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GBP - BULLISH but for how long? 1.40?!GBP - One of my favourite currency pairs! How's everyone doing? What's your favourite currency pair to trade? Do you have an edge? If not - Work hard and create your own edge - I am sure 100% you can and will accomplish that goal. If you don't know what edge is - Message me privately. Sometimes, you don't actually need to trade all the currency pairs and concentrate on selective few that you may have further interest in creating your edge. I've been loving trading GBP - Scalped, day trades and even longer term trades kept for months! It's been great currency with the fundamental & technical aspects...BUT how long do we keep buying for? Well there are key resistance areas within longer time frames that you can analyse further in depth. Quick outlook: GBPUSD Technical aspects: Pattern: Bullish flag Measured towards high ends of 1.39 areas nice confluence of Fib area. Support: 1.38565, 1.38435, 1.38130 Resistance: 1.39250, 1.39460, 1.39705, 1.39955 - 1.40 IF we go below 50 EMA - I'd say bears will gain control. Pay key attention to 1.39 half area! Key tip: Don't go following or copying other peoples plans - Add further CONFLUENCE - Follow your own trade plan! It's more prosperous in the long run. Have a good day. Trade Journal (Disclaimer: Just a trade idea, not a recommendation)
by Trade_Journal
1
Monetary Policy Meeting: BoE & RBALast week, the Bank of England and the Reserve Bank of Australia held their first monetary policy meeting for this year. In this article, we will look at the takeaway from the meetings. BoE put to rest speculation on adoption of negative interest rate. The third national lockdown imposed on England early last month led to the speculation that the Bank of England (BoE) is likely going to take interest rate to the negative level to cushion the negative impact on the UK economy. However, the speculation has been put to rest by the central bank during its monetary policy meeting last week. In the monetary policy minutes, the BoE stated that it “did not wish to send any signal that it intended to set a negative Bank Rate at some point in the future”. Furthermore, the central bank highlighted that the implementation of negative interest rate will require preparatory work to be carried out six months before its implementation. In an effort to control the situation, BoE Governor Andrew Bailey advised the public not to speculate any future actions that the central bank may take. On the economic recovery side of things, the BoE expects the UK economy to contract by 4% during the first quarter of 2021. However, the central bank is optimistic that the economy will recover fast this year with UK’s speedy vaccination programme, expecting the economy to return to the pre-pandemic level by the first quarter of 2022. As a result, the BoE revised down its economic growth forecast for 2021 from 7.25% to 5% but revised up its forecast for 2022 from 6.25% to 7.25%. Finally, the central bank kept its interest rate and monetary policy unchanged. RBA carries out more monetary policy easing. Unlike the Bank of England, its Australian counterpart took a more aggressive approach towards monetary easing. During the monetary policy meeting last week, the Reserve Bank of Australia (RBA) decided to purchase additional $100 billion of government bonds once the current bond purchase program ends in mid-April. The main reason for the central bank to carry out more easing was due to subdued wage and price pressures. The RBA highlighted that the latest annual inflation rate of 0.9% is still far from the central bank’s targeted level of 2-3% while wages are increasing at the slowest rate ever. The central bank expects both inflation and wages to pick up gradually but will still remain below 2 per cent over the next two years. Despite the subdued wage and price pressures, the RBA also acknowledged that economic recovery in Australia has exceeded their expectation. The jobs market has been performing well, indicating strong employment growth and continued decline in unemployment rate. Consumer spending has also been strong while an increase in the number of deferred loan repayments have been made. Thus, the central bank is now expecting the country’s economic growth to return to the end-2019 level by mid-2021 as opposed to the previous expectation of end-2021. Lastly, the RBA also expect interest rate to remain at the current level of 0.10% until wages growth is higher than the current level and its inflation target range of 2-3% has been met, which the central bank foresees it to happen only in 2024 at the earliest.
