Oil Settles Higher Ahead Of Inventory Data

Trading 09 oct 2018 Commentaire »

Crude oil prices moved up on Tuesday amid reports about falling crude exports from Iran ahead of the U.S. sanctions against the country.

According to reports from Refinitiv Eikon, crude exports from Iran dropped to 1.1 million barrels per day in the first week of October, from 1.6 million barrels per day in September. In April, Iran's crude exports stood at about 2.5 million barrels per day.

Another reason for crude's uptick was the news that Hurricane Michael will make landfall along the Gulf Coast by Wednesday, as a category 3 storm.

The National Hurricane Center's bulletin said the center of Michael will continue to move over the southern Gulf of Mexico and then move across the eastern Gulf of Mexico later on Tuesday. Following the hurricane warning, offshore producers including Anadarko Petroleum Corp, BHP Billiton, BP and Chevron Corp have reportedly evacuated workers from 13 oil and gas platforms in the Gulf.

Crude oil futures for November delivery ended up $0.67, or 0.9%, at $74.96 a barrel. On Monday, crude oil futures declined to a low of $73.08 a barrel before recovering to close at $74.29 a barrel, losing 5 cents.

While some reports say Hurricane Michael could hit Panhandle, a 200-mile strip on northwest Florida, which has the state's largest crude and natural gas fields, a report from Reuters suggested the hurricane's track would largely avoid major oil-producing assets in the Gulf, although a change in that path could widen its impact.

Meanwhile, Investors were looking ahead to the weekly oil report from the American Petroleum Institute, due later in the day, and the official inventory data from the Energy Information Administration, due on Wednesday.


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Treasuries Close Modestly Higher After Seeing Initial Weakness

Trading 09 oct 2018 Commentaire »

After an initial move to the downside, treasuries moved modestly higher over the course of the trading session on Tuesday.

Bond prices climbed off their early lows in morning trading and managed to remain in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.7 basis points to 3.208 percent.

With the modest decrease on the day, the ten-year yield gave back ground after ending last Friday's trading at its highest closing level in over seven years.

The rebound by treasuries may partly have reflected bargain hunting following the notable weakness seen over the three previous sessions.

Treasuries may also have benefited from news the International Monetary Fund lowered its forecast for U.S. and Chinese economic growth.

Citing the "negative effect of recent tariff actions," the IMF said economic growth in the U.S. and China is now expected to slow to 2.5 percent and 6.2 percent, respectively, next year.

Overall trading activity was somewhat subdued, however, as a lack of major U.S. economic data kept some traders on the sidelines following the holiday on Monday.

Trading on Wednesday may be impacted by reaction to the Labor Department's report on producer prices in the month of September.

Producer prices are expected to rise by 0.2 percent in September after slipping by 0.1 percent in August. Core producer prices, which exclude food and energy prices, are also expected to tick up by 0.2 percent.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auction of three-year and ten-year notes.

The Treasury is due to sell $36 billion worth of three-year notes and of $23 billion worth of ten-year notes.


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Dollar Turns Lower After Early Gains Erode

Trading 09 oct 2018 Commentaire »

The dollar turned in a strong performance Tuesday morning, but has since reversed and has turned weaker against its major rivals. The lack of U.S. economic data kept some investors on the sidelines. However, things will begin to pick up tomorrow, with the release of the producer price index and wholesale trade data.

The International Monetary Fund slashed the global growth forecast for this year and next on Tuesday, citing an increase in the likelihood of further negative shocks, such as a full-blown trade war.

In its latest World Economic Outlook, released in Bali, Indonesia, the Washington-based lender forecast 3.7 percent growth for the world economy for this year and next. That is less than the 3.9 percent predicted in the April report and in a July update.

The US growth forecast for this year was retained at 2.4 percent, while the projection for next year was trimmed to 2.1 percent from 2.2 percent seen in July, citing the recently enacted trade tariffs.

The dollar climbed to a high of $1.1432 against the Euro Tuesday, but has since retreated to around $1.15.

