dollar held near eight-month highs amid mounting speculations that the U.S interest rate will be raised by December. Federal Reserve Bank of Chicago President Charles Evans on Monday said if the economy continued to grow in line with forecast, it would be appropriate for the Federal Reserve to raise rates three times by the end of 2017.

The Chicago Fed chief was optimism about the U.S. labor market, expecting for continued hiring which could push the unemployment rate down to as low as 4.5 percent without triggering undue inflation. Earlier on Monday, research group Markit reported the U.S. flash manufacturing purchasing managers’ index for October rose to the highest since the start of this year. The gauge for manufacturing activity in the world’s biggest economy reached 53.2 in this month, beating forecast and cementing bets the Fed will make a move on rates in December.

The Loonie pared earlier losses on late Monday as Bank of Canada Governor Stephen Poloz signaled a deferral in cutting rate, even after the country’s disappointing economic data lately. Given the uneven growth in different parts of Canada, Poloz reiterated the central bank considered cutting interest rates but said further stimulus is complicated. Any decision to cut interest rates further will not be unleashed in the next 18 months, the BOC Governor said.

The comments that spurred speculation monetary policy would stay on hold, lifted Canada’s dollar from a seven-month low set earlier on Monday. However, the currency dropped again as in an e-mailed statement following the testimony, Poloz said the comments weren’t a reference to monetary policy.

Swiss National Bank Chairman Thomas Jordan deepened the monetary policy divergence between the U.S central bank and its counterparts by stating that the SNB could cut its negative interest rates even more if needed as there is still room for further stimulus.



Technicals

USDJPY



Fig: USDJPY H4 Technical Chart

The U.S dollar has been on a rise against the Japanese Yen since the pair hit over one-week low at 103.159 last Wednesday. After breaking above the two moving averages from below, the pair has turned these two MAs into its dynamic support. Additionally, we have received signals of going long, as the short-term MA20 has crossed over the long-term MAs, while ADX rebounded from line 20. However, the resistance at 23.6% is within the sight may be the short-term target.

Trade suggestion

Buy Stop at 104.450, Take profit at 104.750, Stop loss at 104.200



AUDUSD



Fig: AUDUSD H4 Technical Chart

The Aussie once again crawled back from the 23.6% retracement. This level has played an important part in supporting the price in the past week since the pair returned to trade above this handle. Recent surge brought market into the neutral zone, which can be observed from the RSI index hovering around the line 50. In the event of continual rally, AUDUSD may form a double top pattern.

Trade suggestion

Buy Stop at 0.76400, Take profit at 0.76900, Stop loss at 0.97150



GBPJPY



Fig: GBPJPY H4 Technical Chart

Recent rally has brought the pair GBPJPY back to the bullish market. As can be seen from the RSI indicator window, the index has soared to as high as 56.74. The price action has penetrated the two MAs from below, consolidating the uptrend. The pair is approaching the upper boundary of the trading range at 128.500.

Trade suggestion

Buy Stop at 127.760, Take profit at 128.500, Stop loss at 127.400



SILVER



Fig: SILVER H4 Technical Chart

Silver has been trading in a thin range for more than 2 weeks. The metal has been moving back and forth around a couple of moving average which has twisted under the price action since yesterday. Although RSI has bounced back from the average line, the rally seems limited.

Trade suggestion

Buy Stop at 17.680, Take profit at 17.940, Stop loss at 17.485



Natural Gas



Fig: Natural Gas H4 Technical Chart

Natural Gas has been suffering a steep decline that witnessed the commodity falling from multi-month high to one-and-a-half-month lows. Natural gas has fell below the 23.6% Fibonacci retracement and may approach other major level at 38.2% threshold. While the market has already dipped in the oversold zone, ADX continued to hold high. No signal of a reversal has appeared yet.

Trade suggestion

Sell Stop at 2.810, Take profit at 2.700, Stop loss at 2.850



DOW JONES



Fig: DOW JONES H4 Technical Chart

U.S Dow Jones index has been struggling below the 18255.00 resistance since mid-October. The benchmark broke above both the short-term and long-term MAs yesterday and found the support at the MA20 when it fell off from the 18255.00 handle. Coupled with the RSI above 50 and pointing upwards in the, the convergence of the two MAs below the price action suggests a breakout today.

Trade suggestion

Buy Stop at 18260.00, Take profit at 18320.00, Stop loss at 18210.00
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Re: Market Outlook by Capital Street FX

Postby CSFX.Support » Tue Oct 25, 2016 10:11 am

Gold Reclaims Lost Ground But Not Likely To Win The War With The Dollar

Gold edged up in European session on Tuesday, boosted by rising demand, especially in the world’s two largest consumers of the metal. However, prices have been kept in a range as an increasing probability of a U.S. interest rate hike fueled the U.S. dollar, in which gold is priced.

