Market Analysis: 30 September, 2016
by Christala Parmaxi:
US Economic Data
The most important economic release for the US yesterday was GDP announcement for the second quarter of 2016. US growth increased by 1.4% beating expectations of 1.3% and the previous figure of 1.1%. Furthermore, the GDP Price Index remained stable at 2.3% while the GDP Sales of Q2 was grew by 0.2% reaching a change of 2.6% against expectations of 2.5%. The Initial Jobless Claims report was also announced positive at 254K, which is higher than last week’s figure by 3K but lower than expectations of 260K. US August Pending Home Sales fell significantly by -2.4% losing expectations of 0.3% growth. However, the greenback traded higher against almost all of its majors during the US session yesterday and the Asian session today.
Germany’s main bank became biggest story for the European and global markets over the last few weeks. The US Justice Department announced the suggestion of the bank to pay USD14 billion for claims settled on mortgage securities. Although Deutsche Bank is expected to agree on a lower fee, its shares fell by more than 7% on Tuesday’s intraday chart on fears that big hedge funds could stop their exposure on the bank. This fact creates uncertainty in the banking sector of one of the strongest countries in Europe, pushing the main currency to fall to weekly low levels today. However, the EURUSD is still trading within a symmetrical triangle with no clear direction either to the upside or to the downside. An important point to highlight is that the uncertainty created in financial markets leads investors to risk aversion strategies buying currencies that reduce their risks, such as JPY, Gold or even USD.
Today we are looking at European YoY CPI at 12:00 server time, which is expected to rise at 0.4% against the 0.2% of the last month. Later, during the US morning the Canadian GDP will be released with expectations at 0.3% against the 0.6% of July. Last but not least, the week will end with Federal Reserve Bank of Dallas President Robert Kaplan participating in moderated Q&A session before Stemmons Corridor Business Association 35th Annual Meeting.
The Gopher is testing again the downtrend line on the daily timeframe with no success on breaking it. ADX indicates negative directional movement while bith MACD and RSI are on nearish terittories. Also, the price is moving below the triple moving average, which is another bearish signal. The general overview of USDJPY remains bearish.
On the hourly timeframe the Yen is running on a roller coaster move with sharp declines and sharp increases. ADX does not indicate a clear direction while MACD and RSI are below their equillibrium levels but close to them. The price is moving between SMA200 and SMA50 at the time of writing while the fastest moving average has already crossed the slowest to the upside. There is a bullish signal from the tripple moving averages, but the price will be the first indicator which will determine the next move.
The pair surged up to 6-month high this week and is currently trading between the channel of SMA100 and SMA200. The indicators are on the bullish levels while SMA50 seems to be a strong support for the pair.
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