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Results of the week, 10 years of growth in US and plan for week The publication of statistics on the US labor market was the top story. We warned that the data will come out much worse than forecasts and recommended selling the dollar before the data has been published. Those of our readers who followed the advice should have earned good money. But back to the data. With the forecast of + 175K, in fact, the number of NFP was only + 75K. In addition, wage growth was below the expectations of experts. This is definitely bad news for the dollar, which is giving the Fed a reason to lower the rate at the meeting to be held next week. In this regard, our recommendations remain unchanged this week - we will look for points for its sales. At the same time, we cannot but note an important for the US economy anniversary - 10 years in a row of economic growth. Also, this fact is remarkable by the fact that if growth continues for another month, it will be the longest period of economic growth in the United States since 1854 (!). But there was no particular joy among analysts and investors. The aggregate GDP growth for this period has not even grown by half from the growth that was recorded in the period 1991-2001. And investors' fears that growth will stop increasing with each passing day. China, Mexico, the EU and might be Japan. The economic data is a growing concern so far, recall the statistics from ADP or the data on the Manufacturing Purchasing Managers Index from Markit, that in ay dropped to the lowest values since September 2009. As a result, analysts JPMorgan Chase & Co. increased the likelihood of a recession in the United States from 25% to 40% in the second half of 2019. There are no major events like NFP or announcements of the results of the leading Central Banks, but there will be plenty of statistics on China (trade balance, inflation, industrial production and retail sales), Great Britain (GDP, trade balance, labor market and industrial production) and the USA (inflation, industrial production and retail sales). As for our trading preferences, they have not changed over the week. And what's the point of changing positions that make a profit? Almost all of our recommendations for last week turned out to be a good plus. So, we will continue to look for points for the sales of the US dollar primarily against the Japanese yen, as well as the euro and the British pound, sales of oil and the Russian ruble, as well as buying of gold.
TVC:DXYShort
by Trade24Fx
Preparing for the NFP, ECB results & FedMonetary policy decisions. The announcement of the ECB’s decision on the parameters of monetary policy in the euro area was the main event. As expected, no changes followed. The most important thing, as usual, was concentrated in the comments of the Head of the ECB, Mario Draghi. The economic growth forecasts worsened again (the GDP growth rate for 2020 was lowered from 1.6% to 1.4%). In addition, according to Draghi, the ECB is serious about a return to quantitative easing and lower rates. Buying euros after such a speech of the head of the ECB is not worth it, even if you really want to sell a dollar. And today we want to sell the dollar more than ever. In yesterday's review, we have already noted that the figures for the number of jobs in private US companies in May were just awful. + 27K - we have not seen such figures since the global financial crisis. After publishing NFP a couple of times over the past few years, frankly, weak numbers, from time to time, have been shown. But not in the case of data from ADP. It is difficult to imagine a situation in which the data from ADP showed + 27K with the forecast of 180K, and the figures for the NFP come out near + 185K. The level of correlation between these indicators is low, and the methodology for calculating indicators differs, but at the same time, they characterize the same market in the same coordinate system. So today we are waiting for the NFP to lower its forecast. By lower we mean marks + 100K and below. The figure in the range of 30-50K will not surprise us much. But the markets definitely will, provoking massive dollar sales on the entire spectrum of the foreign exchange market. We recommend not waiting for the official figures to be realized, but selling the dollar, since it might be too late. Let us explain why exactly today the weak NFP data is so critical for the dollar. The fact is that the markets are increasingly being discounted for the rate decrease by the Fed in 2019. In particular, the probability that the rate by the end of 2019 will be unchanged is less than 2%. Accordingly, with a 98% probability, it can be argued that the rate in 2019 will be lowered. There is almost a 90% chance that the rate will be reduced twice. At the same time, more than 50% of traders believe that the rate will be reduced 3 times. Plus there is another 17% chance that the rate will be reduced 4 times (!). Note that the probability of this event did not exceed 4% last week. That is, the probability increased by more than 4 times (!).in less than a week. Weak NFP Data will provoke a slowdown and problems in the US economy, but also the Fed will lower rates aggressively. Perhaps at the next meeting in mid-June. Perhaps not by 0.25%, but by 0.5%. Our positions today without any changes: we will continue to look for points for sales of the US dollar, sales of oil and the Russian ruble, as well as buying of gold and the Japanese yen.
