Get started

Newstrading

Best quarter, vaccine and US labor market dataThe second quarter for the US stock market was the best over the past few decades. It seems like a more than obvious buy signal. However, we have the opposite opinion. For us this fact is a direct indication to sales. The problem with modern financial markets is that they have the memory of a goldfish. Let’s dive into the past a little bit. The high-tech Nasdaq Composite has showed the best results since the fourth quarter of 1999, soaring by 30.6%. Recall that the fourth quarter of 1999 was the last period of growth before the collapse of the dot-com bubble. Right after the fourth quarter of 1999 Nasdaq index fell by 4 (!) times. And if it seems to you that this is nothing more than a coincidence, then consider the Dow Jones Index, for which the second quarter of 2020 turned out to be the best quarter since the first quarter of 1987. What is 1987 for the US stock market? This is the year of the largest one-day fall in its history. 1987 was the year of the Black Monday, when the Dow Jones Index lost 22.6% in a day, which provoked a severe crisis in the US stock market and around the world too (Australian stock market has lost 41.8% by the end of October, Canada - 22.5% , Hong Kong - 45.8%, Great Britain - 26.4%). That is why when we see news headlines with phrases such as “the best quarter in decades,” it becomes completely clear that the current bubble has reached the terminal stage. Another signal in favor of this is Tesla's first place among automobile companies in the world by capitalization. A company that produces dozens of times less cars than Toyota costs more than the latter. The degree of absurdity has clearly reached a critical point. So, stock market sales continue to be the main trading idea of 2020 for us. By and large, now the whole question is in the trigger. That is, an event that will provoke a change of market sentiments. In general, there are enough reasons, starting from the pandemic and its second wave, ending with the economic crisis. So, today's data on the US labor market, in view of their traditional significance as a whole, are also suitable for the role of a trigger. Although the data most likely will not be disastrous, so we don’t really hope that everything will start today. We have much more hopes for the earnings season for the second quarter, as well as the US GDP data for the second quarter. So, the ebd of July, in our opinion, can become a turning point for the US stock market. But back to the statistics on the labor market. In March-April, about 21.5 million in NFP were erased. Yes, May restored 2.5 million, but this is still MINUS 19 million. That is, almost any figure below 5-7 million is, by and large, a negative signal. For example, if the forecasted 3 million will come out. What does it mean? That the labor market will need another 5-6 months (!) to just restore the losses incurred, in fact, during 1 month. This is all you need to know about the quick recovery of the US economy, and in the world as a whole. As for the rising optimism in the financial markets yesterday, it was triggered by news of a successful vaccine test. This time, the Pfizer and BioNtech vaccine proved to be safe during early trials and ensured the formation of antibodies to the virus. This is not the first surge of optimism against the background of such kind of news. Previously, this was information about the tests of Remdesevir, as well as the results of vaccine tests from Moderna. But the problem is that the pandemic is here and now, and the vaccine is something in the unknown future. That is, here and now this news does not solve anything.
FOREXCOM:NAS100Short
by Trade24Fx
2
Australian terms, economic confidence and FacebookYesterday, the financial markets were relatively calm. For the panic moods, corresponding dynamics in the number of cases in the world and the USA is needed. And since the beginning of the week in this regard traditionally inspires elements of false hope, the markets were in no hurry to be afraid. But they did not have special reasons for relief as well. Economic confidence in the Eurozone in June did not justify expert forecasts: The economic confidence index in June is 75.7 with a forecast of 80.0 and a May value of 67.5. This is not much incorporating the fact how much talks were about a quick recovery and fast return to normal. The pound was under pressure yesterday. The reason is the same - Brexit. Johnson said over the weekend that Britain is ready for trade relations with the EU “on Australian terms” (trading based on standard WTO rules with a number of special agreements for certain goods) if no agreement will be reached. In general, both sides continue to raise rates. But the time is ticking out. So, the concerns of investors are clear. Even Johnson’s statements about his readiness to actively help the British economy through a sharp increase in government spending on investments for infrastructure projects did not help the pound. Among the other news, it is worth noting the natural hunting on Facebook, organized by companies around the world. Inadequate Facebook policy in terms of hateful speeches was chosen as a formal reason. Well, in fact, everything is trite: many companies do not have money, and they are forced to save costs. But you can’t admit it out loud, because it is fraught with consequences. Using this scandal, they saved money, and pretended to be socially responsible and generally on the side of the people.
