EUR/USD Under Pressure, As Market Still Believes Fed Will Hike In December
- San Francisco Federal Reserve Bank President John Williams said he still believes gradual U.S interest-rate rises make sense even after the surprise election of Republican Donald Trump as the next U.S. president. He said that the U.S. central bank is nerdy, geeky, but above all apolitical, and will remain so.
- Williams said the U.S. economy is close to maximum employment and inflation is poised to rise back to the Fed's 2% target, and that therefore it is time for the central bank to increase rates gradually.
- Minneapolis Federal Reserve Bank President Neel Kashkari said on Wednesday that the U.S. central bank treats fiscal policies as an "input" to monetary policy analysis and he will need to "wait and see" what happens under the new president and Congress.
- In our opinion the Fed will go ahead with a rate rise despite a shocking win of Republican Donald Trump in the U.S. presidential election.
- Long upper shadow on Wednesday’s candlestick line weighs heavily on the market. We took profit on EUR/USD short at 1.0920 yesterday. We will consider another short position, but in our opinion a recovery to 1.1015/20 (near 61.8% fibo of October-November rise) is likely now.
NZD/USD: RBNZ Cut Rates, As Expected
- The Reserve Bank of New Zealand said international factors, including U.S. political uncertainty, were the major risks to the country's economy after it lowered interest rates to a record low of 1.75%.
- The central bank indicated that future rate cuts were unlikely after its third cut this year as it forecast inflation heading back into its target range, but did not rule them out entirely.
- RBNZ Governor Graeme Wheeler said: “There is uncertainty about Brexit. There is lots of issues around debt accumulation in China, particularly around corporate debt. (…) And we have seen a result overnight that has clearly surprised the markets.”
- Wheeler said the RBNZ was lobbying the government to add further macroprudential measures to its arsenal in the form of debt-to-income ratio limits (DTI) as it struggles to get to grips with stubbornly low inflation without stoking an already hot housing market. Wheeler suggested the bank had no immediate plans to use DTI ratios as house price inflation - although "excessive" - was beginning to slow.
- The RBNZ ramped up its use of another macroprudential tool earlier this year, tightening lending rules, known as 'loan-to-value' ratios (LVRs), requiring buyers to put down a 40% deposit on investment properties.
- New Zealand's economy grew an annual 3.6% in the second quarter - better than most of its rich-country peers - the jobless rate also dropped to near eight-year lows of 4.9% in the third quarter as employment blew past all expectations. But at just 0.2%, inflation is well below the RBNZ's target band of 1 to 3%.
- The RBNZ reiterated that the kiwi, one of the best performing major currencies in the world, was higher than sustainable.
- We think the monetary easing cycle in New Zealand is over.
- The NZD/USD briefly rose to 0.7360 after the decision, but the reaction was short-lived. However, our NZD/USD outlook remains constructive in the medium term and will be looking to use near-term corrective moves to get long again at lower levels. We keep our bid at 0.7200.
TRADING STRATEGIES:
FOREX - MAJOR PAIRS:
FOREX - MAJOR CROSSES:
PRECIOUS METALS:
It is usually reasonable to divide your portfolio into two parts: the core investment part and the satellite speculative part. The core part is the one you would want to make profit with in the long term thanks to the long-term trend in price changes. Such an approach is a clear investment as you are bound to keep your position opened for a considerable amount of time in order to realize the profit. The speculative part is quite the contrary. You would open a speculative position with short-term gains in your mind and with the awareness that even though potentially more profitable than investments, speculation is also way more risky. In typical circumstances investments should account for 60-90% of your portfolio, the rest being speculative positions. This way, you may enjoy a possibly higher rate of return than in the case of putting all of your money into investment positions and at the same time you may not have to be afraid of severe losses in the short-term.
How to read these tables?
1. Support/Resistance - three closest important support/resistance levels
2. Position/Trading Idea:
BUY/SELL - It means we are looking to open LONG/SHORT position at the Entry Price. If the order is filled we will set the suggested Target and Stop-loss level.
LONG/SHORT - It means we have already taken this position at the Entry Price and expect the rate to go up/down to the Target level.
3. Stop-Loss/Profit Locked In - Sometimes we move the stop-loss level above (in case of LONG) or below (in case of SHORT) the Entry price. This means that we have locked in profit on this position.
4. Risk Factor - green "*" means high level of confidence (low level of uncertainty), grey "**" means medium level of confidence, red "***" means low level of confidence (high level of uncertainty)
5. Position Size (forex)- position size suggested for a USD 10,000 trading account in mini lots. You can calculate your position size as follows: (your account size in USD / USD 10,000) * (our position size). You should always round the result down. For example, if the result was 2.671, your position size should be 2 mini lots. This would be a great tool for your risk management!
Position size (precious metals) - position size suggested for a USD 10,000 trading account in units. You can calculate your position size as follows: (your account size in USD / USD 10,000) * (our position size).
6. Profit/Loss on recently closed position (forex) - is the amount of pips we have earned/lost on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account.
Profit/Loss on recently closed position (precious metals) - is profit/loss we have earned/lost per unit on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account.