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What does a market reaction to the Fed's decision say?Since yesterday, by and large, was the first full day of working out the Fed’s emergency decision to lower the rate by 0.5%, today some results can be summed up. And they are generally disappointing for optimists. In theory, stock markets should have perked up and provoked a sharp increase in stock indices. But this did not happen, that is, there was growth, but not at the scale that could be expected. In theory, the pressure on the dollar should have intensified. But yesterday, the Dollar Index rose. In theory, the Fear Index was to drop significantly. But according to the results of yesterday, the decrease was insignificant. What are all these signals talking about? The magic of Central banks no longer works the way it used to. Lower rates no longer automatically resolve existing problems. And this is a very alarming signal for stock market buyers, gold sellers, and other optimists. It seems that the bubble is nevertheless broken and the air, despite all the efforts of its creators, is gradually coming out. In general, monetary policy has exhausted itself and this is an extremely alarming signal: if the situation worsens, it will not be possible to resolve the situation with the usual methods. The consequences of the coronavirus have not even begun to appear, and Nasdaq is quoted 10% below the maximum and, it seems, can no longer grow with the certainty with which it was literally a couple of weeks ago. So in everything that happens, we see the strongest confirmation of our basic investment ideas: sales on world stock markets, and especially on the US stock market; gold purchases and sales of risky assets (such as the Russian ruble). But back to the events of yesterday, which was very full of news. The Bank of Canada lowered the rate immediately by 0.5%. The Canadian dollar obediently worked this out, losing about 100 points paired with the dollar. But in general, the reaction was relatively calm at such a massive reduction in rates. US employment data from ADP turned out to be quite good: +183K with a forecast of +170K. What sets in a positive mood against the dollar ahead of Friday's official statistics. The ISM Index in the non-productive sphere also pleasantly surprised: 57.3 points with a forecast of 54.8 points. But the Eurozone indices traditionally fell short of expectations and for the most part, came out worse than forecasts. Well, the results of super-Tuesday played into the hands of the dollar, on which Biden won quite unexpectedly, who is considered a more adequate option from the Democrats as opposed to the “left” Sanders. In general, our desire to sell a pair of EURUSD intensified up to the recommendation to sell the pair from the current ones with the addition of any attempt to grow. Oil stocks in the United States have grown quite slightly, but all the attention of oil market participants has been riveted to the OPEC meeting and OPEC+ decisions. It is very likely that today some specific information will appear that could provoke strong movements in the oil market. If OPEC+ decides on additional reductions (ideally about 1 million b/d), oil has a chance of growth. The main stumbling block is Russia and its unwillingness to scale up the reduction.
by Trade24Fx
UK labor market gives the BoE's room for maneuverThe main event of yesterday in terms of macroeconomic statistics was the publication of statistics on the UK labor market. The data pleasantly surprised. Recall that we expected rather weak statistics - the British economy has been painfully unconvincing in recent times. Nevertheless, the UK economy for three months until November created 208K new jobs, which is almost 2 times higher than analysts' expectations. The average weekly wage also came out better than expected (+ 3.2%). Against the background of such data, supporters of the fact that the Bank of England will lower the rate at the next meeting sharply fell silent. Indeed, data on the labor market show that the Central Bank has no reason to rush. This sharply increased the chances that the bet will be left unchanged. The pound, of course, reacted positively to statistics and a shift in market expectations. Recall in this regard to our recommendation to buy a pound on the slopes. In general, for Europe yesterday was a good day. Indices from the ZEW Institute came out very good (relative to past data) both in the Eurozone as a whole (the expectations index came out almost 2 times higher than in December) and in Germany (the expectations index was +26.7 with a +15 forecast). So the growth of the euro looked quite natural. But for its continuation, this impulse will be clearly not enough. In this regard, Thursday looks more promising: on this day, the ECB will announce its decision on the monetary policy parameters in the Eurozone. But we'll talk about this in tomorrow's review. And today, the main event will be the announcement of the Bank of Canada’s decision on monetary policy parameters. Experts do not expect any changes. We are also inclined to believe that the bid will be left unchanged. But given the general trends in the development of the global economy in general and in Canada, in particular, there are risks of a rate reduction. Moreover, the reduction potential is far from exhausted, unlike the ECB or the Bank of Japan. Considering that the USDCAD pair has been treading water for two weeks now, fluctuating in the range of 50 points, there is a possibility of a strong movement in pairs with the Canadian dollar today. Moreover, the direction of movement is not obvious. Our recommendation in this regard is to work along the way. That is, if the pair goes above 1.3090 - we buy, if below 1.3020 - we sell.