TVC:DXYShort
by Trade24Fx
1
Fed U-turn, investors escape, catch-22 for RFMarkets actively discounted under the monetary policy turn in the United States. In this light, the current decline and weakness of the dollar are quite understandable. On the part of officials, comments about a possible rate cut sound more and more actively. In particular, recently the St. Louis Fed President Jim Bullard, said that lowering the rate may be necessary to counter the risks of trade war. Federal Reserve Vice Chairman Richard Clarida said that the Central Bank is ready to lower rates. Well, and finally, yesterday Fed Chairman Jerome Powell noted that the Central Bank is ready to "act in a suitable manner to support the expansion" of the economy. Recall that the markets are confident that the rate will be reduced at least twice in 2019, while there is a non-zero probability that the rate will be reduced 4 (!) Times during the year. Despite the formal reason for the optimism growth in the stock market, investors are escaping from the stock market. One of the reasons for the panic was the information from Reuters that the US Government might launch an antitrust investigation against Amazon, Apple, Facebook and Google. Following the news, Facebook and Alphabet Inc shares fell by more than six percent, and Amazon shares fell by four and a half percent. In this light, the behavior of Stanley Druckenmiller, one of the legendary Wall Street investors, seems quite logical. He sold all the shares from his portfolio (the proportion shares, in the portfolio structure, was over 90%). Recall, the Reserve Bank of Australia reduced the interest rate to the lowest value in the history of 1.25%. Our recommendation for working with the Australian dollar against the background of such information is to look for points for its sales. Yesterday was remembered by rather sad statistics on the UK. Retail sales literally collapsed by 3% at the end of May (the lowest value in the entire history of observations), and the index of business activity in the construction sector surely went below 50, indicating a decrease in economic activity. Wednesday in terms of macroeconomic statistics will be more active. We are waiting for data on retail sales in the Eurozone, data on employment in the US from ADP (we recall, on Friday will be published official statistics on the US labor market, including data on the NFP), as well as data from a number of US business activity indices. Bloomberg analysts recently published the results of a study which showed the unattainability of most plans of the Russian authorities in terms of economic growth and improvement of welfare in the country. The main conclusion is: Putin’s plans to double the GDP aren't meant to be. The Russian Federation in fact fell for the so-called "catch 22". In this case, it can be formulated as follows: to ensure economic growth above 3%, it is necessary to accomplish a number of smaller tasks, performance is possible only at a GDP growth rate above 3%. And the current growth rate equals 2%. That is, small goals will not be completed (the basic condition is not completed), which means that the main goal, growth above 3%, will not be achieved either. In this regard, we recall the feasibility of selling the Russian ruble on any attempts to grow. Since the growth rate is below the world average - it is not even standing still, this is the lag and loss of competitive positions. Our positions today: we are continuing to look for points for buying of the euro and the pound against the US dollar, sales of oil and the Russian ruble, as well as buying of gold and the Japanese yen. In addition, we will sell the Australian dollar against the US dollar.
Short
by Trade24Fx
World war and dollar, useless bitcoin and plans for the weekDay by day the situation with a trade war is getting worse. On Friday, for example, the Mexican peso showed the strongest drop in the last seven months after the announcement of the introduction of new US duties on Mexican goods in response to the flow of illegal immigrants. It was a surprise to the markets since the agreement between the USA, Mexico and Canada did not provide for such a development of events. From June 10, duties on imports from Mexico will be 5%. But this is not the worst. If Mexico could not solve the problem of illegal immigrants, duties will gradually increase until they reach 25% by October. Interestingly enough how the US dollar reacted to this news, which has declined significantly in the foreign exchange market against major currencies. One of the reasons for this was the revision of the market expectations of the Fed. Last week, we already noted that markets tend toward two or even three rate cuts by the end of 2019. So, after hitting Mexico, markets began to incorporate the option in which the rate would be reduced 4 (!) Times. The chance is extremely small (for now) - only 4%. But the trend is the key thing, that plays exclusively against the dollar. Our recommendation on working with the dollar for this week in the light of such events remains unchanged, we only strengthened in our desire to sell the dollar. On Friday, Canadian GDP data was published. GDP growth was + 0.5% m / m and + 1.4% y / y when the forecast was + 0.4% m / m and + 1.2% y / y. Only events around Mexico (which call into question the fate of the USMCA, have kept it from growing but despite it, this is decently a signal in favor of buying the Canadian dollar. Last week, the Bitcoin price rose above $ 9,000, which again grew up chatter about the prospects of its growth. We found Chainalysis Inc., information interesting, according to which only 1.3% of Bitcoin operations were carried out with the aim of serving trade and commercial activity. That says that practically ALL operations with cryptocurrency are purely speculative in its nature (90% of Bitcoin operations are exchange transactions on different exchanges). In this regard, we recall our position - any growth of Bitcoin is a reason for its sales. Current prices are the best for this. The upcoming week promises to be difficult. Their decisions on the parameters of monetary policy will announce the Reserve Bank of Australia and the ECB, and the US will announce statistics on the labor market at the end of the week. Our positions for today and the week as a whole are following: we will look for points for buying of the euro and the pound against the US dollar, sales of oil and the Russian ruble, as well as buying of gold and the Japanese yen. In addition, quite interesting, in our opinion, is buying of the Canadian dollar against the US dollar.
