EUR/USD: Weak PMI, the "Yellow Jackets" and the expectation of the Fed

Trading 18 déc 2018 Commentaire »

After Friday's rise to one and a half year highs, the dollar index today slowed down and returned to 96 points. The strengthening of the US currency was due to weak data from China and strong data from the US. However, the dollar rally did not continue due to the upcoming Federal Reserve meeting, the results of which will be known the day after tomorrow.

But on Friday, the dollar bulls were inspired by US data on the growth of retail sales. First, the October data were revised upwards - from 0.8% to 1.1%. Second, in November, the indicator came out better than expected, although it de facto fell to 0.3%. However, following the release of data on inflation growth, Friday's figures provided strong support to the dollar against the backdrop of growth in consumer activity and lending. After all, in addition to the indicator of retail sales, last week data on the growth of industrial production in the United States were published. This indicator jumped by 0.6% in November, being stronger than the forecast (0.3%).

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In other words, the US data renewed confidence that the Federal Reserve on Wednesday will not only raise the rate, but will also take a "hawkish" position on the future prospects of monetary policy. Although this issue is quite controversial (due to recent talk about the search for a neutral rate), the fundamental picture for the dollar looks undoubtedly better than the euro.

The single currency came under pressure of not only macroeconomic but also political factors. French PMI indices in the services and manufacturing sector fell under the key 50 mark - for the first time this year. German indicators also came out in the "red zone", showing a slowdown. Composite PMI index in the eurozone sharply fell in December to 51.3 - although last month was at 52.7 points. Weak PMI figures are fully consistent with the slowdown in economic growth in the eurozone, which was recorded in the third quarter of this year – let me remind you that GDP growth in the eurozone slowed to four-year lows.

On top of that, European inflation also brought it down - the consumer price index fell to two percent (with a forecast of 2.1% from the previous value of 2.2%), and core inflation excluding volatile energy and food prices returned to 1%, although experts were confident that the indicator will remain at the October level, that is, at around 1.1%. Against the background of these results, Mario Draghi's position at the last meeting of the ECB looked even optimistic – at least the head of the central bank did not rule out the tightening of monetary policy within the next year.

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However, it is too early to talk about it. The bulls of EUR/USD are still satisfied with the fact that the European Central Bank completed QE on time, while the next steps of the ECB look too vague. Uncertainty puts pressure on the single currency, as well as the political situation in many European countries – primarily in France. The ongoing protests of the so-called "Yellow Jackets" unnerve the markets, especially against the backdrop of the Italian budget crisis. On Saturday, Paris hosted another (fifth) round of protests: about 70,000 people took to the streets of the city. And although it is almost two times less than in the past, it is too early to talk about the intensity of protest sentiments: most likely, bad weather conditions (almost zero air temperature + heavy rain) are to blame for everything.

Local demands for lower fuel prices have grown into political manifestos - now protesters demand to move to direct democracy through referendums on key issues of the country's life. In other words, the protest movement in France is taking a protracted form with rather unpredictable consequences. On the one hand, many experts say that the protest in its current form is not supported by all the French (much less than during the first wave of rallies). On the other hand, if Macron is forced to resign, then early elections will be held in the country, and the risk of a political crisis will increase in many ways.

Thus, today's corrective growth of the euro-dollar pair is primarily due to the hypothetical problems of the US currency. First, on the eve of the Fed meeting, traders were still anxious over the central bank's further actions. Secondly, there was a risk of a shutdown again in the United States. The US government may stop work on December 22 due to disagreements over the construction of the wall on the border with Mexico. According to the American press, the White House has already begun to conduct advance preparations for the implementation of this scenario.

