Trading Signals Wednesday, 26 November 2014

GBP/USD Trend: BUY
USD/CHF Trend: SELL
USD/JPY  Trend: SELL
EUR/USD Trend: BUY

The current support/resistance level are :

EUR/USD 1.2453, 1.2463, 1.2469, 1.2474, 1.2480, 1.2484, 1.2495
USD/JPY 117.81, 117.87, 117.91, 117.93, 117.97, 118.00, 118.06
GBP/USD 1.5688, 1.5698, 1.5703, 1.5708, 1.5713, 1.5718, 1.5727
USD/CHF 0.9621, 0.9630, 0.9634, 0.9640, 0.9644, 0.9650, 0.9659

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Gold Fundamental Analysis November 26, 2014 Forecast

Gold is trading at 1201.90 up by $5.30 after taking a bit of a breather yesterday. There is no direct driver today. Gold prices have eased from a three-week high as investors weigh the likely path of global monetary policy. Gold futures advanced to the highest level since October 30 on Friday after China surprised markets with its first interest rate cut in more than two years. The move spurred demand for gold as a store of value and an alternative to paper currency.

But prices declined Monday, after Germany’s central bank President Jens Weidmann, a member of the ECB’s 24-person governing council, said that monetary policy alone can’t create growth and must be based on higher productivity and policy reforms.

Demand for jewelry in China was down 39% year-on-year in the third quarter, while demand for bar and coin investment was down 30%, the World Gold Council (WGC) said in its Gold Demand Trends report last week.  As consumer preferences shifted from 18-carat gold to the 24-carat option, the WGC said that the government’s anti-corruption drive may be contributing to the trend.  The WGC expects demand to pick up during Chinese New Year in February but cautioned that the government’s crackdown on corruption is likely to prevent any exuberance.

The frugality drive has affected high-end tea and the luxury goods market, as well as gold, state media reports have said. The government’s no-nonsense stance towards corruption has also been demonstrated by China’s membership of the Austria-based International Anti-Corruption Academy, the South China Morning Post reported this week.

EUR/USD Fundamental Analysis November 26, 2014 Forecast

The EUR/USD eased by 5 points as the US dollar gained ahead of US GDP. Jean-Claude Juncker will unveil a €315 billion new plan to revive the European economy, the Financial Times reports. The plan, named as European Fund for Strategic Investment, relies heavily on financial engineering to mobilize private investment. The plan will be presented at a summit next month and officials hope it will be approved by the middle of next year.

Germany’s central bank President Jens Weidmann, a member of the ECB’s 24-person governing council, said that monetary policy alone can’t create growth and must be based on higher productivity and policy reforms. Weidmann’s comments contrasted with remarks made Friday by ECB President Mario Draghi, who signaled that the central bank is ready to expand its stimulus program. Traders have been hoping that accommodative measures by Europe’s central bank would spur growth and inflation.

The second estimate of US third quarter GDP is forecast to show a limited downward revision from 3.5% Q/Q annualized to 3.3% Q/Q annualized. A significant downward revision in net exports will probably be offset by an upward adjustment in inventories, while other revisions should be quite limited.

More interesting will be Conference Board’s consumer confidence. The indicator reached already a new post-crisis high in October, but a further improvement is forecast for November. The consensus is looking for an increase from 94.5 to 96.0

Metals Pack Fundamental Analysis November 26, 2014 Forecast – Silver & Copper

Silver gained 277 points soaring at 16.712 remaining very cheap as gold continues to climb. Industrial demand for metals remains weak as Copper recovered from Monday’s losses to trade at 3.012.  Copper was steady on Tuesday as investors weighed additional monetary policy easing in top consumer China against worries that the measures would not necessarily translate into more metals demand. Today China’s central bank lowered the yield for a key short-term money rate for the fourth time this year, as regulators step up efforts to reduce funding pressure for Chinese companies.