German exports declined for a second straight month in August, defying expectations for an increase, preliminary data from the statistical office Destatis showed on Tuesday.

Merchandise exports fell a calendar and seasonally-adjusted 0.1 percent from July, when they decreased 0.8 percent. Economists had expected a 0.4 percent increase.

Imports dropped 2.7 percent after a 2.8 percent rise in July. Economists were looking for a 0.1 percent gain.

The trade surplus rose to EUR 17.2 billion in August from EUR 16.5 billion in the previous month. Economists had predicted a surplus of EUR 16.2 billion.

Speaking to BBC Radio 4's programme, Conservative MP Steve Baker said that there were at least 40 colleagues who are not going to accept a 'half in, half out' agreement shaped around the Prime Minister's Chequers blueprint.

MPs should be "unafraid to go forward without an agreement," he stated.

The buck rose to an early high of $1.3032 against the pound sterling Tuesday, but has since pulled back to around $1.3150.

The greenback ached an early high of Y113.391 against the Japanese Yen Tuesday, but has since eased back to around Y113.025.


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Gold Rebounds From 1-week Low, Settles Modestly Higher

Trading 09 oct 2018 Commentaire »

Gold prices edged higher on Tuesday, after declining to a one-week low on Tuesday, as traders shunned sluggish equities amid mounting concerns over a budget showdown between Italy and the European Union, and on worries about a slowing Chinese economy.

Stock markets in Asia drifted lower on Tuesday after China allowed its currency to slip past a psychological bulwark and the International Monetary Fund lowered its forecast for Chinese economic growth.

European markets recovered after a weak start, but buying interest was mostly subdued in the region.

The IMF has lowered its forecast for Chinese economic growth in 2019 to 6.2% from 6.4%, citing "negative effect of recent tariff actions."

Gold futures for December ended up $2.90, or 0.2%, at $1,191.50 an ounce. On Monday, gold futures ended down $17.00, or 1.4%, at $1,188.60 an ounce, the lowest settlement since September 27.

Silver futures for December settled at $14.400 an ounce, gaining $0.071 for the session.

Copper futures for December ended up $0.0395, at $2.8065 per pound.

Treasury yields rose with the benchmark U.S. 10-year note hitting a fresh seven-year high last week and the 30-year Treasury bond climbing to a four-year peak. With an interest rate hike very likely in December and more increases on the cards in the coming year, risk-free bonds were being lapped up by traders.

However, after moving higher initially today, treasuries pared some gains before edging up slightly.


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Euro Slides Against Majors

Trading 09 oct 2018 Commentaire »

The euro drifted lower against its major counterparts in the European session on Tuesday, as Italian bond yields spiked higher despite reassuring comments from Economy Minister Giovanni Tria over the government's budget plans.

In his Parliamentary address, Tria said he would have a "constructive dialogue" with the EU over the 2019 budget.

He also added that the new budget deficit targets were prudent.

"(We will) significantly reduce, within the first two years of this legislature, the growth gap with the eurozone and bring about the first significant decrease in the debt ratio over the next three years," Tria said.

Preliminary data from the statistical office Destatis showed that German exports declined for a second straight month in August, defying expectations for an increase.

Merchandise exports fell a calendar and seasonally-adjusted 0.1 percent from July, when they decreased 0.8 percent. Economists had expected a 0.4 percent increase.

The euro held steady against its major counterparts in the Asian session, with the exception of the yen.

The euro declined to 1.1432 against the greenback, its lowest since August 20. On the downside, 1.12 is possibly seen as the next support level for the euro.

After rising to 0.8791 against the pound at 5:30 am ET, the euro reversed direction and dropped to a 3-1/2-month low of 0.8761. The euro is likely test support around the 0.86 area.

The euro, having advanced to 130.23 against the yen at 3:00 am ET, changed course and fell to near a 4-week low of 129.34. The next possible support for the euro is seen around the 128.00 level.

Pulling away from an early high of 1.1416 against the franc, the euro dropped to a 5-day low of 1.1369. If the euro falls further, it may find support around the 1.12 level.