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All this suggests that the EUR/USD pair is unlikely to demonstrate strong volatility until Wednesday – only if Italy or Brexit does not present any surprises in the news plan. From a technical point of view, the pair remains within the downward movement until the price fixes above 1.1360 (the average line of the Bollinger Bands indicator on the daily chart, which coincides with the Tenkan-sen and Kijun-sen lines). In this case, the Ichimoku Kinko Hyo indicator will form a "Golden cross" signal, which will determine further growth to the level of 1.1390 (the lower limit of the Kumo cloud). The nearest target of the downward movement is 1.1280 - the lower line of the Bollinger Bands indicator on the same timeframe.

The material has been provided by InstaForex Company - www.instaforex.com

GBP/USD. December 17th. Results of the day. The pound "calms down" on the eve of holidays

Trading 18 déc 2018 Commentaire »

4-hour timeframe

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The amplitude of the last 5 days (high-low): 253p - 158p - 195p - 77p - 137p.

Average amplitude for the last 5 days: 164p (153p).

On the first trading day of the new week, the pound sterling, following the euro, showed a strengthening. There were no good fundamental reasons for the strengthening of the British currency, however, the growth of the pound was not strong enough to start panicking. Normal corrective growth. At the same time, the pair remains close to its lows, maintaining a high chance of resuming the downtrend. As we have already written more than once, the best that a pound can wait until the vote on the Theresa May Bill's Brexit bill in the British Parliament is the lack of new and strong falls. The strong growth of the British currency can not be expected at all. Today, no important macroeconomic reports have been published in the United States and Europe. Therefore, there were no factors that could affect the course of trading. There is new information that Theresa May might resign in the second quarter of 2019, but this is not new information. Rumors about this have been circulating for a long time. If the vote on the"Chequers" plan will fail, then this will be almost a 100% accomplished fact. Technical factors are now fading into the background, since only in the last trading day the lines Kijun-sen and Tenkan-sen crossed two times. Bollinger bands are narrowing, signaling a decrease in volatility. In general, the pound sterling can befall the fate of the euro, which in recent weeks is frankly flat. And again, this will be a very good scenario for the British currency.

Trading recommendations:

The GBP/USD currency pair is being adjusted. It will be possible to resume trading for a decrease in small lots not earlier than the reverse consolidation of the price below the critical line with the target of 1.2451. You should also wait for the MACD indicator to turn down.

Buy positions will become relevant if the bulls are able to overcome the Ichimoku cloud with the goals of the resistance levels of 1,2734 and 1.2767. However, even in this case, it is not necessary to count on a strong strengthening of the pound.

In addition to the technical picture, fundamental data and the timing of their release should also be taken into account.

Explanation of illustration:

Ichimoku Indicator:

Tenkan-sen-red line.

Kijun-sen – blue line.

Senkou span a – light brown dotted line.

Senkou span B – light purple dotted line.

Chikou span – green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD:

Red line and histogram with white bars in the indicator window.

The material has been provided by InstaForex Company - www.instaforex.com

EUR/USD. December 17th. Results of the day. Inflation in the EU did not meet expectations

Trading 18 déc 2018 Commentaire »

4-hour timeframe

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The amplitude of the last 5 days (high-low): 92p - 94p - 72p - 62p - 95p.

Average amplitude for the last 5 days: 83p (77p).

The EUR/USD currency pair continued its upward movement on Monday, December 17, which started at the end of Friday. Initially, it was interpreted as a correction, but at the moment the pair has already overcome the critical line. Thus, there is even more reason to assume that the pair is in the area that is lateral in nature, in other words flat. The current growth of the European currency is completely at odds with the nature of the only, but very important, macroeconomic report that came from Europe. The consumer price index in November in annual terms was 1.9%, although the forecast was 2.0%. However, this is a very important point(!), traders did not continue to sell the euro. And this is despite the fact that in recent months, traders had the tendency to buy US dollars and sell euro currencies. Thus, we believe that the pair has entered a wide side channel and it will be quite difficult to leave it before the new year. It was not possible to leave the pair below the level of 1.1270, but also above the level of 1.1420 too. Between these two levels, steam can move in the coming days or even weeks. Based on these considerations, technical factors can have a very indirect impact on the movement of the currency pair. Signals from Ichimoku can be formed frequently and be false. The Bollinger band can also often change the direction of motion. Only a very strong and important information can make the pair leave the designated range.

