7 minutes ago | November 26th, 2014 22:29:31 GMT

AUD/USD & NZD/USD orders

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AUD/USD has bounced back up to the seller zone. On Tuesday and Wednesday the sellers were chasing it lower … today they are a little more patient

  • Sellers layered from 0.8555 through to 0.8625
  • There are some buyers on the way down, but the larger amounts not until 0.8475, 0.8450

Currently 0.8540

NZD/USD

  • Sellers 0.7890/00, 0.7920 then 0.7950
  • Buyers 0.7850/55 then 0.7800/10

Currently 0.7877

51 minutes ago | November 26th, 2014 21:46:07 GMT

New Zealand October Trade balance: -908m (expected is -642m)

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New Zealand October trade balance data:

Trade balance -908m  (largest October deficit since 2008)

  • expected -642m, prior was -1350m

Exports 4.03bn

  • expected 4.60bn, prior was 3.61bn

Imports 4.94bn

  • expected 4.60bn, prior was 4.97bn

NZ trade recorded a deficit of NZ$107m in the 12 months to October 31

  • First 12-month deficit since Dec 2013
  • Was a NZ1.78bn surplus in the 12 months to August

From Statistics New Zealand:

  • Total goods exports were down $215 million (5.1 percent) in October 2014 compared with October 2013
  • Goods exports to China led the fall, down $433 million
  • “Milk powder exports to China fell after the record prices and quantities of late 2013, contributing to a 40 percent fall in exports to China,” international statistics manager Jason Attewell

1 hour ago | November 26th, 2014 21:29:14 GMT

Preview – Capex – another GDP input data point due from Australia today

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Preview of the Australian Q3 Private Capital Expenditure (capex) report due on 27 November 2014

Coming up at 0030GMT.

  • The ‘headline’ figure is expected to be -1.9% from +1.1% in Q2. The “equipment, plant and machinery” component of this total feeds into next week’s GDP business investment figures so that component might influence market reaction. But the total initially will garner most of the initial headlines.
  •  The “equipment, plant and machinery” component is expected at -1.0% ,, the Q2 reading was -0.9%
  • The other key data point from this report is the capital spending expectations for financial year 2014/15. This is Estimate 4 for 2014/15
  • In the Q2 release we got the 3rd estimate for 2014/15, which came in at $145bn (a bump up from the prior estimate at $137bn).
  • Note that at $145bn, the 3rd estimate for 2014/15 was about 10% below the 3rd estimate for 2013/14. This reflects the slowdown in mining investment.

Here is a little background on the important role capital expenditure plays in the Australian  economy (background via NAB & other sources):

  • More than most other rich countries capital expenditure is a huge part of the Australian economy
  • For the past fifty years new capital expenditure has run at around 25-30% of GDP in Australia compared to around 20-25% of GDP in the United States
  • The historically large amount of Capex in Australia reflects the abundant economic opportunities which in turn are the result of a rapidly growing population (the population grew 1.7% in 2013) and a vast geography with under-developed resources
  • The most recent peak for Capex was near 29% of GDP in Q4 2012, as investment in the mining/resource sector peaked
  • Since then, mining investment has slumped and total capital expenditures have been falling in real terms
  • The challenge for the Australian economy is for something to fill the gap left by the downturn in the resource sector Capex
  • Residential construction is helping, as is public sector infrastructure
  • But the RBA have been hopeful of a recovery in Capex by non-mining firms. In his speech last week Governor Stevens was a bit more hopeful saying “After several years of quite subdued growth, we estimate that non-mining activity has picked up some speed over the past year.”
  • Forward indicators do suggest a modest recovery in non-mining Capex will continue. This is why the Governor added in his speech last week that “it would be good to see some further strength here, as the decline in mining investment activity continues. There are sufficient spare labour resources such that we could probably enjoy a couple of years of non-mining sector growth somewhat above its trend rate before we needed to worry too much about serious inflation pressure”. It’s fair to read this as implying: 1) overall growth remains subdued; 2) there are few/no inflation pressures to be concerned about over the next “couple of years”; and 3) accordingly there are few upside pressures on interest rates in the near term.

1 hour ago | November 26th, 2014 21:22:08 GMT

Trade ideas thread for Thursday 27 November 2014

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Yep … its Thanksgiving already in Asia!

And … it ain’t snowing! Beach, anyone?

Any trade ideas, thoughts, views, ForexLive traders would like to share and discuss with fellow ForexLive traders, this is the thread! Please share your trade ideas in the comments (or turkey recipes if you must :-D )

1 hour ago | November 26th, 2014 21:02:58 GMT

New Zealand dollar traders – trade balance data coming up at 2145GMT

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Coming up soon from New Zealand, the October trade balance data at 2145GMT:

  • Trade balance, expected is -642m, prior was -1350m
  • Exports, expected is 4.60bn, prior was 3.61bn
  • Imports, expected is 4.60bn, prior was 4.97bn

Plane imports helped the trade balance hit a big deficit for September, and these are expected to continue but not in these October figures.

The trade data is usually only of limited interest to the FX market, with minimal impact (normally).