ICEUS:DXY
by JinDao_Tai
Cable Explodes following BOEComments from the BOE meeting this morning 1. CPI inflation is expected to rise quite sharply towards the 2% target in the Spring. 2. Other indicators suggest that Labour market slack has remained higher than implied by the LFS rate. 3. CPI inflation is projected to be close to 2% over the second and third years of the forecast period. 4. A further increase in unemployment is projected over the next few quarters. 5. The average weekly earnings growth has been notably stronger than expected in the November report. 6. See UK GDP +5% in 2021 (Nov. projection: +7.25%). 7. BoE sees UK GDP +7.25% in 2022 (Nov. projection: +6.25%). ------------------------- Please don't forget to FOLLOW, LIKE, and COMMENT ... If you like my analysis:) Trade Safe - Trade Well Regards, Michael Harding 😎 Chief Technical Strategist @ LEFTURN Inc. RISK DISCLAIMER Information and opinions contained with this post are for educational purposes and do not constitute trading recommendations. Trading Forex on margin carries a high level of risk and may not be suitable for all investors. Before deciding to invest in Forex you should consider your knowledge, investment objectives, and your risk appetite. Only trade/invest with funds you can afford to lose.
Long
by Michael_Harding
Week results - between Brexit the NFPThe main event of the previous week was not a meeting of the Bank of England or even a decision of the Fed (both the Central Banks left monetary policy parameters unchanged). This is not data on US GDP (annual growth rates have been the weakest since 2016: 2.3% in 2019 compared to 2.9% in 2018), but the coronavirus epidemic in China. Yes, so far the epidemic has been localized in China. But this is not easier. The magnitude of the coronavirus epidemic has already exceeded the 2003 SARS. And the World Health Organization declared the outbreak of coronavirus a global emergency. So last week, the markets were busy on the one hand counting the victims of the epidemic (more than 300 deaths and more than 15,000 cases), and on the other hand, counting the economic damage. China extended the New Year weekend for another week. That is, another week 2/3 of the Chinese economy will be closed. The magnitude of the losses is not yet clear, as the epidemic continues, but it is already clear that we are talking about tens of billions of dollars. The chances of China's GDP growth rate dropping below 6% now seem almost 100%. So the fears and concerns of the global recession have intensified. The Chinese stock market today is trading in a deep minus (about -8%) despite all the efforts of the Government and the Central Bank. Despite such a regrettable situation, trading is an opportunity that can and should be taken advantage of. For the long-term, it is worth selling in super bought stock markets, but in the medium-term and locally, the purchase of safe-haven assets (gold and the Japanese yen) and the sale of risky assets such as the Russian ruble look great. Actually, we voiced this plan last week, but as the epidemic grows, the relevance of our positions only grows. Another significant event of the past week was Brexit. On January 31, Great Britain officially left the EU. We already wrote that buying pounds remains one of the best trading opportunities at FOREX in terms of potential in 2020. Whether it is implemented or not will show the progress of trade negotiations between the UK and the EU. But if successful, a pound above 1.40 could very well become a reality. The upcoming week will be saturated with various kinds of macroeconomic statistics. But the main attention will still be focused on Friday statistics on the US labor market and NFP figures. Our thoughts and forecasts on this subject will be described closer to Friday. In the meantime, we continue to monitor the development of the epidemic and investor sentiment.
FOREXCOM:XAUUSDLong
by Trade24Fx
2
The epidemic continues, Carney's last word, Brexit dayAs we warned in our two previous reviews, investors relaxed clearly prematurely. Actually, the dynamics of underlying assets on Wednesday confirmed this. And the front pages of publications clearly indicate what investors should think and worry about now - the coronavirus epidemic. Yesterday we wrote that its scale has already exceeded SARS, and the epidemic is still in full swing. The number of deaths has already approached two hundred, and the number of cases is clearly aimed at overcoming the 10,000 mark. Meanwhile, analysts are accelerating the theme of global recession and coronavirus as a trigger. We already wrote earlier that there are prerequisites for this and current events are really great for the role of a catalyst. In general, our recommendations on buying safe-haven assets are still working and their decline on Tuesday was only a great opportunity for cheaper purchases. But back to the events of yesterday. The Bank of England left the bet unchanged. Since the price of the pound at the start of the day partially took into account a possible decrease in the rate, its increase upon the announcement of the decision by the Central Bank was an attempt to exclude this component from the price equation. Actually, our recommendation to buy the pound worked at 100%. For the current head of the Bank of England, Mark Carney, this was the last meeting. Already in March, he will be replaced by Andrew Bailey, who previously served as Executive Director of the British Financial Supervisory Authority. Well, do not forget that today is Brexit day. On January 31, 2020, Great Britain leaves the European Union. Note that Brexit was and remains the main driver of pound movements. Moreover, it is precisely the “soft” scenario that is being implemented. Recall that when the markets were just thinking about the possibility of a “soft” Brexit, the pound was worth 1.41-1.43. From this position, its current prices look like great opportunities for medium-term purchases with very ambitious goals. The US GDP for the fourth quarter was 2.1%. Overall expected as it was the final reading.
