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Forex Forum to Share, Discuss, Communicate and Trade Forex • Market Outlook by Capital Street FX
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Copper Market Outlook by Capital Street FX

PostPosted: Wed Sep 14, 2016 5:42 pm
by CSFX.Support
Copper Rallies on More Signs of Rising Demand And Falling Supply

Copper rose considerably on Wednesday, surging to over three-week highs at $2.1278/lb. The rally was driven by positive economic data in the United States and China recently, and the covering of short positions in China ahead of the upcoming Mid-Autumn Festival in China.

Data from the Census Bureau on Tuesday indicated that U.S household income registered a record growth rate in 2015 after years of stagnation. The median household income adjusted for inflation increased by 5.2%, or $2,798, to $56,516, from a year earlier, indicating the effects of sustained job growth in lifting the living standards of ordinary citizens who had been largely left behind by the recovery in the economy.

According to the report, the unemployment rate has declined from a peak of 10 percent in October 2009 to 4.9 percent last month, while income advanced by 4.4% to $57,200 in native-born households. The number of people living in poverty fell by 3.5 million to 43.1 million last year, pushing the poverty rate down to 13.5% in 2015 from 14.8% in 2014.

In China, a raft of economic data published this week contributed to signs of improvement in the world’s top copper importing country. Factory output, investment and retail sales all grew faster than expected in August, bolstering speculation of strengthening demand for the red metal.

On the Shanghai Futures Exchange, total positions in all copper contracts fell by 19,324 to 470,000 with trading volumes at 300,000 lots. Positions were closed by shorts while longs took no action due to the upcoming holiday between September 15-17. The Chinese market will be closed tomorrow and Friday for the mid-autumn festival.

Copper demand at the Multi Commodity Exchange (India) advanced by 0.19% for delivery in November and by 0.23% for delivery in February 2017 contracts. India ranks number 9 in the list of top 10 copper importers in 2015. The country signed an agreement with Chile last week to expand the India- Chile Preferential Trade Agreement (PTA), in which India has offered a concession to copper imported from Chile with a margin of preference of 50%. As copper is an important input for many sectors of India’s economy, the country expected the demand for this metal will soon grow beyond current domestic capabilities.

On the supply side, more mining firms in the Phillipine face potential mine suspensions under an environmental standard audit backed by President Rodrigo Duterte. The audit’s outcome will be issued on Thursday.

Copper bounced off the support at 2.09000 after more than 2 weeks of trading around this level. The metal has broken out of the descending trading channel and also moved past the MA20 at 2.1005, having broken through it from below. The RSI index finally surpassed the 50-line after spending a long period of time under this threshold, confirming the current uptrend.

Trade suggestion

Buy Stop at 2.1280, Take profit at 2.1400, Stop loss at 2.1100

Re: Market Outlook by Capital Street FX

PostPosted: Thu Sep 15, 2016 8:01 pm
by CSFX.Support
GBPUSD Ignores Subdued U.S data, Weighed by Potential BOE Rate Cut – Longs Still Profitable

British Pound snapped yesterday’s gains versus the U.S dollar after the Bank of England telegraphed a potential rate cut later this year. Meanwhile, faltering US retail sales and producer prices in August didn’t provide much support on the currency pair.

After cutting its benchmark interest rate and unleashing a quantitative easing program worth £435 billion ($576 billion) last month to cushion an economic downturn following the Brexit vote, the BOE left unchanged its key interest rate at a record low 0.25% and made no further changes to the size of its QE program on Thursday.

Given the recent data that reported the U.K economy performing stronger than expected, BOE officials were also unanimous on continuing with the plan of purchasing gilts and corporate bonds, and offering ultra-cheap loans to banks. However, nine members of the Monetary Policy Committee noted that near-term data could not be used to draw inferences for longer-term forecasts. Thus, there is a chance for a further cut in interest rates in 2016, should the economy weaken.

Earlier on Thursday, the Office for National Statistics reported that retail sales fell by 0.2% in August compared to July, translating into a 6.2% advance compared to the same period last year. Today’s data reported a smaller decline than the 0.4% fall expected, after July’s sales figures had been revised upwards, marking the strongest annualized rate of growth for the month of July since 2001.

