Daily Report on September 09, 2016
The European Central Bank decided to leave interest rates unchanged on Thursday as expected but disappointed the markets with a lack of dovish statements on the Euro. With no immediate action to extend/expand the current asset purchase plan, and no explicit guidance about the central bank’s next moves, the markets were left hanging dry by the ECB. Speaking at the press conference after the rate decision, ECB President Mario Draghi stated that the bank was studying potential changes to its asset-buying program, but maintained the March 2017 end-date for the plan.
Crude prices pulled back on Friday as investors booked profits after prices rallied more than 4 percent a day earlier. U.S. Energy Information Administration confirmed a surprisingly huge draw-down in U.S. crude inventories, which had been reported first on Wednesday by the API. Government data showed that U.S. crude stocks dropped by 14.5 million barrels last week to 511.4 million barrels – the biggest weekly drop in stockpiles since January 1999.
This loss was driven by limited imports and shipping activity in the U.S. Gulf Coast owing to Tropical Storm Hermine last week. Higher oil prices powered the U.S dollar’s rally overnight, by raising U.S. inflation expectations, which led some investors to speculate that the Federal Reserve could hike interest rates sooner rather than later despite a recent spate of disappointing economic data.
Reports by China’s National Bureau of Statistics indicated that the country’s consumer price inflation slowed to its weakest pace in almost a year in August. Food costs continued to abate despite unreliable agricultural production due to severe summer flooding. The consumer price index (CPI) growth posted the slowest pace of price inflation since October 2015. CPI growth was at 1.3 percent in August on a year-on-year basis, compared with a 1.8 percent increase in July. The producer price index (PPI) dropped 0.8 percent in August compared to a year earlier, virtually in line with expectations for a fall of 0.9 percent.
EURGBP has been on a sharp rise without a single bearish candle since it broke above the 50.0% retracement level at 1.09090. However, the aggressive and sharp up moves may have exhausted the bulls and slowed down the pace of the up-wave, which is showing up in the short bodies of the last two bullish candles (not including the current one). The pair may continue to surge higher, as the MA20 has converged with the MA50, and both are placed below the price action, thus powering the bullish momentum in EURGBP.
Buy Digital Call Option from 1.09600 to 1.09770 valid until 20:00 GMT September 09, 2016
GBPAUD crawled back from the low at 1.72600 but has been hesitant around the 1.74150 level as the pair is facing a stiff zone of resistance at the trendline marking the descending downtrend created since May 26. A pullback is expected as there is no support for further advances, with the two MAs placed above the price action. Furthermore, the %K line of the stochastics has entered the overbought zone, indicating the possibility of upcoming profit-taking.
Buy Digital Put Option from 1.72600 to 1.72600 valid until 20:00 GMT September 09, 2016
AUDUSD has entered a consolidation phase after nose-diving and moving past the 20-period moving average yesterday. The MA is now acting as a resistance and forcing the price to go down further after each attempt to gain back territory. The RSI has fallen from the overbought threshold to the neutral 50 level. AUDUSD is anticipated to retest the 23.6% retracement level at 0.76144.
Buy Digital Put Option from 0.76430 to 0.76144 valid until 20:00 GMT September 09, 2016
Gold has been trading with a sideways to upwards bias since yesterday following a steep decline which depressed the precious metal below both the two moving averages. The MA20 has penetrated the MA50 from above is casting downward pressure on current up moves. Both MA’s are currently placed above the price action. While the RSI is in bearish territory, the %K line has reversed lower and crossed the %D line from above. The metal is expected to pull back lower after attempting a test of the MA20 just above the price action.
Buy Digital Put Option from 1335.90 to 1330.00 valid until 20:00 GMT September 09, 2016
Having surged sharply from the 23.6% retracement level, at 2.667, Natural gas’s up moves have slowed down. The two MAs placed below the price action are supporting further advances, but prices rising too far too fast have led the market into an overbought zone. The resistance from the upward sloping trendline through recent lows from early August to date is offering a strong road block to further gains currently. Natural gas is expected to reverse lower.
Buy Digital Put Option from 2.800 to 2.770 valid until 20:00 GMT September 09, 2016
SP500 has been restricted below the MA20 recently, even though the index is moving in an upward trending price channel, with higher highs and higher lows since early August. The price is nearing the lower boundary of the channel and is forecast to fall out of the range as bulls seem to be losing steam, with the RSI index pointing downwards and remaining below the 50 line. Prices have broken below both the MA’s from above and bounce-backs have not been able to cross back above the MA’s thus far.
Buy Digital Put Option from 2177.50 to 2172.40 valid until 20:00 GMT September 09, 2016