Long
by Trade24Fx
OPEC meeting, Bank of Canada decision and Eurozone GDPWe start with macroeconomic statistics, it is worth noting the extremely weak employment rate from ADP: +67 thousand jobs with a forecast of +135 thousand. So, buyers of the dollar should at least focus, because if similar statistics come out on Friday on the NFP, the dollar may well be sold out. Statistics on business activity in the Eurozone came out surprisingly good, which intensified the talks that the European economy was beginning to recover. The pound also got its reason for growth, as the UK business activity index also exceeded forecasts. Although we note that it was still below 50. It is rather symptomatic that the pound continues to grow without waiting for the election results. The markets decided that Brexit’s fate is predetermined (there will be no way out without a deal), but the pound is still very cheap, you need to buy it before it’s too late. We have long been bulls as for pound, so nothing surprising happens to us. We only note that a daily close above 1.30 is a strong bullish signal. And the pound may grow more than one hundred pips. So we are looking for points for his purchases. The Bank of Canada did not change the rate yesterday but was quite optimistic in its comments, which contributed to the growth of the Canadian dollar. So those readers who were following our recommendations could put in their piggy bank a good profit. Despite the extremely frightening information at the beginning of the week, the negotiation process between the US and China continues. And according to its participants, by December 15, the first phase should be completed. As for today the macroeconomic statistics, the news of the day will be the publication of Eurozone GDP. The fact may likely be higher than forecasts. This means that the euro may well strengthen up to 1.1160 paired with the dollar. Well, the main event of the week, at least for the oil market, will be the beginning of the OPEC meeting in Vienna. The most likely scenario is an attempt to leave everything as it is. That is, they will adhere to the current line of behaviour (an agreement to reduce production by 1.2 million b / d). For oil, this decision, by and large, does not change anything in terms of fundamental alignment. But any agreements to increase the limits will play into the hands of buyers and vice versa. Refusal of the deal in any form will be a strong hit to oil and activates its sellers.
TVC:DXYShort
by Trade24Fx
USD/CAD Waiting BoCBoC rate decision is the main focus today. For the past 2 weeks, USD/CAD has been traded in a tight range and while no changes are expected from the central bank, Governor Poloz's speech will be watched closely. He could continue to talk about the possibility of an “insurance cut” in coming months, as uncertainty of trade war persists. If Poloz focuses on the downside risks for the economy, USD/CAD could break upward easily but if he emphasizes the appropriateness of current policy, USD/CAD should fall deeply. Also note that in the middle of Nov. the H4 50-day SMA crosses above the 200 SMA. This crossover, known as a ‘golden cross’, is a bullish sign for the pair. On the upside, 1.3327 (high of the current range) is the next resistance line. A clear break above 1.3327 will resume the rise from 1.3042 to 1.3346/82 (October and September's highs) resistance zone. Firm break there will suggest completion of medium-term consolidation from 1.3664. On the downside, a break of 1.3190 will indicate completion of the rebound and turn bias back to the downside for retesting 1.3042 support.
