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Articles by Mark De La Paz

February 24th, 2015 @ 12:50 pm by Mark De La Paz

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Just two hours ahead of Janet Yellen’s first semiannual report we have the US dollar gaining across the board as markets turn contrarian to the recent theme of a defensive dollar amidst a global backsliding in monetary policy. With little else todo ahead of the wait for Ms. Yellen markets in Asia latched on to the weak read for New Zealands Inflation outlook coming in at 1.8% against the prior 2.1% prompting speculations that the RBNZ could actually do further cuts as we see a 180 turn from the overheated assessment for the economy just the backhalf of 2014.

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For traders it would be best to stay clear of the markets during Yellen’s speech particularly the open session where volatility is the norm particularly on such a seminal moment.

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February 23rd, 2015 @ 12:24 pm by Mark De La Paz

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After riding the markets good will on account of the BoE’s decision to break what was a series of surprise rate cuts among Central Banks earlier in the month the British Pound now looks vulnerable and primed from a pull back. Earlier releases out of the UK is making the case on why Mark Carney aught to really speak what hes thinking, he wants a weaker currency, as the CBI Distributive Trades figure turned out at 1 from a 39 prior read and against a 34 consensus. Just as in the US it appears Britons have decided to hold off on spending despite the Jobs market remaining strong.

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From a technical perspective we have a daily double top already formed just needing a trigger with a close under 1.5310. Given the daily averages the trigger should be well within the realm of probabilities while we also note the increased argument for being bearish as we see a rejection off the 38.2 Fib retracement area of the sell-off from Octiober 28th last year.

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Ahead we are looking at possible movers that are again for the dollar with the Existing Homes Sales up for release and while consensus forecasts show a fall for 4.97 million from the previous 5.04M.

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February 19th, 2015 @ 12:25 pm by Mark De La Paz

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The knee-jerk response to the FOMC minutes saw a broadly weaker dollar as people concluded that the possibility of a midyear rate hike had gobe down. Yet just half a day after the said event we have across the board gains for the greenback even keeping the British Pound from seeing a follow through to its own minutes adn data driven gains. So what exactly did the minutes say?

Thinking in the Fed appears to favor the notion of risks to the US recovery should rates be raised early. This actually sounds similar to the BoE’s own position that any tighterning would be alot slower than in previous cycles. More importantly this cincern over downside risks deviates from the January statement that implied a mid year tightening.

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That said we would like to point out the context in which these discussions were made by the open market committee, a time when US economic releases demonstrated weakness suggesting that the jobs market will falter which eventually has proven to be to the contrary. The big question now over US data is why hasnt there been a transmission between job generation as reported by the BLS to other metrics. Once people regain confidence and start spending we should see what is happening now to be more of a pause in the strong dollar story.

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February 18th, 2015 @ 12:50 pm by Mark De La Paz

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With a combination of strong jobs numbers and a less than dovish minutes for the February 4/5 Monetary Policy Committee meeting the British Pound has resplved its earlier indecisive trade by breaking higher with GBPUSD now nearing the weeks top of 1.5440 from monday’s bearish engulfing. Looking at the figures the UK labor market appears to be exhibiting strength on all fronts with the Unemployment Rate dropping to 5.7%, as the Claimant Count came out -38.6K while Average Earnings rose 2.1%.

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As things stand we now risk a further push up to the November/December consolidation floor at 1.5567 which also represents the 50 Fib retracement level for our drop off 1.6182. Note that a read of the minutes suggests allmemebers think rates will be moving higher in the next 3 years, though the MPC is open to further cuts and QE should downside risks actually turn into a reality.

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Broadly speaking we are actually seeing a modestly firmer US dollar across the board with Cable as the one exception. Ahead we could potentially see the greenback gaining further ground with a plethora of US releases headed by the FOMC minutes where dollar bulls will be looking for signs of a much near term tightening than the current August/September consensus timeframe. Other releases will also be seeing Housing Metrics and Output figures.

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February 17th, 2015 @ 1:48 pm by Mark De La Paz

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Cable opened the week with an upside gap only to run into the 38.2 Fib retracement level and see a subsequent rejection for a daily bearish engulfing on monday. Earlier saw UK inflation metrics suggesting things were not as dire on the deflation scenario as annualized core CPI actually picked up to 1.4% against expectations of a steady 1.3% figure.

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Given the inability to hold earlier highs off the core CPI data we are now looking forward for a Cablepullback after recent gains the key objective its 21D EMA though a dovish decision from the BoE on the morrow and a hawkish Fed could see such losses go even deeper.

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February 16th, 2015 @ 12:44 pm by Mark De La Paz

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After Thursday’s inverted hammer, Gold continues to rebound starting the week in strength as the dollar weakens on failure to see any confirmation of the improved jobs situation in actual consumption figures. At this point we note that the yellow metal is oscillating around its accelerated trendline from the December 1st, spike last year with the candles suggesting we continue the technical rebound to perhaps 1252.14 the 38.2 Fib retracement of our drop though we also see the 21D EMA at 1246.13. From an even larger perspective we note that gold appears to have stalled right back a prior weekly double bottom trigger with the rise for the year failing to see a higher high.

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As such we are looking forward to make good use of the current correction looking to short from the said resistances.

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February 12th, 2015 @ 10:01 am by Mark De La Paz

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Reports that the BoJ is saying no extra stimulus will be forthcoming saw the Yen pairs collapsing with USDJPY seeing a quick 150 pip drop. With no confirmation from the major wires however we will be looking at this news as a bum steer particularly as we have also seen a quick substantial recovery in prices and lay blame to algo systems for extending things too far. For now we are actually looking forward to see USDJPY pushing back up to where things started.

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Up ahead is our potential catalyst for dollar gains with the US Retail Sales figures at 1330GMT. While consensus forecasts points to a poor -0.4% read in both the headline and core data the recent surprise in theJobs market, particularly priro upside revisions leads us to thinks of a possible surprise here as well. A zero read would be seen as good though a positive read should see the dollar rally.

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February 11th, 2015 @ 9:32 am by Mark De La Paz

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Just when we thought things could not get any murkier in the Greek govenments financing saga, has turned into a historical drama with the Syriza party asking for war reparations to the tune of 7 billion Euro. A cursory read of history does lend credence to the Greek demands but so does a whole lot more of countries that surround the current Germany and are now its partners in the EU area. The key concern here is where one to give in to war reparation claims by Greece where will it end, what if countries that were even more greatly affected by world war 2 asked for this cash. It was after all the punitive war repatriation conditions which helped the Nazi party of the past take power. And so the immediate answer from Germany is “Nien”. For the currency markets ther has been little in the way of a sustained response to these developments though the Greek stunt will likely harden Germany’s position on debt negotiations and pave the way for further weakness.

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