Global Prime: Daily Market Digest

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Global Prime: Daily Market Digest

Postby IvanD » Mon Feb 03, 2020 3:18 am

Funding Currencies Surge As Risk-Off Rules

Quick Take

There continues to be no respite to the tightening of financial conditions as depicted by the sharp falls in US equities before the end of business on Friday. The coronavirus-induced risk-off is highly likely to be here to stay for weeks if not months with more research papers indicating that the peak of the disease may still be months away. How it all played out in the currency market was a perfect script of text-book movements to be expected in times of suppressed risk conditions as the prospects of bleak Chinese growth in H1 2020 become an outcome factored-in. So, in forex, the swings were characterized by a surge in the three funding currencies (EUR, JPY, CHF), alongside follow-through demand towards the Pound as the bullish BOE play extended. On the other side of the spectrum, the AUD and the NZD saw another massacre in value, this time also joined by the CAD, which tracked the Oceanic currencies lower in locksteps. The USD, which put on a stellar performance in January in line with seasonals, finally succumbed in what some bank research report appear to attribute to month-end flows redistribution.

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As Head of Market Research at Global Prime with over a decade of experience in capital markets, I focus on providing expert market analysis from a technical and fundamental standpoint to Global Prime’s global clients and media outlets, with currencies the area of most expertise and dedication.

My views on the FX market are insightful and actionable, connecting the dots to interpret market dynamics and uncover opportunities. I dive into monetary and fiscal policies, economic data, geopolitics & macro fundamentals. My role also includes oversight of Global Prime’s brand reach globally.

LinkedIn profile: https://www.linkedin.com/in/ivan-delgado-79b770a/
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Global Prime: Daily Market Digest

Postby IvanD » Tue Feb 04, 2020 5:06 am

Quick Take

RBA & Brexit Keeps Vol High In Aussie, Pound

The market has gone through a short-term relief rally in risk-sensitive instruments. The modest easing of financial conditions as depicted by the rise in US equities or the pause in the bloodbath of global bond yields, has led to a minor recovery in the likes of the Aussie or Kiwi. Interestingly, the bid in the Yen or the US Dollar puts into question this recovery as one that still communicates further trouble ahead, as does the fact that Oil or industrial metals keep losing ground. The Swiss Franc is also holding up its trend quite well as the index reflects. The resilience of the Euro is also quite impressive as buyers piled into Monday’s dip. The Canadian Dollar saw follow through supply with no particular fundamental catalyst, so my read on the fall is predicated on the fact that the CAD technicals remain very fragile. However, the main loser was the Sterling, with sellers in control of price from the open in Asia until the final hours of US. What appears to be behind the latest sell-off in the currency is the anticipation that the negotiations between the EU and the UK on a trade deal may collapse unless either side stops playing ball and starts to provide a substantial number of concessions, which looks unlikely.

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As Head of Market Research at Global Prime with over a decade of experience in capital markets, I focus on providing expert market analysis from a technical and fundamental standpoint to Global Prime’s global clients and media outlets, with currencies the area of most expertise and dedication.

My views on the FX market are insightful and actionable, connecting the dots to interpret market dynamics and uncover opportunities. I dive into monetary and fiscal policies, economic data, geopolitics & macro fundamentals. My role also includes oversight of Global Prime’s brand reach globally.

LinkedIn profile: https://www.linkedin.com/in/ivan-delgado-79b770a/
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Global Prime: Daily Market Digest

