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Fed`s surprise, coronavirus chronicles, ADP numbersThe main event of yesterday was the Fed’s decision to urgently reduce the rate by 0.5%. The central bank did not wait on March 18 and caught many by surprise. The reaction of the financial markets as a whole seemed logical: the US stock market went up, the dollar was falling, gold was growing. The whole question is whether these trends will continue. We practically do not doubt gold and put on its further growth. The US stock market may well grow by a further wave of optimism by a few percents. But the closer he gets closer to historical highs, the stronger will be our desire to sell. The dollar will be able to take revenge on Friday, but more on that below. In the meantime, we traditionally continue to review the news from epidemic fronts. The epidemic in China has virtually disappeared (130 new cases), but in the world, everything is in full swing (almost 2000 new cases per day). G7 countries, meanwhile, held an emergency meeting at which they firmly decided to confront the economic consequences of the epidemic. Inspired by this news, as well as information about a possible massive easing of monetary policies around the world (the Central Bank of Australia also lowered the rate yesterday and thereby confirmed reasonable expectations), investors again breathed a sigh of relief and rushed to buy cheaper assets. We traditionally do not share this optimism and consider it clearly premature. The consequences are just beginning to manifest. So in the next month, depressing news will be enough. On the foreign exchange market yesterday there was a certain return of common sense. In terms of the fact that the euro stopped growing at the end of the day (even against the background of information about the Fed’s rate reduction of 0.5%), the pound seemed to have found some ground under its feet. All the attention of traders is focused on the first rand of trade negotiations between the EU and the UK. The results will not be earlier than Thursday. So far, we generally consider all this to be nothing more than noise, which can only give the best entry points. Really, nothing will be solved now, which means you should not worry about anything. Recall that our position on the pound is medium-term purchases. Justification - The EU and the UK will eventually be able to agree again. As for the euro, it seems that there was a less clear explanation for its growth in recent days. In addition to the classic for almost any strong movement of triggering stop loss and buy-stop, analysts call the curtailment of the trade due to the coronavirus epidemic as the main reason for the sharp strengthening of the euro against the dollar. For those who are not in the know, we explain that the ultra-low rates in the Eurozone made it possible to borrow money there and invest them in markets with higher returns (for example, the USA). Which naturally led to a depreciation of the euro. Curtailment is marked by opposite trends, respectively, the euro strengthened. Rumors that the Fed will sharply reduce the rate in March and may reduce the rate even later in 2020 provoked the start of the process of curtailing the trade, which was especially clearly reflected in the EURUSD pair. News about the epidemic has recently monopolized the information space so much that it’s easy to miss important news that does not have the word coronavirus or something like that in the headline. We mean that on Friday statistics on the US labor market will be published. This news is traditionally one of the main ones for financial markets. Considering how sensitive markets are now to any deviations from the norm, these data are of increased importance. But the numbers on the NFP will be published only on Friday, but for now, today we are waiting for data from ADP.
