ACY Daily Market Analyst

[ACYaustralia]

AUD Respects Support, Rally Back to Ascending Channel - 26 June, ACY Team

The Australian dollar halted the short-term descending momentum for four consecutive days, and rallied 0.35 percent to $0.75650 against the U.S. dollar. It’s currently rising with following an ascending channel, depicted as chart 1, started from early May where the reversal occurred.
In a background of decreased real wages in the first quarter and the developed world’s highest debt-to-GDP ratio, consumers are reducing their cash for a rainy day, in which their savings levels have more than halved in five years. The rising cost of living intensifies the squeeze, with news that electricity prices are climbing as much as 20 percent in New South Wales next month.
As consumption accounts for more than half of gross domestic product, the highly indebted can be more sensitive to declines in income, which hence has negative impacts on consumer spending.
According to BIS (Bank of International Settlement), Australia’s household debt to GDP ratio has jumped almost 15 percent points in four years, reaching as high as 123.1 percent in 2016 just after that of Switzerland. As the central bankers’ bank, BIS said that the higher speed of debt than GDP growth over prolonged periods is a “robust early warning” signal of financial stress, while rising household debt boosts short-term consumption.

Chart 1: Developed countries’ household debt to GDP

There is a problem in Australia that the record-low interest rates allow buyers to borrow large amounts of money, which would boost household debt further and continue to push real estate market, especially in Sydney and Melbourne which attract enormous investment from Chinese buyers.
Regarding worries over high level of debt from policy makers, the bank regulator is prompted to enforce measures to rein in riskier mortgages and strengthen lending standards, when the RBA (the Reserve Bank of Australia) noted in April that a third of mortgage holders had either no buffer or not enough of one to cover a month’s repayment. The borrowers with high risks tend to hold newer loans or come from lower-income and lower-wealth households.
Aussie dollar climbed 0.28 percent to US$0.75813 as of 12:50 p.m. in Sydney. Technically with the bullish Relative Strength Index of 58.3327, the AUD/USD is consolidating in a developing ascending price channel. With a sign of rising tendency, it likely continues to rally and move in this price channel. In the event that the AUD/USD edges higher, traders should first watch for the pair breakout above Jun 14th’s high of 0.76354. Alternatively if prices reverse lower, the AUD/USD must first break beneath the lower channel line, then test last Friday’s low of 0.75361.

Chart 2: AUDUSD Daily



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[ACYaustralia]

AUD Respects Support, Rally Back to Ascending Channel - 26 June, ACY Team

The Australian dollar halted the short-term descending momentum for four consecutive days, and rallied 0.35 percent to $0.75650 against the U.S. dollar. It’s currently rising with following an ascending channel, depicted as chart 1, started from early May where the reversal occurred.
In a background of decreased real wages in the first quarter and the developed world’s highest debt-to-GDP ratio, consumers are reducing their cash for a rainy day, in which their savings levels have more than halved in five years. The rising cost of living intensifies the squeeze, with news that electricity prices are climbing as much as 20 percent in New South Wales next month.
As consumption accounts for more than half of gross domestic product, the highly indebted can be more sensitive to declines in income, which hence has negative impacts on consumer spending.
According to BIS (Bank of International Settlement), Australia’s household debt to GDP ratio has jumped almost 15 percent points in four years, reaching as high as 123.1 percent in 2016 just after that of Switzerland. As the central bankers’ bank, BIS said that the higher speed of debt than GDP growth over prolonged periods is a “robust early warning” signal of financial stress, while rising household debt boosts short-term consumption.