TVC:DXYShort
by Trade24Fx
US GDP, analysts wait for recession and dollar collapseWe have already written that the inversion of the yield curve (when the interest rates on long-term debt instruments are lower than on short-term debt instruments) is considered by many analysts as a signal of the impending recession. The same situation happened in 2000 before the US stock market fall, as well as 2006-2007 on the eve of the global financial crisis. So, in 2019, we observed an inversion in March, (there was a lot of noise in this regard). And here again, in May, interest rates on short-term bonds exceeded the long-term ones. Analysts at Morgan Stanley in this regard burst out with another apocalyptic forecast, including both the risk of recession and the sharp drop in the US stock market. Based on current development around the trade war, this forecast does not seem so unreal. Especially when you consider that Citi's Global Economic uncertainty Index (measures whether data is better or worse than expected), has been in negative level for more than a year - this is the longest period of being below zero in the entire history. Yesterday's data on US GDP for the first quarter (2019) is saving the investors from panic. The data were revised downward, but only slightly (up to 3.1% from 3.2%). In addition, experts predicted exactly that indicator value. Therefore, the dollar was not sold yesterday, but it would be strange to buy it actively based on such data. Yesterday Trump was trying to calm the markets, stating that negotiations with China would succeed. But it seems like nobody believes him. Especially Europe, which is next after China. Also, China accused the United States of economic terrorism. Frankly, we are waiting for dollar sales this Friday. The dollar climbed very high and it hurts primarily the States. In addition, the markets are gradually adjusting to changing the Fed's monetary policy vector. The likelihood that the Central Bank will cut rates two or more times by the end of 2019 has risen above 40%, for the first time exceeding the expectations of one decline. So today we are looking for points for buying of the euro and the pound against the US dollar, sales of oil and the Russian ruble, as well as buying of gold and the Japanese yen.
Short
by Trade24Fx
Chinese secret weapon, BoC interest rate decision & US GDPYesterday was “dictated” by the dollar but without new highs and explosive growth. By and large, consolidation at the top is continuing. For a breakthrough to new local maxima, a serious reason is needed. In theory, today's data on US GDP might be a reason for this. These are revised growth figures for the first quarter. However, analysts are skeptical enough - the majority is expecting a revision of the preliminary value downward. We also tend to the fact that the data will come out either extremely close to 3% or even lower. So, in our opinion, the dollar would rather “rush” downward than upward. In this regard, our position on finding points for sales, the dollar has not changed. Rather, the current entry points are very close to the ideal ones. The trade war escalation initiated by the United States naturally raised a question on a retaliatory strike from China. So far, Sino actions were more than restrained, but there is a huge range of methods in Chinese to influence. We are going to talk about a secret weapon today. Everyone has heard about the volume of US government debt owned by China and the markets attention is oriented in that direction, but a blow could be struck out of the blue. China is the world leader in the supply of rare-earth elements (controls about 80% of the world market), which is crucial for many modern industrial products. So hypothetically, as a means of counteracting US aggression, the Chinese authorities may limit their deliveries to the United States, which, in turn, will have a very negative impact on a number of American companies. The decision of the Bank of Canada on the parameters of monetary policy was announced yesterday. The rate was left unchanged. Comments of the Central Bank as a whole were cautious. The Central bank is concerned about the uncertainty due to the trade war. All investors' attention will be focused on data on US GDP. As for our trading positions, they have not changed: we will look for points for buying of the euro and the pound against the US dollar, sales of oil and the Russian ruble, as well as buying of gold and the Japanese yen.
Short
by Trade24Fx
Prospects for peace in trade wars, Japan’s GDP, OPEC+ and BrexitThe previous week has been having a hard time fundamentally duo to Sino-U.S. trade war. China does not intend to a resumption of negotiation still Washington is continuous to speak from a position of strength and power. Therefore the “happy end” was very close but suddenly became subtle. Investors have been hoped for restarting the dialogue and rising in seeking compromise, but on Friday it became clear that it is not something should be counted on. According to the Chinese state media, the country sees no reason for the resumption of the negotiation process. Thus, all hope for a meeting of the heads of China and the United States in the framework of the G-20 summit at the end of June. That is, another month and a half should not count on stress-reduction. From the perspective of such news, we have become even more confident about our position to buy safe-haven assets (Japanese yen and gold). Accordingly, we are planning to look for points for buying safe-haven assets (Japanese yen and gold) on the intraday basis. As for the yen, today's data on Japan's GDP is additional and a strong argument in favor of buying the Japanese currency. GDP growth in the first quarter significantly exceeded analysts' expectations. Everything is still bad with the pound, that ended the week with the strongest decline in the last few years. Markets are selling duo to another Parliament vote failure in Britain. Prime Minister Theresa May is under pressure by not only her opponents but also members of her own party. We are talking about her resignation from the post of a leader according to the results of the fourth vote in Parliament. And the results for the current scenario are predictable - a vote “against” the May plan. Despite the extremely attractive points for pound buying, we continue to wait for a fundamental reason for their start. The results of the previous week appeared pretty successful for oil. But we are still full of pessimism. On the one hand, the trade war is a very negative signal for oil demand, and therefore for a possible increase in asset prices. In addition, we are skeptical about the future of OPEC +. That is, from the supply side in the near future there is a very serious threat. Total, this week we will continue to look for opportunities to sell the asset. But do not tend to get carried away and each intraday position has to be limited with fairly rigid stops. The fact is that the OPEC + meeting held this weekend somehow reassured investors who were nervous. OPEC + participants expressed readiness to comply with the agreement until the end of 2019. And yes, the number of active rigs in the United States has fallen to a minimum over the last 13 months. There are enough bullish signals for oil, especially considering very serious tensions and problem situations in Iran, Venezuela and Libya. As for our preferences for this week in general and Monday in particular, they are as follows: we will look for points for buying the euro against the US dollar, selling oil and the Russian ruble, as well as buying gold and the Japanese yen. Considering how uneasy the financial markets are, we will limit our positions with fairly shortstops, especially since some of the deals are definitely at odds with the current mood on the markets.
