Selloff EUR/NZD as of July 23, 2014

The rise and consolidation of EUR/NZD for weeks is a preparation to continue its payoff for a longer-term as a signal for forex of its decline. On its forex time frame for 4hours, the pair created a head and shoulders pattern that is an understated forex signal for a turnabout.

With prices at 1.5520 below the neckline of the pattern that already constitute a minor psychological level, a drop to1.5420 levels is expected. Observe that the pattern is about 100 pips in height, which suggesting that the breakdown result could be of the same size.

Expected to be released this week is the PMI figures of Euro zone with France and Germany showing weaker contraction or expansion in their manufacturing and services industries. More speculation of easing from ECB spurs weak figures that might push the euro lower. As it is, ECB already lowered a number of interest rates in the June rate statement.

The best option of the pair is still its downside; however moves are limited by expectations of rate hike.

China Sells $14.2 Billion of International Currencies in June

china forexThe central bank of China together with private financial companies sold a net of 414.2 billion or 88.28 billion Yuan of foreign notes last month.

This is significantly more than the net purchase of 38.657 billion Yuan made in May. The figures were provided by Dow Jones and gathered from central bank statistics. Dow Jones and Company is a publishing and financial information company in the United States.

This is the first month of net sales following 10 months of net purchases which suggests that capital started to stream out of the country.

The position of the banking system’s foreign-currency acquision amounted to 29.45 trillion Yuan at the end of last month which was lesser than 29.54 trillion Yuan during the previous month, according to figures from the People’s Bank of China. Said data also covers purchases and sales made by commercial banks but majority reflect transactions of the central bank. Majority of economic analysts see these figures as substitute for both inflows and outflows of foreign capital since most foreign notes that enter China is sold to the central bank.

Russia, Ukraine – Currency, Bonds, Stocks Go Down

The government bonds, ruble and stocks of Russia crumbles July 17 after a fresh sanction was leveled by the U.S. against Russian companies to penalize Putin for his inability to control separatists in the Ukraine. In agreement with this sanction are U.K., French and German PM and Prime Minister David Cameron said he that Europe preparing to impose to further sanctions on Russia that will be discussed in a meeting.

It appeared that Russia’s ruble dove to 2.6% within 5 days ending July 18 against at 35.1416 USD. This is the biggest weekly decline since January.

According to Bloomberg Correlation-Weighted Indexes that track 10 of the most developed currencies, for the past week, the dollar rose to 0.5%. Even the yen moved up 0.8%, becoming best performer for the euro weakened by 0.3%.

Given that, the market expects more consolidation on EUR/USD. However, this week will be seeing volatility in the euro.

Ideal Scenarios for Forex Trade

foreign exchange tradingTop event challenges for the pound and euro are: French manufacturing & services PMI; German manufacturing & services PMI, UK retail sales & preliminary GDP, and BOE meeting minutes.

Another round of weak data is expected from Euro zone PMIs as the figures are like the weaker expansion or a contraction for last months. The lowering manufacture and service performance to more easing expectations could weigh on GDP.

For UK, the slowing down in both GDP and retail sales could be bearish for the pound. If this takes place, a bigger correction might happen in the EUR/GBP and other pound pairs and it appears that the trend down has been exhausted.
Crucial in setting the tone for longer-term pound trading, however, is the meeting minutes of BOE. This is indicative if policymakers will still support an earlier BOE tightening; but possibly this will happen at the end of the year as mentioned in their previous decision of monetary policy.

The BOE minutes contained disturbing remarks that offer more crutch to the pound and that prop it above its counterparts.

Negative Reversal vs. Extended Bullish Divergence

Since 2014, the EUR/GBP has remained bearish since the high at 0.84 that year.

Daily chart shows there are bearish signs going with the lower lows and and lower lows.

  • Trading price within a falling channel.
  • Reflecting the bearish momentum are RSI pegged at 30, and stayed below 60, even going below 50.
  • Moving averages are in bearish alignment, 200-day above the 100-day, above the 50-day.

The moving averages are all sliding down and spreading apart; negative signs of any abatement in the bearish trend.

Last week, a price high at 0.7980 was lower than the 0.8033 high. The RSI high following oversold conditions was higher. RSI guru, Andrew Cardwell observed that negative reversal signal suggests another bearish swing.

More Optimism Seen in India’s Stock Futures Trading

india forexTraders in India’s stock futures sector are more upbeat following a 15 percent increase in the share of high-risk stock futures in the financial market for derivatives.

Trades in this segment have gained currency in 2014 as resilience in the minor market has provided traders with more buoyancy to obtain leveraged bets on individual firms.

Expectations that resurgence in economic growth would benefit particular sectors generated more attention in stock-specific dealings in the derivatives market, according to local analysts. They also maintained that sectors such as infrastructure, real estate, capital goods, electricity, and metals are in high demand. Investors added up on these stocks both in the currency and derivatives markets.

