FXSIGNAL

DAILY FOREX POST – EUR/USD , GBP/USD , GOLD JANUARY 8, 2014

2014-01-08T16:39:00.001+06:00

EUR/USD Technical view

**SPOT EUR/USD Previous day OHLC**
Open	High	Low	Close	Change

1.3626	1.3656	1.3595	1.3615	-0.0016

**Today's Support and Resistance**
Resistance
Support
R3	1.3900
R2	1.3800
R1	1.3660

S1	1.3600
S2	1.3570
S3	1.3460

EURO ended the session on Tuesday with losses of 0.12%, versus the greenback, inching lower in a volatile session. The pair is holding above crucial near term supports at 1.3550; bottom end of the medium term bullish channel, where the downside is likely to be capped before we could see EURO rally to 1.3800- 1.3900. However, close below 1.3550, the pair could slide to 1.3350, negating the near term bullish view. The medium to long term view remains bullish for targets of 1.4200; targets for the symmetrical triangle in an uptrend

TREND DIRECTION

Short term: Bullish
Medium term: Bullish
Long term: Bullish

TRADING RECOMMENDATIONS

Short:
- N/A
Long:

At.1.3580 with a stop at 1.3530 for a profit target of 1.3800

GBP/USD Technical view

**SPOT GBP/USD Previous day OHLC**
Open	High	Low	Close	Change

1.6402	1.6437	1.6373	1.6399	-0.0005

**Today's Support and Resistance**
Resistance
Support
R3	1.6600
R2	1.6500
R1	1.6460

S1	1.6320
S2	1.6260
S3	1.6140

Sterling ended the session on Tuesday flat, with a negative bias, versus the greenback, closing flat for the second successive session. Near term view bullish, but there is a likelihood of the pair testing supports at 1.6250- 1.6300; bottom end of the medium term bullish channel, where the downside could be capped. On the upside, close above 1.6500, Sterling is likely to rally to 1.6700- 1.6800, with the medium to long term targets placed at 1.7100- 1.7200

TREND DIRECTION

Short term: Bullish
Medium term: Bullish
Long term: Bullish

TRADING RECOMMENDATIONS

Short:
- N/A
Long:

At 1.6310 with a stop at 1.6240 for a profit target of 1.6500

GOLD Technical view

**SPOT GOLD Previous day OHLC**
Open	High	Low	Close	Change

1237.56	1245.25	1224.59	1231.49	-6.10

**Today's Support and Resistance**
Resistance
Support
R3	1283.00
R2	1262.00
R1	1245.00

S1	1230.00
S2	1222.00
S3	1216.00

Spot gold ended the session on Tuesday with losses of 0.49%, capping five successive winning sessions, the longest since August 2013. Near term, the gains are likely to extend anywhere between 1260.00- 1300.00 per troy ounce with crucial near term supports placed at 1215.00- 1225.00. ONLY a close below the supports will negate the near term bullish view. The medium to long term view remains extremely bearish with spot gold likely to target 1000.00- 1050.00 per troy ounce; targets for the symmetrical triangle in a downtrend

TREND DIRECTION

Short term: Bullish
Medium term: Bearish
Long term: Bearish

TRADING RECOMMENDATIONS

Short:
- At 1210.00 with a stop at 1218.00 for a target of 1190.00
Long:
- Hold on to long positions initiated at 1230.00 with a stop at 1220.00 for a profit target of 1256.00

DAILY FOREX POST – EUR/USD , GBP/USD , GOLD JANUARY 7, 2014

2014-01-07T17:08:00.000+06:00

EUR/USD Technical view

**SPOT EUR/USD Previous day OHLC**
Open	High	Low	Close	Change

1.3588	1.3652	1.3570	1.3627	0.0040

**Today's Support and Resistance**
Resistance
Support
R3	1.3900
R2	1.3800
R1	1.3630

S1	1.3600
S2	1.3560
S3	1.3460

EURO ended the session on Monday with gains of 0.29%, versus the greenback, capping two successive sessions of losses. The pair rebounded from the session lows and near crucial supports at 1.3550; bottom end of the medium term bullish channel, where the downside is likely to be capped before rallying to 1.3800- 1.3900. However, close below 1.3550, EURO is expected to slide to 1.3350, negating the near term bullish view. The medium to long term view remains bullish for targets of 1.4200; targets for the symmetrical triangle in an uptrend

TREND DIRECTION

Short term: Bullish
Medium term: Bullish
Long term: Bullish

TRADING RECOMMENDATIONS

Short:
- N/A
Long:

At.1.3580 with a stop at 1.3530 for a profit target of 1.3800

GBP/USD Technical view

**SPOT GBP/USD Previous day OHLC**
Open	High	Low	Close	Change

1.6408	1.6433	1.6336	1.6404	-0.0009

**Today's Support and Resistance**
Resistance
Support
R3	1.6600
R2	1.6500
R1	1.6460

S1	1.6320
S2	1.6260
S3	1.6180

Sterling ended the session on Monday flat with a negative bias, versus the greenback, extending its losses to the third successive session. The pair however rebounded from the session lows by more than 0.40 percent to close almost flat for the day. Although the near term view remains bullish, there is a possibility of the pair testing supports at 1.6250- 1.6300; bottom end of the medium term bullish channel. On the upside, close above 1.6500, Sterling is likely to rally to 1.6700- 1.6800, with the medium to long term targets placed at 1.7100- 1.7200.

TREND DIRECTION

Short term: Bullish
Medium term: Bullish
Long term: Bullish

TRADING RECOMMENDATIONS

Short:
- N/A
Long:

At 1.6310 with a stop at 1.6240 for a profit target of 1.6500

GOLD Technical view

**SPOT GOLD Previous day OHLC**
Open	High	Low	Close	Change

1236.48	1248.30	1232.64	1237.59	1.43

**Today's Support and Resistance**
Resistance
Support
R3	1286.00
R2	1262.00
R1	1245.00

S1	1224.00
S2	1216.00
S3	1192.00

Spot gold ended the session on Monday flat, with a positive bias, inching higher to close the fifth successive session, the longest since August 2013. Near term, the precious metal is likely to rally anywhere between 1260.00- 1300.00 per troy ounce with crucial near term supports placed at 1215.00- 1225.00. ONLY a close below the supports will negate the near term bullish view. The medium to long term view remains extremely bearish with spot gold likely to target 1000.00- 1050.00 per troy ounce; targets for the symmetrical triangle in a downtrend

TREND DIRECTION

Short term: Bullish
Medium term: Bearish
Long term: Bearish

TRADING RECOMMENDATIONS

Short:
- At 1210.00 with a stop at 1218.00 for a target of 1190.00
Long:
- Hold on to long positions initiated at 1230.00 with a stop at 1220.00 for a profit target of 1256.00

DAILY STRATEGY JANUARY 6TH, 2014

2014-01-06T13:44:00.000+06:00

EUR/USD:
Our preference: Bearish setups on a pull-back move to within 1.3600 - 1.3640 with targets @ 1.3578 & 1.3555 in extension.

Alternative scenario: Above 1.3640, watch for bullish setups with 1.3653 as target and 1.3676 in extension.

Comment: EUR/USD remains under pressure. Note that hourly stochastic and RSI are oversold. Watch the level of 1.3627 (50% Fibonacci).

GBP/USD:
Our preference: Bearish setups on a pull-back move to within 1.6395 - 1.6440 with targets @ 1.6377 & 1.6347 in extension.

Alternative scenario: Above 1.6440, watch for bullish setups with 1.6473 as target and 1.6500 in extension.

