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Deadlock in the US, gloomy oil demand, important data aheadIn terms of news, yesterday cannot be called a busy day. Plus, the news that came out was somewhat contradictory. For example, statistics on jobless claims in the United States came out better than forecasted: the number of initial jobless claims for the first time in several months came out below 1 million, and the number of people receiving unemployment benefits on a permanent basis fell to 15.5 million. But, on the other hand, Republicans with Democrats continue to be in a deadlock regarding the new stimulus package for the US economy. Or, for example, US oil stocks are declining, which is a positive signal for oil, but the International Energy Agency is reducing its estimates of global oil demand for almost every quarter until the end of 2021. And this in turn is a reason for oil sales. Our position on oil in the current realities: any asset growth should be used as an opportunity to sell. So far, the day started with a negative news: industrial production in China increased, but at a slower pace than expected by experts. But more importantly, retail sales reduced again. Thus, the Chinese economy still cannot fully recover from the pandemic. In this light, today's data on retail sales and industrial production in the United States will be of increased interest. If the data comes out better than forecasted, then the dollar has a chance for recovery, otherwise a re-test of local minimums seems inevitable.
TVC:USOILShort
by Trade24Fx
6
Recession in the UK, roller coaster of gold, US inflationThe main news of the yesterday in terms of macroeconomic statistics was the publication of UK GDP data for the 2-nd quarter. As expected, they not only confirmed the fact of the transition of the British economy into a state of recession, but also turned out to be one of the worst among developed countries and Europe in particular. So, the recommendation to sell the pound primarily against the euro remains relevant. Another important statistical information released yesterday was the data on consumer inflation in the US. The data came out above forecasts. In general, the intensification of inflationary processes may force the FED to tighten monetary policy. This can have an extremely negative impact on the US stock market (price bubbles will start to burst). However, here and now nothing has changed. What was shown by the dynamics of the dollar, which did not even try to grow on these data. Interesting things continued to happen in the gold market yesterday. After the sale on Tuesday, on Wednesday, the asset was recovering and, in general, there is nothing strange in this, because the global fundamental background did not change and what happened on Tuesday was a classic overreaction followed by a contrarian movement the next day. Republicans and Democrats continue to seek a compromise and can’t find it. The oil market received another formal reason for growth (crude oil stocks in the United States fell by -4.512 million barrels against the forecast of a decline of -2.523 million barrels, as well as a significant decrease a week earlier - by -7.373 million barrels), but most likely it will again be ignored. as it has been for several weeks in a row. In general, a big movement is clearly brewing in the oil market, but there are not enough tectonic shifts in the fundamental background. In terms of macroeconomic statistics, this day is interesting primarily with jobless claims data in the United States.
FOREXCOM:XAUUSDLong
by Trade24Fx
1
Gold's failure, Russian vaccine, more Trump ordersThe main event of yesterday was the maximum one-day drop in gold prices over the past 7 years. Considering how high the asset had climbed, it cannot be said that it was something incredible. But still a very impressive fall. As for the reasons, there was information that an effective vaccine against coronavirus was registered in Russia. President Vladimir Putin said one of his daughters had already received it. It is impossible not to note the doubts of experts about the adequacy of tests, especially after the words of the Russian Minister of Health Mikhail Murashko that the production of the vaccine will take place in parallel with its testing. Against this background, the information that the total number of cases in the world has exceeded the 20 million mark looked not so hopeless, especially given the fact that the situation in the United States continues to improve. Trump, meanwhile, seems to have gotten a taste for presidential executive orders bypassing standard congressional procedures. This time, he decided the time had come for a capital gains tax cut. Well, a record budget deficit resulting from a decline in revenues and a simultaneous increase in expenses by 50% - this is the right time to reduce the taxes. Meanwhile, the sentiments in the Eurozone and Germany continues to improve. The ZEW expectations index for the Eurozone came out at around +64.0 against the previous value of +59.6 points. As for the statistics on the UK labor market, it inspired pessimism: the employment rate fell at the highest rate since 2009 (three months before May, 220,000 jobs were lost). But today the data on the UK GDP will be published, which not only state the fact of the recession, but also promise to be the worst in Europe. In this regard, we remind our recommendation to sell the pound in the foreign exchange market.
