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EUR/USD slips on ECB warning, PMIs nextThe euro is in negative territory on Wednesday. In the North American session, EUR/USD is trading at 1.0864, down 0.42%.  The ECB released its semi-annual financial stability review earlier today and warned of stress in financial stability in the eurozone. The report found that tighter financial conditions were making it difficult for households, businesses and governments. In short, the financial stability outlook remains fragile. The review warned that the Israel-Hamas war posed the risk of affecting the supply of oil, which could push inflation higher and dampen growth. The economic picture in the eurozone is not encouraging, as the eurozone economy is stagnating and Germany, once a global powerhouse, has become a deadweight in the eurozone with its weak economy. The euro has jumped 2.8% against the US dollar in November, but that is more a case of US dollar weakness due to expectations of rate cuts in the US rather than strength in the euro. In the US, unemployment claims were lower than anticipated, coming in at 209 thousand. This was below the market consensus of 225,000 and the previous revised release of 233 thousand. The reading indicates that the labour market is still showing signs of strength, which supports the Federal Reserve's rate policy of higher for lower.  The Federal Reserve minutes of the November meeting stated that the Fed plans to proceed with caution and will be keeping an eye on the data in making future rate decisions. The minutes made no reference to any discussion at the meeting about rate cuts, consistent with Jerome Powell's comments after the meeting that the Fed "is not thinking about rate cuts at all". The markets would beg to disagree and have priced in a rate cut in mid-2024. There is resistance at 1.0951 and 1.1017 1.0831 and 1.0748 are providing support
by OANDA
GBP/USD heading towards 1.2550, where history will be made!The GBP/USD continues to rise for the third consecutive session, supported by the speech of the Bank of England (BoE) Governor Andrew Bailey at the Henry Plumb Memorial Lecture on Monday. The GBP/USD pair is trading around 1.2530 during Tuesday's Asian session, approaching 11-week highs. The GBP/USD was last seen trading near 1.2470, where the 38.2% Fibonacci retracement of the downtrend from July to October is located. If the pair confirms that level as resistance, it could extend its downward correction towards 1.2430 and 1,2400. Despite the US Dollar (USD) facing strong selling pressure last week, weak inflation data in the UK has made it challenging for the GBP/USD to extend its uptrend. Meanwhile, British Prime Minister Rishi Sunak stated on Monday that they can start the next phase of fiscal policy and focus on reducing taxes now that inflation has halved. Sunak also noted that taxes can be reduced once inflation and debt are under control, adding that they want to support businesses to invest through lower taxes. All of this is pushing the price towards 1.2550. A crucial point where we could witness a technical confirmation of continuation or reversal. Today's and tomorrow's data during the London session will be interesting. At the time of writing, the daily chart does not show scenarios of a downtrend, but the market is unpredictable, so entry should only be made with the necessary confirmations. Personally, I will wait for the price around 1.255 and then look for M15/H4 for a long/short entry depending on technical confirmations. Comment and leave a like, greetings from Nicola, the CEO of Forex48 Trading Academy.
Long
by Forex48_TradingAcademy
12
XAUUSD: Reaction to the supply zone at 1983!The situation in the Middle East has impacted global markets, affecting commodities like the gold price on Comex. Despite optimism related to Chinese stimulus and expectations of the Federal Reserve maintaining interest rates, Comex gold faces challenges. The recent US CPI report indicated consumer inflation cooling faster than anticipated, while unemployment claims suggested a slowdown in the labor market. Market expectations of the Fed keeping interest rates unchanged in December 2023 and potential rate cuts in 2024 have pushed the yield on the US Treasury's 10-year note to a two-month low, benefiting gold. The decline in the US dollar since September and concerns about the conflict between Israel and Hamas, with potential impacts on the global economy, have contributed to supporting gold. The People's Bank of China's decision to keep borrowing rates low and inject liquidity into markets, along with Chinese regulators' commitment to further support the real estate sector, has boosted investor confidence and limited gold's safe-haven appeal. The price of gold is currently undergoing a corrective downward phase after reaching a recent ten-day high of $1,993 on Friday, seeking a clear direction as a new week begins on Monday. The price is testing bearish commitments while hovering around the 21-day Simple Moving Average (SMA) at $1,975, having sharply retraced from multi-day highs on Friday. Failure to defend this level on a daily closing basis could trigger a renewed downtrend towards static support in the $1,955-$1,950 range. The 14-day Relative Strength Index (RSI) indicates the price is in an overbought condition, suggesting a potential downward movement. The immediate upside barrier is observed at the descending trendline resistance of $1,991, above which Friday’s high of $1,993 could be retested. The corrective decline in the gold price is influenced by risk sentiment, with the absence of significant US economic data, communication from the Federal Reserve (Fed). Risk sentiment is expected to be a crucial factor in gold price dynamics and is currently influenced by optimism regarding Chinese stimulus and positive corporate earnings reports from Japanese companies. Gold is currently in an interesting situation; at the time of writing, the price is reacting to the $1980 level after reaching a supply zone on the daily chart. It will be interesting to wait for operational confirmations, above $2000 to continue and attempt to ride the bullish trend or, conversely, wait for the price to fall below $1920-$1890 to assess potential declines towards the $1850 zone. A truly interesting pair to follow.