But copper failed to gain traction amid concerns that the measures were unlikely to spur an immediate market recovery for companies facing a winter demand slowdown and a freeze on credit.

China consumes some 45 percent of the world’s copper. “A lot of people are not convinced that this will make an awful lot of difference to Chinese economic growth, that it will feed through to greater lending to smaller companies for example,” BNP Paribas analyst Stephen Briggs said.

A new US Senate report showed that the Federal Reserve forced JP Morgan to sell its Henry Bath warehouse. It also rejected applications by Goldman Sachs and Morgan Stanley to trade physical iron ore, and refused an application by Goldman Sachs for a joint-venture sugar plant in Brazil. And a second US Senate report showed that warrant cancellations at Metro International Trade Services’ Detroit warehouse by Deutsche Bank, Red Kite and Glencoe were financially incentivized by Metro and significantly contributed to the lengthy warehouse queue.  Goldman Sachs executives defended the bank against allegations that its activities in physical commodities were a “recipe for manipulation”. And representatives argued that carry trade, not incentives, led to the Detroit warehouse queues.

GBP/USD Fundamental Analysis November 26, 2014 Forecast

The GBP/USD declined by 29 points to trade at 1.5679 after a speech by BoE Governor Carney.  Governor Mark Carney appears in Parliament today to answer questions about the Bank of England’s latest forecasts. That may not be the only grilling he’ll face.

It will also be his first appearance in front of lawmakers since the Nov. 12 publication of an independent review into whether the BOE knew about the rigging of the foreign-exchange market. At the Nov. 12 press conference to present the Inflation Report, Carney faced questions about currency-market manipulation. He told journalists there was “absolutely no evidence and no reason to think” that any member of staff was involved in any improper or unlawful behavior.

Since his arrival at the helm of the BOE in July last year, Carney has left few corners untouched as it absorbs unprecedented new powers to oversee banks and finance. His changes also include guidance on when interest rates will rise, the subject of a wide range of views among the majority voting to keep the key rate at a record low 0.5 percent.

USD/CAD Fundamental Analysis November 26, 2014 Forecast

The USD/CAD climbed to 1.13 up by 17 points today as the US dollar continued to gather momentum and oil prices remain bearish ahead of the OPEC meeting later this week. Commodity currencies and commodities failed to get a sustainable bump from the surprise out of China last week. The People’s Bank of China on Friday lowered interest rates on both deposits and loans, but it cut benchmark lending rates more than it cut rates on deposits, while allowing banks more flexibility in setting rates paid to depositors. The steps were designed to help Chinese banks attract savers and get the banks to lower funding costs for businesses, especially small and private entrepreneurs. But banks may be reluctant to go along, say bankers and analysts. Because the cuts to the lending and deposit rates don’t match, the difference between how much banks charge borrowers and how much they pay depositors could narrow sharply, pressuring profits.Oil prices remain low but have gained ahead of the big OPEC meeting on Thursday. Traders are not sure as to what to expect so the bearish prices continues to weigh on the CAD.

EUR/GBP Fundamental Analysis November 26, 2014 Forecast

The EUR/GBP is trading at 0.7933 up by 11 points as the pound took a major fall as words from Bank of England Carney. The euro is also light but only a bit as traders look forward to next week’s ECB meeting.  Sterling slipped from an 11-day high against the euro today after data showed German business morale rebounded in November, offering some relief to the battered common currency.

The euro had come under intense pressure, dropping towards two-year lows against the dollar, after European Central Bank chief Mario Draghi said on Friday that “excessively low” inflation had to be raised fast by whatever means necessary, prompting bets on further stimulus in the euro zone.

Draghi said there was no sign of economic improvement in the months ahead and that the ECB would expand and step up its program to pump more money into the economy if its current measures fell short of lifting inflation.

In the UK investors are still looking for the Bank of England to tighten monetary policy. However, the expectations of a rate hike have been pushed back to the fourth quarter of 2015 from mid-2015, putting pressure on the pound.