On the USDPHP Exchange Rate & PH Stock Market

Friday's closing as of Sept 7, 2018 have continued the selling pressure for the PSEI with the Philippine Peso -PHP value losing more ground as the USDPHP exchange rate accelerates to the 53.98 high to close at 53.71; on top of the regional performance among its Emerging Markets - EM CCY peers in Asia FX trading.

As of Sept 7, 2018 Philippine Peso

PSEI marked a low at 7526 & close with a pullback at 7599 from market capitulation / short-squeeze as investor / traders don't want to hold positions over the weekends. This is why we emphasize when intervention occurs in the AM opening, and the PM closing leaves retail investors & traders at the hands of institutional players. But not everyone is paying close attention to this market play which happens more often as a matter of exchange policy. With Reference to PH Stocks Mix Readings / Distinct Trade setup & Divergent Trend Direction However the case maybe most major banks could still be able to do this strategy of hedging as part of the banks clients who has international exchange rate exposure from loans. investments and debt financing that would be susceptible to foreign exchange adverse price fluctuations and in need of protection. But at the same time, be cautious of those speculative movements being taken advantage of. Although, this process is not limited to banks & other institutions alone. As high net worth individuals and private companies who holds US Dollar denominated transactions and holdings would be able to do the same for as long as they have access to these markets.

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PSEI Market & Price Call as of June 25-27, 2018 - REVISITED For VALIDATION

Excerpt:
"...once such price action is completed then the probability of a relief turn around for now can be anticipated nearing the end of the 2nd quarter trading. It would not be a full turn around as a base pattern needs to be formed before an actual build up can be viewed with increase in volumes and fresh catalyst from external forces.

In essence a completed formation combined with other elements to support a greater probability of a full price recovery should well be present accompanied by a strong fundamental catalyst that would give the technical formation a solid foundation for a significant rally in the making. "

End result after the fact: After the price extension reflected twice at 6923 /6929 from June 22-26; the PSEI marked a 7838 high as of August 1st, 2018.

PSEI Extension

Likewise, the monthly chart shows the first low on the way down & higher low on the way up, the PSEI marked at 6923. Click here to revisit the overlay chart to have a comparative analysis of the price action where they came from a major correction before and after prices have moved  from the week ending Aug 3, 2018 Watch for our next market info share, where we define & identify how 'Investing & Trading by Correlation' with the other sector indices that extend and maximizes the profitability by tracking the PSEI components after marking a 6923/29 low; while trading a two (2) way open trade window with it's US counterpart #MSCI #EPHE Philippine #ETF registered 28.80 low in the US market respectively. 

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CORRELATION & Price Update Across the Board:

As of May 15, 2018

#Dow Jones Industrial Average (#DJIA)   
                 DJIA Currency in USD                      

24,656.25 -243.16 (-0.98%)

#CBOE #Interest Rate 10 Year (#TNX)
Chicago Options Currency in #USD
3.059 +0.064 (+2.14%) 

              

#US Dollar Index #DXY #ICE 
Currency Index in USD
93.30 +0.633 (+0.68%)  

#USD/JPY (SPOT) Foreign Exchange Rate
CCY Currency in #USD vs #JPY
110.294 +0.609 (+0.56%)

#Nikkei225 #FUTURES Index (#NKDM18 #CME)    
                  CME Currency in #USD                      
22,775.00 -115.00 (-0.50%) 

               

#Nikkei225 #TOPIX (N225)
Currency in #JPY
22,818.02 -47.84 (-0.21%) 

PSEI INDEX (PSEI.PS)Philippine Currency in PHP
7,885.97+133.86 (+1.73%) 

iShares MSCI Philippines ETF (EPHE)

NYSE Arca - Nasdaq Real Time Price. Currency in USD
33.74+0.08 (+0.24%)

Encouraging Catalyst Lifts PH Stocks 'CORRELATION'

Significant Events in #FX Markets a Welcome Treat!

On the other side of the market in Asia, with the recent upgrade S&P PH Credit Rating to 'positive' have indeed been an encouraging news that came in a timely manner when the #PSEI was at its lowest levels. With a registered low at 7526 almost all measure of its underlying stocks have declined for a period of three (3) months from January peak at 9078.

As of May 3, 2018

Update PSEI Chart as of May 4, 2018

However, prior to the 'Positive Credit Rating' price action where seen at their best probable levels where 'Risk' of further declines were likewise limited as net change on the PSEI barometer has already narrowed. While the PSEI relative EPHE ETF have signaled the same variable entry at 32.21 with substantially good volumes / market flow reports. The probability of the recovery was good and the end result is even better. Although this price recovery is limited as a relief which can not be called a trend reversal until certain new highs can be marked on the way up.