Comment: GBP/USD remains under pressure. Note that hourly stochastic and RSI are oversold. Watch the level of 1.6410 (50% Fibonacci).

GOLD:
Our preference: Bullish setups on a pull-back move to within 1225.20 - 1234.25 with targets @ 1238.33 & 1246.26 in extension.

Alternative scenario: Below 1225.20, watch for bearish setups with 1220.58 as target and 1212.65 in extension.

Comment: Gold price remains in an upward trajectory. Note that hourly stochastic has crossed down with divergence. Watch the level of 1229.45 (50% Fibonacci).

FEDERAL RESERVE -2014 OUTLOOK

2014-01-06T13:18:00.001+06:00

By Jon Hilsenrath, Pedro Nicolaci da Costa and Victoria McGrane

The U.S. Federal Reserve enters a year of leadership transition and debates over how to wind down some of its easy money policies as the economy strengthens in 2014.

: The U.S. Federal Reserve building in Washington.; Reuters

If all goes according to policy makers’ plans, Janet Yellen will soon succeedBen Bernanke as Fed leader and quickly face multiple challenges, including guiding Fed policy, forging consensus within a fractious policy committee and honing her public communication skills.

The Senate plans to vote Jan. 6 on her nomination to become Fed chairwoman. She is expected to win confirmation and take the top job Feb. 1.

Mr. Bernanke, who served eight tumultuous years as Fed chairman, will preside over the Fed’s first policy meeting of the year, Jan. 28-29. His last day at the central bank is Jan. 31.

Fed officials will debate at that meeting whether to keep scaling back their bond-buying program, which aims to lower long-term interest rates to help boost growth and hiring. The Fed cited a brightening economic picture in December when it decided to cut the monthly pace of bond purchases to $75 billion, starting in January, from $85 billion previously.

Mr. Bernanke said at a press conference after that meeting that Fed officials would likely continue paring the bond buys by $10 billion at each meeting if the economy keeps improving as they expect. But he stressed that the process is not on a preset course. If the economic data disappoint, they might leave the amount of bond purchases unchanged at a meeting. If the recovery picks up more than they expect, they might cut it by bigger increments.

Fed policy makers continue to disagree over the merits of the bond-buying program. One voting member of the Fed’s policy making committee, Boston Fed President Eric Rosengren, dissented at the December meeting, saying it was too soon to pull back on the program with unemployment still high and inflation well below the Fed’s 2% target. Other members of the committee opposed the program from the start, doubting its value and worrying it risks fueling higher inflation or financial instability.

By the time Ms. Yellen presides over her first meeting as chairwoman in March, the officials will have seen a few more months of economic data. If the figures paint a clear picture, she may have an easy time corralling them into agreement. If the portrait is muddy, she could have a harder task.

Another policy issue for her and her colleagues is to ensure the Fed’s easy money programs don’t spark a new financial bubble, while not retreating from the policies so quickly that they damage the economy.

The group will also gain some new members over the course of 2014. President Barack Obama is expected to nominate Stanley Fischer, former head of the Bank of Israel, to become the Fed vice chairman. Another seat on the board is vacant and at least another is expected to open up in 2014. The Federal Reserve Bank of Cleveland is also looking for a successor to President Sandra Pianalto, who steps down in early 2014.

Once the committee agrees on what to do, Ms. Yellen will be the one to explain their policies and thinking to the markets, Congress and the general public. She has experience as a public speaker, having been the Fed’s vice chairwoman since 2010 and head of the San Francisco Fed for six years before that. But she prefers meticulously prepared presentations to extemporaneous public speaking and as vice chairwoman has avoided congressional testimony.

She has not given any press conferences as Fed vice chairwoman, but will be expected to do so as Fed chairwoman, following the practice begun by Mr. Bernanke. It also remains to be seen if she’ll follow other precedents he set in Fed communications, such as granting TV interviews and answering student questions during a lecture series broadcast over the web.

More broadly, Ms. Yellen will face the same challenge all incoming Fed leaders face, “which is to establish their own credibility,” said Brian Gardner, a Washington analyst at investment bank Keefe, Bruyette & Woods Inc. Mr. Bernanke faced it in succeedingAlan Greenspan, who faced it following Paul Volcker. “It just goes with the nature of anybody succeeding a predecessor who’s been in for several terms and has a larger than life reputation,” he said.

Ms. Yellen “is going to have to establish her own credibility, her own stature, her own reputation,” he said. “Only time can do that; there’s no magic wand.”

MORE... CLICK

3 NUMBERS TO WATCH: UK SERVICES PMI, EU CONFIDENCE, US ISM INDEX

2014-01-06T13:12:00.001+06:00

A blur of purchasing managers' indices (PMIs) will colour sentiment today, including the first look at the UK Services PMI for December. Later, we’ll see reports on the EU Sentix Investor Confidence Index and the ISM Non-Manufacturing Index for the US. Keep in mind that several revised December PMIs for economies across Europe are also scheduled for release, including the German Services PMI (08:53 GMT)and the Eurozone Services PMI (08:58 GMT).

UK Services PMI (09:28 GMT): Britain’s economy mounted a robust recovery in last year's second half, but the prime minister emphasised what he says is a precarious state of macro affairs in his debut message for 2014. “Our recovery is real, but it’s also fragile, and there are more difficult decisions ahead,” David Cameron warned last week. The degree of fragility is debatable, although today’s December update of the Markit/CIPS Services PMI will offer new context for evaluating Cameron’s comment.

Britain's recovery is real but fragile, says David Cameron. Photo: gov.uk

In the previous release for November, the services sector softened by the most so far in the 2013 data. Nonetheless, the reading of 60.0 reflected “strong growth during November as incoming new business continued to rise at a rapid pace,” Markit noted. The positive momentum for the economy overall is expected to spill over into the new year, according to a new poll of economists. “UK growth should be strong in 2014,” a Credit Suisse analyst tells the Financial Times. “The speed-up of 2013 looks broad-based across sectors and sources of demand. The main reason to be optimistic is the shift in corporate mood.”

If the bubbly outlook is more than irrational exuberance, today’s PMI number should provide some supporting evidence for thinking that Britain’s recovery will endure if not accelerate in the months ahead. Given the elevated readings in recent months, there’s still room for this measure of the mood in the services sector to fall without signaling trouble ahead. As long as today’s number sticks close to 60, the bullish forecasts for the UK will continue to resonate in the financial markets.

EU Sentix Investor Confidence (09:30 GMT): Encouraging signs of recovery continue to dot the Eurozone’s macro landscape, but there’s still no shortage of troubling numbers either. Last week provides a fresh example of the mixed news. The final data on the Eurozone Manufacturing PMI for December reflected “the strongest growth in over two-and-a-half years,” Markit Economics advised. But the upbeat trend is tempered by the fact that private-sector lending dropped 2.3 percent for the year through November—the steepest annual rate of decline since the start of tracking Eurozone credit data in the early 1990s, according to Friday’s monetary report from the European Central Bank (ECB).

The ongoing decline in lending is a sign that Eurozone’s recovery is weak at best. It’s also a clue for anticipating that the ECB will keep interest rates low and perhaps announce new round of monetary stimulus at its monthly announcement scheduled for this Thursday. Meantime, today’s update will be closely watched for fresh guidance on investor sentiment. In the previous release, confidence weakened a bit in December, although it remained elevated compared with the first half of 2013. But with a tepid rate of growth projected for the Continent overall, uncertainty abounds about what’s in store for the new year.

