33 minutes ago | August 20th, 2014 12:04:21 GMT

USDCAD once again finds itself in rarified air

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Or does it?

Good general USD demand has seen the pair rise further today to 1.0964 taking out some decent offers at 1.0950 but like in other USD pairs that we’ve been highlighting we’re approaching recent highs and another raft of offers.

Previous highs of 1.0986 will be the first objective for USD bulls but the sellers are lining up from 1.0975 all the way into the 1.1000 barrier again

Markets are waiting on the FOMC Minutes later but if at all hawkish then this pair will be another hotly fought contest

USDCAD daily 20 Aug

USDCAD daily 20 Aug

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1 hour ago | August 20th, 2014 11:23:29 GMT

German exports to Russia fall by 15.5% in first half of 2014

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  • vs Q1 exports down 13.0%
  • first half exports total EUR 15.3 bln

I think we can reasonably expect them to fall more than that in the second-half with all that’s going on

German stats office on on Reuters

  • exports of cars and car parts down 24.4%
  • machinery good down 18.7%

War really has no winners

Update: My thanks to Chef in the comments thread for dragging my weary fingers around to find a little more info to add to this post!

  • Russian exports made up 3.3% of total German exports in 2013 but one business group has recently warned that 25,000 jobs could be at risk if the decline in trade persists
  • Germany sold approx EUR 36 bln of goods to Russia in 2013, almost a third of the EU’s total

3 Comments

1 hour ago | August 20th, 2014 11:12:03 GMT

EBA releases final template for bank stress tests

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  • The tests will reveal 12,000 data points per lender
  • Will publish data on bank losses from fines and litigation
  • Will publish banks fully loaded CET1 ratio for the first time

The data to be disclosed in the EBA templates will cover banks’ composition of capital, risk weighted assets (RWAs), profit and loss (P&L), exposures to sovereigns, credit risk and securitisation. In addition, for the first time, the EBA will disclose a fully loaded CRR/CRD4 Common Equity Tier 1 (CET1) capital ratio for each bank. The disclosure will be based on the outcome of the stress test from end 2013 to end 2016. The templates published today will help market participants better understand the data that banks will be disclosing.

Full details here

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1 hour ago | August 20th, 2014 11:07:09 GMT

ForexLive European morning wrap: Pound rallies on MPC vote but USD demand prevails

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Forex trading headlines from the European morning session 20 August

 News:

Data:

The greenback has been consolidating and advancing overnight gains but we’ve also seen the pound stage a decent rally on the MPC vote showing two in favour of a 0.25% hike

No great surprises in that as per my preview but it was enough in these fragile markets for GBPUSD to rally to 1.6680 from 1.6625 having seen the 1.6600 barrier hold earlier losses but then dropped back to 1.6628. EURGBP dropped from 0.7998 to 0.7970 triggering stops through 0.7980 along the way. Elsewhere the pound enjoyed a similar roller coaster journey

EURUSD finally gave up the barrier demand around 1.3300 and we’ve been to 1.3275 so far while USDJPY has made further gains to 103.41 but stalling ahead of decent offers into 103.50

USDCHF has been chewing through the offers into 0.9125 with EURUSD falling but it too is stalling for the moment as EURCHF remains around 1.2105

AUDUSD and NZDUSD have remained on the back foot after the Asian zone losses while USDCAD has made gains to 1.0964 from 1.0940 but large offers into 1.1000 loom large again.

Attention turns to the FOMC Minutes at 18.00 GMT and we can expect scrappy two-way markets in the meantime.

1 Comment

1 hour ago | August 20th, 2014 11:00:05 GMT

US MBA mortgage market index 342.4 vs 337.7 prior

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  • Purchase index 164.1 vs 164.8 prior
  • Refi index 1358.0 vs 1322.2 prior
  • 30 year mortgage rate 4.29% vs 4.35% prior

A slight fall in purchases but nothing to write home about. Although it’s not the strongest indicator the 30 year interest rate can be used as a guide for the expectation of interest rate. I wouldn’t take marginal moves as important but if we start to see it spike higher then that would increase the expectations in the market. Just something to watch over the next few months.