FOREXCOM:XAUUSDLong
by Trade24Fx
5
US and China, 9 more months, stimulus, pandemic and poundThe world's two largest economies continue to balance on the brink of a new escalation: sanctions, closure of consulates, threats to ban Chinese social networks in the United States, etc. The most obvious problematic target in the nearest future is the phase 1 agreement between the United States and China. China has not yet fulfilled its obligations on imports from the United States (the percentage of fulfillment is less than 25%). Given how tense relations between countries are, there is every chance of a return to the good old trade wars between countries. In Germany, meanwhile, were wondered how long it would take for the economy to return to pre-pandemic levels. According to a survey of German companies conducted by the Munich-based Ifo, about 9 months. Beverage and pharmaceutical companies will be back on track within seven months, while the key auto sector is evaluating them in eight months. The sports and recreation industry, along with the arts and other entertainment-related businesses, will face the longest disruptions that will last until next summer. Meanwhile, the US pandemic situation continues to improve, but is still extremely dire. In the world as a whole, everything is worse, but even at the global level there is a feeling of reaching a second pandemic plateau. The US stimulus package is still underway. Republicans blame Democrats. Mnuchin, in particular, said that an agreement can be reached this week, if the democrats will be “reasonable”. Today is interesting thanks to the data on the UK labor market. In this light, we recall that on Wednesday the figures on the UK GDP will be published. Given how weak the data is expected to be, current pound prices seem like a great selling opportunity.
Long
by Trade24Fx
1
Week in a Glance: NFP, US stimulus, TikTok and Bank of EnglandThe past week has been extremely busy in terms of news. Formally, the main event of the week was negotiations between Democrats and Republicans on a new stimulus package for the US economy. But since the parties did not reach a compromise at the end of the week, this event becomes the main news of the current week. The Bank of England left the parameters of monetary policy unchanged and noted that it is not going to either soften them or even tighten them. The pound reacted relatively calmly to this. It is unlikely that it will succeed this Wednesday, when the data on the UK GDP for the second quarter will be published. The data promises to be devastating, which means the pound will be under pressure. So, the deal for the first half of the week for us will be selling the British pound across the entire spectrum of the foreign exchange market. Even against the dollar. The US dollar, which was under the most powerful downward pressure on Friday, rose rather aggressively. The reason for this was the US labor market data. NFP figures unexpectedly surpassed analysts' forecasts and exceeded 1.7 million. This, of course, does not mean that the crisis in the US labor market is over, but the correction in the dollar has matured a long time ago and the reason for its start is generally very good. Trump's threats to block Chinese social networks TikTok and WeChat if they do not sell their American business segments to US companies can be considered an important event of the past week. As a result, TikTok is in talks with Microsoft. Such actions by Trump may well take tensions between the United States and China to a new level. Meanwhile, the earnings season is fading. Despite the disgusting results for most corporations, they are still better than analysts' expectations, and as a result, the US stock market continues to grow. We have many times noted the irrationality of what is happening and the huge gap between the real world and prices on the stock market.
Short
by Trade24Fx
1
NFP, Bank of England, Trump and Goldman Sachs Yesterday started with the announcement Bank of England meeting results. Monetary policy parameters were left unchanged, with the decrease in the pace of bond purchases to 4.4 billion pounds per week from August 11. The main concern of the markets was that the Central Bank may take measures to tighten monetary policy soon. But the Bank of England assured that they would not tighten monetary policy in the nearest future. At the same time, they directly stated that no one was going to soften it yet. In general, nothing unexpected, the status quo remains. So, attempts to growth of the pound like yesterday's are nothing more than a reason for selling it. The only thing is that in conditions when the dollar is not in favor in the foreign exchange market, it is better to do it against the euro or franc. The main event of today, and of the week as a whole, is the publication of statistics on the US labor market. After the disastrous data from ADP and a series of weak statistics on jobless claims, we expect a significant deviation of the fact from the forecast, in downward direction. In theory, this could provoke a sell-off in the US stock market, and would also be another blow to the dollar. Trump issues executive orders banning TikTok and WeChat from operating in 45 days if they are not sold by Chinese parent companies. Goldman Sachs analysts, meanwhile, have generate an interesting idea that a successful coronavirus vaccine could turn financial markets upside down, triggering selloffs in bonds and high-tech stocks. We are especially interested in the second part - shares of high-tech companies. Little is thought about this now, but indeed, the return to the former reality means that the transition of FAANG companies to a new existence will at least be greatly extended in time, if not postponed at all. So, this fact must be taken into account in their price, which is now precisely based on the fact that the pandemic is a new reality with all the ensuing benefits for FAANG companies.