Short
by Trade24Fx
Week in a Glance: second wave in the USA, IMF and new trade warsLast week began with an outbreak of short-term panic after a White House adviser said in an interview that the US-China trade deal is over. Trump made a rebuttal rather quickly and the markets quickly compensated for the losses. Nevertheless, the problem of trade wars did not end there: Trump administration said that the United States was going to set new tariffs of $ 3.1 billion on export from France, Germany, Spain and the UK. In response to this, the EU will have no choice but to impose its own sanctions in response. That is, trade wars will expand geography and scope. The main event of the week and the main newsmaker again became a pandemic. The situation in the world continued to deteriorate rapidly: the number of new cases in the USA at the end of the week reached 50K, in Brazil about the same number, and India approached the mark of 20K. And if for Brazil and India this is the first wave, then the United States is faced with a full second wave. Unreasonable removal of quarantine restrictions and exit from the lockdown say their words. Judging by the current dynamics, the second wave promises to be even worse than the first one. At least the current highs are already higher than the highs of late April. A week of such growth and the US should prepare for a new lockdown. Actually, some states have already suspended the lifting of restrictions. In general, our recommendation to sell in the US stock market is finding more and more reasons. Speaking of reasons. The IMF last week released updated forecasts on the global economy in 2020. Global growth is projected at –4.9 percent in 2020, 1.9 percentage points below the April forecast. The COVID-19 pandemic had a more negative impact on activity in the first half of 2020 than anticipated, and recovery is projected to be more gradual than previously projected. At the same time, the IMF notes the fact that there is a large gap in prices on financial markets from reality and warns about a correction in financial markets. This week, markets will continue to monitor the situation with the pandemic and their sentiment will be directly determined by the numbers for new cases of disease. In addition, we are waiting for the publication of official statistics on the US labor market: NFP and unemployment on Thursday will be the focus of markets.
DJ:DJIShort
by Trade24Fx
4
Fear of lockdowns, US GDP and its future, oil perspectivesThe pandemic situation in the world and individual countries continues to deteriorate. The result of this was the emergence of a new phobia in the financial markets - fear of lockdowns. The likelihood that countries will begin to close again is high enough. At least if you look at the dynamics of new cases in the United States, where they exceeded the mark of 40K per day, which is a new historical maximum. Amid such dynamics, the University of Washington in Seattle recounted the possible number of deaths in the United States by October. Now it is 180,000, which is almost 50% worse than the previous estimate of 122,000. If the US economy will be closed again, neither the Fed nor the new stimulus from the government will help the US stock market - sell off will be inevitable. But even in the current reality (without a second lockdown) everything does not look very good. Recent US unemployment figures show that around 20 million people continue to receive unemployment benefits. At the same time, over the week the number of new applications again turned out to be near 1.5 million. Yesterday, the final estimates were published on US GDP growth in the first quarter: a decrease of 5%. Recall that this is only the beginning of the problems for US GDP, and not their peak. Most experts believe that the fall in US GDP will be measured in double digits. Leading analysts estimate the rate of decline at 30-40%. Which, of course, is absolutely unthinkable, but in a month, it can become a reality. The growth of the stock market amid such data is beyond the scope of our imagination. So, we continue to remind about our recommendation to sell on the US stock market, and other countries too. In general, the threat of repeated lockdowns carries risks for a number of assets, including oil. The validity period of OPEC + in the current volume is gradually coming to an end (recall, it is valid until the end of July, May and June have already passed), that is, a couple of million barrels per day of additional oil will appear in the market in a month. But the lockdowns will provoke another sharp drop in oil demand. This will inevitably lead to a sharp drop in oil prices, as the oil storage facilities are still full (for three consecutive weeks, US oil stocks are growing). So in the current environment, we are probably inclined to sell oil.