Short
by Trade24Fx
US vs China, Trump vs Fed, and a tough week aheadLast week was marked by uncertainty about the resolution of the US and Chinese trade wars. Trump took a rather aggressive stance, resulting in an increase in tariffs on Chinese goods worth $ 200 billion to 25% China has not responded yet, but only expressed regret. And the experience shows that " respond " is inevitable. For instance, in the form of restrictions on the export of agricultural products from the United States. As for the negotiation process, despite the fact that the Chinese delegation arrived in Washington, it did not achieve success. In our previous reviews, we have already noted that a strong dollar is one of the factors that level the effect of US trade restrictions. We were waiting for Trump to return to the old topic - pressure on the Fed to force the Central Bank to lower interest rates. On Friday, the President of the United States on Twitter collapsed with another piece of criticism on the Fed. In particular, he noted that the Central Bank raised interest rates when there was no real need for this (inflation was quite low), resulting in an overdose of monetary tightening. Further, Trump said that the United States has the potential to literally “take off” in terms of economic growth if the Fed lowers the rate by at least 1%. Not surprisingly, the dollar was under pressure on Friday. If Trump continues to develop this theme, markets may well revise their expectations on the parameters of US monetary policy in the direction of its easing. Moreover, Friday's data on consumer inflation in the United States came out lower than expected and on an annualized basis amounted to exactly 2% (inflationary target of the Fed). So this week we will continue to sell the dollar. But, naturally, we will follow the news development. We note that the UK GDP came out in the framework of forecasts on Friday. The figures for industrial production were pleasantly surprised (+ 0.7% with a forecast of + 0.1%). The buyers of the Canadian dollar were pleased with the data on the labor market in Canada. Changes in the number of employees exceeded the most ambitious and positive expectations: + 106.5K with the forecast of + 10K, the unemployment rate also came out better than expected. So the strengthening of the Canadian currency was fully justified. As for the upcoming week, it is definitely not worth relaxing. News of trade wars and negotiations between the US and China will remain in the center of events, also the macroeconomic statistics (data on the UK labor market on Tuesday, GDP in the Eurozone and consumer inflation in Canada and retail sales in the United States on Wednesday; statistics on Australia’s labor market on Thursday and finally Eurozone inflation statistics on Friday) will be published. Considering how events developed last week, our positions for the current week are as follows: we will look for points to buy the Australian and Canadian dollars and the euro against the dollar, sales of oil and the Russian ruble, as well as buying of gold and the Japanese yen.
Long
by Trade24Fx
Trade war results, dollar’s future and a lot of statisticsThe data on the US trade balance was published yesterday. In the light of the unfolding trade wars, this publication can be regarded as an indicator of victory/failure. So, the negative trade balance between the USA and China in March decreased to a record low in the last 5 years. Formally, this can be written as a victory for the United States. But on the other hand, in the first quarter, imports to the United States from China fell by 13.6%, while exports fell by 17.6%. Well, probably, this cannot be considered as a victory, maybe only a pyrrhic victory. In addition, the US trade deficit with Mexico reached a record $ 9.5 billion in March, and with Europe it grew by more than half to $ 14.2 billion (Trump could send greetings to the weak peso and the euro, as well as a strong dollar). Markets are increasingly worried that Trump is not bluffing when he accuses China of disrupting negotiations and threatens a new active phase of the trade war. In addition, attacks on a strong dollar from Trump’s side might intensify. Strengthening the dollar, as we see, eliminates the effects of current victories in trade wars. So besides the new victories, Trump also needs to ensure a lower dollar. Goldman Sachs currency strategists obviously “feel” that, because they observe the prerequisites for a weaker dollar in the medium term. Also, it should be noted that Friday will be intensive with macroeconomic statistics such as a block of data from the UK, which among other things include statistics on GDP, industrial production and the trade balance. Given the volume and importance of data, an explosion of volatility in pound pairs is almost inevitable. Since the pound movement direction directly depends on the output data, therefore today we recommend today to try trading on the news. So, a couple of minutes before the data release, we place buy-stop and sell-stop orders at 20-30 points from the current price at that time. GBPUSD will be best for work with. News and the subsequent surge in volatility will lead to the directional movement, the formation will be possible to earn on. Using this trading tactic, do not try to predict the price movement, but simply join the general market movement. In addition to statistics from the UK we are waiting for a block of data on the labor market in Canada, as well as consumer inflation in the United States. So in the afternoon in dollar pairs, and especially USDCAD will not be boring. Again, this is a reason for active trading and earnings. Our positions did not change much at the end of the week. We are continuing to look for points for buying the Australian dollar and the euro against the dollar, selling of oil and the Russian ruble, as well as gold and the Japanese yen buying.