In the U.S, a chain of economic data came out earlier today. But most of them failed to generate positive signals. U.S. wholesale prices were reported to be flat in August, mostly because of sharp declines in the cost of food and gasoline. This consequently dampened retail prices for the same goods and dragged the overall retail price index down by 0.3%.

Sales at U.S. retailers fell for the first time in five months. Not only were department stores suffering losses due to the robust of online sales, internet sellers were also hit for the first time since the start of 2015. Only grocers and clothing outlets recorded an increase last month. Supported by back-to-school demand, sales at apparel stores climbed the most by 0.7%.

Core retail sales, which exclude automobiles, ticked lower by 0.1% in August after falling by 0.4% one month earlier.

In a separate report, the Federal Reserve announced that output at American manufacturers fell 0.4% in August. The consensus forecast had called for a decline of 0.2%. The results are consistent with the ISM’s factory survey for August, which had signaled a contraction, and also worsened the outlook for producers, after a private survey of purchasing managers last week showed that manufacturing contracted in August.

The softer than expected data from the US, however, failed to lend support to the GBP and GBPUSD was trading down 0.2% in late morning US trade.

GBPUSD has been on a decline for more than a week, with the price action moving from the upper boundary of the upward trading channel straight to the lower boundary of the trading channel and also breaking through the short and long term MA’s in the process. The pair eventually fell out the range and has failed to crawl back. However, the down move is now facing a strong zone of support marked by the downward sloping trendline that connects previously registered lows of significance. Further declines are expected but a bounceback may occur when the market attempts a test of the red trendline.

Trade suggestion

Buy Limit at 1.31650, take profit at 1.32100, stop loss at 1.31300

Re: Market Outlook by Capital Street FX

PostPosted: Mon Sep 19, 2016 6:16 pm
by CSFX.Support
Investors Fleeing From Crude Even As Supply Controls Look Likely – Whats The Mystery?

Crude oil started the new week in positive territory after the clashes in Libya eased concerns over a global supply surplus amidst mounting signs that major oil producers are close to an output capping deal. However in a strange twist, oil investors are moving towards the sidelines as the meeting between OPEC and non-OPEC nations to discuss the freeze agreement draws closer.

Fighting between forces loyal to east-based military commander Khalifa Haftar and the local Petroleum Facilities Guard unit at the port of Ras Lanuf forced the tanker Seadelta to suspend the loading of 781,000 barrels of oil for shipment to Italy. Clashes in Libya have halted the loading of the first oil shipment from the port of Ras Lanuf since 2014, and turned a country which had pumped 1.6 million barrels per day into the second-lowest producer in the OPEC with an output of only 260,000 barrels a day in August.

Speaking at the end of a summit of the Non-Aligned Movement on Margarita Island on Sunday, Venezuelan President Nicolas Maduro stated that a deal to stabilize the oil market could be announced as soon as this month.

Iran’s President Hassan Rouhani, speaking on the sidelines of the same conference, said “Tehran welcomes any move aimed at market stability” but did not forget to mention the the words “fairness” and “fair quota” for all oil producers. OPEC’s third-largest producer has been ramping up its output after the sanctions imposed by the West were lifted in January, and is bargaining with OPEC on possible exemptions from output limits.

According to Algeria’s state news agency APS, OPEC Secretary-General Mohammed Barkindo said he was optimistic about the meeting that is to be held on Sept. 26-28, and OPEC may convene an extraordinary formal meeting if oil ministers reach a consensus on oil markets at the informal gathering on the sidelines of a conference of the International Energy Forum later this month.

Ahead of the meeting, speculators trimmed their positions on both short and long futures contracts. According to the Commodity Futures Trading Commission, wagers on falling West Texas Intermediate crude prices fell by 29,195 contracts to 101,079 contracts during the week ended Sept. 13. Long positions declined by 1.5%, bringing the net-long position 14 percent higher but reducing the total number of longs and shorts , also known as the Open Interest, to the lowest level since July.