GDP growth for last year’s fourth quarter is projected to rise 0.2 percent for the Eurozone, or about half as much as the estimated rate in the October prediction, according to Now-Casting.com. This year’s first-quarter outlook is a bit better, but the trend in the weekly nowcasts has been slipping on this front too. No wonder that economists are generally cautious. A new BBC survey finds that half of 28 economists polled think that the euro crisis is still a real and present danger. Today’s report from Sentix will tell us if the market is inclined to agree.

US ISM Non-Manufacturing Index (15:00 GMT): Last week’s December update on the ISM Manufacturing Index suggests that the sector continues to expand at close to the fastest pace since April 2011. The bullish close to 2013 in manufacturing implies that the momentum will spill over into the new year. But there may be a slight glitch: the services sector is losing altitude, or so the recent trend in the ISM Non-Manufacturing Index suggests.

In contrast with its manufacturing counterpart, the ISM services benchmark fell in November to its lowest level since June (53.9). Although the index is still well above the neutral 50 mark, the sector’s conspicuous deceleration suggests that the economy may hit some turbulence in the new year. Services claim a bigger share of economic activity versus manufacturing and so another soft number in today’s release would temper the news in last week’s cheery manufacturing data.

For the moment, it’s still premature to see the wobbly services trend of late as something more than noise. Fed Chairman Ben Bernanke thinks that US economic growth will accelerate this year. "The combination of financial healing, greater balance in the housing market, less fiscal restraint, and, of course, continued monetary policy accommodation bodes well for U.S. economic growth in coming quarters," he said last week in his last major speech as head of the central bank. But if today’s December number reveals another drop, the crowd may start to wonder if there’s another rough patch lurking in the first quarter. The market, however, expects some good news in today's release. The consensus forecast sees the ISM Services Index rising moderately to 54.8, based on the consensus forecast.

FROM... http://www.tradingfloor.com

DAILY FOREX POST – EUR/USD , GBP/USD , GOLD JANUARY 6, 2014

2014-01-06T11:15:00.001+06:00

EUR/USD Technical view

**SPOT EUR/USD Previous day OHLC**
Open	High	Low	Close	Change

1.3670	1.3672	1.3581	1.3587	-0.0083

**Today's Support and Resistance**
Resistance
Support
R3	1.3900
R2	1.3800
R1	1.3630

S1	1.3550
S2	1.3520
S3	1.3450

EURO ended the session on Friday with losses of 0.60%, versus the greenback, extending its decline to the second successive session. The pair is likely to test crucial near term supports at 1.3500- 1.3550, where the downside is likely to be capped and a rally to 1.3800- 1.3900 looks very likely. However, close below 1.3500, EURO is expected to slide to 1.3350, negating the near term bullish view. The medium to long term view too remains bullish in favor of the EURO for targets of 1.4200; targets for the symmetrical triangle in an uptrend

TREND DIRECTION

Short term: Bullish
Medium term: Bullish
Long term: Bullish

TRADING RECOMMENDATIONS

Short:
- N/A
Long:

At.1.3520 with a stop at 1.3480 for a profit target of 1.3800

GBP/USD Technical view

**SPOT GBP/USD Previous day OHLC**
Open	High	Low	Close	Change

1.6451	1.6474	1.6393	1.6413	-0.0038

**Today's Support and Resistance**
Resistance
Support
R3	1.6510
R2	1.6480
R1	1.6450

S1	1.6300
S2	1.6250
S3	1.6150

Sterling ended the session on Friday with losses of 0.23%, versus the greenback, capping two successive weekly gains. The pair slipped after hitting medium term targets at 1.6600; targets set by the bullish symmetrical triangle. Near term view bullish with the downside likely to be capped at 1.6250- 1.6300. Close above 1.6500, Sterling is likely to rally to 1.6700- 1.6800, with the medium to long term targets placed at 1.7100- 1.7200. Long Sterling on declines

TREND DIRECTION

Short term: Bullish
Medium term: Bullish
Long term: Bullish

TRADING RECOMMENDATIONS

Short:
- N/A
Long:

Hold on to long positions initiated at 1.6400 with a stop at 1.6370 for a profit target of 1.6500
At 1.6310 with a stop at 1.6240 for a profit target of 1.6500

GOLD Technical view

**SPOT GOLD Previous day OHLC**
Open	High	Low	Close	Change

1224.56	1240.00	1221.76	1236.16	11.65

**Today's Support and Resistance**
Resistance
Support
R3	1280.00
R2	1264.00
R1	1245.00

S1	1224.00
S2	1216.00
S3	1198.00

Spot gold ended the session on Friday with gains of 0.95%, extending its gains to the fourth successive session and the second successive week. Near term, the precious metal could rally anywhere between 1260.00- 1300.00 per troy ounce with crucial near term supports placed at 1215.00- 1225.00. ONLY a close below the supports will negate the near term bullish view. The medium to long term view remains extremely bearish with spot gold likely to target 1000.00- 1050.00 per troy ounce; targets for the symmetrical triangle in a downtrend

TREND DIRECTION

Short term: Bullish
Medium term: Bearish
Long term: Bearish

TRADING RECOMMENDATIONS

Short:
- At 1210.00 with a stop at 1218.00 for a target of 1190.00
Long:
- Hold on to long positions initiated at 1230.00 with a stop at 1220.00 for a profit target of 1256.00

FOREX - AUD/USD UP DESPITE FALL IN AUSTRALIA DEC SERVICES INDEX

2014-01-06T10:30:00.001+06:00

The Australian dollar rose against the U.S. dollar on Monday in Asia despite the AI Industry Group Australian Performance of Services Index going down to its lowest level since August 2013 and in the longest period of contraction since it started in 2003.

According to AI Group Chief Executive, Innes Willox, if the services sector does not recover quickly, pressure will build on the Reserve Bank of Australia to reduce interest rates further and the task of fiscal consolidation will be made more difficult in the shorter-term.

AUD/USD traded at 0.8956, down 0.09%, while USD/JPY traded at 104.88 up 0.04% and NZD/USD traded at 0.8263 down 0.09%.

Elsewhere, the dollar rose to four-week high against the euro on Friday after cautiously optimistic comments from outgoing Federal Reserve Chairman Ben Bernanke boosted the outlook for the U.S. economy.

The dollar strengthened after Bernanke said the U.S. economy should continue to improve in 2014, but reiterated that monetary policy will remain “highly accommodative” for as long as needed.

“The combination of financial healing, greater balance in the housing market, less fiscal restraint, and, of course, continued monetary policy accommodation bodes well for U.S. economic growth in coming quarters,” Bernanke said. “Despite this progress, the recovery clearly remains incomplete”.

The comments came after the Fed’s December decision to roll back its asset purchase program to USD75 billion a month from USD85 billion a month starting this month.

EUR/USD traded at 1.3592, up 0.03%. GBP/USD traded 1.6409, down 0.05%,

USD/CHF touched highs of 0.9056, the strongest since December 4 and was trading at 0.9053, 0.03%.

Trading conditions remained thin following the New Year’s holiday, while a severe snowstorm in the northeastern U.S. also kept activity light.

In the week ahead, the Fed is to publish the minutes of its December meeting on Wednesday, while the U.S. jobs report for December is scheduled to be released on Friday. Meanwhile, interest rate decisions by the European Central Bank and the Bank of England will also be in focus.

Coming up on Monday, the U.S. is to publish data on factory orders, while the Institute of Supply Management is to release data on service sector activity.

FROM.... http://www.investing.com

TARGET TRADING: WEEKLY OUTLOOK

2014-01-05T20:40:00.004+06:00

EUR/USD

What Forex Target Traders See: We are currently sitting at 1.3599. The pair has broken the uptrend and the break of the significant supports confirms the move to the downside. We are looking for a bearish movement below 1.3600 to the 0.786 Fibo at 1.3487. The average daily true range (ATR) for the pair has dropped and is currently is 70 pips.

