Friday, 29 April 2016

Trend Lines

Basic Trading Concepts defined

Trend lines and trend channels are excellent tools for measuring and monitoring market direction and sentiment. Trend lines capture the very core of price movements by connecting multiple hit points which allow Forex traders to distinguish patterns and trends. Forex traders can use trend lines for a wide variety of purposes such as:

1. Capitalize on opportunities in the Forex market
2. Exact trade decisions (entry, stop loss, take profit)
3. Trade management (trail stop loss movement)
4. Monitor for breaks
5. Monitor for bounces
6. Filter out setups with less probability
7. Determine the trend
8. Identify chart patterns
9. Generally as support and resistance levels

 What is a trend line?

A trend line is a line which connects multiple highs or lows on a chart. The best trend lines have 3 hits or more. A trend line with 2 hits is in theory a potential trend line. When connecting the highs and lows, the trend line either has no angle (horizontal line) or various angles varying from shallow to steep. Read more here about the differences between horizontal and angled trend lines.

What is a trend channel?

A trend channel consists of 2 trend lines, one connecting tops and one connecting bottoms. The best channels have 3 hits or more as well; a channel with 2 hits is not yet “established”. The angle of the bottom and the top of the channel are equal to each other.

Where to start?

Forex traders need to take the trend line key and start connecting 1 point with another. Usually a bottom is connected with another support point; whereas a top is connected with another resistance point.

The trader can repeat the process and place multiple trend lines on one chart (same pair and time frame); there is really no limit as long as the trader can manage to read and understand the chart. The trader can draw more trend lines on other time frames as well for additional information (if the trader uses multiple time frame analysis). Here is an example of a chart “overloaded” with trend lines:

Forex traders usually use 1-3 trend channels on all time frames. The main reason is practical: channels with parallel lines at the top and bottom are rarer than trend lines because both sides need multiple hits. The process of drawing a channel is the same as drawing a trend line, with one major difference: traders need to check the accuracy of both lines.

Once a Forex trader starts drawing trend lines, the chart could quickly fill up with trend lines in dozens of directions, which defeats the importance of keeping trading simple and effective. In the next section I will show you how to examine trend lines and decide which ones have the most value.

Distinguishing better trend lines

There are multiple ways Forex traders are able to identify better trend lines. Here is the list:
1. Relevance or proximity to price
2. Number of hits
3. “Neatness” of a trend line
4. Broken lines
5. Distance between hits

Relevance or proximity to price

A trend line that is “miles” away from current price levels is not relevant for current analysis or trade setups and therefore will only clutter the charts. The best practice is to place lines on the chart which are not too far away and have a chance of playing a role in your analysis or plan.

Number of hits

Trend lines with 2 hits are usually not interesting unless price is close by. In these cases there is a chance that price will hit the trend line and “respect” it, which in turn creates a 3rd hit (and therefore becomes an “established” trend line). If price is far away then trend lines with 2 hits can be ignored for the time being.

Trend lines with 3 hits or more are the most interesting trend lines. These trend lines are “established”, which means the market confirms the existence of this support or resistance line. These trend lines create decision spots on the charts.

Neatness of a trend line

The best trend lines connect the high and lows of candles with each other. However if a Forex trader follows this guideline then many trend lines would have only 2 hits. To increase the number of hits on a trend line, Forex traders need to decrease the neatness of a trend line by not only using highs and lows of candles. This means that trend lines “cut” through part of the candle. Preferably only the wick of a candle is placed beyond the trend line but even placing part of the candle outside the trend line perimeter is acceptable. However, in most cases, placing an entire candle or group of candles on the opposite side of the trend line is not accepted and would make the trend line less valuable.

Broken lines

In many cases broken trend lines will eventually be removed but it is a good practice to be patient and leave the broken trend lines on the charts for a while. Often the market retests broken trend lines and they offer extra confluence points.

Distance between hits

A new hit on the trend lines is only counted when there is sufficient distance between 2 hits. A new hit is not valid if the candle high or low is too near the previous high and low. In the most extreme example, traders cannot count a trend line to have 2 hits if the candles are next to each other. The fact that both candles hit the trend line counts as 1 hit.

Reference: Chris Svorcik

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Yen spikes to 18-month peak, Amazon softens Apple blow

A man looks at an electronic board showing the graphs of the recent fluctuations of the exchange rate between Japanese yen against the U.S. dollar (R) and the graphs of the Japan's Nikkei average outside a brokerage in Tokyo, Japan, February 29, 2016.  REUTERS/Yuya Shino

The yen surged to an 18-month peak on Friday as investors wagered the Bank of Japan might be done adding fresh stimulus to the economy, hurting prospects for Japanese exporters with a move that rippled through share markets across the Asian region.

Perhaps taking advantage of Japan's absence for a holiday, speculators smashed through the yen's previous top at 107.63 per dollar and drove the currency as far as 107.075.

It had been at 111.67 before Thursday's decision by the BoJ not to ease policy further, even though prior media reports had set the market up for more action.

The euro likewise dropped to 121.94 yen, but had not quite breached its 2016 trough around 121.71.

The sheer speed of the move stirred speculation the Japanese authorities might intervene to restrain the yen. Officials on Thursday warned markets that they would be on guard even over the holidays.

Some, however, seemed unconvinced.

"The steady hand on Thursday is consistent with the yen being some way down the BoJ's list of priorities," noted Sean Callow, a senior currency analyst at Westpac.

"With the looming G7 meeting reinforcing the low risk of FX intervention, markets are likely to keep pressing their luck, with no obvious barrier to a test of 105."

The renewed rise in the yen has badly bruised exporters and left the Nikkei down 5 percent for the week on Thursday. While the cash market was shut on Friday, Nikkei futures on the CME were down another 1 percent at 16,165.

Markets across the region suffered in sympathy and MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.5 percent.

South Korean stocks slipped 0.8 percent and Taiwan lost 1.3 percent.


On Wall Street, shares took a late spill after Apple shed 3 percent when billionaire investor Carl Icahn said he no longer has a position in the tech giant.

Amazon sweetened the mood a little after the close by blowing away earnings expectations for its first quarter, sending the stock up almost 13 percent.

The Dow ended Thursday down 1.17 percent, while the S&P 500 lost 0.92 percent and the Nasdaq 1.19 percent. European shares had started weaker but steadied toward their close.

Not helping sentiment was news the U.S. economy braked hard in the first quarter to its slowest pace in two years as consumer spending softened and a strong dollar undercut exports.

Gross domestic product increased at a 0.5 percent annual rate, the weakest since early 2014.

Yet jobless claims fell again and analysts remain optimistic that payrolls data out next week will show another solid gain.

The reversal in the U.S. dollar proved a boon for most commodities with oil reaching 2016 highs for a third straight session. Brent has climbed nearly 80 percent since hitting 12-year lows of around $27 a barrel in late January.

Modest profit-taking set in on Friday, with Brent crude off 25 cents to $47.89 a barrel. U.S. crude lost 19 cents to $45.84.

The two benchmarks are still up about 20 percent in April and on track for their largest monthly gain in a year.

Reference: WAYNE COLE

Thursday, 28 April 2016

Stock Trading Tips

Basic Trading Concepts Defined

Stock trading is one of the ventures that you can put your money in so as to get some extra money to supplement your income. You however need to understand what this business is all about if you want to have an easy time navigating it and increase your chance of profitability. If you enter the stock market blindly, you will be at a high risk of losing your money.

One of things you need to know about stocks is that they are not mere pieces of paper. When doing stock trading, you are taking a share of ownership of the company whose stocks you will have bought. The company is collectively owned by all of its shareholders, and each share that every individual has bought from that company represents a claim on assets as well as earnings.

