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GBP Is Armed At All Points Let us ask ourselves if the NFP report will have any impact on the markets. It is unlikely it will. With two weeks before Christmas, and also considering that next week the Fed and the ECB will have their meetings, the investors will not rush into aggressive USD's buying or selling. In September, the US employment data was awfully weak but that time it was a consequence of the rough weather. November was quiet and just usual. Meanwhile, the US Government is running out of money today, and there was a possibility it suspends its work. The Congress had time until Friday’s midnight to pass legislation funding the government, but it agreed on a delay, and now it has two weeks to make an agreement on the budget and raising the ceiling. There is some positive news from the Pound’s theatre: firstly, the EU’s Juncker told today they managed to make the “first breakthrough” in the negotiations with the UK. Secondly, the sides are ready to proceed to the second phase of the talks. Finally, the Irish Minister of Foreign Affairs said that there will be no hard border whatever the outcome is. So, everybody is happy. The Sterling’s positions have been improving for the last 24 hours, but it is better to wait for the breakout of the resistance at 1.3532, which will confirm the bullish phase. If the NFP data is a dollar- positive, the pair may start a correction to the 1.3465 level with the target at 1.3395.
by HelenRush
AUD: No Help Within Reach The Aussie is on the back foot again. The currency refreshed 6-month lows against the buck at 0.7517. This time the reason for the sale-off was the disappointing trade balance data, which showed a sharp drop to the 6-months lows. At the same time exports decreased by 3%, mainly due to a drop in sales in the mining and metallurgical sectors, while imports grew by 2%. Net exports are used to calculate a country's GDP, so it is unlikely that the indicator for the fourth quarter will bring any good. Currently, considering the fundamental data, the Aussie’s decline is more justified than its growth. The trading conditions in Australia are at their best levels in the last 20 years, and this is a good opportunity for the companies to make money. But, there is one catch: concerns over Australia's record household debt and slow rate of wages’ growth. The retail sales have not been very active since the mid-year, which is a reason for concern since the consumer spending accounts for about 60% of Australian GDP. The experts expect a slower pace of growth next year because Australia does not catch up with the global growth rate. So, the rates will remain at low levels until 2019, at least. On Tuesday, the RBA kept status-quo, having left the key rates on hold, and suggested it has no plans of hiking in the near future. AUD broke the key support area at 0.7540-30. If the pair closes below 0.7520 support and chews June, 21-22 lows, it may test the 0.7420 area.
by HelenRush
Bullet Point For USD This Week EUR and USD exchanged the courtesy and disappointed the markets with weak statistics. The investors are ‘reading tea leaves’ trying to guess what will have a bigger impact on the EUR/USD: Trump's tax cut reform or the debt ceiling. The biggest central banks start thinking about the pair’s path in 2018. US ISM Manufacturing Index receded from the area of 12-years highs, and the US trade deficit rose to the 9-months highs in October. So, there are some reasons to doubt that US GDP will be able to repeat the last month’s success of 3% growth. it's curious that the common currency could not use its opponent’s weakness because of its own problems: disappointing retail sales data and the weaker business activity in the region. On Friday, US will publish its Nonfarm Payrolls data. This survey used to be a very important one, but it has lost its meaning recently. Be that as it may, considering the stalemate situation, the figures matter. The Fed’s decision of a rate hike may depend on what we see on Friday. EUR is bullish long-term, but the problem is it may use its ‘trump card’ no earlier than in the second or in the third quarter of 2018, when the ECB starts to scale back quantitative easing, and the markets start to price it in. If Friday’s data disappoints, which is quite possible, EUR/USD may resume the growth, and the current levels seem a good opportunity for buying with the target at 1.1870. Another scenario is a medium-term consolidation.
