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Articles by Mark De La Paz

September 29th, 2014 @ 7:34 am by Mark De La Paz

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After last weeks attack on the “over-valued” Kiwi, NZDUSD is once again selling off again courtesy of New Zealand’s Prime Minister John Key. It seems to add loads of credibility for the market if the PM is a former currency trader himself. Add to this comments from the RBNZ Governor over markets failure to price in the declining prices of New Zealand’s exports and the long pause in the banks rate tightening and it would be a good idea for people to keep an eye on 0.7681 the low for the June 2013 pull back.

NZDUSDMonthly

 

 

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September 29th, 2014 @ 5:40 am by Mark De La Paz

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We have a not so typical start for the week with a smattering of data actually crossing our screens ahead but a review of the releases suggests these are low to mid-impact data. Hardly worth noting and offering little in the way of a potential catalyst to get the markets moving.

 

calendar 92914

 

Absent anything new then we will be sticking to the previous weeks theme of seeing a stronger dollar considering the close we had Friday with the greenback right around its highs for the day against the respective currency pairs. Going forward we are already seeing commodity currencies taking a beating with Kiwi in particular suffering from a lack of love as RBNZ Governor Graeme Wheeler suggest that the currency had not yet fully adjusted to the slump in prices of New Zealands exports.

 

MetaTrader - FX Clearing 92914

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September 29th, 2014 @ 3:12 am by Mark De La Paz

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Japan’s Nomura Holdings Inc. is looking for the Euro to drop to the 1.2000 region by the middle of next year for a slow and gradual decline contrasting the sell-off during the debt crisis. Head of currency strategy Yunosuke Ikeda is citing what we’ve all been looking at, with the writing on the wall centered on “widening interest-rate differentials between the U.S. and Europe”. That said we have to point out that rising rates out of the US may not be the only potential catalyst for Euro weakness the bigger risk will be actual US style monetary easing, i.e. ECB actively buying government bonds. Note that the ECB has already pointed out the limits that easing credit conditions actually face given the failure of its recent TLTRO. Pressure is building for the heavy hand of governments to come in and provide direction, an ECB funded Marshall Plan or as the recent American experience puts it Q.E version 1 and 2. 

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September 26th, 2014 @ 8:32 am by Mark De La Paz

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European markets so far are seeing a mixed day, after the follow through drop-in Asian equities to yesterday’s rout. Currency markets for their part have been whipsawing with no clear winners just yet though this seems to be a dollar on dollar off kind of day looking at the broader action. Earlier releases from Germany has mostly been ignored with the Gfk Consumer Climate Index again easing down to 8.3 from 8.6 and an 8.5 consensus while Import Prices contracted less than forecast to read -0.1% against -0.2% expectations on top of the 0.4% drop before. To this we add a bit of brewing geopolitical intrigue as the tit-for-tat between the west and Russia over the Ukraine and sanctions appears not to be over with Bloomberg reporting that members of the Russian Duma associated with Mr. Putin are drafting a bill to seize foreign assets. So far there has been little response to the news as a draft is far from an actual measure though this is a development people ought to keep an eye on.

Ahead it will all be about US data with final figuresforGDP on the card the consensus calling for a 4.6% bounce following the 2.1% contraction from from Q1. A strong read mere would not be much of a surprise though weakness may finally allow us to make he best of the hammers in our daily EURUSD and GBUSD charts. calendar1

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September 26th, 2014 @ 2:47 am by Mark De La Paz

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At the close, daily candlesticks have an interesting proposal with hammers in both EURUSD and GBPUSD while the commodity currencies retreated against the dollar and haven instruments, i.e. USDJPY, USDCHF and Gold were firmer. Key for us today however is the sharp sell-off of global equities already adding to the months rout of close to$1.42 Trillion. Already we are seeing Asian equities follow through yesterdays sell-off in New York suggesting we look for a stronger Yen, then the Dollar and Swiss Franc. Given the bearish breakout in EURJPY and GBPJPY we suggest focusing on these two if global equities continue to drop going into the European markets.

MetaTrader - FX Clearing 3

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September 25th, 2014 @ 2:27 pm by Mark De La Paz

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The ECB’s failure to attract more interest in their recent Targeted LTRO, with 400 billion Euro’s on the offer a projected 150 billion uptake and an actual 82 billion borrowing from the banks has seen the Euro collapse on speculation that the ECB will now be forced to adopt real US style quantitative easing.  The continuing lack of inflationary pressure in the Euro area and a recognition of the weak credit conditions as evinced by the low uptake on TLTRO has been taken to suggest that we now need the firm hand of government to get things moving. So just as in the US, where the Fed has bought Treasuries expanding its balance sheet from $1 Trillion to $4 Trillion the last few years, or in Japan where the BoJ has been gobbling up JGB’s people are now thinking that Super Mario will turn into a pacman to eat up the bonds of Greece, Spain, Italy, and all the rest.

MetaTrader - FX Clearing 2

For the markets this has been a convenient excuse to take out 1.2788 the 61.8 Fib retracement level of the rally from 2012  and previous false breakout lows at 1.2745. Yet we are reminded of  how the market behaved on the Scottish referendum right after the news of a possible yes broke out we saw a sharp sell-off in GBPUSD only to spend the rest of the week until the actual vote unwinding the shorts and finally seeing a big rally before the actual vote. This time we will be looking at the ECB’s meeting next week as the key date to watch out for and much as it was with the Scottish vote we expect the ECB to say neigh, at least not just yet.

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September 24th, 2014 @ 1:52 pm by Mark De La Paz

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After spending much of the day in a consolidation, the pre New York open trade has seen a quick rally for the US dollar across the board taking even EURUSD to its key 61.8 Fib retracement support of the rally from 2012. At this point we will look forward to buying interest to develop from the said area given that previous EURUSD pullbacks also used this region  as a bounce off point.

EURUSDnWeekly

Up ahead we are looking at US New Home Sales to be the next market mover with consensus forecast at 0.43 Million but with a spotty performance falling short 4 out of the last 6 releases. Given the weakness that we saw from Existing Home Sales monday 5.05M against 5.21M consensus another poor read here could quickly put a 180 turn on the dollar rally.

 

US data

 

 

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September 23rd, 2014 @ 7:06 am by Mark De La Paz

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Equity markets took a hammering Monday from the open of Asia, to Europe, and all the way to New York trade to underscore our risk averse tone. For currencies this typically means a bias for risk aversion, stronger Yen and a stronger dollar, and with recent gains among the Yen pairs the possibility for a technical correction. Scanning through the pairs with JPY on the left hand side we are liking what we see for EURJPY. With a “Dark Cloud Cover” at the close of Friday the past week suggesting we are now ready to ease-off. Given that we have just about a third of average ranges we are looking for prices to drop to the 38.2 Fib retracement level at 139.14, incidentally also just around the previous daily highs. Statistically the projected lows go all the way down to 138.85 with an even better support / taget at the 138.50 region.

EURJPYnDaily

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