by Trade24Fx
The Bank of England, the problems of the ruble & NFPThe Bank of England left the monetary policy parameters unchanged as we expected. Since this decision was included in the price, all the attention of traders was focused on the comments of the Central Bank and its head. The Bank of England raised its economic growth forecast (up to 1.5% of GDP growth) but warned that the situation with Brexit “darkens” the future for monetary policy. At the same time, the Members of the Monetary Policy Committee of the Bank of England support the view that the Central Bank will require a more stringent policy. However, the markets were not that impressed with such rhetoric of the Central Bank and the pound for the day suffered losses. Today, all the attention of the markets will be focused on data on the US labor market. In view of the pause in the Fed's actions, it is the figures of the NFP that will shape the market expectations for the future actions of the Central Bank. Recall, last month the data turned out to be quite good + 196K and the dollar buyers could breathe out with relief after the devastating February data (the NFP was only + 30K). Good numbers are also expected this time - + 180K. This figure fully coincides with the average value of the NFP over the past two years. This means that data will almost certainly differ from forecasts. The question is this number will be worse than predicted or better. In our opinion, there are reasons to expect an excess with a “+” sign. These thoughts are pushed by numbers from ADP (on Wednesday, the data showed an increase of 275K with a forecast of 180K). The level of correlation between these indicators is low, but they still characterize, by and large, the same thing. In addition, the US GDP figures for the first quarter, albeit with some assumptions, “insist” in a positive way. So today we will buy a dollar. Another motivation for this is the results of research by analysts JPMorgan Chase, who conducted a retrospective analysis of the dollar behavior over the past 10 years. So, in May, the dollar index grew 8 times. For the American currency, this is the strongest month of the year. The Russian ruble showed the worst results in the foreign exchange market yesterday. So those of our readers who listen to our recommendations should have earned good money. The reasons for the current sales of the ruble on the surface - the decline in oil prices and fears of new sanctions from the US. As for the deeper, fundamental foundations, we wrote about them earlier in our previous reviews. About the oil market. Here our readers could earn even more. Russia published data on oil production in April. The country has again failed to meet the conditions of OPEC +. And this is despite the fact that Alexander Novak. Minister of Energy of the Russian Federation, swore an oath that the country would fulfill the terms of the deal. The problem is not in additional volumes of oil that Russia releases to the market (they are insignificant, about 40-50K b / d). But that Russia is not fulfilling the agreement. If other members of OPEC + start following a similar strategy, then in June the agreement may well not be extended. And this could potentially lead to the appearance on the market of 1.2 million b / d of additional oil supply. That, naturally, will be the strongest blow to the oil quotes. So the current decline is far from the limit. We continue to monitor the situation on the oil market. In the light of such events and market sentiments, today we will also look for points for asset sales.
Short
by Trade24Fx
Pound is growth leader, dollar and ruble in danger and FEDThe best day for the pound over the past six weeks. Sum up, the result of its growth was the highest among the 30 other currencies on FOREX. Causes - a general correction in dollar pairs and possibility of Brexit progress. It is about the progress in the negotiations between Government and the leaders of the opposition Labor Party. As a result, by the middle of the next week, a compromise on Brexit may appear. In addition, a decision on the parameters of monetary policy in the UK will be announced on Thursday. But we will talk about it tomorrow. Today, the Fed’s Open Market Operations Committee will announce its decision. With a 98% probability, the rate will remain unchanged. That is characteristic 2% put on a decrease in the rate. Obviously, the rate change is not worth waiting. But in general, if you look at the likelihood of lowering the rate until the end of the year, then the tendency is rather “dovish”: the probability that by the end of the year the rate will be decreased is 60-70%. What does this mean for the dollar? - Nothing good. Yesterday's sales - further proof of that. The weak inflation component in the latest report on US GDP indicates that the expectations of a rate hike in 2019 by the Fed are not that baseless. Thus, yesterday the markets were discounted under a possible "pigeon" tone by the Fed. Note that as a reason for the Fed’s optimism is the latest figures for US GDP (they are much higher than forecasts). So the results are quite unpredictable in terms of the Central Bank’s comments. Our position as a whole is to sell the dollar. But, it will need to be adjusted in the process of results announcement. Returning to the events of yesterday, we should note relatively good data on the Eurozone GDP (exceeded forecasts: 0.4%, with market expectations averaging 0.3%). But the GDP of Canada frankly disappointed: in February, the indicator fell by 0.1%. In addition, the situation with unemployment in the Eurozone was better than experts' expectations (7.7%, with a forecast of 7.8%). In this light, yesterday's growth of EURUSD above 1.12 can be considered as logical. Democratic Leader Senator Chuck Schumer called on the United States to impose additional sanctions against Russia. And today, in the US Congress should pass a hearing on Russia, which could result in another tightening of sanctions. As for our positions, today we are continuing to look for points for the dollar sales against the euro, pound, as well as the Australian and Canadian dollars. In addition, we will buy gold, as well as sell oil and the Russian ruble on the intraday basis.
