22 June 2015 - The Elusive Greek Deal
As we approach yet another deadline in the ongoing Greek drama, it has become increasingly likely that a deal which will suit Germany is probably not going to happen for now. The political ramifications of Greece exiting the Eurozone are quite profound, and no one in Europe would like to see this happen. The Russians have always had an interest in having a military base in Greece, and Tsipras has the power to make it happen. It is a possibility that Greece quietly defaults, makes a few extended repayments and continue with negotiations to save face until the public loses its taste for the story, and life eventually goes on.
The Euro is currently trading lower on the day between the 55EMA and the 200EMA.
EURUSD Daily Chart
18 June 2015 - Australian Dollar Attracting Investors?
The Australian Dollar has been relatively quiet with the RBA having kept no secret of its intentions to keep a fairly low priced currency. The past months have seen a general appreciation of the AUD as the markets disregard RBA comments at every turn. The FOMC statement yesterday has boosted the Australian Dollar v the USD, as the FED continues to exercise caution on rate hikes. To further test the RBA resolve on a potential rate cut, the weakness of the New Zealand Dollar has pushed the Aussie Dollar even higher. The reason behind this is because the RBNZ cut rates by 25 basis points to 3.25% which sparked a sell off in New Zealand Dollars. The key question is whether or not the RBA respond with rate cuts, and if they will lose control of the Aussie Dollar? A failure to act could potential signal investors that buying the AUD may not be a bad idea after all.
The Australian Dollar has broken above its 55 day EMA.
AUDUSD Daily Chart
17 Jne 2015 - BOE Vote Remains Unchanged
The BOE vote remains unchanged at 9-0 in favour of keeping rates at the current level and maintaining the asset purchasing program. The big news for Sterling is the impressive jobs data, showing a stable unemployment rate at 5.5%. Despite the BOE clearly indicating that they will not be guided by other Central Banks policies, the market prefers to latch onto the expectation that inflation will start to increase. This is fuelling speculations of a rate hike, possibly ahead of the US. That being said, a rate hike remains unlikely at this point, but it hasn’t stopped Sterling from opening very strongly in the London trading session. The FED interest rate decision is due at 7pm (UK time) today followed by a speech from Janet Yellen.
Sterling continues its bullish run trading above its 200 day EMA.
GBPUSD Daily Chart
15 June 2015 - No Deal!
Talks over the Greek bail out have failed for the 10th time. Details on the contents of the proposals are elusive, but Greek officials are saying that the sticking points are VAT hikes and pension cuts. Greece appears more willing to negotiate on fiscal targets but not further austerity / tax cuts. It makes sense for Greek officials to avoid angering Syriza hardliners which could lead to a revolt. At this stage it is evident that, neither the IMF nor Greece actually wishes to see Greece exit the Eurozone. So what does this mean? Well, simply put, it is highly likely that the charade will continue. All eyes will be on the Euro group Finance Minister’s meeting this coming Thursday.
The Euro appears to be slightly bearish on the day, it continues to trade very close to the 55EMA.
EURUSD Daily Chart
10 June 2015 - Oil Moves Higher In Intra-day Trading
The OPEC meeting left oil production unchanged. Members of OPEC felt that it was better for market forces to determine the supply of oil. This confidence probably signalled that, in the short to medium term, producers felt that oil prices may likely turn higher and increase their profitability. Oil is trading intraday at $61 per barrel ahead of the EIA inventory report released later today. A sharp move to the upside, would likely affect the Euro as well. We shall see how the EIA report will move the markets.
Oil is trading at the 200 EMA a key resistance level over the past few days.
WTI Crude Oil Daily Chart
9 June 2015 - HSBC Under Fire
HSBC has had a turbulent 2015. From money laundering probes in the UK and Switzerland which lead to fines of $43m, to US lawsuits of up to $34bn surrounding mortgage debts, and now the bank has announced it will axe 25,000 jobs across the globe. It appears as if HSBC is taking this drastic action in order to protect its organisation. There is also the potential that other institutions may have been involved in similar practices but not met with similar punishment – yet. HSBC shares are down on the day trading at 612p per share.
