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Forex News 2017

2017 forex news

Crude Oil Prices Torn Between Supply Trends, US Dollar Influence

Talking Points:

Crude oil prices torn as US Dollar falls, swing supply expands further Gold prices find support as geopolitics overshadows Fed rate hike bets Day two of G20 foreign ministers’ meeting, rig count data eyed ahead Crude oil prices continued to oscillate in a choppy range as traders weighed the conflicting influence of a weaker US Dollar – a source of support because the WTI benchmark is priced in terms of the greenback – and growing swing supply. US crude inventories and exports jumped to record highs last week, with the latter swelling by the most in almost three years.

Gold prices rose as the US Dollar and Treasury bond yields sank in tandem, boosting the appeal of non-interest-bearing and anti-fiat assets. The move seems to mark the triumph of geopolitical jitters over Fed rate hike speculation. The stock of news-flow shaping FOMC policy bets was sapped as Chair Yellen finished a second day of Congressional testimony, letting a G20 foreign ministers’ meeting capture the spotlight.

Looking ahead, a quiet economic data docket seems likely to keep politics at the forefront as the G20 meeting in Bonn continues. That may keep gold prices supported, though the absence of bombshell headlines by midday on Wall Street may see corrective flows take over and erase some of the moves seen since early Thursday. The Baker Hughes rigs count report is on tap on the oil side of the equation.

Are gold and crude oil prices matching DailyFX analysts’ first-quarter bets? Find out here!

GOLD TECHNICAL ANALYSIS – Gold prices edged up to take aim at February’s swing high but a still-valid Bearish Engulfing candlestick pattern hints a top may yet be in the works. A daily close above the 23.6% Fibonacci expansion at 1245.29 exposes the 38.2% level at 1263.05. Alternatively, move back below the 14.6% Fib at 1234.34 targets the 23.6% Fib retracement at 1215.75.

Crude Oil Prices Torn Between Supply Trends, US Dollar Influence Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSIS – Crude oil price standstill continues. A daily close above range resistance at 53.86 paves the way for a test of the 55.21-65 area (January 3 high, 38.2% Fibonacci expansion). Alternatively, a turn below rising trend line support, now at 51.92, sees the next downside barrier at 50.25, the 38.2% Fib retracement.

Crude Oil Prices Torn Between Supply Trends, US Dollar Influence Chart created using TradingView

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

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Silver Price: Steady Advance Keeps Bullish Outlook Intact

What’s inside:

Silver continues to head higher from inverse H&S formation Riding higher within parallels 18.50-ish next area in focus with further strength

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The other day when we looked at silver it was trading right around the 200-day MA; a form of resistance we viewed as minor when considering the broader forces at work following the breakout from the two-month-long inverse head-and-shoulders pattern.

The US dollar is helping (now), but not sure how much it matters at the moment. Just a couple of days ago the two-week correlation between the dollar and silver stood at a positive 78%. Fancy that. The two can move together. This is why watching correlations out of the corner of your eye is a good thing, and not getting overly caught up in them; especially in the short-term.

Silver is riding higher along an upper parallel just above the 200-day. The upward sloping level of resistance shouldn’t be much of a factor if we are to see the eventual target at 19; this is not only the November peak, but also the measured move target based on the depth of the H&S formation. The concern is the area around 18.50, as we’ve discussed before, where lies the biggest threat to stopping the advance prior to reaching the target. The low from August and several daily closes in November have made 18.50-ish important.

Short-term, there is a parallel to the top-side line which is helping keep silver moving ‘neatly’ higher. A break below there and an undercut of the most recent swing low on 2/15 at 17.73 would bring the short-term picture into question. But overall, it would require an aggressive reversal lower to hit pause on the broader advance.

Silver: Daily

Silver Price: Steady Advance Keeps Bullish Outlook Intact

Created with TradingView

See the Webinar Calendar for a schedule of upcoming live events with DailyFX analysts.

—Written by Paul Robinson, Market Analyst

You can receive Paul’s analysis directly via email bysigning up here.

You can follow Paul on Twitter at@PaulRobinonFX.

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GBP/USD Falters as UK Retail Sales Numbers Miss Across the Board

Talking Points

– UK spending in January fell below market expectations as higher fuel and food prices hit.

– Retail sales data remain notoriously volatile with revisions commonplace.

– See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for next week on the DailyFX Webinar Calendar.

The British Pound fell Friday morning after January UK retail sales data disappointed with the monthly numbers falling into negative territory. While the series is volatile and prone to revisions, the underlying trend paints a negative picture for GBP in the coming months.

In January retail sales grew by 1.5% y/y, against expectations of 3.4% and a prior month’s reading of 4.1%. On a monthly basis, sales fell by 0.3% compared to expectations of a 1.0% rise and December’s fall of 2.1%.

Commenting on today’s official retail figures, Kate Davies, ONS Senior Statistician said:“In the three months to January 2017, retail sales saw the first signs of a fall in the underlying trend since December 2013. We have seen falls in month-on-month seasonally adjusted retail sales, both in conventional stores and online, and the evidence suggests that increased prices in fuel and food are significant factors in this slowdown.”