In China, further weakness in the local currency and investors’ concerns about government’s stringent measures to cool down the property market are seen as a boost for gold demand. The offshore Yuan hit a six-year low against the dollar before partially recovering on Monday. Large state-owned banks had to sell dollars yesterday in an effort to slow a rapid decline in the currency.

However, the Yuan is likely to remain weak as Chinese policy makers have signaled they are willing to allow greater currency flexibility against the backdrop of a slump in exports and a strengthening dollar. Potential Yuan depreciation and restricted investment in the property market may be the main drivers of Chinese gold purchases.

According to figures from the website of Swiss Federal Customs Administration, shipments of gold from Switzerland to China increased to 35.5 metric tons last month from 19.9 tons in August.

In India, seasonal demand is picking up. Dhanteras and Diwali – the country’s most eagerly-awaited festivals – are around the corner. Dhanteras – the first day of the five-day Diwali Festival – falls on October 28th but many Indians have visited the bullion market to buy gold. After Dhanteras and Hindu festival of Diwali this weekend, wedding season will follow. Good rains this year is expected to pushed up rural incomes and in turn boost rural purchases, which make up 60 percent of consumption.

Despite ongoing healthy demand, it will be hard for gold to rally as the greenback has been on a steady rise. Traders are currently pricing in a more than 70% chance of a rate hike at the Fed’s December meeting, following positive economic data and hawkish comments from Fed officials.

Gold is sensitive to moves in the U.S dollar price and U.S rates, as a stronger buck makes gold more expensive to purchasers using other currencies, while higher rates raise the opportunity cost of holding non-yielding assets such as bullion.

Gold prices have been kept range-bound for the past week after pulling back from the 38.2% retracement at 1249.79. Gold reversed higher today following three-day losing streak but the upside seems limited. The rally is being threatened by the upper boundary at 1274.50 and the short-term DMA20. As the gold market is still in favour of bears, the metal is expected to retreat once it hits the 1274.50 resistance.

GOLD Trade suggestion
Sell Limit at 1274.50, Take profit at 1260.00, Stop loss at 1280.00

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Re: Market Outlook by Capital Street FX

Postby CSFX.Support » Tue Oct 25, 2016 6:15 pm

WTI signal by Capital Street FX

From GMT 15:45 25/10/2016
Till GMT 21:00 25/10/2016

Sell at 50.00
Take profit at 49.35
Stop loss at 50.50
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Re: Market Outlook by Capital Street FX

Postby CSFX.Support » Tue Oct 25, 2016 6:21 pm

P&G Reports Upbeat Quarterly Results – Long Position Suggested

Procter & Gamble Co. (P&G), the world’s largest maker of household and personal-care products reported a better-than-expected quarterly profit before the market open on Tuesday.

P&G posted a profit of $2.71 billion, or 96 cents a share for the first fiscal quarter of 2017, up from $2.6 billion, or 91 cents a share, a year ago. Upbeat results were underpinned by cost-cutting and strong demand for its health care products.

Particularly, P&G’s health care segments performed the best, recording 5% increase in volume, fabric and home care and baby, feminine and family care segments came after with 4% improvement. Beauty brands contributed 2% and grooming products added 3%.

The company also reduced costs by selling off unprofitable brands and building a plan to cut as much as 10 billion over the next five years, after having saved the same amount in costs over the last five years.

Trade suggestion

Buy Stop at 87.25, take profit at 88.00, stop loss at 87.00

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Re: Market Outlook by Capital Street FX

Postby CSFX.Support » Wed Oct 26, 2016 3:56 pm

Apple Down After Earnings Fall – Positive Forecast To Bring Shares Back on Track

Shares of Apple dropped 3.51% to $114.10 per share in extended-hours trading on Tuesday, after the company reported a third successive quarter of declining revenue and profits. The results recorded Apple’s first drop in annual revenue since 2001 as the California-based company has been struggling with slowing sales of its flagship iPhone.

For the fiscal fourth quarter through September, Apple’s net income registered at $9 billion, or $1.67 a share, which was down 19% from $11.1 billion, or $1.96 a share in the same period a year earlier. Analysts had expected earnings of $1.65 per share.

Apple posted revenue of $46.9 billion for the quarter, and missed forecasts by $100 million. Those figures also came in short compared with the company’s performance during the same period last year, when it reported revenues of $51.5 billion.

