Forex analysis review |
- Trend line analysis on EURUSD
- Ichimoku cloud indicator analysis of Gold
- Ichimoku cloud indicator analysis of EURUSD
- EUR/USD. "Green" Nonfarms and bad news from Capitol Hill
- Comprehensive analysis of movement options for #USDX vs EUR/USD & GBP/USD & USD/JPY (Daily) on August 10, 2020
- Financial market to face fluctuations throughout coronavirus crisis
- Gold declines after months of rallying up
- Underestimated US economy startles EUR
- August 7, 2020 : EUR/USD daily technical review and trade recommendations.
- August 7, 2020 : EUR/USD Intraday technical analysis and trade recommendations.
- August 7, 2020 : GBP/USD Intraday technical analysis and trade recommendations.
- American stock indices continue their rally while market sentiment in Asia and Europe deteriorates
- End of US dollar hegemony
- Analysis of EUR/USD and GBP/USD for August 7. Markets are starting to believe in the US currency, which is linked to strong
- BTC analysis for August 07,.2020 - Watch for potential long entries on the dips with the target at $12.160
- Dollar's oversold position not enough to change the trend
- Analysis of Gold for August 07,.2020 - Contraction phase on the Gold, watch for the breakout to confirm further direction
- EUR/USD analysis for August 07 2020 - Potential completion of ABC downside correction and upside movement towards 1.1890
- Dollar rises ahead of Non-farm Payrolls report
- Trading recommendations for the GBP/USD pair on August 7
- Where are we going? Cost of oil is slowly declining
- USD/CAD. New trade war is coming between Canada and the United States
- GOLD Confirms Further Growth!
- Trader's diary on 08/07/2020. Market awaits Nonfarm payrolls
- USD/CAD On The Verge Of Losing The Downtrend Resistance!
| Posted: 07 Aug 2020 02:01 PM PDT EURUSD is showing signs of weakness. EURUSD justifies a pull back towards the medium-term upward sloping trend line support, specially if price breaks below the horizontal support at 1.1720-1.17.
Blue rectangle- support Green line - medium-term trend line support Red rectangle -target if support fails to hold I expect EURUSD to move towards the red rectangle on top of the green support trend line if and after price breaks below the blue rectangle support area at 1.17. The failure to make a higher high increases the chances of making a deeper pull back. That is why breaking below 1.17 would a be fast short-term sell signal with 1.16-1.1570 as target. The material has been provided by InstaForex Company - www.instaforex.com |
| Ichimoku cloud indicator analysis of Gold Posted: 07 Aug 2020 01:57 PM PDT Gold price ended the week higher making new weekly all time highs and closed above $2,030. Trend remains bullish. The precious metal was under pressure on Friday as most probably profit taking by bulls took place.
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| Ichimoku cloud indicator analysis of EURUSD Posted: 07 Aug 2020 01:53 PM PDT For a consecutive week price managed to move above 1.19 but week closed below 1.18. Trend might still be bullish but the weakness of bulls to recapture 1.19 implies that a deeper pull back might be in store for us for next week.
As can be seen in the weekly chart above this weekly candle has same long upper tail as last week's candlestick. This candlestick formation confirms the importance of resistance at 1.19-1.18 area.
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| EUR/USD. "Green" Nonfarms and bad news from Capitol Hill Posted: 07 Aug 2020 09:20 AM PDT The US dollar ends the current trading week on a major note: despite the ongoing political battles in the US Congress, the greenback strengthened across the market, thanks to strong macroeconomic reports.
The EUR/USD pair collapsed by more than 100 points. Other currency pairs of the so-called "major group" showed similar dynamics, reflecting the demand for the dollar. However, it is too early to talk about a trend reversal – even in the medium term. The American won today's round, but the complete victory is still far away – at least, to break the situation, you need good news from Capitol Hill (which is not). Therefore, at the moment, we can only talk about a correction. A large-scale, fairly comprehensive, but still correction. The next trading week will put everything in its place – but in the meantime, dollar bulls can "uncork the champagne": Non-Farms have become a kind of lifeline for the US currency. What happened? Key data on the labor market for July were published today. Non-Pharmaceuticals themselves play an important role for traders, but this release had a special significance for the market. First, in July, an outbreak of coronavirus was recorded in the United States. The daily increase in the number of cases did not fall below the 60-thousand mark, and on some days it remained above the 70-thousand target. The epicenter of the epidemic shifted to the south of the country – in California, Florida, and Texas, record rates of morbidity and mortality were recorded (and are still being recorded). Although the quarantine restrictions were not tightened at the national level, local authorities took appropriate decisions (for example, in Miami). This circumstance could negatively affect the dynamics of the recovery of the American labor market. Secondly, on the eve of the release of July Nonfarms, the market received quite ambiguous signals. For example, the increase in the number of initial applications for unemployment benefits in mid-July paused its decline (which lasted for 12 weeks) and began to show a slight pullback, reflecting worrying trends in the labor market. Also, just two days before today's release, an extremely weak report was published from the ADP agency, whose experts also monitor the situation in the US labor market. According to their data, in July, the increase in the number of people employed in the private sector was only 167 (experts predicted to see an increase of up to 1.5 million). In other words, the intrigue around the July Nonfarms persisted until the last minute, so the reaction to today's release was very volatile. The pendulum could swing one way or the other. As a result, Nonfarm were on the side of the dollar: almost all components of the release came out in the "green zone", exceeding the forecasts of experts. Thus, the unemployment rate fell to 10.2% (the forecast was at 10.5%), and the number of people employed in the non-agricultural sector increased by 1 million 763 thousand (with forecast growth of 1.5 million). Only the manufacturing sector of the economy "pumped up" – the increase in the number of people employed in this area was only 26 thousand, although analysts expected to see this figure much higher, at the level of 250 thousand. But salaries – pleased. The average hourly wage rose by 0.2% every month (the indicator came out of the negative territory for the first time since May), and rose to 4.8% on an annual basis (with a growth forecast of 4.2%). The growth of this indicator has a positive impact on the level of consumer activity of Americans, and therefore on inflationary processes.