Trading recommendations:

The EUR/USD pair is currently being adjusted. Thus, in case of a reverse consolidation of the price below the Kijun-sen line, it will be possible to open new shorts with the target at the level of 1.1270. There is a high probability of flat.

Long positions will become relevant not earlier than overcoming the Ichimoku cloud with targets 1,1408-1,1420. It will be quite difficult for the pair to gain a foothold above this zone in the current conditions, without fundamental support.

In addition to the technical picture, fundamental data and the timing of their release should also be taken into account.

Explanation of illustration:

Ichimoku Indicator:

Tenkan-sen-red line.

Kijun-sen – blue line.

Senkou span a – light brown dotted line.

Senkou span B – light purple dotted line.

Chikou span – green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD:

Red line and histogram with white bars in the indicator window.

The material has been provided by InstaForex Company - www.instaforex.com

Control zones NZDUSD 12/17/18

Trading 18 déc 2018 Commentaire »

Last week, the pair continued to fall, and by the close of trading it was trading below the weekly KZ 0.6815-0.6829. This suggests the need to hold a short position until the next target zone

Today, the test of NKZ 1/4 0.6815-0.6812 took place. If the pair continues to fall from the current levels, sales will be profitable, as the target of the downward movement becomes the NKZ 1/2 0.6745-0.6738. It is important to understand that the bearish momentum is strong enough. This makes it impossible to consider purchases from the current marks. The main resistance is 1/2 knz 0.6854-0.6847. While the pair is trading below this zone, the downward movement remains an impulse. The best prices for selling are within the zone.

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Reaching the target zone of the NKZ 1/2 will also allow the pair to test the monthly KZ of December. This can lead to large demand. This fact indicates the need to fix most of the sales or complete exit from a short position.

Growth is required in order to break the downward momentum, which will absorb Friday's decline. In this case, the ncz 1/2, which is the determining resistance, will be broken. With the implementation of this model, purchases will come to the forefront tomorrow. Now the probability of working out this model is 30%, which makes it auxiliary.

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Day short - daily control zone. The zone formed by important data from the futures market, which change several times a year.

Weekly KZ - weekly control zone. The zone formed by the important marks of the futures market, which change several times a year.

Monthly KZ - monthly control zone. The zone, which is a reflection of the average volatility over the past year.

The material has been provided by InstaForex Company - www.instaforex.com

Control zones GBPUSD 12/17/18

Trading 18 déc 2018 Commentaire »

Last week, the pair was quite volatile and was able to overcome the average value of the move three times in the flat range. This indicates the formation of a significant accumulation zone, where the main levels will be the previous week's extremes.

At the beginning of this week, the pair is trading in the middle of the flat range. Buying and selling from the current levels does not look profitable. This suggests the need to search for more favorable prices. The determining resistance is NKZ 1/2 1.2689-1.2670. The achievement of that zone had already taken place last week and had led to a major proposal. In case of a repeated test, it is necessary to consider the formation of a false breakdown pattern as an excuse to open sales for those who do not have them yet.

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You can continue to work in the flat until one of the US sessions closes above the level of 1.2689. Work within the range implies partial fixation of purchases and sales on significant control zones.

All conditions have already been created for the continuation of the downward movement. If the pair continues to trade below the NKZ 1/2, the probability of the December low update will be 70%. This should be used when holding a short position. You can try to transfer part of sales to the average period and bring it to breakeven. Do not forget that the decline of last week was stopped at the middle course, however, this week this range is lower, which can form the conditions for the continuation of the fall.

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Day short - daily control zone. The zone formed by important data from the futures market, which change several times a year.

Weekly KZ - weekly control zone. The zone formed by the important marks of the futures market, which change several times a year.

Monthly KZ - monthly control zone. The zone, which is a reflection of the average volatility over the past year.

