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Articles by Mark De La Paz

March 12th, 2015 @ 12:09 pm by Mark De La Paz

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The trading day appears to have surprised many in the market with a strong correction among the dollar pairs that has seen the commodity set taking the lead heading back up as the RBNZ sounded just hawkish enough to warrant profit taking and a pullback to the daily EMA lines while Australian data also presented some surprises with the unemployment rate at 6.3% against the steady 6.4% consensus. From then on it was a scramble to book some profits as we face some key metrics out of the US.

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For a while now it has been our contention that you cannothave sustained strength in the US economy without this eventually filetering through to the consumers. Recall last week gave us another surpise in NFP which turnedout at 269K on Friday against a 240K consensus helping pull down the unemployment rate to 5.5% from the previous 5.7%. Now its time for us to know whether all those new jobs is finally having some effect. The US economic calendar has Retail Sales numbers turning out at 1230GMT with consensus expectartions calling for a recovery in demand at 0.3% for the headline number and 0.5% in the core data. Given the extent of dollar’s rout today we will be avoiding any response with as expected or disappointing numbers but double the consensus forecast and we will look at current pullback pricing as coming from a good vantage point to go greenback long once more.

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March 10th, 2015 @ 1:41 pm by Mark De La Paz

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One would have thought that after Fridays hugely firmer results in the US jobs data we would be seeing a straightline up for the US dollar. After all we did see new lows in Euro, Pound and the Swiss Franc while the commodity pairs also dropped under their supports. And yet when we look at our charts monday was your tupical pullback and todays new dollar highs have been unsustainable with the currency pulling back across the pairs. It appears that despite the mid-year Fed hike story reinforced by the latest jobs numbers markets are still wary of pushing the dollar anyfurther.

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Still we will continue to call for weaker Euro plays as the ECB has already started printing money with an interesting choice for its first sovereign bond purchases, Germany and Italy. Note the idea here is basically to force players in the secondary market to channel capital where they could be much more productive by inducing them with cash and hefty profits.

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March 6th, 2015 @ 1:07 pm by Mark De La Paz

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After three months of seeing actual numbers beat the experts forecasts, currency markets appear to have learned its lesson on underestimating the US economy driving both Euro and Cable already lower while seeing aussy and kiwi gaining ground working on the notion that more jobs in the US would mean greater consumption and commodity imports. Chart wise the move lower in Euro opens us further toa dive the big psychological number at 1.0000 provided US jobs growth remains strong opening the argument of increased consumption and consequent inflation sooner rather than later. For GBPUSD the break of 1.5195 reopens the January consolidation lows at 1.4951 though again much of what happens here will be about the jobs data.

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March 5th, 2015 @ 11:43 am by Mark De La Paz

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After all the statements, opinions, comments, and anaylsis by officials monetray and fiscal, politicians and the typical punter we raise the prospect of todays meeting possibly turning into a dud as far as actualprice action is concerned. True we are likely to get a date on when the actual bond buying will start, likely this monday but from the looks of the markets things have already been priced in when the not so unexpected decision was announced lasty January.

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March 4th, 2015 @ 2:09 pm by Mark De La Paz

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Market thus far has seen mixed trades though exciting enough as the European currencies retreat amidst weakness from its Services sector data while Kiwi and Aussy attempt a follow through to yesterdays bounce while USDJPY is seeing a very tight range. Technically the more interesting trades are in EURUSD and GBPUSD as these are follow throughs to clearly bearish trends while the commoditypairs are still stuck in a consolidation.

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Up ahead we will be looking at the US ISM Non-manufacturing PMI figure with consensus expectations actually marginally lower ofthe previous read at 56.5. More importantly perhaps market will be looking for signs that we wil stll get a firm read in Friday’s Non-farm Payrolls by looking at the employment component of the report. Another way of looking at all these is a comparative with European data weak a strong read for the US should see some follow through sell-off.

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March 3rd, 2015 @ 12:59 pm by Mark De La Paz

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As we have called yesterday, the Euro remains a sell-on rallies as people look to the start of the ECB’s version of quantitative easing in Thursday’s policy meeting. Recall that the central bank has previouslly announced March as the starting point for its own effort of flooding the market with cash, a move that will generally be seen as Euro bearish. The question though is how do we position oursleves ahead of this announcement? Which Euro pair should we focus on?

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A look at the charts draws our attention to a straight forward EURUSD play that although seeing a break lower the prior weekstill has prices roughly just under the consolidation floor for February. Other attractions would ofcourse involve EURAUD which still has plenty of room from its 1.3963 lows in January, while the no go for us would be EURJPY which has the potential to whipsaw as bond holders think about where to park that 60 billion euros in cash that their getting from the ECB.

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March 2nd, 2015 @ 1:09 pm by Mark De La Paz

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After the Euros recent break lower of its month long consolidation market players took advantage of a slightly better read in the EU’s inflation metrics and jobs data with the former coming out -0.3% against an -0.5% consensus. The Unemplouyment Rate for its part turned out at 11.2% while the previous number was adjusted lower to 11.3% from the steady 11.4% expected. These meant that across the board we have seen a firmer Euro for today though this should not deter us from expectations of further weakness.

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A head we are looking at a number of data from the US bannered by the latest ISMnumbers where consensus forecast points to a number marginaly changed at 53.10 evenas we point outthatthe UK’s own figure surp[rised onthe upside to 54.10 from the previous 53.00. Any shortfall for the US figure could potentially see Cable chasing the Euro up against the dollar though we would still stick to a strong dollar view in the near term ahead of Friday’s NFP.

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February 26th, 2015 @ 3:30 pm by Mark De La Paz

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Two hours after the release of a mixed set of numbers we find acrpss the board strength for the greenback. Euro has broken lower of its consolidation for the month, Cable is developing a daily engulfing candle to possibly define the swing highs, and the commodity set is in retreat. One might ask why is this happening given the mixed numbers.

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Consider what we saw, core inflation metrics actually rose, perhaps the one data that the FOMC needs to see picking up to seriously consider raising rates. And while one data does not a trend make it creates a possible inflection point. We could even argue that the weakness in the headline CPI at -0.7% could be the finalimpact of the drop in oil prices finally reaching the broader economy. With its effect likely to peter out going forward.

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And then there is Durable Goods, true the core data came out weaker than expected at 0.3% against the consensus forecast of 0.5% yet the headline figure came out a whopping 2.8% against the 1.7% consensus forecast suggesting new sales on ships, trains, and aircraft which will imply more manufacturing jobs and an improved outlook in next weeks NFP.

All these building the argument for a tightening.

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