The euro depreciated to a 4-day low of 1.4857 against the loonie and a 5-day low of 1.6195 against the aussie, reversing from its early highs of 1.4900 and 1.6263, respectively. The euro is seen finding support around 1.47 against the loonie and 1.60 against the aussie.

The single currency eased back to 1.7775 against the kiwi, not far from a 4-day low of 1.7763 seen at 5:15 pm ET. The euro is poised to find support around the 1.75 area.

Looking ahead, the Bank of England Deputy Governor Ben Broadbent testifies on the use of the Retail Price Index before the Economic Affairs Committee in London at 10:35 am ET.

At 2:00 pm ET, the Bank of Canada Senior Deputy Governor Carolyn Wilkins will take part in a panel discussion titled "Empowering Women in the Workplace" at an International Monetary Fund seminar in Bali.


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BITCOIN Analysis for October 9, 2018

Trading 09 oct 2018 Commentaire »

Bitcoin has been quite indecisive with the recent price action. The price jumped higher above $6,600 yesterday. Today, the price reversed its direction, dropping lower at same strength today. The overall trend momentum is seen as neutral in the current market situation. The price has been impulsive amid the bearish pressure, having a bearish Tenkan and Kijun line cross along with Kumo Cloud break below. Nevertheless, the price is still expected to climb higher as it remains above $6,000-6,500 area. The price may correct a bit more in the coming days before pushing higher, whereas a break above $6,600 again is not ruled out which could lead to an impulsive bullish move in the coming days.

SUPPORT: 6,000, 6,500

RESISTANCE: 7,500, 8,000

BIAS: BULLISH

MOMENTUM: VOLATILE

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IMF Slashes Global Growth Forecast As Trade War Intensifies

Trading 09 oct 2018 Commentaire »

The International Monetary Fund slashed the global growth forecast for this year and next on Tuesday, citing an increase in the likelihood of further negative shocks, such as a full-blown trade war.

In its latest World Economic Outlook, released in Bali, Indonesia, the Washington-based lender forecast 3.7 percent growth for the world economy for this year and next. That is less than the 3.9 percent predicted in the April report and in a July update.

"Downside risks to global growth have risen in the past six months and the potential for upside surprises has receded," the global lender said in the report. "Escalating trade tensions and the potential shift away from a multilateral, rules-based trading system are key threats to the global outlook," the report noted.

The IMF cautioned that an intensification of trade tensions, and the associated rise in policy uncertainty, could dent business and financial market sentiment, trigger financial market volatility, and slow investment and trade. Further, the lender said higher trade barriers would disrupt global supply chains and slow the spread of new technologies. Consequently, global productivity and welfare would be lowered. And poor households would be hurt disproportionately as more import restrictions would also make tradable consumer goods less affordable.

"There are clouds on the horizon," IMF Chief Economist Maurice Obstfeld said during a press conference.

"Growth has proven to be less balanced than we had hoped."

Obstfeld noted that growth is being supported in several key economies by policies that seem unsustainable over the longer term.

"These concerns raise the urgency for policymakers to act," the economist added.

The US growth forecast for this year was retained at 2.4 percent, while the projection for next year was trimmed to 2.1 percent from 2.2 percent seen in July, citing the recently enacted trade tariffs. Growth projections for China for this year was left unchanged at 6.6 percent for this year, but the forecast for next year was cut to 6.2 percent from 6.4 percent. Eurozone's growth outlook for this year was cut to 2 percent from 2.2 percent, while the projection for next year was kept at 1.9 percent. The UK growth forecasts for this year and next were unchanged at 1.4 percent and 1.5 percent, respectively. Obstfeld expressed hope that a deal that includes tariff-free trade between the EU and the UK would be reached. India's growth projection for this year was kept at 7.3 percent, while the outlook for next year was trimmed to 7.4 percent from 7.5 percent.