Postby IvanD » Wed Feb 05, 2020 3:53 am

'True Risk On' As Virus, US Politics Rule

Quick Take

The pick up in risk appetite, in what I call ‘true risk on’, as both equities and bond yields in the US rose strongly in tandem, led to a further reprieve in the Oceanic currencies (AUD, NZD). The currencies were catapulted into higher ground for a second straight day, also aided by an RBA policy meeting and subsequent speech by Lowe today, with both events failing to make a strong case with regards to the RBA ready to ease policy any further in the short-run. The Kiwi found its wings again as the NZ employment report saw a significant reduction in the jobless rate, even if the details were troublesome as the change in employment and participation were down. On the other side of the G8 FX spectrum, the Yen was smashed lower as the ‘risk on’ flows in equities were maintained at a steady pace throughout the three sessions (Asia, Europe, US). The easing measures, aka bazooka, by the Chinese government, of which I provide details in today’s report, have proven to be an effective tool to combat the panic selling on the back of the coronavirus, a crisis that still remains well and alive even if the Chinese government is doing all it can to massage the number of cases and the death toll to avoid the chaos that may emerge. The Swiss Franc also found solid sellers in line with the improved risk profile, even if the currency remains in a steady bullish trade premise since the start of the year. The Pound, after being hammered following the European Commission unveiling of its draft mandate for upcoming negotiations with the UK, which was interpreted as bearish for the future prospects of reaching some mid-ground on trade negotiations, saw strong buying off the lows. Encapsulated in between we find the USD, EUR and CAD, which saw limited flows on Tuesday.

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As Head of Market Research at Global Prime with over a decade of experience in capital markets, I focus on providing expert market analysis from a technical and fundamental standpoint to Global Prime’s global clients and media outlets, with currencies the area of most expertise and dedication.

My views on the FX market are insightful and actionable, connecting the dots to interpret market dynamics and uncover opportunities. I dive into monetary and fiscal policies, economic data, geopolitics & macro fundamentals. My role also includes oversight of Global Prime’s brand reach globally.

LinkedIn profile: https://www.linkedin.com/in/ivan-delgado-79b770a/
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Global Prime: Daily Market Digest

Postby IvanD » Thu Feb 06, 2020 3:14 am

Commodity-Linked Currencies Keep Attracting Demand Flows

Quick Take

Another very strong performance by risk assets, almost analogous to the price action script seen in the prior 24h, with equities flying higher and fixed-income (bonds) dumped. The in-sync reinvigoration in these two asset classes wreaked havoc the Yen or Swissy, even if as I distill in the study of the G8 FX indices, gain further exposure to safe-haven currencies’ short inventory carries a heightened level of risk given the NCoV context we are in. By the same token, it should be troublesome that the market has bought up risk in dubious headlines about a breakthrough in the treatment of the virus, while shrugging off the factual and worsening details of a steady increase in the number of cases and death toll. Whenever the market stops going down in bad news and overplays questionable bullish news, that’s a motive to be worried. A clear winner regardless of the risk dynamics, I must state, is the US Dollar. As the aggregate flows reflect, which I detail in the charts section, it’s finally gunned through a key resistance, which opens the door to fresh bullish dynamics as part of this newly found bullish leg. US data aided the rise. The Euro, despite better EZ services PMIs, has kept the downside pressure, with an intervention by ECB Chief Lagarde failing to stimulate the price action as all she did was to touch on old news that were well telegraphed in the last ECB policy meeting. The Pound remains in a position that lacks technical clarity with swings up and down without a clear bias. It goes without saying that amid this pick up in the risk vibes, the commodity-linked currencies (AUD, NZD, CAD) have fared the best, even if technically speaking, we are far from out of the woods just yet.

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As Head of Market Research at Global Prime with over a decade of experience in capital markets, I focus on providing expert market analysis from a technical and fundamental standpoint to Global Prime’s global clients and media outlets, with currencies the area of most expertise and dedication.

My views on the FX market are insightful and actionable, connecting the dots to interpret market dynamics and uncover opportunities. I dive into monetary and fiscal policies, economic data, geopolitics & macro fundamentals. My role also includes oversight of Global Prime’s brand reach globally.

