Germany’s business climate index fell to 99.1 points in January

Trading 25 jan 2019 Commentaire »

According to the Ifo Research Institute, the business climate index in Germany fell from 101 points in December o 99.1 points in January, which is the lowest figure since February 2016. Analysts expected the figure to decline only to a level of 100.7 points.

As known, the business climate index in Germany is a leading index of the state of the entire European business. The data to measure business sentiment and business conditions are taken from a survey of about 7,000 German companies.

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Shutdown continues, the risk of a weaker dollar rises

Trading 25 jan 2019 Commentaire »

On the eve of the US Senate considered two bills aimed at ending the so-called "Shutdown." One of them was proposed by the Republicans and the second by the Democrats. Both documents did not receive the required number of votes in the upper house of Congress.

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Recalling that the stumbling block among representatives of the Republican and Democratic parties was the financing of the construction of the wall on the border with Mexico.

The head of the White House, Donald Trump, refuses to approve the budget for the 2019 fiscal year, as long as it does not include an item of expenditure for these purposes.

Political differences persist for 5 weeks in a row. This is a record-long period and there are no obvious signs of compromise yet. Meanwhile, there is growing concern about economic growth. According to some estimates, the "shutdown" of the government will deduct 0.3% from the country's GDP in the first quarter.

In addition, the "Shutdown" may put pressure on the dollar and government bonds, if it lasts too long. However, a quick settlement of this issue can have the same effect, since discussions on the limit of public debt can be added to disputes over federal spending.

"All these increases the likelihood of lowering the US credit rating. So it was already in 2011. However, now the market reaction may be different. If last time the demand of investors for treasury bonds increased, now it may be the opposite. This will also have a negative impact on the dollar: the rate of the American currency will decline, "experts say.

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Soros: "cold" war between the United States and China could turn into a "hot"

Trading 25 jan 2019 Commentaire »

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The famous American financier George Soros believes that the United States and China are in a state of cold war, while there is a danger of it becoming a "hot one".

Speaking at the World Economic Forum in Davos, Soros said that the current relationship between the United States and China can be described as "a cold war that could escalate into a hot one."

According to him, the United States should pursue an effective policy towards China, but now President Donald Trump seems to follow a different course: he makes concessions to China, while he declares victory and at the same time leads attacks on the US allies.

J. Soros believes that this practice harms the main goal of the presidential administration, to curb abuses and excesses on the part of the PRC.

According to the American financier, China is an authoritarian regime, which at the same time is a rich, strong and technologically advanced state, which makes President Xi Jinping the most dangerous opponent for an open society.

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GBP / USD pair: plan for the American session on January 25. Optimism regarding Brexit fades away, as does the British pound

Trading 25 jan 2019 Commentaire »

To open long positions on the GBP / USD pair, you need:

Buyers again failed to maintain demand for the British pound, which led to a decrease and update the minimum of the day at the support level of 1.3074, which I paid attention to in my morning review. Moreover, keeping the pair from further decline keeps hope for the resumption of the rising wave in GBP/USD with a break of 1.3133 maximum, above which resistance levels of 1.3186 and 1.3233 open, where I recommend to fix profits. In the scenario of reducing the pair under the support of 1.3074, you can immediately buy to rebound from the minimum of 1.3013.

To open short positions on the GBP / USD pair, you need:

The bears coped with the morning task of returning to the level of 1.3074, however, it was not possible to break below this range. In the afternoon, a breakthrough in this area of support is required, which will strengthen the downward impulse and lead to a minimum of 1.3013 and 1.2950, where I recommend taking profits. In the case of an uptrend in the second half of the day, you can take a closer look at sales at the next unsuccessful fixing above the resistance of 1.3133 or on the rebound from the maximum of 1.3186.

More in the video forecast for January 25

Indicator signals:

Moving averages

Trade is conducted above the 30- and 50-day moving, which indicates the continuation of the bullish nature of the market.