The material has been provided by InstaForex Company - www.instaforex.com

RBA Minutes On Tap For Tuesday

Trading 18 déc 2018 Commentaire »

The Reserve Bank of Australia will on Tuesday release the minutes from its December 4 monetary policy meeting, highlighting a light day for Asia-Pacific economic activity.

At the meeting, the board decided to keep its benchmark interest rate unchanged at the record low 1.50 percent - where it has remained since August 2016.

New Zealand will see December results for the business confidence survey and activity outlook from ANZ; in November, their scores were -37.1 and +7.6, respectively.

New Zealand also will see November numbers for non-resident bond holdings; in October, they were at 57.1 percent.

Hong Kong will release November figures for unemployment with forecasts pinning the jobless rate at 2.5 percent - down from 2.8 percent in October.


The material has been provided by InstaForex Company - www.instaforex.com

Oil Futures Settle At Over 14-month Low

Trading 17 déc 2018 Commentaire »

After edging up marginally earlier in the session, crude oil futures tumbled and settled at over 14-month low on Monday, on demand growth concerns.

Concerns about a likely fall in crude demand, Qatar's exit from OPEC and Iran's unwillingness to commit to an across the board production cut weighed down the commodity.

Crude oil futures for January ended down $1.32, or 2.6%, at $49.88 a barrel, the lowest settlement since early October 2017.

On Friday, crude oil futures ended down $1.38, or 2.6%, $51.20 a barrel.

Reports about a jump in crude stocks at the U.S. storage hub last week raise concerns that the Energy Information Administration's weekly oil report this Wednesday may show a jump in U.S. crude inventory last week.

A report from Genscape showed that U.S. crude inventories at the storage hub of Cushing, Oklahoma increased by over 1 million barrels last week.

A recent report from Energy Information Administration expects a surge in U.S. shale oil production.

Slower pace of industrial production and retail sales growth in China, weak eurozone economic data, the European Central Bank Mario Draghi's warning that the "balance of risks is moving to the downside," and the lowering of GDP and inflation forecasts for the eurozone has raised concerns that energy demand is likely to drop notably in the near to medium term.


The material has been provided by InstaForex Company - www.instaforex.com

Treasuries Move Higher Amid Substantial Volatility On Wall Street

Trading 17 déc 2018 Commentaire »

After ending last Friday's trading modestly higher, treasuries saw some further upside over the course of the trading session on Monday.

Bond prices reached new highs in afternoon trading before moving roughly sideways going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.4 basis points to 2.857 percent.

The continued strength among treasuries came amid considerable volatility on Wall Street, with stocks recovering from early weakness only to pullback sharply in the afternoon.

With the sell-off, the Dow has tumbled to a seven-month intraday low, while the Nasdaq and the S&P 500 have slumped to their lowest intraday levels in ten months.

Treasuries also benefited from the release of some disappointing U.S. economic data, including a report from the National Association of Home Builders unexpectedly showing a continued deterioration in homebuilder confidence in the month of December.

The report said the NAHB/Wells Fargo Housing Market Index dropped to 56 in December after tumbling to 60 in November. Economists had expected the index to inch up to 61.

With the unexpected monthly decrease, the housing market index tumbled to its lowest level since hitting 54 in May of 2015.

NAHB Chief Economist Robert Dietz called the housing slowdown an "early indicator of economic softening."

A separate report from the New York Federal Reserve showed a much bigger than expected slowdown in the pace of growth in regional manufacturing activity in December.

A report on new residential construction in November may attract attention on Tuesday, although trading activity could be somewhat subdued as the Federal Reserve's two-day monetary policy meeting gets underway.


The material has been provided by InstaForex Company - www.instaforex.com

Gold Futures Settle At Over 1-week High

Trading 17 déc 2018 Commentaire »

Gold futures settled at over one-week high on Monday, as the U.S. dollar slipped against most major currencies on disappointing economic data and equities declined on global growth concerns.