WTI crude has bounced back from two-month lows at 43.00 in early trading today. The bounce back follows a decline that took away 5% of the crude value. There does not seem to be any concrete sign that confirms or signals a reversal into an uptrend. Both MAs are currently placed above the price chart, not to mention the fact that the 20-day MA has crossed the long-term MA50 from above. RSI also remains in bearish territory and is not even close to the neutral 50 line. Thus, the current rally may be limited.

Trade suggestion

Buy Stop at 43.70, Take profit at 44.50, Stop loss at 42.65

Silver Market Outlook by Capital Street FX

PostPosted: Tue Sep 20, 2016 7:22 pm
by CSFX.Support

Will A Supply Deficit Power Silver Higher Post Central Bank Meetings?

Silver inched higher in European trading hours on Tuesday, extending yesterday’s gains after two consecutive weeks of closing in the red. Year to date, the grey metal has outperformed gold, oil and many other commodities thanks to a softening dollar, highly volatile markets and growing global demand.

There is only one day until the U.S Federal Reserve and the Bank of Japan announce their rate decisions and publish their economic assessments. While the Fed is widely expected to leave interest rates unchanged, the BOJ remains a mystery when it comes to which stimulus measure will be deployed. Possible options not only include cutting rates further into negative territory, but also buying more bonds and even maintaining current policies as is. All options will be taken into consideration at this week’s meeting. Whatever the outcomes may be, U.S and Japanese economies will continue to remain under accommodative monetary policies, echoing the general tone of policy easing all over the world.

Artificially low interest rates, disappointing economic indicators and political uncertainty (including the Brexit aftermath and upcoming U.S presidential elections in November) have caused investors to flock into safe haven assets such as silver and gold.

In general, silver prices often move in the same direction as gold prices but due to smaller market volume, silver tends to be the more volatile precious metal. Additionally, while gold is a purely monetary instrument and used for investing purposes mostly, silver demand is also derived from industrial applications.

“The World Silver Survey 2016,” an annual report published by The Silver Institute published in May said that the silver market in 2015 witnessed a physical deficit of roughly 130 million ounces, as demand increased by 39 million ounces to 1.17 billion ounces, outpacing 1.04 billion ounces of total supply. 2015 represents the third consecutive year of deficits and marks the second-largest deficit year since 2008.

High demand was driven by higher retail investment, jewelry and silverware fabrication and solar and demand for ethylene oxide catalyst. The report noted that demand for silver in solar panels grew by 23% on a yearly basis to 77.6 million ounces, demand by investors for bars and coins surged by more than 56 million ounces to 292.3 million ounces, while demand from the jewelry and silverware industries increased for the third consecutive year and hit a fresh record high of 226.5 million ounces.

According to a report published in August by Capital Gold Group, demand for silver used in solar panel manufacturing will “sky-rocket in the next five years” as industrial economies such as US, Japan, Germany and China try to bolster their green credentials by shifting from burning fossil fuels to using renewable energies to produce electricity.

Against the background that silver demand is increasing, the supply side seems subdued. Around three quarters of the world’s silver output is a by-product of mining for other metals. Therefore, cuts in capital expenditure and the closure of zinc, lead and copper mines over the last two years due to more stringent environmental policies in China and aging mines in Australia and production cutbacks by the biggest mining companies have effectively driven down the supply of silver.

Silver has been moving sideways for nearly two weeks between the resistance at the 23.8% retracement level at 19.365 and the support at 18.765. As a result, the ADX index has ticked lower below 20, suggesting cautiousness in the market that is keeping both sellers and buyers on the sidelines. The price action is trading very close to the MA’s and the MA’s themselves are tied very close together. Further the RSI is also crawling very close to the neutral level. All of this indicates a market that is range bound for the moment.The metal is expected to continue this current consolidation period until a breakout stemming from the fundamental side, coupled with cues from related markets such as gold and the US Dollar define a new direction.