DJ:DJIShort
by Trade24Fx
2
US and EU #tradewar revived: $3.1 bn on tariffsTrump administration wants to put tariffs on German, French, English and Spanish exports to the US, amounting $3100 million. Tomorrow, US opens a query period lasting one month, until July 26. These tariffs could be set as 100% of the produce value. A new trade war has been started due to Airbus subsidies and revived taxes topic to american big tech companies such as Google, Facebook or Amazon. If this $3100 million see green light, Euro could be dismantled to 1.10, leaving back that sideways movement started on June 8. Looks like America has realised Euro is gaining strength (maybe too much for their taste) against major pairs since May 14.
Short
by alexinve
Trade Wars, US problems, and IMF ForecastsThe main event of yesterday can be considered the publication of the IMF updated forecasts on the economic growth in the world in 2020. As expected, forecasts were revised downward. A decline in global GDP is now projected at 4.9 percent in 2020 (1.9 percentage points worse than the April forecast). In general, according to the IMF, the COVID-19 pandemic has done bigger negative impact on activity in the first half of 2020 than anticipated, and recovery is projected more gradual than previously expected. Among other news, it is worth noting information that the United States can set new tariffs for European exports in the amount of $ 3.1 billion. That is, the markets did not have time to breathe out after statements by the White House adviser that the trade agreement between the USA and China is over, and they have another blow. But this time it is a new front in trade wars. Obviously, such a move by the United States will provoke a symmetrical response from the EU with all the ensuing. In general, one more reason to worry about the future of the global economy. The news about the pandemic this week are extremely negative: the outbreak of diseases in Germany, the growth of new cases in the US and the country's inability to leave the plateau of diseases. As for the positive, we can note the latest information from the Ifo Institute, which demonstrated that business expectations in Germany have been rising for the second month in a row. On the other hand, this news was offset by a survey of employers in the UK, which showed that a quarter of workers are likely to lose their jobs after returning from forced leave when state support ends in September.
Short
by Trade24Fx
1
EURUSD: New safe haven against major pairs?This morning, I saw an educational video from transparent-fx and showed that the EURUSD is shaping an inverse H&S in D chart and indeed it is. Besides, in the H4 chart it comes from shaping a non-inverse H&S what makes you realise that the pair is experiencing a sideways movement since June 8. If the figure is finished, by June 30 EURUSD could reach 1.14. In addition, fundamental readings have been quite strong, coronavirus is contained in most of the european countries and even though Germany has seen a surge in covid19 cases, Merkel is still the Chancellor so she knows how to deal with this. On the other side of the Atlantic, US and Latin America are not improving which is why investors are running away from america (which has recently seen a spike in bankruptcies filing in the past week, 13-20 June) and embracing euro as the only safe currency since Japanese yen lost that condition when covid19 outbreak sparked the markets around Feb 24. So EURUSD might be the safest currency (inveur, investing.com's euro index is staying around 101, highs not seen since 2014) for this summer-autumn only, until everything drops down again.
Long
by alexinve
Slow recovery, IMF forecasts and common movementsYesterday, quite a few business activity indexes were published in Germany, the Eurozone, the UK and the USA. Indices were for June; therefore, their information was crucial to understand the pace of recovery. Apparently, the recovery process is not explosive, but gradual. At least the indices were below 50, that is, economic activity continues to decline. It is worth noting that indicators came out better than forecasts, which means events are developing not in the worst way. Given these data, as well as Trump's comments that the US-China trade deal remains valid, the markets were again optimistic and common movements typical to these market sentiments were detected: stock markets were growing, the dollar was declining, commodity markets were strengthening and the currencies of developing countries grew. At the same time some deviations were detected: safe haven assets were mostly increased. We thing this might a signal of reverse in the market sentiments soon. The positive mood of the markets yesterday was strengthened by the WTO report, which says that thanks to the actions of the governments, the worst-case scenario for the global economy can be avoided. Speaking about the actions of governments, we note that more than $ 2.3 trillion of the total amount allocated by the EU to help companies remained untouched. We traditionally remain pessimists. The lack of a quick recovery suggests that 2020 as a whole will be exceptionally disastrous for the global economy. So, there is nothing to be happy about right here and right now. In this regard, it will be interesting to read updated forecasts from the IMF on the pace of development of the global economy. The Fund warned a couple of weeks ago that we should expect a worsening of previous forecasts. The whole intrigue is how much worse the forecasts will be (in April, the IMF announced -3% shrink in the global economy by the end of the year).