Chart 1: Developed countries’ household debt to GDP

There is a problem in Australia that the record-low interest rates allow buyers to borrow large amounts of money, which would boost household debt further and continue to push real estate market, especially in Sydney and Melbourne which attract enormous investment from Chinese buyers.
Regarding worries over high level of debt from policy makers, the bank regulator is prompted to enforce measures to rein in riskier mortgages and strengthen lending standards, when the RBA (the Reserve Bank of Australia) noted in April that a third of mortgage holders had either no buffer or not enough of one to cover a month’s repayment. The borrowers with high risks tend to hold newer loans or come from lower-income and lower-wealth households.
Aussie dollar climbed 0.28 percent to US$0.75813 as of 12:50 p.m. in Sydney. Technically with the bullish Relative Strength Index of 58.3327, the AUD/USD is consolidating in a developing ascending price channel. With a sign of rising tendency, it likely continues to rally and move in this price channel. In the event that the AUD/USD edges higher, traders should first watch for the pair breakout above Jun 14th’s high of 0.76354. Alternatively if prices reverse lower, the AUD/USD must first break beneath the lower channel line, then test last Friday’s low of 0.75361.

Chart 2: AUDUSD Daily



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[ACYaustralia]

AUD Respects Support, Rally Back to Ascending Channel - 26 June, ACY Team

The Australian dollar halted the short-term descending momentum for four consecutive days, and rallied 0.35 percent to $0.75650 against the U.S. dollar. It’s currently rising with following an ascending channel, depicted as chart 1, started from early May where the reversal occurred.
In a background of decreased real wages in the first quarter and the developed world’s highest debt-to-GDP ratio, consumers are reducing their cash for a rainy day, in which their savings levels have more than halved in five years. The rising cost of living intensifies the squeeze, with news that electricity prices are climbing as much as 20 percent in New South Wales next month.
As consumption accounts for more than half of gross domestic product, the highly indebted can be more sensitive to declines in income, which hence has negative impacts on consumer spending.
According to BIS (Bank of International Settlement), Australia’s household debt to GDP ratio has jumped almost 15 percent points in four years, reaching as high as 123.1 percent in 2016 just after that of Switzerland. As the central bankers’ bank, BIS said that the higher speed of debt than GDP growth over prolonged periods is a “robust early warning” signal of financial stress, while rising household debt boosts short-term consumption.

Chart 1: Developed countries’ household debt to GDP

There is a problem in Australia that the record-low interest rates allow buyers to borrow large amounts of money, which would boost household debt further and continue to push real estate market, especially in Sydney and Melbourne which attract enormous investment from Chinese buyers.
Regarding worries over high level of debt from policy makers, the bank regulator is prompted to enforce measures to rein in riskier mortgages and strengthen lending standards, when the RBA (the Reserve Bank of Australia) noted in April that a third of mortgage holders had either no buffer or not enough of one to cover a month’s repayment. The borrowers with high risks tend to hold newer loans or come from lower-income and lower-wealth households.
Aussie dollar climbed 0.28 percent to US$0.75813 as of 12:50 p.m. in Sydney. Technically with the bullish Relative Strength Index of 58.3327, the AUD/USD is consolidating in a developing ascending price channel. With a sign of rising tendency, it likely continues to rally and move in this price channel. In the event that the AUD/USD edges higher, traders should first watch for the pair breakout above Jun 14th’s high of 0.76354. Alternatively if prices reverse lower, the AUD/USD must first break beneath the lower channel line, then test last Friday’s low of 0.75361.

Chart 2: AUDUSD Daily



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[ACYaustralia]

AUD Respects Support, Rally Back to Ascending Channel - 26 June, ACY Team

The Australian dollar halted the short-term descending momentum for four consecutive days, and rallied 0.35 percent to $0.75650 against the U.S. dollar. It’s currently rising with following an ascending channel, depicted as chart 1, started from early May where the reversal occurred.
In a background of decreased real wages in the first quarter and the developed world’s highest debt-to-GDP ratio, consumers are reducing their cash for a rainy day, in which their savings levels have more than halved in five years. The rising cost of living intensifies the squeeze, with news that electricity prices are climbing as much as 20 percent in New South Wales next month.
As consumption accounts for more than half of gross domestic product, the highly indebted can be more sensitive to declines in income, which hence has negative impacts on consumer spending.
According to BIS (Bank of International Settlement), Australia’s household debt to GDP ratio has jumped almost 15 percent points in four years, reaching as high as 123.1 percent in 2016 just after that of Switzerland. As the central bankers’ bank, BIS said that the higher speed of debt than GDP growth over prolonged periods is a “robust early warning” signal of financial stress, while rising household debt boosts short-term consumption.