Another thing you need to understand about stocks before you start trading in the stock market is that there various kinds of stocks. Some of the ways that you can use to divide the market include size, sector as well as type of growth patterns. You will hear stock investors mostly talking about energy versus technology stocks, large cap versus small cap stocks, or growth versus value stocks. These are examples of the stocks that you will find in the market.

You also need to know the behavior of the stock market. Over the short term, the behavior of this market is usually based on factors such as fear, enthusiasm, news and rumors. Over the long term, it is mostly the company earnings that affect the movement of the stock. The company earnings determine whether a stock will go up, sideways or down.

Another important fact you need to understand about stock trading is that a great track record of a company does not always mean that there will be guaranteed strong performance in the future. What determines the stock prices are future projections on earnings of the company. A strong track record is a good factor to consider when choosing a company to buy your shares, but it is also important to know that even the best companies can slip.

In order to get a sense of whether the stock you want to buy is overvalued or undervalued, you should compare the price of that stock to earnings, revenue, and cash flow among other fundamental criteria. It will also be a good idea to compare the company's performance alongside the performance of the industry that it is in. You should consider purchasing stocks from companies whose sectors are more robust as opposed to those that are operating in industries that are experiencing slow growth.

Some people usually engage in rapid-fire trading while others choose to buy and hold good stocks for a long time. The latter will be a smarter idea than the former if you want to maximize your profits when trading in the stock market. If you go the short-term trading way, you will need to be pay close attention to fluctuations in stock prices all the time.

Reference: Sylvester Madxen

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Fed keeps rates unchanged, signals faith in U.S. economy

The Federal Reserve headquarters in Washington September 16 2015. REUTERS/Kevin Lamarque

The Federal Reserve kept interest rates unchanged on Wednesday but signalled confidence in the U.S. economic outlook, leaving the door open to a hike in June.

The U.S. central bank's policy-setting committee said the labour market had improved further despite a recent economic slowdown and that it was keeping a close eye on inflation.

It added that global economic headwinds remained on its radar, but removed a specific reference from its last policy statement to the risks they posed.

"The committee continues to closely monitor inflation indicators and global economic and financial developments," the Fed said in a statement following a two-day meeting.

It kept the target range for its overnight lending rate in a range of 0.25 percent to 0.50 percent. The Fed hiked rates in December for the first time in nearly a decade.

For the third consecutive meeting, it did not include any mention of the balance of risks to the economy.

However, the Fed noted that while growth in household spending had moderated, households' real income had risen at a "solid rate" and consumer sentiment remained high.

Inflation has picked up recently, but the Fed on Wednesday said it was expected to remain low in the near term in part because of earlier declines in energy prices. It added that it remained confident inflation would rise to its 2 percent target over the medium term.

Despite strong job gains and an unemployment rate of 4.9 percent, Fed policymakers have previously said they would proceed cautiously in raising rates again due to the uncertainty in the world economy and a lack of inflation pressures at home.

A global equities sell-off and the tightening of financial markets earlier this year largely on concerns of a slowdown in China prompted the Fed's policy-setting committee last month to dial back rate hike expectations for the year.

Fed policymakers currently project two rate hikes in 2016, compared to the four hikes forecast in December.

Stocks have continued to rise since the Fed's March policy meeting and investors' nerves have been soothed by an apparent pick-up in China's economy.

Oil prices also have rallied from a near-collapse earlier this year and the U.S. dollar .DXY has shed some of its strength from last year. A robust dollar last year acted as a drag on U.S. manufacturing and other sectors in the economy.

Other major central banks have been grappling with ways to deal with lacklustre economies, including the adoption of negative interest rates.

For its part, the Fed is concerned that with interest rates still close to zero it would have to rely on more unconventional policy tools should the economy take a turn for the worse.

An initial estimate of U.S. first-quarter gross domestic product is expected on Thursday to show tepid growth.

Kansas City Fed President Esther George dissented for the second consecutive meeting.


Wednesday, 27 April 2016

Brexit would threaten London financial dominance - minister Jo Johnson

If Britain votes to leave the European Union, London's dominant position as the pre-eminent global financial centre in its time zone would be placed under threat and other EU centres would seek to rip away business, minister Jo Johnson said.

London dominates the $5.3-trillion-a-day (3.7 trillion pounds-a-day) global foreign exchange market and is by far the most important financial centre in the European Union, vying with New York for the title of the world's financial capital.

Some financiers say a British exit would sap London's wealth, hammer sterling, undermine the world's fifth-largest economy and prompt some traders to move their business to other centres such as New York and Singapore.

Johnson, whose older brother Boris is the most prominent member of the "Out" campaign, said a vote to leave could hurt sterling, affect interest rates and sap the dynamism that has made London the dominant EU centre for financial services.

"There is a real possibility that London, having established itself as the pre-eminent European financial centre, decides to let Paris and Frankfurt back into the game," Jo Johnson said at a discussion hosted by Thomson Reuters and Clifford Chance at Canary Wharf in London.

"We have positioned ourselves now in a position where it is between London and New York, and potential future centres in Asia," Johnson said. "We would suddenly be putting all that at risk and preoccupying ourselves with a fight for pre-eminence again within Europe."

Since British exchange controls were scrapped in 1979, London has thrived as a centre for everything from foreign exchange and bonds to derivatives and fund management, making it the largest net exporter of financial services in the world.

London accounts for 41 percent of global foreign exchange turnover, more than double the nearest competitor, New York, according to the Bank for International Settlements.

London's closest European competitors are Switzerland and Paris, which each take about 3 percent of global foreign exchange turnover.

"A more glowing future exists for Britain outside the European Union as it develops into a truly even more global financial hub," said Craig Mackinlay, a Conservative lawmaker who is campaigning for a Brexit and spoke against Johnson.

When asked about the warnings from global banks such as Goldman Sachs and JP Morgan, he said: "They were probably the same people who said the end of the world was nigh and we would all be leaving if we didn't adopt the euro. They were wrong then and they are wrong now."

Bank of England Governor Mark Carney has cautioned that a vote to leave the EU could hit the country's $2.9 trillion economy, prompt some banks to move away from London's global financial powerhouse and even push up mortgage interest rates.

"I think on sterling I would stick with what Mark Carney said the other day," said Johnson, adding that a sterling depreciation "would import inflation and lead to a path of higher interest rates".

Johnson, who serves as universities minister, said that after a vote to leave, Britain would have to accept freedom of movement if it wanted access for its companies to the single market of 500 million consumers.

"The pattern shows that whenever countries try to construct access to the single market ... it has required freedom of movement and massive contributions to the EU budget, and no role in any decision making processes that frame the rules," Johnson said.

The fate of British trade after a possible vote for an exit in the June 23 referendum has taken centre stage since U.S. President Barack Obama warned Britain would be "in the back of the queue" for a trade deal with the United States.


Stocks, oil prices climb as investors ready for Fed, BOJ

World stocks climbed for the first time in four days on Tuesday and a weaker dollar helped oil prices gain as investors fine-tuned their expectations for monetary policy meetings in the United States and Japan.

European shares also benefited from a less-bad-than-expected 80 percent first quarter profit fall and an unchanged dividend from BP (BP.L), as well as encouraging results from pulp and paper maker.

Wall Street looked set to open slightly higher, according to index futures

With the quarterly earnings season in full swing, investors were awaiting an update from the world's biggest company, Apple (AAPL.O). The pan-European FTSEurofirst 300 .FTEU3 stock index and Britain's FTSE 100 both rose 0.3 percent .FTSE. [.EU]

Those gains helped the MSCI world equity index which tracks shares in 45 countries, edge up after three successive days of losses, taking it back towards an almost-five-month high touched last week.

"European equity markets are trading moderately higher on positive corporate earnings surprises from several companies," said City of London Markets trader Markus Huber.

