{"id":66145,"date":"2015-01-07T09:17:23","date_gmt":"2015-01-07T14:17:23","guid":{"rendered":"http:\/\/countingpips.com\/?p=66145"},"modified":"2015-01-07T09:17:23","modified_gmt":"2015-01-07T14:17:23","slug":"daily-forex-analysis-how-will-the-ecb-react-to-deflation","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2015\/01\/daily-forex-analysis-how-will-the-ecb-react-to-deflation\/","title":{"rendered":"Daily Forex Analysis: How Will The ECB React To Deflation?"},"content":{"rendered":"<div id=\"inves-3529781734\" class=\"inves-below-title-posts inves-entity-placement\"><div id =\"posts_date_custom\"><div align=\"left\">January 7, 2015<\/div><hr style=\"border: none; border-bottom: 3px solid black;\">\r\n<\/div><\/div><p><strong><a href=\"http:\/\/GROWTHACES.COM\" target=\"_blank\">GROWTHACES.COM<\/a> Forex Trading Strategies:<\/strong><\/p>\n<p><strong>Trading Positions<\/strong><\/p>\n<p><strong>EUR\/USD: <\/strong>long at 1.1820, target 1.2020, stop-loss 1.1790<\/p>\n<p><strong>USD\/CHF: <\/strong>short at 1.0160, target 0.9990, stop-loss 1.0190<\/p>\n<p><strong>USD\/JPY: <\/strong>long at 118.70, target 121.80, stop-loss 117.80<\/p>\n<p><strong>EUR\/GBP: <\/strong>short at 0.7850, target 0.7700, stop-loss 0.7880<\/p><div id=\"inves-1984628975\" class=\"inves-in-content inves-entity-placement\"><hr style=\"border: 1px solid #ddd;\">\r\n<div id=\"inpost_ads_header\">\r\n<p style=\"font-size:10px; float:left; color:#666;\">Free Reports:<\/p><\/div>\r\n<div id=\"inpost_ads\"> \r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/1ApBOV\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2018\/06\/graph_techs_PD.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t     <a href=\"https:\/\/goo.gl\/1ApBOV\"><b><u>Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p><br><br>\r\n<br>\r\n<br>\r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/f3RrHX\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2019\/01\/cot_pie_80.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t    <a href=\"https:\/\/goo.gl\/f3RrHX\"><b><u>Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p><br><br>\r\n<\/div>\r\n<hr style=\"border: 1px solid #ddd;\">\r\n<br><\/div>\n<p><strong>EUR\/CHF: <\/strong>long at 1.2025, target 1.2090, stop-loss 1.1995<\/p>\n<p><strong>AUD\/NZD: <\/strong>short at 1.0530, target 1.0320, stop-loss 1.0475<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Pending Orders<\/strong><\/p>\n<p><strong>USD\/CAD:<\/strong> buy at 1.1700, if filled target 1.1990, stop-loss 1.1630<\/p>\n<p>&nbsp;<\/p>\n<p><strong>EUR\/USD: How Will The ECB React To Deflation?<\/strong><\/p>\n<p>(long for 1.2020)<\/p>\n<ul type=\"disc\">\n<li><strong>Euro zone December headline inflation fell more than expected. HICP inflation amounted to -0.2% yoy in December , down from 0.3% yoy in November<\/strong>. The median forecast was at the level of -0.1% yoy. However, the core rate excluding energy, food, alcohol and tobacco moved higher to 0.8% yoy compared to 0.7% yoy. The data show that deflation is the result of much cheaper energy.<strong>Energy prices fell by 6.3% yoy vs. a decline by -2.6% yoy in November.<\/strong><\/li>\n<\/ul>\n<p><strong><img loading=\"lazy\" decoding=\"async\" title=\"\" src=\"http:\/\/growthaces.com\/sites\/default\/files\/ez_hicp_07012015.png\" alt=\"Euro zone inflation\" width=\"480\" height=\"288\" \/><\/strong><\/p>\n<ul type=\"disc\">\n<li><strong>Why was the inflation reading so important today and what does it mean for the nearest decision of the European Central Bank?<\/strong><\/li>\n<li>The ECB is expected to announce the full-blown quantitative easing on January 22. However, the ECB may say that deflation is only the result of low crude prices and result mainly from supply-side factors and core inflation is still positive. <strong>The deflation based on a slump in oil prices may increase may increase the purchasing power of consumers<\/strong>. The ECB may also say that <strong>low oil prices will reduce businesses\u2019 costs and could be supportive for higher economic activity in the future<\/strong>. Moreover<strong>, a strong depreciation of the EUR since last ECB meeting gives a strong boost to the exporters from the Euro zone<\/strong>. That is why, <strong>the decision on quantitative easing may be postponed. The ECB may choose to wait and see if the economic growth strengthens before deciding on sovereign QE.