Short
by Trade24Fx
Week Results: Virus, NFP, Pound & Investor ConcernsA week in the financial markets was held in the chronicles of the coronavirus. The epidemic is still under development. The number of deaths exceeded 700, and the number of deaths approached 40,000. A number of quarantined cities in China, many plants are idle, are already starting to disrupt the functioning of the global economy: some companies outside of China cannot continue the production process, since components from China do not arrive, some ( like Toyota and Honda) temporarily shut down their Chinese capacities and sharply lose in production volumes, some (like Apple) close their stores in China. And if on Monday and Tuesday last week, the markets still tried to pretend that they did not notice this, then towards the end of the week even excellent NFP figures could not inspire American investors to buy on the stock market. And although the VIX Fear Index fell by 15% over the week, there is a feeling that the time of unbridled euphoria in financial markets is coming to an end. And this means that now is the time to start opening short against risky assets. Moreover, the markets marked the highs, respectively, the points for placing stops are obvious, and the stops themselves are small especially with respect to the goals that can and should be set. The week as a whole turned out to be very successful for the dollar and ended on a major note: NFP figures came out well above market expectations (+225K with a forecast of +165K). In principle, employment data from ADP (+291K) were prepared by the markets for good numbers, but until the very last it was difficult to believe in them. The overall view was somewhat spoiled by weaker than expected growth rates of hourly wages, as well as unemployment, which went above forecasts. The main losers in the foreign exchange market were the euro and the pound. Traditionally, the reason for the sale of the euro was the weak macroeconomic statistics from the Eurozone. So German industrial production in December literally collapsed by 3.5% during a month, recalling that the recession is not just an economic term, but also one of the aspects of reality. As for the pound, the pressure on it was due to growing fears that the UK and the EU would not be able to agree on a trade agreement until the end of 2020. Our trading plan for this week is next. We continue to look for points for purchases of gold and the Japanese yen anyway (unless an ultra-effective vaccine is found and the epidemic of coronavirus is quickly over). We will wait until the euphoria around the dollar subsides, and we will look for points for its sales. The pound is not bad, the Canadian dollar looks interesting. We won’t touch the euro - the single European currency seems too toxic in the light of the latest data from Germany. While oil is below 51.20 (WTI benchmark) - we sell it with stop-flips above 52. In general, the situation with oil looks rather uncertain. OPEC +’s decision to expand the decline in oil production by 600K bd is, under normal conditions, the strongest bullish signal.
Short
by Trade24Fx
A reason why you should mix TA and macro analysis... $GBPUSDHey. The chart above provides the perfect reasoning as to why purely looking at price action around market sensitive data points can be your undoing. On Friday we had the NFP number - this was a big beat. However, GBPUSD didn't really move to the downside all that much. This likely led to many getting long, lulled into a false sense of security going into the New York trading session. I'd argue that many seeing the textbook bullish engulfing candle got excited - but the probability of upside is likely not in your favour after such a large beat on a key data point! After all, orderflow is determined by the interpretation of macroeconomic variables. You can read more about this here: (www.imf.org) This is one of those situations where one has to look away from charts and look at the realities of the data - a market hasn't yet made its move on a massive data drop at a time when the Fed are deliberating about cutting rates and you want to get long? No worries, I'll happily take the other side there! It's vital to always keep a macro picture in your head, and add and take away from your view with little bits of information that we're hit with each day, because I guarantee that this will help your trading massively!
Education
by FinkPro
NFP Day, Coronavirus Chronicles, Pound WeaknessThe main event of today will be the publication of official statistics on the US labor market. On average, experts expect a gain of 162K. This is more than it was in the previous month, but less than the average value for the last couple of years. In general, it is worth noting that the trend towards a decrease in the number of newly created jobs with each new publication of data is becoming increasingly apparent. After the peak values of 2014 (then about 3 million new jobs were created during the year), the indicator was constantly decreasing, with the exception of 2018, when Trump's tax reform affected, but already in 2019, the effect had exhausted itself. So the US labor market in 2020 looks rather vulnerable. Especially in light of the coronavirus epidemic, which continues to gain momentum: the number of deaths is close to 600, and the number of deaths is close to 30,000. Quarantine continues, and more and more countries completely or partially interrupt a transport connection with China. In this light, data on the US labor market may well be unpleasantly surprising. The only thing that holds us back from frankly negative forecasts is the excellent employment figures from ADP (+ 291K). Although they can play a trick on the dollar because against the background of such numbers, almost any statistics on the NFP will seem weak. In total, we will not be surprised at the weak NFP figures, but we would not dare to put on this forecast. Instead, we offer traditional news trading in a pair of USDCAD. Recall that in parallel with the data from the United States will be published statistics on the labor market of Canada. That is, the USDCAD pair has a chance of a double impulse with no obvious direction. So a minute before the publication of data, we place pending orders such as stop orders for purchases and sales at 20-25 points from the current price at that time. And just waiting for the data. If there is a situation with data overlay (positive for the Canadian dollar and negative for the American or vice versa), then we remain in position until the end of the day. To other news and events of yesterday. In the foreign exchange market, the pound was under pressure amid growing investor concern over the outcome of trade negotiations between the UK and the EU. We believe that the parties will agree. In the end, the United States and China were able to enter the first phase, let alone Britain and the EU. So pound purchases remain one of our favorite forex positions. For other assets and markets, buying gold and the Japanese yen is still a priority. But with oil we, perhaps, will wait a while. The asset can not decide who it is - buyers and sellers - so we'll wait for more clarity. Moreover, Saudi Arabia and Russia have been agreeing on something for three days. The outcome of the negotiations could potentially blow up the oil market.