Thus, the dollar is reasonably growing today, demonstrating a corrective recovery. The published data reduced market concerns about the prospects for recovery of the US economy in the second half of the year. But for a more confident growth, dollar bulls lack the last puzzle, "worth" one trillion dollars. We are talking about the Republican party's bill on additional assistance to the US economy. Republicans still cannot agree with the Democrats, although both sides assure reporters that "some progress has been made". But the de facto situation is hanging in the air: congressmen from different political camps do not want to make serious concessions in the run-up to the presidential election. Moreover, as White House economic adviser Larry Kudlow said today, negotiations on the stimulus package "have reached an impasse to date". This fact did not allow the dollar bulls to fully manifest themselves: the growth of the dollar index and the decline of the euro/dollar pair was limited. How to trade? At the moment, the first reaction to the publication of Nonfarm has already subsided. The dollar index began to gradually slide down again, and the eur/usd pair floated in the 17th figure. This is largely because traders began to fix profits en masse, without risking leaving open positions for the weekend. Especially since the negotiations between Republicans and Democrats will take place on Saturday and Sunday. If they announce a compromise by Monday, the dollar will continue its ascent. Otherwise, the greenback will return to the same positions as it was before Nonfarming. In the context of the eur / usd pair, this means that the pair will return to the area of the 18th figure and again try to test the 19th price level. Thus, it is too late to open trading positions now – traders have already "played" the macroeconomic release. On the weekend, it is necessary to monitor American news feeds: if the congressmen still find a common denominator, the downward movement of EUR/USD will resume with a new force. The main support level (the goal of the southern movement) is located at 1.1650 – this is the lower line of the Bollinger Bands indicator on the daily chart. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 07 Aug 2020 09:20 AM PDT Minor operational scale (Daily) Are the peaks conquered? Correction? Options for the development of the movement #USDX vs EUR/USD & GBP/USD & USD/JPY (Daily) on August 10, 2020. ____________________ US dollar index From August 10, 2020, the movement of the dollar index #USDX will continue depending on the direction of the breakout of the range:
In case of a breakdown of the resistance level of 93.35, the movement of the dollar index will continue in the 1/2 Median Line Minute channel (93.35 - 93.65 - 94.00) with the possibility of continuing the development of the movement already in the equilibrium zone (94.25 - 94.80 - 95.30) of the Minute pitchfork with the prospect of reaching the initial SSL lines (96.25) of the Minor operational scale forks and the FSL Minute end lines (97.10). If the support level of 93.05 breaks at ISL38.2 Minor, the #USDX movement will continue its development in the equilibrium zone (93.05 - 91.90 - 90.80) of the Minor operational scale fork. The markup of the #USDX movement options from August 10, 2020 is shown on an animated chart.
____________________ Euro vs US dollar The single European currency EUR/USD from August 10, 2020 will be determined by the development and direction of the breakdown of the range:
In case of a breakdown of the support level of 1.1735, the movement of the single European currency will continue in the channel 1/2 Median Line (1.1735 - 1.1685 - 1.1645) of the Minute operational scale fork, and in the event of a breakdown of the lower boundary (1.1645) of this channel, the downward movement of this instrument can continue to the control line LTL Minute (1.1510) and the boundaries of the equilibrium zone (1.1345 - 1.1245 - 1.1135) of the Minor operational scale fork. A breakdown of the resistance level of 1.1835 at ISL38.2 and Minute will return the development of the EUR/USD movement to the boundaries of the equilibrium zone (1.1835 - 1.1940 - 1.2010) of the Minute operational scale fork with the prospect of reaching the control line UTL (1.2120) of the Minor operational scale fork. The EUR/USD movement options from August 10, 2020 are shown on the animated chart.
____________________ Great Britain pound vs US dollar The development of the movement of Her Majesty's currency GBP/USD from August 10, 2020 will also be due to the development and direction of the breakdown of the range:
The breakdown of the final Shiff Line Minute - support level of 1.3070 - will determine the continuation of the downward movement of the currency of Her Majesty to the goals:
A breakdown of the 1.3150 resistance level at ISL38.2 Minute will make the development of the GBP/USD movement in the equilibrium zone relevant (1.3150 - 1.3300 - 1.3400) of the Minute operational scale fork. Options for the movement of GBP/USD from August 10, 2020 are shown on the animated chart.
____________________ US dollar vs Japanese yen The development of the movement of the currency of the "Land of the Rising Sun" USD/JPY from August 10, 2020 will be determined by the development and direction of the breakdown of the boundaries of the equilibrium zone (104.80 - 105.45 - 105.90) of the Minute operational scale fork - details of movement within this zone are shown on the animated chart of the Minute operational scale fork. The breakdown of the resistance level of 105.90 at the upper boundary ISL38.2 zone equilibrium of the Minute operational scale fork will be relevant in the development of the upward movement of the currency "Land of the Rising Sun" to the ultimate Shiff Line Minute (106.65), the lower boundary ISL38.2 (107.35) fork operational scale Minor, and the borders of the channel 1/2 Median Line Minute (108.10 - 108.50 - 109.00). A breakout of the lower border ISL61.8 zone equilibrium of the Minute operational scale fork - support level 104.80 - confirm the further development of the movement of USD/JPY in the channel 1/2 Median Line (105.20 - 103.90 - 102.50) of the Minor operational scale fork. The markup of USD/JPY movement options from August 10, 2020 is shown on an animated chart.
____________________ The review is compiled without taking into account the news background, the opening of trading sessions of the main financial centers and is not a guide to action (placing "sell" or "buy"orders). Formula for calculating the dollar index: USDX = 50.14348112 * USDEUR0.576 * USDJPY0.136 * USDGBP0.119 * USDCAD0.091 * USDSEK0.042 * USDCHF0.036. Where the power coefficients correspond to the weights of currencies in the basket: Euro — 57.6 %; Yen — 13.6 %; Pound sterling — 11.9 %; Canadian dollar — 9.1 %; Swedish Krona — 4.2 V %; Swiss franc — 3.6 %. The first coefficient in the formula brings the index value to 100 on the starting date-March 1973, when the main currencies began to be freely quoted relative to each other. The material has been provided by InstaForex Company - www.instaforex.com |
| Financial market to face fluctuations throughout coronavirus crisis Posted: 07 Aug 2020 09:03 AM PDT Experts at investment bank Goldman Sachs warned of serious fluctuations in financial markets, which could potentially provoke both the emergence of the coronavirus vaccine and the failure of its trials. In the first case, GS analysts note, the S&P 500 index is capable of rising to 3700, and in the second, it can fall to 2200 points. This forecast made experts feel wary.
