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Articles by Mark De La Paz

November 28th, 2014 @ 7:15 am by Mark De La Paz

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Thursday finally saw the Euro ease with a rejection from the 21D EMA line and another lower low off the previous days peak. With the engulfing close in the daily charts we are now looking for follow through weakness in EURUSD with the keyprice target at 1.2358, our swing low from earlier in November. Ahead we are looking at what is likely to be alight data day with the US feeling the holiday spirit with no releases while in Europe we have merely flash estimates, albeit of an important number CPI, the consensus forecast calling for an 0.3% read in the headline and 0.7% read for its core. For the markets a weak read in Europe inflation metrics will be just the thing we need to actually get some push down going for EURUSD.

1EURUSDDaily

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November 26th, 2014 @ 2:19 pm by Mark De La Paz

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Just like yesterdays trade where the market was unable to get traction on good preliminary US GDP data and eventually reversed we are once again seeing a retreat from the knee-jerk response by traders. This time around we are seeing long wicks and indecision candles after the initial move saw dollar dumping as Core Durable Good contracted by -0.9% against expectations of a 0.55 rebound from the previous -0.1% though the headline number did come out better at 0.4% against -0.4% forecasts due to an unexpected surge in the Transport sector. Other numbers were equally disappointing as Personal Income and Spending in the US both turned out at 0.2% short of the 0.4% consensus forecast.

1MetaTrader - FX Clearing

Ahead markets will be looking at more numbers with Final figures for the University of Michigan Consumer Sentiment suddenly getting greater importance as it holds the key to further dollar loses should it confirm yesterdays result of poor Consumer Confidence from the conference board and of course headline Durable Goods. Consensus forecasts has us looking for a 90.2 read against a prior 89.4 figure.

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November 25th, 2014 @ 2:28 pm by Mark De La Paz

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Knee-jerk response to better than expected US data has been for a stronger dollar though traction appears to be a problem as we have
long tails and hammers in many charts by the close of the hour. Note that while the data is in agreement with our overall trends for a stronger dollar across the board many of the pairs are at critical levels within proximity of key price areas seeing a technical correction.

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Looking at the numbers we had preliminary GDP coming in at 3.9% year-on-year well above the consensus forecast of 3.3% with the Chain Price Index coming in at 1.4% against the 1.3% expectations suggesting inflation trends are slightly higher than the trend forecast. Essentially this is argument that the market ought to be watching for the potential of markets to talk up US rate hike story. Though we have more things on the cards to watchout for before the day is over.

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November 21st, 2014 @ 12:59 pm by Mark De La Paz

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Just when the technicals suggested that the Euro could see a pullback for the sell-off from July we had ECB President Mario Draghi sabotaging the up side with a timely comment on potential QE. The statement of”ECB will do what it must to raise inflation and inflation expectations as fast as possible” gave Euro bears an excuse to get moving particularly as the charts showed a loss of upside pressure when we hit the daily EMA lines. For now we would caution intraday types about pressing their luck with days range already seeing 150 pips almost twice the daily averages with a weekend to boot opening the risk of position squaring once European markets near their closing time. We should also note that the ECB President has made similar statements before though still we have seen no sign of US/Japanese style quantitative easing that should power the next Euro sell-off.

 

1EURUSDDaily

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November 20th, 2014 @ 2:11 pm by Mark De La Paz

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Less than thirty minutes after the mixed US numbers and we have the dollar reversing its knee-jerk gains across the board with the Japanese Yen leading the charge reversing its earlier rally. Note that while the Weekly Claimant Count disappointed reading 291K against the consensus forecast of 285K markets were more interested with the inflation metrics that saw a slightly firmer read of 0.2% for month-on-month Core CPI and the headline figure coming in flat zero against expectations of a contraction of -0.1%, stronger triggering the dollars jump.

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A second look at the numbers however suggests this does not change the dynamics as far as expectations of Fed action are concerned. The labor market continues to recover yes but is far from overheating as the claimant count showed while inflation levels are far from reads that require a close eye of the Fed on borrowing rates.

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November 19th, 2014 @ 9:40 am by Mark De La Paz

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Knee-jerk response to the BoE minutes has been for a big surge despite the lack of changes in the number for the votes with an as expected 7 unchanged and 2 hikes in the split with McCafferty and Weale still calling for a tightening. Note however that contrary to the recent forecasts by the BoE of a benign inflation scenario, the minutes actually spoke of the slack in the economy as likely to disappear soon which in our world we see as a precursor for inflation. however things turnout in the future for now we have a case for a stronger BritishPound.

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At this point, we have already nearly seen as much as the daily average range in Cable though this turn of events suggest we may be seeing more. As it is the news could provide a turning point for GBP with recent lows likely defining the near to medium term trough. For now look for a buy on dips to the 1.5625 region. Given the time we have spent at the lows risks going forward calls for some mean reversion to the 21D EMA for the rest of the week.

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November 18th, 2014 @ 11:18 am by Mark De La Paz

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On a day of broad dollar weakness Euro has managed to make the most of its respite following better than expected soft economic data that saw the ZEW Economic sentiment Index up 11.0 for the region against consensus forecasts of 4.3 and the prior 4.1 while Germany’s own figure also exceeded expectations an even better 11.5 against the 0.9 bounce market was looking for. Note we appear to be seeing a near term bottom off recent lows as markets may have aggressively priced in the notion of us tightening and real European quantitative easing.

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From the chart the argument of a near term low will require a clear push past the 21D EMA a close above the said 1.2544 region suggesting markets should look at 1.2611 next, a previous consolidation floor. Key for us however will be a 38.2 Fib retracement of the sell-off from July at 1.2871. Interestingly it appears that with todays price action we are now forming a bullish divergence in the weekly charts even as the candlesticks have been hammer’s reinforcing the whole idea.

EURUSDDaily

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November 14th, 2014 @ 11:19 am by Mark De La Paz

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Knee-jerk reaction to the slightly better than expected GDP figures out of Europe has been limited with attempts to move up failing to push the days highs ahead of what could be more significant US results. Note While European CPI was inline with expectations at 0.4% year-on-year we had final GDP surprising on the upside to read 0.2% quarter on quarter and an annualized 0.8% against expectations of 0.1% and 0.7% respectively. Unimpressive numbers still for an economy that should be coming out of the trough.

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Ahead we will be looking at some critical US data with Retail Sales expected to bounce off the previous months contraction. Consensus forecast for the core figure has us looking for an 0.2% with the headline numbers seen reading the same. We of course would like to see reads topping these expectations as the jobs market has continued to expand strongly. Note the US economy is mostly consumption driven thus we would attach a lot of significance to a strong read and would start looking for new highs in the greenback.

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