Looking ahead, retail sales will need to rise in excess of 2% over the next two months in order to prevent retail sales dropping in Q1 and dragging on GDP growth.

According to Howard Archer at IHS Markit, “The economy’s persistent resilience since last June’s Brexit vote has been largely built on consumers keeping on spending. If consumers really are now beginning to moderate their spending, the long anticipated slowdownin the economy may be about to materialize.”

GBPUSD, already under downward pressure, slipped lower and looks likely to test the 1.23 handle shortly with Wednesday’s low of 1.23832 the first target.

Chart: GBPUSD 3-hour Time Frame (February 09 – 17, 2017).

GBP/USD Falters as UK Retail Sales Numbers Miss Across the Board

Chart by IG

— Written by Nick Cawley, Analyst

To contact Nick, email him at Nicholas.cawley@ig.com

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Low Volatility At New And Higher Price Floor Favors Upside

Low Volatility At New And Higher Price Floor Favors Upside

Fundamental Forecast forUSOIL:Bullish

Where will the Crude Oil go in the first quarter of 2017? Get our forecast here!

Crude Oil looks poised to end the week lower for the first time in five weeks. However, there is a silver lining. As of Friday morning, the weekly price range in Crude Oil is the smallest in 13-years. If you had to pick a week to be on the wrong side of a long Oil trade, you picked a pretty good one.

Looking at the broader picture, there is naturally some angst building about price stability as US Stockpiles surge to new records. The price of Oil though doesn’t seem to mind as we’ve moved roughly sideways since the start of the year. Much of the credit for the lack of downward pressure has been given to the compliance of OPEC members in adhering to the production cuts that have helped to limit the previous supply imbalance.

We’ve recently heard figures as high as 92% about how much has been cutrelative to the promised amount. A significant factor to keep an eye on with Oil is not just the lack of price action since January, but rather the rising trend in other commodities like industrial metals. Headlines from Reuter’s this week helped further support Oil on reports that OPEC could extend or deepen supply cut at May meeting if oil stocks are still too high. Naturally, there tends to be a positive correlation to energy products like Oil and industrial metals. In the last week, the famous Dr. Copper (a term coined by the view the Copper holds predictive value in explaining global market demand,) recently surpassed the November peak.

The rise in industrial metals alongside the production cuts from OPEC could be setting up a convincing Bullish background for Crude Oil alongside rising inflation that is getting ever closer to Central Banker targets, and in the Fed’s case, has recently exceeded targets.

We continue to get an increasing amount of activated US rigs as shown via the Baker Hughes Rig Count alongside extreme positioning from hedging bears and speculative Bulls. The current Rig count moved up rigs in the U.S. TO 597, which has moved steadily higher from 404 in May of 2016. For perspective, the 5yr peak was 1989 active US Rigs back in 2012. It may seem surprising that this background has led to the lowest weekly trading range in 13-years and the lowest intraday ATR5) since 2014 (before Oil fell from $112 to a low of $26 in early 2016), but that’s the environment we find ourselves.

We should continue to look for news of growing demand that could flip the positioning bias in favor of the Bulls as hedgers may pull off of their short exposure, which we expect would help to lift the price.

Low Volatility At New And Higher Price Floor Favors Upside

Technical View:

The chart above should be encouraging to the Bulls, especially the patient ones as we look to have found a new and higher price floor that is highlighted on the chart above. This zone occupies the $50/52 per barrel range and the ability for the price to stay above this zone should favor that when volatility returns, it could very well take the price higher. How much higher is to be determined, but it’s fair to say we could make a move close to $60/bbl if the trend in Oil tries to match what has been seen in the industrial metal complex.

Next Week’s Data Points That May Affect Energy:

The focal points for the energy market next week will remain Wednesday’s EIA Petroleum Supply Report at 10:30 AM ET and Friday’s Baker-Hughes Rig Count at 1:00 PM ET. Next week also brings International Petroleum Week that takes place in London and will host many prominent members of OPEC.

Happy Trading!

-T.Y.

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US Dollar May Rebound if G20 Meeting Ends Without Incident

Talking Points:

British Pound may overlook UK retail sales figures US Dollar may rebound as G20 meeting winds down Yen corrects lower, NZ Dollar falls on soft data flow UK retail sales data headlines an otherwise quiet European data docket. Core receipts growth is expected to slow to 3.9 percent on-year in January, the weakest in seven months. UK news-flow has increasingly outperformed relative to forecasts in recent weeks however, opening the door for an upside surprise.

That may offer little solace to the British Pound however. A rosier picture of retail activity seems insufficient to dislodge the BOE from its perch at the dovish end of the policy spectrum. With that in mind, the figures may pass without much fanfare.

Comments from the on-going G20 foreign ministers’ summit in Bonn, Germany likewise warrant attention. This is the first such outing for newly minted Secretary of State Tillerson and traders are understandably worried that he might channel the combative campaign rhetoric of his boss Donald Trump.

