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


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

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
Most people haven’t heard the word, “gamification,” even though they probably, and perhaps unwittingly, participate in it every day. Gamification is “the process of adding games or game-like elements to something (as a task) so as to encourage participation.” Further, gamification is about bringing game mechanics – rules, constructs, processes, and methods – into the real world in an effort to engage people. In his session at @ThingsExpo, Robert Endo, owner and engagement manager of Intrepid D...
WebRTC adoption has generated a wave of creative uses of communications and collaboration through websites, sales apps, customer care and business applications. As WebRTC has become more mainstream it has evolved to use cases beyond the original peer-to-peer case, which has led to a repeating requirement for interoperability with existing infrastructures. In his session at @ThingsExpo, Graham Holt, Executive Vice President of Daitan Group, will cover implementation examples that have enabled ea...
SYS-CON Events announced today that Enzu will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Enzu’s mission is to be the leading provider of enterprise cloud solutions worldwide. Enzu enables online businesses to use its IT infrastructure to their competitive advantage. By offering a suite of proven hosting and management services, Enzu wants companies to focus on the core of their online busine...
@DevOpsSummit has been named the ‘Top DevOps Influencer' by iTrend. iTrend processes millions of conversations, tweets, interactions, news articles, press releases, blog posts - and extract meaning form them and analyzes mobile and desktop software platforms used to communicate, various metadata (such as geo location), and automation tools. In overall placement, @DevOpsSummit ranked as the number one ‘DevOps Influencer' followed by @CloudExpo at third, and @MicroservicesE at 24th.
Enterprise IT has been in the era of Hybrid Cloud for some time now. But it seems most conversations about Hybrid are focused on integrating AWS, Microsoft Azure, or Google ECM into existing on-premises systems. Where is all the Private Cloud? What do technology providers need to do to make their offerings more compelling? How should enterprise IT executives and buyers define their focus, needs, and roadmap, and communicate that clearly to the providers?
In the next forty months – just over three years – businesses will undergo extraordinary changes. The exponential growth of digitization and machine learning will see a step function change in how businesses create value, satisfy customers, and outperform their competition. In the next forty months companies will take the actions that will see them get to the next level of the game called Capitalism. Or they won’t – game over. The winners of today and tomorrow think differently, follow different...
SYS-CON Events announced today that Roundee / LinearHub will exhibit at the WebRTC Summit at @ThingsExpo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. LinearHub provides Roundee Service, a smart platform for enterprise video conferencing with enhanced features such as automatic recording and transcription service. Slack users can integrate Roundee to their team via Slack’s App Directory, and '/roundee' command lets your video conference ...
SYS-CON Events announced today that Sheng Liang to Keynote at SYS-CON's 19th Cloud Expo, which will take place on November 1-3, 2016 at the Santa Clara Convention Center in Santa Clara, California.
More and more brands have jumped on the IoT bandwagon. We have an excess of wearables – activity trackers, smartwatches, smart glasses and sneakers, and more that track seemingly endless datapoints. However, most consumers have no idea what “IoT” means. Creating more wearables that track data shouldn't be the aim of brands; delivering meaningful, tangible relevance to their users should be. We're in a period in which the IoT pendulum is still swinging. Initially, it swung toward "smart for smar...
So you think you are a DevOps warrior, huh? Put your money (not really, it’s free) where your metrics are and prove it by taking The Ultimate DevOps Geek Quiz Challenge, sponsored by DevOps Summit. Battle through the set of tough questions created by industry thought leaders to earn your bragging rights and win some cool prizes.
DevOps is being widely accepted (if not fully adopted) as essential in enterprise IT. But as Enterprise DevOps gains maturity, expands scope, and increases velocity, the need for data-driven decisions across teams becomes more acute. DevOps teams in any modern business must wrangle the ‘digital exhaust’ from the delivery toolchain, "pervasive" and "cognitive" computing, APIs and services, mobile devices and applications, the Internet of Things, and now even blockchain. In this power panel at @...
Without lifecycle traceability and visibility across the tool chain, stakeholders from Planning-to-Ops have limited insight and answers to who, what, when, why and how across the DevOps lifecycle. This impacts the ability to deliver high quality software at the needed velocity to drive positive business outcomes. In his general session at @DevOpsSummit at 19th Cloud Expo, Eric Robertson, General Manager at CollabNet, will discuss how customers are able to achieve a level of transparency that e...
SYS-CON Events announced today that SoftNet Solutions will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. SoftNet Solutions specializes in Enterprise Solutions for Hadoop and Big Data. It offers customers the most open, robust, and value-conscious portfolio of solutions, services, and tools for the shortest route to success with Big Data. The unique differentiator is the ability to architect and ...
"Matrix is an ambitious open standard and implementation that's set up to break down the fragmentation problems that exist in IP messaging and VoIP communication," explained John Woolf, Technical Evangelist at Matrix, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
In past @ThingsExpo presentations, Joseph di Paolantonio has explored how various Internet of Things (IoT) and data management and analytics (DMA) solution spaces will come together as sensor analytics ecosystems. This year, in his session at @ThingsExpo, Joseph di Paolantonio from DataArchon, will be adding the numerous Transportation areas, from autonomous vehicles to “Uber for containers.” While IoT data in any one area of Transportation will have a huge impact in that area, combining sensor...