by ForexTrendline
Getting ready for a difficult week and analyzing key eventsThe previous week for the foreign exchange market was marked by record-low volatility. Even the blackest Friday of the year did not desire to buy or sell actively anything. The informational background of the week was relatively calm. Negotiations between the US and China were moving somewhere, according to the assurances of the parties. But the markets are tired of talks and waiting for actions. And then Trump signed an extremely irritating China law to support Hong Kong protesters. That hypothetically could disrupt the entire negotiation process. In general, so far everything is not that clear, which means potentially unstable. Accordingly, this week we are looking for opportunities for the purchase of safe-haven assets. The points for this are very prospective, in terms of profit/risk per trade. The upcoming week will be interesting. Statistics on the US labour market will be published on Friday, which is expected to lead to strong movements in dollar pairs. Also, OPEC will meet on Thursday, which in theory could provoke an explosion of volatility in the oil market. According to experts, Saudi Arabia may put the question point-blank of non-fulfilment by several members of their obligations under OPEC +. Actually, it is the efforts of the Saudis that keep afloat the conditions for reducing production by 1.2 million barrels. If Saudi Arabia decides that they are done, the oil will fall quickly and violently (see oil dynamics on Friday). In this light, let us recall our recommendation to sell oil as a basic idea for working with oil under current conditions. Another important news that worth noting is the announcement of the Bank of Canada decision on monetary policy parameters, data on Eurozone GDP and US business activity indices. So far, our position on the dollar is unchanged - we are looking for points for its sales. But a series of a confident macroeconomic positive outcome may make us change our position, at least in the short term position. So we will closely follow the news.
FOREXCOM:XAUUSDLong
by Trade24Fx
Results of Central Banks, US GDP and ADPLet’s analyze the key events of yesterday. Consumer confidence in the Eurozone is rather depressed, as indeed the entire economy of the Eurozone. But at the same time, the euro did not show any specific movements. The dollar, on the contrary, despite the relatively good statistics, was losing its way. Preliminary data on US GDP for the third quarter came out much better than analysts' forecasts (+ 1.9% y / y with a forecast + 1.6% y / y), consumer spending also showed growth. Employment data from ADP (especially important in anticipation of tomorrow's data on NFP) also higher than expected (+ 125K with a forecast +110 K). Although we note that fact that USD paired with the Canadian dollar strengthened due to the decision of the Bank of Canada to leave the rate unchanged. Therefore the USDCAD provided an excellent opportunity for its sales, as we recommended in yesterday. It means that you can sell it today. The main event of yesterday, of course, was the announcement of the decision of the Federal Open Market Committee. The rate was cut by 0.25%. As a result, the dollar continued to suffer losses in the foreign exchange market. Our recommendation on the dollar remains unchanged - we are looking for points for its sales. Tomorrow we are waiting for the official statistics on the US labour market, which is likely to lead to the formation of a full downtrend. But we will talk about this tomorrow. The Bank of Japan: the rate is unchanged. The press conference of the Central Bank will take place after the publication of this review, so we’ll talk about its results tomorrow. In the meantime, we tend to buy the yen primarily against the dollar. Today we are waiting for the statistics on GDP growth in the Eurozone, data on personal income and expenditure in the United State to come out. Our recommendations for today: sale USDCAD, as well as the dollar as a whole in the foreign exchange market; buy gold and sale the Russian ruble.
Short
by Trade24Fx
Fed’s decision: sell dollar, buy gold & CADBefore moving on to the main event this month, and perhaps the next one too, we will talk about yesterday’s events. As usual, the most interesting news is coming from the UK. Johnson could find support for his idea of an early election. So in December, the British are expected to have the third parliamentary election over four years. According to some experts, they can become a kind of referendum on Brexit. If residents give preference to parties opposed Brexit, then Brexit might be cancelled. Our position on the pound has not changed. On the contrary, we believe even more strongly that the pound will rise. Yesterday its strengthening only confirms our idea. But everything goes to the point that its growth will be delayed by at least a month and a half. Wednesday can be called the main day of the week because today the Bank of Canada and the Fed will announce their decisions on the monetary policy parameters. The results are appearing to be clear, but the foreign exchange market might be wide open with its reaction. So, the Fed with a probability of 95% + will lower the interest rate by 0.25%. Formally, this is a powerful bearish signal for the dollar, as lowering the rate today will be the third in 2019. And this is considered as a trend. The last time the Fed launched a full-fledged rate reduction cycle, the dollar lost about 15% of its value in the foreign exchange market. That is why we will sell the dollar today, despite its stubborn reluctance to decline. As for the Bank of Canada, the rate is likely to remain unchanged. Against the background of a potential Fed’s decision to cut the interest rate, in our opinion, this will be an excellent occasion for a further USDCAD reduction. Therefore, today we will sell it (if the Bank of Canada leaves the rate unchanged, and the Fed lowers the rate). based on technical analysis, of course, it is worth waiting for a breakdown of 1.30 and enter the position below 1,30 right after stop losses execution. Gold looks quite good for purchases in anticipation of the Fed rate cut. Current prices are attractive in their own right, and a decrease in the Fed rate will only add arguments in favour of gold purchases (recall, one of the key problems of gold is the inability of the asset to generate stable income, unlike the dollar in the form of deposit income or purchases of treasury bonds).