Long
by Trade24Fx
ADP Failure, Bank of England and Gold RecordsThe main event of yesterday was the frankly disastrous data on employment in the US from ADP. With the forecast of 1.2-1.5 mln new jobs and the previous value of 4.3 mln, in fact + 167K came out. This evidences in favor of the deepest depression in the US labor market and its inability to recover quickly. It is a very alarming signal ahead of the publication of official statistics on the labor market on Friday. This failure looks especially challenging against the background of the US PMIs, which go above 50 and show an increase in economic activity. Such situation can be explained by the fact that with its weekly payments of $ 600, the US government completely deprived most low-paid workers of the incentive to look for new jobs or return to old ones. So, it is quite interesting to see the new stimulus package. Recall that the Republicans want to reduce the amount of payments from $ 600 to $ 200, while the Democrats want to leave it at $ 600. A compromise is expected by the end of the week and it seems to be the dollar's last hope for at least a local correction. Otherwise everything looks extremely unfavorable for the American currency. Among other events, it is worth noting new historical highs in gold. We have already discussed the reasons for this growth before. As for the prospects, in the current reality, absolutely everything contributes to the further growth of gold. Another piece of news yesterday was the agreement between the United States and China to meet in mid-August to discuss the results of the first phase of the trade agreement and other contradictions. Negotiations can end very badly, up to the breaking of the first phase agreement. Today the main event of will be the announcement of the decision of the Bank of England on the parameters of monetary policy. Analysts and experts are not expecting any changes or surprises. Accordingly, the pound is unlikely to receive a positive injection.
FOREXCOM:XAUUSDLong
by Trade24Fx
1
Highs of world stock markets amid the crisisIt is very symptomatic that after the publication of the biggest ever recorded decline in US and Eurozone GDP, the global stock markets (MSCI world equity index) showed the highest values over the past five months and came close to the historical maximum. Buyers are not stopped by the economic crisis, or the disastrous earnings season in the United States, or the growing tensions between the United States and China, not the pandemic, and nothing at all. Absurdity is a key component of the current behavior of financial markets and everything related to them. Let’s take Microsoft and Tik Tok situation, as an example. Its emergence largely due to an ultimatum from the US government, but the US government also wants to get a share of the deal. At the very least, President Trump said that the US government should receive a share from this sale without specifying, however, how he imagines it. Republicans and Democrats have not yet reached a compromise. Against this background, Trump said that the Government can take a number of measures to save the economy, including a moratorium on evictions, the introduction of tax holidays, and additional unemployment payments. Trump can be understood, the situation in the US labor market continues to be extremely depressing even with the availability of weekly payments of $ 600. And since Monday, they are officially gone, which threatens a sharp drop in consumption. Considering that almost half of the temporarily unemployed believe that their jobs will not return (according to a survey by the Associated Press-NORC Center for Public Relations Research), additional payments from the authorities are practically their only chance for a more or less full-fledged existence. In this light, it will be extremely interesting to look at today's statistics on employment in the US from ADP and, of course, we look forward to Friday with data on NFP and unemployment.