by HelenRush
GBP Is Waiting For Wednesday The Pound tried hard but was not able to sustain above the 1.35 area against the US dollar. Theresa May failed the negotiations with EU’s Junker on Monday. At least, both sides declared they did not achieve any sufficient progress. Jean-Claude Juncker mentioned that Britain’s position is a tough one, so it is not easy to negotiate with it. It is quite possible that both sides would cut it close, at the last moment, in keeping with the highest European traditions. The macroeconomic data receded into the background. The news on Brexit has become really important for GBP dynamics today. That involves political headlines and jitters. In light of this information, it is worth mentioning that a source from the UK Government said today the British leader could return to Brussels on Wednesday ‘to try to save a deal’. This is a positive news, obviously. The Irish border is still a sensitive issue, but as Irish minister McEntee told today, ‘UK said all issues could be sorted in Phase 2 of the negotiations’. Anyways, the markets believe everything will have been solved by the EU summit on December 14-15, where a go-ahead for future talks will be given, too. The overall picture for the Pound is positive. The progress in negotiations will surge GBP to the area above 1.35 level and will aim the pair to September highs at 1.3657. Otherwise, if May and Co. fail, GBP will receive an uppercut and rebound below the 1.3290 area to its October range.
by HelenRush
Will USD Last For Long? USD made the fur fly. We were waiting for a quiet weekend, and nothing foreboded the storm on Friday, but then suddenly the ball rolled. The Senate approved the tax bill, and Trump’s ex-advisor Flynn confession took the stage. Among these two messages, the latter one did not influence the dollar, but the former one was a great help. The passing of US tax bill gave a boost to 10-years Treasury yields, too, which skyrocketed to the area above the key level near 2,40% where it is trying to settle. The new week started with USD-gaps across the board. USD/CAD did not succumb to the moment, considering that the US dollar slumped more than 2 figures against the Loonie on Friday. CAD gathered support from the better-than-expected GDP and employment data. The prospects of a rate hike from Bank of Canada are slim to none, but the Central Bank’s policymakers may speak well of the economic stance and macroeconomic data, which means the Bank may think about the tightening in the distant future. A noteworthy detail is that oil has not been a guaranteed CAD’s supporter recently, even though OPEC delivered last week. The pair may try to conquer the mid-November highs at 1.2780 area, but the falling below the 1.2420 toward the pair’s October range is not ruled out. On the other side, the USD bulls may squeeze the most out of the US dollar’s performance and retake the 1.3060 level which will knock out the bearish pressure.
by HelenRush
USD/JPY Is Bluffing USD/JPY had been growing since Tuesday before it settled above the 112.00 level. One of the reasons for the recovery, apart from the approval of the tax cut bill, was a technical correction. But today we see another decline. As usual, USD lost some points due to weaker Treasury yields. But, also, the market is now concentrated on the Fed’s monetary policy path for 2018. From the one side, the latest Yellen’s comments confirmed the idea the current inflation and economic stance does not require the immediate rate hike in the near future after December. This may contribute to the pair’s sell-off. From the other side, the stronger-than-forecast US GDP for the third quarter, a positive outlook for the economic growth in the fourth quarter and the possible approval of the Trump’s reform are positive for the USD/JPY growth potential. Anyways, even if USD/JPY is able to surpass the 112.50 level, the pair will meet a strong resistance area around 114.50 level. No matter what, the Yen is under pressure and the dollar is in favour. It’s unlikely that the Central Bank of the Land of the Rising Sun has the intention to start unwinding its stimulus programme. The Bank of Japan is not ready to act, and it will probably maintain its expansionary policy during the upcoming months. Or years. So, the pair’s decline is correctional. Our next target is November,24 and 28 highs at 111.60. The breakout of this area will aim the pair to the recent November lows at 111.00. We may use the current slump as a good opportunity for buying.