TVC:DXYShort
by Trade24Fx
Brexit postponed, last quiet day of the weekThe Brexit date is set to be delayed until 31 January Again. Johnson, as promised, asked parliamentarians to call early elections in December. He has failed to win on Brexit. Johnson said that he would make another attempt today and said that without early elections, it would not be possible to ratify the agreement with the EU. Today will be the last relatively calm day in the foreign exchange market, because on Wednesday the Fed and the Bank of Canada will announce their decisions, on Thursday we expect news from and the Bank of Japan, well, on Friday we are waiting for data on the US labour market to come out. So it will be an extremely interesting and volatile week. But we will talk about these events as they approach. And today we suggest focusing on trading using the stochastic oscillator. That is, we trade without obvious preferences according to the signals from hourly oscillators - we buy in the oversold zone and sell in the overbought zone. But at the same time, we do not try to impose our will on the market and fix our positions with relatively small stops. List of our current trading preferences as follows: selling the dollar, buying gold and the Japanese yen, selling the Russian ruble and buying oil on the intraday basis. -Some of the positions may change their direction, so new prospective options could be added. For example, purchases of the Canadian or Australian dollars against the US dollar. The only thing that keeps us from actively recommending the purchase of commodity currencies is their approach to important levels. The Canadian will have a chance to hit the key support on Wednesday when the results of the meetings of the Bank of Canada and the Fed will be announced. The Australian dollar may take advantage of the possible sale of the US dollar on Wednesday after the Fed’s decision and also gain a foothold above 0.6880.
Long
by Trade24Fx
EURCAD - Sell Small Position at Market after BOC!Despite the rally in risk assets, the negatives that sent the EUR lower have not changed. The economic gloom in Europe remains and, despite the north-south divide on the ECB board, many still expect policy easing, if not in September than before year-end as Christine Lagarde ascends to the presidency. Thus EUR/CAD is likely to continue to trend lower. Larger option expiries above current spot should help to cap too. At the same time, the Bank of Canada came out with a less dovish statement yesterday, which should boost the Loonie in the near-term. Sell a small position at market as we are breaking through the previous support zones from August.
Short
by Sam_Eder
Contradictory forecasts for oil & the Bank of Canada decisionThe dollar we recommend to sell against the main currencies duo to reasons absence (we still see no reasons for the Dollar Index new highs ).With the exception of the Canadian dollar. Extremely weak data on the labor market in Canada, published on Friday, amid excellent statistics on NFP from the United States, together with today's meeting of the Bank of Canada, can create ideal conditions for the pair to grow. Tightening monetary policy followed by the Bank of Canada however the gradual economic slowdown multiplied by the Fed's intentions to lower the rate, provide serious prerequisites for changing the vector of monetary policy. Well, today the rate is unlikely to be lowered, but there is a chance for this. This will harm the Canadian dollar, so today we will buy USDCAD. with, at least, 200-300 points, and stops set below 1.3050. Against the rest of the "major" currencies, we will sell the dollar. It is primarily about the Japanese yen, as well as the euro and the pound. Do not forget about Testimony of Fed Chairman Powell in Congress, which is quite possibly accompanied by important statements for the dollar. Future of oil price, that is a good thing to think about, therefore analysts have divided into several groups with a different view of the situation. Some (for example, analysts at JP Morgan) say that OPEC + creates prerequisites for the redistribution of market shares: OPEC + countries essentially “give” some part of their market share to the US and other countries that are not participating in the agreement. So, the oil team from the United States receives carte blanche for further rapid development. As a result, the total supply in the oil market does not fall. At the end, when the OPEC + participants start to engage in their market share and decide to “unscrew the tap”, this will only lead to a decrease in oil prices. That is a new reality is currently being formed on the oil market, in which the fair oil price is not $ 100- $ 120, but $ 60- $ 70. And it is likely that in the foreseeable future, this ceiling will fall to $ 30- $ 40. However, there is an alternative point of view. For example, the Saudi Minister of Energy believes that the situation will evolve according to the classical theory of cycles, which means that the current cycle will soon reach a peak, then change to stagnation, and then come down. In Geopolitics Central, they recall the threat of a military conflict between the US and Iran, which could lead to Iran blocking the Strait of Hormuz. And this will provoke a strong shortage in the oil market and, as a consequence, sharp rise oil prices rise. We are of the opinion that was voiced by analysts J.P. Morgan. The world has changed and it needs to be accepted. The shale revolution (from the supply side and the transition to alternative energy sources from the demand side ) have radically changed the balance of power in the oil market. And the attempts to “measure it” by the out-of-date methods are largely doomed. So we continue to recommend oil sales. Our other trading recommendations are unchanged: we sell the Russian ruble, and for gold, we work without any special preferences - buy from hourly oversold zones and selling from overbought.