LinkedIn profile: https://www.linkedin.com/in/ivan-delgado-79b770a/
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Global Prime: Daily Market Digest

Postby IvanD » Mon Feb 10, 2020 3:58 am

Quick Take

NCoV Fears Reignited, USD Buying Persists

A renewed surge on risk aversion reignited the Yen, while the USD, invigorated by a solid US NFP, and backed up by strong technicals, also rose, in tandem with the appreciation seen in the Canadian Dollar as the domestic employment numbers topped expectations. The Swiss Franc managed to firm up its stance amid this risk-off dynamics, but far from amassing the most demand last Friday. The tightening of financial conditions came as the number of deaths caused by the NCoV now exceed SARS (813 v 774), even if the predictions by several epidemiologists of prestige see a peak in the NCoV in Wuhan by mid-late February. As a consequence of the sell-off in risk assets, the Aussie and Kiwi, as the two favorite shorts acting as a proxy for China, got dumped last Friday. The Euro continues to trade in a confined range at an index level amid the lack of clear catalysts, while the Pound is still attracting committed sellers since the highs printed over a week ago as the UK enters a tricky period of trade negotiations with the EU.

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As Head of Market Research at Global Prime with over a decade of experience in capital markets, I focus on providing expert market analysis from a technical and fundamental standpoint to Global Prime’s global clients and media outlets, with currencies the area of most expertise and dedication.

My views on the FX market are insightful and actionable, connecting the dots to interpret market dynamics and uncover opportunities. I dive into monetary and fiscal policies, economic data, geopolitics & macro fundamentals. My role also includes oversight of Global Prime’s brand reach globally.

LinkedIn profile: https://www.linkedin.com/in/ivan-delgado-79b770a/
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Global Prime: Daily Market Digest

Postby IvanD » Wed Feb 12, 2020 4:04 am

The Kiwi Catapulted After Hawkish RBNZ

Quick Take

The economic calendar was packed with Central Bank events, including Fed’s Powell, ECB’s Lagarde and BOE’s Carney. The net effect, after all said and done, is a sense that these policymakers did a great job at sounding non-committal and sticking to the familiar mantra. What does this mean? It means there was little meat in the bone, a lack of substance or new surprises in the remarks they had prepared. As a consequence, the movement in currencies this week continues to be rather dull in nature, with the US Dollar a touch softer, even if that has not acted as a catalyst to see buying in the Euro, which remains in free-fall. Watch the EUR index closely as it nears a key level where long inventry building is a real possibility.

The Kiwi, however, is the exception, marked up aggressively by algo activity and the unwinding of shorts on the aftermath of a more hawkish-than-expected RBNZ. The Aussie, meanwhile, saw buy-side flows re-emerge but at a much slower pace as the positive groove in equities feeds through. The lower reported rate of new NCoV infections by China (even if numbers manipulated), or expectations of some factories in China to soon re-open are factors supporting equities. Not to forget, the Fed’s balance sheet expansion via money market operations, alongside the boost in Trump ratings to win this year’s presidential race after the Iowa caucus fiasco is also an aid.

This recovery in equities is causing the Yen and Swissy to see sell-side flows dominate this week, but the setback in the currencies is still under a bullish context when analyzing the aggregated daily flow. The Sterling is one of the clear beneficiaries from the current state of affairs, with its recovery more to do with a technically-inspired re-loading of longs at a critical liquidity area than any particular fundamental catalyst, as the EU-UK trade talks still the key driver with the outlook as tricky as it was during the aggressive sell-off in the Pound earlier this month. Lastly, the Canadian Dollar remains firmer but on the daily the currency remains structurally bearish.

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As Head of Market Research at Global Prime with over a decade of experience in capital markets, I focus on providing expert market analysis from a technical and fundamental standpoint to Global Prime’s global clients and media outlets, with currencies the area of most expertise and dedication.

My views on the FX market are insightful and actionable, connecting the dots to interpret market dynamics and uncover opportunities. I dive into monetary and fiscal policies, economic data, geopolitics & macro fundamentals. My role also includes oversight of Global Prime’s brand reach globally.

