GROWTHACES.COM Forex Trading Strategies:
Taken Positions
AUD/USD: long at 0.7600, target 0.7800, stop-loss moved to 0.7610, risk factor **
EUR/GBP: long at 0.7270, target 0.7450, stop-loss 0.7190, risk factor **
AUD/JPY: long at 90.75, target 93.00, stop-loss moved to 92.30 , risk factor ***
Pending Orders
EUR/USD: buy at 1.0720, if filled – target 1.1030, stop-loss 1.0570, risk factor *
GBP/USD: buy at 1.4740, if filled – target 1.4980, stop-loss 1.4600, risk factor ***
USD/JPY: sell at 121.20, if filled – target 118.00, stop-loss 122.50, risk factor **
USD/CHF: sell at 0.9735, if filled – target 0.9490, stop-loss 0.9370, risk factor **
USD/CAD: sell at 1.2640, if filled – target 1.2400, stop-loss 1.2750, risk factor **
NZD/USD: buy at 0.7500, if filled - target 0.7700, stop-loss 0.7400, risk factor **
EUR/JPY: buy at 128.50, if filled – target 132.50, stop-loss 127.00, risk factor ***
CHF/JPY: buy at 123.00, if filled – target 125.50, stop-loss 122.00, risk factor ***
AUD/NZD: sell at 1.0260, if filled – target 1.0000, stop-loss 1.0380, risk factor ***
EUR/USD: Buy At 1.0720, Target 1.1030
(buy at 1.0720, medium-term outlook is bullish)
- The Fed published minutes of the March 17-18 meeting. Fed officials disagreed widely on when they would be ready to lift interest rates. Some U.S. policymakers predicted a rate hike in June. Other officials expressed concerns that falling energy prices and a stronger dollar would keep pushing inflation below 2%. They said the central bank should hold off until later in the year. Still others said the economy would not be strong enough for an increase until 2016.
- In the statement the Fed issued after the meeting, it signaled it was moving closer to a rate increase by dropping language it had been using since December that it would be patient before starting to raise its benchmark rate. Federal Reserve Chair Janet Yellen said at a news conference following the meeting that just because the Fed had dropped the word patient did not mean the central bank would become impatient in deciding when to start raising rates. She also stressed that the Fed's first rate move would be dependent on how the economy, including the job market and inflation, perform in coming months.
- In the opinion of GrowthAces.com the Fed's first rate hike will not occur until September. But New York Fed President William Dudley and Fed Governor Jerome Powell sketched out scenarios in which the central bank could make an initial move earlier and then proceed in a slow and gradual manner on further rate increases.
- William Dudley, a permanent voting member on the Fed’ policy committee said: “I could imagine circumstances where a June rate hike is still in play. If the next jobs report is strong... if second-quarter GDP look like it is bouncing quite sharply”. He added, however, that the bar was probably a little bit higher for a June hike given recent data. Jerome Powell was even more hawkish: “You cannot wait until you see the goal posts coming because monetary policy works with these long lags. (…) By the time of the June meeting we will have had a lot more incoming data on just about everything in the economy. June is a different world than today”. He added: “I do not think we need to be in a hurry,” but “you have to start well before you actually hit the goal.” Jerome Powell said that the rising USD was restraining growth and that trend would be probably continued.
- Let us take a look at German macroeconomic figures. The industrial production growth of 0.2% mom was in line with the consensus forecast. But a downward revision to January’s reading (from 0.6% to -0.4%) left the annual growth rate weaker than expected at -0.3%. The trade surplus was flat at EUR 19.6 billion. Exports rose 1.5% mom, while imports went up by 1.8% mom. This suggests that net foreign trade may have contributed negatively to GDP in the first quarter. However, a rise in imports is a sign of German consumer spending strength.
- The EUR/USD came under pressure after hawkish comments from Fed’s officials. Although the reaction after the FOMC minutes was limited, Greece uncertainty provided the excuse to sell the EUR/USD. Our long EUR/USD position reached the stop-loss level. However, we maintain our medium-term bullish outlook on this pair. The strong USD dollar is a headwind on the U.S. economy. USD-buying positions are still very popular. However, the biggest fund are cutting exposure to the USD amid concern the Fed will delay a widely-anticipated interest rate hike. Currently fund managers are about evenly split on whether the USD will strengthen further. That is a change from several months ago when a majority expected the USD to keep appreciating.
- We do not change our medium-term outlook on the EUR/USD. Our trading strategy is to get long again at 1.0720, just above daily low on March 31. If the order is filled, the target will be 1.1030.
Significant technical analysis' levels:
Resistance: 1.0788 (hourly high Apr 9), 1.0834 (10-dma), 1.0888 (high Apr 8)
Support: 1.0713 (low Mar 31), 1.0650 (low Mar 20), 1.0613 (low Mar 19)
GBP/USD: BoE In No Rush To Raise Rates
(buy at 1.4740)
- Britain’s deficit in goods widened to GBP 10.34 billion from a shortfall of GBP 9.17 billion in January. It was the highest reading in seven months and much higher than the market consensus of GBP 9.00 billion. Goods exports sank to GBP 23.16 billion, their lowest level in any month since September 2010. The falling exports mainly reflected weaker sales to the United States. The total trade deficit, including services, also widened to GBP 2.86 billion from GBP 1.54 billion.
- While the trade deficit narrowed in the fourth quarter of last year and helped overall economic growth in the period, today’s figures show that Britain's strong economic recovery is reliant on consumer spending.
- The MPC meeting is scheduled for today. We expect no change, with the Committee keeping the rate at 0.5% and its stock of asset purchases unchanged at GBP 375 bn. The monetary authorities are in no rush to raise rates as inflation fell to zero in February, an historic low. Another reason for delaying interest rates hikes is the appreciation of the GBP against the EUR. This had the potential to prolong the period for which CPI inflation would remain below the target. We expect BoE to start raising rates in the first quarter 2016.
- GBP traders will be focused on general election (May 7) with two main parties being neck-and-neck in opinion polls, and the release of BoE quarterly inflation report on May 13.
- Our long GBP/USD position reached its stop-loss level today. We are looking to get long again at lower levels and have place our buy offer at 1.4740, low April 7. However, worries about the outcome of a May 7 national election may weigh heavily on the sterling, so the risk of long position is elevated. We expect the GBP to depreciate against the EUR. Our buy order on the EUR/GBP was filled at 0.7270.
Significant technical analysis' levels:
Resistance: 1.4885 (hourly high Apr 9), 1.4972 (high Apr 8), 1.4981 (high Apr 6)
Support: 1.4740 (low Apr 1), 1.4722 (low Mar 20), 1.4689 (low Mar 19)