Chart 1: Developed countries’ household debt to GDP

There is a problem in Australia that the record-low interest rates allow buyers to borrow large amounts of money, which would boost household debt further and continue to push real estate market, especially in Sydney and Melbourne which attract enormous investment from Chinese buyers.
Regarding worries over high level of debt from policy makers, the bank regulator is prompted to enforce measures to rein in riskier mortgages and strengthen lending standards, when the RBA (the Reserve Bank of Australia) noted in April that a third of mortgage holders had either no buffer or not enough of one to cover a month’s repayment. The borrowers with high risks tend to hold newer loans or come from lower-income and lower-wealth households.
Aussie dollar climbed 0.28 percent to US$0.75813 as of 12:50 p.m. in Sydney. Technically with the bullish Relative Strength Index of 58.3327, the AUD/USD is consolidating in a developing ascending price channel. With a sign of rising tendency, it likely continues to rally and move in this price channel. In the event that the AUD/USD edges higher, traders should first watch for the pair breakout above Jun 14th’s high of 0.76354. Alternatively if prices reverse lower, the AUD/USD must first break beneath the lower channel line, then test last Friday’s low of 0.75361.

Chart 2: AUDUSD Daily



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[ACYaustralia]

Euro Slides After Draghi Comments, Investors Await Yellen Speech - 27 June, ACY Team

The euro hit the weekly highs to $1.12187 against the U.S. dollar, but later retraced its gains, by 0.15 percent to $1.11809 on Monday after the European Central Bank chief Mario Draghi defended the ECB’s easy monetary policy, and as investors are waiting for Federal Reserve Chair Janet Yellen’s speech on Tuesday.
Draghi, who gave a speech to university students in Lisbon, noted that super low rates create jobs, boost economic growth and benefit borrowers, ultimately easing inequality. He also rejected calls to exit ultra easy monetary policy quickly, by arguing that premature tightening would lead to a new recession and more inequality.
German businesses, as a dominant factor of European market, were feeling more positive than ever this month, according to a closely-watched business survey, which unexpectedly improved in the latest sign of confidence in Europe’s economic recovery.
The Institute for Economic Research (Ifo’s) overall business climate index had already hit a record high last month, and June’s survey saw the index rise from 114.6 to 115.1, in contrast to predictions that it would ease slightly. Ifo’s two sub-indices which measure expectations and current assessment beat forecasts, increasing to 106.8 and 124.1 respectively.
Euro zone’s economy would be positive as Germany’s economy is already in rude health, with unemployment at a record low and economic expansion of 0.6 per cent in the first quarter, and also experts are expecting the growth to continue.
Fed Chair Yellen is set to deliver a speech in Europe on Tuesday, with investors’ expectation that she will maintain a positive outlook on the U.S. economy in spite of a recent batch of weak economic data, which hence is supporting the Fed’s forecast of raising interest rates once more this year and three times next year.
The rate hike expectation helps improve the performance of the dollar against a basket of major currencies. With a reason that it already fuels enormous energy into the dollar, the long-term outlook of this strong performance may not be sustainable.
The EUR/USD climbed 0.1 percent to $1.11910 as of 3:30 p.m. in Sydney. Technically with a sign of relatively strong Relative Strength Index (RSI) of 54.6686, the euro is consolidating in a daily developing ascending channel. This cannel as depicted below, has been created by connecting a series of swing highs and lows beginning with last Tuesday’s price action.
In the event that the EUR/USD breaks lower, traders should first watch for the pair to breakout beneath 5-day moving average of 1.11763. Alternatively if prices continue to edge higher, the euro must first break above Monday’s high of 1.12187, then test the ascending channel line near 1.12259.