Bollinger bands

In the case of a pound increase, sales can be viewed from the top line of the Bollinger Bands indicator around 1.3150. If the pound goes down, support will be provided by the lower limit in the area of 1.3013.

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Description of indicators

MA (moving average) 50 days - yellow

MA (moving average) 30 days - green

MACD: fast EMA 12, slow EMA 26, SMA 9

Bollinger Bands 20

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EUR / USD: problems of the dollar are growing like a snowball

Trading 25 jan 2019 Commentaire »

The dollar index did not hold its position and again collapsed in the region of 95 points, demonstrating the inability of the greenback to large-scale actions. Despite attempts at recovery, the dollar cannot ignore the burden of existing problems, from the political crisis to the dovish attitude of Fed members. Even the single currency, which is also under pressure from a negative fundamental background, shows character and does not allow the EUR / USD pair to drop below the 13th figure. Moreover, in my opinion, the dollar at the moment is an overvalued currency, which is in certain demand only "by inertia", after many years of stable growth.

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The US Senate yesterday, predictably, failed two legislative initiatives that were aimed at ending the record-breaking shutdown. And the senators did not support both the Democrats project (which is expected, because they don't have a majority in the Upper House), nor did Trump's proposal. 51 senators voted for the presidential bill, 47 voted against (60 votes are needed for approval). Democrats offered to restore the work of the government before February 8, but without any concessions in the context of financing the border wall. But the head of state, on the contrary, offered to allocate $ 5.7 billion for the wall and $ 800 million for a humanitarian aid program for migrants. But the Senate blocked both proposals, thus continuing the shutdown, which lasts 34 days.

After that, the press started talking about the fact that Trump is preparing to declare a state of emergency in the country, allocating $ 7 billion to bypass the Senate for the construction of the wall and other actions in this direction. This idea does not like neither politicians nor ordinary Americans. According to the results of opinion polls, the vast majority of US citizens do not support the idea of introducing an emergency. Nevertheless, according to the same polls, Shutdown significantly weakened Trump's position in the eyes of the population, and his rating decreases, as they say, not by day, but by the hour. Therefore, if he retreats on this issue, he will lose electoral attractiveness among those Americans who support a tough anti-immigration policy. Given this fact, the likelihood of a state of emergency in the United States is large enough, despite all the risks of a political crisis, which will undoubtedly follow.

And here it is worth recalling that very soon, in February, Republicans and Democrats will start another political battle, this time on the limit of the national debt of the country. The fact is that the government has the right to increase unlimited loans only until March 1 of the current year. After that, the so-called public debt ceiling will be earned, which will not allow borrowing above the level of debt that has been reached by this date. According to a number of experts, the budget deficit of the United States by next year will reach one trillion dollars, and by 2028 the size of the debt will reach 96% of the country's GDP. Trump also set a record in this area. So, during his tenure as president, public debt increased by two trillion dollars, reaching its record value in the last 70 years.

All this suggests that the political struggle regarding the limit of public debt will be tough enough, and the country may again plunge into the swamp of the political crisis. Against the background of all other problems, the dollar will receive another "anchor", especially if the major rating agencies (S & P, Moody's and Fitch Ratings) lower the US credit rating. Rumors about this are also exaggerated in the American press, although representatives of these agencies have not yet voiced such intentions.

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Thus, the overall fundamental picture does not bode well for the dollar in the foreseeable future. Earlier this week, Greenback enjoyed a certain demand due to rumors that the trade negotiations between the United States and China had stopped due to insurmountable disagreements. However, yesterday, the Ministry of Commerce of China officially denied this information, after which the dollar was no longer interesting as an "island of security."

In general, the behavior of the EUR / USD pair is dictated by the dynamics of the American currency. Yesterday's PMI data, which was published in Europe, did not actually affect the mood of the traders (although the German data sank quite badly). Today's data from IFO produced a similar effect, confirming market benchmarks.