<\/strong><\/li>\n<li>On the other hand, the European Central Bank will have to counteract rising deflationary expectations. A more sustained period of deflation may destroy debt consolidation efforts of the Euro zone countries. <strong>A deflation creates a risk that asset prices also fall, particularly property and other assets used as collateral, which would be negative for heavily-indebted economies of the Euro zone.<\/strong><\/li>\n<li><strong>Tuesday brought important fata from U.S. economy. ISM index in the services sector fell to 56.2 in December, compared with 59.3 in November<\/strong>. The reading fell short of the consensus for a 58 reading.<\/li>\n<li><strong>U.S. New orders for manufactured goods dropped 0.7% mom in November after an unrevised 0.7% mom fall in October.<\/strong> A decline by 0.5% mom was expected. Factory orders excluding the volatile transportation category fell 0.6% mom as demand declined almost across the board. That followed a 1.5% mom drop in October. Inventories rose 0.1% mom in November, while shipments fell 0.6% mom. The inventories-to-shipments ratio was 1.32, unchanged from October.<\/li>\n<li><strong>We have one more important event scheduled for today \u2013 FOMC minutes (19:00 GMT),<\/strong> <strong>which in our opinion may be not so hawkish, as it is widely expected.<\/strong> That would support the EUR\/USD in the short term. Moreover, investors will be focused on ADP employment change (13:15 GMT) \u2013 an important reading ahead of Friday\u2019s U.S. jobs report.<\/li>\n<li>Our EUR\/USD reached its stop-loss level at 1.1875 yesterday . Our EUR\/USD trading strategy for today is to get long ahead of FOMC minutes that <strong>in our opinion are likely to provide some relief to the EUR. We\u2019ve got long at 1.1820 with the target at 1.2020 and stop-loss at 1.1790.<\/strong><\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" title=\"\" src=\"http:\/\/growthaces.com\/sites\/default\/files\/eurusd_07012015.png\" alt=\"EUR\/USD Daily Chart\" width=\"500\" height=\"350\" \/><\/p>\n<p>Significant technical analysis&#8217; levels:<\/p>\n<p>Resistance: 1.1892 (hourly high Jan 7), 1.1969 (hourly high Jan 6), 1.2006 (high Jan 5)<\/p>\n<p>Support: 1.1800 (low January, 2006), 1.1640 (low November, 2005), 1.1212 (61.8% of 0.8228-1.6040)<\/p>\n<p>&nbsp;<\/p>\n<p><strong>USD\/CAD Hit Fresh Multi-year High<\/strong><\/p>\n<p>(looking to get long again)<\/p>\n<ul type=\"disc\">\n<li>The USD\/CAD rose to its highest since May 2009 yesterday. <strong>The CAD was undercut by crude prices<\/strong>that were beaten down and closed at 47.93 USD a barrel on Tuesday. The loonie was also underperforming most other major currencies. Canada is a major oil exporter and its currency is strongly correlated with crude prices \u2013 we encourage you to check our Correlation Matrix that will be released later today.<\/li>\n<li>The CAD traders are waiting for <strong>Canada&#8217;s trade balance for November (today 13:30 GMT) and Canadian and U.S. jobs data for December (Friday 13:30 GMT)<\/strong>. After taking profit on our long USD\/CAD position on Friday, <strong>our forex trading strategy for the USD\/CAD is to get long again on dips. The next target will be 1.1990. We raised our buy order to 1.1700.<\/strong><\/li>\n<\/ul>\n<p><img decoding=\"async\" title=\"\" src=\"http:\/\/growthaces.com\/sites\/default\/files\/usdcad_07012015.png\" alt=\"USD\/CAD Daily Chart\" \/><\/p>\n<p>Significant technical analysis&#8217; levels:<\/p>\n<p>Resistance: 1.1867 (hourly high, Jan 7), 1.1900 (psychological level), 1.1951 (May 1, 2009)<\/p>\n<p>Support: 1.1732 (low Jan 6), 1.1600 (low Jan 2), 1.1567 (low Dec 31, 2014)<\/p>\n<p>&nbsp;<\/p>\n<p><strong><a href=\"http:\/\/GROWTHACES.COM\" target=\"_blank\">GROWTHACES.COM<\/a><\/strong><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>GROWTHACES.COM Forex Trading Strategies: Trading Positions EUR\/USD: long at 1.1820, target 1.2020, stop-loss 1.1790 USD\/CHF: short at 1.0160, target 0.9990, stop-loss 1.0190 USD\/JPY: long at 118.70, target 121.80, stop-loss 117.80 EUR\/GBP: short at 0.7850, target 0.7700, stop-loss 0.7880 EUR\/CHF: long at 1.2025, target 1.2090, stop-loss 1.1995 AUD\/NZD: short at 1.0530, target 1.0320, stop-loss 1.0475 &nbsp; [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-66145","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/66145","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=66145"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/66145\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=66145"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=66145"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=66145"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}