Ahead of the two-day Federal Reserve meeting starting on Tuesday, Huber said "many traders are at least temporarily moving their overall exposure to more neutral from previous negative, consequently closing some of their short positions."

Markets see no chance of a U.S. interest rate increase and are pricing in about a one-in-five chance of a move at the next meeting on June 14-15. A surprise drop in new U.S. home sales data for March on Monday added to evidence of anaemic U.S. economic growth.

Nevertheless, Fed officials have repeatedly said a hike in June is on the cards.

"Even dovish policy makers such as (Boston Fed President Eric) Rosengren are saying market expectations are too low," said Nomura Securities fixed income strategist Tomoaki Shishido, in Tokyo.

"So the Fed may try to urge markets to price in higher rates. On balance, we are more likely to have a hawkish surprise than a dovish surprise," he added.

The 10-year U.S. Treasuries yield stood at 1.909 percent, easing from a four-week high of 1.914 percent on Monday.


Asian stocks reversed earlier falls. MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.1 percent and Japan's Nikkei .N225 closed down 0.5 percent.

The yen, which tends to have an inverse correlation with Japanese stocks, climbed for a second day, with the dollar falling a third of a percent to 110.80 yen JPY=, as prospects of more monetary stimulus this week from the Bank of Japan, which begins a two-day meeting on Wednesday, remained unclear.

Late last week, the yen tumbled to three-week lows on speculation that the BOJ would introduce more easing measures, but analysts said those expecting aggressive monetary loosening may be disappointed.

Sterling strengthened to a 10-week high against the dollar GBP=D4, building on Monday's gains as investors bet more heavily that Britons would vote to stay in the European Union at a referendum in June, following an intervention from U.S. President Barack Obama on the side of the "In" campaign.

"It looks as if there has been a change of sentiment," said Esther Reichelt, an FX strategist with Commerzbank in Frankfurt. "The options market in general is pricing in less chance of a big move around the Brexit vote and the market seems less worried it will happen."

Against the euro, too, the dollar edged down EUR=, leaving it 0.3 percent lower on the day against a basket of major currencies .DXY.

The weaker dollar, and expectations the global oil glut would ease, lifted crude prices. Brent futures  traded up 1.4 percent at $45.10, while U.S. crude futures CLc1 were up 57 cents, at $43.21 a barrel.

Both remained off five-month highs hit last week.

An unexpected bond sale from the euro zone rescue fund kept German Bund yields near five-week highs on Tuesday, as worries grew that a recent rise in yields resembled the run-up to a brutal sell-off that occurred in 2015.


Tuesday, 26 April 2016

U.S. proposes rule to strengthen big banks' liquidity

The Federal Deposit Insurance Corp (FDIC) logo is seen at the FDIC headquarters as Chairman Sheila Bair announces the bank and thrift industry earnings for the fourth quarter 2010, in Washington, February 23, 2011. REUTERS/Jason Reed

The top U.S. banking regulator on Tuesday released its proposal for establishing a Net Stable Funding Ratio, a final piece in the puzzle to strengthen banks' liquidity in case they come under financial stress.

The ratio is intended to ensure liquidity over a one-year horizon, compared with the liquidity coverage ratio of 2014 requiring banks to hold high-quality assets that could be readily converted into cash within 30 days. The ratio will "discourage reliance on more volatile short-term funding," the FDIC said in its proposal.

"During the financial crisis, a number of large banking organizations failed, or experienced serious difficulties, in part because of severe liquidity problems," said FDIC Chairman Martin Gruenberg. "The proposed rule would reduce the vulnerability of large banking organizations to the kind of collapse in liquidity that occurred to the crisis."

The proposal is in line with the international Basel standard set in 2015, according to the FDIC. It differs primarily by providing a narrower definition of a "high-quality liquid asset" and a way to address "trapped liquidity."

The NSFR would apply to bank holding companies and depository institutions with $250 billion or more in total consolidated assets or $10 billion or more in foreign exposure.

The Federal Reserve Board will release a less-stringent version for holding companies with at least $50 billion in assets that are not considered as big a risk to the financial system, the FDIC said.

The ratio would not apply to smaller holding companies, community banks, and nonbanking firms the federal government has designated "systematically important."

Fifteen holding companies would have to comply with the full rule, and another 20 with the modified version, according to the proposal's cost-benefit analysis.

The regulator expects the ratio, effective as of Jan. 1, 2018, to inspire few industry changes, estimating nearly all companies are already able to meet its requirements.

The "required stable funding amount," the part of the ratio that will likely generate the most debate among, looks at assets, derivatives exposures and commitments using a set of standardized weightings. It emphasizes long-term debt, capital instruments, and insured deposits, according to the FDIC.

By requiring banks "to maintain more stable funding to support less liquid assets" the rule would cut the risk that a bank would need to sell off assets at fire-sale prices to meet liquidity demands, the FDIC said.


Asian stocks retreat ahead of Fed, BOJ meetings

A businessman wipes his face as he stands in front of electronic boards showing the Japan's Nikkei average outside a brokerage in Tokyo, Japan April 6, 2016. REUTERS/Issei Kato

Asian stocks retreated on Tuesday as investors braced for central bank policy meetings in the United States and Japan this week.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3 percent, while Japan's Nikkei .N225 slipped 1.1 percent.

Hong Kong's Hang Seng index .HSI tumbled 0.5 percent. But Chinese shares were flat, with the CSI 300 .CSI300 little changed and the Shanghai Composite .SSEC slipping 0.1 percent.

Investors are cautious about buying riskier assets ahead of the U.S. Federal Reserve's two-day policy meeting starting later on Tuesday.

A surprise drop in new U.S. home sales data for March published on Monday supported a view of anemic U.S. economic growth, which may keep the Fed from raising interest rates.

In fact, markets sees no chance of a rate increase at this week's meeting and are pricing in just about a one in five chance of a move at the next meeting on June 14-15.

Yet, Fed officials have repeatedly said a hike in June is on the cards.

"Even dovish policy makers such as (Boston Fed President Eric) Rosengren are saying markets expectations are too low. And it is not hard to imagine many at the Fed feel current market rates are too low," said Tomoaki Shishido, fixed income strategist at Nomura Securities.

"So the Fed may try to urge markets to price in higher rates. On balance, we are more likely to have a hawkish surprise than a dovish surprise," he added.

Ahead of the Fed's meeting, the 10-year U.S. Treasuries yield stood at 1.8968 percent, easing from a four-week high of 1.914 percent seen on Monday.

U.S. stocks fell on Monday as weaker oil prices weighed on energy shares, with the S&P 500 .SPX dipping 0.18 percent to 2,088, slipping further from a 4-1/2-month closing high of 2,102 hit last Wednesday.

Oil prices recovered on Tuesday, pushed up by a weaker dollar and a flood of new cash into the market, but analysts warned of further weakness as producers continue to battle for customers in the Middle East.

"The biggest bear risk to the oil market right now is that Iran's ramp-up accelerates and then that Saudi Arabia does the same," analysts at Citibank said.

U.S. crude CLC1 rose 0.9 percent to $43.04 per barrel but remained down 1.6 percent this week.

Brent crude LCOc1 advanced 1 percent to $44.92 per barrel, but is still 0.4 percent below its closing price on Friday.

Both remain off their five-month highs hit last week.

On Monday, Saudi Arabia unveiled ambitious plans to transform its oil-dependent economy, centering on a partial privatization of state oil company Saudi Aramco which has crude reserves of more than 15 percent of global oil deposits.

The company is expected to be valued at over $2 trillion, more than five times the size of Exxon Mobil , ahead of the sale of less than 5 percent of it through an initial public offering (IPO).