From a technical point of view, the situation has not changed much this week. Bulls EUR / USD needs to overcome the mark of 1.14240 to confirm their dominance. In this case, the Ichimoku Kinko Hyo indicator will generate a bullish Parade of Lines signal, which will open the way to the top line of the Bollinger Bands indicator, the mark of 1.1525. The support level is at 1.1310, this is the bottom line of the Bollinger Bands on the daily chart.

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EUR / USD pair: plan for the US session on January 25. Bears are in no hurry to return in the market

Trading 25 jan 2019 Commentaire »

To open long positions on EUR / USD pair, you need:

Euro buyers are slowly but surely confidently moving up to the resistance level of 1.1340 and trying to cling to it. As long as the trade will be conducted above this range, it will be possible to count on the continuation of the upward trend to the area of the larger level 1.1376, where I recommend taking profits. In the event of a decline in the euro in the second half of the day, it is best to return to buying a rebound from support 1.1307 or from a new annual minimum around 1.1272. as the pair has rested against the upper limit of the downward price channel following the trend.

To open short positions on EUR / USD pair, you need:

The pair rested on the upper limit of the downward price channel and returning to the resistance level of 1.1339, on which there are no sellers active, will be a good signal to open short positions in euro with the first test goal of 1.1307 minimum. A breakthrough of which will lead to a larger EUR/USD sale in the support of 1.1272, where I recommend to take profits. In case of further smooth growth of the euro in the second half of the day, it is best to consider short positions to rebound from resistance 1.1376.

More in the video forecast for January 25

Indicator signals:

Moving averages

Trade is conducted in the area of 30- and 50-medium moving but the bearish trend continues.

Bollinger bands

In the event of a euro decline in the afternoon, support will be provided by the lower limit of the Bollinger Bands indicator around 1.1294.

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Description of indicators

MA (moving average) 50 days - yellow

MA (moving average) 30 days - green

MACD: fast EMA 12, slow EMA 26, SMA 9

Bollinger Bands 20

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Wave analysis of GBP / USD pair for January 25. Pound develops upward momentum

Trading 25 jan 2019 Commentaire »

Wave counting analysis:

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On January 24, the GBP/USD pair dropped by 10 bp, but the current wave counting did not undergo any changes and suggests building an uptrend. In the proposed third wave, the elongation and internal 5-wave structure are already visible. Given the unresolved issue with Brexit, there is doubt that this impulse wave will be built completely and the wave pattern does not transform into anything. An unsuccessful attempt to break through the Fibonacci level of 100.0% may lead to the construction of an internal fourth wave in 3.

Purchases targets:

1.3168 - 100.0% Fibonacci

1.3367 - 127.2% Fibonacci

Sales targets:

1.2996 - 76.4% Fibonacci

1.2889 - 61.8% Fibonacci

General conclusions and trading recommendations:

The wave pattern involves the construction of 5 ascending waves. Now, I recommend buying with targets located near the estimated level of 1.3168, which corresponds to 100.0% Fibonacci, since the estimated third wave does not look fully completed. After building the fourth wave in 3, it is expected that the instrument will continue to increase with targets located near 1.3367.

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EUR / USD: Euro is tired of falling and ignores weak fundamental statistics

Trading 25 jan 2019 Commentaire »

Apparently, the euro is tired of constantly having the same fundamental data indicating a slowdown in the European economy, because, despite the next row of weak statistics in Germany, the EUR / USD pair maintained its corrective upward movement in the first half of the day.

As it became known today, the Ifo business confidence index in Germany in January 2019 was lower than expected. This is another confirmation of the fact that the monetary policy of the European Central Bank will remain soft for a very long period.

According to the report of the Ifo Institute, the preliminary index of business sentiment in January 2019 fell to 99.1 points against the December value of 101.0 points. Economists had expected the index to remain above 100 points and reach 100.6 points. In Ifo noted that recent data suggests that the German economy is experiencing a slowdown after the growth cycle.

