Thread: Daily Market Analysis from ForexMart

Last Friday, the EUR/USD pair unexpectedly increased with an exchange rate of 1.0874 but experienced to have a reverse path today and formed a negative candle pattern with a price rate of 1.1067 . The pair continued to strike around within the consolidation period and it snap back in the bottom of 1.10 level and 1.12 level at the top. Short-term market rallies will continue to sell and offer various opportunities that support short-term charts.

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The USD/JPY pair clamped down an impressive pip average of 423 pips after the session closed down last week, the pair’s biggest weekly gain since October 2014. The pair doesn’t seem to be stopping these gains anytime soon, as this week’s opening proved to be favorable for the USD/JPY.

Sentiment has experienced a downgrade and is in its lowest level since January 2016. Meanwhile the SSI also went down at +1.15, the lowest reading since January 31, 2016, entering short into the USD/JPY.

The USD/JPY set its record of one of the highest pip sell off at 2,000 pips last January 2016. This sudden surge of the USD/JPY and a decrease in SSI readings might be even more favorable for traders if the prices can break newly-forming resistances.

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Currency Pair GBP/USD (British Pound/U.S. Dollar) has earned 55 points just as the U.S paper dollars go through a few price differences. Short-term buyers are expecting to have a significant data set this impending week since the recent British Prime Minister is now working for a new trade agreement with Europe. The moving average of the sterling pound is 1.3237 and gained up to 0.5% that yielded $1.3256. The pound increased right after the time of announcing the deal for adjustable-rate mortgage (ARM) and when the policymaker of the Bank of England, Martin Weale released a statement about the need of a firmer financial evidences in order to change bank policy and bring an impact to U.K after they leave EU behind.

The BOE provided an additional market liquidity and cutback the mandatory capital requirements for the credit unions. Most of the Monetary Policy Committee members is anticipating for a stable movement on the 4th of August immediately prior to the publication of economic conditions and forecast.

Eventually, Weale will hand his resignation in the rear of the meeting next month. He confirmed that there is no instances of panic selling or panic buying among traders and investors after the strong vote for Brexit last month. Weale also said that central banks are far beyond the horizon of the falling market.

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The EUR/USD pair went down to 1.1071 while traders sit in anticipation of the ECB meeting scheduled on Thursday, where Mario Draghi is expected to comment about the ECB bond buying program after it drained the market supply. On the other hand, the economic sentiment for the German ZEW went lower due to uncertainties brought about by Brexit, as well as Italian bank concerns and worldwide terrorism attacks.

The economic sentiment reading for the German ZEW went down drastically at -6.8 points. Meanwhile, the Eurozone ZEW sentiment numbers were released at -14.7 points, with both sentiment readings coming short of its expected numbers.

The Brexit vote will be affecting not only the German ZEW but also other european countries. Although the German economy has proven to be resilient enough, its economy is still prone to the negative effects of economic events in the nation, and the ZEW numbers is expected to reflect these repercussions.

The German ZEW economic sentiment surprised the market after a steep decline in July, its first since October 2014. It was initially forecasted to come in at +8.2 points.

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The EUR/JPY recorded a downturn with an estimate of 35 points to 117.23 after euro traded a flat-lining, though the Japanese yen strongly gained a higher level just before the meeting of the Bank of Japan (BoJ) to be held next week, July 28-29. The BoJ expects that banks all over the world will cease the feverish trading cues. While the European Central Bank (ECB) already stated that they will set up a meeting this week.

The movement of Governor Kuroda's Mario Draghi recovered and will continue to affect him as he stands to lose through the monetary course. However, he can reconsider the route he used to take or measure the BoJ's quantitative easing then accept that he is suffering from defeat. On the other hand, Kuroda could apply the recommendation from the Chairman of the Federal Reserve, Ben Bernanke about the deflation of Japan for a long period of time.

Whereas, the conjecture of the BoJ on their upcoming meeting is that Japan will pursue the “helicopter money” in order to widen the perpetual bond payments. The analysts from Morgan Stanley pointed out about the reports issued last few months ago by which it appeared that BoJ had an increase on their purchases beyond their official year pace worth $750 billion.

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The USD gained an increase versus the CAD after investors paid more attention to a possible hike in US interest rates rather than a recovery in oil prices. The USD/CAD pair went up by 0.0036 or +0.28% at 1.3060.