In the currency market, the dollar retreated against many major currencies while keeping its upper hand against emerging economy currencies.

The dollar index, which tracks the greenback against a basket of six major currencies, slid 0.2 percent to 94.682.

The dollar also slipped to 111.06 yen JPY= from three-week high of 111.90 touched early on Monday.

The yen weakened sharply on Friday on a report that the Bank of Japan is considering cutting rates at which the central bank lends money to banks. But doubts are growing about how effective such a measure would be in lifting the moribund economy.

The Bank of Japan will make its policy announcement on Thursday.

The euro held steady at $1.1268 EUR=.

The British pound held near a 10-week high as bets on a Brexit eased after U.S. President Barack Obama voiced his support for Britain's staying in the European Union.

The pound last stood at $1.4503 after climbing as high as $1.4520 GBP=D4 on Monday, its highest since mid-February.

The dollar's weakness and investor demand for safe haven assets gave gold a boost.

Spot gold XAU= rose 0.1 percent to $1,239 an ounce, building on its 0.5 percent gain in the previous session.


Monday, 25 April 2016

Global stocks, dollar stumble ahead of Fed, BOJ meetings

World stocks, the dollar and oil all fell modestly on Monday as investors locked in recent gains before central bank meetings in the United States and Japan this week.

European and Asian equities both sank as 3.2 and 1.2 percent falls for miners .SXPP and oil firms .SXEP pushed the FTSEurofirst 300 .FTEU3 down for a third straight day and Tokyo .N225 gave back a fifth of the 4 percent it made last week.

Wall Street looked set for a subdued start too with another flurry of company earnings from, among others, Halliburton and Xerox about to hit after some disappointing showings last week. [.N]

Signs that a three-month rally in stocks and commodities markets was cooling, a U.S. Federal Reserve rate decision on Wednesday and a Bank of Japan policy update on Thursday meant there was little incentive for traders to be bold.

Talk has been that Japan could push deeper into negative interest rate territory, while there is intense interest on where the Fed currently stands on another rate hike.

"Central banks are still the name of the game," said Nordea's chief strategist for developed markets, Jan von Gerich.

"There is a chance that the Fed could surprise with a bit of hawkishness on Wednesday. The dollar hasn't really strengthened and the S&P 500 is back near its all-time high, so they could certainly test the market."

The dollar index .DXY was trading 0.3 percent lower on the day at 94.862. Against the euro, it dipped to $1.1256, at the weaker end of a 10-cent range it has held for a year, while the yen rose to 111.16 after a walloping at the end of last week.

Sterling, meanwhile, had hit its highest in over a month after a UK media blitz from President Barack Obama calling for Britain to stay in the European Union saw bookmakers lengthen the odds on a Brexit vote in June.

"If one of our best friends is in an organization that enhances their influence and enhances their power and enhances their economy, then I want them to stay in it," Obama said.

The subdued start to the week for Europe's markets, was further compounded by an unexpected dip in German business morale amid simmering global growth concerns.

The Munich-based Ifo economic institute said its business climate index, which surveys around 7,000 firms, edged down to 106.6 in April compared to a forecast of a rise to 107.0. That was still well above the survey's long-term average, but also its fourth fall in five months.

"The mood in the German economy is good but not euphoric," Ifo economist Klaus Wohlrabe said, citing concerns about weakening exports -- traditionally Germany's main growth driver -- linked to a slowdown in the United States and China.


The jittery mood sent investors back into government bonds, having largely shunned them for the last couple of weeks.

Bund yields fell a fraction but remained above 0.2 percent having ended Friday with their biggest weekly rise since last December. <GVD/EUR> U.S. Treasury yields also squeezed lower in European trade.

As well as the big central bank meetings this week, there is a blizzard of multinational company earnings and A-list macro data including both U.S. and euro zone Q1 GDP. ECONG7

In Asia overnight, Chinese shares had continued a recent poor run as the blue-chip CSI300 index .CSI300 and Shanghai Composite Index .SSEC slipped 0.5 and 0.6 percent respectively. [.SS]

Japan's Nikkei .N225 ended down 0.8 percent as the yen pulled off its lows. MSCI's benchmark 23-country emerging market index .MSCIEF dropped roughly the same in its second consecutive session of falls.

Japan's central bank on Thursday is likely to cut its price forecasts and debate whether a strong yen, weak global demand and soft consumption have hurt inflation expectations enough to warrant another hit of stimulus.

"We've had a strong 20 days (in Japan) and now is the point where the index will break out or move sideways in anticipation of further catalysts," said Martin King, co-managing director at Tyton Capital Advisors.

Among commodities, oil prices slipped after notching their third straight week of gains following a pick-up up in market sentiment and signs a persistent global supply glut may be easing. [O/R]

Brent LCOc1 fell roughly 1 percent to $44.65 a barrel, while U.S. crude CLc1 shed 1.2 percent to $43.20.

Industrial metals also sagged after Shanghai aluminum futures hit their highest level in nearly 10 months overnight, while gold XAU= ticked higher on its reputation as a safe port in unsettled markets.


Fed seen holding rates this week with hike still on horizon

U.S. Federal Reserve policymakers are expected to hold interest rates steady when they meet this week, but may tweak their description of the economic outlook to reflect more benign conditions, leaving the path open for future rate rises.

The Fed raised its policy interest rate last December for the first time in a decade when market volatility finally subsided in the wake of a scare over China's economy.

Similarly early this year markets wobbled on worries about a slowdown in global economic growth and weak U.S. corporate earnings, leading to expectations for further Fed rates rises to be revised down, so Fed policymakers may be wary of this week sending too strong a message of an imminent policy tightening.

Many Fed officials remain spooked by the steep stock market drop earlier this year and by weak first-quarter U.S. economic data. Concrete signs of higher inflation and growth may be needed before the FOMC, the Fed's policy committee, continues with the projected gradual path toward more normal levels of interest rates.

Though the U.S. economy is generating jobs and consumer prices have risen, providing support for a Fed interest rate rise, weakness in retail sales and international trade, as well as concern about China's economy, are among reasons Fed Chair Janet Yellen will stay cautious about further rate hikes before the second half of the year.

Markets have already anticipated such an approach, seeing no chance of a rate increase at this week's meeting on April 26-27 of the Federal Open Market Committee (FOMC), and are pricing in just a one in five chance of a move at the next meeting on June 14-15. Reuters polling of market participants sees two rate hikes this year.

"I don't think they can pull off a June hike without triggering another round of volatility, and they don't want that because the selloff in January and February left a deep scar," Aneta Markowska, chief U.S. economist at Societe Generale, said in New York.

"The FOMC can't go too hawkish overnight because markets aren't pricing in anything close to that."

Last week the European Central Bank held its policy rates at historic lows and while the Fed is also set to stand pat for now, its policymakers will not stay silent for too long as markets are pricing in barely one rate hike this year, compared with the Fed's view that two will probably be appropriate.


Last October, when stock markets had recovered from a sharp selloff and as fears of a slowdown in China's economy were receding, the Fed specifically cited the "next meeting" as possible for a policy move. In December they followed through, raising rates for the first time since 2006.

Fast forward to April this year and the Fed is experiencing deja vu.

After a volatile couple of months, stocks have rebounded and financial conditions have eased as expectations for China's economy again improved.

The S&P 500 index .SPX has recovered by some 15 percent in two months while China's economy grew at 6.7 percent in the first quarter.

But this time, that's not enough. While Fed officials want to keep the path clear to a rate rise in June, repeating their aggressive pitch for a rate rise of last October will likely be a bridge too far, given that a rise in inflation back to the Fed's 2.0-percent target is seen unlikely.

The reading on first-quarter U.S. gross domestic product growth will be published the day after the Fed meeting this week.