OANDA:XAUUSDShort
by Forex48_TradingAcademy
17
USD/JPY Waiting for USD news!The USD/JPY pair recorded an increase near the 150.20 area, recovering some of the previous losses caused by weaker-than-expected US inflation data. However, the US dollar is near its lowest level since September, reflecting expectations that the Federal Reserve has concluded its tightening policy. The BoJ may delay a shift from accommodative monetary policies following the contraction of the Japanese economy. The daily trend is bearish, but the pair shows resilience above the psychological level of 150.00 and an ascending trendline. A downside break could lead to further declines towards 149.20-149.15, while an upside move may encounter resistance at 151.00, 151.20, and 151.90. The situation calls for caution before positioning for further gains or losses.
Short
by Forex48_TradingAcademy
9
US30 general viewEnglish For this index, I see how we are on a bullish rally (Christmas rally) which is about to break its last H(HIGH) and unless something happen with the FOMC on December, I wouldn`t expect to start a bearish movement. We are currently in a monthly OB which is the last H, if it breaks that H, we could expect higher prices and maybe break the ATH price, but we also have the possibility to go down, but in this point, it is up to the FOMC and all they say on December, let`s see how the price moves. By now, it looks better to buy and not to sell, it is more probable to happen. *THIS IT NOT INVESTMENT RECOMMENDATION OR SOMETHING LIKE THAT, THIS IS ONLY FOR ANALYSIS AND EDUCATION PURPOSE* Español Para este ìndice, veo como estamos en pleno rally alcista (Rally navideño) el cual está cerca de romper su máximo anteriores y a menos que la FED comente algo en su reunión en diciembre que afecte al dolar, seguramente siga subiendo, no espero iniciar un movimiento a la baja. Estamos en pleno OB mensual bajista, el cual puede servir de contenedor para que no suba, pero lo puede romper e incluso subir a su precio ATH y romperlo, vamos a ver cómo se mueve el mercado después de la reunión de la FED en diciembre. De momento, es más probable comprar y tener éxito que vender. *ESTO NO ES RECOMENDACIÓN DE INVERSIÓN NI NADA QUE SE LE PAREZCA, ESTO ES SOLO PARA ANÁLISIS Y EDUCACIÓN*
PEPPERSTONE:US30
by DarkTradingCapital
EUR/USD Breakout to the upside followed by a pullback towards 1.On Friday, the EUR/USD exchange rate is rising, approaching 1.0900, with the U.S. dollar supported by higher Treasury yields and mixed market sentiment. The pair is poised to mark the highest weekly close since August. Despite a lower low, the pair quickly reversed the trend upwards according to the daily chart. The 100 and 200 Simple Moving Averages (SMAs) are directionless between 1.0790 and 1.0800, while the 20 SMA is accelerating north below the longer ones. Technical indicators, though stable near overbought levels, show a slight increase without a clear directional bias. In the short term, the technical outlook suggests a potential uptrend, as 4-hour chart indicators corrected from extremely overbought readings, reflecting a growing buying interest. The bullish momentum is likely to resume by surpassing the immediate resistance level at 1.0890. In fact, we have a price oscillating between two support and resistance areas. Let's say the long-term outlook is bullish, and I expect the price to break the level of 1.0946 before a retest of the 1.09 level, and then move towards 1.10. Let me know what you think, comment, and leave a like. Greetings from Nicola, the CEO of Forex48 Trading Academy.
Long
by Forex48_TradingAcademy
19
USDJPY: Trendline breakout, wait for retestLooks like USDJPY has broken down through the rising trendline, there was a slight recovery at the backend of Friday, this indicates we could see a short retracement from here to test the trendline break, and then down. The Yen performed well at the start of Friday, I don't believe this was BoJ intervention, as they have said that they expect the fundamentals to play out - we'll see, bad data from JPY this week may necessitate intervention, however good data on Friday (PMI) will I think be enough to start the recovery process for the Yen. If Japan looks like it's going to have a soft landing then I think markets will reward the Yen with a more positive sentiment and this could mean we get a lot of good action for these crosses. I think the USD is done being bullish for now (even the hawkish speakers cannot convince the markets), so either way I think we'll see this pair fall, so monitoring LTF's for a suitable entry / rejection from the retest point. A break below 148.5 will see a more sustained move to the downside, imho.
