Thread: Daily Market Analysis from ForexMart

The USD/CAD pair closed down the week on a much lower note as compared to the previous trading week after the Canadian dollar exhibited strength across the board and the USD weakened in value yet again even though it was able to recover during the latter part of the week. This particular recovery of the US dollar looks like it will be here for the long run, and this is why dollar bulls are putting added confidence to the performance of the US dollar in the next trading sessions. In addition, the Trump administration has already went about making changes and fulfilling its campaign promises, such as the shifts in Obamacare and the Mexican border wall, and the pulling out of US from trading agreements with Canada and other neighboring countries. This has created unrest in the market, and could open the doors for a possible trade war which is very bad news even for the US economy.

This has then prompted the USD/CAD pair to drop significantly in value from 1.3450 to 1.3000 points, but was saved by the sudden surge in the USD’s value as the previous week came to a close. The Canadian dollar also received support from the resiliency of oil prices, which managed to stay put in spite of the recent increase in the value of the US dollar. Market players are expecting this uptick in the USD/CAD to continue and could possibly extend up to 1.4000if it manages to stay just above 1.3000 points.

The Canadian GDP will be released this week, and governor Poloz from the Bank of Canada will also be releasing a statement this week. On the other hand, US will be releasing a string of important economic data including the NFP, wage earnings, as well as the statement from the FOMC. These are all expected to induce volatility in the market, and traders should either exercise caution or wait for things to settle before trading with this currency pair.

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USD/JPY Fundamental Analysis: January 31, 2017

The Japanese yen inched higher as opposed to the US dollar as a result of a flight-to-safety trend across the market, which was triggered by investor reactions to a sudden drop in global equity markets. Meanwhile, stocks were sold off as a result of Donald Trump’s immigration ban. The USD/JPY pair closed off the previous trading session at 113.778 after decreasing by -1.10% or 1.269 points.

A lot of investors have sought the protection of the Japanese yen after protectionism concerns arose due to the immigration ban since these could possibly have a negative effect on both exports and imports and could also create substantial risks for the economy. Towards the latter part of yesterday’s session, the Japanese Household Spending data came in with a reading of 0.3%, exceeding market expectations of 0.8% and the previous reading of -1.5%. However, the unemployment rates for the country remain stagnant at 3.1%. Meanwhile, the Bank of Japan chose to maintain its current benchmark interest rates at -0.10%, a move that was generally anticipated by the majority of market players. The central bank also increased its GDP forecast to 1.4% as opposed to its past prediction of 1.0% back in October. In addition, the BoJ also stated that it is expecting an inflation surge of around 2% come the fiscal year 2018.

Interest rate differentials could have a positive effect on the USD/JPY pair since the central bank chose to maintain its interest rates while the Fed hinted at high-frequency rate hikes for 2017. In the short term, the USD/JPY could be driven by volatility coming from the equity markets. However, the dollar-yen relationship could possibly be influenced by the positive interest rate differentials.

GBP/USD Fundamental Analysis: January 31, 2017

The GBP/USD pair’s activity has been very disappointing during the past 24 hours, which could be largely due to the fact that the market is nearing the end of the month. Towards the end of every month, the UK government is required to pay its membership fees to the European Union, and this usually amounts to 1 billion euros, and this usually induces volatility in the movement of the sterling pound. These monthly dues from the UK are usually masked by the banks which process these transactions, but these show more often than not, and this contributes to the drop in the value of the GBP.

Market analysts have constantly saying that the direction of the sterling pound would most likely be influenced by the Brexit process, and this has been already seen with the increased pressure on the GBP/USD pair. This particular pressure on the pound is expected to continue until such time that the Brexit process is finally completed, and this is also the reason why the pound climbed up to trading highs near 1.2700 but eventually corrected and is now expected to hit 1.2300 points in the short term. The GBP will remain to be one of the weaker currencies, and although there might be a few intermittent reversions at the expense of the dollar weakness, these are not expected to follow through in the long term.

There are no major news releases from the UK set to be released today but the US will be releasing its consumer confidence data. Month end flows are expected to come in today as this is the last day of the month, and traders are advised to take the necessary precautions to protect themselves from the onslaught of additional volatility today.

The market has been generally expecting the USD/CAD pair to undergo a period of ranging and consolidation as the US prepares to release its NFP report, and this was what happened with this particular currency pair during the past trading sessions. The USD/CAD is currently trading at over 1.3000 and is headed in a generally disappointing trading streak, but then again this region has strong support barriers, and this region might be a good place for traders to go long with a stop loss.

Oil prices have already settled down last month and has exhibited little activity on both directions. As a result, the Canadian dollar was able to obtain some support and the economic data scheduled to be released from Canada are also expected to be generally positive, and there are no major changes expected to occur within the Canadian economy. The drop in the value of the USD/CAD was mainly due to the weakness of the dollar, and once Trump makes major changes in the NAFTA agreement, then the trade relationship between US and Canada could be up for some major adjustments. This has no positive effect on both economies whatsoever, and this uncertainty has been fueling the drop in the value of the currency pair.

There are no major news expected to be released from the Canadian economy today but the market is expecting the release of the NFP report as well as the average earnings data and the non-manufacturing PMI data from the US. If these data comes out as positive, then this could further affirm an interest rate hike from the Fed in the near future, but a weak reading could cause the USD to further decrease in value.