Long
by Trade24Fx
12
Price of the epidemic, the Fed and BoE decisionsYesterday, investors felt less relaxed and confident than it was on Tuesday. The VIX index stopped pouring, gold even rose by the end of the day, the Russian ruble returned to decline, as did oil. That is, everything is back. Investors can understand: the number of deaths continues to grow rapidly, as does the number of cases. As a result, the current epidemic has already exceeded the 2003 SARS epidemic in scale. But events are still developing. Yes, China is doing everything possible and impossible to stop the epidemic: closing transport links, prolonging holidays, isolating entire cities - all this has a well-defined economic price. ING experts believe that this could cost China a loss of 0.3% of GDP growth in the 1st quarter of 2020. So for now, we are only strengthening our desire to buy safe-haven assets, stock market assets and other risky assets such as the Russian ruble. In addition to reports on the situation with coronavirus, the main event of the day yesterday was the announcement of the decision of the Federal Open Market Operations Committee. As expected, they did not change the bid. Of interesting and important. The Fed has extended repos at least until the end of April this year. That is, the markets will continue to fill in with money, which in itself is an occasion for dollar sales in the foreign exchange market. Today, the Fed will intercept the baton of the Bank of England. Despite the fears of some investors that the Central Bank will reduce the rate at the meeting, we believe that the monetary policy parameters will remain unchanged. Given that the pound has dipped quite well recently, today we will buy it against the dollar. But with mandatory small stops because surprises, although unlikely, are possible. In addition, the US GDP data will be published today. This is the final reading, so no surprises should be expected, but the indicator is important in itself, so you need to follow it up.
Long
by Trade24Fx
Central Banks weekly results, Coronavirus, Fed & BoELast week was marked by meetings of the Bank of Japan, Bank of Canada and the ECB. The first wave of decisions showed that the central banks are not yet ready for any changes in monetary policy. You can understand them: at the current rate of economic growth, raising the rate is impractical, and there is nowhere to lower it (at least in the case of the Bank of Japan and the ECB). ECB expected to detail the new monetary strategy but did not get it. According to the head of the Central Bank Lagarde, before November December 2020, it will not be. This week will be the second wave of meetings of the Central Banks. The Fed will announce its decisions on Wednesday and the Bank of England on Thursday. With the Fed, the intrigue is minimal, but there are doubts about the Bank of England - a number of analysts predict a rate cut. But we will talk about this closer to Thursday. The main global event of the past week was the coronavirus epidemic in China. The situation looks quite menacing. About 40 million people are limited in mobility. The tourist season is disrupted (all this happens at the height of the celebration of the Lunar New Year). Economists are only just beginning to calculate possible losses, but it is already clear that the damage will be very significant. But events are still only at the progress stage. It is very likely that this week will also be marked by growing fears in the investor environment in connection with the epidemic. We cannot but note that risky assets (primarily stock markets) are potentially under attack. But safe-haven assets, on the contrary, have good chances for growth. So this week we are again buying gold and the Japanese yen. In addition, we will continue to sell the Russian ruble: the formation of a new government, a hasty and generally dubious constitutional reform, the outcome of risky assets - all these are good reasons for the correction of the ruble. On Friday, January 31, Great Britain officially leaves the European Union. This is an occasion to recall the pound and its purchases. Recall, when the markets were just beginning to believe in the “soft” Brexit, the pound grew to the area of 1.41-1.43. Now it is becoming a reality, but the pound is quoted at about 1.31. Which in itself is a reason to think about buying it.