A survey of economists at the European Central Bank was also published today, in which a number of analysts revised their expectations regarding economic growth and inflation for the eurozone. The main reason for the revision was the weak economic data and problems in world trade.

According to the European Central Bank, respondents expect that eurozone GDP growth in 2019 and 2020 will drop to 1.5%, whereas previously they predicted an increase in eurozone GDP by 1.8% in the current year and by 1.6% in the next.

As for the inflation forecast, it was also lowered for this year, 1.5% from 1.7%. In 2020, inflation in the eurozone is expected to be 1.6%, not 1.7%, as previously assumed. Let me remind you that the target inflation rate, indicated by the ECB, is slightly below 2%.

As for the technical picture of the EUR / USD pair, the demand for the euro is unlikely to hold out above the resistance level of 1.1340 for a long time, and a return under this range will be a signal to close a number of long speculative positions, which will lead to increased pressure on risky assets and updating the minima in the 1.1305 area to support 1.1270.

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Venezuela could be a driver for oil growth this spring

Trading 25 jan 2019 Commentaire »

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In fact, there are currently no factors on the market that can significantly support oil prices. Energy stocks in the United States continue to grow, the first results of the OPEC + transaction will not appear soon. In addition, from the side of stock markets, the threat continues to go. A new wave of flight from risk will surely overwhelm the commodity segment.

The bulls did a good job at the end of last December and the first decade of January this year. In order to drag quotes up, they need a new feed. If we consider what we have now, geopolitics may well become a positive factor. In particular, the threat of US sanctions against the oil sector of Venezuela as a protest against the Maduro regime, who stepped in for a second presidential term on January 10. Judging by the information in the media, Donald Trump may make such a decision in the coming days.

In recent months, oil has significantly reduced in price, and Washington, apparently, has weakened its fears about the rise of black gold in the event of the imposition of sanctions. It is important to remember that Trump needs cheap oil, which he openly stated more than once. Certainly, symbolic sanctions against Iran are a vivid illustration of his position. Therefore, if measures are still taken to Venezuela, then they are likely to turn out to be a special format that contributes to a slight push up of oil.

Sanctions hurt the US

Sanctions will seriously hit Venezuela, while the States themselves will be among the victims. Now the oil storage facilities in the USA are full, the plants are working at full capacity, and the stocks of petroleum products are accumulating.

Mexico at the time of solving the problems associated with the thefts from pipelines suspended the purchase of American raw materials. If Venezuela follows the same path (it will suspend imports), you can wait for a surge in stocks of petroleum products.

During 2019, oil production in Venezuela will drop to 1 million barrels per day. This opinion is shared by most analysts and strategists. In case of acceleration of this process due to sanctions, oil quotations in May may sharply increase.

A combination of factors such as sanctions against Venezuela, the beginning of the US auto season, the expiration of the exemptions issued to importers of Iranian oil, and the restrictive measures OPEC + can lead to a tightening of the market situation in spring.

On Friday, the prices of reference brands of oil change slightly. If during the Asian session, quotations began to grow due to the prospects of reducing the supply of fuel from Venezuela, then during the European one they decreased.

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EIA: US oil production will continue to grow until 2030

Trading 25 jan 2019 Commentaire »

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According to the Energy Management Information (EIA) Annual Report of the US Department of Energy, oil production in the country will continue to grow until 2030, and by 2040 production will remain at more than 14 million barrels per day.

Volumes of production until 2030, EIA analysts expect at around 6 million barrels per day. The continuation of the development of hard-to-recover oil and shale gas resources in the eastern and south-western regions will contribute to maintaining such production rates.

By 2050, according to forecasts of the US Department of Energy, the production of dry natural gas will reach 43.4 trillion cubic meters. feet

As previously reported, the ministry has left unchanged its forecast for the production of "black gold" in 2019, at the level of 12.1 million barrels per day.

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