One way for the Fed to nudge skeptical traders into changing their outlook without roiling markets would be to acknowledge the recent improvement in financial conditions, including near-record U.S. equity prices and a weaker U.S. dollar, by dropping or toning down its warning in March that global economic and financial developments "continue to pose risks."

The Fed could also rewrite its characterization of the uncertainty surrounding its forecasts, signaling risks are more balanced.

Such a cautious gesture next week could pave the way for Yellen to later use a speech to clearly signal the Fed's intentions for June.

Such a strategy could also win over Boston Fed President Eric Rosengren, a voter this year on policy who is usually among the "doves" but has given two recent speeches in which he took issue with the market's "dour" expectations for rates.

The Fed's so-called "hawks" typically prefer higher rates while "doves", like Yellen of late, are more cautious.

"We see the April statement as leading to a compromise outcome," wrote Barclays economist Michael Gapen in a note last week.


Friday, 22 April 2016

5 Simple Day Trading Strategies

Basic Trading Concepts Defined

Day Trading alludes to market positions which are held for just a brief span, ordinarily the merchant purchases and offers a stock that day. The idea got an awful notoriety in the 1990's when numerous day commerce novices hopped onto the new web exchanging stages without applying tried stock exchanging procedures.
Day exchanging is considered to be the most difficult style of trading. Achievement obliges steady specialized exactness, enthusiastic limitation, and mental core interest. These are difficult attributes to initially exhibit, considerably.

The Day bartering techniques and strategies are significant to know if you need to be an effective day trader. A consistent barter has no less than a couple of most effective strategies that he falls back on over and over. And what works for one individual may not work for another. Yet day bartering is not too entangled once you take in a straightforward, guidelines based procedure for reckoning business sector moves.
Following are the simplest strategies for day trading:
  • Think differently:
Trading is basic, yet it is difficult. The reason it is difficult is on the grounds that it is a continuous activity in brain research. To right this, traders must perceive how they have been modified to think, then start to think in an unexpected way.
In today's associated society, brokers are shelled with data. Some of the data is imperative, however, the majority of it is commotion. A good trading practice is to not take this data at face esteem. Maybe, think in contrast and accept the announcements about the item to check whether there is a genuine dealing opportunity or not.
  • Search for advantageous scenarios:
A simple day trading strategy is to search for situations where supply and request are definitely imbalanced, and utilize these as your entrance focuses. The financial markets are similar to whatever else in life: if supply is close to depletion and there are yet willing purchasers, the cost will go higher. If there is an overabundance supply and no ready buyers then the cost will go down.
  • Arranging and Planning:
The most ideal approach to rule is to have a bartering arrangement and to peruse it every day. Informal investors have various chances to enter the business sector every day. Be that as it may, amount does not liken to quality. It is essential for brokers, to revive these criteria in their brains before dealing. A strong plan can keep you focused and by reading the plan on the daily basis, one can perceive the significance and start applying them.
  • Set the price targets:
In case you're purchasing a long position, choose ahead of time the amount of benefit is adequate and also a stop-misfortune level if the trade betrays you. At that point, stick by your choices. This confines your potential misfortune and keeps you from being excessively ravenous if value spikes to an untenable level.
  • Wait for a trend to develop:-
A day broker must be patient and sit tight for a trend to create. A day trader must likewise should be steady in bringing exchanges with the trends and not be enticed to pick the top or base. Day trading with the trends strategy helps you to focus on whats important these days, which is essential for profitability.

Reference: Mathew Emanuel

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Asian shares sag after cloudy U.S. earnings outlook

Businessmen stand in front of electronic boards showing the exchange rate between Japanese yen against the U.S. dollar outside a brokerage in Tokyo, Japan April 6, 2016. REUTERS/Issei Kato

Asian shares slid from a 5 1/2-month high on Friday as disappointing earnings from U.S. blue chip companies poured cold water on the rally that took off in March.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.6 percent, a day after it hit its highest level since early November. With that decline, gains for the week shrink to 0.5 percent.

Japan's Nikkei .N225 erased earlier losses to briefly hit a 2-1/2 month high. It was trading little changed at 0230 GMT, and on track for a weekly gain of 3 percent.

The Shanghai Composite index also pared earlier losses to barely change for the day, but on track for a loss of 4.4 percent for the week.

Hong Kong's Hang Seng index .HSI slid 0.7 percent, narrowing gains for the week to 0.7 percent.

On Thursday, Wall Street suffered its first loss in four sessions on a mixed bag of quarterly reports and a warning by Verizon Communications (VZ.N) that a strike would likely impact its bottom line.

The S&P 500 .SPX, which came within striking distance of its record closing peak of 2,134.28 touched last May, lost 0.52 percent to 2,091.48.

After the bell, Google parent-company Alphabet , Microsoft  Visa (V.N) and Starbucks all posted disappointing quarterly reports, sending their stocks down 4 percent or more.

Alphabet, the world's second-largest company by market capitalisation, fell more than 6 percent, taking around $32 billion off its market value.

"Essentially, global shares and commodities have been rallying since U.S. Federal Reserve Chair Janet Yellen had indicated a dovish stance in March," said Norihiro Fujito, senior investment analyst at Mitsubishi UFJ Morgan Stanley Securities.

"But you would need more improvement in economic fundamentals for the rally to go further. The S&P 500 is quite overvalued, trading at 17.8 times the forecast profits. Disappointing earnings from hi-tech companies will surely cap the market," he said.

Oil prices fared better than shares, with strong gains on Friday contributing to one of their biggest weekly gains this year, as producers took advantage of higher prices by locking in production.

Brent crude futures advanced 1.4 percent to $45.17, bringing gains since Monday to 8.2 percent.

U.S. crude rose 1.4 percent to $43.78, up 13 percent since Monday.

Both have surged about 67 percent since their January trough. But despite the recent rally, oil markets remain oversupplied with supply consistently exceeding demand.

The rise in oil prices is thought to be behind a noticeable rise in global bond yields in the past couple of days.

The 10-year U.S. Treasuries yield last stood at 1.861 percent, compared to 1.752 percent at the end of last week. It rose to a three-week high of 1.891 percent on Thursday.

The 10-year German Bunds yield rose to a five-week high of 0.242 percent DE10YT=RR on Thursday.

The strong Treasury yields have helped underpin the dollar this week, with the U.S. currency on track for a 0.6 percent gain against the yen JPY= this week.

It was last trading flat at 109.39 yen.

The yen remains pressured by market speculation that the Bank of Japan could ease policy further as early as next week. The Japanese central bank could either expand its asset purchases or cut interest rates even further into negative territory.

The euro advanced 0.2 percent to $1.1303 EUR= following a volatile session overnight but remained off its one-week high of $1.1399 set on Thursday.

The European Central Bank held policy steady at its meeting on Thursday, prompting a rally in the common currency on the view that the central bank won't boost stimulus anytime soon. But a statement by ECB President Mario Draghi that he would use all the tools at his disposal for "as long as needed" sent it skidding back to $1.1270.

Commodity currencies took a breather from their recent rally.

The Australian dollar advanced 0.3 percent to $0.7761 AUD=D4, off its 10-month high of $0.7836 touched the previous day.


Thursday, 21 April 2016

Euro, euro zone yields jump on ECB Draghi's remarks

A man walks through the lobby of the London Stock Exchange in London, Britain August 25, 2015.  REUTERS/Suzanne Plunkett

The euro and euro zone bond yields jumped on Thursday after European Central Bank president Mario Draghi said the bank's policies were working, the economic recovery was continuing and inflation would pick up eventually.

The euro flirted with $1.14 and Germany's 10-year yield hit its highest in over a month as investors interpreted Draghi's comments to reporters after the bank left policy unchanged as slightly less dovish than expected.