by HelenRush
‘Day-X’ For Oil Today OPEC is discussing the possible prolongation of its oil cut agreement. What does this mean for the crude? The most optimistic scenario, the extension for 9 months till the end of 2018, is already fully priced in. But the odds are this will not happen. Yesterday, Russia and Saudi Arabia reached a consensus but did not deliver the details. One of the stumbling blocks is Moscow. The big Russian oil corporations made their ambitious plans and they do not want to postpone its realization. Especially, when the USA is ramping up the shale oil extraction. Another option is the extension of the agreement by 6 or 3 months (not by 9). Saudi Arabia’s energy minister told today that they expected everyone to implement output cut extension. The Kingdom is a ‘big fish’ in oil production, and its opinion is of key importance, but, considering the relatively high oil prices, some of the exporters may vote for shorter terms of the extension, hoping that the market will find the balance sometime earlier during 2018. Nigeria and Libya have been exempt from the cuts, but their participation in 'the common cause' is now a distinct possibility. The talks are continuing. The worst scenario the cartel may offer is 'no deal'. In case of any disagreement among the members, they will have to postpone the decision until the next quarter. This would not only bring disappointment to the markets but reinforce the uncertainty in the commodity-related area. In this case, Brent will fall below the $60 per barrel level.
TVC:UKOIL
by HelenRush
GBP Is Trying To Throw Dust In Eyes For the UK, the rumours of the ‘divorce bill’ agreement between Britain and EU may compare only with the news about the engagement of Prince Harry. This is a real and long-awaited progress in Brexit talks. The rumours were confirmed, and today’s morning GBP surged to the 1.3430 area. This has been just a preliminary agreement which should be confirmed on the national level. The next roadblock on the way to the trade agreement is the board with Northern Ireland. Irish Europe Affairs Minister McEntee told today Ireland could not accept the return to the hard border. The Pound’s growth seems to be overbought. It is not supported by the state of the economy. Sir Jon Cunliffe, the BoE deputy governor, mentioned some weak points of the UK economy today, such as a weak potential for economic growth, lack of the inflationary pressure and low level of the consumer lending. If GBP is able to settle above the 1.34 level, its short-term picture may improve significantly. At the same time, we should not count on a significant GBP growth since the final divorce bill figure is still unknown. GBP/USD needs a very good reason to claim a right to the area above the mentioned resistance.
by HelenRush
EUR/USD: Time To Come Clear? The euro is not so strong as we thought. The common currency plays it close to the edge. During almost twenty days, the European currency had been growing because of the dollar’s weakness and not because of its own strength. Quite apart from the fact that the political situation in Europe has been improving, EUR will need a support from the ECB on December’s meeting to prove its right to dominate, which is unlikely. Even the incoming inspiring data would hardly make the central bank change its current stance and start tightening. It means, in this pair, a lot will depend on the USD-side. Today is a challenging day for the USD traders. Donald Trump will try to persuade his party fellows to approve the tax-cut bill. If he succeeds, the dollar may investigate the higher levels, but the reaction will hardly be stable and prolonged, considering the dubious consequences of this possible reform for the economics. We will also hear from the next Fed chairmen J. Powell speaking on the Senate floor. We already know he is going to hike rates at a moderate pace, but the details are important. So, the markets will try to understand the inner meaning of his speech. If he sounds more hawkish than expected, EUR/USD's decline will pick up the pace. All in all, the markets will not rush into buying. The pair’s downward correction may lead it to its next target at 1.1850 and at 1.1820 afterwards.
by HelenRush
USD/JPY - Opportunity To Short?Hi traders, hope you're having a good start to your trading week. We have a nice setup forming on USD/JPY on the 4H chart, with a breakout trade. I analyzed this chart and I have discovered that price appears to be in a 3 wave pattern. Price had impulse down leg (See chart for details), had a corrective up move, and now has now started a down leg. I am expecting the new down leg to be equal to the length of the first impulse down leg. With this logic, I was able to predict and plot the next move on the chart. I have replicated a down leg that is equal to the impulse leg, to determine where I expect price to move to. After seeing a nice pullback leg, I was then able to replicate the leg, knowing that the corrective leg had found it's top, which coincides with the resistance line above price. (See chart for details) I am expecting a down move of 110 pips, which will complete at around 109.90. This is under the provision that price successfully breaks much more reliable move than a breakdown without a retest. I do not consider this trade to be valid to create a new position at this time, unless it breaks the horizontal support. So bare this in mind. It would be more ideal if price breaks 111.20, then retests the original support as resistance and then breaks down. This would be the right place to be considering a position in this pair. There was an entry opportunity many hours ago which was taken, but since price moved a lot since then, has now expired. We now need to see a support level break for any new position to be considered. Entering now will have too wide of a stop loss, and is not worthwhile. The target price is not only a measure move price of the impulse down leg, but also coincides with a parallel channel sideways support. This could be a good place to watch for long opportunities, if price bounces in the near future. The calculation is simple, I have simply measured the first impulse leg, replicated this leg and placed the leg to where the the correction ended. Then I had a measure move target. Those of you in my Telegram signals group will already know about this one. And we are watching the trade and waiting for it to become further favorable for us. I will be posting updates on this trade as it progresses below. So leave a like & follow so you can keep up to date with this analysis. If you have any questions or queries, feel free to connect with me.