Long
by Trade24Fx
USD bullishness didn’t spill over to the USD/JPY – GDP to help?On Friday, Forex traders will be focused on the new dataset covering the US economy for Q1/2019. In Q4 of last year, the US economy advanced at an annualized 2.2% on quarter, well below a 2.6% growth in the second estimate and compared to 3.4% in Q3/2018. So, the question will be whether this trend of pessimistic readings continues, and how the USD will react. While we would usually expect the USD to drop in response to negative readings below expectations of 2.1%, after the USD index future instead broke out to new yearly highs, currently about to attack 98.00 points. Bullish momentum is probably only temporarily interrupted, but strong enough for a technical reversal. That said, a reading above expectations could accelerate the move in the USD index future and result in a weekly close above 98.00 points. Interestingly enough, the USDJPY wasn't really able to profit from the USD bullishness. We only saw a short spike above 112 to near-highs, but no follow through. While a reading above expectations (> 2.1%) could certainly result in another attempt to sustainably break above 112.40 where further gains up to 114.50/115.00 become an option, a disappointing data set resulting in a stabilisation/corrective move in the USD could push the USD/JPY back towards 110.80/111.00 in the days to come.
by Admiral_Markets
1
Where investors will run to? OPEC +, it’s time to buy euroQuite unclear statistics on personal income and expenses in the United States appeared on Monday. The first one came out worse than expected, and the second - better. In addition, Europe has reported a low level of consumer confidence. Firstly, the euro is very cheap, and secondly, today we are waiting for data on the GDP of the Eurozone and a data block for Germany. Societe Generale recommends analysts to buy EURUSD with targets of 1.16. The reason - hopes for improving the economic situation in the Eurozone. Nouriel Roubini (American economist, a professor at NYU's Stern School of Business) broke out with apocalyptic predictions about the future recession in the global economy and the early flight of investors into safe assets. Among the possible triggers of global problems, Roubini calls the huge debts accumulated by countries, especially the US, trade wars between the US and China, the bad shape of the Eurozone economy, the political risks of developing countries (Turkey, Venezuela, Iran, Brazil, etc.), as well as unpredictable Trump’s actions on the eve of the 2020 elections in the United States. In this light, we recall our recommendations for buying gold. If investors run, then this is determined by one of their goals. Meanwhile, OPEC + is trying to stop the start of the correction in the oil market. In particular, Russian President Putin announced the fulfillment of the OPEC + deal, none of the participating countries raised the question of whether to withdraw from the deal as well. Recall the deal expires in June. And its non-renewal is fraught with the appearance on the market of an additional 1.2 million b / d. This will definitely lead to a sharp decline in oil prices. Our position on oil this week is unchanged - we look forward to the start of the correction and recommend selling the asset. Another reason for reflection was the information that more than one-third of the 80 respondents (managers at Central Banks owning assets of € 7 trillion) made it clear that they are ready to reduce the share of British assets under their personal control (the results of a Central Banking Publications survey). Given that we are talking about tens of billions of pounds that could potentially be spilled onto the market, this news is very negative for pound buyers. However, while there are no facts, it’s obviously premature to panic. As for our positions, today we are continuing to look for points for selling the dollar against the euro, pound, as well as the Australian and Canadian dollars. In addition, we will buy gold, as well as sell oil and the Russian ruble on the intraday basis.
Long
by Trade24Fx
US GDP growth, Trump called to OPEC and a hard week ahead Last week was marked by a significant strengthening of the dollar growth. We noted that one of the reasons was the expectation of good data on US GDP last Friday. Preliminary data for the first quarter appeared much higher than analysts' forecasts: + 3.2% y / y, when the forecast was expected as + 2.3%. But the most interesting thing that happened after the publication of this data was that the dollar has undergone a fairly massive sales on all fronts. In high rates of GDP growth, analysts noted the risk of a future recession in the United States. The fact is that the first quarter growth in 2019, the US GDP is bound to increase stocks and exports. While consumer demand showed a rather weak trend. This was confirmed by the inflationary component of GDP, which grew by only 0.9% after rising by 1.7% in the previous quarter. In addition, experts are very alerted by such an indicator as final sales of products to national buyers. This figure is falling for the second quarter in a row and shows that the effect of Trump's tax incentives has ended. Thus, the situation with demand in the country is deteriorating. Recall that 2/3 of US GDP is directly or indirectly related to the consumer sector. So, it seems like the dollar buyers shouldn't just be excited. Our position remains unchanged so far - we believe that the dollar is too expensive, and we will continue to look for points for its sales: both in the medium term and on the intraday basis. Another significant event on Friday was sales in the oil market. The asset literally was covered with the panic wave, which provoked a sharp decline in the cost of oil. The reason was Trump's call to OPEC, in which the President of the United States told the cartel to lower oil prices. We are rather sceptical about the information about Trump's call, but such massive profit-taking out of the blue suggests that the market is ripe for a correction. Especially when you consider that the number of active oil installations in the United States for the week decreased by 20 units (!) To 805 units, which is the minimum value in 2019 (that confirms the current weakness and vulnerability of bulls). In this regard, this week we decided to roll over into oil sales. And today we will look for points for the sale of an asset within the day. Talking about the upcoming week, we note that it will be very difficult for trading - too much important information. We want to note Eurozone GDP data that will be published on Tuesday, the Fed's decision on the parameters of monetary policy on Wednesday, the announcement of the results of the Bank of England meeting on Thursday, and statistics on the US labor market will complete a difficult week. As for our other positions, today we are continuing to look for points for the dollar sales against the euro, pound, as well as the Australian and Canadian dollars. In addition, we will buy gold, as well as sell oil and the Russian ruble on the intraday basis.