USD/JPY
What Forex Target Traders See: We are currently at 104.66 and in a continuation to the upside. We are looking for a move to the R5 at 105.39 then a possible pullback for more upside to the 106.30 area. The average (14 day) daily true range (ATR) for the pair currently is 86 pips.

GBP/USD
What Forex Target Traders See: Cable is currently at 1.6422. We expect a corrective move to the 0.214 Fibo at 1.6360 with an overall target of the R6 at 1.6670 area. The average (14 day) daily true range (ATR) for the pair currently is 91 pips.

AUD/USD – A great smooth currency for Newbie’s!
What Forex Target Traders See: Aussie is currently at 0.8974 after a bounce and break of the down trend. We are looking for a bullish move to the S5 at 0.9066. We will reassess then if this is a correction of a full-fledged uptrend. The average daily true range (ATR) for the pair currently is 95 pips.

EUR/USD 240 Min Chart

USD/JPY 240 Min Chart

GBP/USD 240 Min Chart

AUD/USD 240 Min Chart

EUR STUMBLES AND CABLE HITS MULTI YEAR HIGH ONLY TO FALL BEFORE A LOADED WEEK

2014-01-05T19:05:00.002+06:00

With the New Year’s Day right in the middle, this past week has suffered from holiday-mode markets. Many choosing to extend their end of year holiday couple of extra days before returning to their desks this coming Monday.

The early part of the week saw the Cable extend its rally from previous weeks on speculation that the Bank of England (BoE) will be forced to increase interest rates sooner that it has previously forecast. Early Thursday saw the pair touch its highest level since August of 2011, however the level was short lived.

It was a bit of a perfect storm for the Cable: A near 4-big figure rally in 2-weeks, thin markets, weak data and some bearish technical s triggered a sharp reversal. GBPUSD had just touched fresh multi-year highs and technical indicators were pointing to overbought territory, which led to profit taking. Then a below forecast Manufacturing PMI was released (57.3 actual vs. 58.0 expected), prompting additional selling activity, which was amplified by thin holiday conditions. By the time the dust settled, the pair had tumbled almost 2 big-figures and erased a week’s worth of gains.

This reversal takes some of the sting out of rates that short-term Cable buyers have experienced through the holiday session. Looking forward the depth of the late-week reversal takes a bit of the luster off of both the pair and the Sterling in general. Which in turn could lead to consolidation at post entrancement levels heading into Thursday’s BoE announcement.

After EUR$ & EURJPY touched multi-year highs late last week, it’s been a negative week for the common currency as well. The last couple of days has seen a round of short-covering and profit taking in the Japanese Yen, which has weighed on the Euro. As this week draws to a close, EURJPY has backed away almost 3 big-figures from last week’s high, as has the EUR$. Also taking its toll on the common currency was a report this week which indicated factory output in France has recently declined to a 7-month low. France, the Euro zone’s second largest economy, has so far weathered the crisis well, but recent data prompted the Lisbon Council, a Belgian think tank, to call France “the real sick man of Europe” and to warn that the “French aversion to reforms and its politics are indeed a serious tail risk”. Which has cause the Euro to go on the defensive.

Next week, after a drought of data over the holiday session, there will be plenty of releases for investors to chew on. The end of the week will be particularly exciting with activity from both the BoE and the European Central Bank (ECB) on Thursday, and employment statistics out of the United States on Friday. No change in policy is expected from BoE governor Mark Carney. Unemployment in the UK is still above the 7.0% forward Guidance threshold and lately inflation has backed away from 3.0%; the upper limit of the BoE’s 2.0% target, with the 1.0% band on either side. Giving Carney the flexibility to maintain extraordinarily loose monetary policies in support of real economic expansion.

After stunning markets in November with a rate cut and stark warnings about deflationary risks, ECB President Draghi’s has been singing a different tune. In an interview last week he commented that there doesn’t appear to be an “urgent need” for an additional rate cut. He further noted that in some countries exist “encouraging signs”, including diminished budget deficits and fledgling economic recovery. With this in mind, it’s unlikely that the current rate, already at a record low of 0.25%, will be changed on Thursday. However the one thing to watch out for will be any reference to the recent Euro strength. The common currency outperformed many of its peers in the second half of 2013, particularly the JPY & the USD. This poses risks to Euro zone exports, which in turn threatens the broader recovery.

Despite not being EU or UK related, it’s hard to ignore the global impact that events next week in the United States are likely to have. First off is Janet Yellen’s nomination vote in the US senate on Monday. She is widely expected to pass this vote, bringing her one step closer to being Ben Bernanke’s replacement and the first female chairperson of the Federal Reserve (Fed). Then Wednesday has the minutes from the last Fed Meeting slated for publication. In light of the recent decision to taper, the minutes will be crucial, as they will give insight into where the Fed stands on the schedule for further asset purchase reductions. Finally Friday is ‘Non-Farm Day’, the last two results were shockingly good, posting 200k or above and helping bring the unemployment rate down to 7.0%, its lowest level in 5-years. Expectations according to a Reuter’s poll is for a result of 193k, and for the unemployment rate to hold steady at 7.0%. An on target or better result (especially anything above 200k for the third consecutive time) is likely to be a boon to the Greenback, which has trended sideways since tapering was announced.

More: What is ‘The Trend’, how do we detect it, and why does it occur?

FELDSTEIN TO SUMMERS FORECAST QUICKENING U.S. GROWTH THIS YEAR

2014-01-05T17:42:00.000+06:00

U.S. economic growth will accelerate this year even as the pace of expansion remains sub-par almost five years after the end of the recession, according to academic economists and former policy makers.

“2014 is going to be a better year,” Martin Feldstein, a professor at Harvard University and chairman of the Council of Economic Advisers under President Ronald Reagan, said yesterday in Philadelphia. “There is no reason for pessimism about our near future if we adopt appropriate policies.”

Feldstein pointed to diminishing drag from fiscal policy and an $8 trillion increase in household wealth over the last 12 months from rising stocks and home prices. The Standard & Poor’s 500 Index climbed 30 percent last year for its biggest advance since 1997, while house prices rose in October from a year earlier by the most in more than seven years, according to the S&P/Case-Shiller index of values in 20 cities.

JPMorgan Chase & Co. (JPM) is among the Wall Street banks turning more optimistic, predicting this week the economy will expand 2.8 percent this year, an increase from its 2.5 percent estimate of a month ago and faster than the 1.9 percent it calculates for 2013.

Former U.S. Treasury Secretary Lawrence Summers and John Taylor of Stanford University agreed in interviews that stronger growth this year was possible even as they clashed over what more policy makers could do to speed expansion.

“I’m not arguing with Marty about being a little more optimistic, but I think it’s a mistake to say that all’s well,” Summers, who also teaches at Harvard, said at the annual conference of the American Economic Association. Taylor, a former Treasury undersecretary, said growth this year “will be better but to me it’s still disappointing -- it’s not going to be what it could be.”

Bernanke’s View

The academics spoke a day after Federal Reserve Chairman Ben S. Bernanke told the conference that headwinds to growth may be abating. He cited a healthier financial industry, greater balance in housing, less fiscal restraint and accommodative monetary policy as reasons for optimism in coming quarters.

“Of course, if the experience of the past few years teaches us anything, it is that we should be cautious in our forecasts,” Bernanke said.