Index growth factors In its report, Goldman Sachs writes that investors are paying insufficient attention to the potential for successful vaccine trials. If this does happen, then market trends will change faster than expected. Bonds will be the first to suffer and will be disposed of. Then funds will accumulate in the shares of traditional cyclical companies and banks, leaving the technology sector. The latter is likely to lose its leadership. A factor such as the US presidential election will have an additional impact, according to Goldman Sachs. The potential loss of the incumbent White House along with the good news about the vaccine will push up emerging market stocks. Analysts say that under such circumstances, the S&P 500 index could rise to 3700 points. Index decline factors If all of the above circumstances do not add up to a single picture, and in addition to everything, the second wave of coronavirus will rage stronger than expected, then Goldman Sachs does not exclude a potential drop in the S&P 500 index to 2,200 points. Morgan Stanley, represented by analyst Michael Wilson, warned about the possibility of negative developments even earlier, the very one who correctly predicted the market situation in March this year. Earlier this month, he talked about the possibility of reducing the S&P 500 by 10%. True, he focused on the fact that after such a correction, growth can resume, while demonstrating a healthier and broader character. The prerequisites for the resumption of growth, as per Wilson, is the economic recovery and the growth of corporate profits. However, it is not known how the so-called "August curse" will affect all the forecasts made above. Recall that over a decade and a half, the S&P 500 has always declined in the last month of the summer. The average decline over the years was 0.4%. But the uniqueness of this year's situation, some analysts believe, could break the traditional "August trend". Experts are already saying that the market volatility is lower than that which usually accompanies the corporate reporting season. Influence of the virus The corona crisis is exerting tremendous pressure on the global economy. However, the S&P 500 index specifically did not always meet the expectations of experts monitoring the impact of the pandemic on the financial market. The first news about COVID-19 recorded a growth of about 3%, which then fell sharply in February-March by 34%, and from March 23 it gradually increased, which it continues to do to this day, by 42%. The coronavirus has had a direct impact on Goldman Sachs as well. Investbank in the second quarter of this year showed 41% in revenue over the same period last year of more than $ 13 billion. This is the second largest quarterly income of the bank in history. The material has been provided by InstaForex Company - www.instaforex.com |
| Gold declines after months of rallying up Posted: 07 Aug 2020 06:55 AM PDT
The price of gold this moved to a negative correction Friday morning due to the unexpected strengthening of the greenback. However, the precious metal still has the opportunity to be noted for the longest and most rapid rise, which has only been over the past ten years. The reason for the excitement around the metal was the coronavirus pandemic, which negatively affected almost all areas of the economy, and became a support factor for gold. However, it is impossible to count on the continuation of the winning streak now. In the near future, there will be some rollback, which is primarily due to the gaining confidence of the greenback to take back its lost position after reaching the bottom. The strengthening of the dollar is understandable, and it will be followed by a reduction in the position of gold. And if you manage to lose not all the acquired advantages, then this will be a good sign for the future. Market participants will try to catch on to any fact that will force the precious metal to reduce its value in order to return to their usual work in other sectors. At least, there are no overly negative forecasts for either the medium or long term. The price of the precious metal fell by 0.33% and reached $ 2,056.47 per troy ounce. At the same time, the level of support for gold amounted to $ 1,963.50 per troy ounce, and the resistance level moved to the level of $ 2,072.75 per troy ounce. However, the previous rise in gold was quite convincing. So, in two days, the precious metal was able to take by storm the value of $ 2,040 and hastened even higher. The dynamics of growth remains very good, therefore, unless something catastrophic happens, the metal will go up again and will break new records. Let us recall that the rise in the value of gold has been going on practically without interruption since the middle of the first month of summer. Traders, being in rather difficult conditions of pressure from the coronavirus pandemic, are not prone to big risks and use gold as a protective asset that can save their capital from an unexpected collapse. Now, gold has a new goal, which is quite possible to achieve in the very near future and that is $ 2,100 per troy ounce. Silver futures for September delivery also slightly corrected downward falling 0.01%, leaving it at its current price level of $ 28.402 per troy ounce. The price of palladium fell more significantly by 1.88%. Its level is consolidating at around $ 2,179.7 per ounce. Platinum followed the negative trend and fell 2.82%, pushing it to $ 969.77 an ounce. Copper futures for September delivery fell 1.24% to $ 2.8773 a pound. The material has been provided by InstaForex Company - www.instaforex.com |
| Underestimated US economy startles EUR Posted: 07 Aug 2020 06:42 AM PDT Sometimes, it happens that the market is moving in the direction opposite to expectations. This is exactly what is going on now. The S&P 500 had been on track to historic highs before the publication of the ADP National Employment Report. The ADP payroll processor released downbeat data on the private sector employment. It seemed to crush resistance of the EUR/USD bears. Nevertheless, the US Labor Department posted better-than-expected data on initial unemployment claims. On Friday, the US nonfarm payrolls revealed similar data on employment in the public and private sectors like in the ADP report. This assured EUR bulls to take profit. Now they are thinking about a downward correction. The milestone event for EUR is the EU-backed recovery fund which provides a long-term support to the single European currency. In addition, EUR found support from the move of central banks towards diversification of their gold and forex reserves as well as investors' revision of their portfolios in favor of the euro-denominated assets. Another argument for investors in favor of EUR is different prospects of the EU and US economies. On the one hand, the eurozone plunged into a deeper recession in Q2 than the US. On the other hand, the better coronavirus picture, more efficient social programs on the labor market, and coordinated efforts of the EU leaders suggest a more rapid GDP recovery to the pre-crisis level than in the US. US and eurozone GDP No wonder EUR is shining now with prospects for sustaining strength in the long term. Nevertheless, it would be a good idea to take notice of two important points. First, US stock indexes have been advancing higher than European ones. Why? The US stock market owes its steady rally to unexpectedly strong financial reports from large US companies for Q2. Second, the assumption about a growing EUR share in central banks' gold and forex reserves has not been confirmed yet. Apparently, central banks will rush pumping up their reserves with EUR in case Washington decides to resume its trade war with China. It makes sense to stay sober amid the EUR stunning rally. Indeed, the second COVID-19 wave in Spain and lower virus rates in the US assure some EUR/USD bulls to take profit. Remarkably, the US economy released unexpectedly upbeat metrics which come as a surprise. This prompts investors to make a conclusion that the downturn in the US economy is not as dismal as believed. For instance, the US outpaces the eurozone and Japan in terms of business activity. Manufacturing PMI Meanwhile, some EUR fans are willing to exit long positions for several reasons such as uncertainty around the new stimulus package in the US, escalating jitters in the US – China relations, and the presidential elections. Hardly anyone doubts that the White House and Congress will eventually come to the common denominator and pass the bill until the first week of August. So, the second stimulus package will be good news for the US dollar. The meeting between Washington and Beijing is scheduled for August 15. The parties are due to discuss to what extent they have fulfilled their commitments under the first phase trade deal made in January. Citing well-informed sources, Bloomberg reported that China intends to revise the trade deal due to the pandemic. However, if something goes wrong for Donald Trump, the trade war is likely to spark off again. Back to the chart. The overall trend of EUR/USD is quite steady but the time is ripe for a downward correction. It would be a nice idea to enter the market with long deals on retracements to 1.1755, 1.169, and 1.1635. EUR/USD, daily chart  |
| August 7, 2020 : EUR/USD daily technical review and trade recommendations. Posted: 07 Aug 2020 06:27 AM PDT
The EURUSD pair has been moving-up since the pair has initiated the depicted uptrend line on May 25. On June 11, a major resistance level was formed around 1.1400 which prevented further upside movement for some time and forced the pair to have a downside pause. Recently, the EURUSD demonstrated an ascending wedge around the mentioned price level of 1.1400.However, recent negative fundamental data from the U.S. have caused the EUR/USD to achieve another breakout to the upside. By the end of last week, the EURUSD has been approaching the price levels around 1.1900 where signs of downside pressure were enhanced by the negative fundamental reports from Germany on Friday. Intraday traders should be considering the current breakdown of the depicted short-term uptrend line. A Breakdown below the price level of 1.1650 is going to give a better confirmation for a valid SELL Position. Estimated targets would be located around 1.1550, 1.1500 then 1.1450. On the other hand, Conservative traders should consider the recent bullish pullback to retest the backside of the broken short-term uptrend for another SELL Position with a lower risk. The material has been provided by InstaForex Company - www.instaforex.com |
