Provides intra-day trading recommendation based on fundamental factors.
The End of the Euro Recovery?
The Fiber has been recovering for the past week on improvement in some economic data. A report last week revealed that Spain’s first quarter economic growth was the highest in seven years. In addition to this, Euro-area manufacturers raised prices for the first time in eight months signaling that the region’s economy is overcoming deflation fears.
Fed Might Hike Rates Later Than Expected - Investment, Finance and Foreign Exchange News - MetisEtrade Blog
In their previous statement, the Fed mentioned how the strong US Dollar hampers the achievement of a 2.5% annual growth. In addition to this, the Fed reiterated that they won’t raise interest rates until inflation is on track towards their 2% target. These statements hinder further Dollar appreciation.
Greek Fears Reignite on IMF - Investment, Finance and Foreign Exchange News - MetisEtrade Blog
The uncertainty in Greece’s political situation will most likely influence the Euro to fall in the long run. Especially since the Japanese Yen is considered a safe-haven currency, a continuation of a EURJPY downtrend is expected. A sell position in EURJPY is recommended.
US Equities to Continue Bull Run on Unlikely Rate Hike? - Investment, Finance and Foreign Exchange News - MetisEtrade Blog
Recent disppointment in labor market data could dampen prospects of an early rate hike in June, allowing a stay of investments in the stock market. SPX500 is likely to test the 2116 level in the next few weeks as support at 2023 remains intact.
On Personal Consumption Expenditure - Investment, Finance and Foreign Exchange News - MetisEtrade Blog
In their last meeting, the Federal Reserve decided to keep interest rates at record low 0.25%. In the same meeting, inflation forecasts for 2015 were revealed to be revised lower. Low inflation has been one of the concerns of the Federal Reserve.
Concerns On Middle East Drove Oil Prices
Oil prices have recovered after reaching a low at the 42.00 price level. Yesterday, oil prices rose for the fifth day moving up by about 300 pips after news was released that Saudi Arabia bombed Yemen. Although Yemen does not produce as much oil compared to its neighbors in the Middle East, the bombing puts Middle East into focus as one of the largest producers of oil.
UK Inflation Falls to Zero
February’s inflation data is the first zero reading. The Bank of England forecasts inflation to drop below zero in the coming months. Slow inflation has been an ongoing concern of the central bank. Although the fall in prices are possibly temporary as an effect of cheaper energy prices, the downside risks to inflation imply that the central bank will not make a move to raise interest rates anytime soon.
Temporary Recovery of EURUSD
EURUSD made a recovery after the Federal Reserve gave a more dovish than expected statement in the FOMC meeting last week. The Federal Reserve lowered inflation and growth forecasts for 2015. In addition to this, concerns that a strong Dollar will have negative impacts on US exports and inflation were brought upwhich dampened the US Dollar.
Bets on the Upcoming FOMC Meeting
The US Dollar appreciated further on bets that the Federal Reserve will remove the commitment to being patient regarding the next interest-rate-hike. The move towards an increase in interest rates from extremely low levels signifies that the US will do well without the need for the central bank’s to stimulate the economy.
Expecting Tomorrow's BOJ Statement - Investment, Finance and Foreign Exchange News - MetisEtrade Blog
In their last meeting, the Bank of Japan decided to maintain current monetary policy. Interest rates remained at 0%. The monetary base will continue to be increased at an annual pace of 80 trillion Japanese Yen. These decisions are expected to help the central bank reach its 2.0% inflation target and help accommodate growth in the Japanese economy.
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Australian Employment Shows Slight Improvement - Investment, Finance and Foreign Exchange News - MetisEtrade Blog
The Reserve Bank of Australia expected unemployment to peak higher which is why the central bank decided to implement a rate cut last February. There is speculation that the RBA will further ease their monetary policy.
the RBNZ Bank Governor Wheeler would most likely reiterate that the Kiwi remains overvalued and this affects exports negatively. However, given the policy divergence between the Reserve Bank of New Zealand and the Reserve Bank of Australia which implemented a rate-cut this year, the Kiwi would most likely strengthen against the Aussie in the long run.
Anticipating Tonight’s Employment Data
Looking at the GBP AUD pair with the H4 time frame, the British pound has been moving within a range before dropping down to the support of 1.9502. The price now is has been slowly moving in an upward trend. A possible position to take is a BUY STOP at an entry price of 1.9566 with a stop loss of 1.9492 and a take profit of 1.9792. The next resistance that the price will hit is at 1.9860.
Anticipating the BOE and ECB Rate Statement
On the other hand, the European Central Bank announced the start of a quantitative easing in their last rate statement. There is no expected change in the Euro zone’s rate decision but the Euro will possibly weaken further since there is a possibility for tomorrow’s rate statement to be dovish.