DJ:DJIShort
by Trade24Fx
1
Banks are preparing for the worst, Microsoft and Tik TokOne of the most interesting moments in the current earnings season is the active reserving of funds by banks to cover possible losses from loan defaults. We are talking about tens of billions of dollars on a banking system-wide scale. What does this mean? In means that the fall in US GDP in the second quarter is far from the last bad news for the economy. The consequences of the pandemic are stretched out over time and banks are waiting for massive loan defaults to begin. In fact, the ongoing bankruptcy of large companies and entire networks in the United States speaks in favor of this. Bank losses, in turn, mean more expensive loans with more stringent conditions for obtaining them. This is exactly what the business exsanguinated by the pandemic lacks to make a decision to end the struggle. In this light, we cannot fail to note the growing gap between the US stock market, especially its technological sector, from reality: Nasdaq Index yesterday showed new all-time highs. But not even a week has passed since the data on US GDP were published. This was partly due to the news of Microsoft's desire to buy TikTok's operations in the U.S., Australia, Canada, and New Zealand. This potentially means the emergence of a serious competitor for other social networks like Snapchat and even Facebook. Meanwhile, the dollar is recovering somewhat in the foreign exchange market. It is clearly too early to bet on its growth. But the very fact that the rampant decline has stopped suggests at least that the situation has stabilized somewhat. Perhaps this is an attempt by the markets to discount for a future stimulus package for the US, which Democrats and Republicans have not yet been able to agree on.
FOREXCOM:NAS100Short
by Trade24Fx
Week in a Glance: GDP, FED, US stimulus, earnings peakLast week was the peak of the earnings season in the United States. On the one hand, tech giants have shown that not for all pandemic is a loss and the threat of bankruptcy. But on the other hand, the overwhelming majority of companies are losing revenues at a double-digit rate, and many at the same time record billions in losses at the end of the quarter. So, the current earnings season, despite some success so far, is one of the most disastrous in modern history. An even more depressing picture in this regard was detected in the dynamics of US GDP (-32.9% - the maximum drop in the entire history of observations). The situation in the Eurozone and Germany is somewhat better, but even there the rates of decline turned out to be double-digit and the highest in the entire history of observations. In general, the data is more than conducive to take profits in the stock market and to start a full-fledged correction. Last week was marked by record prices for gold, which almost reached $ 2000 per ounce. Again, the fundamental background was at its best, especially when you consider that the pandemic in the world cannot reach a plateau in any way and the number of new cases of diseases is very close to 300K per day. The dollar in the foreign exchange market was under strong pressure all week (except for profit taking Friday). The Fed is partly to blame for this: the Central Bank left the parameters of monetary policy unchanged and made it clear that ultra-soft monetary policy in the United States is for a long time. In addition, the permanent failures of negotiations between Republicans and Democrats over a new stimulus package for the United States, coupled with Trump's provocative tweet about the delaying of the Presidential election, only worsened the already gloomy fundamental backdrop around the dollar. In terms of news, the upcoming week will be quieter, but still very eventful - the data on the US labor market, as well as the announcement of the results of the Bank of England meeting would be the headliners.
FOREXCOM:NAS100Short
by Trade24Fx
1
Results of the crisis, earnings of giants and Trump initiativesYesterday was exceptionally rich in key macroeconomic statistics. In fact, it is now possible to sum up some intermediate results of the economic crisis caused by the pandemic. Germany's GDP in the second quarter fell by a record 11.7% (compared with the same period last year). The data came out slightly worse than expected. So, some weakness of the euro during the European session yesterday is understandable. Especially when you consider that the statistics on Eurozone GDP will be published today. The rate of decline will almost certainly exceed 10%. The whole question is how much. But the main loser was the US economy. In the second quarter, it lost 32.9%. This is the maximum drop in the entire history of observations. And although a sharp recovery in economic activity is expected from the third quarter, it is already obvious that the economy will not return to the pre-crisis level in the nearest future. The situation with the pandemic in the world continues to remain as negative as possible. In addition, when looking at the data on jobless claims, it becomes clear that the US economy continues to be in disgusting shape. Initial claims for unemployment benefits are above 1.4 million per week. As for continuous claims, they have grown significantly, exceeding the 17 million mark. Given such a difficult situation on the labor market, if the Republicans and Democrats do not agree about stimulus act, the consequences for the US economy could be as negative as possible. And they, meanwhile, have not yet found a common language. Donald Trump yesterday decided to finish off the already weakening dollar by voicing the idea of delaying the presidential election. And although this is generally unreasonable stuffing, many thought that there is no smoke without fire. Yesterday was also important because the tech giants reported: Amazon, Apple, Alphabet, Facebook. By and large, all of them, to one degree or another, are beneficiaries of the pandemic. This was confirmed by their strong quarterly data.