Short
by Finchcliffe
NASDAQ Pullback before 16,500!On November 17th, the USA's technology stocks index closed with a modest gain of +0.03%. The opening was stable compared to the previous day's closing, followed by a gradual improvement throughout the session. The short-term trend of the Nasdaq 100 is strengthening, with a resistance area identified at 15,956.4, while the nearest support is seen at 15,601.2. An upward continuation towards the level of 16,311.6 is expected. Furthermore, after the breakout from the bearish channel in the daily chart, I anticipate a retracement to the level of approximately 15,200, which corresponds to the 0.5% Fibonacci level. After that, I will aim to ride the upward trend, targeting an entry with a goal between 16,300 and 16,700. Let me know what you think, comment, and leave a like. Greetings from Nicola, CEO of Forex48 Trading Academy.
NASDAQ:NDXLong
by Forex48_TradingAcademy
14
USOIL: Pullback to the upside before the descent! West Texas Intermediate (WTI), the benchmark for U.S. crude oil, has rebounded from a three-month low of $72.22, experiencing a more than 4% increase during the mid-North American session. This rise has been attributed to U.S. sanctions on Russian oil shippers and profit-taking by traders. Currently, WTI is traded at $75.97 per barrel, marking a gain of 4.27%. The U.S. Treasury Department has imposed sanctions on companies and vessels involved in shipping oil beyond the G7's $60 limit, with the aim of reducing Russian profits linked to actions in Ukraine. Despite an increase in U.S. crude oil stockpiles and a rise in Baker Hughes' drilling rig count, indicating growing oil production, WTI prices have not been significantly influenced. Additionally, the price is in a bearish channel with the possibility of a pullback to the upside before resuming the downward trend towards 68 points. Let me know what you think, comment, and leave a like. Greetings from Nicola, the CEO of Forex48 Trading Academy.
TVC:USOILShort
by Forex48_TradingAcademy
13
GBP/USD Pullback in Sight Before Reaching 1.28?The GBP/USD pair is currently slightly above the 1.2400 level, navigating the upper part of the recent consolidation range. Initially, the British Pound gained 2.25% against the US Dollar midweek but later trimmed its increase to a more modest 1.65%. Despite general market optimism due to speculation about the Federal Reserve possibly pausing interest rate hikes, the GBP/USD remains trapped in a mid-range position, influenced by disappointing economic data from the UK. In October, retail sales in the UK decreased by 0.3% on a monthly basis, sharply contrasting with the expected increase of 0.3%. September's data was revised downward, changing from -0.9% to a significant -1.1%. Retail sales in the UK on an annual basis recorded an even steeper decline, with a decrease of -2.7% compared to the previous -1%, surpassing the forecast of -1.5%. The next focus for investors will be on the release of the Federal Reserve meeting minutes next week. From a technical perspective, the GBP/USD has recorded a 1.75% increase during the week, holding onto midweek gains. The key level to watch is the midweek peak at 1.2510, representing a significant challenge for the bulls. Additionally, next week, the price may face strong resistance at 1.2544, which could trigger a slight retracement before continuing upward towards 1.26-1.28. Share your opinions in the comments and give it a like. Have a great weekend and happy trading to everyone from Nicola, CEO of Forex48 Trading Academy.
Long
by Forex48_TradingAcademy
11
XAUUSD: Breakout of 2000 in sight!Gold, consolidating above $1,980 this Friday, aims to break a two-week downtrend. Despite the potential for a US dollar recovery, the decline in Treasury bond yields supports gold's upward movement. Surging above the 21-day Simple Moving Average at $1,974, Thursday's close motivated buyers. The 14-day Relative Strength Index remains comfortably above the midline, confirming the upward trend. The next challenge is the descending trendline resistance at $1,992, near the November 6 high of $1,993. A breakthrough could push buyers to target the psychological $2,000 level. In case of selling pressure, initial support lies at the 21-day SMA at $1,974, with a risk of rapid decline to $1,960. Further downward extension may test psychological support at $1,950. Gold remains influenced by risk trends and Federal Reserve statements. US-China trade tensions and Fed rate uncertainty keep investors cautious. In a market of uncertainty, the safe-haven US dollar limits gold's upward attempts. However, gold benefits from recent Treasury bond yield declines, with hopes the Fed's rate-hiking cycle is done and rate cuts are anticipated by May next year. Weak US economic data reinforced expectations of a Fed pause, justifying the gold surge. In October, the US Producer Price Index had its steepest decline in three and a half years, and Consumer Price Index inflation dropped to 3.2% YoY. Retail sales fell 0.1% in October. Thursday saw US initial claims rise by 13,000 to 231,000 for the week ending November 11. Gold prices are likely to maintain an upward trend, but end-of-week profit-taking and a potential US dollar recovery may pose challenges. Data on US housing starts and building permits are expected to have a limited impact on US dollar trading.
