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Articles by Mark De La Paz

November 12th, 2014 @ 10:59 am by Mark De La Paz

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After the pre-release jitters which saw Cable firmer across the board reality appears to bite seeing a reverse of the earlier price action and then some. Again disappointing fans of the BoE rate hike story for H1 in 2015 we had the latest BoE inflation report actually painting an opposite picture of what Cable bulls need. In its latest assessment the BoE according to Governor Carney sees the possibility of stagnation in Europe and the UK economy weighed along with it. While the UK expects to continue its path to normalization, i.e. no more Asset Purchase Facility hikes or rate cuts, it is clear that we are unlikely to see the UK raising rates along with the US. Note CPI expectations for 2015 has been cut to 1.4% against the earlier forecasts if 1.7% heading to the lower boundaries of its assymentric target, 2.0%. This as outlook for the economy as a whole has weakened inline with the Euro area’s downside risk amd a moribond global economy.

GBPUSDH4

Technically it looks like wewill be heading back to the swing lows after all. Setting sights again to the 1.5789 area.

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November 12th, 2014 @ 10:02 am by Mark De La Paz

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Less than an hour from the days big event we have Cable gaining ground across the board even bouncing against the dollar which has shaken off the NFP funk to focus on promises of a tightening from Charles Plosser. While the UK is actually seen among those that should pace the US once monetary policy begins to normalize we note that the disappoint from before over the failure to actually communicate such an approaching policy shift by Governor Mark Carney has lead to an extreme sell-off from the highs of 1.7191 back in July to just around the consolidation floor for the September-November period from last year. For now we are seeing some speculation that the inflation report will provide hawks some more excuse to sound the alarm thus the current position squaring of prior shorts. Note we already have two hawks within the MPC who have consistently been voting for a tightening, the inflation report may lead to a third such voice in the next meeting.

GBPUSDWeekly

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November 12th, 2014 @ 8:25 am by Mark De La Paz

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With very little in the data calendar to move the market the Fed’s usual hawk, Philadelphia Fed Pres. Charles Plosser is stirring the pot with his standard comments though this time from across the pond in London. Mr. Plosser is predicting rate hikes by the Fed next year which is already a given for the market though as usual calling for early preparations for the eventual move. He describes the US economy as having progressed well to the Fed’s objectives and sees US GDP pushing 3% once data goes out for H2 and well into next year. The latter is interesting because for a large developed economy like the US such a read would suggest that main street will soon be feeling the recovery hopefully not in the form of  inflation.

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For the markets we are already seeing earlier dollar losses being reversed though this is a far cry from a ground breaking news event where we would expect to see new highs for the greenback. For now we do not expect things gaining traction.

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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.

USDJPYWeekly

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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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