FOREXCOM:NAS100Short
by Trade24Fx
2
New outbreaks, Germany pumps, the deal is overPerhaps the main news provider yesterday was Germany. On the one hand, an outbreak of pandemic, on the other - a signal in favor of a “hard” Brexit. To begin with, the reproduction rate jumped sharply over the weekend. From a rate of less than 1, the reproduction rate rose to area 3. This is due to an outbreak at the slaughterhouse where tests of 1300 workers gave a positive result. If we add to this the continued deterioration of the situation in Brazil and India and an increasing number of signs of a “second wave” in the USA, we get an extremely threatening picture for the world as a whole. Another reason to concern was provided byy White House adviser Peter Navarro, who said that the US-China trade deal is “over”. And although after this there were statements that the “over” was not quite the “over”, and Trump said that it was not the end at all, the sediment remained. And the markets began to think about a new round of trade wars between the two world largest economies. So, we see no other options than to recommend sells in the stock markets. But back to Germany. The German Deputy Finance Minister said that it is necessary to prepare for the worst and urged banks to be prepared for the “hard” Brexit, adding that there was a very strong risk of a difficult situation in the future. We think this message is not for German banks, but as the last warning to the UK, which continues to show miracles of inflexibility in the EU negotiation process. And apparently, the EU is already fed up with it. This is negative news for the pound, so we will sell it today.
Short
by Trade24Fx
6
Week in a Glance: Bank of England, pandemic and the second waveLast week was full of various events, both economic and political, such as the meeting of the Bank of England, Powell’s testimony in Congress, the armed conflict between China and India, protests in the United States, the outbreak of pandemic in Beijing and a general worsening of the world epidemiological situation. This is not a complete list of what happened last week. Despite the fact that most of these and other events had a rather negative impact for the economy, this already habitually did not prevent the stock markets from growing. Millions of “noise” traders supplied by platforms like Robinhood are doing their job and continue to blow bubbles. Powell in his testimony before Congress did not say anything fundamentally new and only tried to cool the hottest heads, recalling that you should not count on a quick economic recovery. Even the “witching day” did not help on Friday afternoon - the massive expiration of futures and options contracts on the US stock market could not stop the current frenzy. Despite the fact that we are once again going against the will of the market, we continue to recommend sales in the US stock market and will open short positions on major US stock indices this week. Moreover, the situation with the pandemic is not something that has not improved during last week, but rather worsened and quite strongly. The outbreak of disease in Beijing, in which for a couple of months they forgot about the coronavirus and now about 150 new cases in literally 1-2 days. Germany's R number rockets again - from 1.79 to 2.88. US has 30K new cases per day again. So the fear of the second wave has acquired a completely material form. Main European currencies had problems last week. The pound was under the pressure from weak statistics and the lack of progress in negotiations with the EU, and even the Bank of England, with its additional 100 billion pounds to expand its quantitative easing program, could not reverse the negative market sentiment. As for the euro, the ECB's record injection of money (the largest refinancing operation in 22 years of the ECB's existence), in which 724 banks received 1.308 trillion euro loans from the regulator, provoked downward pressure on the euro. The negative for the euro intensified on Friday on news that the EU countries did not agree on a program of assistance of 750 billion euros to the economies of the countries affected by the coronavirus.