OANDA:XAUUSDLong
by Forex48_TradingAcademy
11
GBP/USD: Pullback after Asia and ahead of 1.27.GBP/USD is moving sideways with a negative tone near 1.2410 during the Asian hours on Friday. The US Dollar (USD) finds support despite positive data on US jobless claims and a decrease in US Treasury yields. Continuing Jobless Claims for the week ending on November 3 increased to the highest level since 2022 at 1.865 million, compared to the previous reading of 1.833 million. Additionally, Initial Jobless Claims for the week ending on November 10 rose to 231,000, exceeding the expected 220,000, marking the highest level in nearly three months. Despite challenging labor market indicators, the US Dollar Index (DXY) recovered ground. Notably, the yield on the 10-year Treasury note bottomed at 4.43% on Thursday. However, it is observed that the DXY is bidding lower around 104.30 at the time of writing. Federal Reserve representatives have spoken out to counter expectations of rate cuts. Cleveland Fed President Loretta Mester emphasized that the US central bank is data-dependent when considering whether to raise rates further, reflecting the nuanced approach taken in response to economic conditions. The UK inflation report for October revealed a notable decline in the annual rate of the Consumer Price Index (CPI), dropping to 4.6% from the previous level of 6.7%. The monthly rate also eased to 0.0%, falling short of the expected 0.1%. Core CPI (Year-on-Year) also contracted to 5.7% from the previous reading of 6.1%. Despite the Bank of England (BoE) emphasizing the need for higher rates, market participants are not anticipating more rate hikes. Investors are awaiting key economic indicators, focusing on UK Retail Sales and US housing data. Additionally, I note how the price has reacted at the level of 1.25, near the 0.5% Fibonacci level, during the Asian session. I expect a slight pullback to regain liquidity below the Asian session low before aiming for a long position towards 1.27. Let me know what you think, leave a like and comment. Greetings and happy trading from Nicola, CEO of Forex48 Trading Academy.
Long
by Forex48_TradingAcademy
18
EUR/USD: Two long scenarios with a target of 1.09!The EUR/USD currency pair recently reached a high of 1.0896, the highest level since late August, before experiencing a slight pullback below 1.0850. Despite softer-than-expected US economic data and lower Treasury yields, the pair remains above its moving averages on the daily chart. The short-term technical outlook suggests a potential upward movement, with indicators on the 4-hour chart showing signs of recovery. The US Dollar has modestly recovered after a recent decline, as investors anticipate the Federal Reserve's reluctance to further raise rates and the possibility of a new rate-cut cycle. Financial markets turned optimistic, leading to a decline in the safe-haven US Dollar and pushing EUR/USD closer to 1.0900. It's noted that other US economic data indicates a relatively stronger local economy, which could potentially strengthen the US Dollar in the future. Before Wall Street's opening, ECB President Christine Lagarde highlighted the resilience of the European financial system in avoiding severe systemic risks. On the daily chart, two possible long scenarios are marked, one with a retracement, which is the one I will target for a long entry, and then the second scenario that predicts a direct rise tomorrow towards 1.09. Comment and leave a like, greetings from Nicola, the CEO of Forex48 Trading Academy.
Long
by Forex48_TradingAcademy
10
Gold Surges on Weaker US Inflation DataThe price of gold has experienced substantial gains, surpassing $1,950 following a less pronounced increase than anticipated in the US Consumer Price Index (CPI) for October. This has led traders to scale back their bets on a December Federal Reserve rate hike. The US dollar slid in tandem with US Treasury bond yields due to disappointment in US inflation data. Currently, the price of gold is confined to a narrow range, correcting towards the 38.2% Fibonacci retracement, situated around $1,933.80. The short-term outlook has turned bearish, with gold trading below the 20-day Exponential Moving Average (EMA), although the 50-day EMA at approximately $1,938.00 continues to provide support. Investors await October's US inflation data, hoping for clarity on monetary policy. Economists project steady growth in the core Consumer Price Index (CPI) but a slowdown in overall inflation. Persistent US inflation could fuel expectations of further restrictive measures by the Federal Reserve (Fed), committed to timely reducing inflation to 2% and prepared to raise rates if deemed necessary.