Chart 1: EURUSD Daily



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[ACYaustralia]

Euro Slides After Draghi Comments, Investors Await Yellen Speech - 27 June, ACY Team

The euro hit the weekly highs to $1.12187 against the U.S. dollar, but later retraced its gains, by 0.15 percent to $1.11809 on Monday after the European Central Bank chief Mario Draghi defended the ECB’s easy monetary policy, and as investors are waiting for Federal Reserve Chair Janet Yellen’s speech on Tuesday.
Draghi, who gave a speech to university students in Lisbon, noted that super low rates create jobs, boost economic growth and benefit borrowers, ultimately easing inequality. He also rejected calls to exit ultra easy monetary policy quickly, by arguing that premature tightening would lead to a new recession and more inequality.
German businesses, as a dominant factor of European market, were feeling more positive than ever this month, according to a closely-watched business survey, which unexpectedly improved in the latest sign of confidence in Europe’s economic recovery.
The Institute for Economic Research (Ifo’s) overall business climate index had already hit a record high last month, and June’s survey saw the index rise from 114.6 to 115.1, in contrast to predictions that it would ease slightly. Ifo’s two sub-indices which measure expectations and current assessment beat forecasts, increasing to 106.8 and 124.1 respectively.
Euro zone’s economy would be positive as Germany’s economy is already in rude health, with unemployment at a record low and economic expansion of 0.6 per cent in the first quarter, and also experts are expecting the growth to continue.
Fed Chair Yellen is set to deliver a speech in Europe on Tuesday, with investors’ expectation that she will maintain a positive outlook on the U.S. economy in spite of a recent batch of weak economic data, which hence is supporting the Fed’s forecast of raising interest rates once more this year and three times next year.
The rate hike expectation helps improve the performance of the dollar against a basket of major currencies. With a reason that it already fuels enormous energy into the dollar, the long-term outlook of this strong performance may not be sustainable.
The EUR/USD climbed 0.1 percent to $1.11910 as of 3:30 p.m. in Sydney. Technically with a sign of relatively strong Relative Strength Index (RSI) of 54.6686, the euro is consolidating in a daily developing ascending channel. This cannel as depicted below, has been created by connecting a series of swing highs and lows beginning with last Tuesday’s price action.
In the event that the EUR/USD breaks lower, traders should first watch for the pair to breakout beneath 5-day moving average of 1.11763. Alternatively if prices continue to edge higher, the euro must first break above Monday’s high of 1.12187, then test the ascending channel line near 1.12259.

Chart 1: EURUSD Daily



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[ACYaustralia]

