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Articles by Mark De La Paz

September 17th, 2014 @ 2:19 pm by Mark De La Paz

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Today’s FOMC meeting at 1800GMT is one that’s worth the wait and some burning of the midnight candle. The Fed is on track to stop its bond buying program by October, aka quantitative easing and we recall the previous talk of perhaps raising rates as early as 6 months after which would mean the second quarter of 2015 though this view has long been rescinded by the phrase “considerable time”. So what exactly will the Fed be doing? The answer is no one can really be sure right now but what makes this FOMC meeting more special than usual is that we have the release of the FOMC Economic Projections allowing us to get a feel for the policy environment they expect to face six months on.

So what could drive the markets? Watch out for three things.

1) A deflationary environment, ie inflation expectations putting CPI at barely above zero could see traders discounting a prolonged low interest rate regime.

2) Labor market forecast, true that the recent NFP numbers were a disappointment and yet historically reads greater than beyond 100K have been seen as good for the US dollar.  Another six months of a 150K read in NFP would mean almost a million new jobs created during period, should the Fed predict a tight labor market you have argument for a tightening sooner rather than later.

3) And last but not the least do we keep the phrase “considerable time” in the Fed statement as a removal of this tonight would signal a bias to tighten which markets will likely price in giving us a stronger dollar.

Note, its always possible for the Fed to rephrase the words which should mean knee jerk dollar strength may not last.

 

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September 16th, 2014 @ 11:00 am by Mark De La Paz

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With currency markets getting know where thus far, a Bloomberg report has us feeling buoyant as the information asymmetry between big institutions and the retail trader is about to get narrower. With all the investigations going about their practices in different jurisdictions it appears Tier 1 market makers, they who make the prices, are putting some curbs on the information and client abuse the buy side of the market has been getting.  Of course this doesn’t mean that dealers will be unable to do some stop hunting or price fixing but these preemptive measures should make it a slightly more uncertain environment for a dealer put to fatten their bonuses.

 

Biggest Banks Said to Overhaul FX Trading After Scandals

The world’s biggest banks are overhauling how they trade currencies to regain the trust of customers and preempt regulators’ efforts to force changes on an industry tarnished by allegations of manipulation.

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September 16th, 2014 @ 3:39 am by Mark De La Paz

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USDJPYDaily

Monday’s USDJPY turned out to be a bearish Harami with the pattern suggesting we risk a pullback in today’s trade. True that with the 4th quarter a mere two weeks away we have increased speculation that the BoJ’s Kuroda may finally be in a position to pursue his quantitative agenda, we may have seen a move that is too fast too soon. With the preceding days seeing smaller real bodies the suggestion is momentum for the upside has dissipated with a push to prior highs serving as an opportunity to short from a better vantage point. Note we will be hearing from the BoJ Governor at 0530GMT, just under two hours as of this posting.

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September 15th, 2014 @ 9:44 am by Mark De La Paz

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GBPUSDDaily

 

Friday’s attempt to cover the gap from last weeks open turned into a hanging man by the close of markets in New York. Asian traders meanwhile appear to have been reading a Morgan Stanley that said be wary of a  UK rally as the big referendum date nears and the consequences of a yes vote set in for the majority of the people in Scotland. Sovereignty may be all well and good for the Scottish politicians but people need their pensions and the trend in Geopolitics is bigger is better. For now we remind people of the big date, September 18 where a No vote is the kind of reassurance that global markets need and will likely be kicking Cable into a quick reversal or recent losses. As for the Yea we may have already priced in a big chunk of the downside as governments will likely be reasonable enough to negotiate and orderly separation else just end up ruining both countries future prospect’s. The UK’s more than Scotland.

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August 29th, 2014 @ 8:06 am by Mark De La Paz

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Normally I do not believe that there is such a thing a a sure bet but when a central banks reputation is at stake then there is a lot on the line. While its true that a central bank is not all powerful nor is it infallible, recall George Soros and the Bank of England in the nineties, more than most players in the market it has the ability to consistently influence pries. And this take us to EURCHF, the open hostility between Russian forces and Ukraine’s security apparatus in rebel held territory has seen markets on the edge for risk aversion. This has meant that for the pair we have seen an acceleration of losses for the swiss franc. Yet the SNB has a standing commitment of a floor for the pair at 1.2000 and unlike the Soros / BoE tussle which saw the latter lose badly it is far more easier for a central bank to weaken a currency than to strengthen it. The latter needs credibility and actual demand by external parties to see a stronger currency. To weaken you need only resolve to print money ideally as inflation pressures are nil.