DJ:DJIShort
by Trade24Fx
Witching day, Bank of England and jobless claimsThe main event of yesterday was the announcement of the Bank of England decision on monetary policy parameters. Rates as expected remain unchanged - the Central Bank is not ready yet for negative rates. No less than expected, Bank of England expanded the quantitative easing program, increasing it by 100 billion pounds to 745 billion. These moves were expected by the markets, and the pound decided to work out the negative that has accumulated recently and has been actively declining. Accordingly, we see no reason to revise our “sell” recommendation for the pound. What else is worth selling, in our opinion, is the Australian dollar. Yesterday's data on the Australian labor market did not come out very well. Unemployment is at its highest level in almost two decades, and the reduction in employment turned out to be greater than experts expected. Today is interesting day first because it is one of the four so-called witching days of the year. The third Friday of the third month is the expiration of all major derivatives in the US market. This day is called "witching day". This event is fraught with illogical and sharp movements in the US stock market, as players randomly close their positions, as a result trading volumes and volatility can increase significantly. According to BMO Capital, since 1990 in such weeks the S&P 500 has lost an average of 3.1%. So, the day is ideally suited for the start of sales on the US stock market that we have been expecting for quite some time. Moreover, the reasons for this have long accumulated a critical mass: starting from an unprecedented economic crisis in the country, which resulted in a wave of bankruptcies of large companies, ending with a pandemic and mass protests in the United States. Yesterday's data on jobless claims is a confirmation of this: an increase of 1.5 million new applications, which is higher than forecasts, and the number of actually receiving unemployment benefits remains above 20 million.
FOREXCOM:NAS100Short
by Trade24Fx
2
Pandemic, Bank of England, Indian Issues and the EU MeetingThe pandemic situation continues to deteriorate. The number of new cases in the world is keep on growing. Significant share of this “success” belongs to Brazil, which breaks new records, bringing the daily number of cases to 35,000. Concerns are also giving China, where a new outbreak of the pandemic has been recorded. So far, there are hundreds, not thousands of cases, but all this does not look very good, especially in light of the main fear of the markets - the second wave. Situation in India is stably bad (10K-11K per day). A pandemic is far from the only problem of the country. The sluggish conflict with China over the “neutral” border territories is growing from hand-to-hand fighting and throwing stones into full-fledged armed clashes with dozens of dead. We will multiply this by problems in the economy and get a recommendation to “sell” for both the Indian rupee and the Indian stock market. Yesterday a lot of inflation data was published. And in general, they are rather bleak: the current economic crisis is not only a decline in production, but also deflation. And this is very bad, since it entails a full-fledged economic depression. Today it is worth paying attention to the statistics on jobless claims in the USA (analysts expect that the number of new unemployed in the USA will replenish with another million). But the main event of the day is the meeting of the Bank of England. The markets do not expect the Central Bank to move interest rates into the negative zone, but expect the expansion of the quantitative easing program from £ 645 B to £ 745 B. If this happens, the pound will receive the first positive news in the last couple of weeks. Otherwise, the disappointment will be so great that the pound selloffs will be inevitable. On Thursday-Friday there will be an EU summit. The fate of the proposal to create an aid fund of 750 billion euros will be decided. If the majority can convince a minority (Austria, the Netherlands, Denmark and Sweden), then the euro will receive an excellent opportunity for growth.
Long
by Trade24Fx
US Retail Sales, Powell and overpriced market The main event of yesterday was Powell's testimony in Congress. More precisely, the first day of testimony. Markets expected his comments for the Fed’s economic outlook issued last week following a FOMC meeting. Powell did not disappoint, saying that a full recovery of the US economy is possible only when the coronavirus is fully taken under control. Against the backdrop of fears of the second wave and the current pandemic peak, which is still not be formed, this is practically a recognition of the fact that economic recovery will be a very long process. In this light, we recall our recommendation “sell” in the overheated US stock market. According to recent survey from Bank of America, about 80% of professional investors consider the US stock market overvalued. By the way, this is a record value since the beginning of the publication of such surveys. In fairness, we note that yesterday there were reasons for the growth of optimism in the US stock market. We are talking about retail sales in the United States, which showed the maximum monthly increase in the entire history of observations. However, this is a chain indicator, therefore this record is actually the merit of the low base of comparison, which was formed as a result of a record drop in retail sales in April. So, it's too early to relax. This is also supported by data on industrial production in the USA: grew by 1.4% in May which is twice as low as the average forecast of analysts. That is, there is no explosive growth after the lockdown in the economy yet. UK labor market data was also released yesterday. The data came out mixed, but the growth in the number of claimant counts, which was almost 2 times higher than the expectations of the markets. In our opinion, this inclines the weight against the British pound. So, our recommendation to sell the pound remains relevant.