FOREXCOM:XAUUSDLong
by Trade24Fx
GBPAUD waiting for the break of the rangePrice again testing the upper trend line after a false break from election period. Upcoming week is key and all attention on UK Brexit conclusion. Boris finally pushed his Brexit plan and on Friday 31st UK is leaving the EU. Also on Thursday we have BoE, Carney's last meeting, with various call from board members to potentially cut the rates to boost the economy. 2019 had the slowest growth since 2012 and some members already expressed dovish outlook on the rate decision. So lots of fundamentals this week for GBP. Technical range in the comments shows that a breakout trade is likely here. Good Luck!
by Antonio_trader
3
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
GBPUSD is trading in the green𝔹𝕖𝕗𝕠𝕣𝕖 𝕪𝕠𝕦 𝕣𝕖𝕒𝕕 𝕥𝕙𝕚𝕤 𝕚𝕕𝕖𝕒, 𝕡𝕝𝕖𝕒𝕤𝕖, 𝕔𝕝𝕚𝕔𝕜 𝕥𝕙𝕖 𝐋𝐈𝐊𝐄 𝐛𝐮𝐭𝐭𝐨𝐧 𝕥𝕠 𝕤𝕦𝕡𝕡𝕠𝕣𝕥 𝕞𝕪 𝕨𝕠𝕣𝕜. 𝕀 𝕨𝕠𝕦𝕝𝕕 𝕒𝕡𝕡𝕣𝕖𝕔𝕚𝕒𝕥𝕖 𝕚𝕥. The pair is trading in the green, but the British pound is largely under pressure, while the US dollar moves according to the results of the interim trade deal between Washington and Beijing signed on Wednesday. The pound is losing some stream after the dull release of the December UK inflation data, which gained at an annual pace of 1.3%, failing to meet market expectations. The core figure, which doesn’t include food and energy costs, came in at 0.0% when compared to the previous month and at 1.4% from a year earlier. The Bank of England as also turned dovish. Policymakers have issued indications that they would vote for a rate cut. For instance, BOE rate setter Michael Saunders said that signs of weakness in the UK economy should receive “relatively prompt and aggressive response.” These figures, overall, reinforce the case for monetary easing. The BOE will meet to discuss policy in several weeks.
by Financebroker
Worst week. Christmas. What to expect?The pound experienced one of the worst week these years. Johnson and the deadlines greatly spoiled the mood for buyers of the British currency. The ghost of an exit without a deal materialized again. However, its probability is no more than 25% (according to Goldman Sachs analysts), many hastened to take profits from the sharp growth of the pound in the parliamentary elections after net sellers joined them. Also, weak data from the UK was published, as well as a “dovish” tone of comments from the Bank of England. As a result, all this led to the 1.30 test. No matter how bad was the last week, we see no reasons to panic. On the contrary, the pound is perfectly substituted and this should be used. Johnson's words in no way (in our understanding) cancel the general line, which is the "soft" exit of Great Britain from the EU. On Friday, the new Parliament of Great Britain has already voted for the version of the agreement developed by Johnson. That is, from the point of view of facts, everything speaks in favour of an exit from the transaction. Exit with the deal is the price of the pound against the dollar 1.40 and higher. Besides, Friday's UK GDP data came out better than expected. So feel free to buy the pound in the medium term and on the intraday basis. Highlights and takeaways from the historic week that Trump was impeached. We do believe that Trump will “sit in his chair” until the end of his term, but the future fate of the presidency is a question. In general, the Democrats held an excellent rally of black PR. Their coming to power can greatly change not only political but also the economic reality in the United States. But this perspective is still quite far. We are waiting for Christmas week. Accordingly, an extremely thin market with an increased risk of volatility explosions or even flash crashes. Our trading plan for this week is extremely aggressive intraday trading based on oscillator signals. We do not expect any strong directional movements and look forward to fluctuations in relatively narrow ranges. Making trading almost risk-free. In our case (thin market), we ensure each position with relatively small stops. As for the medium-term positions: we buy the pound, the Japanese yen and gold, we sell the Russian ruble.