Institutional firms, brokers / dealers, and local retail investors have initially taken advantage of this report while bargain-hunting for beaten down stocks. The market's relief recovery came about from the welcomed historic peace meeting with North and South Koreas respective presidents.

Thus giving global stocks and foreign exchange markets the initial catalyst a more positive outlook for the US Dollar overall. While this occurred, a retrieve for the PHP back to the levels 51.62 was also seen but this move was mainly from the reactions in the Global Forex trading market's reaction related with the ECB's stance unchanged monetary policy.

That drove the European majors such as the EURO and CABLE back down to as low as 1.2055 and 1.3750 levels. These moves have led most FX investors led by institutions to Euro/USD short-covering positions as the USD Index (DXY) pulls back from its recent session highs nearing the 92.00 basis point levels and closed at 91.54 for the week.

With that said, the 'REAL CORRELATION' of stocks and the FX market can best be seen through 'PRICE ACTION ANALYSIS' which goes beyond charting and technical analysis. 

CORRELATION: Trading the USD EURO GBP & Cross Rates

USD Index (#DXY) is in a tight range and fundamentally supported by rate hike expectations although this may well be priced in the market, After it had marked  the 95.05/15, the DXY could not hold its levels and subsequently drifted back to the 93.40 higher low well within is near term up swing.

The recent correction on the EURO was mainly attributed towards Germany's   Chancellor Angel Merkel declared failure in forming a coalition government. But we see this as a temporary setback which resulted to a decline with the #EURUSD making a low at 1.1722 after reaching last week's high near the more important levels of 1.1860/80 price range. It is only by staying above this price level can we consider a positive breath that can be sustained for the Euro. Thus a retest of the previous 1.2000 levels would not be discounted. 

That drives us to reconsider a near term corrective move for the USD. However, since there is a relative correlation with the Sterling Pound's price action back towards a recovery, the end result would be a conflicting price direction for the #EURGBP Cross rate. As the EURGBP is at its initial price recovery session where a pullback can occur when the EURO fails to go above the 1.1880 by the end of the trading week.

While the UK is getting ready to make an offer with a #BREXIT bill before December summit just time for the US rate hike. And this is also what Goldman Sachs predicted that the #FED would raise rates at least 4X by 2018. Supportive for the USD but not quite without a reasonable leg down to gain traction for a good rally.

For now a thin market would be more susceptible for the unexpected market swings being a Thanksgiving Holiday. Watch the before and after the holiday trading for some action.

Meanwhile, the following reports to watch areas follows:

> Wednesday: US jobless claims, durable goods orders; FOMC minutes;
> Eurozone consumer confidence
>Thursday: New Zealand retail sales;
>German GDP final; Eurozone PMIs, ECB monetary policy accounts;
>UK GDP revision ; >Canada retail sales
>Friday: Japan PMI manufacturing; German IFO; US PMIs

#PSEI Lags Behind Global Stocks Performs

Unfortunately, the PH Stock market has been lagging behind when it comes to market price action as the PSEI even went negative on 6.20.17 after a day of recovery from the decline of the HOLDINGS sector. The reason for such was drawn from the OFW remittance report that saw a drop, as a substantial share of the PH GDP comes from OFW remittances.

As of June 20, 2017

PSEI even declined to the 7917 levels, contrary to the start of the week's trading reaching the 7950 resistance level where most traders managed to bring it back lower to where it is today. The same replica trading of drifting lower towards the close of the trading day, with Monday as a mere exception to the rule. The obvious down play of global stocks rally have been shrugged off with local protectionism from a continued inflow from foreign investments. Goldman Sachs have even called two of the major companies with a rating of buy, yet still underperformed such call with the market price ability to push for a rally in spite of the DOW's record levels @21500 then.

Although, today's timid price action have been attributed to a handful of block sales as seen on the PSE daily reports that gave investors outlook sluggish to say the least. However, it maybe for now markets sentiments points to growth in global stocks. PH Asian Investors should take their lead from what markets provide the best return for their buck.

Herewith is a comparative market analysis between price action from PH Holding firms, the PSE Index price performance and the PH Financials relative market movements for the day 6.20.17. Take note that certain 'chart patterns & technical divergences' have occurred between these index sectors compared with the PSEI. Watch the next price action as it draws the end of the 2nd quarter trading.

SMART Investors Do!