FOREXCOM:NAS100Short
by Trade24Fx
Market sentiments, UK labor market and the FedLast week, financial markets closed in a rather gloomy mood. The pandemic still cannot reach the second peak, and the countries that defeated the epidemic begin to doubt it, that is, the second peak goes hand in hand with the second wave. Even the seemingly successful countries in terms of the fight against coronavirus like China and Germany have reasons for concern. In China, this is an outbreak of diseases in Beijing, and in Germany, an increase of the infection rate above a threshold value of 1. Some words about China. Yesterday's data on industrial production and retail sales were rather disappointing. In May, retail sales fell by 2.8% (analysts expected a decrease of 2%), while industrial production grew by 4.4%, which is below growth forecasts of 5%. China is hinting to the rest of the world that it is not worth counting on a quick and painless economic recovery. Protests in the United States continue and even became more active after the next murder by police of an unarmed black. But despite all this market sentiments on Monday have changed dramatically. As a result we saw a sharp decline in the level of fear in the markets, growth of stock markets, a decrease in the dollar and the growth of commodity markets. In general, the swing swayed the other way. One of the reasons for such a sharp turn was FED press-release that the US Central Bank began buying bonds in the secondary market. And although plans for this have been voiced for quite some time, the markets took the news as an occasion for optimism growth. Today Fed Chairman Jerome Powell will testify in Congress and report for the first half of the year. And although the FOMC meeting was less than a week ago and everything seems to be said, Powell's comments are extremely important. As for macroeconomic statistics, the main attention should be paid to data on the UK labor market. A pound, which already has an extremely negative fundamental background, may not be able to withstand another portion of weak data and will fall again. A few words about the pound. Yesterday, Boris Johnson agreed with the EU on the need to intensify the negotiation process. That is, there is reason for the emergence of hopes, but there is no any breakthrough. After yesterday, our positions only added relevance, as they significantly improved entry points: we sell the pound against the dollar and the euro, we sell in the US stock market, we buy the dollar against emerging and also commodity currencies (for example, we will sell AUDUSD around 0.70) .
Short
by Trade24Fx
Week in a glance: gloomy forecasts, fear returns, and protestsLast week can hardly be called rich in fundamentally new fundamental events. But the markets were very volatile. The reason for the strong movements was not a change in objective reality, but rather a change in sentiments towards it. If for a long time the markets ignored the fact that the world economy is experiencing the worst crisis in the last 100 years, then last week after the publication of forecasts from the World Bank (global GDP will shrink by 5.2% in 2020), OECD (at best, the world GDP will lose 6% in 2020, and at worst to 7.6%), as well as updated forecasts from the Fed following the FOMC meeting (the US Central Bank expects the country's GDP to decline by 6.5%), market sentiment has changed dramatically. Greed was replaced by fear. If you believe that the veil of optimism will not again obscure the vision of the markets, then this week we should expect a further decline in the stock markets, the growth of safe havens (gold and the Japanese yen), the growth of the dollar, lower prices on commodity markets, primarily prices for oil, as well as the subsidence of currencies of developing countries. At least that is how financial markets have reacted to rising fear recently. Moreover, the markets have enough causes for concern: this is the protests in the USA, the new peak of the pandemic, the sharp increase in the number of cases in Latin America and India, the fear of the second wave, and tensions between the USA and China. Another important event of the week in terms of macroeconomic statistics was the publication of data on UK GDP and industrial production in April. The data were even worse than the extremely pessimistic forecasts. A 20.4% drop in Britain’s GDP was a record for the entire history of observations. In this light, this week we will continue to look for opportunities for pound sales. The upcoming week in the news plan promises to be quite eventful. The Central Bank of Japan and the Bank of England will announce their decisions on monetary policy parameters, a lot of inflationary statistics will be published, in addition, data on retail sales in the US and the UK for May, as well as Canada for April, will be released. Plus Powell's testimony, negotiationsbetween EU and UK. This week not going to be boring. Our recommendations this week are essentially a bet on growing fear in the financial markets. So, we will sell in the US stock market, search for opportunities to buy safe haven assets, as well as the US dollar (primarily against the British pound).