Summers, reiterating his warning that the U.S. could be suffering from “secular stagnation,” told the conference the economy is 10 percent weaker than the Congressional Budget Office projected prior to the financial crisis in 2007. About half of that probably won’t be recovered as the recession has permanently damaged growth by curtailing capital spending and prompting people to quit the workforce, he said.

Propel Growth

To propel growth, both Summers and Feldstein advocated a multiyear program of increased government spending on infrastructure projects such as improved transportation links. Feldstein said a $1 trillion, five-year fiscal plan should be offset by efforts to slow the growth of Social Security and Medicare outlays in the longer run.

“Expansionary fiscal policy is the right, primary response to our current woes,” said Summers, a former director of President Barack Obama’s National Economic Council. “An increase in demand is required.”

Taylor blamed policy makers for undermining the economy by acting unpredictably and intervening too much, sowing confusion among companies and consumers about the economic outlook. Among his targets: a lack of clarity toward bank rescues, congressional standoffs over the budget and bond purchases known as quantitative easing by the Fed.

‘Poor Performance’

“Policy has to be on the list of factors to criticize for poor performance,” he said.

Summers rejected that analysis, drawing an analogy with a doctor who prescribes medicine at times of illness. Taking extraordinary action was often worthwhile even if it departed from past practice, he said.

In turn, Taylor questioned Summers’s suggestion that the economy could be mired in secular stagnation in which the Fed cannot cutinterest rates low enough to deliver full employment without risking financial instability. Although Summers said such a phenomenon could have taken hold before the crisis, Taylor said the economy had experienced faster inflation and strong hiring in the mid-2000s.

The U.S. is faring better than most other industrial nations in having recovered its pre-crisis level of per capita output, said Kenneth Rogoff, also of Harvard and a former chief economist at theInternational Monetary Fund.

That’s “no guarantee everything is fine again,” Rogoff told a separate session in Philadelphia.

His co-author, Carmen Reinhart, said their study of historical crises showed it often takes time for companies to ramp up investment even after the economy has regained lost ground.

IMF chief economist Olivier Blanchard said it’s “worrisome” that the U.S. and other industrial nations have failed to make a full recovery five years after the recession concluded.

To contact the reporters on this story: Simon Kennedy in London atskennedy4@bloomberg.net; Rich Miller in Washington atrmiller28@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz atcwellisz@bloomberg.net

FROM...http://www.bloomberg.com

USD/CAD: LOONIE RANGE BOUND BETWEEN 1.0590 AND 1.0726

2014-01-05T14:48:00.001+06:00

The loonie stays range bound between the 1.0590 level as support and the 1.0726 as resistance. Each of these levels has provided traders with opportunities to enter in this currency. As we can see on the chart below, courtesy of Masterforex-V World Academy, the range is more than 130 pips, suggesting that if you had sold or went short at the top resistance of the 1.0726 level or long (buy) at the bottom support of the 1.0590 level, you could’ve enjoyed the profits of the swings from each of these levels.

Today, we had a very good bounce from the 1.0590 level to the upside, supported by the 200 period Exponential Moving Average (blue line) on the 4 hour chart. Usually, these visits to the 200 EMA, especially on the 4 hour charts, provide us with excellent opportunities to enter the market.

At the moment, the bounce has already moved more than 50 pips, but it is encountering some type of minor resistance around the current levels of 1.0655. But we must be attentive to a possible visit of the top of the range, because we may find another opportunity to go short on the pair at that area.

USD/CAD Hourly Chart

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WEEKLY TECHNICAL OUTLOOKS FOR EUR/USD, & USD/JPY - TD

2014-01-05T13:45:00.000+06:00

The following are the weekly technical outlooks for EUR/USD, and USD/JPY as provided by TD Bank.

EURUSD peaked just under 1.39 in thin, late-December trading but failed to close above the 1.3800/10 area that had capped the market through the latter part of last year. The weakness in price action through the course of the past few days has taken EURUSD below short-term bull trend, moving average and initial retracement support. Weakness seems likely to extend to the low 1.35 area (61.8% retracement support for the November/December rally at 1.3524, 100-day MA at 1.3536) at least in the next few days. More broadly, the repeated failures in the 1.38 area suggest that a drop back to the 1.33 line is warranted. We are bearish and look for resistance in the low/mid 1.36 area to cap EUR rebounds in the week ahead.

The weekly chart underscores the potential importance of the December failure in the high 1.38 area—trend line resistance off the 2008 high. Weekly trend channel support at 1.3559 is liable to come under more pressure in the week ahead. The pattern of trade over the past year in EURUSD has been one of fading range extremes, as we have said many times before. The rejection of 1.38+ levels suggests that, beyond a test of the 1.33 zone in the next few weeks, a drop back to 1.27/1.28 may lie ahead.

USDJPY had seen nine consecutive weeks of net gains prior to the current one so a correction of some sort was perhaps due. Price action Thursday signaled a peak, confirmed by losses today, albeit with developments occurring in thin and illiquid trading (Japan remains closed). The risk of a deeper pullback cannot be excluded; the USD rally looks over extended and the market has not corrected the bare minimum of the 97/105 rally seen through late 2013. Trend channel support highlighted above is not especially strong but still seems to be enough to halt the USD slide for now, however. We think the longer-term trend remains positive, however, so we have to look for chances to buy—either on a dip nearer 101/102 or on an extension to new highs above 105.50.

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OBAMA CALLS ON CONGRESS TO RESTORE EXPIRED UNEMPLOYMENT BENEFITS

2014-01-04T23:24:00.000+06:00

President Barack Obama urged Congress to make the restoration of unemployment benefits a priority as both he and lawmakers return to work after a holiday break.

The renewal of the “vital economic lifeline” provided by the aid should be lawmakers’ “first order of business” next week, Obama said in his weekly radio and Internet address today.

“Republicans in Congress went home for the holidays and let that lifeline expire,” the president said, referring to the program that provided supplemental payments to long-term unemployed workers. “And for many of their constituents who are unemployed through no fault of their own, that decision will leave them with no income at all.”

Senate Democrats are searching for a compromise with Republicans to extend the program for another three months to about 1.3 million people. The plan would cost about $6.5 billion, according to the Congressional Budget Office.

Republican congressional leaders say the spending should be offset with cuts elsewhere in the budget. The jobless benefits expired Dec. 28 after the program was left out of a deal to fund the government for two years that Democrats and Republicans hammered out before leaving Washington for their break.

Obama said continuing the benefits will help mothers afford to feed their children while looking for work, and fathers trying to learn a new skill to get a job.

“And denying families that security is just plain cruel,” the president said. “We’re a better country than that. We don’t abandon our fellow Americans when times get tough – we keep the faith with them until they start that new job.”

Economic Impact

He also pressed an economic argument for the aid.

“If folks can’t pay their bills or buy the basics, like food and clothes, local businesses take a hit and hire fewer workers,” he said. “And after our businesses created more than two million new jobs last year, that’s a self-inflicted wound we don’t need.”

The extended unemployment program began in 2008 and at one point provided as much as 99 weeks of aid -- 26 weeks in state benefits and up to 73 weeks in federal benefits. It has been renewed 11 times since it was put in place by then-President George W. Bush amid the financial crisis.

The length of the extra assistance has been reduced through the extension renewals and now has a maximum total of 73 weeks, though most states average fewer.

Obama has been vacationing in his native Hawaii with his family. They are scheduled to fly back to Washington tonight.

To contact the reporter on this story: Jim Snyder in Washington atjsnyder24@bloomberg.net

To contact the editor responsible for this story: Don Frederick atdfrederick1@bloomberg.net

FROM.... http://www.bloomberg.com

EURO FALLS MOST IN 2 MONTHS AS RALLY OVERHEATS; YEN SNAPS LOSSES

2014-01-04T23:16:00.001+06:00

The euro fell the most against the dollar in two months amid speculation its six-month rally was due for a pause even as data signaled improvements in the European economy.