OANDA:XAUUSDLong
by Forex48_TradingAcademy
11
Understanding GDP Growth: A Key Indicator of Economic HealthIntroduction Gross Domestic Product (GDP) growth is a crucial economic indicator that provides insight into the overall health and performance of a country's economy. As a comprehensive measure of a nation's economic activity, GDP growth reflects the value of all goods and services produced within a country over a specific period. In this article, we will explore the significance of GDP growth, its components, and the impact it has on various aspects of a nation's well-being. Definition and Components of GDP GDP is the total value of all goods and services produced within a country's borders in a given time frame. It is commonly calculated quarterly and annually. There are three main ways to measure GDP: the production approach, the income approach, and the expenditure approach. Each approach provides a unique perspective on economic activity. Production Approach: This method calculates GDP by adding up all the value-added at each stage of production. It includes the value of intermediate goods and services to avoid double counting. Income Approach: GDP can also be measured by summing up all the incomes earned by individuals and businesses within a country, including wages, profits, and taxes minus subsidies. Expenditure Approach: This approach calculates GDP by summing up all the expenditures made in the economy. It includes consumption, investment, government spending, and net exports (exports minus imports). Importance Here are some of the primary reasons why GDP growth is considered important: Economic Health - GDP growth is a fundamental measure of a country's economic health. A positive growth rate indicates that the economy is expanding, producing more goods and services over time. This growth is essential for creating jobs, increasing incomes, and improving overall living standards. Job Creation - A growing economy often leads to increased employment opportunities. As businesses expand to meet rising demand for goods and services, they hire more workers, reducing unemployment rates and contributing to a more robust labor market. Income Generation - GDP growth is linked to the overall income generated within a country. As the economy expands, incomes generally rise, providing individuals and households with more financial resources. This, in turn, contributes to an improvement in the standard of living. Investment Climate - Investors and businesses often use GDP growth as a critical factor in assessing the attractiveness of a country for investment. A growing economy suggests potential opportunities for businesses to thrive, encouraging both domestic and foreign investments. Government Policy - Policymakers use GDP growth data to formulate economic policies. High GDP growth rates may lead to expansionary policies aimed at sustaining economic momentum, while low or negative growth rates may prompt policymakers to adopt measures to stimulate economic activity. Consumer and Business Confidence - Positive GDP growth contributes to increased confidence among consumers and businesses. When people perceive a growing economy, they are more likely to spend money, and businesses are more inclined to invest and expand. International Competitiveness - A country with a strong and growing economy is often viewed as more competitive on the global stage. A robust GDP growth rate enhances a nation's economic influence and can attract international trade and investment. Government Revenues - Higher GDP growth rates can lead to increased tax revenues for the government. This additional income can be used to fund public services, infrastructure projects, and social programs, contributing to the overall development of the nation. Debt Management - Economic growth can help manage a country's debt burden. A growing economy typically generates more revenue, making it easier for the government to service its debt without relying excessively on borrowing. Poverty Reduction - Sustainable GDP growth is often associated with poverty reduction. As the economy expands, opportunities for employment and income generation increase, helping to lift people out of poverty. Conclusion In conclusion, Gross Domestic Product (GDP) growth stands as a cornerstone in understanding and evaluating a nation's economic well-being. Through its comprehensive measurement of all goods and services produced within a country, GDP growth provides valuable insights into economic health, job creation, income generation, and various other facets that collectively contribute to the overall prosperity of a nation. The three approaches to measuring GDP—production, income, and expenditure—offer distinct perspectives, ensuring a holistic understanding of economic activity. The importance of GDP growth cannot be overstated, as it serves as a fundamental gauge of a country's economic trajectory and influences crucial decision-making processes at both the individual and policy levels. The positive correlation between GDP growth and job creation underscores the role of a thriving economy in fostering employment opportunities and contributing to a robust labor market. Additionally, the impact on income generation translates into an improved standard of living for individuals and households, reflecting the tangible benefits of economic expansion. Investors and businesses keenly observe GDP growth as a key indicator when evaluating the potential for investment. Government policymakers, armed with GDP data, craft strategies to either sustain economic momentum or stimulate activity, underscoring the pivotal role GDP growth plays in shaping economic policies. The ripple effects of GDP growth extend to consumer and business confidence, international competitiveness, government revenues, and effective debt management. A growing economy not only instills confidence but also attracts global trade and investment, positioning the nation favorably on the international stage. Perhaps most importantly, sustainable GDP growth is intricately linked to poverty reduction. As the economy expands, opportunities for employment and income generation increase, contributing to the uplifting of individuals and communities from poverty. In essence, the study of GDP growth goes beyond mere economic statistics; it serves as a compass guiding nations towards prosperity, inclusive development, and an improved quality of life for their citizens. Recognizing the multi-dimensional impact of GDP growth enables policymakers, businesses, and individuals to make informed decisions that foster long-term economic well-being and societal advancement.