Short
by Trade24Fx
Fear returns, the pound is in danger, US unemploymentMarkets have desperately refused to acknowledge reality. Forecasts of the World Bank, OECD, estimates of leading investment banks - all were by no means. But the gloomy Fed estimates of the future US economy in 2020 (-6.5%) seem to have been able to provide some effect. As a result, the level of fear in the financial markets has risen quite sharply. This was followed by a chain reaction in financial assets: stock markets went down, safe-haven assets (Japanese yen, gold) went up as well as the dollar. Oil was under pressure, as well as emerging currencies. It is still difficult to say whether we will get the effect of a snowball and the bubbles will begin to burst, but the fact of a sharp stop of previous trends is quite important and symptomatic. Recall that in addition to the bad macroeconomic data on the horizon, there are still a lot of causes for concern, starting with protests in the USA or tensions between the USA and China and ending with the fear of the second wave. In general, our recommendation to "sell" in the US stock market every day only gets more relevant. Yesterday's data on the jobless claims in the United States (jobless claims grew by 1.5 million) did not generate optimism: nearly 21 million people still receive unemployment benefits. As for today, the hero of the day (or rather anti-hero) is likely to be the pound. UK production and GDP statistics in April are expected. According to OECD estimates, it is Great Britain that takes the first place in the world in terms of the rate of decline in GDP in 2020 (-11.5%). So, there is more than enough reasons to expect devastating data. The pound is already under serious pressure from the failed negotiations between UK and EU. So weak data will almost certainly provoke massive sales. In this light, selling the pound is the # 1 trading idea for today.
Short
by Trade24Fx
6
FED outlook, OECD forecasts, EU vs BritainThe main event of yesterday was the announcement of the results of a two-day meeting of the Federal Open Market Committee. The monetary policy parameters did not change, but the markets were expecting for this. All attention was focused on updated forecasts of US economic growth. Recall that the Central Bank gave the latest assessments back in December 2019. FED gave another reason for the bulls in the US stock market to think about the state of the US economy again. The Fed's forecasts turned out to be very gloomy: a decrease in US GDP by 6.5% in 2020. Note that the Fed is not alone in its pessimistic assessments. Yesterday we wrote about rather gloomy forecasts for the future of the global economy in 2020 from the World Bank, and another respectful organization OECD (Organization for Economic Cooperation and Development) has published its latest forecasts for the global economy. They turned out to be even more pessimistic. If the World Bank expects the world economy to decline by 5.2%, then the OECD expects a decrease of 6% (at best) or 7.6% if the second wave of the epidemic follows. The US economy in a best case scenario will shrink by more than 7%, and the UK economy by 11+%. In this light, we recall our recommendations “sell” in the US stock market and “sell” pounds in the foreign exchange market. Speaking of the pound. The EU’s chief Brexit negotiator yesterday walked very hard on Britain’s position in the negotiation process. In short, his idea boiled down to the fact that Britain wants to have all the advantages of an EU member, but not have any obligations of an EU member. In recent years, since the referendum and the mass of negotiations between Britain and the EU, this is perhaps the most aggressive statement by the European Union. So, the question of the "hard" Brexit is not so hypothetical. If Britain continues to stand its ground, it risks being left with nothing.
Short
by Trade24Fx
1