Trade suggestion

Buy Stop at 19.200, Take profit at 19.370, Stop loss at 18.940

Re: Market Outlook by Capital Street FX

PostPosted: Wed Sep 21, 2016 7:34 pm
by CSFX.Support
Adobe Systems On Cloud 9 – Cloud Computing Powers Profits – Buying Suggested

Adobe Systems Inc. looks set to open the U.S session with a gap up on Wednesday after the company reported better-than-expected earnings for the third quarter following the market close yesterday.

For the fiscal quarter ending August 2016, the software company posted earnings of $270.8 million, or 54 cents per share, up from $174.5 million, or 34 cents per share for the same quarter in 2015. Excluding certain items, Adobe’s earnings per share rose to 75 cents, reaching the top end of its forecast range from 69 cents to 75 cents.

Revenue rose 20.4% on a yearly basis to $1.46 billion, thanks to record revenues of $990 million in the Digital Media Solutions segment. Within the segment, the Creative Cloud (CC) and Document Cloud (DC) categories contributed $803 million and $187 million in revenue, respectively, reflecting the effectiveness of the focus towards adoption of cloud technology.

Shantanu Narayen, Adobe president and chief executive officer said that “Our leadership in cloud-based content and data platforms make us a mission critical partner to the world’s biggest brands as they transform how they engage with their customers.”

In a prepared statement, the California-based company’s Chief Financial Officer Mark Garrett stated that he expected “another record quarter” in the current three-month period. Garrett forecast his company’s revenues in the range of $1.55-$1.6 billion for the fiscal fourth quarter, and between $5.8 and $5.85 billion for the whole fiscal year 2016.

Adobe shares soared back above the daily moving averages yesterday, suggesting a short/medium term bottom and a reversal into an uptrend. As can be seen from the ADX chart, bears are getting weakened. While the ADX has lowered to 28.31 from the highs at 50.27, the +DI line has crossed over the –DI line from below. The RSI index has surpassed the neutral 50 line, providing confirmation for the up-trend. The price action has broken through both the MA’s from below and both MA’s should be underpinning the price moves as solid support going forward.

Trade suggestion

Buy Stop at 101.70, take profit at 104.05, stop loss at 98.50

Gold Market Outlook by Capital Street FX

PostPosted: Thu Sep 22, 2016 7:27 pm
by CSFX.Support
Gold Rally Snaps As Risk Tolerance Rises – Is 1338 Possible?

Gold retreated early in the European session on Thursday. Investors took profits after the rally yesterday that lifted prices by nearly 1.5% on the day, and shifted their attention to riskier assets after the U.S. Federal Reserve kept interest rates unchanged.

Fed Insists on A Rate Hike In 2016

As expected by the majority of market participants, the Fed stood pat on the benchmark rate at the September meeting. The central bank decided to hold its target rate for overnight lending between banks in a range of 0.25 to 0.50%. The Fed stated that the decision did not reflect any lack of confidence in the U.S economy. Policymakers would like to witness more evidence of continued progress towards its goals, before deciding on the next steps.

In the current environment, one of two targets set by the central bank has been reached. The labour market has created an average of 182,000 jobs every month so far this year. Average hourly earnings and participation rate are rising. Nevertheless, inflation is still far below the Fed’s 2% goal. Considering recent disappointing economic data that reflected falling consumer consumption, and weaker activity in the manufacturing and service sectors, the Fed probably needs to leave the low-rate environment intact for some more time to support the economic recovery.

Nonetheless, the central bank also indicated a rate hike by the end of this year. Speaking at the FOMC Press Conference following the rate decision, Fed Chair Janet Yellen said U.S. growth was looking stronger and rate increases would be needed to keep the economy from overheating. According to the CME Group’s FedWatch Tool, traders are pricing in a nearly 60% possibility of a December rate increase.

Gold’s Upside Seems Limited Due To Fading Attractiveness
Gold rose sharply on the deferral of an interest rate hike. A softer dollar, which gold is traded in globally, makes the precious metal less expensive for investors holding other currencies. Low interest rates also boost gold’s appeal as it doesn’t offer a yield and incurs an opportunity cost to the investor for holding it. However, the upside seems limited. Gold’s main function of hedging against risks, is being overlooked as speculators jump into riskier but higher-yield assets such as stocks. Such assets seem to be benefitting from perceptions of a continuation of the low interest rate environment.