Long
by Trade24Fx
What is behind the dollar growth? Forex Market Trading PlanYesterday's dollar growth took many by surprise on the foreign exchange market. The dollar index has reached its maximum in the last couple of years. Let's try to understand the reasons for this growth, as well as reflect on the near future of the US currency and trading tactics. There were several suggested explanations for the growth of the dollar by leading analysts and traders. One of them - the rise in prices on the oil market will trigger an increase in inflationary pressure in the United States. In turn, the unwinding of the inflation spiral will force the Fed to reconsider its current position in relation to rates. The process of raising them will be removed from the pause and the Central Bank will continue to increase the rate. Another reason for the dollar growth, voiced by analysts, was the expectation of good statistics on US GDP for the first quarter and the current strengthening of the US currency - an attempt to discount for good data. As we see, both explanations are outside the plane of facts and, in fact, are trading on expectations and rumors. That is, the markets routinely “buy” rumors, so than to sell the facts. In this regard, we are extremely skeptical about the prospects for further growth of the dollar in the foreign exchange market. At least, till growth begins to be based on facts. For example, will excellent data on US GDP will actually come out? Or the Fed will make some real statements and actual actions? So far this week, data on sales of new homes in the United States (reached the maximum for the last year and a half marks: + 4.5% with a forecast of -2.7%). Note that the dollar growth has also contributed to the weakness of its main competitors. The euro was declining due to problems with Italy (rating agencies may downgrade Italy), the pound was traditionally “upset” because of the lack of progress in Brexit (according to rumors, Theresa May is serious about voting on the Brexit bill again, on the next week, considering that nothing radical it was not included in it, the chances for another failure are very high), the Swiss franc and gold were falling because of the general growth of investors' “appetite” to risk, and their exit from safe-haven assets.Thus, our position on the dollar remains unchanged - we will continue to look for points for its sales in the foreign exchange market. And we will do this in double volumes with obligatory and rather rigid stops. However, the size of potential profits justifies such a risk. In relation to the news, the following day is interesting because of the meeting results of the Bank of Canada. The Central Bank is likely to leave the parameters of monetary policy unchanged. But the recent rise in oil prices has definitely played into the hands of the Canadian dollar. So, we recommend watching USDCAD- current quotes look exceptionally attractive for its sales. Our trading plan for today is USDCAD sale from 1.3450 with stops above 1.3520 and profits around 1.33. Despite the fact that we are going against the current “will” of the market, today we will continue to look for points for selling the dollar against the euro, the pound and especially the Canadian dollar. We will wait for a little with buying of gold, but we will look for points for buying oil on the intraday basis.
Short
by Trade24Fx
2
Data from China and the US, world trade is at crisis pointThe statistics from China was the main news event of yesterday. It seems that government measures to stimulate the economy have taken effect. Retail sales and industrial production were much higher than analysts' forecasts of 8.7% and 8.5%. As a result, GDP growth was also pleasantly surprised: 6.4% quarterly growth, with market expectations of 6.3%. The progress in the negotiations between the US and China the result is the decline in gold and the Japanese yen and it looked quite logical and reasonable. But we are still not in a hurry to sell gold. At least today. Moreover, the negotiations are rumors, and the facts are that in the fourth quarter of 2018, world trade fell by 1.8% q / q, which was a record value in the last ten years since the global financial crisis. According to The Telegraph, the recent downturn in world trade is similar to the dot-com bubble collapsed in 2001. Over the past almost 20 years, things were worse only in 2007–2008, when the volume of world trade fell by 12.7%. The dollar “received support” from data on the US trade balance. The deficit turned out to be less than experts had expected: - $ 49.4 billion with the forecast - $ 53.4 billion. We were pleased with the markets and data on the trade balance of Canada, which also came out better than expected. So the main beneficiary of the news of yesterday was the Canadian dollar, which strengthened well, although at the end of the day lost most of the gains. Recall that for the Canadian dollar, which is a typical commodity currency, positive news from China, coupled with positive macroeconomic statistics and high oil prices create almost perfect conditions for growth. Yesterday's news background is generally favorable for commodity markets. But oil was not able to take advantage of this and dropped at the end of the day. We consider this as a signal that the market correction has already matured. Accordingly, while asset quotes are at the local top, we decided to roll over from buying to sales. However, if oil resumes its growth (it will be able to consolidate above 64.50). So today we sell oil with stops above 64.50.