LinkedIn profile: https://www.linkedin.com/in/ivan-delgado-79b770a/
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Global Prime: Daily Market Digest

Postby IvanD » Thu Feb 13, 2020 5:00 am

Currencies Behave Pricing In Coronavirus Peak

Quick Take

The more days that go by, the more traders are getting a sense that the worst in the NCoV scare may be behind us. This is not a hunch or something I write out of my gut feeling, but as usual, I let price action and the aggregated flows in G8 FX tell the story. We are witnessing, without exception, the three funding currencies (EUR, GBP, CHF) be dumped this week. Whenever speculators show a greater interest to borrow a low-interest rate currency to use it as a funding currency to profit, it suggests the carry trade is ‘back on’, and this would not be happening if the market was still engulfed by elevated levels of uncertainty. As one shifts the focus to equities, the same picture arises, with the S&P 500 making fresh record highs. Chinese equities? The same story, with 7 days of straight gains in the CSI 300 index. The Aussie has clearly benefited from this recovery in risk, at a time when the RBA Governor Lowe is starting to sound more upbeat on the economy judging by the speech given this Thursday. However, the Aussie performance was eclipsed by the aggressive mark-up in the New Zealand Dollar after the RBNZ hints at the end of its easing bias. Shifting gears to the world's reserve currency, the USD maintains a bullish outlook with a notable dip buying participation noted as Fed's Powell testimony failed to act as a catalyst to alter the northbound tendency. Its neighboring peer, the Canadian Dollar, had a stellar performance as Oil keeps recovering in line with risk, while the Pound saw very tepid aggregated flows.


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As Head of Market Research at Global Prime with over a decade of experience in capital markets, I focus on providing expert market analysis from a technical and fundamental standpoint to Global Prime’s global clients and media outlets, with currencies the area of most expertise and dedication.

My views on the FX market are insightful and actionable, connecting the dots to interpret market dynamics and uncover opportunities. I dive into monetary and fiscal policies, economic data, geopolitics & macro fundamentals. My role also includes oversight of Global Prime’s brand reach globally.

LinkedIn profile: https://www.linkedin.com/in/ivan-delgado-79b770a/
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Global Prime: Daily Market Digest

Postby IvanD » Fri Feb 14, 2020 5:09 am

The Pound Spikes As Looser Fiscal Policy Eyed

Quick Take

The British Pound had no rivalry in the Forex land, with the currency finding strong demand after the British Finance Minister Sajid Javid resigned in what was seen as a surprise move. Immediately, the market started to connect the dots, assuming that the successor (Rishi Sunak) will support looser fiscal policy to satisfy UK PM Johnson wishes, and as a result, this may lead to a reduction in the odds for the BOE to cut rates this year. The Yen was the other currency that gained ground with the bulk of the gains seen in Asia as the number of reported coronavirus cases spiked, leading to algo-selling to dominate early doors. The catch, however, is that this spike in numbers won’t be sustained as it was due to change in the standards to measure the disease by the Health Commission for Hubei Province. Nonetheless, it was enough to see the spectacular 7-day bull run in the Chinese market to come to an end and weakness to ensue in the Aussie and the New Zealand Dollar, even if the losses were marginal. The Canadian Dollar was also affected by the selling in carry trades, but the losses were minimal. The USD continues to put up a fight to prevent further downside and as I pointed out when analyzing aggregated flows in the charts section, while the USD valuation is high, the current pullback is the most pronounced seen in 2020, hence counting for further USD weakness is betting on this 2020 pattern to be broken; quite a bold call if you ask me. A currency which just keeps on delivering for the satisfaction of sellers is the Euro, unable to find sufficient buyers to stop the bleeding. Speculation that a dovish shift in rhetoric at the March ECB meeting could be in store amid the slowdown in China’s economic activity is one of the narratives doing the rounds.

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https://www.globalprime.com.au/market-r ... ampaign=de
As Head of Market Research at Global Prime with over a decade of experience in capital markets, I focus on providing expert market analysis from a technical and fundamental standpoint to Global Prime’s global clients and media outlets, with currencies the area of most expertise and dedication.

My views on the FX market are insightful and actionable, connecting the dots to interpret market dynamics and uncover opportunities. I dive into monetary and fiscal policies, economic data, geopolitics & macro fundamentals. My role also includes oversight of Global Prime’s brand reach globally.