| August 7, 2020 : EUR/USD Intraday technical analysis and trade recommendations. Posted: 07 Aug 2020 06:26 AM PDT
On March 20, the EURUSD pair has expressed remarkable bullish recovery around the established bottom around 1.0650. Shortly after, a sideway consolidation range was established in the price range extending between 1.0770 - 1.1000. On May 14, evident signs of Bullish rejection as well as a recent ascending bottom have been manifested around the price zone of (1.0815 - 1.0775), which enhances the bullish side of the market in the short-term. Bullish breakout above 1.1000 has enhanced further bullish advancement towards 1.1150 then 1.1380 where another sideway consolidation range was established. Hence, Bearish persistence below 1.1150 (consolidation range lower limit) was needed to enhance further bearish decline. However, the EURUSD pair has failed to maintain enough bearish momentum to do so. Instead, the current bullish breakout above 1.1380-1.1400 has lead to a quick bullish spike directly towards 1.1600 (Fibonacci Expansion 78.6% level) which failed to offer sufficient bearish pressure. That's why, further bullish advancement pursued towards 1.1730 (Fibonacci Expansion 100% level) which failed to offer sufficient bearish rejection for a few days until Today. Bullish persistence above 1.1730 will probably favor further bullish advancement towards 1.2075 (161% Fibo Expansion Level) in the intermediate-term. On the other hand, bearish re-closure below 1.1730 indicates lack of bullish momentum and enhances further bearish decline initially towards 1.1600. Trade recommendations : Conservative traders should wait for the current bullish movement to pause and get back below 1.1730 as an indicator for lack of bearish momentum for a valid SELL Entry.T/P levels to be located around 1.1600 and 1.1500 while S/L to be placed above 1.1800 to minimize the associated risk. The material has been provided by InstaForex Company - www.instaforex.com |
| August 7, 2020 : GBP/USD Intraday technical analysis and trade recommendations. Posted: 07 Aug 2020 06:25 AM PDT
Since April, the GBPUSD has been moving sideways within the depicted consolidation range extending between (1.2265 - 1.2600)On May 15, transient bearish breakout below 1.2265 (consolidation range lower limit) was demonstrated in the period between May 13 - May 26, denoting some sort of weakness from the ongoing bullish trend. However, immediate bullish rebound has been expressed around the price level of 1.2080 bringing the GBPUSD back above the depicted price zone of 1.2520-1.2600 which failed to offer sufficient bearish rejection. Further bullish advancement was expressed towards 1.2780 (Previous Key-Level) where another episode of bearish pullback was initiated. Short-term bearish movement was expressed, initial bearish targets were located around 1.2600 and 1.2520 which paused the bullish outlook for sometime & enabled further bearish decline towards 1.2265. Significant bullish rejection was originated around 1.2265 bringing the GBP/USD pair back towards 1.2780, where the mid-range of the depicted wedge-pattern failed to offer enough bearish rejection. Intermediate-term Technical outlook for the GBP/USD pair remains bullish as long as bullish persistence is maintained above 1.2780 (Depicted KeyLevel) on the H4 Charts. On the other hand, significant bearish rejection was demonstrated around the price level of 1.3160 in the form of (Bearish Engulfing Candlesticks). Hence, upcoming bearish reversal should be expected provided that early bearish breakout occurs below 1.2980 (the depicted wedge pattern upper limit). Trade recommendations : Technical traders are advised to wait for any upcoming bearish breakdown below 1.2980 as a valid SELL Entry. Initial T/p level is to be located around 1.2780. On the other hand, bullish persistence above 1.2980 invalidates this trading scenario. The material has been provided by InstaForex Company - www.instaforex.com |
| American stock indices continue their rally while market sentiment in Asia and Europe deteriorates Posted: 07 Aug 2020 05:57 AM PDT Yesterday, the US stock market closed in positive territory as all major stock indicators went up. The excitement came after the news that the US authorities were planning to launch another stimulus package. However, no agreement has been reached so far on this issue. Moreover, the Dow Jones and S&P 500 have been rising for five days in a row, and the Nasdaq is closing with gains for the seventh consecutive session. So, thirty two times in a row the Nasdaq index is breaking all records. Moreover, the Nasdaq was able to achieve incredible performance in just forty trading days: it rose by more than 1,000 points from the previous level. Such rapid growth was last recorded twenty years ago in 2000 when the index jumped within 49 days from the level of 4,000 to the mark above 5,000 points. Yesterday the news about the intention of the American leader to sign the document ratifying a new stimulus package in the next two days improved investors' sentiment. They have long been waiting for this decision. The document will specify the size and principles of additional payments and unemployment benefits, as well as the introduction of tax holidays on employee salaries, etc. Meanwhile, the number of unemployed Americans fell by 249,000 for the first time last week. Now the unemployment rate has reached 1.186 million. The preliminary forecast was less optimistic: it was assumed that the new unemployment rate would be at around 1,415 thousand people. Today, the US Ministry of Labor is due to reveal the report of on the unemployment rate in the country for July. Market participants hope to see positive data here as well. The Dow Jones Industrial Average increased by 0.68%, or 185.59 points. Currently, it has reached the level of 27,387.05. The Standard & Poor's 500 index rose by 0.64%, which corresponds to 21.39 points. As a result, the index is set at around 3,349.17 points. The Nasdaq Composite index became the best performer: it rose by 1%, or 109.67 points, and it is currently holding at 11,108.07 points. On the contrary, the Asian stock exchange is facing the overall downtrend. Major indicators are heading to the downside this morning and are very likely to close in the red by the end of the week. This was probably caused by a new round of conflict escalation between the US and China. Yesterday, the users and creators of TikTok and WeChat finally faced the scenario they were so afraid of. The American president made the final decision to ban the use of these applications in the United States. According to the new legislation, American companies are prohibited from conducting various kinds of transactions with the owners of the banned applications. In case of violation of this law, extremely tough sanctions are envisaged. The document was signed yesterday and will come into full force in 45 days. Donald Trump's decision followed immediately after the urgent request of Secretary of State Mike Pompeo to remove these applications from all application stores operating in the country. Moreover, the requirements for almost all Chinese companies operating on the US stock exchanges have become much stricter. Now they have to provide regular detailed reports on their activity to the American authorities. China's Shanghai Composite Index has posted considerable losses: this morning it declined by 1.45%. China's Shenzhen Component Index also went down by 1.23%. However, an even greater drop was recorded in the Hang Seng index of Hong Kong which fell by as much as 2.28%. Japan's Nikkei 225 fell 0.83%. South Korea's KOSPI index suffered less than the rest: it showed only a 0.31%.decline. Australia's ASX 200 index went down by 0.71%. Meanwhile, the country's main regulator pointed out in its report that the lockdown measures reintroduced in certain parts of the state could negatively affect Australia's GDP. According to some estimates, the indicator may decline by 2% in the current quarter. The European stock markets are also pessimistic today. Most of the indices went through negative correction. In the morning session, the general index of large enterprises of the European region, Stoxx Europe 600, decreased by 0.13%, hitting 362.02 points. The UK FTSE Index dropped 0.37%. The German DAX Index fell 0.39%. The French CAC 40 Index sank 0.71%. The leaders of the collapse were the indices of Italy FTSE MIB and Spain IBEX 35, having lost 0.93%, and 0.94% respectively. The indicators were seriously shaken by the news about the deterioration of relations between the US and China. The situation is steadily moving towards its logical end, which may become a complete termination of trade relations. In this regard, any news of the escalation of the conflict makes the market participants panic. Yet, investors take into account the statistics of the European region. Thus, the total volume of production in the German industrial sector in June increased by 8.9% indicating a good recovery rate. The data came in much better than expected. Analysts predicted the growth of no more than 8.1%. German exports also increased by 14.9% in June compared to the previous month. However, analysts expected only a 13.3% growth. In the meantime, experts at Bank of America Securities have improved their forecast regarding the GDP level in the euro zone. According to new data, the drop should be 7.9%, while previous estimates showed at least 8.3% decline. However, next year the GDP is expected to rise by 4.3% instead of 4.8% estimated earlier. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 07 Aug 2020 05:46 AM PDT
