Good times for German industry are over, how will it affect the euro

Trading 06 fév 2019 Commentaire »

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Weak demand from abroad unexpectedly reduced the volume of industrial orders in Germany, this is another sign that exporters in Europe's largest economy are suffering from a slowdown in the global economy and growth in the number of trade barriers. Contracts for goods produced in Germany declined by 1.6% in December, the overall decline was caused by a fall in orders of 5.5% from customers outside the eurozone, while domestic orders decreased by 0.6%.

"It is now clear that the best times for the German industry have passed. Due to the slowdown of the global economy and many political risks, I doubt that new and sustainable growth impulses will appear in the near future," said Alexander Kruger, an economist at Bankhaus Lampe.

Growth is expected to remain weak early in the year, as sentiment indicators indicate a decline in industrial activity in the coming months. Industrial orders declined, and any recovery in industrial activity would be slow. The Ifo indicator last week showed that business sentiment in Germany fell in January for the fifth month in a row. Other data showed that retail sales in Germany fell in December more noticeably in just 11 years, which became an alarming signal about household spending, which became a key factor in growth in Germany. Positive factors include record high employment, real wage growth, and low borrowing costs.

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The speech of the head of the RBA led to the sale of the Australian dollar

Trading 06 fév 2019 Commentaire »

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On Wednesday, February 6, the head of the Reserve Bank of Australia, Philip Lowe, made an unexpectedly mild speech, while investors were awaiting statements about raising interest rates. This caused the sale of the Australian currency.

In a speech titled "Next Chapter," he pointed out that the increase in interest rates of the US Federal Reserve and other large central banks does not have automatic consequences for Australia.

The official also noted that the flexible rate of the Australian dollar gives the RBA considerable time independence for the implementation of domestic policy.

In addition, high mortgage arrears means that consumer consumption may decrease due to higher rates.

P. Lowe said that the RBA is not aimed at conducting fine-tuning of monetary policy. According to him, the state of the country's economy is improving, but there are still risks, noting that the surge in investment activity in the mining industry is gradually subsiding.

The head of the regulator believes that in order to raise real income per capita, it is necessary to increase productivity.

After the speech of the head of the RBA, the Australian dollar against the US dollar as of 16:30 Moscow time fell by 1.44% to 0.7130, the minimum since January 21 against the euro by 1.27%.

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GBP / USD plan for the American session on February 6. Divergence worked on the buyers side of the pound

Trading 06 fév 2019 Commentaire »

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

The formation of the divergence, which I drew attention to in my morning review, led to a return in demand for the British pound and consolidating above 1.2950 support, which may strengthen the upward correction in the afternoon. The main objective of the bulls is to break through the resistance level of 1.2992, just above which the upper limit of the current downward channel passes. In the case of a repeated decline of the pound to the support area of 1.2931, from there it is best to return to long positions only on a false breakdown or on a rebound from a new minimum of 1.2883.

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

The bears could not continue the downward trend in the pound in the first half of the day, which led to the closure of a number of short positions and a slight upward rebound of the GBP/USD pair. At the moment, short positions can return to a false breakdown in the area of large resistance at 1.2992, where the 50-day moving average is located, or to rebound from a maximum of 1.3048. The main task of the sellers will be a repeated test of the support area 1.2931 and a breakout will open a direct road to the area of new weekly lows of 1.2883 and 1.2833, where I recommend taking profits.

More in the video forecast for February 6

Indicator signals:

Moving averages

Trade is conducted below the 30- and 50-day moving, which indicates a possible drop in the pound in the short term.

Bollinger bands

Bollinger Bands indicator volatility has plummeted, which does not give signals on the market entry.

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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 plan for the US session on February 6. There is no bad news for the euro

Trading 06 fév 2019 Commentaire »

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

Given that there are no expected significant fundamental statistics to be released today, euro buyers took advantage of this moment and managed to keep the pair from a larger sale. Now the bulls are trying to return to the resistance level of 1.1403, fixing above which will lead to a stronger upward correction in the area of maximum at 1.1432 and 1.1459, where I recommend fixing profits. In the case of another wave of EUR / USD and a decline in the second half of the day, you can look for long positions on a rebound from the support of 1.1370 and 1.1342.

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

Sellers need to form a false breakdown in the area of resistance at 1.1403 and keep the euro below this level, which will keep the downward potential in the pair. The purpose of which is for further reduction of EUR / USD in the area of the minimum at 1.1370 and 1.1342, where I recommend fixing profits. In the case of consolidation above the level of 1.1403, a series of stop-orders of sellers may occur, which will lead to an increase in the euro to an area of maximum 1.1432, where I recommend today to sell immediately for a rebound.

More in the video forecast for February 6

Indicator signals:

Moving averages

Trade is conducted below the 30- and 50-medium moving, which indicates the continued pressure on the euro.

Bollinger bands

In case of EUR / USD growth, the upside potential may be limited by the upper limit of the Bollinger Bands indicator in the 1.1418 area.

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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

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

Dollar is trading in different directions to the yen and the euro after Trump’s speech

Trading 06 fév 2019 Commentaire »

The speech of US President Donald Trump with an annual message to Congress had a weak effect on currency trading. The dollar strengthened against the euro but weakened against the yen. As of 11:00 London time, the EUR/USD rate dropped to 1.1385 mark and the USD/JPY rate dropped to a level of 109.70. The dollar index rose by 0.09% to 96.16 points.