US30 Declined Amid Yellen’s Speech - 28 June, ACY Team

The U.S. 30 (underlying Dow Jones Industrial Average) lost around 0.45 percent of its value to the two-week lows of 21309.1 even though U.S. Federal Reserve Chair Janet Yellen said on Tuesday that she does not believe that another financial crisis will occur at least as long as she lives, mainly due to reforms of the banking system since the 2007-09 crash.
For a summary, the NYSE was lower at the close on Tuesday, with Dow Jones Industrial Average falling 0.46 percent, while the S&P 500 down 0.81 percent, and the NASDAQ Composite index declining 1.61 percent.
The biggest gainers of the session on the U.S. 30 were JPMorgan Chase & Co (NYSE:JPM), which rose 0.93 percent or 0.81 points to close at 88.05. Wal-Mart Stores Inc (NYSE:WMT) gained 0.68 percent or 0.51 points to end at 76.01 and Home Depot Inc (NYSE:HD) was up 0.54 percent or 0.82 points to 152.24 in late trade.
The loss of the index was largely propelled by losses in Technology and Communication Service sectors. The biggest losers included Verizon Communications Inc (NYSE:VZ), lost 1.99 percent or 0.91 points to end at 44.84, while Microsoft Corporation (NASDAQ:MSFT) declined 1.87 percent or 1.32 points to 69.21 and Cisco Systems Inc (NASDAQ:CSCO) shed 1.49 percent or 0.48 points to close at 31.76.
Fed’s chair Yellen gave no indication her plans for continued tight monetary policy had shifted while acknowledging that some asset prices had become pretty high. “We’ve made very clear that we think it will be appropriate to attainment of our goals to raise interest rates very gradually,” she said this time in London.
However, the general loss of U.S. equity market was largely influenced by her speech, as the rate hike plan seems in a rush, an opinion from Neel Kashkari, Minneapolis Fed President. With inflation low and wages showing little sign of an upward surge, the U.S. Reserve action on raising interest rates may be inappropriate to current economy which has no sign of overheat.
"Why are we trying to cool down the economy, when there may still be some slack in the job market, and there is still some room to run on the inflation front?" he said. "We're not seeing wages climb very fast, and we're not seeing inflation. That tells me the economy is not on the verge of overheating."
Technically intraday trading is at 21322.6 as of 2:50 p.m. in Sydney, and retracing its gains to 20-day moving average, which generally is seen as a support level by investors. As it is gathering a descending momentum in the near term from the record high, a downside may not shift if breakout of MA20 occurs.

Chart 1: US30USD Daily


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[ACYaustralia]

Crude Rose For a Fifth Straight Day as U.S. Inventories Drop - - 29 June, ACY Team

Crude rebounded for a fifth straight day and recovered all losses from last week. It surged on Wednesday 2.76 percent or $1.23 per barrel, to end at $44.694 as concern over a supply glut eases.
Oil slumped into a bear market last week on concerns that physical oversupply and increases in U.S. inventories would undermine a deal of output cuts from the OPEC (Organization of Petroleum Exporting Countries). A data from the Energy Information Administration showed that U.S. crude inventories remain more than 100 million barrels above the five-year seasonal average, which drove oil prices down.
According to the EIA, inventories that remained stubbornly high dropped 894,000 barrels last week, with Oklahoma inventories (the largest delivery stock in US) falling for the sixth straight week, while U.S. crude oil stockpiles rose by 118,000 barrels, the amount of oil held at the Cushing hub fell for the sixth week in a row. Declined U.S. gasoline stockpiles boosted futures (5.5 percent) over the past five sessions on Wednesday.
“The positioning clearly says there is room for a fairly abrupt reversal,” said Mike Wittner, head of oil market research at Societe Generale SA, adding that this will depend on signs the market is re-balancing. “The gross short positions are very big. Sentiment is overwhelmingly bearish right now, but things can turn around in a hurry.”
Technically in the near term oil prices is moving in a descending price channel, which is depicted in blue below. After touching a support level of the lower channel line the price got a sharp bounce and now is testing the 20-day moving average, which is seen as a key resistance. In the event of crude prices edge higher to break the MA20, there is a large room for traders to see further increases towards MA60. Alternatively if prices reverse lower impeded by the MA20, it will decline further to test Jun 21st’s low of 41.822.
If we see the longer term’s outlook, it is still staying in an upper upward price channel after finding a median line support. A brighter future can be seen if it is not breaking lower to this support line with rising Relative Strength Index (RSI) which is now standing around at median level.