EURCHFWeekly

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August 28th, 2014 @ 2:22 pm by Mark De La Paz

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Just a grab on the Ukraine story:

NEW YORK (MarketWatch) – Russia is no longer leading the fighting in Ukraine “from behind,” a senior military officer from the North Atlantic Treaty Organization said Thursday. “It is more overt now,” the official told Dow Jones Newswires. NATO says Russia has “well over” 1,000 troops operating in Ukraine now, and Ukraine on Thursday accused Russia of having seized a coastal town and several villages near the border with Russia. “It is clear that Russia is not willing to accept the defeat of the separatists,” Dow Jones Newswires quoted the officer as saying. “It will most likely do anything it takes to prevent such a defeat.” Russia has said any Russians fighting with the separatists are volunteers, but the officer said these are organized fighters. “You can have a rabble of people holding guns, or you can have an effective fighting force. And what we have here is the latter,” the officer said. A U.S. diplomat on Thursday called Russian claims that it is not destabilizing Ukraine “absurd.”

Looks like e are building an exuse for Gold to make a run one the 61.8 Fib retracement of the sell off the pat two months, at 1317.51. Such a move would also mean we trigger a descending wedge with a classic resistance breakout. The question here really is just what will the west do? Any hints of additional support in the military front by Europe and the US would be just the catalyst that’s needed to get things moving.

 

XAUUSDDaily

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August 28th, 2014 @ 10:16 am by Mark De La Paz

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Ukrainian President Poroshenko has cancelled a trip to Turkey to meet with the country’ defense council. Coinciding with the Ukraine Government’s tweeting of Novoazovsk falling to separatist hands and previous reports of Russian troops inside the country this is now being describe as a ‘Russian Invasion’.

Knee jerk response has been broad based gains for the Japanese Yen and Swis Fran with the dollar also coming off its earlier lows. Still for us to get more the the daily averages we will need third party confirmation on these developments. Focus now will be for the more exposed majors EURJPY and GBPJPY though it would also be interesting to see what the SNB will do as pries near its floor of 1.2000 for EURCHF.

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February 11th, 2014 @ 1:17 am by Mark De La Paz

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AUDUSD
Resistance: 0.8969 moderate / 0.9004 moderate / 0.9045 minor
Support: 0.8937 moderate / 0.8912 moderate / 0.8880 moderate

Aussy ended up with a ‘hanging man’ at the close monday as market saw little conviction with data elsewhere turning out weak in line with the US results Friday. For the moment we have prices stuck in between the EMAs while other indicators has stochastic coming off overbought levels while macd is heading up, looking to push through the zero line. Note daily price charts show a fractal with its top a false break of the 55D EMA. Latest releases has Aussy numbers mixed with Business Confidence picking up reading 8 though house inflation pressures has eased and home loans contracted. Intraday we are seeing mixed signals out of the 4H charts while hourly indicators has a confluence of buys courtesy of data, stochastic crossing up while macd pushes clearly past the zero-line. That said we are looking for a test of the fractal highs at most the psychological resistance at 0.9000 and shorts there after.

EURUSD
Resistance: 1.3701 moderate / 1.3739 moderate / 1.3776 moderate
Support: 1.3649 minor / 1.3615 moderate / 1.3595 minor

Euro is seeing a strong start for Tuesday with a follow through to our trend line breakout, mondays close managing tostay above the resistance line off swing highs at 1.3893. Among indicators we have daily stochastic pushing further into overbought levels while macd is looking to push up through the zero line. At this point we appear set tomake a run for the 1.3740 highs from January. From the lower timeframes we are seeing a confluence of buys with stochastic in both hourly and 4H charts looking to push back above the 80 threshold while macd’s are also heading up. Note we appear to be seeing markets attempting to price in a dovish sounding Janet Yellen in her first testimony as Fed Chairperson.

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