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Articles by Mark De La Paz

November 10th, 2014 @ 8:36 am by Mark De La Paz

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A weekend after the mixed US Jobs numbers we have the majors opening firmer against the dollar with some minimal gaps but largely unable to get a follow through to the dollar dumping response. Recall Friday’s figures saw the Non-farm Payrolls figures short of consensus at 214K against expectations of 235K with some upside revision to the prior read to 256K. Meanwhile the household survey side of things saw the Unemployment Rate improving, down to 5.8% against expectations of a steady 5.9% print. Note Friday’s knee-jerk action suggested then a lot of confusion before finally resolving into dollar weakness. While indeed we saw a weak print for NFP it should be pointed out that sustained reads of above 200,000 are still to be considered impressive with historically very little period that could be considered comparable.

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Ahead with very little in the way of market catalyst and Friday’s dollar dumping likely more of position squaring given the pre-release gains, i.e. “buy the rumor, sell the fact” we expect market to remain technical with limited potential for dollar loses.

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November 7th, 2014 @ 12:13 pm by Mark De La Paz

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Less than an hour and a half from the forex world’s monthly big event and we have most of the pairs stucj in tight ranges with even the days mover’s thus far, Aussy and Kiwi seeing enthusiasm doused before 1330GMT. Note that consensus forecast is calling for a slight retreat in the figure’s to 231K against the prior 248K. That said seasonal cycles actually favor a pick-up in the figure and even were we to get consensus it would still mean that almost a quarter million news jobs has been added and that the US recovery remains hail. Even at consensus the risk is high that we will still get a stronger greenback.
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November 5th, 2014 @ 6:36 am by Mark De La Paz

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It sounds oxymoronic that moments after it became clear that US leadership will be in for greater gridlock we have the US Dollar getting stronger. With the ballots already in and counted it appears that the legislative side of the US government has turned red with the republicans getting control of the senate while successfully fending off the democrats in the lower house. While people may be expressing their unhappiness with the Obama administration by going republican for the markets this could mean a US that will be taking a more hawkish stance whether in the negotiating table or in the form of pressure to the FOMC to accelerate normalization of its policy rates.

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October 31st, 2014 @ 10:23 am by Mark De La Paz

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Yen pairs are shattering resistance across the board following the earlier decision by the BoJ to underscore its dovish monetary policy. After months of disappointment as the BoJ Chief Kuroda found it difficult to push his fellow board members to do more we now have the BoJ announcing that free money is here to stay for an indefinite period of time. At a time when the FOMC gave its own QE a natural death the BoJ has come to the rescue announcing that it will be buying JGB’s to the tune of 8 to 10 trillion a month, roughly about $10 billion. Meanwhile Governor Kuroda is keeping his hands off the next round of government sales taxes saying that it was an issue for the executive though the Japanese Governments spokerman Suga is on the wires stating that future action between fiscal and monetary authorities will be coordinated. Interestingly there seems to be something of a cycle to the BoJ’s decision as we recall Q4 2013 as the start of  the banks aggressive monetary easing the last time.

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October 30th, 2014 @ 12:35 pm by Mark De La Paz

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We have just seen US Advance GDP coming at fast clip of 3.5% against a consensus forecast of 3.1% while the GDP Price Index came out 1.3% against a 2.0% consensus forecast. Given the split between headline figures and the inflation adjusted number implication is that growth is more about an increase in US output instead of higher prices. Don’t expect an early tightening but still look forward for a strong US dollar.

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October 30th, 2014 @ 12:07 pm by Mark De La Paz

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Markets are about half an hour away from the next key event from the US with advance GDP figures up for release, the consensus calling for a 3.0% read against the prior 4.6%. Taken at face value people may look at the downside adjustment as a bad number but we would like to point our that for a large developed economy like the US 3.0% is the fast-lane. Taking yesterdays FOMC announcement into context we would view todays data as a confirmation of the hawks argument thatthe recover is well and the US can weather global turmoil.

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October 30th, 2014 @ 11:14 am by Mark De La Paz

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Wednesday’s FOMC driven sell-off for GBPUSD appears to have quickly lost steam as daily charts are now showing a possible hammer in the making with the potential to turn into a piercing pattern at the close. Half a day following the FOMC statement we have intraday indicators for Cable already picking up with the 4H oscillators looking to get out of oversold areas while hourly stochastic is even pushing into overbought levels. This should mean that our previous inverted SHS remains n play, just needing some fine tuning to count for the previous false breakout. Key for us going forward will be the ability to push towards the daily pivot at 1.6058. Note we have projected highs reading 1.6083.

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From a fundamentals perspective we note that the UK also is seen as having a bias towards monetary tightening so if both central banks are now leaning hawkish we would prefer looking for other catalyst as a driver for Price Action.

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October 30th, 2014 @ 6:24 am by Mark De La Paz

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Wednesday saw the FOMC take another small but symbolic step towards policy normalization as the QE program met its natural end with the FED cutting to zero its budget for buying Treasuries and Mortgage-Backed Securities. This is from a high of $85 billion a month in 2013 to $15 billion in the past month though with the Fed maintaining its policy of reinvesting previous principal payments this does not exactly equate to withdrawing liquidity. The Fed has also noted “solid job gains and a lower unemployment rate” along with the improving capacity utilization trends to underscore the idea of a pickup in the recovery. Effectively the Fed is saying no more additional free money but market can keep what its already gotten, at least for the moment.

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Knee-jerk response for the market has been to see a stronger dollar though we appear to be having some difficulty in getting a follow through going. As things stand though the news has been enough to invalidate previous patterns suggesting we say good bye to the cup and handle in EURUSD and inverted hand and shoulder in GBPUSD.

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