On the supply side
Gran Colombia Gold Corp. is forecast to halt production by Friday. A local mining collective, comprised in its majority by illegal miners, convened a strike in Segovia and Remedios, (in which the company’s Segovia Operations are located) and prevented mining activity. Gran Colombia Gold is continuing to produce gold from stockpiles. Still, the supply is limited and not expected to sustain operations into next week.

CEO Lombardo Paredes said that a stoppage could prevent Gran Colombia Gold from reaching a 2016 output target of 145,000 to 150,000 ounces.

Technical Analysis

Gold took off after moving sideways around the 1315 level since the start of this week. The precious metal has successfully breached through the 38.2% Fibonacci retracement at 1330.00. Previously, the strong rally sent the market into the overbought territory. Gold is re-gaining momentum after a slight retreat. Two MAs that have converged and are currently placed below the price action. Thus, the metal is expected to surge and reach the 50.0% level.

Trade suggestion

Buy Stop at 1334.00, Take profit at 1338.50, Stop loss at 1330.00

Re: Market Outlook by Capital Street FX

PostPosted: Fri Sep 23, 2016 7:55 pm
by CSFX.Support
Unfazed By German Data, Euro Trades Higher – Some Buying Potential Remains

The Euro shrugged off early losses after the release of mixed data from the euro zone, to extend its gains to a third consecutive trading day on Friday. Bullish bias reigned in EURUSD as investors digested the outcome of the U.S Federal Reserve meeting on Wednesday.

Euro-area Economic Growth Slides to A 20-month Low
Data from Markit reported that the euro-area economy’s growth rate slid to a 20-month low in September. The Markit monthly composite PMI remained above the 50 mark that indicates expansion, but inched down to 52.6 in September from 52.9 one month earlier. The service sector weakened to 52.1 – the lowest since December 2014. Meanwhile, manufacturing improved to 52.6 in the current month, beating expectations for a reading of 51.5.

The slowdown in the pace of growth within the EU service sector was largely due to fatigue in Germany, where the service sector delivered its worst performance since May 2013. Europe’s largest economy saw its composite PMI drop to a 16-month low at 52.7 this month, from 53.3 in August. The general number was dragged down by a decline to 50.6 in the country’s service sector.

On the contrary, France posted its strongest performance in 15 months, with the measures for both manufacturing and services improving. According to the Markit report, France’s composite PMI rose to 53.3 from 51.9 in August. In particular, the manufacturing sector index rose to 49.5 in September from 48.5 one month earlier. Likewise, the gauge for services rose to 54.1 – the best result since the start of 2015.

The Pace for Further Hikes Seems to be Decelerating
The Euro declined a little in the early European trading hours but soon regained ground as the U.S dollar has been under greater pressure. Althought a rate hike by the FED in December is quite possible, the pace for further hikes seems to be decelerating.

Looking back to last December when the Fed raised its rates for the first time in a decade, four rate hikes were forecast for the following year 2016. However, until the end of the 2016 September meeting, not even one rate hike has been undertaken by the Fed, as U.S economic growth has remained uneven.

With a labor market moving towards full capacity, Fed chair Yellen said that the case for an interest rate increase had been strengthened. However, considering subdued economic growth abroad and weakness in inflation, as well as relatively sluggish performance in the manufacturing and service sectors at home, the time required for the world’s most powerful central bank to complete its policy normalization process may be longer than initially thought.

Technical Analysis

Fig: EURUSD D1 Technical Chart

Euro found firm support at 1.11500 which has recently helped the pair avoid falling deeper into losses. The currency pair broke above the 23.6% retracement level yesterday and continues heading upwards in the last session ahead of the weekend. The RSI index has just confirmed the uptrend by surpassing the 50 line. Nonetheless, the downward trendline connecting the lower highs over the last couple of months is within sight. The resistance offered by the downward sloping trendline may contain the upside. Thus further gains currently seem limited.