Long
by Trade24Fx
Pound under pressure, GDP & dollar There was a lot of talks about Trump Impeachment. Despite the decision of the House of Representatives, the chances of gaining Senate support are extremely low (gaining 2/3 of the vote is almost impossible). So the reluctance of the dollar to fall against this formally negative fundamental background is generally understandable. And if the dollar yesterday felt relatively confident in the foreign exchange market, the British pound continued to be under pressure. The day for the GBP began with failure: retail sales (MoM) November f -0.6%, however, the experts expected an increase + 0.2% (MoM). As a result, this decline formed the longest series of monthly retail sales in the country since 1996. A series of the fundamental negative for the pound continued the Bank of England. The central bank did not lower the rate but made it clear that considering such an option. Lowering the forecast by the Central Bank on UK GDP growth rates in 2020 by 0.1%is not optimism news for pound buyers. So the results of the meeting of the Bank of England are “dovish”, which was against the British currency. The fate is not in the hands of the Bank of England or macroeconomic indicators but in the hands of Brexit. Despite Johnson’s statements on Monday, we continue to believe in the deal and the “soft” Brexit, which means that the pound will certainly grow, with growth rates up to 1000 pips. Accordingly, the lower the pound falls, the greater the growth. Therefore, we continue medium-term purchases of the pound, and today we buy on intraday from 1.30 (the entry point is too good to pass by, plus the Friday before the Christmas holidays - many want to take profits in short pound positions, which will contribute to its growth) Today is unlikely to be calm. Besides the fact that it is necessary to process and take into account the prices the entire array of information that is hitting the financial markets this week, on Friday we are waiting for data on the GDP of the UK and the USA to come out, as well as statistics on retail sales in Canada. We do not expect any excessively strong directional movements, so we will adhere to the tactics of oscillatory trading on the intraday basis As for medium-term positions, there are no changes: we buy the pound, the Japanese yen and gold, we sell the Russian ruble.
Long
by Trade24Fx
Trump Impeachment, infernal sanctions, BoE & BoJUS President Donald Trump has been impeached by the Democratic-led House of Representatives for obstruction of Congress and abuse of power related to his dealings with Ukraine. The votes made Trump only the third president in United States history to be impeached and set the stage for a likely trial in the Republican-led Senate in January. This event has already been included in current prices and moods in the financial markets. Note, the fate of Trump is in the hands of the Senate, and there are 2/3 of the Republicans, so, Trump is not in danger. Nevertheless, we cannot but note that our already strong desire to sell the dollar after such news only intensified. After a volatile market on Tuesday, Wednesday became a respite day. But today there is a possibility of the return of strong movements in pound pairs in the foreign exchange market. It is about the announcement of the results of the Bank of England. Experts expect the parameters of monetary policy in the country to remain unchanged. In general, this will be in line with the current mood of the leading Central banks in the world, which have taken a break and are following the development of events. So, surprises should be expected only from Mark Carney’s comments. Our expectations and a trading plan for today. As the pound sales dwindled yesterday. The markets have calmed down. So you can not be afraid of a crazy panic wave, which will be able to absorb our position beneath. Therefore, today we are returning to the idea of buying a pound both on the intraday and in the medium-term positions. The EU and Johnson’s comments could provoke local outbursts of volatility, and the direction of the price dynamics of the pound will be determined by the nature of information injections. But if you sit and wait for this kind of information, then you can freeze trading activity at all. So do not be afraid of opening the trade - the only restriction taking into account current realities is setting up the stops for each of the trade. Recall that we believe that the pound’s real value is 500, or even 1000 pips more expensive, which means buying is a promising trading idea. Among other trading ideas, we note simply excellent points for the sale of the Russian ruble. The fact is that yesterday the relevant committee of the US Senate approved sanctions against Russia for interfering in the elections. We are talking about the so-called "hellish sanctions." Of course, the bill still needs to be voted on and given to Trump for signature, so it is still a long way from implementation. The fact that the process is in progress cannot but put pressure on the ruble. That is why its current price is a gift that is simply a sin to refuse from. But in order to make this position more balanced, we recommend using oil purchases as a hedge. Actually, the ruble is growing because of oil growth. Even after the announcement of the OPEC + decision to increase production cuts, we recommend buying oil. So far, the dynamics of the asset fully justify this recommendation, which testifies in favour of our correct understanding of the situation. The Bank of Japan has already announced its decision. The expected monetary policy parameters remained unchanged. Therefore we purchase the Japanese yen. Low volatility, coupled with the USDJPY near to the top of the medium-term range, makes the deal quite profitable on the other hand with very limited risks. That is, sales of the USDJPY from 109.60 with stops above 109.90 and minimum profits of about 108.50 (or even 107.30) make the deal extremely interesting.