by Trade24Fx
Snooze Ville in FOREX, pound’s immunity and China gives hopeIn general, the previous week was relatively calm. As a result, the volatility index of exchange rates, which is calculated by the investment bank JP Morgan, fell to its new minimum since 2014. For instance EURUSD. Since the beginning of 2019(that is already 3.5 months), it has been fluctuating in a range of width less than 400 points (such a range a pair could pass in 3-4 days even without any volatility explosions). The most likely contenders for the “role” of irritant can only note the start of a full-fledged trade war between the US and the EU. The main event of the week was another Brexit postponement. In general, the word “another” has already become a prefix to Brexit: the next voting in Parliament, the next failure of May’s plan, the next negotiations, etc. The main result of the appearance of this “prefix” was the development of immunity in pounds for information regarding Brexit. The GBPUSD dynamics of last week is proof of that. Actually, we can hardly expect any breakthroughs this week, that means that the pound will continue to fluctuate without a clear direction. This should be used for active trading with no clear preference, buying a pound on descents and selling after local growth. Among other events, it is worth noting the publication of the Fed's minutes, as well as the announcement of the results of the ECB meeting (again, nothing new and unexpected). It is worth paying attention to the block of key data on the Chinese economy (GDP and industrial production). After the next drop in forecasts of the pace of economic development by the IMF, the markets would be very happy to see a positive trend in the economic development of the world economy. In general, there are reasons for optimism. On Friday, data on China’s trade balance were published, which showed an extreme rise in China’s exports. In addition, a sharp increase in loans showed that measures to stimulate the economy in China seem to be yielding results. In terms of trading preferences, we start approximately the same as we ended the previous one: we will continue to look for points for selling the dollar in the foreign exchange market (except USDJPY, we are buying it), buying gold and oil in the commodity markets, besides continue to sell the Russian ruble.
by Trade24Fx
NFP, May asks EU for Brexit delay, and The USA oil productionBureau of Labor Statistics reported employment data on Friday. Data on NFP pleasantly surprised “fans” of the dollar. With market expectations + 177K, in fact, came out + 196K. After the failure of the previous data, the level of fear that the US labor market is experiencing serious problems has subsided. But the mood was spoiled by data on the average hourly wage, which grew by only 0.1% (analysts had expected growth of 0.3%). In general, the data can be interpreted as positive for the dollar, but its growth was moderate. This suggests that its growth potential is limited. In this regard, this week we are looking for points for selling dollar. We give the current summary of Brexit. Theresa May officially requested the EU to postpone until June 30 in order to negotiate with the opposition and create a version of the agreement for which the Parliament will vote. However, it remains to be seen whether the EU will provide this delay or not. Last month, the EU has already refused to provide it until June 30 and may well “resist”, citing the need for a longer delay. So everything remains unclear and tense. More clarity on the idea will be April 10, when the EU will convene an emergency summit on Brexit. EU leaders will meet April 10 at an emergency summit this will clarify the Brexit situation. Recall the United Kingdom should either leave the EU without a deal or agree on a new postponement on Friday. The pound is under pressure. We continue to believe in the common sense of both parties and that the UK will not come out with no deal. Therefore, our trading tactics are unchanged - we buy a pound on descent. Trade negotiations between the US and China are still in progress, and the parties continue to radiate optimism. A few words about the oil market. Last week we already noted that the data of the US Department of Energy recorded the fact of a new absolute record of oil production in the USA - 12.2 million barrels. So on Friday, data from Baker Hughes was published, which showed that the number of oil rigs in the United States increased by 19 units. Signals are definitely bearish for the oil market. The sharp drop in oil production in Venezuela and the effect of OPEC + No. 2 offset production growth in the United States so far, and events in Libya only add optimism to oil buyers. But the situation, in our opinion, is becoming increasingly dangerous from the point of view of oil prospects. So, we still continue to look for points for buying on the intraday basis, but with a much lower level of aggression at the same time we are beginning to gradually prepare for correction, as well as open medium-term positions for sale. OPEC + No. 2 will soon expire and if it is not renewed, the massacre will begin on the oil market. The EU will probably be the main news generator. The meeting of the European Central Bank on Wednesday and the EU decision to postpone for the UK will be the main events of the week. Pay attention to the text of the minutes of the last FOMC Fed meeting, UK GDP and inflation rate for the United States. And once again we remind, April 12 is the current official date of the UK exit from the EU. In general, it will not be boring and volatile, it means there will be a lot of opportunities for earnings.
Long
by Trade24Fx
3