Revenue from iPhones accounts for two-thirds of the company’s total revenue. Apple said it sold 45.51 million iPhones in the three-month period ending September, down 5% from the same period last year.

However, Apple is still optimistic about its business in the current, holiday-dominated quarter. Apple has forecast a revenue range of $76 billion to $78 billion for the fiscal first quarter, given the sales of its new phone lineup – the iPhone 7 and iPhone 7 Plus, especially so, given the crisis at rival Samsung with the Galaxy Note 7.

The technology leader is also confident about the market in China, where the middle class is expanding and smartphone ownership remains low, according to Chief Financial Officer Luca Maestri.

Chief Executive Tim Cook also expressed his confidence in the Indian market. Tim Cook said India was on the brink of a boom in smartphone sales as a more powerful 4G cellular network has been put in place this year and is going to expand next year.

Apple forecast gross margins of 38% to 38.5% for the next three months, which is similar or slightly higher compared to 38% in the just-completed quarter.


Apple has been trading sideways around the 61.8% level at 117.25 following a steady rally which sent the shares to 10-month highs at 118.59. Since the price action crossed over the two Mas from below, on July 07th, the prices have been supported by the short-term MA20 and the long-term MA50. With a decline in after-hours trading, Apple’s share price is expected to create a gap down on the chart. However, it is also forecast to cover the gap and extend the recent up move.

Trade suggestion

Buy Limit at 114.50, Stop loss at 111.95, Take profit at 117.25
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Re: Market Outlook by Capital Street FX

Postby CSFX.Support » Thu Oct 27, 2016 6:25 pm

Dragged By Rising Supplies, Natural Gas Extends Losses

U.S natural gas prices edged lower on Thursday after the U.S. Energy Information Administration reported that the commodity’s storage rose 73 billion cubic feet for the week ending October 21st, which is slightly higher than forecast of an increase of 71 bcf.

Natural gas retested the 38.2% Fibonacci level at $2.691 per million Btu following a pullback to as high as $2.775 per million Btu on Wednesday. According to the government data, total stocks now stand at 3.909 trillion cubic feet, up 52 billion cubic feet from a year ago and 182 billion cubic feet above the five-year average.

Natural gas Trade suggestion
Sell Stop at 2.675, Take profit at 2.625, Stop loss at 2.760

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Re: Market Outlook by Capital Street FX

Postby CSFX.Support » Thu Oct 27, 2016 6:49 pm

GBPUSD Reaches One-Week High Following Upbeat GDP Data

The British Pound erased earlier losses and moved firmly higher after data on Thursday showed the U.K. economy grew faster than economists’ forecast in the third quarter – the period following the country’s Brexit vote.

The pair GBPUSD hit an intra-day high at $1.22701 – the highest in the past week following the report by the Office for National Statistics which showed the U.K. gross domestic product expanded 0.5% in the July-September period. The figure was lower than the unusually strong growth of 0.7% recorded in the second quarter, but it has comfortably outpaced forecasts calling for an expansion of 0.3%.

Particularly, service sector inched 0.8% higher, offsetting declines in other three main industrial groups namely construction, agriculture and production. Compared with the same quarter a year ago, growth ticked up 2.3% – the fastest pace in more than a year.

Last quarter’s data is considered to be more importance than usual as it covers the first full quarter after the U.K.’s vote in June to leave the European Union. Since then, the economy has proved to be more resilient than initially forecast, which may diminish the chance that the Bank of England will slash rates further after a cut in August.

In the U.S, weekly jobless claims and durable and core durable goods orders for September are due later, followed by pending-home sales for the same period.

Since a steep slide in the period from September 29 to October 11 which sent GBPUSD below the 23.6% Fibonacci retracement at 1.29360, the pair has been moving sideways. GBPUSD has been kept locked between the support at 1.20880 and the resistance at 1.23300, but it is heading upwards to attempt the upper boundary. The upside is expected to extend as RSI index has bounced back from 50 line, confirming the uptrend.

GBPUSD Trade suggestion
Buy Stop at 1.22600, take profit at 1.23300, stop loss at 1.22000

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Re: Market Outlook by Capital Street FX

Postby CSFX.Support » Fri Oct 28, 2016 10:43 am

Advertising and Cloud Business Help Alphabet’s Revenue Surpass Forecast

Google parent Alphabet Inc reported revenue and profit that topped analysts’ estimates after the closing bell on Thursday. The web giant’ revenue, excluding payments to partner sites, rose to $18.3 billion in the third quarter, beating forecast for a $18 billion of sales. Profit before certain items climbed to $9.06 a share, which is also higher than average estimates of $8.61 per-share profit.