DJ:DJIShort
by Trade24Fx
4
Big Day, Fed Decision and Antitrust HearingsToday may well become the defining day for the US stock market for weeks ahead. The fact is that on Thursday, the US tech giants, which control almost half of Nasdaq's capitalization, are reporting on the results of the second quarter. In addition, US GDP data for the second quarter will be released today. The fall is expected to exceed 30%. A figure a few months ago, absolutely unthinkable, may well become a reality. Failure in the consumer sector (recall dozens of bankruptcies in the retail sector, drop in airline revenues by 80-90%, failure in the automotive market, etc., which ultimately led to estimates of a 30-35% reduction in US consumption in the second quarter) ) for an economy where 70% of GDP is generated by consumer demand, means that the figure of -35% in terms of GDP growth rates relative to the same period last year is generally achievable. It is likely that this could bring stock markets back to reality. Naturally, we are talking about a radical reduction in prices there. So today we are actively selling in the US stock market. Yesterday, the Federal Open Market Committee expectedly left the parameters of monetary policy in the US unchanged. Powell was quite categorical, saying that an increase in rates in the foreseeable future should not be expected. Meanwhile, the epic with a new stimulus package for the United States continues, and the parties are still moving away from consensus rather than approaching it. This puts pressure on the dollar, which is not going through its best times without it. The heads of the largest US corporations have been testified in Congress. So far, it has given nothing but news noise.
FOREXCOM:NAS100Short
by Trade24Fx
2
Republican’s plan, Fed, past and future volatility explosionsAs soon as we had analyzed the current situation in the precious metals market from the standpoint of the general fundamental background yesterday, a record for recent months volatility explosion in gold and silver prices was detected. Considering that there were no changes in the general fundamental background yesterday, we think yesterday movements were the result of technical moments, such as profit fixing and the involvement of that part of traders who catch reversal moments in price dynamics. Again, since the fundamental background is unchanged, we do not see any reason to revise our position yet. Thus, purchases of gold and silver only added to the relevance, and did not lose it. The main event of yesterday, outside the context of price dynamics, was the discussion of the Republicans' plan with the Democrats, since without their support it will not be possible to implement it in practice. So far, the gap between parties does not even allow to approach a compromise, but, in our opinion, it is inevitable - the whole question is what form it will take and when it will be reached. In this light, we continue to believe that the dollar has every chance of a correction this week. Today, the Fed's Open Market Committee will announce its decision on the parameters of monetary policy in the United States. Analysts are not expecting any changes. The point is rather in the comments on the future actions and plans of the Central Bank. Today the heads of the largest tech corporations in the United States will be interviewed at an antitrust hearing in Congress, which could potentially provoke a surge in volatility in the quotes of Amazon, Google, Apple and Facebook. By the way, they will all report on the results of the second quarter as early as Thursday. So there are very volatile days ahead of us.