by TomProTrader
5
Bitcoin: A Bubble To Burst?Fasten your seatbelts, because this week there will be something interesting, including the OPEC’s meeting and the US and Eurozone’s inflation data. Meanwhile, all the majors are keeping their ranges. The only exception is Bitcoin which has climbed to the new record highs. The currency skyrocketed to $9500 on the news that one of the largest South Korea’ commercial banks Shinhan is testing a virtual Bitcoin vault which is expected to be offered to clients till the mid-2018. From the beginning of this year, this cryptocurrency has already added more than 900%. Of course, compared to Etherium’s +5000% is just nothing, but anyways. Today’s morning Bitcoin peeped into above the $9500 mark. We can see all the signs of a market bubble. Of course, it may take a while for this bubble to burst, and we still don’t know the possible reasons. It will also may take a while before the market starts panicking and breaks into a run. What we see now is a growing popularity of the digital money, let’s say ‘crypto boom’. So, it will likely continue scrambling to the upside. The test of $10 000 mark is not ruled out, and we may see it this week.
BITSTAMP:BTCUSD
by HelenRush
GBP Looks To May All Right The Black Friday did not give the dollar any minute of respite. There are both, fundamental and technical factors there, that put pressure on the currency. USD broke some significant local levels in pairs with EUR, JPY and GBP, which aggravated the overall bearish picture for the buck this week. Yesterday the UK Government tripped up the national currency. Her Majesty's Treasury lowered its economic growth forecast from 2% to 1.5% for this year and expects the slowdown to continue in the coming years. The future of investment and business is questionable because of Brexit. In the European morning, the pair continued falling. The pair broke the 1.33 level, and it seems unlikely that the bulls have been invited to this party. GBP-bulls really need a closure above this mentioned support turned resistance now. Today PM May goes to Brussels with a new offer for the EU. The Sterling’s fate depends on the EU reaction. Any decline below the 1.3230 level will offset all previous gains and deteriorate the short-term technical picture.
by HelenRush
JPY On Its Way To the SouthHaving spent almost three weeks above the 113.00 level, the Yen took up the reins and added almost 100 points to the bulls’ ‘money box’. Again, it means the markets are not sure in the US dollar, and the December rate hike has already become a broken record. So, it is not enough to live up to USD’s advanced hype. The traders are way more interested in FOMC’s decisions for 2018 now. In turn, the Japanese currency was supported by the rumours. They say the Bank of Japan may cut stimulus ‘de facto’. This sounds like a very positive news for the Yen in the near future. USD/JPY broke an important support at 111.12, and while it stays below the 111.80-112.00 area, the bears will be in charge. Most of all, there is probably the third top in place, so, the decline to 110.80 is quite possible. Also, we keep in mind that the Fed is getting more dovish even before some possible ‘dovish’ changes inside the Committee, which may happen after J.Yellen’s resignation and J. Powell’s official assignment. P.S.: Happy Thanksgiving! Don't eat too much turkey.