The first day of the sit-down seemingly passed without incident. The absence of a bombshell by midday on Wall Street may soothe jittery investors, triggering an unwinding of moves inspired by geopolitical unrest fears. That may return Fed rate hike speculation to the forefront, boosting the US Dollar.

The Japanese Yen corrected broadly lower in overnight trade having outperformed against its G10 FX counterparts yesterday. The New Zealand Dollar proved weakest on the session however, weighed down by disappointing economic data.

Is the US Dollar behaving as DailyFX analysts expected so far in 2017? Find out here!

Asia Session

US Dollar May Rebound if G20 Meeting Ends Without Incident

European Session

US Dollar May Rebound if G20 Meeting Ends Without Incident ** All times listed in GMT. See the full DailyFX economic calendar here.

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

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Contact and follow Ilya on Twitter: @IlyaSpivak

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Global Equity Indices Buoyed, but Risk Quickly Rising for the S&P 500

Global Equity Indices Buoyed, but Risk Quickly Rising for the S&P 500

What’s inside:

U.S. stocks appear to be in a ‘blow-off’ stage, complacency running high DAX is set up to test top-side levels Nikkei 225 consolidating or demonstrating relative weakness?

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Last week was a generally bullish one for equity indices outside of Japan, with U.S. and European markets showing modest to strong gains. Volatility was muted, something which traders are hoping will soon change. Looking ahead to next week, though, there isn’t any major scheduled data points or events on the docket outside of a couple key economic releases, of which neither are anticipated to upset markets too much.

On Wednesday, we have UK GDP and the FOMC minutes, with other minor data points peppered throughout the week. See the economic calendar for details. While these ‘high’ impact releases could induce volatility, it is likely to be more impactful for the FX and rates markets than equities. With that said, we look for the recent bullishness to persist, but not without growing risk as investor optimism tilts further towards complacency.

S&P 500

The U.S. has been on fire, and while a bullish bias is likely to persist and perhaps even speed up if we are amidst a ‘blow-off’ stage, risk is rising significantly for long positions, especially new ones. The average level of the CBOE Volatility Index (VIX) – also known as a ‘fear barometer’ – over the past month is at 11.3, the lowest the one-month average has been since the summer of 2014. It wasn’t long after reaching such persistently low readings in the VIX that the market experienced about a 4% haircut. Risk of a flare-up is rapidly rising as investor complacency grows. With that in mind, we are taking caution from the long-side, but have yet been provided a good reason to turn bearish. Heading into next week, on further strength we will look to the backside of the steeply rising November trend-line as potential resistance; given its angle, depending on the timing, the level comes in at ~2369-2385. On a minor dip, we will look to the Feb ’16 trend-line the market arched over last week as potential support: ~2332-2339.

S&P 500: Daily

Global Equity Indices Buoyed, but Risk Quickly Rising for the S&P 500

Created with TradingView

DAX

The DAX posted all of its weekly gains on Monday, and tried to give those back by week’s end before a solid rebound took shape Friday afternoon. Overall, the picture is constructive and we view the DAX as having potential this coming week to take out 11848 and challenge the Jan high of 11893. On a break above, the market will begin facing off against swing highs created during the decline off record highs in 2015. The most notable levels are 11920 and with a strong bid up to 12079. Should we see weakness there is support by way of a trend-line back to the beginning of December.

DAX: Daily

Global Equity Indices Buoyed, but Risk Quickly Rising for the S&P 500

Created with TradingView

Nikkei 225

After a modestly volatile week, the Nikkei finished lower. Overall, the period from December until now remains constructive; viewed as a consolidation, maybe even a developing triangle, from which the Japanese index could launch into the 20k mark in the not-too-distant future. The general bias, though, is neutral for now. It’s also possible the lag in Japan relative to other global indices is a sign of weakness to come. For now, we will wait for further confirmation one way or another before drawing any concrete conclusions. We will look to the a top-side trend-line at around 19475 as resistance, with a break above the 2/13 high of 19519 as giving the Nikkei potential to begin an advance towards hitting 20k. It will of course need to break above 19615 for full clearance. On the downside, watch the 2/10 gap-day for a possible fill. On Friday, the market dipped slightly below the gap-day low, but closed back above. A fill of that gap would carry the Nikkei down into the lower trend-line in the 18970 vicinity, with swing lows beneath at 18805 and then 18650. A break below those levels likely means we are seeing some form of risk-off on a global basis. No notable news events on the docket to get excited about.

Nikkei 225: Daily

Global Equity Indices Buoyed, but Risk Quickly Rising for the S&P 500

Created with TradingView

See the Webinar Calendar for a schedule of upcoming live events with DailyFX analysts.

—Written by Paul Robinson, Market Analyst

You can receive Paul’s analysis directly via email bysigning up here.

You can follow Paul on Twitter at@PaulRobinonFX.

We recommend using RobotFX trading tools.

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