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USD / JPY: strong dollar against defensive asset

Trading 09 oct 2018 Commentaire »

In the first days of the trading week, the economic calendar of the foreign exchange market does not indulge traders with important statistics. Only on Wednesday and Thursday, there will be really significant reports. In Britain, they will publish data on GDP growth, and in the USA, the producer price index and the consumer price index. In the meantime, dollar pairs are forced to focus on the external fundamental background, discussing in passing the events of last week. The current situation provides support for the dollar index, which was entrenched in the middle of 95 points, also prompted by the increased yield of 10-year treasuries. The remaining currencies of the "major group" feel not so confident.

Even with the status of a defensive instrument, even the Japanese yen did not withstand the onslaught of dollar bulls. The currency pair USD / JPY pushed off the support level of 112.90 (the Bollinger Bands line on D1) a second time in a day, and headed in the opposite direction. On the whole, the situation with the pair is rather ambiguous. The Japanese currency is in demand against the background of tense relations between Washington and Beijing, as well as the budgetary "epic" in Italy. The dollar, in turn, does not lose its attractiveness due to the hawk sentiment in the Fed's camp. Such a confrontation between fundamental factors leads to increased volatility of USD / JPY, and the risk of impulse movements is quite high.

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I recall that on Monday, US Secretary of State Michael Pompeo arrived on a visit to China, but no detente on the results of this voyage occurred. On the contrary, the parties exchanged mutual reproaches, veiled and transparent threats, hinting at the aggravation of the trade war in the near future. As a rule, such visits (especially at such a high level) carry a constructive and at least minimal "thaw" in relations, but this time, everything went differently. The meeting was held in an atmosphere of mutual and undisguised discontent.

Moreover, Beijing's claims were not only economic in nature. China was irritated by Washington's actions against Taiwan (in particular, the sale of weapons), stating that with such actions, the States interfere in the internal affairs of the Chinese state. In turn, US Vice President Mike Pence voiced similar accusations in the context of the upcoming congressional elections. He recently said that the Chinese are trying to reduce the result of Republicans in the elections (though not specifying how), and in the White House, they would like to see a "weaker president than Donald Trump".

Thus, the visit of the US Secretary of State to China made it clear that in the near future, the situation on the front of a trade war can only change for the worse. Trump recently announced that he is ready to proceed to the next, third in a row, phase of applying "protective measures" if the Chinese resort to retaliatory measures. Beijing, in turn, assured the Americans that such countermeasures would be taken without fail. In other words, to be continued.

Events in Italy are also worrying, causing the demand for defensive assets. As some experts warn, the inability of Brussels to reach a compromise with Rome in the budget issue will provoke a large-scale financial crisis, which will also be aggravated by the political crisis and the growth of anti-European sentiment. Italian Minister for European Affairs Paolo Savona said that at the moment, the members of the current government have no intention of leaving the Alliance. However, in the case of forced re-elections, the most radical political forces on this issue may come to power. It is difficult to say whether Rome will achieve its goal with the help of such a kind of "blackmail", but at the moment, the situation remains unresolved. Against this background, the decline in Italian assets intensified, and the yield of Italian government securities increased significantly, putting pressure on the euro. The parties cannot resolve the budget issue for several weeks, so it is no longer local, given the possible consequences. And one of the beneficiaries of the current situation is the yen against the background of a general risk aversion.

But if the Japanese currency in cross-pairs now has an indisputable advantage, then in tandem with the dollar, the yen is not behaving so confidently. The probability of raising the Fed rate to 2.5% at the December meeting now stands at more than 80 percent, and the probability of raising to 2.75% at the Fed meeting in March is 54%. Jerome Powell's hawkish rhetoric gave impetus to the growth of the US currency, and now, the greenback is holding its positions "by inertia", spurred on by the record yield of 10-year treasuries (3.252%, the maximum result since April 2011).

Such an ambiguous fundamental background of USD / JPY forces us to resort to technical analysis in order to understand the scope of price ranges. Thus, on the daily chart, the pair is between the middle and upper lines of the Bollinger Bands indicator, but between the Tenkan-sen and Kijun-sen lines. This means that at the moment, the priority is for the northern movement, but this combination is not enough to open positions.