by HelenRush
AUD: Does The History Repeat?A significant part of the traders has gone to celebrate Thanksgiving Day. Yesterday AUD/USD managed to bounce while the markets were sleeping. The Aussie tried to grow on the RBA’s Governor Lowe comments. It goes almost without saying that the next central bank’s step will be a rate hike. It was really helpful for the currency. Well, it was quite obvious, too. But the question is when the regulator meets its targets. Considering the RBA’s position reflected in the Minutes and comments made by some of the policymakers, it does not happen near term, and probably in this life. Anyways, the hawkish comments are always AUD-positive, and the pair may continue its recovery after a long fall. At least, it corresponds to its regular cycle: 3 or 4 months of the fall are followed by 2 months of growth. What may put a crimp in the scheme is the strong US data. AUD/USD tested the intraday maximum at 0.7595. Yesterday it could bounce from the dangerous support level at 0.7500. The bears need a good reason to make their dreams come true here.
by HelenRush
GBP/USD is on thin ice? Janet Yellen will not continue her work in the FOMC once J. Powell takes charge. That means Trump has one more vacant chair. It is quite possible the new FOMC member will be a ‘dovish’ one, which is not too positive for the dollar, but it can’t collapse the currency, especially during the pre-Thanksgiving trading. The traders will now concentrate on the release of the Fed’s Minutes tomorrow. Another important question is whether the Fed is still ready to continue its tightening policy with the ‘reshaped’ team. GBP/USD has been growing for 6 days and is moving straightly towards the next resistance at 1.3280/1.3300. Theresa May, even being at risk of resignation, managed to make an interesting offer to both – the EU and the UK government. This has been a GBP-positive background, which helped the currency to grow against USD and EUR. The degree of uncertainty in both countries is high. There is a relatively high probability of a bullish continuation short term, but it’s better to wait for the break out of the 1.3250 area with the target at 1.3290.
by HelenRush
Will Draghi Rock The Euro? As a rule, political news is just a kind of an irritant for financial markets. The consequences of a political turmoil are unpleasant, but non-fatal usually. When a country with the strongest economy in Eurozone does not succeed in forming the government, the national currency suffers. Today is not a good day for the euro, apparently. Neither is the worst one. Political uncertainty together with the lack of macroeconomic news is a tough part for EUR, but these are just temporary factors. The Eurozone economic background has improved recently, which was enough for the Central Bank to start unwinding its QE program. On Friday, Mario Draghi made overall positive comments on the job market, and there are two more speeches planned for today. The key question is: what will the Central Bank will in case the economy diverges from the base scenario? If Draghi makes EUR to retreat below the 1.1720/00 area, we will see the falling towards 1.1660 first. The bulls anchor their hopes on the 1.1790/1.1800 resistance line.
by HelenRush
Will The Aussie Pull A Trick? AUD is in a fever. The Antipodes are those who lose positions against the US Dollar. But, the Aussie is just pretending to be sick. USD traders shifted too fast their attention from the macro data to politics. That means the dollar is getting more and vulnerable. AUD/USD is a good player. The pair is approaching the lower limit of its 5-months range. Australia’s economy is flexible and it is not too big. When AUD is expensive, it immediately reflects on the economy. The exporters suffer, international tourism declines, all of which hurts the business activity in the country. So, that’s quite obvious that the central banks can’t stand such state of things and interferes. The pair has been falling for 4 months, so, it’s probably the very time for it to turn around. Remember that there will be the RBA’s meeting next Tuesday, and Philip Lowe will deliver his speech. AUD may find the bottom at April 16th lows at 0.7490 and turn to to the upside then.
by HelenRush
USD/JPY: Let's Risk It The risk-on mode is on, and that is what helped the US dollar to ‘save the face’. The US currency managed to recover part of its previous devastating selling. On Wednesday, USD/JPY lost almost 100 points, but the pair could recover the smile. Anyways, we'll keep that in mind. USD/JPY spent some time within a tight range because USD was not able to move to the upside. It means the market was ready to make a U-turn and start selling. We should also keep in mind that yesterday the Fed’s Evans added ‘a fly in the ointment’ by expressing his doubts over the future path of inflation. Against this backdrop, it is interesting that USD/JPY is struggling to settle above the 113.00 area. The Yen is committed to the principle ‘the more haste, the less speed’. In other words, little strokes fell great oaks. And, putting it otherwise, the markets will wait for the vote on the US tax cut reform to determine USD’s fate. This year there have been a lot of ups and downs for the pair. Considering that all year, when the market came up to the range resistance 114.00-113.00, it started falling down, the next bearish target may be the late October lows at 112.95 and 112.50 after that. If the bulls have some counter-argument, they will need to regain the area above 113.90 level.