  • For the NZD/USD, there is resistance 0.7890/0.7900 then 0.7945/50.
  • Support initially 0.7855 then 0.7840, better 0.7800/10 ……… I’ll get a better look at the order book soon for more

1 hour ago | November 26th, 2014 20:58:08 GMT

ForexLive Americas wrap: A Thanksgiving feast of data

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Forex headlines for Nov 26, 2014:

OPEC

Markets

  • Gold down $3 to $1198
  • WTI crude down 37-cents to $73.72
  • US 10 year yields down 1.6 bps to one month low of 2.24%
  • S&P 500 up 3 points to 2070
  • NZD leads, USD lags

We’ve noted the recent inability of the US dollar to rally on good news but today it was a different story. US economic data was soft but the US dollar didn’t slide, or at least not particularly far.

Durable goods orders numbers were poor and they were joined by a handful of weak indicators from elsewhere but US dollar weakness was mild, falling by at most 25-30 pips.

USD/JPY finish US trading about where it started after some losses in Europe and Asia. The pair slide down to 117.44 on the dip but slowly dug itself out of the hole and climbed to 117.73.

EUR/USD started US trading nearly flat after erasing a dip in European trading. The upward momentum continued after the data as 1.2500 fell on the way to a spike to 1.2532. That was a bit too much for this market and the pair slipped back to 1.2508.

Cable remained impressively bid throughout trading, even making a fresh high late in the day at 1.5806. The lows were higher throughout the day and we’re finishing near the highs — all good signs.

The commodity currencies have also been bid late in the day despite a warning about Chinese growth from Deere & Co. USD/CAD slid to 1.1234 from 1.1260 despite pressure on oil. The Aussie also erased a large dip below 0.8500 and finishes higher on the day at 0.8552.

For WTI oil, the $73.25 low from earlier in November was challenged but it held ahead of tomorrow’s OPEC decision.

2 hours ago | November 26th, 2014 19:57:55 GMT

EUR/JPY pressing the session highs – orders

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EUR/JPY has wavered between negative and positive territory today but the latest push is to the upside. Yesterday’s high of 147.39 was briefly breached.

EURJPY 10 minute chart

EURJPY 10 minute chart

Strategists at Barclays  recommend selling EUR/JPY near current levels, targeting a move to 142.10 and a stop at 148.50. They expect declines ahead of the ECB meeting on Dec 4 and the Japanese elections 10 days later.

Offers at 147.50 in medium size with more at 147.78, which is the 61.8% retacement of the Nov 20-24 decline and a key level on my charts. More sellers at 148.00 and 148.33.

Bids at 146.50, which was the intraday low today. More at 146.30 and just below.

3 hours ago | November 26th, 2014 19:11:07 GMT

What time is the OPEC decision?

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The OPEC decision will be made on Thursday, Nov 27, but at what time?

The main event on the economic calendar on Thursday is the OPEC decision in Vienna. Several countries are hoping for a production cut but signs are strongly pointing to no change in quotas. The best oil bulls can hope for at this point is a pledge to adhere more closely to current quotas.

When will an official announcement come?

There is no set time or embargoed release of the decision, it usually leaks out of the meeting room shortly before the official announcement from Secretary General Abdallah Salem el-Badri.

OPEC decision Nov 27

Watch for a white puff of smoke at 1240 GMT.

At the most-recent meeting on June 11, headlines about no change in quotas first crossed at 6:58 am ET. The press conference began about an hour later.

At the previous meeting, on Dec 4, 2013, the first headlines crossed at 7:40 am ET. The May 31, 2013 meeting decision first leaked out about a minute earlier at 7:39 am GMT.

In general, the press conference is scheduled for 2 pm Vienna time, which is 1300 GMT but it can be changed on the fly. The decision usually leaks 20 minutes or more earlier.

This meeting is especially likely to run long because some nations are desperate for a cut. Reuters reported earlier today:

An OPEC delegate from one of the smaller oil producers suggested on Wednesday that the group’s meeting could be prolonged:

“They must agree, even if they have to stay here for two days. It is a matter of death or survival for budgets,” the delegate said.

“It might take a bit longer than the ordinary meetings.”

What’s different this time is that the press conference is scheduled for 1600 local time, which is two hours later than normal. The headlines usually leak out about 20 minutes before the press conference so 1440 GMT would be a good spot for the over/under.

OPEC schedule

OPEC schedule

Bottom line: Begin looking for headlines at 1230 GMT (7:30 am ET) but don’t expect anything for at least another hour. If we get past 1445 GMT, the market will begin to become concerned there is no consensus and that points to a higher likelihood of a surprise cut so oil could begin to climb.

3 hours ago | November 26th, 2014 18:48:29 GMT

Oil making a stand at the November lows

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At this point, the probability of an OPEC production cut must be down to about 5% but buyers continue to step in ahead of the November low of $73.25.

I struggle to see how that level will hold when the announcement is made tomorrow (in thinner liquidity because the US is out).

The risk, for me, is that all the selling is over on the rumor of the announcement. Perhaps we get a brief spike through stops and $73.00 but then the ‘buy the fact’ crowd will step in.

In the bigger picture, I think the trade is oil shorts for the longer term. There’s a game of chicken going on in terms of production and OPEC thinks it can bankrupt US shale producers. A price war might be the story of 2015 and then we’re talking about $50-60 oil.

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