Experts think that the percentage of stock futures against total derivatives may not see substantial growth from existing levels. Nevertheless, the interest of investors in stock futures segment is believed to be moving from big names to rather smaller stocks.

Based on industry valuations, retail and high net-worth individuals’ interest in stock futures amplified one million shares since the beginning of this year. On the other hand, open interest of foreign institutional investors increased from one million to 1.5 million shares within the first two quarters of 2014.


Things to do in and around Canary Wharf

As a cohesive property development, organizational and investment group of companies, the Canary Wharf Group has accomplished one of the highest feats of achievements by transforming formerly neglected docklands into more that 16 million square feet of spaces for office, retail and leisure across its historic center for business and shopping in inner London.

For the last twenty years, it has grown many top-quality office spaces in London than any other development, assisting to position London as one of the most excellent place in the world to set a business.

Its kaleidoscopic offering of art, dance, fashion, film, music and more throughout the year plus more than 300 bars, restaurants and restaurants targets the Canary Wharf as the perfect destination for fun day or night.

Sate your appetite with tasty offerings in Alfresco lunch! Lunch Market in Wood Wharf opens between11:00 to 3:00 o’clock.

At 7:00 o’clock tonight in Canada Square Park, you will have your fill of free live music featuring the Royal Philharmonic Concert Orchestra bringing the best music of Gershwin and Porterin the 2nd concert of Twilight Delights concert.

On Thursday, you are invited to join all the action of the Tour de France as it returns to Wood Wharf for the final staging and grand closing celebration.

Even on weekends and Bank Holidays, you are given 3 hours’ free parking after spending £10 at any bar, café or shop in Canary Wharf.

Basic Analysis for USD/JPY Forecast

FOREXSince Japanese yen does not debilitate against the US dollar, so the exchanging rate of USD/JPY remains 101.32 that is well below the projected range over the 102 level. Yesterday, traders are slowly returning to safe haven trading after the turmoil in Israel and the Ukraine. Bank of Japan earlier this week held their policy and rates that disappointed the market that was expecting some encouragement to counteract the increase of sale tax last April.
The 2% economic growth this quarter was sufficient to enable PM Shinzo Abe to proceed with plans next year to increase in the consumption tax to 10% as shown by a Bloomberg survey.

The Abe admin will be announcing decision in December after studying the data through September. In a separate poll, economists projected a 2.4% growth this quarter on a yearly basis. The government has to raise levy to tackle the most onerous public debt burden in the world, despite the fact that it will redown to low-income households.

In its July economic report released, the government altered its economic assessment. Cabinet Office report said that economy of Japan is on its way to a modest trend of recovery and it is easing up following the abrupt increase in demand prior to tax increase from 5% to 8%.

FOREX Outlook for July 21, 2014

Although the markets in general have seen recently slightly energetic, however, ultimately, it settles in its old levels. Emerging pair in the market are the EUR/USD and the USD/JPY. Investors noticed that both pairs are demanding noteworthy support status, resulting in a feeling that something vigorous is coming within the short-term. This expectation could simmer down the markets a bit overall though, leaving the task to the coming summer months.
A nice hammer of outstanding support is formed by the EUR/USD pair and this is an encouraging sign of potential buying pressure.

Although nothing substantial is expected from the USD/JPY pair like the EUR/USD, but there is still a tremendous support level, and it appears that this is a good starting point for the market to bounce.
Watch out for coming improvements as there will be many of other markets out there that are available for trading; but the general opinion is that these markets represent the most ideal trading opportunities this week.

Significant Changes Involving Major Foreign Currencies

There have been major changes related to principal FOREX currencies.

The Canadian dollar increased for the fifth straight week to its highest level since February of last year.

The Euro currency decreased last week down to their lowest level since a year ago. The EU currency is nearly at the same blustering level against the US Dollar as the Japanese Yen.

British Pound Sterling went down for the second straight week to the lowest possible level since June 10.

The Japanese yen crept higher last week following a falling off the preceding week.

The Australian dollar pushed higher last week with buoyant positions which reached roughly 40,000 contracts. This was the highest since April of 2013.

The New Zealand dollar positions grew for the fourth straight week as the overall optimistic positions exceeded 15,000 contracts since June 10.

Most recent figures from the Commitment of Traders weekly report announced by Commodity Futures Trading Commission before the weekend indicated significant trader and speculator stakes for the US dollar decreased a bit through July 15.

General changes for major currencies revealed that big speculators preferred the Canadian, Australian and New Zealand dollars; Japanese yen; Swiss franc; and, Mexican peso. There were reductions on a weekly basis for the British pound sterling and euro.

The traders’ data showed the positioning of speculators and commercial traders in the futures markets.