The rise in the euro and bond yields led the region's stocks to extend their losses, with the FTSEuroFirst 300 index of leading shares down around 1 percent.

U.S. stock futures pointed to a slightly lower open on Wall Street ESc1.

"There was some limited expectation of a further move on asset purchases and interest rates. But there were no further measures and they did not discuss 'helicopter money'," said Neil Jones, head of FX hedge fund sales at Mizuho in London.

"He's basically saying there will be no more action, for now at least."

The euro rose as high as $1.1394 EUR=, up almost 1 percent on the day and bouncing back sharply from an earlier low of $1.1283.

German 10-year Bund yields rose above 0.24 percent for the first time in a over month, supported by an earlier jump in oil prices.

The FTSEurofirst 300 index earlier touched its highest level since early January before falling.

"We've had a great run-up in the last few weeks and we're now just starting to pause for a bit," said Terry Torrison, managing director at Monaco-based McLaren Securities.

World stock markets hit their highest level in almost five months before easing back


But Draghi also left the door open to further easing, adding that the ECB would act to ward off any unnecessary tightening in financial conditions, a possible reference to the higher euro.

The tone in markets remained generally upbeat. Oil prices rose to a five-month high as the International Energy Agency said that 2016 would see the biggest drop in non-OPEC production in a generation.

U.S. and Brent crude futures have gained around 70 percent since the lows reached in January and February. Both benchmarks were last down around 0.5 percent, however, at $43.95 and $45.60 a barrel, respectively.

"It looks like the trough in oil is now behind us," said Chris Scicluna, head of economic research at Daiwa Capital Markets.

Oil's rally resonated across world markets, with emerging market stocks rising to 5 1/2-month highs and Russian shares racing to record highs.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.8 percent, brushing against its highest since early November. Japan's Nikkei .N225 gained 2.6 percent and the MSCI world equity index rose to its highest level since December.

Commodity-linked currencies held firm. The Australian dollar AUD=D4 was at $0.7813, after rising to an 11-month high of a $0.7830 on Wednesday.

The Swedish crown gained to its highest level against the euro EURSEK= since March 2015 after the Riksbank kept its key interest rate unchanged at -0.5 percent, as expected, and extended its bond-buying program.


Britain's 'In' campaign gains steam ahead of EU referendum, polls show

The 'Brighter Future In' campaign bus is seen at its launch at Exeter University in Exeter, Britain April 7, 2016. REUTERS/Dan Kitwood/Pool

British support for staying in the European Union has risen slightly, according to two opinion polls on Wednesday that add to signs the "Remain" campaign has gained momentum ahead of a referendum in June.

An Ipsos MORI telephone poll of 1,026 people showed the "In" camp, supported by Prime Minister David Cameron, holding a 10-point lead over those wanting to leave the 28-nation bloc.

While backing for the remain campaign was unchanged from last month at 49 percent, support for the "Out" vote fell two points to 39 percent.

A TNS online poll earlier on Wednesday also pointed to a widening gap, putting the "In" campaign on 38 percent against 34 percent for the pro-Brexit camp.

"The last five pollsters to report ... have all reported a move to 'Remain' on their previous polling," election analyst Mike Smithson noted.

Telephone polls have tended to give the "Remain" camp a bigger lead while online polls have the two sides running neck and neck.

Poll fluctuations have also influenced the currency market and on Wednesday sterling hit a three week high against the euro. The single currency fell to 78.675 having traded as high as 79.17 pence in the morning session. A British exit from the EU would rock the Union -- already shaken by differences over migration and the future of the euro zone -- by ripping away its second-largest economy, one of its top two military powers and by far its richest financial centre.

Pro-EU campaigners, including former prime ministers Tony Blair and John Major, have warned that an exit could also trigger the break-up of the United Kingdom by prompting another Scottish independence vote if England pulled Scotland out of the EU.

Members of Britain's "Out" campaign say such warnings are overblown and that Britain would prosper if it broke free from what they say is a doomed German-dominated bloc that punches way below its weight.

IPSOS Mori said a poor turnout for the June 23 referendum would probably favour the Brexit campaign, cutting the lead of the "In" side to six points.

"Remain supporters say they are more persuadable to change their vote based on what's best for the economy than are leave supporters on their key issue of immigration," Gideon Skinner, head of political research at Ipsos MORI, said.

When respondents in the TNS poll were asked how they expected Britain would vote, 40 percent said they thought Britain would opt to stay, 26 percent said voters would seek an exit and 34 percent said they did not know.

Reference: ANDY BRUCE

Wednesday, 20 April 2016

Global markets stabilize as likely ECB support offsets weak oil

Stocks markets stabilized on Wednesday as expectations of support from the European Central Bank offset a decline in the price of oil.

Oil prices fell as worries after Kuwaiti workers ended a three-day strike that had halved the nation's crude output. That revived the bearish mood brought last weekend when major producers failed to agree on a cut in output.

Global stock markets initially fell, but the FTSEurofirst 300 index .FTEU3 of top European shares recovered to edge into positive territory.

U.S. equity futures also rose. The MSCI All-Country World index was flat.

The ECB is not expected to make any policy changes at its meeting on Thursday. But it is expected to reiterate its plans to support the euro zone economy, which was enough to steady markets, analysts said.

"Investors have realized that the Doha meeting was a flop. Nevertheless, one cannot deny that buying momentum in stock markets remains present, which should prevent equity indexes from losing too much ground," said Mirabaud Securities' senior equity sales trader John Plassard.

"This should be even more evident given the ECB meeting tomorrow which could again keep up that momentum," he added.

Commodity-linked currencies such as the Australian and Canadian dollars also approached recent peaks on Wednesday while German bund yields dipped.

"Bund auctions are usually an accident-prone event, but today there are no signs of any risks whatsoever and that's certainly encouraging heading into the ECB meeting," said David Schnautz, a Commerzbank interest rate strategist.


S&P 500 breaches 2100 as oil, earnings drive gains

Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York in this April 12, 2016, file photo. REUTERS/Lucas Jackson/Files

The S&P 500 breached 2,100 on Tuesday, about 30 points shy of its record high, boosted by a rise in crude and earnings reports from heavyweights Goldman Sachs and Johnson & Johnson.

The Dow Jones industrial average stayed above 18,000, a day after crossing the key psychological barrier for the first time since July, on rising optimism that corporate earnings would continue to beat tempered expectations.

Oil was up about 3 percent, shrugging off Sunday's failed talks among producers to tackle a global glut. [O/R]

Only the Nasdaq composite edged lower, weighed by a 25 percent slide in Illumina. The diagnostic test maker's shares were trading at $133.81 after its preliminary results fell short of expectations.

"Companies have been coming in more or less in line with what we thought they would do and it's also adding to our thesis that it's another year of slow growth," said Kim Forrest, research analyst at Fort Pitt Capital Group in Pittsburgh.

While U.S. corporate earnings are seen as a swing factor for the stock market, expectations are bleak. First-quarter earnings at S&P 500 companies are expected to fall 7.7 percent on average, according to Thomson Reuters I/B/E/S.

At 10:40 a.m. ET, the Dow Jones industrial average was up 58.89 points, or 0.33 percent, at 18,063.05.

The S&P 500 was up 6.95 points, or 0.33 percent, at 2,101.29, the highest since early December.

The Nasdaq Composite was down 6.57 points, or 0.13 percent, at 4,953.45.

Eight of the 10 major S&P sectors were higher, led by a 1.59 percent rise in the materials sector. Energy was up 1.29 percent.

Johnson & Johnson rose 1.8 percent to $112.94 after it reported a marginal growth in quarterly sales. The stock was the biggest positive influence on the S&P 500.