The US dollar has long been a dominant reserve currency and a symbol of reliability and economic prosperity. However, this is already in the past. The era of the US dollar is over. Due to the coronavirus pandemic, household incomes have plummeted and the US national debt has risen. Moreover, now China claims to be the leading economy in the world. It is not surprising since it was China that first emerged from quarantine and resumed the work of its economy. In this regard, many economists predict a collapse of the US dollar. For example, the eminent economist Stephen Roach is confident that the American currency will collapse by 30-35% very soon. For a very long time, the dollar was the world's leading currency. Its dominant position strengthened after the First World War thanks to US military superiority. However, in the early 2000s, there was a long-term tendency towards a weakening of the American currency, which is still observed today. Indeed, July 2020 was the worst month for the US dollar in the past 10 years. It collapsed to multi-year lows. In just a month, the greenback lost six percent against the pound, five percent against the euro, and four percent against the Swiss franc and the Australian dollar. The COVID-19 pandemic has clearly exposed the long-standing problems of the United States which have been accumulating for many years. So, the crisis became a catalyst for their development. The US economy is now facing a growing budget deficit, recession, and the risk of deflation. Since there were no personal savings in the country for a "rainy day", and the economy had to be rescued, the American resorted to investments from outside, which led to a record national debt. Market participants have actively invested in the US dollar because of its special role in the global economy. However, now investors do not trust the US dollar due to the growing government deficit. The US government spends trillions of dollars to support businesses and the population, but this is not enough. According to some reports, the US GDP fell by 32.9% compared to the same period last year. Also the dollar is under pressure due to Donald Trump's policy. The American leader does not support globalization and seeks to distance from the other countries. America may soon lose its status as the world's leading economy and financial center. This process has already begun as traders are actively investing in gold for fear of a military conflict between the United States and China. The founder and director of APS Asset Management Pte Kok Hoi Wong believes that it is time to withdraw money from American securities. The expert thinks that during the US presidential elections, political tensions may peak. The US dollar is now losing ground against its main competitor, the Chinese yuan. While the pandemic is raging through the United States and the number of infected people is rapidly rising, China's economy has quickly recovered from the virus. In addition, the Chinese economy, according to the experts, is undergoing a stage of transformation from industrial to post-industrial. This means that China will focus on the domestic market and will be less dependent on exports. This, in turn, will push the yuan to a new level of a reserve currency. Mr. Roach has also noted that the increase in oil demand will strengthen the Mexican peso and the Canadian dollar. Moreover, the euro, which has survived all the economic shocks over the past 10 years, has good prospects for further growth. This is enough to crash the US dollar. At the same time, Charles Biderman, founder of the analytical company TrimTabs Investment Research, sees another danger. At the moment, unemployment in the US is rising, while savings are falling. However, new car sales are increasing, as well as the real estate prices. This signals that instead of saving money, Americans spend it instantly. If the world faces the second wave of coronavirus, the country will face a sharp decline in consumption. Yet, this is not the worst thing. Stephen Roach noted that the US economy is recovering very slowly, and there are more and more unemployed people in the country. This will lead America into a deep hole of debt as the population has nothing to pay off its loans. The authorities will have no choice but to continue stimulating the economy by investing the next trillions of dollars. Therefore, the budget deficit and dollar depreciation are inevitable. Former US Secretary of the Treasury Henry Paulson is also confident that the dollar's dominance is coming to an end. The role of the yuan will increase due to the integration of the China's economy into global processes. Indeed, the American currency has faced the most difficult situations in the entire post-war era. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 07 Aug 2020 05:38 AM PDT EUR / USD On August 6, the EUR/USD pair gained about 20 pips, but still presumably completed the construction of a 5 in 5 in C in B. Today, August 7, a new departure of quotes from the reached highs began. The current wave markup looks completely complete. Thus, I expect the completion of the construction of the uptrend section and the transition to a new downward set of waves, which may stretch for several months in the time aspect. Fundamental component: Yesterday was fairly neutral in terms of information. There was only one report on claims for unemployment benefits in America, which turned out to be somewhat more optimistic than forecasts. Nevertheless, the demand for the US currency did not change during the past day, that is, it remained rather low. It should be noted once again that the wave counting implies a long rise in the US currency. However, will the markets only have enough wave counting as reasons? The hopes of the US currency are mainly associated with the Nonfarm Payrolls report today, which reflects the number of jobs created outside the agricultural sector. If the value of the report is higher than the forecast (+1.6 million), then the demand for the dollar may grow significantly in instruments with the European and the British currencies. There is nothing more to hope for the dollar. On the other hand, the epidemiological situation in America remains quite difficult, with no significant improvement observed. Moreover, Donald Trump continues to discourage Americans almost every day with his "misleading" statements regarding the coronavirus. It is so discouraging that his posts have already begun to be deleted by social networks Twitter and Facebook. For a second: American social networks are deleting messages from the president of the country, as they are "knowingly false." Nonsense, but this is the American reality now. The situation in the economy is no better than the situation with the epidemic. Economists are predicting a serious recession for America, from which the country will take a very long time, perhaps several years, in contrast to Trump's promises to "lift the economy almost by 2021." We have already seen the GDP report for the second quarter. General conclusions and recommendations: The euro/dollar pair has presumably completed the construction of the upward wave C in B. Thus, at this time, I do not recommend new purchases of the instrument, but I recommend closing the old ones. I also recommend starting to look closely at sales with the first targets, which are around 15 and 16 figures, since the instrument can now move on to building a global wave C. GBP / USD On August 6, the GBP/USD pair gained about 20 pips, however, an unsuccessful attempt to break through the 127.2% Fibonacci mark indicates that the markets are not ready for new purchases of the pound, and the current wave counting implies the construction of a new downtrend section, as wave 5 took a fully completed view. Thus, before a successful breakout of the 127.2% Fibonacci mark, I believe that the instrument will try to start building a downward set of waves. Fundamental component: The demand for the US currency declined yesterday, paired with the pound, although the results of the meeting of the Bank of England and the subsequent speech of its governor Andrew Bailey cannot be called too optimistic for the British currency. Nevertheless, the current wave counting implies the beginning of a decline in the instrument, respectively, the dollar should start to grow, unless the American reports that will be released in the next few minutes spoil everything. The main thing is that if the Nonfarm report is strong, then you can really expect a strong increase in the dollar. No news is expected from the UK today. General conclusions and recommendations: The pound/dollar instrument is expected to have completed an upward wave 5 around 1.3183. Therefore, I recommend at this time to close all purchases at least until a successful attempt to break through the 127.2% Fibonacci level and tune in to a possible long-term decline in quotes within a new downward trend section with the first targets around 27 and 28 figures. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 07 Aug 2020 04:38 AM PDT As I discussed in the previous review, the BTC is trading in the up cycle and with the breakout of the ascending triangle. Further Development
Analyzing the current trading chart, I found that buyers are in control and there is potential for the test of $12,160. The Bollinger bands are in expansion, which is sign that there is good volatility on the BTC. Wait for the pullback for the long entry towards the $12,160 Key Levels: The material has been provided by InstaForex Company - www.instaforex.com |
| Dollar's oversold position not enough to change the trend Posted: 07 Aug 2020 04:31 AM PDT
The US dollar may end with a decline for the seventh straight week. Against a basket of six main competitors, the greenback fell at the beginning of the week to its lowest levels since May 2018. At the same time, the dollar index lost more than 10% from the March highs.