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GBP/USD Fundamental Analysis: February 3, 2017

The GBP/USD pair is currently trading at 1.2500 points after briefly reaching 1.2700 points after traders took sell opportunities every time the GBP/USD exhibited reversions. The Bank of England released its statement yesterday and maintained its current rates as expected, while the monetary policy meetings and inflation reports did not deliver anything significant to the economy and did not induce any market activity. However, these neutral readings had adversely affected the currency pair since the majority of market players were expecting hawkish comments from the BoE as well as from the inflation reports, but since both of these data came out as neutral, the market was generally disappointed and this put a significant amount of downward pressure on the value of the sterling pound. However, it was a good thing that the dollar was weak, since if the dollar were stronger then the pound might sink even lower.

The pound is expected to continue its losing streak, and any reversions are expected to be met with major sell-offs, especially with the oncoming volatility which will be caused by the implementation of the Brexit process. For today’s session, UK will be releasing its services PMI data and US will be releasing its NFP reports and wage earnings data. These string of economic readings set to be released today are expected to increase the pair’s volatility. The market is expecting a positive US labor report, and if this happens, then the GBP/USD pair might be able to break through 1.2500 and move further towards 1.2400 points.

The EUR/USD pair has been subject to a lot of messy trading activity during the past trading sessions as the pair had no definite direction and generally exhibited an uncertain trading stance. The currency pair has been vainly trying to break through the 1.0800 trading range and briefly made it through this barrier and even reached up to 1.0828 points but eventually reverted back to its original stance after a massive sell-off met the pair, causing it to fall back to 1.0800 and even went as low as just over 1.0760 points.

Today is the scheduled release date of the NFP report from the US, and the market volatility is expected to surge as this particular report is one of the major economic reports anticipated by the markets every month. The NFP report now is even more crucial than ever, because the Fed has previously stated that the central bank will be relying on positive economic data as basis for whether they will be hiking interest rates in the future or otherwise. In addition, the release of the NFP report is equally important to restore investor and trader confidence in the USD, especially since the past few days has seen the dollar subject to more weakness as Trump drew negative comments from his recently implemented foreign policies such as the immigration ban. This is one of the reasons why the general direction of the EUR/USD remains uncertain since the market wants first to confirm the results of the NFP report before making any concrete moves.

For today’s session, US will be releasing its NFP report as well as the non-manufacturing PMI data and average wage earnings data. Investors are hoping that these economic data comes out as positive in order to induce some strength in the ever-weakening stance of the US dollar.

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NZD/USD Technical Analysis: February 6, 2017

The Kiwi against greenback declined on Friday's trading session. A strong support was found at 0.7250 level but was able to reverse the trend after forming a bullish candle while the resistance is found at 0.7350 level. If the price breaks higher than the psychological levels which will then result to a decline to the 0.71 level. Traders should expect high volatility in the market. Hence, fluctuations and rough trading for the pair.

USD/CAD Technical Analysis: February 6, 2017

The pair USD/CAD surged on Friday's trading session. It turned around finding a resistance towards the 1.30 level. The price could set into a new fresh low and this could further go down. However, if the price breaks higher than the candle pattern formed on Friday's session, there could be chances for buying opportunities. Traders should monitor the oil market as it has an influence to the Canadian dollar that usually affects the price inversely for the pair.

The EUR/USD pair will undergo pressure this week. Moreover, the NFP report was positive as the average earnings positioned at 0.1% lower than the expected 0.3%. When at first, it is expected for the bulls to take over the market but the trend doesn't have enough momentum bringing the price towards the 1.0800 as a resistance level which was the prior region. The greenback is being swayed because of the uncertainty from Trump and his team to change the policies and cannot be determined the next move of Euro.

The current psychological level at 1.0800 is a significant region and a break in this region could further bring the price towards the 1.12 mark which has been the region for some time last week. The market is trying to break the EUR/USD in the midst of the weakened dollar. At the same time, the market aims to stabilize the current rates but there were not enough support from the administration and economic policy changes and the reports of the economic data.

Although, a majority of the support for the currency supported from the economic data or the administration and at the same time influence the next Fed rate hike. However, it seems that the wage earnings reports are on the lows which could delay the rate hike process. This would put more pressure to the dollar today and this whole week and it is still uncertain until when the dollar rates would hold.

As for today, there will be no major economic news from the Euro or from U.S. regions. It is expected for the price to EUR/USD to remain in consolidation with a bullish bias with chances of a breakout near the 1.0800 level.

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USD/JPY Fundamental Analysis: February 6, 2017

The USD/JPY pair attempted to rally several times during the past week due to the positive feel of the US equity markets as well as its effect on the US carry trade but there was a shortage of buyers which could have fueled an upside follow-through. The USD/JPY pair finished the previous trading session at 112.551 points after dropping by -2.17% or 2.496 points. This movement in the currency pair was largely due to Trump’s comments in the past week as well as statements coming from both the Fed and the BoJ.

The FOMC maintained its current rates last week at 0.50%-0.75% and was generally expected by the majority of market players, but the bearish tone of the USD/JPY pair was also largely influenced by the Fed’s refusal to give out hints with regards to its next interest rate hike.

There are no major news releases coming from either Japan or US for this week, and this means that the market will be affected by events that will have a bearing on the current stance of the US dollar. Currently, Trump is aiming for a weaker USD value in order for him to upgrade his statements with regards to currency devaluations and other unfair trade policies. The charts are indicating that the USD/JPY pair could possibly rise up to 109.919 points if sellers of the pair would be able to put enough pressure on the market to march through 112.00 points.