by Trade24Fx
USA and China, Saudi Aramco and Bank of EnglandThe previous week, promised to be relatively calm, however, it turned out to be eventful. Gold and the Japanese yen were under downward pressure. The reason is the progress in negotiations between the US and China as well as the growth of positive market expectations regarding the end of trade wars in the foreseeable future. The main result of the week was the news that the United States and China agreed on a phased cancellation of duties before signing a deal. Another event was a separate decision by the Bank of England to leave the rate unchanged. Markets did not expect two members of the Monetary Policy Committee to be in favour of a rate cut. That triggered a decline in the British pound value. In general, you should not expect strong movements in the pound, because the basic driver of pound value in the last 3 years is Brexit. But it is paused so far. So any movement caused by news not related to UK exit will be limited. Due to the large amounts of macroeconomic statistics, the future of the pound looks very vague. On Monday, data on GDP and industrial production in the UK will be published, on Tuesday - statistics on the labour market, on Wednesday - inflation data, on Thursday the data on retail sales will sum up the week. Since the dynamics of the pound, this week will depend on the output data, we will adjust the positions depending on the nature of the data. At the same time, we do not expect irrationality from the foreign exchange market. That is, weak data will provoke sales in pound pairs, and positive statistics data will be the reason for the growth of the pound. Total, this week in the pound we will act contextually, but we give preference to its purchases. On the other hand, we have a very definite position in the oil market - we will look for points for asset purchases. Saudi Arabia in connection with the impending IPO Saudi Aramco will do anything to ensure the growth of oil prices. Latest data on the number of active oil rigs in the United States (the number has dropped to the lowest marks since April 2017) play into the hands of buyers. So we buy oil on the intraday basis. The goal is the growth up to 60.
Long
by Trade24Fx
Trump and Powell confrontation and current marketsLast week proved quite eventful for financial markets. More than we expected. The Federal Reserve cut its fed funds rate on Wednesday by 25 basis point to a range of 2% to 2.25%. Fed Chairman Jerome Powell said, “It's not the beginning of a long series of rate cuts,”. The current rate cut is a reaction of the Central Bank to an economic slowdown, and its further actions will depend on the state of the economy. The Fed also noted the trade war negative impact on the US economy. Trump shocked the markets in May by hiking tariffs to 25% from 10% on $200 billion in Chinese goods. China immediately retaliated and said a trade deal will not be reached unless the existing duties were stripped. In this light, the safe-haven assets are needed to be bought. As a result, Interactive chart of historical data showing the broad price-adjusted U.S. dollar index published by the Federal Reserve has shown its MAX since 2017. The Banks of Japan and England maintaining the existing structure of the financial system have decided not to change the existing status. A new round of the trade battle between the United States and China. “The U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country,” says Trump in a tweet. China quite naturally replied that it would respond adequately. Nothing foreshadowed trouble. On Monday, American delegates arrived in Shanghai. Although that did not bring any special results, the parties agreed to meet in September already in the United States. That is, it would seem, there is a certain process. And here Trump comes out with his statements. We have a small conspiracy theory about this. Pay attention! The time when Trump announced a new round of trade war is similar to the Fed’s decision the reaction and Powell’s comments as well, which led to a rise in the dollar price. Recall, Trump is extremely dissatisfied with the strong dollar, but, despite all his criticism of the Fed and Powell, the US Central Bank continues to bend its line, ignoring the requirements of the President. What Trump has to do if it is not possible to push through the idea of currency intervention, for now? He has only one tool of indirect influence - trade war. Its escalation will force the Fed to lower the rate further, which in turn will drive to a decline in the dollar value as a reaction to the cycle of depressions. Another important event last week was the publication of statistics on the US labor market. The NFP came out worse than forecasts, but on the whole, the value is sufficiently neutral (although we note that the June’s job report has revised down by more than 30K). Our position on the dollar remains unchanged - we recommend selling it. Escalating trade war increased the likelihood of several Fed rate cuts in 2019. Data on the NFP signal a slowdown in the US economy and Trump makes it unequivocally clear that he intends to “fight” a strong dollar. So the current week we declare a week of dollar sales. Besides, it makes sense to buy safe-haven assets. Remember, sell the Russian ruble and oil.