Goldman Sachs shares were up 1.8 percent at $161.98. The bank's shares fell premarket after it reported a fall in profit for the fourth straight quarter. The stock gave the biggest boost to the Dow.

Other bank stocks also rose. Bank of America was up 2 percent, while JP Morgan, Citigroup, Morgan Stanley and Wells Fargo were all up 1.5 percent.

IBM fell 5.6 percent to $144 after it reported its worst quarterly revenue in 14 years, and was the biggest drag on the Dow and S&P 500.

Netflix shares were down 10 percent at $97.52 after the video streaming service's subscriber forecast missed estimates.

Advancing issues outnumbered decliners on the NYSE by 2,156 to 695. On the Nasdaq, 1,626 issues rose and 941 fell.

The S&P 500 index showed 37 new 52-week highs and no new lows, while the Nasdaq recorded 45 new highs and seven lows.


Tuesday, 19 April 2016

Dollar falls against euro, commodity currencies on risk appetite

Currency signs of Japanese Yen, Euro and the U.S. dollar are seen on a board outside a currency exchange office at Narita International airport, near Tokyo, Japan, March 25, 2016. REUTERS/Yuya Shino

The U.S. dollar hit 10-month lows against some commodity currencies on Tuesday on a growing appetite for risky assets and lost further ground to the euro after weak U.S. economic data reinforced views that Federal Reserve monetary policy would remain dovish.

The Australian dollar AUD=D4 hit $0.7817, its highest level against the dollar since last June, while the New Zealand dollar NZD=D4 touched $0.7055, also its highest since last June, on the back of gains in oil prices. The Canadian dollar also rallied.

Analysts said a strike by oil workers in Kuwait, which continued for a third day and nearly halved production from the OPEC member, boosted crude prices and commodity currencies. Concerns over China's economic growth have also diminished, while the likelihood of a rapid string of Fed interest rate hikes this year has receded, they said.

The dollar gained against the safe-haven yen for a second straight day, however, as investors moved into riskier currencies. The dollar was last up 0.43 percent against the yen at 109.28 yen JPY=.

"The predominant theme is risk on," said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.

"We came into the year concerned about Chinese growth and an aggressive Fed, and we’ve gotten nothing even remotely similar to where our fears were."

He also noted that recent data on Chinese manufacturing, retail sales and industrial production had been strong.

Analysts said U.S. housing starts data supported expectations that the pace of Fed rate hikes would be slow. Groundbreaking decreased 8.8 percent to a seasonally adjusted annual pace of 1.09 million units in March, the lowest level since October, the Commerce Department reported.

"Investors continue to believe that the Fed is going to be hard-pressed to even come in with two more rate increases this year," said Chris Gaffney, president of EverBank World Markets in St. Louis.

The weak housing data hurt the dollar against the euro. A survey by think tank ZEW showing the mood among German analysts and investors rose for the second consecutive month in April also boosted the euro, EverBank's Gaffney said.

The euro was last up 0.5 percent against the dollar at $1.1369 after hitting a six-day high of $1.1382 EUR=.

The dollar index, which measures the greenback against a basket of six major currencies, was last down 0.47 percent at 94.044 .DXY.


Asian shares rise, taking cue from Wall Street

A man looks at a stock quotation board outside a brokerage in Tokyo, Japan, April 18, 2016.   REUTERS/Toru Hanai

Asian share markets rose to five-month highs on Tuesday, taking their cue from gains on Wall Street after a strike in Kuwait helped pull crude oil prices above their prior-session lows.

MSCI's broadest index of Asia-Pacific shares outside Japan  was up 0.7 percent, after touching its highest intraday levels since November. The Dow Jones industrial average .DJI climbed to its highest level since July overnight.

Japan's Nikkei stock index .N225 was up 3.5 percent in early trading, a day after it fell 3.4 percent as investors assessed the impact of earthquakes in southwestern Japan's Kyushu on manufacturers' supply chains.

"The effects of the Dow reaching a nine-month high created a buying trend that helped lift the Nikkei today," said Hiroki Allen, chief representative of Superfund Securities Japan in Tokyo.

The Korea Composite Stock Price Index was up 0.1 percent after the Bank of Korea kept rates unchanged as expected.

Brazil's Bovespa .BVSP index fell 0.6 percent on Monday as President Dilma Rousseff vowed to fight her impeachment, which could force her from office after 13 years of leftist Workers' Party rule.

Beleaguered crude oil futures turned lower in Asian trade but remained well off lows plumbed in the previous session after weekend talks failed in Doha, where producers had hoped to curb a supply glut. A strike in Kuwait temporarily slashed the country's oil output by more than half, and helped pull crude prices off their lows.

Kuwaiti officials said they expect to counter the open-ended strike by using crude from inventory and by taking legal action against unions.

Brent crude LCOc1 was down about 0.7 percent at $42.63 a barrel, while U.S. crude CLc1 fell about 0.4 percent to $39.65.

Commodity-linked currencies pared their steep losses logged after the Doha deal breakdown.

The Australian dollar AUD=D4 was last up 0.3 percent at $0.7768 after earlier rising as high as $0.7784, its highest since June. On Monday, it had skidded as low as $0.7594.

In minutes of its April 5 policy meeting, Australia's central bank cautioned that a rising Aussie could tilt the economy off balance.

The perceived safe-haven yen slumped in line with the recovery in risk appetite. The dollar added 0.2 percent to 109.05 yen JPY=, while the euro added 0.3 percent to 123.47 yen EURJPY=R, moving away from the previous session's three-year low.

Against the dollar, the euro edged up about 0.1 percent to $1.1322 EUR=, as investors looked ahead to the European Central Bank's policy meeting on Thursday. While no change is expected, investors are awaiting Mario Draghi's news conference for clues on the central bank's thinking.

The U.S. Federal Reserve will meet next week, and is also expected to hold pat on policy, though any suggestion that more hikes are on the way sooner rather than later would lift the greenback.

New York Fed President William Dudley said in a speech on Monday that economic conditions are "mostly favourable" yet the central bank remains cautious in raising interest rates because threats loom.

For the second time in as many weeks, Boston Fed President Eric Rosengren warned on Monday that futures markets, which see only one modest rate hike in each of the next few years, are off the mark.


Monday, 18 April 2016

Wall Street lower as energy shares drag

Traders work on the floor of the New York Stock Exchange (NYSE) April 15, 2016. REUTERS/Brendan McDermid

U.S. stocks were lower on Monday as crude prices slipped after a much anticipated meeting of oil producers failed to result in a deal to freeze production.

Crude was down about 3 percent after the failed talks in Doha renewed fears of an escalating battle for market share among the major producing countries and add to the stubborn global surplus. [O/R]

"This is definitely negative news for the energy sector, but it seems the index can still hang on there," said Zhiwei Ren, managing director and portfolio manager at Penn Mutual Asset Management.

Ren said the losses in oil were moderate despite the collapse of the talks because bullish positions had been reduced heading into the weekend.

A rebound in oil and signs that the U.S. economy was recovering had helped stocks rally from a steep selloff at the start of the year. The S&P 500 is now up about 1 percent in 2016, after falling as much as 10.5 percent earlier in the year.

While macroeconomic and geopolitical factors continue to weigh on markets, focus now turns to U.S. earnings reports as investors look for the impact of the global turmoil on financial markets and the slump in commodities on balance sheets.

Morgan Stanley (MS.N) barely rose to $25.85 after the Wall Street bank's quarterly profit halved, but came above estimates.

Hasbro (HAS.O) jumped 5.3 percent to $86.81 after the toymaker reported better-than-expected quarterly profit and revenue.

At 9:37 a.m. ET the Dow Jones industrial average .DJI was down 38.25 points, or 0.21 percent, at 17,859.21, the S&P 500 .SPX was down 5.86 points, or 0.28 percent, at 2,074.87 and the Nasdaq Composite .IXIC was down 18.25 points, or 0.37 percent, at 4,919.96.