FRED:GDPEducation
by financialflagship
USD/CAD Toward 1.39 after US Data?The USD/CAD pair has attracted buying interest, maintaining modest gains just below the 1.3700 level. Declining crude oil prices and the strengthening of the US dollar contribute to this dynamic. From a technical perspective, the 50-day Simple Moving Average (SMA) support has been defended, but the lack of sustained support requires caution. A break below the support could lead to deeper losses. Conversely, sustained strength beyond 1.3710 could trigger a short-covering move, but further upward movements may be seen as selling opportunities. The key level of 1.3800 will be crucial; surpassing it will shift the short-term bias in favor of bulls, with the goal of reaching 1.3900, the highest level since May 2020. In fact, on a daily basis, the price is moving in a resistance zone at the 1.37 level, supported by an uptrend channel. My current bias is long since the price is bouncing off the intersection of two daily trendlines. However, before entering, I will wait for US data before the opening of the American market. Subsequently, if my view is supported by the data, I will evaluate and look for a long entry with a target of around 1.39-1.40. Comment and leave a like, greetings from Nicola, the CEO of Forex48 Trading Academy.
Long
by Forex48_TradingAcademy
18
GBP/USD. Two Upside Scenarios Today!During Thursday's Asian session, the GBP/USD pair consolidated, oscillating in a narrow range and maintaining spot prices above the 1.2400 level, influenced by the dynamics of the US Dollar (USD). The USD Index (DXY), which tracks the USD against a basket of currencies, struggled to capitalize on the modest recovery from the lowest level since September 1 due to dovish expectations from the Federal Reserve (Fed). Bets increased following the softer US CPI report released on Tuesday, indicating consumer inflation was cooling faster than expected. Moreover, markets are now pricing in a higher probability that the Fed will begin cutting rates in the first half of 2024, keeping US Treasury bond yields low and acting as a headwind for the dollar. However, upside prospects are limited by the growing acceptance that the Bank of England (BoE) may soon start cutting interest rates. The UK Consumer Price Index (CPI) on an annual basis dropped significantly from 6.7% to 4.6% in October, hitting a two-year low. Additionally, Core CPI declined from 6.1% in September to 5.7%. In this mixed fundamental context, aggressive traders should exercise caution before establishing a firm direction in the short term, especially in the absence of relevant macroeconomic data from the UK on Thursday. Meanwhile, the US economic calendar features the usual Weekly Initial Jobless Claims, Philly Fed Manufacturing Index, and Industrial Production figures. These, along with US bond yields and overall risk sentiment, could influence USD price dynamics and offer short-term opportunities in the GBP/USD pair. I have also identified two possible price scenarios: the first anticipates an upward price movement during the London session as we are in an Order Block at the 1.24 level, and the price could retest the supply zone at 1.249. The second scenario suggests a decline to the 0.5% Fibonacci level calculated from the low of 1.207 to the high of 1.251. If it retraces to this Fibonacci level and tests the bullish trendline again, the price could push higher. Comment and leave a like; greetings from Nicola, the CEO of Forex48 Trading Academy.
Long
by Forex48_TradingAcademy
16
EUR/USD Pullback before 1.10!The EUR/USD pair holds above 1.0850 but faces resistance below the 1.0900 threshold during the early European trading hours on Wednesday. Weaker-than-expected US inflation data exerts some bearish pressure on the US Dollar (USD) and supports the EUR/USD pair. That being said, the markets anticipate that the Federal Reserve (Fed) has concluded the hiking cycle this year and expects rate cuts in the early second quarter of 2024. The region between 1.0895 and 1.0900 represents an immediate resistance level for the pair. Further north, the next barrier is at 1.0933 (high of August 22). Additional resistance is observed at 1.0947 (high of August 30), with the final destination at 1.102 (a round figure and high of August 11). On the flip side, the initial support level is near the psychological round figure of 1.0800. The next contention level will emerge at the November high of 1.0756, followed by 1.0713 and 1.0672. The market overnight experienced a false breakout of the swing high, which could lead the price to react during the London session, initially gaining liquidity above the Asia high and subsequently pulling back towards the 38% Fibonacci level. Let me know what you think, comment, and leave a like. Happy trading to everyone from Nicola, the CEO of Forex48 Trading Academy.