Long
by Trade24Fx
NPF data may confuse marketsYesterday, markets somehow tried to price the rate cut in and realized that the door that has been opened for a cycle of rate cuts by FED is not the beginning of a downward cycle. Therefore, the dollar continued to dominate the foreign exchange market, but the stock market was experiencing problems. We would like to draw attention to an important nuance in the Fed's rhetoric - the further of the Central Bank actions will be determined by the state of the economy. One of the key indicators of its health is the state of the labor market. That is why today's US statistics is important. Weaker data on the NFP will give the markets a new serious reason to expect further rate cuts by the Fed. This will finally confuse the foreign exchange market. Strong numbers will show that the Fed should not be in a hurry and cut the rates. That will give a signal that the markets were right when did not sell the dollar-based on the rates cut fact. What do we expect from the NFP data? If we look at the ADP figures, then the + 160K is the most likely scenario. But we cannot but note that the forecast is less than the average value of the NFP indicator over the last couple of years suggests that the US economy is slowing down. In general, the output of data in of 150-180K area is a kind of a “grey” zone, when it is difficult to be sure whether this is good or bad. In this case, you can expect anything - both the start of the dollar correction, and the continuation of the current upward movement figures below 140-150K in our opinion can be the reason to close existing long positions in the dollar in order to fix the profits. This, in turn, can lead to the start of a correction in the dollar. NFP above 200K is a serious positive signal for the dollar, which practically removes the question of lowering the rate in September from the agenda. We note a lack of progress in U.S.-China talks in Shanghai this week. Apparently in response to this lack of progress and in punishing the Chinese for their obstinacy, “The U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country,” says Trump in a tweet. The trade battle between the world’s two largest economies has dragged on for more than a year and a half. Trump shocked the markets in May by hiking tariffs to 25% from 10% on $200 billion in Chinese goods. China immediately retaliated and said a trade deal will not be reached unless the existing duties were stripped. In this light, the safe-haven assets are needed to be bought. Bank of England yesterday did not change its monetary policy. What was expected and had little impact on the dynamics of the British currency. It still remains captive in Brexit. We plan to meet the end of the week with dollar sales, which, however, ready to close in case of the NFP excellent figures. Sales of oil and the Russian ruble do not lose their relevance, as well as the purchase of safe-haven assets.
Long
by Trade24Fx
FOMC decision and dollar reaction, BoE and other newsThe main event of yesterday was undoubtedly the announcement of the outcome of the meeting of the Federal Open Market Operations Committee. The 0.25% cut has "symbolic importance" as one analyst puts it. data from the Fed funds futures market has suggested that for weeks 100% of investors already expected at least that much. We still do believe that we have to sell the dollar. The reason is the same. We prefer to make decisions based on facts, rather than rumours and expectations. After the Federal Reserve's announcement that it would lower its basic interest rate that is a bearish signal for the dollar. Plus, the Fed announces a plan to end balance sheet runoff well ahead of schedule. Another fact and another signal in favor of dollar sales. As well as market sentiment has not changed fundamentally even despite the rapid growth of the dollar. More than 80% of traders expect at least the second reduction in the Fed rate in 2019. Data on GDP and consumer inflation in the Eurozone, which came out in line with our expectations. Note that Eurozone GDP Growth Confirmed at 0.2% So the Eurozone economy continues its unconvincing series of economic data. In this light, we find a very prospective position on the foreign exchange market - sales of EURGBP. Also yesterday, data on employment in the US from ADP were published. Private payrolls rose 156,000 in July, better than economist estimates of 150,000. On Friday the NFP outlook will be published, so Friday will be an interesting day. Bank of England meeting results that is what we are waiting for today. Markets do not expect any surprises, which is generally logical. Despite the fact that today the Bank of England will give support the pound, we continue to recommend its purchasing. The motivation is the same - the markets incorrectly assess Brexit situation and its outcome. Also, pay attention to the data on business activity in the United States. We sell Russian ruble and oil and buy the Japanese yen.