FOREXCOM:NAS100Short
by Trade24Fx
2
Gold and silver records, pandemic and dollar problemsJudging by the dynamics of gold and silver in recent months, all the negative generated by the global economic system because of the pandemic is incorporated not in the stock market or in the foreign exchange market, but in the precious metals markets. In general, the fundamental background has probably never been so favorable for precious metals, especially for gold and silver. The pandemic, which is only getting worse every week (another outbreak in China and a sharp increase in Spain, a rapid deterioration of the situation in India, etc.) forces the most cautious investors to go into cash or safe-haven assets. Zero interest rates across all the world's leading central banks have made zero-yield assets (like gold) much more attractive than bonds (many government bonds yields are now negative). Huge injections of money from central banks and governments create a surplus of money in the markets, which in turn acts as a reliable basis for the demand for precious metals. The fall of the dollar in the foreign exchange market has recently been an additional factor in favor of the growth of gold and silver. And the last thing to consider: technically, gold and silver have formed stable trend structures that stimulate buyers. In general, it is not surprising that gold has reached the highest prices in history. It will be surprising if it does not try to hit the 2000 mark this week. Also, there is nothing strange about the 100% (!) growth of silver since March. And again, it will be strange if everything ends without attempting at least to touch 30. Meanwhile, dollar problems are getting worse. It is beaten systematically and methodically. To explain this, analysts talk about the growth of the euro and the Japanese yen, which are pushing the dollar down. We find this explanation more than dubious. However, analysts are understandable. By and large, there have been no globally new factors for dollar sales recently (the economic decline, protests in the US, a pandemic, and even tensions with China - all this was already long before the current dollar's problems). And what is happening with the dollar from the standpoint of cause-consequences relationships is really not obvious. Especially when you consider its status as a haven asset in the foreign exchange market. So it’s a little bit too soon to bury the dollar.
FOREXCOM:XAUUSDLong
by Trade24Fx
Prosegur Cash: Head and Shoulders and earningsH&S pattern and earnings outcome on July 31 may drag the price down to new historical minimum levels at 0.58, following long-term bearish channel. Also, second wave in Spain swelling may put pressure downwards on the stock price due to the company's main business: ATM's cash, which in covid19 days people are less keen on using physical money and prefer paying with card. However, Prosegur Cash is trying to keep floating capital with dividend reinvestments and buying its own capital. No analyst recommends to sell and 8 recommend to buy. Q1, CASH reduced profits 10.7% and made -3.9% sales. CASH also blames the currencies' effect to its earnings, so keep in mind that when covid exploded euro was up to 1.14 and now, after European Union took action with its funding 750.000 million, eurusd is up to 1.17. So watch out its Q2 earnings, but also get ready for Q3 in case Q2 are disappointing.
BME:CASHShort
by alexinve
Week in a Glance: 750 billion for the EU, US vs China, earningsThe past week has been extremely successful for the euro. The reason for this, first of all, is the aid fund worth 750 billion euros. Instead of the prescribed 1 day, the EU summit lasted all weekend and even this was not enough to reach a compromise. It was only on Monday that the EU members came to an agreement: the total amount of grant aid was reduced from 500 to 390 billion euros, and the amount of loans is 360 billion instead of 250. The week ended with an additional injection of positive for euro: data from Markit indices in the Eurozone and Germany, were above 50 (means increase in the economic activity). The problem of stimulus is now facing the United States. Moreover, the Republicans and Democrats have literally a few days left to reach a compromise. So far, their positions are quite distant: Republicans are ready to vote for a package of $ 1 trillion, and Democrats are insisting on $ 3 trillion. So, this week all attention will be focused on this topic. The dollar, which was under the strongest downward pressure last week, canstop the fall this week. But for this, the United States must have a new stimulus package. The main cause for concern of investors last week was another round of escalation in relations between the United States and China. The states ordered China to close the consulate in Houston, and China, in turn, ordered the United States to close the consulate in Chengdu. It is very likely that the sides will exchange new blows this week. Earnings season is at its peak this week. Microsoft, Tesla, Intel, Twitter, At&T and many more reported last week. Airlines have routinely shown a drop in revenues by 80-90% and significant losses. Tesla posted its fourth consecutive quarter of profit, which gives it formal reasons for claiming a place in the SP500 index, although everyone understands that this profit is just on the paper, and the company itself continues to generate losses. This week we expect quarterly results from the rest of FAANG members: Amazon, Apple, Alphabet, Facebook, and after that the earnings season will start to fade. As for macroeconomic statistics, the week will be interesting primarily because of the US GDP data. Obviously, this will be the worst quarter ever. The question is how much. In addition, we are waiting for data on GDP in the Eurozone and Germany, as well as the announcement of the results of the FOMC Fed meeting. In general, the week will be extremely busy.
Short
by Trade24Fx
3