The yen snapped nine weeks of losses as Japanese Prime Minister Shinzo Abe said Jan. 1 the nation was halfway to escaping deflation. New Zealand’s dollar advanced against all 16 major counterparts on bets for an interest-rate increase. Federal Reserve Chairman Ben S. Bernanke said the U.S. is poised for faster growth before a Jan. 10 report forecast to show 195,000 jobs were added in December.

“The risk-off trading in foreign-exchange markets is completely at odds to robust economic indicators we have seen recently,” Eimear Daly, head of market analysis at Monex Europe Ltd. in London, said yesterday. “I expect next week to bring a return to fundamental currencies levels as traders return from extended holidays.”

The euro dropped 1.2 percent to $1.3589 this week in New York after reaching $1.3893 on Dec. 27, the strongest level since October 2011. The greenback fell 0.3 percent to 104.86 yen after rising to 105.44 on Jan. 2, the weakest level since October 2008.Japan’s currency climbed 0.6 percent to 142.48 per euro.

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, rose 0.3 percent to 1,026.23, the third-straight weekly rally.

Winners, Losers

The New Zealand dollar’s 1.5 percent advance this week against the greenback was the most among 16 major currencies, followed by the dollars of Australia, up 0.9 percent, and Canada, up 0.7 percent. South Africa’s rand and Brazil’s real led decliners, dropping 2.1 percent and 1.6 percent.

The kiwi climbed for the first time in four weeks amid speculation the Reserve Bank of New Zealand will raise its benchmark interest rate at a Jan. 29 meeting. It traded at 82.73 U.S. cents.

“I would not rule out a rate hike, which most expect in March,” Marc Chandler, chief currency strategist at Brown Brothers Harriman & Co., said in a phone interview yesterday.

Sterling posted its first weekly decline in three weeks versus the U.S. currency as a survey of purchasing managers released Jan. 2 showed manufacturing unexpectedly fell, and data the next day showed construction output cooled in December.

The Bank of England may signal a lower unemployment threshold next week, Sam Hill, a strategist at RBC Capital Markets, wrote in a note. It’s “highly likely” that the jobs data release on Jan. 22 will be even closer to 7 percent, he said, from 7.4 percent.

The pound fell 0.4 percent to $1.6418.

‘Global Growth’

The common currency declined against all but three among major currencies this week even as euro-area factory output in expanded for a sixth month.

An index based on a survey of purchasing managers in the euro-area manufacturing industry increased in December to 52.7 from 51.6 the previous month, London-based Markit Economics said Jan. 2. In Spain, registered unemployment fell by 107,570 people in December, the country’s labor ministry said in Madrid. That was largest drop since June.

“The plethora of manufacturing PMI data points to strong near-term global growth in 2014 and certainly does not justify the underperformance of risk and the move into safe-haven currencies we have seen,” Monex Europe’s Daly said.

The European Central Bank is forecast by all 50 economists in a Bloomberg survey to hold its key interest rate steady when it meets Jan. 9. ECB President Mario Draghi kept the rate unchanged last month after surprising investors in November by cutting it to a record 0.25 percent.

‘Technical’ Drop

The euro, which welcomed 18th member Latvia this week, has gained 6.3 percent versus the greenback since July 10, when Bernanke said the economy still required very accommodative monetary stimulus.

“The drop in euro-dollar is mainly technical in nature,” Sebastien Galy, a New York-based senior foreign-exchange strategist at Societe Generale SA, said of this week’s move. “A phase of consolidation at such high levels is nothing unusual.”

Bernanke, in his final month as Fed chairman, said yesterday in a Philadelphia speech that the headwinds that have held back the U.S. economy may be abating.

“The combination of financial healing, greater balance in the housing market, less fiscal restraint, and, of course, continued monetary policy accommodation bodes well for U.S. economic growth in coming quarters,” he said.

Tapering Speculation

The Fed will release the minutes of its last policy meeting on Jan. 8. Officials said Dec. 18 they would trim monthly purchases of bonds to $75 billion from $85 billion starting this month as economic growth accelerated and take further “measured steps” depending on how the economy performs. It next meets Jan. 28-29.

Non-farm payrolls in the U.S. increased by 195,000 in December after rising by 203,000 the previous month, according to the median forecast of 61 economists surveyed by Bloomberg. The unemployment rate was unchanged at 7 percent, survey estimates of the Labor Department data showed.

“Our key focus on the minutes will be to discern whether meeting participants viewed the first tapering move as the beginning of a steady sequence of purchase reductions which should continue over the next several meetings, or whether they are leaning toward a more tentative approach,” Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York, said Jan. 3 in a report. “Our expectation is that QE tapering will continue.”

The common currency has rallied 8.4 percent in the past 12 months, the best performer of the 10 developed-nation currencies tracked by Bloomberg Correlation Weighted Indexes. The yen has weakened 16 percent, the biggest drop, while the U.S. dollar gained 3.6 percent.

To contact the reporter on this story: John Detrixhe in New York atjdetrixhe1@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka atdliedtka@bloomberg.net

FROM... http://www.bloomberg.com

EUROPE WEEK AHEAD: ECB, BOE, GER HICP, -IP, -FACTORY ORDERS, EZ ESI, -HICP, UK IP

2014-01-04T21:27:00.000+06:00

There is probably little to expect from the first ECB meeting this year, at least in terms of conventional policy measures. President Draghi said in a recent interview that, based on the latest data, he saw “no immediate need to act” on policy rates, further emphasising the encouraging signs in financial markets and the “progress” made by Eurozone countries. Other Governing Council members made it clear that they were comfortable with the current monetary stance given the ongoing signs of a gradual recovery – the ECB’s central case. Inflation probably holds the key for further action, but downside risks would need to materialise, in our view, for the ECB to act, ie, radical pre-emptive action looks unlikely for now. All in all, at Thursday’s press conference we expect Draghi to repeat that the ECB is maintaining an easing bias within its forward guidance framework, meaning that it remains ready to act to support markets and the real economy. However, we would be surprised to hear about concrete plans so soon. One key topic has been, and will remain, the management of liquidity conditions, as large LTRO repayments at the end of last year pushed excess liquidity down and term money market rates higher. But, on this topic as well, we suspect the ECB will not rush into temporary solutions but rather slowly build a consensus on the best tool(s) to deploy (we still expect a targeted ‘FLS LTRO’ at some point this year). One specific issue Draghi will definitively have to address as soon as next week is the repeated failure to sterilise SMP purchases due to a combination of falling excess liquidity, higher rates and financial fragmentation. More than ever, it would make sense to suspend the SMP sterilisation process and let the market adjust to those new conditions. With no inflation risks on the radar, including in Germany, it would be hard to argue that the ECB is taking any risk in doing so.

We expect Eurozone flash HICP to have stabilised at 0.9% YoY in December. Slightly stronger energy prices (0% YoY vs -1% YoY in November) will not be enough to balance the negative impact coming from a partial change in methodology in the German index (see below). Inflation in the Eurozone should remain weak in 2014 in our global scenario of both lower EUR and lower oil prices (see Economics Quarterly). Eurozone HICP inflation should remain close to 1% YoY during most of 2014, before getting closer to 1.3% YoY by end-2014.

We expect German HICP inflation to decline from 1.6% in November to 1.2% in December. This is mostly explained by a change of methodology in the calculation of prices for “accommodation services” and “package holidays”. Otherwise, goods and services inflation should remain weak.