On Tuesday, the USD/CAD sustained its support from traders after the release of a positive US housing starts data, causing a drastic change in the possibility of a Fed rate hike by at least 50%, after previous indicators showed only a 20% hike.

The USD was previously backed up by healthy June data of US Non-Farm Payrolls and an unexpected upsurge in retail sales data. On the other hand, the CAD was previously supported by the Bank of Canada’s decision to maintain its interest rates while rallying for a stronger and more stable economic status.

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The EUR/USD gradually declined at 1.1009, dropping at 0.0011 or -0.10% because there is a build up of selling pressure that moves technically into a weaker global market since July 2014 which has 1.1164 as their highest points.

Investors are now fully prepared since the European Central Bank (ECB) have announced their monetary policy today thus resulted to a physically lower level of volume and volatility. According to the ECB, they planned not to enact new policy to their current protocol but it is still possible for the bank to issue a statement about the negative effects of inflation with response to the Brexit decision. After the dovish tone statement made by the ECB they intended to have a break for eight weeks.

The Brexit decision also affected the main driver of the price growth which is the relative value of U.S. Dollar. The report about the U.S Non-Farm Payrolls for the month of June made the dollar to settle against the Euro and the dollar continuously to heighten just as the U.S. Retail Sales excelled more over their anticipated outcome.

Yesterday, the report about the bullish housing were released and it supported the Fed rate to have a chance in increasing its rate hike up to 50% in response to the upcoming meeting on the month of December. Due to the absence of any major economic releases the market presented a two-way market on Wednesday.

In addition to the ECB announcement, traders can decide whether to cutback their positions over the long run since the EUR/USD may continue to finished a lower interest rate because of the rate differential against the U.S dollar. To wrap it up, the ECB could plan for an additional quantitative easing program while the U.S Fed is settling an increase for the recovery of the U.S dollar rate hike.

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The EUR/GBP pair finished off last session with a gain of 27 points after the British Pound fell and the Euro sustained its value after the ECB held fast to its policy and rates. Traders are now monitoring Draghi’s address regarding the Brexit vote and the bond buying program. The ECB has left stagnant interest rates in the European Union.

However, the governing council has not taken any steps in spite of the uncertainties brought about by the Brexit referendum. The headline rates are still at zero and banks are still charged at 0.4% as penalty for leaving money inside the vaults of ECB. Retail sales on the other hand fell rapidly since December, with bad weather in the UK put to blame. Meanwhile the present currency volatility caused by the Brexit referendum and the recent attacks in Nice, France and Turkey continue to affect consumer confidence rates.

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The AUD/USD pair shifted from greater rates down to a lesser flat rates earlier today. The Australian dollar is experiencing an adverse situation since its net position turned down against the USD. The AUD trading rate is 0.7476. In spite of the relentless decline of the Aussie dollar, the Reserve Bank of Australia will uphold the reduction of the percentage rates within two weeks, although the rate of the US dollar is surging.

After an hour session last Wednesday, AUD/USD can be purchased at 0.7477 while the pair flattened again in the Asian trade. The New Zealand dollar also regressed with the AUD. The Reserve Bank of New Zealand released a statement about their reduction on the interest rates, with regards to the restoration of the economic performance that were issued after the session.

The investors are expectant about the diversion of the United States' monetary policy after the US Federal Reserve increased in percentage rate and the RBA made an interest rate recession. While the Aussie dollar could possibly heightened their rate since it happened last May 2015.

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The USD/CAD pair closed last week’s session with a gain of 1.21% at 1.3128 points as the commodity prices weighed in on the pair and the USD rallied on the commodity currency. After the Brexit vote, forecasts regarding the international economy has been dim, together with views that monetary policy is slowly fading away, with more and more institutions relying on borrowing policies to survive.

With the November elections just a few months away, the United States is now facing a period of economic uncertainty. Political and economic risks are felt worldwide not just because of the Brexit, but also of numerous terrorist attacks, particularly in France and Turkey.

A significant downgrade in Canada’s economic growth forecast from 1.6% to 1.4% signals a rapidly weakening global economy and business investments. The commodity-rich country experienced wildfires in Alberta, one of the country’s primary oil resources, which caused May’s energy-production shutdowns, according to the Conference Board of Canada last Thursday. The IMF later confirmed Canada’s economic downgrade, after their forecast for the Canadian economy showed a dip at 1.4% from 1.5%.

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