LinkedIn profile: https://www.linkedin.com/in/ivan-delgado-79b770a/
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Global Prime: Daily Market Digest

Postby IvanD » Mon Feb 17, 2020 3:23 am

Yen & USD Capitalize On The COVID-19 Crisis

Quick Take

Last Friday was one of those uninspiring days with minimal flows in the G8 FX complex. Buy on dip strategies continue to thrive in the British Pound and US Dollar markets, while the Japanese Yen has firmed up its stance in recent days too, despite fresh record highs in US equities. These currencies are by a large margin the strongest since the unraveling of the coronavirus crisis in China, even if the Pound trades based on factors largely non-related to the drama China is undergoing as Brexit/politics-led stories play the bigger role. Therefore, it is safe to say that the USD and the JPY are by far the fiats drawing the most demand by such an uncertain landscape.

The coronavirus has led, on the contrary, to the Aussie and Kiwi, now joined by the outperformance of the Euro, as the other group of three currencies most punished by this new dynamics in the market. As weeks have rolled by and the market keeps working out the ramifications of the coronavirus, this fall in the Euro to multi-year lows appears to carry a clear message about the impending risks of a more dovish ECB heading into the March meeting. The story here is that when ‘China sneezes, Germany catches a cold (no pun intended)’, so the market is betting on this Chinese drama to re-instill economic sluggishness in Europe, something that the ECB may have to act upon through easier tools.

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https://www.globalprime.com.au/market-r ... ampaign=de
As Head of Market Research at Global Prime with over a decade of experience in capital markets, I focus on providing expert market analysis from a technical and fundamental standpoint to Global Prime’s global clients and media outlets, with currencies the area of most expertise and dedication.

My views on the FX market are insightful and actionable, connecting the dots to interpret market dynamics and uncover opportunities. I dive into monetary and fiscal policies, economic data, geopolitics & macro fundamentals. My role also includes oversight of Global Prime’s brand reach globally.

LinkedIn profile: https://www.linkedin.com/in/ivan-delgado-79b770a/
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Global Prime: Daily Market Digest

Postby IvanD » Tue Feb 18, 2020 4:25 am

GBP & CAD Movers, COVID-19 'Peak' Near?

Quick Take

As Forex traders, volatility is the oxygen we need, and judging by the last 48h, the market has certainly strangled us by missing this critical component. On Monday, with the exceptions of the British Pound and the Canadian Dollar, the rest of the G8 FX complex traded in a rather ‘comatose’ state, even if that should not surprise nobody, as the US equity and bond markets were closed in observance of President’s day. In the first hours of trading in Asia this Tuesday, looks like vol is starting to return though.

The GBP was the weakest currency on Monday, as the UK’s Brexit negotiator David Frost reminded the market once again of the big stumbling blocks that lie ahead in the negotiations for future trading relationships with the EU. Britain said it will not sign up to follow EU standards because it would defeat the point of Brexit, while the EU maintains a hardline stance in ‘the level playing field’ that the UK must respect in accordance with EU laws. A rather bold yet representative statement of where they both stand came from the French foreign minister who warned of the tough EU-UK negotiations ahead by noting “EU-UK will rip each other apart” in trade talks.

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https://www.globalprime.com.au/market-r ... ampaign=de
As Head of Market Research at Global Prime with over a decade of experience in capital markets, I focus on providing expert market analysis from a technical and fundamental standpoint to Global Prime’s global clients and media outlets, with currencies the area of most expertise and dedication.

My views on the FX market are insightful and actionable, connecting the dots to interpret market dynamics and uncover opportunities. I dive into monetary and fiscal policies, economic data, geopolitics & macro fundamentals. My role also includes oversight of Global Prime’s brand reach globally.

LinkedIn profile: https://www.linkedin.com/in/ivan-delgado-79b770a/
User avatar
IvanD
 
Posts: 472
Joined: Thu Jun 01, 2017 6:04 am

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