European Commission economic sentiment indices will likely continue to increase in December. Contrary to PMI surveys, which are relatively more volatile, the ESIs have been on a steady upward trend over the second half of the year and will likely rise again in December for the eighth month in a row. We expect the ESI to increase to 99.3, which would be its highest level since July 2011, and an improvement to be reported in the manufacturing and services sectors. The PMI manufacturing index increased in December and, while the PMI services roughly stabilised, consumer confidence has ended 2013 on a firm positive note.

German factory orders are expected to have increased by 2.1% MoM in November, mirroring the decline registered in October. Notwithstanding high monthly volatility (especially in capital goods orders), the 3M/3M growth rate has been rising gradually over the past six months or so, broadly in line with the improvement in the PMI manufacturing new orders component. The recovery in factory orders suggests a positive near-term outlook for industrial production. We expect a 1.5% MoM increase in November, which would more than offset the -1.2% MoM contraction in the previous month and mitigate the negative carry-over effect for Q4, implied by the weakness in September and October readings.

The BoE will likely leave its key interest rate and asset purchase program unchanged at its January meeting, in the context of the three knockouts of the forward guidance announced in August. CPI inflation declined closer to the target, at 2.1% YoY in November, and GBP’s appreciation (5.5% over the past six months in trade-weighted terms) is expected to weigh down on inflation further out. Wage growth has remained subdued despite the faster-than-expected decline in the unemployment rate. The LFS measure of the unemployment rate decreased to 7.4% in October, a pace of decline that, if sustained, would imply the 7% threshold would be hit as soon as early 2014. The BoE will have to strengthen its forward guidance, either by lowering the threshold of 7% or, more likely, by a Fed-like adjustment to its guidance. The November MPC minutes already laid the grounds for such a change in communication by announcing that “there could be a case for not raising the Bank Rate immediately when the 7% unemployment threshold is reached”; a bolder announcement which explicitly extends the period of no-rate-hike will likely be needed in order to anchor market interest rate expectations.

UK industrial production is expected to have increased by 0.6% MoM in November. After a temporary and sharp setback in October, the CBI expected output survey edged up in November to a relatively high level at 24. Surveys in the manufacturing sector have continued to increase and the BoE’s Agents survey has reported steady growth in manufacturing exports to the US in particular (13% of total exports of goods), as well as to the Middle East and emerging markets. Despite the improvements in economic prospects, investment intentions have remained hesitant and mostly focused in the automotive and aerospace industries.

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EUR/USD AT 1.45, CABLE AT 1.72 END-2014 ON THESE 3 FACTORS - BNY MELLON

2014-01-04T17:28:00.001+06:00

Focus of the day:

"We're expecting growth in 2014 for the US economy at least 2.5%, so clearly an improvement from the results of 2013. However, we also see that this is going to encourage the continuation of the great rotation out of bonds into equities and that will make another good year for the equity market and for emerging market investment but not particularly a good year for the dollar.

Despite equity's gains and despite strong economy, there are 3 factors that are undermining the dollar right now: the re-emergence of the carry trade, the diversification of China out of US dollar's reserves, and also the deficit of the balance of payment...

I would say the USD Index has gone a little too far; we're looking for 1.45 for EUR/USD by the end of year, 1.72 for cable, and 110 for USD/JPY...

I do share a lot of those upbeat sentiments regarding the euro. There are many weak points in the Euro Area but if you look at their balance of payment, you will see a lot of long term structural surpluses. You take a look at FDI and portfolio investment, they are also very sound. So, from a currency perspective, the euro has much more solid fundamentals on a trade-investment-flow basis than does the dollar at this point...

Favorite trades for 2014: euro and sterling higher against the yen."

Michael Wool folk, MD & Senior Currency Strategist at BNY Mellon

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US WEEK AHEAD: NON-FARM PAYROLLS, FOMC MINUTES, FACTORY ORDERS, TRADE BALANCE

2014-01-04T17:16:00.000+06:00

November factory orders likely rose 1.8%, with soft non-durable orders alongside lower energy and commodity prices.

Durable orders were previously reported up 3.5%, boosted by a gain in aircraft orders. The new information in the report will be on non-durable orders, which we forecast fell slightly in nominal value alongside lower energy and commodity prices.

We forecast the November trade balance remained roughly stable at -USD40.4bn from -USD40.6bn in October.

Energy prices moved lower in November, which is likely to bring down the nominal size of the import bill for crude oil products. We also look for softer imports of foods, feeds, and beverages again, alongside softer agricultural prices (-0.6% MoM in the import price index). Automotive imports likely increased alongside stronger auto sales. On the export side of the ledger, the November ISM survey showed a pick-up in demand in new export orders, suggesting a strong month for capital goods exports, likely offset by some pull-back in consumer goods exports after a moderate increase last month.

Taper decision focus of December FOMC minutes.

The December FOMC minutes will provide insight into the decision to begin tapering asset purchases this month. The interest of market participants will be in the discussion over the pace of further reductions and the weight policymakers gave to the factors (declining unemployment and rising core inflation) in arriving at those decisions. We currently look for another USD10bn reduction to USD65bn to be announced at the end of the 29 January FOMC meeting.

Our non farm payrolls forecast looks for a 200K gain in December with the unemployment rate rounding to 7.1% Employment-related information released so far this month is consistent with a continued moderate pace of hiring.

The December Consumer Confidence report suggested slight improvements in the lab-our market with fewer people reporting jobs as hard to get, and slightly more reporting jobs as plentiful. The employment component in the Dallas Fed’s Texas Service Sector Outlook survey moved higher, pointing to solid hiring in the private sector services. Manufacturing surveys for December such as the Philadelphia Fed Business Outlook Survey, the Empire State Manufacturing Survey, and the ISM Manufacturing survey all pointed to improvements in the pace of factory hiring. The ADP Employment Report, released Wednesday, will round out the set of data we input into our forecasting models, and we will look at revising our forecast if these reports come in far from expectations.

In the household survey, we look for the unemployment rate to move up to 7.1%. Employment gains will likely remain positive, though we expect at a more moderate pace following November’s 818K employment gain. We anticipate that employment gains will be offset by gains in the workforce, causing the unemployment rate to round 7.1%.

FOREX WEEKLY OUTLOOK JANUARY 6-10

2014-01-04T11:52:00.000+06:00

The week of the new year saw the dollar and the yen make a comeback against the euro and the pound. And now, the real action returns: FOMC Meeting Minutes as well as important employment data culminating in the most important NFP event on Friday are joined by rate decisions in the euro-zone and in the UK, among other events. These are the main market movers on our list for the second week of 2014. Here is our outlook for the major events to influence forex trading.