Trade suggestion

Buy Stop at 1.12145, Take profit at 1.12500, Stop loss at 1.11800

Re: Market Outlook by Capital Street FX

PostPosted: Mon Sep 26, 2016 7:03 pm
by CSFX.Support
Will Clinton Victory Ignite A Multi Year Bull Run In Natural Gas?

Natural gas rose for the first time in the last four trading sessions, on Monday. After drifting lower in the second half of last week due to both fundamental and technical pressure, natural gas bounced back today as hedge funds increased bullish wagers on the commodity.

Natural Gas Demand-Supply Outlook
Natural gas pulled back from 16-month highs at $3.097 on Wednesday, and was driven lower on Thursday after the U.S. EIA reported larger-than-expected stocks for the week ended Sept. 16. Data showed that supplies rose 52 bcf in the reported week, topping the average rise of 51 bcf expected by analysts. Total stocks surged to 3.551 trillion cubic feet, up 140 bcf from a year ago and 268 bcf above the five-year average.

U.S. Commodity Futures Trading Commission data released on Friday indicated money managers increased their net-long positions in natural gas futures and options for a second week to the highest level since 2014. NG futures have staged a dramatic recovery after a warmer than usual winter led to low consumption and left behind record inventories earlier this year, sending prices to multi-decade lows in March. Scorching summer and unusually warm weather for this time of year has boosted air-conditioner use this year.

As a result, gas demand from electricity generators has been pushed to a record, helping erode an inventory surplus that was weighing on prices. Drillers cut costs and capped production from shale due to low oil prices. Thus, stockpiles may fall below normal levels before the winter. In the event of a cold winter, the NG market may be left with a deficit and could be vulnerable to price spikes.

Gas used by power plants has risen 55% since 2006 not just due to a boom in production from U.S. shale fields that increased supply and drove down prices. Furthermore, governments are gradually replacing coal with gas as it produces less carbon dioxide than coal when burned.

Japan’s demand for liquefied natural gas (LNG) is expected to increase regardless of the nuclear re-start program. Japan is the world’s largest LNG importer at about 35% of global demand. Nonetheless, this country is still overly reliant on oil and coal when it comes to energy use. Japan is being criticized for using a significantly higher ratio of oil and coal in generating power than other developed countries. As a result, Japanese government to encourage natural gas consumption instead of oil and coal to reduce CO2 emissions.

U.S. Presidential Debate
Natural gas investors are waiting for the debate between U.S. presidential candidates that is scheduled for later today. Given different economic policies of the two candidates, U.S gas demand will be influenced. According to Bloomberg Intelligence estimates, gas use for power generation in 2030 will fall by 11% compared to the level of 2015, if Republican Donald Trump is elected.

Trump is among those supporting to eliminate clean air rules proposed by President Barack Obama. Obama’s Clean Power Plan targets to wean the U.S. off coal used by power plants to reduce emissions by 32 percent by 2030.

On the contrary, the volume of natural gas burned by America’s power plants may rise by 5.8 percent should Democrat Hillary Clinton, who has pledged to enforce the Obama plan, becomes the first female president of the U.S.

Technical Analysis

Natural gas has witnessed a strong rise since March 2016 which has doubled and pushed the commodity price above 3.000 for the first time since May 2015. The price retreated after the market hit the overbought threshold but is expected to extend the advance as both the short-term DMA20 and the long-term DMA50 are moving below the price action, fueling bullish momentum in the market.

Trade suggestion

Buy Stop at 2.985, Take profit at 3.020, Stop loss at 2.930

Mexican Peso Market Outlook by Capital Street FX

PostPosted: Tue Sep 27, 2016 7:50 pm
by CSFX.Support

Mexican Peso Rises From All Time Lows Following Trump Defeat – But Can The Rally Sustain The Momentum?

The Mexican Peso rose nearly 2% on Tuesday after Democrat nominee Hillary Clinton outperformed her rival Donald Trump in the first of three presidential debates. Recently, the peso has been moving in inverse proportion to the probability of a Donald Trump victory, as the Republican candidate is perceived to be a significant threat to Mexico’s economy.