Despite heavy spending on unprofitable new products and projects, such as self-driving cars and smartphones, the company still registered a strong increase in revenue. This was thanks to robust sales of advertising on mobile devices and YouTube, and the cloud business where the company is competing with other market-leader including Amazon.com Inc and Microsoft Corp and IBM Corp

The search giant said it would repurchase about US$7 billion of its Class C stock.

Trade suggestion

Buy Stop at 825.10, take profit at 845.00, stop loss at 815.00

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Re: Market Outlook by Capital Street FX

Postby CSFX.Support » Fri Oct 28, 2016 10:51 am

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Daily Report on October 28, 2016

Global stocks plummeted on Friday while bond yields and the U.S dollar rallied amid rising speculation for a near-term U.S. interest rate hike. Most Asian benchmarks fell, while European shares opened lower. Europe Stoxx 600 lost 0.5% to open at 339.90. FTSE 100 inched down 0.4% to 6,960.81, and Germany's DAX retreated 0.8% to 10,635.55

The greenback held on to its strength as Upbeat U.S. data on Thursday including jobless claims, manufacturing activity and pending home sales strengthened the case for the Federal Reserve to raise rates by the year-end. The market attention was now turned toward third-quarter U.S. gross domestic product data which is scheduled to come out later today.

The Bank of Japan on Friday said that consumer price index – the bank’s preferred inflation gauge rose 0.2% from a year earlier in September. This is the weakest gain since September 2013, following a 0.4% increase in August. The gauge has headed lower since peaking at 1.3% in December last year, as Yen strengthened and domestic demand remained weak.

Crude oil prices were almost unchanged in Asian and early European trade after bouncing back on Thursday from three-week lows. Investors are waiting for a meeting of oil officials from OPEC countries this weekend in Vienna for more clues on a proposed production cut deal. OPEC will make a formal announcement on Nov. 30 about the outcome of its negotiation on the fate of the deal.



Technicals

USDCAD



Fig: USDCAD H4 Technical Chart

USDCAD is moving sideways to higher under the resistance at 1.34000. The pair is receiving huge support from the short-term 20-period moving average. Although RSI is floating horizontally, it remains in the bullish territory and suggests a market which is in favor of buyers. Investors are awaiting data of the U.S economy. If the report benefits the greenback, the pair can rise to as high as 1.34700.

Trade suggestion

Buy Stop at 1.34000, Take profit at 1.34700, Stop loss at



NZDUSD



Fig: NZDUSD H4 Technical Chart

New Zealand’s dollar resumed its slide after enjoying a correction from the support at 0.71100. The short rally could not defeat the short-term MA20 and send the market into the bullish zone. As can be seen from the indicator window, RSI bounced back from the 50 line and is heading downwards, indicating further declines.

Trade suggestion

Sell Stop at 0.71100, Take profit at 0.70500, Stop loss at 0.71300



EURGBP



Fig: EURGBP H4 Technical Chart

EURGBP have been trading in a thin range between the support at 0.88800 and the resistance at 0.90555 since a wide fluctuation on October 07th. The pair is on course to approach the upper boundary with bullish signal from two MAs placed below the price action. The 20-period MA has penetrated the 50-period MA from below, which consolidates the up moves.

Trade suggestion

Buy Stop at 0.89800, Take profit at 0.90555, Stop loss at 0.89400



WTI



Fig: WTI H4 Technical Chart

U.S crude prices are still under downward pressure from two MAs after failed attempts to cross over this dynamic resistance lately. The commodity headed back to the support at 49.30 and keeps the market in the bearish territory. In the event of continual downtrend, crude prices can make a break out through the 49.30 handle and retest another support at 48.30.

Trade suggestion

Sell Stop at 49.30, Take profit at 48.30, Stop loss at 49.80



SILVER



Fig: SILVER H4 Technical Chart

Silver has been trading in a thin range lately. As can be observed from the RSI chart, the market is in a neutral zone with the RSI moving back and forth around the average line, which divides the bullish area from the bearish area. RSI is pointing downwards, but to confirm a downtrend, we may need to wait until the price action has crossed over the two MAs successfully.

Trade suggestion

Sell Stop at 17.520, Take profit at 17.300, Stop loss at 17.700



EURO 50



Fig: EURO 50 H4 Technical Chart

Euro Stoxx 50 index pulled back from the firm support at 3062.00 which has retrained the price to fall deeper on the last two days. Today the index also receive another support which comes from the long-term 50-period MA at 3050.90. However, the parabolic sar has changed its direction to hang above the price action, suggesting extended down moves.

Trade suggestion

Sell Stop at 3062.00, Take profit at 3050.00, Stop loss at 3070.00


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