For more than two weeks, the dollar index has been in the oversold zone. Such sustained pressure on the US dollar was last observed in 2008. After a long consolidation, it reversed, then a 12-year growth trend began. However, there are no two identical situations, and it is naive to expect a trend reversal in the dollar solely from this experience. For example, before 2008, there were also periods of strong pressure on the dollar, followed by consolidation and renewed sales growth. It is dangerous for medium-term traders to rely on the dollar rebound only because it is oversold. There are times when the technical picture is completely crossed out by fundamental factors. Like today, nonfarm payrolls and the unemployment rate will be released before the start of trading in the US. Judging by the leading ISM indicators for the industry and services sector, one should not rely on better forecasts. Meanwhile, the recent decline in the number of applications for unemployment benefits does not allow thinking about the release of weak data. The final value is likely to be in the area of the consensus forecast, which is neutral for the market. Millions of Americans returned to work after forced leave in May and June. But more and more information is emerging about long-term staff reductions. Many are out of work, and there is no talk of vigorous recovery of employment now. For the greenback, this bodes tough times as the government and the Fed try to introduce a new stimulus to keep the economy from a W-shaped recession. The calculation is based on its V-shaped rebound. It should be noted that dollar rates are still decreasing in the interbank market in New York and London. The most curious situation is in London, where the 3-month Libor rate hit a 5-year low. This is definitely a bad signal for the greenback. Meanwhile, on Friday, the Federal Reserve will not buy bonds on the market, and the Treasury will also take a break. On August 11, the redemption of securities in the amount of $ 10 billion is expected, which should keep the dollar from falling. What do we end up with? The upward trend in the EUR / USD pair will continue, and the technical correction can be used to open buy positions.
Experts from UBS revised their forecast for the euro against the dollar to $ 1.2000 by the end of the year, previously they had expected an increase to 1.1700. They cited uncertainty about US fiscal stimulus as a reason for the shift in expectations. "The risk of dollar depreciation should not be neglected, and in the long term, the growth of government debt is likely to affect the US currency," the bank's analysts said. Nevertheless, they called it unreasonable to wait for a rally in the euro to the levels of 1.2500-1.3000. The European economy is recovering, but growth remains weak. In addition, the monetary policy of the ECB is too expansionary. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 07 Aug 2020 04:30 AM PDT UK finance minister Sunak: Furlough program is not sustainable in the long run
It is one of the most difficult decisions
As mentioned before, the furlough program is masking a lot of the underlying damage and pain suffered by the UK economy over the last few months and we will only get a better idea of how things are once we get into the latter stages of Q3 and in Q4.
As I discussed in the previous review, the Goldis in contraction and is waiting for the breakout. Further Development Analyzing the current trading chart, I found that there is the contraction and I would watch for the breakout to confirm direction. 1-Day relative strength performance Finviz
Based on the graph above I found that on the top of the list we got Lumber and VIX and the bottom of the list are Palladium and Rough Rice. Gold is very neutral on the list, which is another confirmation for the contraction and potential for the breakout. Key Levels: Resistance: $2,074 Support level: $2,050 The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 07 Aug 2020 04:15 AM PDT China top diplomat calls for US to create favourable conditions for implementation of Phase One trade deal
Uh oh, China is starting to pull out the Phase One trade deal card in light of recent tensions between the two. There are known boundaries that both sides should not cross that may lead to the deal breaking down, so China is making that clear once again. Just be mindful considering the recent escalation in tensions, as the facade of the Phase One trade deal is pretty much what is holding everything together at this stage. As I discussed in the previous review, the EUR is in corrective phase and in my opinion EUR is very close to end the corrective phase. The level at 1,1820 seems like solid support and potential for the upside cycle to begin. Further Development Analyzing the current trading chart, I found that the sellers got exhausted today and the upside rotation would be possible towards the 1,1890 and 1,1915. 1-Day relative strength performance Finviz
Based on the graph above I found that on the top of the list we got Lumber and VIX and the bottom of the list are Palladium and Rough Rice. Key Levels: Resistance: 1,1890 and 1,1913 Support level: 1,1820 The material has been provided by InstaForex Company - www.instaforex.com |
| Dollar rises ahead of Non-farm Payrolls report Posted: 07 Aug 2020 04:06 AM PDT
Things have not been going well for the dollar lately. In the second quarter, US GDP fell at a record, with which the Fed showed a pessimistic attitude in the July meeting. In addition, the US government couldn't find a consensus regarding new programs that would help the national economy. Meanwhile, the coronavirus continues to spread in the United States. The number of COVID-19 cases in the country has already reached almost 5 million, and the death rate has exceeded 161 thousand. The uncertainty associated with the presidential elections in November also adds fuel to the fire. Nevertheless, the US dollar bounced off a new two-year low at a price level of 92.52 ahead of the July US labor market report, recovering some of its losses since the start of the week. "The dollar moved away from the brink, but for the bulls, this is only of tactical interest unless risk sentiment falls," strategists at Saxo Bank said. According to experts, the upcoming US employment report poses a serious risk for the dollar, which explains its recent decline against most of its major competitors. The US economy is projected to create 1.48 million jobs in July, quite a bit from 4.8 million in June. Authorities in some of the most populous states in the United States have tightened social distancing policies as coronavirus cases hit record levels.