Short
by Forex48_TradingAcademy
37
GBP/USD Pullback before of 1.27!On Tuesday, the GBP/USD experienced a significant surge following the release of a US inflation report, which increased the likelihood that the Federal Reserve has concluded its interest rate hikes. The US Bureau of Labor Statistics reported a more pronounced decrease in October's inflation than expected, with the Consumer Price Index (CPI) dropping to 3.2% annually from 3.7%, and the core CPI falling from 4.1% to 4%, missing estimates. These data triggered a dollar collapse, with the US Dollar Index falling over 1.40% to 104.13, and the yield on the US 10-year benchmark note dropping to 4.45%, a level last seen in September 2023. In the US, the Producer Price Index, Retail Sales, New York Fed Empire State Manufacturing Index, and Federal Reserve speakers are anticipated. Additionally, I note a price in supply zones in H4 and the break of some swing highs, suggesting a potential pullback before a continued bullish run towards 1.27. Comment and leave a like, greetings from Nicola, the CEO of Forex48 Trading Academy.
Short
by Forex48_TradingAcademy
7
SR3: Trading Opportunities in a Disrupted Treasury MarketCBOT: Three-MO SOFR Futures ( CME:SR31! ) Breaking News: The US Treasury bonds are risk-free No Longer ! Last Friday, top credit ratings agency Moody's lowered its credit outlook on the U.S. to "negative" from "stable", citing large fiscal deficits and a decline in debt affordability. It has so far maintained the AAA credit rating for U.S. sovereign bonds. This move follows a rating downgrade by Fitch, another major ratings agency. On August 1st this year, Fitch cut U.S. credit rating from AAA to AA+, a decision made following months of political brinkmanship around the U.S. debt ceiling. Going back, the S&P was the first credit agency to give Uncle Sam a bad grade. It cut the U.S. credit rating from AAA to AA+ in August 2011 and has maintained it ever since. U.S. credit rating is now lower than that of Australia, Canada, Denmark, Germany, Luxemburg, Netherlands, Norway, Singapore, Sweden, Switzerland, and the European Union. These countries all enjoy AAA ratings from the top-3 major ratings agencies. The risk-free assumption on US Treasury bonds has long been the foundation of the global credit market. It typically measures the riskiness of a debt issue by adding risk premium(s) on top of a risk-free interest rate, which by default is the Fed Funds rate. If the U.S. bonds are no longer deemed risk-free, should we change “the mother of all reference rates” with a new risk-free rate? It would be like cracking the foundation of the Empire State Building and will bring chaos to the $133-trillion global bond market. In my opinion, this Doomsday scenario is very unlikely to occur. ‘A revisit of the following high-profile credit market events helps us understand why. August 2011: the S&P downgraded U.S. credit rating On August 5, 2011, the S&P announced its decision to give its first-ever downgrade to U.S. sovereign debt, lowering the rating by one notch to "AA+", with a negative outlook. S&P was direct in its criticism of the governance and policy-making process, which took the U.S. to the brink of default as part of the 2011 U.S. debt-ceiling crisis. This unprecedented downgrade drew sharp criticism from the Obama administration and the U.S. Congress, but the S&P refused to budge. What did the investors think? • The 10-Year Note with a par value of 100 traded at around 130 before the downgrade. A month later, its price hardly moved. By year end 2011, the 10Y note rose to 132. • The 30-Year Bond was quoted at 136. It reached 145 by year end, up 6.6%. • Following the downgrade, the S&P 500 lost 7.6% in August. But it quickly rebounded. The S&P ended the year at 1,258, up 3.3% from before the downgrade. I rephrase a famous quote to explain what happened: “When the U.S. sneezes, the World catches a cold.” The U.S. downgrade created a bigger chao in global markets. Investors pulled money out of emerging markets, which were considered even riskier. They put money back in the U.S. stocks and bonds, which, ironically, are deemed safer. There has not been any long-term impact from the S&P downgrade, or from its decision to keep U.S. rating at the less-than-perfect rating: • The S&P settled at 4,415 last Friday, up 260% since the downgrade in 2011; • US GDP has grown from $15.6 trillion in 2011 to $25.5 trillion in 2022, up 63%; • In 2011, US national debt totaled $14.8 trillion, a level the S&P considered as “unsustainable”. It has now mushroomed to $33.7 trillion, up 128%. The U.S. government has not defaulted on any debt or missed any interest payment. August 2023: Fitch