Long
by Trade24Fx
2
Institutional Weekly and Daily SUpply for USD/CADDear Traders, Based on NFP later today, this swing trade can be interesting this afternoon of next week! If we see a slight push up today based on news or being a fake breakout to the upside, I am expecting a strong pullback down. Monthly: The monthly chart is sitting at a long-term bearish trendline, which almost always results into a nice daily pullback. The Weekly: The Weekly chart is in a bearish run and in need of a pullback, based on our weekly strategy, it is very likely to see a push down from here based on the clean fresh supply area. (Even though the zone is not 100% valid) The Daily: This time frame is used for timing, price is sitting in fresh daily supply and has been decelerating for a while now, based on the news incoming it is recommended to take it as a swing trade with an entry on top of the daily wicks. This way you're triggered in when it looks like a bull trap. Let's see how this one goes. Our community is currently positioned in EUR/USD Shorts since monday, which are running very nicely.
Short
by newcapitalfx
Week results - between Brexit the NFPThe main event of the previous week was not a meeting of the Bank of England or even a decision of the Fed (both the Central Banks left monetary policy parameters unchanged). This is not data on US GDP (annual growth rates have been the weakest since 2016: 2.3% in 2019 compared to 2.9% in 2018), but the coronavirus epidemic in China. Yes, so far the epidemic has been localized in China. But this is not easier. The magnitude of the coronavirus epidemic has already exceeded the 2003 SARS. And the World Health Organization declared the outbreak of coronavirus a global emergency. So last week, the markets were busy on the one hand counting the victims of the epidemic (more than 300 deaths and more than 15,000 cases), and on the other hand, counting the economic damage. China extended the New Year weekend for another week. That is, another week 2/3 of the Chinese economy will be closed. The magnitude of the losses is not yet clear, as the epidemic continues, but it is already clear that we are talking about tens of billions of dollars. The chances of China's GDP growth rate dropping below 6% now seem almost 100%. So the fears and concerns of the global recession have intensified. The Chinese stock market today is trading in a deep minus (about -8%) despite all the efforts of the Government and the Central Bank. Despite such a regrettable situation, trading is an opportunity that can and should be taken advantage of. For the long-term, it is worth selling in super bought stock markets, but in the medium-term and locally, the purchase of safe-haven assets (gold and the Japanese yen) and the sale of risky assets such as the Russian ruble look great. Actually, we voiced this plan last week, but as the epidemic grows, the relevance of our positions only grows. Another significant event of the past week was Brexit. On January 31, Great Britain officially left the EU. We already wrote that buying pounds remains one of the best trading opportunities at FOREX in terms of potential in 2020. Whether it is implemented or not will show the progress of trade negotiations between the UK and the EU. But if successful, a pound above 1.40 could very well become a reality. The upcoming week will be saturated with various kinds of macroeconomic statistics. But the main attention will still be focused on Friday statistics on the US labor market and NFP figures. Our thoughts and forecasts on this subject will be described closer to Friday. In the meantime, we continue to monitor the development of the epidemic and investor sentiment.
FOREXCOM:XAUUSDLong
by Trade24Fx
2