Markets are looking ahead to the upcoming Federal Reserve monetary policy meeting. The Fed is widely expected to raise its benchmark interest rates by 25 basis points, but it looks very unlikely that there will be frequent increases in the coming year.

The Fed's statement and forecasts that will be released after the announcement about rate, will provide clues about future rate hikes.

Meanwhile, fears of a possible U.S. government shutdown over security on the border with Mexico too weighed on the greenback and contributed to its weakness. In the event of the Trump administration and Democrats not agreeing on a new spending plan for building a wall along the U.S.-Mexican border, several U.S. government operations could shut down at midnight Friday.

The dollar index declined to 96.52, losing about 0.4%.

Gold futures for February ended up $10.40, or 0.8%, at $1,251.80 an ounce. On Friday, gold futures settled at $1,241.40 an ounce, down $6.00, or 0.5%.

Silver futures for March ended at $14.759 an ounce, up $0.122 from Friday's close.

Copper futures for March settled at $2.754 per pound, declining from Friday's close of $2.763 per pound.

In economic news, After reporting a sharp pullback in U.S. homebuilder confidence in the previous month, the National Association of Home Builders released a report on Monday unexpectedly showing a continued deterioration in confidence in the month of December.

The report said the NAHB/Wells Fargo Housing Market Index dropped to 56 in December after tumbling to 60 in November. Economists had expected the index to inch up to 61.

With the unexpected monthly decrease, the housing market index tumbled to its lowest level since hitting 54 in May of 2015.

Business activity in the New York manufacturing sector saw substantially slower growth in the month of December, according to a report released by the Federal Reserve Bank of New York on Monday.

The New York Fed said its general business conditions index tumbled to 10.9 in December after rising to 23.3 in November.

While a positive reading still indicates growth in regional manufacturing activity, economists had expected the index to dip to 20.0.


The material has been provided by InstaForex Company - www.instaforex.com

Dollar Weakening Ahead Of Fed Announcement

Trading 17 déc 2018 Commentaire »

The dollar is losing ground against all of its major rivals Monday afternoon. Traders are in a cautious mood ahead of the Federal Reserve's highly anticipated monetary policy announcement scheduled for Wednesday.

The Fed is widely expected to raise interest rates by another quarter point, although traders are likely to closely scrutinize the central bank's accompanying statement and forecasts for clues about future rate hikes.

Business activity in the New York manufacturing sector saw substantially slower growth in the month of December, according to a report released by the Federal Reserve Bank of New York on Monday. The New York Fed said its general business conditions index plunged to 10.9 in December after rising to 23.3 in November.

While a positive reading still indicates growth in regional manufacturing activity, economists had expected the index to dip to 20.0.

After reporting a sharp pullback in U.S. homebuilder confidence in the previous month, the National Association of Home Builders released a report on Monday unexpectedly showing a continued deterioration in confidence in the month of December.

The report said the NAHB/Wells Fargo Housing Market Index dropped to 56 in December after tumbling to 60 in November. Economists had expected the index to inch up to 61.

The dollar has dropped to around $1.1350 against the Euro Monday afternoon, from an early high of $1.1299.

Eurozone consumer price inflation in November eased more than initially estimated, latest data from Eurostat showed on Monday. The consumer price index rose 1.9 percent year-on-year, which was slower than the 2 percent flash estimate on November 30. The figure is the lowest since May, when it was at the same level.

The buck has fallen to around $1.2625 against the pound sterling this afternoon, from a high of $1.2552 this morning.

UK households' assessment of their future financial wellbeing fell to its lowest level in six months in December, amid a stronger increase in living costs and a weaker rise in employee earnings, survey data from the IHS Markit and Ipsos MORI showed on Monday.

The IHS Markit Household Finance Index, or HFI, fell to 43.9 from 44.4 in November, marking the lowest reading since June.

The greenback has dropped to nearly a 1-week low of Y112.725 against the Japanese Yen Monday afternoon, from an early high of Y113.520.


The material has been provided by InstaForex Company - www.instaforex.com