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The fact is that the Ichimoku Kinko Hyo indicator can generate two opposite signals, depending on the price movement in the medium term. So, if the price exceeds the level of 113.55, then Ichimoku Kinko Hyo will form a bull signal "Parade of lines", which will open the way to the resistance level of 114.60 (the upper line of the Bollinger Bands). If the bears push the price under the mark of 112.45, then Ichimoku Kinko Hyo will demonstrate the "Dead Cross" signal. In such a scenario, a further decline to the level of 111.30 is likely.

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The trading plan for the pound on October 9, 2018

Trading 09 oct 2018 Commentaire »

Although the US had a day off yesterday, the dollar was able to resume its growth against the pound. This is largely due to the rebound after Friday's growth of the pound, caused by extremely weak data on the US labor market. True, the European problems that have a negative impact on the single European currency have somewhat spoiled the life of the pound.

Today, the calendar is completely empty, although BRC has published its retail sales data, which showed a 0.2% growth shift, a decline of 0.2%. This, of course, is not complete retail sales data, but still there is something to think about. Also today, you can pay attention to the speech of Charles Evans, as it precedes the release of data on inflation, which will be published tomorrow and the day after tomorrow. Given that inflation is expected to rise, a representative of the Fed will be waiting for statements specifically on this matter. If a member of the Federal Commission on operations in the open market focuses on this issue, then all questions will be removed regarding the rate of increase in the Fed's refinancing rate.

The currency pair pound / dollar once again felt support in the region of the range level of 1.3000 / 1.3050, forming a pullback. Probably assume a return to the framework of this level, where relative it and we will consider the main course.

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GBP / USD. October 9th. The trading system "Regression Channels". The pound resumed growth on favorable market expectations

Trading 09 oct 2018 Commentaire »

4-hour timeframe

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Technical data:

The senior linear regression channel: direction - sideways.

The younger linear regression channel: direction - down.

Moving average (20; smoothed) - up.

CCI: 91.0831

The currency pair GBP / USD on October 9 adjusted to the moving average line and bounced off it, resuming the upward movement. Thus, the correlation between the euro and the pound is now extremely low, and traders seem to still see in the "insider" information hints at the successful promotion of negotiations between the EU and the UK on Brexit, which provokes buying the pound sterling, while very restrained. We still believe that even if negotiations, according to Michel Barnier, have moved to the final stage, there is still no official information on this matter. Thus, the markets are not aware now of what agreements have been reached between London and Brussels. Accordingly, traders respond only to the expectations of a successful "divorce" of the EU and Britain with a "deal". As absolutely everything was already understood, the absence of a "deal" would be extremely disadvantageous to both parties, but especially to Britain. Moreover, within the UK itself, disputes continue over the May plan for exit from the EU. Very few politicians support him, moreover, there was even talk of dismissing Theresa May from the post of prime minister of the country. Nevertheless, despite these conversations, both sides, not without a share of bluffs, continue to argue in advancing the negotiations, and they seem to have even agreed on certain points concerning the border between Northern Ireland and Ireland.

Nearest support levels:

S1 - 1.3092

S2 - 1.3062

S3 - 1.3031

Nearest resistance levels:

R1 - 1.3123

R2 - 1.3153

R3 - 1.3184

Trading recommendations:

The currency pair GBP / USD has rebounded from the MA and is ready to continue the upward movement. Thus, before turning Heikin Ashi down, it is recommended to trade for a raise with targets at 1.3123 and 1.3153.

It is recommended to return to sell orders after traders have overcome a moving average line. In this case, the target for trading for a fall will be Murray levels of 1.3000 and 1.2970.

In addition to the technical picture should also take into account the fundamental data and the time of their release.

Explanations for illustrations:

The senior linear regression channel is the blue lines of unidirectional movement.

The lower linear channel is the purple lines of the unidirectional movement.

CCI is the blue line in the indicator regression window.

The moving average (20; smoothed) is the blue line on the price chart.

Murray levels - multi-colored horizontal stripes.

Heikin Ashi is an indicator that colors bars in blue or purple.

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