FX:USOILShort
by Trade24Fx
Chinese secret weapon, BoC interest rate decision & US GDPYesterday was “dictated” by the dollar but without new highs and explosive growth. By and large, consolidation at the top is continuing. For a breakthrough to new local maxima, a serious reason is needed. In theory, today's data on US GDP might be a reason for this. These are revised growth figures for the first quarter. However, analysts are skeptical enough - the majority is expecting a revision of the preliminary value downward. We also tend to the fact that the data will come out either extremely close to 3% or even lower. So, in our opinion, the dollar would rather “rush” downward than upward. In this regard, our position on finding points for sales, the dollar has not changed. Rather, the current entry points are very close to the ideal ones. The trade war escalation initiated by the United States naturally raised a question on a retaliatory strike from China. So far, Sino actions were more than restrained, but there is a huge range of methods in Chinese to influence. We are going to talk about a secret weapon today. Everyone has heard about the volume of US government debt owned by China and the markets attention is oriented in that direction, but a blow could be struck out of the blue. China is the world leader in the supply of rare-earth elements (controls about 80% of the world market), which is crucial for many modern industrial products. So hypothetically, as a means of counteracting US aggression, the Chinese authorities may limit their deliveries to the United States, which, in turn, will have a very negative impact on a number of American companies. The decision of the Bank of Canada on the parameters of monetary policy was announced yesterday. The rate was left unchanged. Comments of the Central Bank as a whole were cautious. The Central bank is concerned about the uncertainty due to the trade war. All investors' attention will be focused on data on US GDP. As for our trading positions, they have not changed: we will look for points for buying of the euro and the pound against the US dollar, sales of oil and the Russian ruble, as well as buying of gold and the Japanese yen.
Short
by Trade24Fx
Trade war price, short dollar and Bank of CanadaTuesday turned out to be another quiet day. So, we have time to talk about global things. For instance, about the possible price of a trade war for the United States, China and the world as a whole. The fact is that trade wars have been discussed often, almost constantly, but at the same time, some things are sounded as self-evident without any refinements to detail. Therefore, today we would like to talk about the price of trade wars. In the end, this problem will be solved until the end of this month (the meeting of the United States and China leaders at the G-20 summit), and the losses are already taking place now. So, economists at Bloomberg Dan Hanson and Tom Orlik analyzed the main scenarios of a trade war and its consequences. Their main conclusion is: if tariffs spread to all trading process between the USA and China, then global GDP will lose about $ 600 billion by 2021. By the way, this year will be a peak in terms of losses from trade wars. If tariffs turn out to be at current levels, in a couple of years China’s economy will lose 0.5% growth as well as the United States - 0.2%. If tariffs are distributed to all groups of goods, then China will lose 0.8% of economic growth, the USA will lose 0.5%, just like the world as a whole. So, the trade war is, indeed, a key aspect for the modern global economy. No wonder its is paid so much attention by markets and analysts. Meanwhile, Brandywine Global Investment Management LLC. - an investment fund with $ 72 billion of assets – is predicting the end of the dollar rally. The reason is that the United States will agree with China: the damage from trade wars is too high for both sides. In addition, a trade war hurts US consumer, and setting people up against, on the eve of the US Presidential election, is the last thing Trump wants to do. Returning to the current situation in the financial markets and the news background, we note that the main event of the environment will be the results announcement of the Bank of Canada meeting. The rate is likely to remain unchanged. We also are not waiting for aggressive comments from the Central Bank - it is not the time to show aggression. Trade war escalation is more than a serious reason to continue to pause. Despite the fact that we do not expect a hawkish position from the Bank of Canada, we believe that the current price of USDCAD is simply excellent in terms of its sales. So, we recommend today to look for points for its sales. In general, you need to sell about 1.35. We place stops above 1.3550, and put profits at the bottom 1.33. The rest of our trading positions have not changed: we will look for points for buying of the euro and the pound against the US dollar, sales of oil and the Russian ruble, as well as buying of gold and the Japanese yen.