Eight of the 10 major S&P sectors were lower, led by a 1.21 percent fall in energy .SPNY. Shares of Chevron (CVX.N) were down 1 percent, while Exxon (XOM.N) shed half a percent.

Expectations for the first quarter are bleak, with earnings at S&P 500 companies seen falling 7.8 percent on average and revenue expected to fall 1.6 percent, according to Thomson Reuters I/B/E/S.

IBM (IBM.N) and Netflix (NFLX.O) are slated to post results after the market closes. Netflix was down 2 percent.

Declining issues outnumbered advancing ones on the NYSE by 1,910 to 752. On the Nasdaq, 1,514 issues fell and 726 rose.

The S&P 500 index showed one new 52-week high and one new low, while the Nasdaq recorded 17 new highs and 9 lows.


Traders vulnerable as market volatility breaks familiar correlations

A trader sits at his desk at IG Index in London September 9, 2014.   REUTERS/Luke MacGregor

The high degree of market volatility this year has unnerved investors not only because of the losses it has triggered but also because of the damage it has done to familiar trading patterns and strategies across asset classes.

Central to the breakdown in many correlations are the Japanese yen and oil. Both feature in a wide range of investors' portfolios, are among the world's most liquid assets, and are viewed as barometers of risk appetite.

Broadly speaking, a rising oil price is inflationary, reflects a more optimistic economic outlook, and a willingness on the part of investors to take on risk. A strengthening yen, on the other hand, generally signifies the opposite.

Both have been on wild rides this year, catching many investors off guard with the direction or ferocity of their moves.

Having plunged below $30 a barrel in January from $115 in mid-2014, Brent crude has since soared 60 percent. The yen, to the surprise of many who might have expected it to fall, has surged 10 percent against the dollar since the Bank of Japan stunned markets by introducing negative interest rates in January.

These are seismic shifts in the price of two of the world's most liquid and important financial assets and have wreaked havoc on investors' portfolios and trading models.

And coming in the first quarter, usually the most lucrative period for banks as investors put money to work, the impact has been devastating.

"This is a very difficult period for the market with oil prices rising and risk sentiment healing, but inflation expectations and bond yields not responding," said Kenneth Broux, head of corporate research, FX and rates at Societe Generale.

"We had the big fall in dollar/yen because investors were selling into bounces all the time regardless of what was happening in stocks, no matter what the BOJ was saying or doing," he said.


First-quarter earnings from U.S. banks confirm the three months to March was an extremely challenging period for markets. Revenue from market trading at JPMorgan fell 13 percent and 17 percent at Bank of America, leading to overall declines in profits.

Several banks, notably Credit Suisse, have recently announced large-scale job cuts and more are likely to follow the Q1 earnings season.

Hedge funds had a torrid time in early 2016 but recovered in recent weeks thanks to the rebound in world stocks and emerging markets.

Hedge funds were down 0.52 percent at the end of Q1, according to industry tracker Eurekahedge, but some big-name funds had their worst start to a year on record.

A perfect positive correlation of +1 implies that as one asset moves, in either direction, another moves in tandem in the same direction. A perfect negative correlation of -1 is when one asset moves in one direction and another moves in tandem but in the opposite direction.

With the exception of December, the correlation of dollar/yen with Brent over the past year has been negative, going as low as -0.65 in January. But on Thursday it rose to a three-month high of -0.04, within a whisker of turning positive.

Dollar/yen often follows a similar pattern to the spread between U.S. and Japanese 10-year bond yields. A widening spread signifies a more attractive premium for buying Treasuries over Japanese bonds, drawing in Japanese investors and lifting dollar/yen.

But this relationship broke down in late February. The yield spread rose to 205 basis points in mid-March, its widest in 17 months, while the dollar fell to a 17-month low of 107.60 yen earlier this month.

Curiously, two of the world's best-performing currencies this year are at the opposite ends of the risk scale. One is the safe-haven yen, the other is the Brazilian real.

Brazil's economy is in a deep recession but the real has rallied 14 percent this year as investors have bet that embattled President Dilma Rousseff will be impeached and that her exit will help pave the way to recovery.

A mixture of safe-haven buying and repatriation flows from Japanese investors has boosted the yen 10 percent.

"It's not often you have best performing currencies the yen and real – they're very odd bedfellows, and it shows how volatile risk appetite has been and how classic correlations are breaking down," Tim Graf, managing director and head of macro strategy, EMEA, at State Street in London.


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Friday, 15 April 2016

Economists united: Brexit would damage UK - Reuters poll

A car sticker with a logo encouraging people to leave the EU is seen on a car, in Llandudno, Wales, February 27, 2016. REUTERS/Phil Noble

A British vote to leave the European Union on June 23 would hurt the economy, an overwhelming majority of economists said in a Reuters poll, and could push the Bank of England to cut interest rates for the first time since the financial crisis.

Conversely, if the outcome was to remain a member of the EU, those saying there would be a net positive economic boost and those saying neutral were roughly split.

"Both the UK and Europe risk a fall into recession in the following quarters due to the increased uncertainty. One has to take into account that the UK is the second largest economy in the EU so this is a big deal," said Mikel Milhoj at Danske Bank.

Britain's economy could be one of the fastest growing among developed nations, expanding 1.9 percent this year and 2.1 percent next, the poll of economists based in the UK and across Europe found - but that would be under threat from Brexit, as leaving the EU is known.

"Recessionary in the short-term," said Philip Rush, UK economist at Nomura based in London, adding that "longer term effects (are) less clear-cut."

BayernLB economist Manuel Andersch, based in Munich, was more emphatic: "Short-term disaster, long-term damage."

Thirty-one of the 35 economists polled said the economic impact from Britain leaving the EU would be negative and four said it would have no effect. None said a Brexit would be positive for the economy.

Roughly two-thirds of those who answered questions on Brexit were UK-based, but there were no differences in answers provided based on geography. The sample was the monthly panel of forecasters on the British economy, at banks, fund management companies and independent research firms, who quite often disagree with each other.

On Tuesday, the International Monetary Fund cut its 2016 growth forecast for Britain to 1.9 percent from 2.2 percent and said the country could deal a damaging blow to the fragile world economy if it votes to leave the EU.

The findings of the latest poll were nearly identical to a Reuters poll of mainly UK-based economists taken about two months ago that showed an overwhelming view remaining in the UK would be best for the economy.

If the vote does go in favor of the "In" campaign, Britain's beaten-down pound would rally 4 percent against the dollar in the immediate aftermath, a separate Reuters poll of foreign exchange strategists found last week.

While opinion polls on the referendum suggest the result could be very close, most have come marginally in favour of an "In" win and betting firms are also pricing that in. One poll published Tuesday, however, showed the Leave campaign three points ahead.

After public opinion polls failed to predict a Conservative Party victory in Britain's 2015 parliamentary election there is a great deal of uncertainty around their accuracy.


What's more certain is inflation won't reach the Bank of England's 2 percent target anytime soon. The latest Reuters survey suggested it would be the second half of 2017 at least before it even gets close.

Low oil prices have meant most central banks have struggled to get inflation to rise and the BoE won't be lifting interest rates from a record low until early next year, a separate Reuters poll found earlier this month.

But a move from 0.5 percent, which would be the first change in over seven years, could also be swung by a Brexit vote. Seventeen of 26 economists in the poll said if Britain decides to leave the Bank's next move would likely be a cut.

"If the UK votes to leave the EU, then the BoE is likely to cut interest rates to 0.25 percent, but also restart quantitative easing," said Azad Zangana, London-based senior economist at asset management firm Schroders.