Forecasts for the July US labor market report were very disappointing. Layoffs are projected to grow about 576.1% against the 305.5% noted a month earlier, mainly due to the weak report published by the ADP, which showed an increase in jobs by only 167 thousand against the expected 1.5 million. Employment components of the ISM and PMI indices also remained below 50 points, separating growth from contraction. If these assumptions turn out correct, with which the number of jobs created in July does not meet expectations, the US dollar is certain to face a new round of decline. However, a rise in the dollar could still occur, if the number of new jobs exceeds forecasts, the average salary increases, and Congress nevertheless agrees on the next stimulus package. Some experts, though, are skeptical that the dollar will rise, especially against the euro, amid rapidly dying hopes for a V-shaped economic recovery. UBS specialists even revised their forecast for the EUR / USD pair upward, from 1.17 to 1.20. "In the long term, the rise in US government debt is likely to affect the US dollar, so the risk of a depreciation should not be neglected," UBS said. "Amid uncertainty over the upcoming presidential elections in the United States, and expectations that the Fed will implement another easing in the fall, the US dollar is likely to weaken by the end of the year," analysts at ANZ also commented. "We expect the EUR / USD pair to enter a price range of 1.20-1.25. However, if the US Congress fails to agree on further stimulating the national economy, demand for the dollar will decrease even further in the short term. In this case, the weakening of it will be more significant, and the EUR / USD pair may reach a range of 1.25-1.30," they added. The material has been provided by InstaForex Company - www.instaforex.com |
| Trading recommendations for the GBP/USD pair on August 7 Posted: 07 Aug 2020 03:33 AM PDT The trading week is coming to an end. If we summarize the preliminary results, we will see that the pullback from the local high at 1.3169 did not give the desired result, as the corrective move did not come to the market, and the psychological level of 1.3000 became a support that returned the quote to the conditional high. How long will this upward tact last? It all depends on the speculators. A lot of reversal signals have already appeared, but alas everyone still ignored it and continued to trade in a bullish mood in the market. Perhaps, a little push is needed from the information and news background, to change the situation with the dollar. A similar situation also exists for the EUR / USD currency pair, which already updated all possible highs in this period, having a vertical price movement and no full-fledged correction. Anyhow, in the price range 1.2770 // 1.3000 // 1.3300, a fluctuation has occurred in the upper limit, where the 1.3200 / 1.3250 area already affects the volume of long positions. Thus, analyzing the last trading day by minute, we can see that the local high was updated at the opening of the European session, during which the quote managed to rise to a price level of 1.3180 / 1.3184, but after that it reversed in the chart. Volatility was also low, recording at only 75 points, which is 33% below the average daily value, 112 ---> 75. Such gives light to the theory "calm before the storm", with regards to the behavior of market participants. Meanwhile, as discussed in the previous review , traders worked on holding the quote at the conditional price high, but still did not forget about the area of interaction of trading forces at 1.3200 / 1.3250. So, looking at the trading chart in general terms (daily period), we can see that as early as five trading days in a row, a conditional sideways move has taken place, in the structure of which there are versatile Doji candles, signaling a high degree of uncertainty. As for news that were published yesterday, one announcement important was the decision of the Bank of England to keep the interest rate at 0.1% and maintain the asset repurchase program at £ 745 billion. Bank of England Chief Andrew Bailey said that although negative rates are an integral part of the Central Bank's toolkit, the regulator is in no hurry to use it to pull the British economy out of the crisis. With regards to statistics, the latest data on the US labor market came out better than expected, as initial claims for unemployment benefits decreased from 1,434,000 to 1,186,000, while repeated applications fell from 16,915,000 to 16,107,000. Although the US dollar did not immediately rise because of such good statistics, it nevertheless strengthened within the day. Today, another US labor market report is expected, and it will definitely cause a stir among speculators, especially now, in the conditions of almost two months of sale in the US dollar. The first thing that traders should pay attention to is the unemployment rate, which is expected to drop from 11.1% to 10.5%, mainly due to the creation of 1,550,000 new jobs. In a situation with a colossal oversold of the US dollar, a positive information and news background in the US may provoke a flow of short positions on the GBP / USD pair. The upcoming trading week includes important macroeconomic reports such as data on the UK labor market and inflation indicators in the United States, which can provoke high activity in the market. Monday, August 10 US 15:00 - JOLTS (June) Tuesday, August 11 UK 09:30 - Unemployment rate (June) UK 09:30 - Applications for unemployment benefits (July) UK 09:30 - Average salary with / without bonuses (June) US 09:30 - PPI (July) Wednesday, August 12 UK 07:00 - Preliminary GDP (Q2) UK 07:00 - Volume of industrial production (June) US 13:30 - Inflation (July) Thursday, August 13 US 13:30 - Claims for unemployment benefits Friday, August 14 US 13:30 - Volume of retail sales (July) Further development Analyzing the current trading chart, we can see that a downward movement from the area of 1.3170 / 1.3185 is already taking place, and holding it can easily return the quote to the psychological level of 1.3000, just against the background of positive statistics on the United States. Traders are well aware of the fact that a price return to the level of 1.3000 will not correct the situation with the overbought pound and oversold US dollar, thus, everyone is waiting for a full correction, not just a pullback. So, to minimize the risk, wait for the quote to consolidate first below the area of the psychological level of 1.3000 (1.2950 // 1.3000 // 1.3050). An alternative scenario could occur though, if the quote consolidates above 1.3185, which may lead to a movement towards the border of the price range 1.2770 // 1.3000 // 1.3300. The area 1.3200 / 1.3250 reflects the interaction of trade forces from January to March 2020, where the volume of long positions decreases on a systematic basis. Indicator analysis Analyzing the different sectors of time frames (TF), we can see that the indicators of technical instruments in the minute TF signal "sell" due to a price rebound from the conditional high. Meanwhile, the hourly and daily TFs continue to signal "buy" due to a fluctuation around the high. However, the hourly TF can change indicator from buy to sell after the quote consolidates below 1.3100. Weekly volatility / Volatility measurement: Month; Quarter; Year The measurement of volatility reflects the average daily fluctuation, calculated per Month / Quarter / Year. (August 7's was built, taking into account the time this article is published) The current volatility is 62 points, which is 44% below the average daily value. Its dynamics could accelerate, after the publication of the latest data on the US labor market. Key levels Resistance zones: 1.3200 (1.3250) **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **. Support Zones: 1.3000; 1.2885 *; 1.2770 **; 1.2620; 1.2500; 1.2350 **; 1.2250; 1.2150 **; 1.2000 *** (1.1957); 1.1850; 1.1660; 1.1450 (1.1411); 1.1300; 1.1000; 1.0800; 1.0500; 1.0000. * Periodic level ** Range level *** Psychological level Also check the brief trading recommendations for the EUR / USD and GBP / USD pairs here . The material has been provided by InstaForex Company - www.instaforex.com |
| Where are we going? Cost of oil is slowly declining Posted: 07 Aug 2020 02:58 AM PDT
This morning, oil raw materials start with a negativity once again: a reduction in cost was recorded for all items. However, in contrast to the previous trading days, yesterday's trading also closed in the red zone, which ended the series of rallies that had lasted for four consecutive days. Nevertheless, oil is not being adjusted too significantly, and at the end of the current week, it is likely to end its trading with a good increase in the price (at least 4% compared to the increase of the previous week). Yesterday, the main attention of market participants was occupied by statistics from the labor market of the United States. As it became known, the total number of those who applied for unemployment benefits declined by 249 thousand people for the first time last week. Now, their total number is at the level of 1.186 million people, which is the minimum value in the country since the beginning of the coronavirus pandemic. Of course, even such not very impressive results cannot but please the markets and the government of the state. Experts began to argue that the US economy has chosen the right path for its recovery, which is reflected in the main statistics. This will also provide good support for the oil market in the near future, which is now in a rather difficult situation. Iraq should also ensure a positive development of events in the oil market. So, the country's authorities made a statement that they are ready to reduce the production of raw materials in the country by about 400 thousand barrels per day in the last month of summer. This step is necessary to compensate for the surplus production that Iraq had under the agreement with OPEC in the previous period, before the moratorium was eased. Of course, this will have a positive effect on the level of supply and demand in the market, especially in the context of increasing hydrocarbon production by those countries that have fulfilled the first part of the contract and have now entered the second phase. In addition, investors still hope that an agreement on a new stimulus package in the United States of America will be signed very soon. The situation is already seriously tense, and an urgent solution is simply vital, especially since the government is going on vacation. On the other hand, good growth in oil prices in the coming week was also provided by the reduction of oil reserves in the US and the rapid collapse of the US dollar index ICE Dollar, which plummeted to the lowest values for the last two years. These factors seem to be gradually losing their influence on the market. The price of futures contracts for Brent crude oil for October delivery on the trading floor in London on the morning of the last business day this week is down 0.31%, or $ 0.14. Its current value was at $ 44.95 per barrel. At the close of yesterday's trade, the brand also declined in price, but only slightly - minus 0.2%, or $ 0.08. Today, the price of futures contracts for WTI light crude oil for September delivery on the electronic trading floor in New York went down by 0.41%, or $ 0.17, which moved it to the level of $ 41.79 per barrel. Trading on Thursday also ended in the red zone: the decline was 0.6%, or $ 0.24. The main concerns of market participants today are related to the fact that demand and, accordingly, fuel supplies in the near future will be very weak, since the negativity from the impact of the global coronavirus pandemic has not yet been leveled. In addition, the press should receive a report on the number of operating oil and gas installations in the United States today, which can also change the balance of power in the market. According to some preliminary data, the American side will start launching additional production capacities amid rising oil prices. This means that the pressure on the market will increase and the price will continue to move in the opposite direction. The material has been provided by InstaForex Company - www.instaforex.com |
| USD/CAD. New trade war is coming between Canada and the United States Posted: 07 Aug 2020 02:31 AM PDT There is a forthcoming conflict between Canada and the USA again: Washington decided to increase duties on imports of aluminum products, and now, the market expects a response from Ottawa. The intrigue will be resolved tonight - the Canadian Department of International Trade will make a statement in the evening, approximately at 15:00 (Universal time). If the Canadians decide to escalate the conflict, the Canadian currency will be under strong enough pressure. The difficult months-long trade negotiations between Washington, Ottawa and Mexico City, which ultimately ended in Trump's victory, are still fresh in the memory. Today, the situation is somewhat different, primarily in the political aspect. Given the proximity of the presidential elections in the United States (less than 100 days left before them) and Trump's current ratings (in many respects, he loses to Democrat Biden), it can be assumed that Canadians are unlikely to be compliant this time around. This means that trade relations between the countries will go through difficult times, and these times do not bode well for the Canadian dollar.