Short
by Trade24Fx
USDCAD bulls waiting for dovish shift in BOC's rhetoricThe technical picture for the USDCAD remains very interesting, particularly with today's rate decision coming from the Canadian central bank. Last week's Canadian inflation data was published, coming in at 1.9% (YoY) for March 2019, up from 1.5% from the previous month; meeting market expectations while printing at the highest level since December, so it will be interesting to see if the Bank of Canada shows a slight hawkish touch. When looking at the resulting price action of the USDCAD after last week's inflation rate and seeing that the CAD didn't take on any serious momentum, stabilising above 1.3250, it appears that market participants don't see a hawkish shift, especially after last March's rate decision and rhetoric. Lat March, Governor Poloz and his colleagues removed the tightening bias in their statement, acknowledging "more pronounced and widespread" global economic slowdown, and noted that "trade tensions and uncertainty are weighing heavily on confidence and economic activity" and "global economic prospects would be buoyed by the resolution of trade conflicts." In this context, any dovish hints have the potential to initiate a bullish breakout above 1.3470, activating current yearly highs of around 1.3670/3700 as an initial target. Technically, only a drop below 1.3250 would darken the technical picture, and activate 1.3080/3100 on the downside.
Long
by Admiral_Markets
CADCHF - Strong Resistance!Today is a high impact news event on CAD - Bank of Canada ( BoC ) Interest Rate Decision, so, let's prepare for it. If we get pump upwards then there is a pretty strong resistance area which consists of multiple criteria: 1. Previously worked Super Resistances: - The blue line matching exactly with Weekly EMA200 which should act as a resistance - The orange line matching exactly with Monthly EMA 50 which should act as a resistance 2. Fibonacci golden ratio - 62% 3. Historically worked round number - 0.77000 4. The trendlines ...and the market structure also supporting that possible reversal inside the blue box because we have made some LH's and LL's. Currently, the price is pretty far from it but the BoC decisions can drive it easily into this area. Those interest decisions are with high volatility! Feel free to support my idea post by hitting the "LIKE" button, it is my only fee from You! Have a nice day, Best regards! *This information is not a recommendation to buy or sell, it is used for educational purposes only!
Short
by VaidoVeek
CA10Y | Rate Cuts Ahead for Canada. Watch the Banks!Back in November (2018) the yield on the 10 year Canadian treasury hit the upper boundary historical trendline and reversed sharply after briefly overshooting. Fundamentally, interest rates follow GDP figures so we can use these technicals to give us a bit of a prognoses for the financial and economic wellbeing of the country... and its not looking good. Today the central bank confirmed the fears so expect Canadian rates to drop across the board (but I expect spreads to rise between safe paper and junk). It will be interesting to watch what happens to bank stocks over the next 12-18 months as the economy slows down. Will we see a credit crunch? How will this impact the Loonie versus the US dollar? I am expecting trouble for Canadian banks as they are now dealing with a red hot housing market, the rout in commodities, and now, rising consumer delinquencies. Most importantly, bank capital (equity) will likely get squeezed, which will put tension on bank balance sheets and their eagerness to extend credit. A policy for negative interest rates is already primed and ready in the Bank of Canada's toolbox. But luckily Canada doesn't have "reserve requirements" for banks ;) ***This is not investment advice and is simply an educational analysis of the market and/or pair. By reading this post you acknowledge that you will use the information here at YOUR OWN RISK
TVC:CA10YShort
by Trader6127
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