Trading News Events

Trading the News: U.S. Non-Farm Payrolls (NFP)

The U.S. Non-Farm Payrolls (NFP) report by fuel the near-term decline in EUR/USD as employment is projected to increase another 195K in November, while Average Hourly Earnings are expected to climb an annualized 2.7% during the same period.

A further improvement in labor market dynamics accompanied by signs of stronger wage growth may heighten the appeal of the greenback as it encourages the Federal Open Market Committee (FOMC) to further normalize monetary policy in 2018, and the dollar may exhibit a more bullish behavior over the remainder of the year should the central bank stay on its current course of delivering three rate-hikes per year.

However, another series of lackluster data prints may encourage the FOMC to adopt a more cautious tone at its last interest rate decision on December 13, and the greenback may face a more bearish fate if the fresh developments drag on interest-rate expectations.

• EUR/USD stands at risk for a larger pullback as it snaps the monthly opening range, with the pair carving a fresh series of lower highs & lows following the failed attempt to break above the 1.1960 (38.2% retracement) hurdle.
• The Relative Strength Index (RSI) highlights a similar dynamic as it fails to preserve the bullish formation carried over from November, with a break below the 50-Day SMA (1.1758) raising the risk for a move back towards 1.1670 (50% retracement).
• Next downside region of interest comes in around 1.1580 (100% expansion), which sits above the November-low (1.1554), followed by the Fibonacci overlap around 1.1480 (78.6% expansion) to 1.1500 (78.6% expansion).

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Trading the News: U. of Michigan Confidence

A meaning rebound in the U. of Michigan Confidence survey may fuel the recent series of lower highs & lows in EUR/USD as it encourages the Federal Open Market Committee (FOMC) to further normalize monetary policy over the coming months.

Data prints highlighting an improved outlook for the U.S. economy may push the FOMC to deliver a March rate-hike as ‘many participants judged that the proposed changes in business taxes, if enacted, would likely provide a modest boost to capital spending.’ In turn, the Fed may utilize the January 31 interest rate decision to prepare U.S. and households for higher borrowing-costs, with the dollar at risk of exhibiting a more bullish behavior as the central bank appears to be on course to deliver three rate-hikes in 2018.

The U. of Michigan Confidence survey unexpectedly weakened in December, with the index narrowing to 96.8 from 98.5 the month prior. At the same time, the gauge for future expectations slipped to 84.6 from 88.9, while 12-month inflation expectations climbed to an annualized 2.8% from 2.5% in November.

EUR/USD Daily Chart

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Trading the News: U.S. Gross Domestic Product (GDP)

Updates to the 4Q U.S. Gross Domestic Product (GDP) report may heighten the appeal of the greenback as the fresh revision is expected to show the economy growing an annualized 2.7% versus an initial forecast of 2.5%.
Signs of stronger-than-expected activity may encourage the Federal Open Market Committee (FOMC) to deliver one rate-hike at every quarterly meeting, and Chairman Jerome Powell and Co. may continue to prepare U.S. households and businesses for higher borrowing-costs as ‘the Committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate.’ In turn, a batch of positive developments may foster a bullish reaction in the U.S. dollar as the central bank appears to be on course to further normalize monetary policy over the coming months.

However, a set of below-forecast prints may trigger a bearish reaction in the greenback as it drags on interest-rate expectations, with EUR/USD at risk of staging a more meaningful advance over the coming days as it breaks out of a narrow range.

EUR/USD Daily Chart

• EUR/USD pulls back from a fresh weekly-high (1.2476), but the near-term outlook remains tilted to the topside as it breaks out of a narrow range.
• Need a close above back the 1.2430 (50% expansion) to keep the 2018-high (1.2556) on the radar, with the next topside hurdle coming in around 1.2640 (61.8% expansion) to 1.2650 (38.2% retracement) followed by the 1.2860 (50% expansion) region.
• Keeping a close eye on the Relative Strength Index (RSI) as it snaps the bearish formation carried over from the previous month and appears to be extending the upward trend from late last year.

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Trading the News: U.S. Gross Domestic Product (GDP)



Updates to the U.S. Gross Domestic Product (GDP) report may curb the recent weakness in EUR/USD as the growth rate is anticipated to slow to an annualized 2.0% from 2.9%. Bear in mind, market participants may put greater emphasis on the core Personal Consumption Expenditure (PCE), the Fed’s preferred gauge for inflation, as the reading is projected to increase 2.6% during the first three-months of 2018, which would mark the fastest pace of growth since 2007. Signs of heightening price pressures may ultimately trigger a bullish reaction in the U.S. dollar as it puts pressure on the Federal Open Market Committee (FOMC) to extend the hiking-cycle.