by HelenRush
AUD: Weaker Than The Weakest The US Dollar is like Alice in Wonderland falling down the rabbit hole. Will someone or something help USD today? We are not so sure. Even if the US data brings a positive surprise, would it be enough to help USD? Let's not forget that one of the main maintaining factors for the buck - the probability of a rate hike in December – is almost fully priced in. Does the dollar possess any other trump card (and by “trump” we don’t mean just one from the pack of cards)? Nevertheless, AUD distinguished itself today. In the morning, the currency lost almost 0.6%. AUD/USD broke the very important support level in the 0.7600 area. The Aussie was really disappointed with the wages data. The RBA repeated in all sharps and flats it was not ready to tighten the monetary policy anytime soon. Its cautious stance is quite understandable, in spite of the overheated job’s market. And, you know, the incoming data confirms the regulator is right. The Aussie is near July’s lows. Here it found a solid support. The break out of the 0.76 round figure will be a bearish signal. Under this scenario, AUD/USD should recover to the previous range, otherwise, the pair may fall towards May’s lows at 0.7400.
by HelenRush
EUR Finally Did ItToday was a big day. Apart from the flow of macroeconomic data, the meeting of the biggest central banks’ chiefs in Frankfurt definitely attracted some of the market’s attention. Frankly speaking, we did not expect any surprise from the central banks' chiefs, yet their comments provoked some volatility in some pairs. The common currency finally did it. Here it is again beyond the 1.17 levels. We are waiting for the US inflation and retail sales data for October now. The fact is the figures may influence the Fed’s decision of a rate hike in December, even though the Fed’s Kaplan told today they were ‘actively considering’ December rate rise.
by HelenRush
GBP: Houston, We've Had A Problem Pardon the phrase, but something is rotten in the United Kingdom. The country is torn in pieces. The prime minister has already lost some of its chess pieces, and this time 'the queen' is 'in check' herself. The news broke that 40 Conservative members of Parliament have agreed to sign a letter of no-confidence in Theresa May. They need only 8 voice votes to initiate the process of changing the leader. Last week the Pound showed resilience in spite of the uncertainty around the disruptive Brexit. This time GBP could not stand the news. The currency slumped 0.7% against the dollar and tested the lows at 1.3061. The political factors are too strong, and it will be difficult for the economic data to draw markets’ attention. The bulls will expect some hawkish or, at least, consolatory comments from the Bank of England's Governor Carney this week. At the same time, ‘the lion's share’ of attention will concentrate on the UK the inflation data. The downside is limited by November, 2-3 support line at 1.3040-50. Anyways, GBP/USD has to surpass the 1.3200-30 area to start the sustainable growth.
by HelenRush
The Dollar’s Decline As The Theme Song The US dollar is under the thumb of the president who got a handful of nothing during his visit to China. It’s interesting that yesterday Trump did not blame China for the trade balance deficit, but today he told the US ‘can no longer tolerate these chronic trade abuses’. Bad night, probably. As it turned out, the Senate version of the bill differs a lot from the House version. It seems that Trump’s team will not be able to implement the reform by the year-end, which means USD will lose the bulls’ support. So, someone has got a good chance to gain some points. The UK published a positive data today. The industrial production smashed the expectations, and the trade deficit narrowed. The positive figures helped the GBP to touch the highs at 1.3167. During the press conference today, EU’s Barnier told that only real progress on 3 key issues would open the second phase of talks. UK’s Davis noticed it’s the time for both sides to seek solutions. Right on time. The GBP-bulls tested 1.3190 resistance and retreated to the 1.3180 area. The 1.32 level is still a tough level to break, and a 'hard Brexit' is still not a myth.
by HelenRush