Technically traders are in a potential bearish formation based on the trend line break.
HSBA.L Daily chart
8 June 2015 - Is the Bond sell off losing momentum?
Bonds have sold off globally in the wake off a potential rise in interest rates in the United States. Even though the situation in Greece seems to be improving, it would not be a surprise to see negotiations fall apart, as has been the case in previous meetings. There is a potential that some investors may be thinking of long positions in the short term, especially on European Bonds. As we approach the FED’s interest decision next week, retail sales figures from the US will be in focus. It appears that it will be an interesting week for the markets.
The Eurobund is trading lower today, well below its 200EMA.
Bund Daily Chart
5 June 2015 - OPEC Meeting in Vienna
As we approach the start of the US session and the much anticipated Non-Farm Payroll, the last before the US interest rate decision; we also have OPEC meeting in Vienna. The market is expecting that there will be no change in production capacity, meaning a surprise decision will likely have a major market impact. There is a general market consensus that there is an oversupply of oil, from both the US and Middle East, and higher oil prices are unlikely. As the demand appears to be increasing, is not strong enough to warrant supply restrictions. Iran prepares to potentially join the International Oil market, there is likely to be a rush to clear their current stocks… in effect causing more supply. It will be interesting to see what OPEC concludes at the end of the meeting today.
Crude Oil continues its bearish trend but is now finding support at the 55 Exponential Moving Average. A break could lead to a test of $56.45-47 per barrel.
WTI Crude Daily Chart
3 June 2015 – OPEC Meets on Friday, Oil in Focus
Oil has been on an upward trajectory since March. As we approach the OPEC meeting on Friday, ministers from the major oil producing countries have been signalling that current price levels are good, and that both supply and demand are in balance. The ministers from the U.A.E. and Qatar are signalling that demand is increasing, and perhaps this might lead to a gradual price rise. Since the majority seem to be circling around the idea that there is room for price increases, traders have to be cautious. Oil production in the USA has also risen steadily from January 2014 to April 2015. Traders will have to wait to see what OPEC decides come Friday.
Oil prices have held firmly at the 200EMA . A break of the key resistance level could see prices go higher.
WTI Crude Oil Daily Chart
2 June 2015 – Euro Area Inflation Returns to Positive
As Greece once again nears a deal at the 11th hour, the Eurozone is showing some promising signs of a recovery. Inflation has recovered from January’s lows to show a 0.3% positive inflation rate. This is after being in negative territory for the past over 5 months. The market has responded ahead of the NY session with a stronger Euro. The FED still keeps giving mixed signals on interest rate rises, but Chair Yellen remains positive and has been quickly sweeping aside negative data as simply noise and no reason for concern. If we were to read between the lines, such positivity may have an agenda. The Euro is stronger today against the Dollar and we shall see if this strength will continue or be overshadowed by Yellen’s optimism.
The Euro is currently trading at $1.1020 very close to its 55 Exponential Moving Average. A break above the average may signal a stronger rally, any resistance in that area could mean a potential decline.
EURUSD Daily Chart
1 June 2015 – D-Day For a Greek Default Approaches
The Greek PM, Alexis Tsipras has kicked the can another mile down the road, as he deems EU proposals unreasonable. It appears there is no more room left for manoeuvre. This Friday Greece is expected to either pay €304m or register a default which could start the process of a Eurozone exit, and even potentially see the banking system go bust. Greek citizens are lining up at ATMs to retrieve whatever cash they can before D-Day. The bank run so far is estimated to be about €800m. As it becomes increasing likely that Greece may default, the impact is being felt in the Euro as it continues to trade significantly lower in the European session.
The Euro is trading at $1.0904, below its 55 day Exponential Moving Average.
EURUSD Daily Chart