Chart 1: WTICOUSD Daily



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[ACYaustralia]

Crude Jumps With U.S. Stockpile’s Decline – 26 July, ACY Team

Crude surged on Tuesday to break to the July 20th’s highs, reaching to the top since June at 48.485. It jumped nearly 4.57 percent back to $48 per barrel as OPEC moved on Monday to cap Nigerian oil output and called on several members to boost compliance with production cuts, which aim to help clear excessive global stocks and support flagging prices.
OPEC has agreed with several non-OPEC producers led by Russia to cut oil output by a combined 1.8 million barrels per day (bpd) from January 2017 until the end of March 2018, stating Libya and Nigeria were exempted from the limits to help their oil industries recover from years of unrest.
The deal to curb output propelled crude prices above $58 a barrel in January but they have since slipped back to a $45 to $50 range as the effort to drain global inventories has taken longer than expected.
Oil futures traded as much as 5 percent higher, extending its session’s gains, while a report released by American Petroleum Institute on Tuesday revealed crude inventories declined by 10.2 million barrels last week. That would be the largest shrink since September if Energy Information Administration data confirms the decline on Wednesday.
Although oil surges recently, some lingering doubts over the pace of the oil market rebalancing still exist, with increasing oil supplies from the U.S., Libya and Nigeria threatening to hinder curbs by members of the Organization of Petroleum Exporting Countries and its allies. Saudi Arabia is less likely to act alone to balance the market and other nations should improve their implementation of supply cuts.
For fundamentals, investors should be more focusing on tomorrow’s Fed Interest Rate Decision which has a forecast of 1.25 percent, matching the former figure. If the U.S. interest rate remains unchanged, there is no much impacts on oil prices.
Technically it is now touching the upper level of descending price channel, with facing a great resistance. If it successfully breaks to it, traders may see a further increase in the short term; otherwise, it will reverse lower and continue to follow the price channel in the middle term.
When we see the longer term outlook of oil prices, it is currently standing far away from the median line which is considered as a support level. In the event of crude prices are falling back, the median line will be seen as a support in the long term.

Chart 1: WTICOUSD Daily

Chart 2: WTICOUSD Daily (2)



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[ACYaustralia]

Dow Hits Record Amid Fed’s Dovish Statement – 28 July, ACY Team

Thursday the U.S. 30 (underlying Dow Jones Industrial Average) gained 0.49 percent or 106.7 points to close at 21775.8, hitting new record after FOMC statement noted that it seems the doves are back in charge at the Fed yesterday. Any chance of a September rate hike seems to have disappeared with not-as-good-as-expected Consumer Price Index (CPI).
Under the view of realized and expected labor market conditions and inflation, the Committee decided to maintain its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. It also keeps the target range for the federal funds rate at 1 to 1-1/4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.
The biggest gainers of the session on the U.S. 30 were Verizon Communications Inc (NYSE:VZ), which rose 7.68 percent or 3.41 points to close at 47.81. Boeing Co (NYSE:BA) gained 3.23 percent or 7.55 points to end at 241.00 and Merck & Company Inc (NYSE:MRK) was up 3.06 percent or 1.89 points to 63.69 in late trade.
The loss of the index was largely propelled by losses in Technology sectors. The biggest losers included Apple Inc (NYSE:AAPL), lost 1.89 percent or 2.90 points to end at 150.56, while American Express Company (NYSE:AXP) declined 1.70 percent or 1.45 points to 83.85 and Visa Inc (NYSE:V) shed 1.27 percent or 1.28 points to close at 99.57.
The U.S. Department of Labor released Initial and Continuing Jobless Claims on Thursday, showing that the labor market’s performance is not as good as expected, which likely dragged the U.S. dollar in the near term. While the Durable Goods Orders are far exceeded the forecast, set to be 6.5 percent which is more than double of the expectation figure. The U.S. international trade status strengthened, with Goods Trade Balance showing a reduction in trade deficit.
However, intraday trading is retreating from the record, at 21734.1 as of 11:50 a.m. in Sydney, partly erasing yesterday’s gains. Technically with a sign of relatively strong Relative Strength Index (RSI) of 64.3999, it is still in an ascending trend. When we analyse by Fibonacci retracement, if the index breaks higher to 21779.1 (100% retracement), traders may look for some spaces for further rise before a key resistance found at 22074.4 (123.6% retracement).
Future movement in the near term may be highly influenced by its Gross Domestic Product (GDP) released later today.

Chart 1: US30 Daily


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