Last week US first weekly jobless claims report in 2014 posted a 339,000 increase in the number of new claims for unemployment benefits. The figure was broadly in line with market consensus and was down 2,000 claims from the prior week. Further good news arrived with US consumer confidence, rising to 78.1 in December after posting 72 points in the previous month. Manufacturing growth was also satisfactory sustaining its growth trend reaching 57.0, following 56.4 in the previous month. All in all US economy continues to expand, a good omen for 2014. EUR/USD lost long term uptrend support, and cable reached out above 1.66 but fell sharply, as data was good, but not as high as expected. Let’s start,

US ISM Non-Manufacturing PMI: Monday, 15:00. The U.S. services sector index fell to 53.9 in November from 55.4 in October indicating cautious spending by consumers. This lukewarm expansion rate was lower than the 55.4 reading forecast by analysts. The employment gauge fell to 52.5 from October’s 56.2 to hit its lowest since May, while business activity growth slowed to 55.5 last month from 59.7 in October. Growth in the service sector was steady in 2013 with an average of 55 over the past 12 months. A rise to 54.6 is expected this time.
Fed Chairman Nomination Vote: Monday, 10:30., The US Senate will vote to approve the nomination of Janet Yellen as Federal Reserve Chairperson for a term, Feb 2014 – Jan 2018. The event is expected to go smoothly. Any delays could weigh on the dollar.
US Trade Balance: Tuesday, 13:30. The U.S. trade deficit narrowed to $40.6 billion in October from September’s gap of $43 billion due to an all-time high in energy products export. Exports rose 1.8% to a record $192.7 billion. Imports climbed 0.4% to $233.3 billion, the highest since March 2012. Oil imports rose 1.5%. U.S. petroleum exports edged up 9.3% in the first 10 months of 2013 compared with the same period in 2012, while petroleum imports plunged 11.1%. Economists believe exports will keep growing, reflecting modest recoveries in Europe, Japan and China. Trade deficit is expected to contract further to 40.2 billion.
US ADP Non-Farm Payrolls: Wednesday, 13:15. The U.S. private sector employment market added 215,000 jobs in November, exceeding forecasts of a 172,000 increase. Hiring picked up since October after a sharp upward revision reaching an 184,000 job-gain. This event is usually overshadowed by the major non-farm payrolls report from the U.S. Labor Department but the upward trend increases optimism among economists. A smaller gain of 199,000 is expected now.
US FOMC Meeting Minutes: Wednesday, 19:00. The Fed releases the minutes of the meeting in which QE tapering was decided upon. It will be very interesting to read into the sentiment of policymakers in this big decision, and to see whether we get hints for future moves. While the general path is known, end of QE by the end of the year, the pace is certainly not, and the decision if to taper or not to taper in January remains open.
UK rate decision: Thursday, 12:00. No change is expected from the BOE. At the moment, the UK enjoys a perfect combination of low inflation and strong growth, including in jobs. If growth remains strong, we can expect an update to forward guidance in one of the quarterly inflation reports, perhaps in May.
Eurozone rate decision: Thursday, 12:45, press conference begins at 13:30. The ECB is unlikely to change its policy in January, but could certainly hint about looser policy in the next meeting. There are a few encouraging signs in the old continent, but financial conditions remain tight, and deflation is a threat, especially with a strong value of the currency. Draghi tends to zig-zag between an optimistic message to a pessimistic one. After sending a calm one in December, we can expect him to weigh on the euro this time, especially if the negative deposit rate option receives a bigger hint than usual..
US Unemployment Claims: Thursday, 13:30. US first weekly jobless claims report in 2014 posted a 339,000 increase in the number of new claims for unemployment benefits. The number of claims was 2,000 lower than the reading posted in the prior week. The data in recent weeks was highly turbulent due to the holiday season volatility. This week’s reading returns to a more stable state. Nevertheless, nearly 4.5 million people received some form of unemployment benefits in the week ending Dec. 14, the latest data available. That’s 180,000 more than the previous week. An addition of 334,000 jobs is expected now.
Canadian employment data: Friday, 13:30. The Canadian job market created 21,600 jobs in November, posting the third consecutive rise. The rise topped predictions for a 12,300 rise. Meanwhile, the unemployment rate remained at a nearly five-year low of 6.9%. The Bank of Canada is more concerned about low inflation than the situation in the job market. The positive job market figures are welcome news for them. Since November 2012, the economy added 179,100 jobs, an increase of 1.0 percent. The Canadian job market is expected to add 13,300 jobs and unemployment rate is expected to remain unchanged at 6.9%.
US Non-Farm Payrolls and Unemployment rate: Friday, 13:30. Non-farm payrolls posted a 203,000 job gain in November, following a revised 200,000 increase in October. The increase was well above market prediction of a 180,000 job addition pushing jobless rate to a five-year low of 7.0% from 7.3% in October. Analysts believe further improvement in the labor market will occur in 2014 aided by stronger GDP growth. The pick-up in hiring suggests companies are more confident in future demand and labor conditions are improving amidst this upward trend. The US economy is expected to add 194,000 jobs with the same unemployment rate.

*All times are GMT.

That’s it for the major events this week. Stay tuned for coverage on specific currencies.

More: FX Outlook 2014 – Conditional Dollar Strength

KANYE WEST-INSPIRED CURRENCY 'TO LAUNCH SOON'

2014-01-03T21:48:00.001+06:00

A new Bit-coin-like virtual currency inspired by rapper Kenya West is set to be launched, and has been dubbed "Coin ye West".

Kenya West is not involved and has yet to comment on its inception.

It will follow in the footsteps of "Doge coin", another virtual currency based on the popular Doge meme.

The value of Bit coin, the most famous virtual currency, peaked at over $1000 (£613) last year but is currently worth around $850 (£520).

Various alternatives to Bit coin have sprung up, such as Lite coin, Name coin and Pp Coin.

Virtual currencies are often linked to the purchase of illegal items, namely drugs, thanks to transactions being extremely difficult to trace.

However, more humorous currencies like Doge coin are used for more tongue-in-cheek transactions.

One user, posting on Doge market, a section on popular link sharing site Reddit, offered Doge coins in exchange for ideas to name a company.

"I thought the whole Doge coin thing was interesting," said Jeremy Bonny, from virtual currency news site Coin desk.

"It grew into something somewhat legitimate. There are people that genuinely believe in it out there."

Gig tickets

The makers of Coin ye West have lofty ambitions for the currency which they described as a "concurrency for the masses".

Speaking anonymously to music site

Concurrency explained: how Bit coin works

Bit coin is often referred to as a new kind of currency.

But it may be best to think of its units being virtual tokens rather than physical coins or notes.

However, like all currencies its value is determined by how much people are willing to exchange it for.

To process Bit coin transactions, a procedure called "mining" must take place, which involves a computer solving a difficult mathematical problem with a 64-digit solution.

For each problem solved, one block of bit coins is processed. In addition the miner is rewarded with new bit coins.

This provides an incentive for people to provide computer processing power to solve the problems.

To compensate for the growing power of computer chips, the difficulty of the puzzles is adjusted to ensure a steady stream of about 3,600 new bit coins a day.

There are currently about 11 million bit coins in existence.

To receive a bit coin a user must have a Bit coin address - a string of 27-34 letters and numbers - which acts as a kind of virtual postbox to and from which the bit coins are sent.

Since there is no registry of these addresses, people can use them to protect their anonymity when making a transaction.

These addresses are in turn stored in Bit coin wallets which are used to manage savings.

They operate like privately run bank accounts - with the proviso that if the data is lost, so are the bit coins owned., they said: "I can picture a future where Coin ye is used to buy concert tickets, with cry photographically verified virtual tickets, and other ideas I can't give away just yet."

They said they planned to give away a number of Coin ye to early users when the currency launches on 11 January.

"It will get people who are on the fence interested and help them to start using the currency, and we hope they'll share it with their friends, too."

However, one Bitcoin expert urged caution in investing in new virtual currencies that were as yet untested in public use.

"There's been a number of people who have put out 'joke' currencies in the past," said Johnathan Turrall, chief technology officer atMetalair, a concurrency start-up based at the University of Sussex.

"There were some coins in the past that seemed to be a 'pump and dump' operation.

"In one case, the original developers launched on obscure websites, but when they took it mainstream, and the price spiked, they sold up and disappeared. Estimated earnings in one instance were $800,000."

Mike Hearn, a Bit coin developer, said Coin ye West was, at the very least, an expression of the "democratic" nature of the technology behind virtual currencies.