However, a series of below-forecast data prints may sap the appeal of the greenback, and EUR/USD may stage a near-term rebound as market participants scale back bets for four Fed rate-hikes in 2018.

EUR/USD Daily Chart

• Near-term outlook for EUR/USD remains tilted to the downside as it extends the series of lower highs & lows from the previous week, with the pair clearing the March-low (1.2155).
• Close below 1.2130 (50% retracement) raises the risk for a move towards 1.1960 (38.2% retracement) to 1.1970 (23.% expansion), with the next region of interest coming in around 1.1810 (61.8% retracement) followed by the Fibonacci overlap around 1.1670 (78.6% expansion) to 1.1680 (50% retracement).
• Keep a close eye on the RSI as it approaches oversold territory, with move below 30 raising the risk for a further decline in the exchange rate as the bearish momentum gathers pace.

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Trading the News: Federal Open Market Committee (FOMC) Interest Rate Decision

The Federal Reserve interest rate decision is likely to shake up the near-term outlook for the U.S. dollar as the central bank is widely expected to increase the benchmark interest rate to a fresh threshold of 2.25% to 2.50%.

Keep in mind, market participants may put increased emphasis on the Summary of Economic Projections (SEP) ahead of 2019 as Fed officials show a greater willingness to tolerate above-target inflation over the policy horizon, and a downward revision in the interest-rate dot-plot is likely to fuel the recent appreciation in EUR/USD as the central bank appears to be approaching the end of the hiking-cycle.

However, ongoing projections for a neutral fed fund rate of 2.75% to 3.00% would indicate Chairman Jerome Powell & Co. will continue to normalize monetary policy over the coming months despite the recent remarks from the Trump Administration, and a hawkish forward-guidance may ultimately drag on EUR/USD especially as the European Central Bank (ECB) remains in no rush to move away from its zero-interest rate policy (ZIRP).

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Today, a wide variety of online revenue generating sources have become well admired and forex is one of the largest over the counter market around the world. And foreign currency exchange traders are now enjoying better income facilities here. But a forex trader must be prompt in his trading actions otherwise he won’t be able to ensure a profitable and secured trading journey. Of course a trader give concentration on all important news.

Trading the News: U.S. Consumer Price Index (CPI)

The U.S. Consumer Price Index (CPI) may undermine the recent rebound in EUR/USD as the headline reading is expected to hold steady at 1.6% in February.

What's more is that the core rate of inflation is projected to print 2.2% for the fourth consecutive month, and signs of sticky price growth may spark a bullish reaction in the U.S. dollar as it put pressure on the Federal Reserve to bring back the hawkish forward-guidance for monetary policy.

Updates to the U.S. Consumer Price Index (CPI) showed the headline reading narrowing to 1.6% from 1.9% per annum in December, while the core rate of inflation unexpectedly held steady at 2.2% for the third consecutive month in January. A deeper look at the report showed the stickiness was led by a 1.1% in the cost for apparel, with prices for food increasing 0.2% during the same period, while transportation costs fell 1.3% on the back of lower energy prices.

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Trading the News: European Central Bank (ECB) Interest Rate Decision

The European Central Bank (ECB) interest rate decision may fuel the recent pullback in EURUSD as the Governing Council continues to pursue its monetary easing cycle.

The ECB meeting may influence the near-term outlook for EURUSD as there appears to be a growing discussion at the central bank to implement a negative interest rate policy (NIRP) on the Main Refinance Rate, its flagship benchmark for borrowing costs.

It seems as though the Governing Council will continue to rely on its non-standard measures to insulate the Euro-area as “slower growth momentum is expected to extend into the current year,” and a dovish forward guidance for monetary policy is likely to weigh on the Euro Dollar exchange rate as it boosts speculation for a more accommodative stance.

However, the ECB may merely attempt to buy more as the central bank prepares to launch another round of Targeted Long-Term Refinance Operations (TLTRO), and a more bullish scenario may materialize for EUR/USD if President Mario Draghi and Co. stick to the same script.

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Gold price action oscillated within a 2.5% trading range over the last five sessions only to finish flat on the week. Broadly speaking, spot gold (XAU/USD) has clung onto the $1,700 price zone for the last month while the precious metal consolidates and awaits another catalyst to spark its next big move.

Despite recent turbulence, gold performance is up about 10% year-to-date, and still has potential to climb higher. Gold price outlook remains upbeat as liquidity gushes amid staggering central bank balance sheet growth.

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The Euro continues to trade in a narrow range against the US Dollar but a break to the downside is looking more and more likely.

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