Welcome!

News Feed Item

FXPRIMUS Market Brief of the Week: Dollar Strengthening in 2014 Looks Inevitable

SINGAPORE, SINGAPORE -- (Marketwired) -- 02/05/14 -- In FXPRIMUS' Market Brief of The Week for 3 February, the brokerage firm's Senior Economist, Jimmy Zhu, discusses the Dollar's performance.

Economic Insights

Dollar Almost Outperformed All G10 Currencies Despite Concerns for U.S. Labour Market

In the first month of 2014, U.S. Dollar remains on the strong side, nearly outperforming all G10 currencies except for the Yen. Although consensus is to reduce monthly purchases by USD 10 billion in every Federal Open Market Committee (FOMC) meeting, it is still data dependent and not a pre-set course, according to the Federal Reserve (Fed).

It is a heavy week amid the global central banks' meeting and some top tier data from the U.S., such as Non-Farm Payroll (NFP) and Institute for Supply Management (ISM) manufacturing Purchasing Managers' Index (PMI). The market is keen to know whether the soft release of December's payrolls was due to bad weather, or economic downturn. We do see some uncertainties on possible decline here because durable orders and housing data released earlier suggested another possible soft print. Another key issue will be that the change in payrolls is inconsistent with last month's 6.7% falling unemployment rate. A 35-year low labour market participating rate suggested that increasing amount of people has left the labour force.

As we mentioned few times this year, where is the correlation in the near term? Our advice will be a "risk off" model until next payrolls data returns to resilience. You can see equities selling off, USD and U.S. Treasuries rallied, clearly suggesting that traders are looking at safer assets for this stage. For currency traders, they only wonder about the USD direction if U.S. economic data rebounds in later days. In our view, the direction should still have upside bias. Capital flows into the U.S. are likely to continue regardless of market scenario or risk sentiment. The only question is whether capital will flow into riskier equities or safer Treasury bills. Either will result in further strengthening of the Greenback. Even a catastrophe in the U.S. (a much worse economic condition than now) may boost both the Dollar and U.S. Treasury bills, judging from previous market scenarios, such as the U.S. debt-ceiling debates and sovereign credit-rating downgrade by Standard & Poor's in 2011.

U.S. 10-Year notes March Future (white) vs. S&P 500 (yellow) last month

To view the figure associated with this press release, please visit the following link: http://media3.marketwire.com/docs/fxpr02051.jpg

Source: Bloomberg

Still, demand in global economy remains lacklustre which suggested safe haven assets might be in traders' favour before future catalysts appear. China's States manufacturing PMI fell to 50.5 last month, confirming HSBC's survey that economy growth has reached the peak.

Various central banks will meet this week, including the Reserve Bank of Australia (RBA), Bank of England (BoE) and European Central Bank (ECB). Among all, ECB could gain the most attraction as investors are keen to learn further of ECB's monetary policy. Mario Draghi said in Davos 2014 conference that the bank was ready to act if necessary, but he insisted that deflation was not yet an issue for the Euro Zone. The message hinted that an immediate rate cut is unlikely, thus the attention will be its press conference this Thursday. In the coming few months, we expect ECB to be as dovish as they can. According to current data, Euro Zone inflation is subdued, and expected to remain subdued in 2014. The longer it stays at a low level, the more serious the risk of deflation. The central bank shall seek its available tools to reverse the scenario, such as Long-Term Refinancing Operations (LTRO), Funding Lending Scheme loans, or even U.S. Style Quantitative Easing (QE). For the RBA, we do not expect it to lower the Official Cash Rate (OCR) by another 25 bps since the central bank has raised caution of rising prices in the property market. But Aussie dollar downside risk remains as the central bank may continue its verbal intervention such as "a comfortable level at 0.85 or 0.80 for the AUDUSD".

Top News This Week

U.S. Non-Farm Payroll
I expect figures to come in at 125K

RBA Cash Rate decision
I expect figures to come in at 2.5% unchanged

ECB main refinancing rate decision
I expect figures to come in at 0.25% unchanged

Trade Recommendation

AUDUSD - Short at 0.8780

AUDUSD retains its downside bias due to the Chinese economy weakening and "RBA's 0.85 bias". Based on the recent price reaction, most of the price rebound is due to technical factors, instead of fundamentals factors. Thus, the pressure remains on the downside.

Based on the H1 chart, we see some resistance level around the level of 0.8780, and we will short this pair if the price rebounds to this level.

Entry Price - 0.8780
Stop Loss - 0.8830
1st Target Price - 0.8730
2nd Target price - 0.8680

To view the figure associated with this press release, please visit the following link: http://media3.marketwire.com/docs/fxpr02052.jpg

Source: Bloomberg, AUDUSD H1 Chart

ABOUT FXPRIMUS

FXPRIMUS offers retail traders a level of trade execution, service quality and fund safety that are normally reserved only for the largest investors. Serving traders in 205 countries across 6 continents FXPRIMUS combines an unmatched level of fund safety with regular independent audits of company financials and Straight Through Processing, top notch execution with tight spreads, prompt and responsive customer support, ISO 27001 certification in Information Security, ISO 9001:2008 certification in Quality Management and an industry-leading trader toolset that includes free access to powerful trader tools. FXPRIMUS truly is The Safest Place To Trade.