by Trade24Fx
The Fed, the Banks of Japan and EnglandAt the last meeting, the Governing Council of the European Central Bank (ECB) decided that the interest rate remain unchanged. Also, Mario Draghi said that officials had not discussed the rate cut. Accordingly, the euro has a good chance this week to rebound from the medium-term range lowest level. In this regard, our position on the euro - we buy primarily against the dollar. Boris Johnson Became U.K. Prime Minister, Replacing Theresa May. Markets are frankly afraid of Johnson because of his aggressive position on Brexit. As a result, the pound is under strong downward pressure. But again, it is so far underwater right now given that there are no real reasons for this - market expectations are based on fears and rumours, not facts. We believe that common sense will eventually win and bet on the pound growth. Therefore, we recommend its purchase. The data on the US GDP for the second quarter will be published today. GDP probably expanded 1.8% in the second quarter, down from 3.1%. If the growth is 2.2-2.5%, then the dollar, perhaps, is not in danger until Wednesday. But if 1.8%, it cannot avoid sales. This will be the main event not only of the week but of the summer. Wednesday may well lay the foundation for a dollar downtrend in upcoming months or even years. We are still waiting for the Central Banks of Japan and England meetings, as well as the Eurozone GDP outcome and the US labor market data to come out. In general, it will not be boring. Our trading recommendations for the week are as follows. We will continue to look for opportunities for selling the dollar across the entire spectrum of the foreign exchange market, buying the pound against the dollar as well as against the euro, selling oil and the Russian ruble, and also buying the Japanese yen against the dollar. As for gold, in the oversold we buy and in the overbought area we sell gold.
Long
by Trade24Fx
What is behind the gold and oil growth & Powell again signals Perhaps the main event that jogged financial markets and had effected on the momentum of oil prices valuations, as well as gold prices, was an incident in the Strait of Hormuz. This time the United Kingdom and Iran were involved. Three Iranian warships tried to block the passage of the British company BP tanker. A British warship offset the attempt, but the tension is increasing in the region. So, the gold and other safe-haven assets’ price increase was sharp yesterday. This week, the fundamental background is on the bull's side with respect to oil. In addition to the above-mentioned incident, the reduction in US reserves, tropical storm Barry likely to form in the Gulf of Mexico, and threats from Trump regarding a toughening of sanctions against Iran supported oil buyers. The Bank of England yesterday published its financial stability report. The most interesting that was published was the likelihood of the Great Britain exit “scenario” without a deal has grown, which in turn can provoke negative consequences for the British economy. However, the pound reacted calmly to this report. So our position is unchanged - we are looking for points for its purchases. Day two of Fed Chairman Jerome Powell's testimony to Congress, he noted that the current rates are in the neutral area, however, there is a chance that the Fed might cut the rates. At the same time, the markets are more confident with a rate cut in July. They are more likely guessing about the question “For how much it will be lowered” by 0.5% or by 0.5% at once. So far ¾ support the first variant. Recall, this is quite a bearish signal for the dollar. Analysts are revising their dollar forecasts downward. Recall, we remind you about the feasibility of selling the dollar on the foreign exchange market. Friday promises to be a “rest stop”. And this means that participants in financial markets are likely to continue to follow the current trends. Our trading recommendations for today are as follows. We continue to look for opportunities for selling the dollar (USDJPY, EURUSD, GBPUSD). Sell the Russian ruble. Sell the gold near the highs and buy from the lows.
Long
by Trade24Fx
GBPUSD - Bullish signals!The graph has just formed a morning star as the price touches the support level of the bearish channel and the price was also touching the oversold level on the RSI. This means that the price is getting ready to change direction and we might see bullish moves over the coming days. This pair has been looking very interesting lately after the BOE (Bank of England) announced that they are likely to increase interest rates over the coming months. An interest rate hike could see some significant bullish gains for this currency pair, I would be updating this frequently yo keep everyone up-to-date with what is happening with the interest rate hike. If anyone has any questions please feel free to ask.
Long
by JohnnyPurtoy98