The peso plunged to a record low of about 19.90 against the U.S dollar last week and had hovered near an all-time low around the 20.00 threshold for a couple of day ahead of the widely expected debate, as polls indicated support was growing for Trump. Trump has pledged to renegotiate the two-decade-old North American Free Trade Agreement. This could spell trouble for the Mexican economy as the United States is Mexico’s biggest single export market.

If Trump is elected, and the NAFTA agreement is terminated, some Mexican goods will be slapped with a 35% tariff, such as Ford cars that are made in Mexico and sold in the United States

Furthermore, the Republican nominee blamed immigrants from Mexico for causing a number of U.S’ evils such as violent crime, drugs and the loss of jobs. Trump launched his campaign last year, promising to step up immigration controls and even vowing to build a wall along the US – Mexico border.

Until the Election Day on November 8, there are two more debates and the peso is foreseen to keep fluctuating with each event.

However, in general, Trump is not the only reason triggering the downfall of the Mexican peso versus the greenback. Depressed oil prices, declining foreign investment, and stagnating wages for low-income workers are among structural problems that Mexico’s government is facing. Mexico’s economy was reported to have contracted for the first time in three years in the second quarter of this year. Thus, it is hard for the peso to hold on to today’s gains, purely based on a Clinton victory.

USDMXN rebounded from the 23.6% Fibonacci retracement level at 19.44059 after falling steeply from all-time highs at 19.91962. The sharp decline has brought the market into bearish territory and pushed the price action to move past the two moving averages. But the downside seems short-lived as the price has crossed back above the long term MA50 from below. With the RSI Index nearing the oversold territory, the market could ounce back and resume its rise to test the recent highs.

Trade suggestion

Buy Stop at 19.60000, Stop loss at 19.44000, Take profit at 19.74000

Re: Market Outlook by Capital Street FX

PostPosted: Wed Sep 28, 2016 5:12 pm
by CSFX.Support
Golden “Rio” Quarter For Nike But Future Orders Disappoint – Selling Favourable

Shares of Nike Inc. dropped in the after-hours trading session on Tuesday after the world’s largest athletic gear maker reported earnings and revenues that topped forecasts coupled with a slowdown in future orders growth.

The Rio Summer Olympics helped give Nike’s sales a boost. The company reported that sales for the fiscal first quarter rose 7.7% to $9.06 billion, beating the average analyst estimate of $8.87 billion. Nike’s earnings climbed 5.9% to 73 cents a share, outshining Wall Street’s forecast of 56 cents a share.

However, future orders for delivery in the period from September 2016 through January 2017 rose at a disappointing pace of 5% to $12.3 billion, falling behind the figures from the same period a year ago. Future orders for the same period last year had registered a 9% rate of growth. Meanwhile, inventories jumped 11 percent from the year-ago period to $4.9 billion in the three months ended Aug. 31.

Nike finance chief Andy Campion said on Tuesday that Nike would no longer report future orders in its quarterly earnings news releases, as the athletic apparel company is aiming to sell those products directly to consumers, instead of sellling through wholesale partners.

Nike recorded consistent sales growth across the board, with double-digit gains in foreign markets including China, Japan and Western Europe. Nonetheless, sales in North America, which comprises the lion’s share of Nike’s business, were only up 6%, due to increasing competition from rivals Under Armour Inc. and Adidas AG. Both companies are grabbing market share from Nike in crucial categories such as basketball and casual footwear.

Technical Analysis

Nike has rebounded to trade above the 23.6% retracement level at 55.25. But a downfall in after-market trading may create a big gap down on the market open today and depress the price back below this level. The next support at 53.10 is within sight and may be tested. The market setup currently looks bearish as the RSI has dropped below 50 and is headed towards the oversold territory, while the price action has broken through both MA’s from above and both MA’s placed overhead are exerting downward pressure.

Trade suggestion

Sell Stop at 53.76, Take profit at 53.10, Stop loss at 54.75