US MBA 30 year mortgage rate 20 08 2014

US MBA 30 year mortgage rate 20 08 2014

1 Comment

1 hour ago | August 20th, 2014 10:58:56 GMT

Is now the time to buy the euro even as king dollar sits down on his throne?

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I’ve finally taken my long held euro longs round the back of the barn and put them out of their misery on this break through 1.3300, so as is normally the case when you get stopped out, it’s likely to be the bottom before we see a 500 pip rip higher. Fill your boots folks ;-)

In all seriousness, the dollar is starting to behave how we’ve been expecting it too for sometime. Both Adam and I have pondered why the buck hasn’t been joining in the improving economic picture. Yes, there are still plenty of issues with the economy, and we’re quick to highlight them, but overall the US is in a better place than it has been over the last few years and that should have been reflected in the dollar a bit more we feel.

There looks to be some sort of response now though and the break through 103 has been defining. Finally we may see us break out of the 2014 range but there are still some levels that will keep buyers cautious abut this being another false dawn.

There’s resistance here at 103.40 but it’s mild and we’re going to need to see the years highs at 103.75 and 104.10 taken out before we can really believe we’ve got a decent rally on our hands.

USD/JPY Daily chart  20 08 2014

USD/JPY Daily chart 20 08 2014

Looking at the wider picture we are still facing a big obstacle from some long term fibs.

USD/JPY Monthly chart 20 08 2014

USD/JPY Monthly chart 20 08 2014

Bringing that in a bit closer we can see that the 105.60 level is a big level to watch but given the history of these big levels holding over the last two years the haven’t help up to a second attempt. Once we’re clear of that blue 31.8 fib then we’ve got a fair bit of open water until the next one.

USD/JPY Monthly chart 20 08 2014

USD/JPY Monthly chart 20 08 2014

I want to see the dollar really break out as confirmation of this current move or we face falling back into the usual range. Over the last year or so I’ve laid my trades on the line and where they are against the dollar I have always shown the consideration that the USD must be observed.  It matters not what the RBA, RBNZ or it’s central bankers say or do, It matters not the state of the European and UK economies because as far as trading the buck goes, when it really moves it trumps all.

This may or may not be a fake out but it’s something I’ve been expecting for a while so there’s a chance it could be real. If it is then I’m cashing in my aussie longs and I’ll be looking to add to my USD/JPY longs in a big way.

If the dollar does move up then at some point it will reach a new comfortability level and range and that will be the time to think about buying other currencies. Until then be careful with trying to pick bottoms against the dollar for a longer term trade.

It’s all still early days but let the price do the talking.

7 Comments

1 hour ago | August 20th, 2014 10:41:18 GMT

Germany prepared to send arms to Iraq

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Foreign min on Reuters

  • will do everything possible together with European partners to help Kurdish forces defend themselves
  • says Germany knows the risks attached to sending weapons, will show moderation

Defence min adds:

  • currently examining what weapons Germany can make available and what is needed by Iraq’s Kurds
  • will decide in one week
  • weapons will be sent directly to Northern Iraq in close dialogue with Iraqi govt

Lest we forget the heat’s finally being turned up, and some, in this conflict

Add:

  • Italy also ready to send arms says defence minister
  • will be providing light weapons and ammunition
  • there needs to be close co-ordination between countries supplying assistance to avoid duplication

1 Comment

2 hours ago | August 20th, 2014 10:27:13 GMT

USDCHF still banging its head against the offers

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Currently 0.9115 after posting 0.9119 highs and with offers still into 0.9125

Building a short position up here on a range trade play that has been treating me well of late but there’s no denying this feels a little different this time with EURUSD looking soft and USDJPY also holding gains .

Will re-assess above 0.9130-40, or EURUSD breaching 1.3250 and or pre-FOMC, whichever arrives the sooner but i’ve got some comfort in short GBPUSD too so effectively short GBPCHF

1 Comment

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