Let me remind you that the United States, Mexico and Canada signed a new USMCA trade agreement at the beginning of last year, which replaced the North American Free Trade Agreement (NAFTA). This deal was renewed on new terms, which is more beneficial for the Americans. Trump's election slogan "America First" under his rule was gradually transformed into the format "America against all", with all the ensuing consequences. And if in the case of China, the United States got stuck in a long multi-year trade war, but Washington coped with neighboring countries relatively quickly. Although this term is not entirely correct here: the negotiations lasted for two years amid regular threats from Trump to increase trade barriers between the countries. The uncertainty on this issue was reflected in the determination of the members of the Canadian Central Bank, and in the investment climate of the country. For example, in October 2017, the USD/CAD pair jumped by almost a thousand pips after the NAFTA deal fell through once again. In the process of discussing a new North American free trade agreement, the American president changed the previously agreed conditions several times and refused to sign the preliminary agreement documents at the last moment, citing insufficient benefits. As a result, Canada was forced to make significant concessions (especially in the dairy industry), putting an end to a months-long negotiation epic. This background suggests that the current trade conflict may also go into a prolonged phase, whereas today's announcement by the Canadian Department of Commerce may act as a trigger for the impulse growth of the USD/CAD pair. The next stage of the trade confrontation began with the announcement of Donald Trump about the decision to impose an additional 10 percent duty on some Canadian aluminum products from August 16. He said that Canada benefits from the United States and harms the American aluminum industry. According to the American press, the White House took this step after Washington was unable to convince Ottawa to introduce quotas on its metal exports. At the same time, in an additional statement explaining Trump's decision, it was clarified that "imports from Canada of the product, which accounts for the largest share of Canadian aluminum exports in America, exceeded the historical level." More specifically, in 2019, Canadian aluminum exports amounted to $ 8 billion 330 million. In 2018, according to the World Bank, Canada was the largest exporter of aluminum. In the States, ingots, blocks, billets, including those of a thin section, are made from such material.
During the trade war between Canada and the United States (which preceded the NAFTA trade negotiations), Washington imposed a 25 percent surcharge on steel and a 10 percent surcharge on aluminum. According to agreements reached early last year, the United States canceled these measures: Washington and Ottawa agreed that they would control imports, and if the country "supplies too much products," the other may re-introduce tariffs. And now, after a year and a half, Trump considered that the import of Canadian aluminum "fills the American market and kills jobs" and returned the duties. Thus, we will find out tonight whether Canada will respond to the US aluminum duties or take a more diplomatic position. The first reaction of the Canadian dollar to Trump's decision was negative: the USD/CAD pair has been growing for two days. It strayed away from the support level of 1.3250 (the lower line of the Bollinger Bands indicator on the daily chart) and has already risen by a hundred points. If Ottawa "accepts the challenge" and decides to escalate the trade conflict, the pair will at least test the nearest support level of 1.3430, which corresponds to the Bollinger Bands middle line on the same time frame. The material has been provided by InstaForex Company - www.instaforex.com |
| Posted: 07 Aug 2020 02:26 AM PDT
Gold is trading at $2,060 level after making another top and after the upside breakout from the ascending channel, above the upside line. I've said in a previous analysis that the gold price is expected to increase further, to jump higher, and I've talked about the $2,000 psychological level and by the upside line as potential upside targets on the Daily chart. The breakout above, pass beyond, the upside line of the up-channel has confirmed strong buyers once again and potential further growth. Price could decline a little to retest the broken upside line before going upwards.
Buy Gold if the price touches the $2,080 level. If it jumps above the $2,075 all-time high, the next upside target could be at the $2,100 psychological level. The price is expected to climb higher, to resume its upside movement, as long as it stays above the upside line. Now, we don't have a selling opportunity, only a drop below the upside line followed by several retests of this line could announce a potential decline and could bring a selling opportunity. The material has been provided by InstaForex Company - www.instaforex.com |
| Trader's diary on 08/07/2020. Market awaits Nonfarm payrolls Posted: 07 Aug 2020 02:04 AM PDT
EUR/USD: We continue to buy from the level of 1.1810. Thus, growth is expected to be above the level of 1.1900. In case of a downward reversal, we can consider selling from the level of 1.1690. The material has been provided by InstaForex Company - www.instaforex.com |
| USD/CAD On The Verge Of Losing The Downtrend Resistance! Posted: 07 Aug 2020 02:01 AM PDT USD/CAD has rebounded in the short term and now is pressuring the major downtrend line, the repeated breakout attempts signal that the dynamic resistance may eventually give way. Though, we need strong confirmation before going long as the pair is susceptible to a drop anytime again if the Dollar Index will lose altitude. Today's Canadian and US data will bring high volatility on USD/CAD, some good Canadian figures and poor US numbers will send the pair towards fresh new lows, while better than expected US data could boost the pair.
USD/CAD is pressuring the downtrend line and also the 1.3356 static resistance, but I believe that only a valid breakout above the Pivot Point (1.3460) level will really validate a large leg higher. Another false breakout above the downtrend line could lead to another downside movement. The failure to stabilize below the S1 (1.3276) level has signaled a potential come back to the PP (1.3460) level.
Sell a lower low, a drop below the 1.3233 level, the next downside targets are seen at the S2 (1.3144) and at the S3 (1.2959) levels. Buy a valid breakout above the PP (1.3460), another higher high, the first upside target is seen at the median line (ML) of the ascending pitchfork, around the R1 (1.3590) level. The material has been provided by InstaForex Company - www.instaforex.com |
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