Add to Digg Bookmark with del.icio.us Add to Newsvine

Contacts:
FXPRIMUS Support
[email protected]

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
"Cloud Academy is an enterprise training platform for the cloud, specifically public clouds. We offer guided learning experiences on AWS, Azure, Google Cloud and all the surrounding methodologies and technologies that you need to know and your teams need to know in order to leverage the full benefits of the cloud," explained Alex Brower, VP of Marketing at Cloud Academy, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clar...
In his session at 21st Cloud Expo, Carl J. Levine, Senior Technical Evangelist for NS1, will objectively discuss how DNS is used to solve Digital Transformation challenges in large SaaS applications, CDNs, AdTech platforms, and other demanding use cases. Carl J. Levine is the Senior Technical Evangelist for NS1. A veteran of the Internet Infrastructure space, he has over a decade of experience with startups, networking protocols and Internet infrastructure, combined with the unique ability to it...
While some developers care passionately about how data centers and clouds are architected, for most, it is only the end result that matters. To the majority of companies, technology exists to solve a business problem, and only delivers value when it is solving that problem. 2017 brings the mainstream adoption of containers for production workloads. In his session at 21st Cloud Expo, Ben McCormack, VP of Operations at Evernote, discussed how data centers of the future will be managed, how the p...
"NetApp is known as a data management leader but we do a lot more than just data management on-prem with the data centers of our customers. We're also big in the hybrid cloud," explained Wes Talbert, Principal Architect at NetApp, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
"Akvelon is a software development company and we also provide consultancy services to folks who are looking to scale or accelerate their engineering roadmaps," explained Jeremiah Mothersell, Marketing Manager at Akvelon, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
"We're focused on how to get some of the attributes that you would expect from an Amazon, Azure, Google, and doing that on-prem. We believe today that you can actually get those types of things done with certain architectures available in the market today," explained Steve Conner, VP of Sales at Cloudistics, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
"Space Monkey by Vivent Smart Home is a product that is a distributed cloud-based edge storage network. Vivent Smart Home, our parent company, is a smart home provider that places a lot of hard drives across homes in North America," explained JT Olds, Director of Engineering, and Brandon Crowfeather, Product Manager, at Vivint Smart Home, in this SYS-CON.tv interview at @ThingsExpo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
It is of utmost importance for the future success of WebRTC to ensure that interoperability is operational between web browsers and any WebRTC-compliant client. To be guaranteed as operational and effective, interoperability must be tested extensively by establishing WebRTC data and media connections between different web browsers running on different devices and operating systems. In his session at WebRTC Summit at @ThingsExpo, Dr. Alex Gouaillard, CEO and Founder of CoSMo Software, presented ...
Enterprises are adopting Kubernetes to accelerate the development and the delivery of cloud-native applications. However, sharing a Kubernetes cluster between members of the same team can be challenging. And, sharing clusters across multiple teams is even harder. Kubernetes offers several constructs to help implement segmentation and isolation. However, these primitives can be complex to understand and apply. As a result, it’s becoming common for enterprises to end up with several clusters. Thi...
"There's plenty of bandwidth out there but it's never in the right place. So what Cedexis does is uses data to work out the best pathways to get data from the origin to the person who wants to get it," explained Simon Jones, Evangelist and Head of Marketing at Cedexis, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
WebRTC is great technology to build your own communication tools. It will be even more exciting experience it with advanced devices, such as a 360 Camera, 360 microphone, and a depth sensor camera. In his session at @ThingsExpo, Masashi Ganeko, a manager at INFOCOM Corporation, introduced two experimental projects from his team and what they learned from them. "Shotoku Tamago" uses the robot audition software HARK to track speakers in 360 video of a remote party. "Virtual Teleport" uses a multip...
"We work around really protecting the confidentiality of information, and by doing so we've developed implementations of encryption through a patented process that is known as superencipherment," explained Richard Blech, CEO of Secure Channels Inc., in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
High-velocity engineering teams are applying not only continuous delivery processes, but also lessons in experimentation from established leaders like Amazon, Netflix, and Facebook. These companies have made experimentation a foundation for their release processes, allowing them to try out major feature releases and redesigns within smaller groups before making them broadly available. In his session at 21st Cloud Expo, Brian Lucas, Senior Staff Engineer at Optimizely, discussed how by using ne...
The question before companies today is not whether to become intelligent, it’s a question of how and how fast. The key is to adopt and deploy an intelligent application strategy while simultaneously preparing to scale that intelligence. In her session at 21st Cloud Expo, Sangeeta Chakraborty, Chief Customer Officer at Ayasdi, provided a tactical framework to become a truly intelligent enterprise, including how to identify the right applications for AI, how to build a Center of Excellence to oper...
"IBM is really all in on blockchain. We take a look at sort of the history of blockchain ledger technologies. It started out with bitcoin, Ethereum, and IBM evaluated these particular blockchain technologies and found they were anonymous and permissionless and that many companies were looking for permissioned blockchain," stated René Bostic, Technical VP of the IBM Cloud Unit in North America, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Conventi...