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Articles by Mark De La Paz

January 28th, 2015 @ 12:47 pm by Mark De La Paz

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With the FOMC set to have its first policy announcement for the year currency markets for the day have remained mostly quiet about the only big move, an earlier spike in Aussy following a strong read in the quarterly Trimmed Mean CPI that read 0.7% against a consensus figure of 0.5%. Even here though we have seen AUDUSD eventually easing off in European trade with eyes focused on what the banks decision will be.

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Note many at this point are asking whether the Fed is on track of a widely expected symbolic tightening of the Fed Funds rate following the mixed signals that economic data has been painting. While sentiment in the US has remained robust people do not appear to be dipping into their wallets as we saw Retail Sales contract, supply side data ease off, and inflation metrics falling short of forecast. Capping all these bad news was yesterdays Durable Goods numbers that says strategic buys, i.e. big ticket items, have been weak to reflect uncertainty of future conditions.

So the big question for many now is will the Fed remain very optimistic of future conditions or sound a cautious tone. The latter will set in fully with many of the charts that has a pullback from recent dollar highs on their agenda.

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January 27th, 2015 @ 12:13 pm by Mark De La Paz

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Currency action for the day has mostly been disappointing were one to gauge the action from the daily average with most stuck at the usual half of the daily range and few if any are holding to the extremes. A review of the daily candles suggest dollar weakness for the moment as Aussy and Euro, shows as hammer for Monday, Cable a morning star and Kiwi a loss of bearish momentum. About the only thing that hasn’t showed much momentum has been USDCAD though the narrower bodies since the surprise rate cut is deceptive as these still range above a 100.

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Going forward we are staring at a slew of numbers from the US headlined by Durable Goods (13330GMT) numbers seen coming in at a decent 0.5% bounce following the previous contraction of -0.7% while the Core figure is expected at 0.6% upticks which could reinvigorate the US jobs story, after all people and business don’t go for big ticket durable goods when they are full of uncertainties. Following this is again a big ticket issue, at 1500GMT with New Home Sales expected to tick up month-on-month to 450K and Consumer Confidence also suggesting a dollar uptick with its 95.1 consensus forecast. All of these arguing a dollar comeback.

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January 26th, 2015 @ 12:05 pm by Mark De La Paz

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The Greek elections are over with the anti-austerity opposition party Syriza winning and already in the process of forming a new government. This has been one of the worst case scenarios for financial markets with the Euro opening the week with a big downside gap. As the day has developed however it looks like we will not be seeing chaos or an existential threat for the Euro with potential ‘finance minister’in waiting MP Yanis Varoufakis insisting that the country will be sticking it out in the Eurozone with the new Government likely to just ask for a renegotiation. That said austerity advocate Germany has also sounded conciliatory as government spokesman Steffen Seibert indicated that the country will “… offer to work together woth them.”.

EURUSDH1

From a technical perspective the days development has already seen EURUSD form an hourly double bottom with a 1.1289 trigger though we dislike the lower lows from the open. In the bigger picture we may also be set to end up with a hammer from the days lows of 1.1098 though the considerable range we have already seen may mean a lack of urgency to trigger the bullish reversal pattern.

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January 23rd, 2015 @ 12:29 pm by Mark De La Paz

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Contrary to what we were speaking of yesterday the ECB decision actually turned out to be a source of excitement once the press-conference began with Mario Draghi and a day after we continue to see the effects for the announced 60 billion Euro monthly QE, with the Euro remaining the weakest of the majors adding another 250 pips thus far to its 2,000 pip drop since August. What is interesting to note however is the broadly firmer dollar that we are seeing, this in the context of all the currency war talk going on at Davos.

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With the current theory on winners and losers among the global rich suggesting consumers leading the first column while natural resource exporters fill the next, we have commodity currencies crowding behind EURUSD in the intensity of todays fall. This said we suggest caution is in order now with the weekend and the extent of dollar gains suggesting a need for closing out profits.

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January 22nd, 2015 @ 10:18 am by Mark De La Paz

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A lot has been said about today ECB announcement, Monday saw the French President Francois Hollande announcing that the ECB will be pulling the trigger even as Angela Merkel says it will “not be a seminal” moment for the Euro, i.e. no money printing. Then Yesterday we had rumors that a 50 billion Euro’s a month of OMT purchases will be forth coming only to have the ECB spokesperson do a no comment. And of course all the interest was sparked last week by the SNB’s decision to stop defending 1.2000 in EURCHF after years of doing so as the ECJ gave a glimmer of legality to ECB’s QE plans. With all this many are now thinking lets get to 1.0000.

EURUSDH1

While i do not discount that we will be getting there sooner or later, I am much more inclined to think that the market has already priced in the initial QE shocked. From when we heard Draghi talk at Jackson hole last August we have actually seen the Euro sell off 2000 pips against the dollar already. This compares to the reversal that Euro did when the US first announced its own QE1 back in 2008. As such we are looking at things to day to be a potential much ado about nothing.

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January 21st, 2015 @ 12:35 pm by Mark De La Paz

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Despite Wellington markets already long close for the day and Europe seeing its midday break we have Kiwi still seeing limited action for Wednesday reading only 56 pips in the daily range so far despite a weighted average of 110. Note that intraday charts have now formed a double bottom in the hourly scale with its breakout point at 0.7678 while wjile the daily pivot is at 0.7681, a better entry point for bulls chasing a break out.

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In the bigger picture yesterdays dipin Kiwi has brought us to our range plat floor of the last four months following the sell-off in late September of 2014. Interestingly a case may actually be made for a very gradual higher low and higher high for the said daily scale consolidation. Of course breaking the topside of the range for now is out of the question given the lack of fundamental excuses to do so though a test of the 0.7900 area would be interesting.

NZDUSDDaily

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January 20th, 2015 @ 1:02 pm by Mark De La Paz

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European currencies have been quiet for the most part as market players appear to be mulling their plans ahead of Thursday’s big announcement by the ECB. That said much of the days action has been with Cable after an early sell-off in Asia saw a turn-around on M&A talk with Infrastructure PLC selling a stake in Eversholt Rail to CK Investments SA in a deal that’s giving Eversholt an enterprise value of 2.5 billion pounds. that said we expect things to be nearing the days top absent other catalyst as we have well exceeded the daily averages already.

GBPUSDH1

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January 19th, 2015 @ 2:14 pm by Mark De La Paz

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Pre-ECD meeting talks thus far have been confusing as battle lines are drawn. With the European Court of Justice issuing an opinion Wednesday that the ECB’s Outright Monetary Transactions program was legal many in the markets are expecting a QE move, including the SNB which prompted the CHF carnage Thursday. Among politicians we have French Pres. Francois Hollande already announcing that the ECB will be adopting QE this week, perhaps with intel from the DGSE (just kidding here folks), while as one would expect Germany’s Angela Merkel sees status quo predicting that it would not be a fateful week for the Euro.

EURUSDDaily

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