downgraded U.S. credit rating In a surprise move on August 1st, Fitch downgraded U.S. Treasuries to AA+ from AAA. The U.S. markets were already in decline following the July 25th Fed decision to raise interest rates by 25 bps to 5.25-5.50%. Markets were clearly driven by the Fed, and the Fitch downgrade was merely a footnote. • The 10-Year Note traded at around 112 at the time of the downgrade. It fell as much as 6% to 105. The 10Y note has recovered somewhat to 107 by Monday. • The 30-Year Bond was quoted at 136. It dipped to 108 (-20%) by October, and it’s now quoted at 113, a rebound of nearly 5%. • Following the July rate hike, the S&P 500 has dropped from 4,588 to 4,117, a sharp 10% drawdown. However, it has since staged ten winning streaks, pushing the index back to 4,415, an impressive 300-point rebound (+7.2%). November 2023: Moody’s lowered U.S. credit outlook Last Friday November 10th, Moody's kept U.S. credit rating at AAA, but lowered its outlook to "negative" from "stable", citing large fiscal deficits and a decline in debt affordability. • The 10-Year Note ended the day at 4.646%, a modest gain of 0.016%. • The 30-Year Bond was settled 4.756%, down 0.011%. • The S&P 500 closed at 4,415, up 68 points or +1.6%. The U.S. hardly moved on Monday, as investors waited for the new inflation data. Today, the BLS reports that October CPI was unchanged from previous month, with the annual headline CPI dropping to 3.0%, below market expectations. The S&P pushed up 2% to reach 4,500 in morning trading. There you see how little the impact from a downgrade. Trading with CBOT SOFR Futures In “SOFR: Farewell to LIBOR”, published on July 3rd, I explained that the Securitized Overnight Funding Rate (SOFR) has already replaced the London Interbank Offering Rate (LIBOR) as the leading global credit market benchmark. If you are curious about what this means to you, check out your credit card agreement. You would find that the bank interest rate calculation usually consists of a “prime rate” and a markup, where the prime rate is defined as the sum of SOFR and a fixed rate. CBOT 3-Month SOFR Futures ( FWB:SR3 ) lists 40 quarterly contracts. It shows what the SOFR would be, quarter by quarter, ten years down to road. Based on Friday settlement prices and volume, here is the market consensus on SOFR through the end of 2024: • Current Fed Funds rate: 5.25-5.50% • December 2023 SOFR: 5.415%, volume: 265,153 • March 2024 SOFR: 5.350%, volume: 283,053 • June 2024 SOFR: 5.140%, volume: 324,902 • September 2024 SOFR: 4.880%, volume: 469,238 • December 2024: SOFR: 4.605%, volume: 402,005 SOFR futures are the most liquid futures contracts in the world. On Friday, 2,787,432 lots changed hands. Open interest was 10,655,832 contracts. The contracts showed here each traded over a quarter million lots in a single day. We could assume that market prices reflect best investor consensus on interest rate level at any given time in the future. Here are my observations: • The lead December contract is quoted at 5.415%, in line with the current Fed Funds range of 5.25-5.50%. It dropped to 5.3675% Tuesday after the CPI data. • The September 2024 quote of 4.635% on Tuesday, is 62-87 bps below range, indicating 2-3 rate cuts of 25 bps within the next ten months. • The December 2024 quote of 4.330% is 92-107 bps below range, indicating three to four rate cuts by the end of next year. In my opinion, the Fed decision, the Fed Chair statement and the latest data on payrolls and inflation, sent conflicting signals to the market, creating confusion among investors. Market prices are temporarily dislocated, which may present trading opportunities. The September 2024 quote indicates two or three rate cuts. I think that this assumption is too aggressive. The Fed, in both its statements and the Fed Chair public comments, repeatedly stressed that it never raised the issue of if or when to cut rates. If a trader holds the view that the September SOFR rate shall rise, he could express it with a short position in SOFR futures. The quoting convention of SOFR future is 100-R, where R is the effective interest rate. If the rate goes up, futures price will go down. SOFR contracts have a notional value of $2,500 x contract-grade IMM Index. Each 1 basis-point move would result in a gain or loss of $25 per contract. The minimum margins are $850 for the September contract. Hypothetically, if the trader is correct and the rates turn out to be 25 bps high, he would have a theoretical return of $625 per contract (= 25 X 25). The trader would lose money if the Fed cut rates faster than anticipated. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CME:SR3Z2023Short
by JimHuangChicago