Yesterday, Donald Trump promised to complete the construction of the border wall in Mexico. According to the White House administration, a letter was sent to Congress with a proposal that is apt to end the crisis on the country's southern border.

Touching on the topic of trade with China, the US president said that the new deal with China should include significant structural changes in the trade interaction of the two countries and lead to a reduction in the trade deficit of the United States.

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February 6, 2019: EUR/USD has lost its bullish breakout above 1.1420.

Trading 06 fév 2019 Commentaire »

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Since June 2018, the EUR/USD pair has been moving sideways with slight bearish tendency within the depicted bearish Channel (In RED).

On November 13, the EUR/USD pair demonstrated recent bullish recovery around 1.1220-1.1250 where the current bullish movement above the depicted short-term bullish channel (In BLUE) was initiated.

Bullish fixation above 1.1420 was needed to enhance further bullish movement towards 1.1520. However, the market has been demonstrating obvious bearish rejection around 1.1420 few times so far.

A further bullish advance was expected towards the price level of 1.1550 where the upper limit of both depicted channels (RED & BLUE) was located.

However, the EUR/USD pair has lost its bullish momentum since Thursday when a bearish engulfing candlestick was demonstrated around 1.1514. Thus, another descending high was established then.

Hence, the current bearish closure below 1.1420 terminates the current bullish movement (initiated on January 25) allowing another bearish visit towards 1.1350 and 1.1300.

Trade Recommendations:

Conservative traders should wait for the current bearish pullback to pursue towards the price zone of 1.1285-1.1300 (lower limit of the depicted movement channel) for a valid BUY entry.

T/P level to be located around 1.1350 and 1.1420. S/L to be located below 1.1250.

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February 6, 2019: The GBP/USD pair is looking for bullish demand around 1.2950

Trading 06 fév 2019 Commentaire »

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On December 12, the previously-dominating bearish momentum came to an end when the GBP/USD pair visited the price levels of 1.2500 where the backside of the broken daily uptrend was located.

Since then, the current bullish swing has been taking place until January 28 when the GBP/USD pair was almost approaching the supply level of 1.3240.

That's when the current bearish pullback was initiated around slightly lower price levels near 1.3215 (around the depicted supply levels in RED).

This was followed by a bearish engulfing daily candlestick on January 29. Thus, the GBP/USD pair lost its bullish persistence above 1.3155 as a result.

As expected, the recent bearish decline below 1.3150 brought the GBP/USD pair into a deeper bearish correction towards 1.3000 where lack of bullish demand was recently noticed.

That's why, further decline was demonstrated towards 1.2920-1.2950 where (38.2% Fibonacci level) as well as the backside of the depicted broken trend are located (in RED).

For the bullish scenario to remain valid, significant bullish recovery should be demonstrated around the current price levels 1.2920-1.2950. This would enhance a quick bullish visit towards 1.3000 and 1.3150.

Trade Recommendations:

Conservative traders should consider the current bearish pullback towards 1.2940-1.2920 (backside of the broken downtrend in RED) for a valid BUY entry.

T/P levels to be located around 1.3055, 1.3155 and 1.3200. Any bearish H4 closure below 1.2900 invalidates this scenario.

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Dollar suspended gold

Trading 06 fév 2019 Commentaire »

A strong report on the US labor market somewhat cooled the ardor of precious metal admirers. Amid reports of employment growth outside the agricultural sector, ETF stocks dropped by 5.3 tons immediately since February. A rather noticeable loss, given the fact that the figure had increased by 25 tons over the previous four days. Profit taking on long positions contributes to the development of XAU/USD consolidation.

From the levels of the November lows, precious metals rose by almost 10%. The rally accelerated in December as US stock indices fell in January due to a change in the Fed's rhetoric. Jerome Powell and his colleagues talking about the need for a long pause in the process of normalizing monetary policy in large numbers. It will drag on at least until June, according to the President of the Federal Reserve Bank of Dallas, Robert Kaplan. At the same time, gold is supported by geopolitical risks aside from concerns over the fate of the global economy and low rates of the global debt market. Donald Trump announced his intention to dislodge the necessary money from the US Congress to build a wall on the border with Mexico. Otherwise, we are waiting for re-disabling the government. According to estimates of the Budget Committee, it will cost the US economy $3 trillion initially.

The dynamics of supply managers' indices convince the further slowdown of the world economy. Business activity in the United States began to fall in the fourth quarter and much earlier in the eurozone and China, which caused the weakness of the euro and the yuan in 2018.

Dynamics of business activity indexes

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Perhaps the main culprits of hitting the XAU/USD bulls are weak currency competitors of the US dollar. The euro cannot move higher when Italy's economy falls into a technical recession while France's PMI indicates an early recession. The European retail sales are declining at the highest rates since 2011 and the European Commission significantly cuts the forecast for GDP currency block from 1.9% to 1.4%.

At the same time, the weakness of the world economy and the passivity of central banks associated with it should have a positive effect on gold in the future. The fact is that the propensity of regulators to soft monetary policy reduces the yield of bonds. The attractiveness of a precious metal that does not provide its interest holders grows, similarly to its share in investment portfolios. Thus, the longer the global economy feels unimportant and the lower the rates on debt markets are, the greater the chances for the XAU/USD rally to continue.

For the resumption of the upward trajectory, gold will require disappointing macroeconomic statistics for the United States, which will lead to a weakening of the US dollar. In my opinion, traditionally bad weather for this time, the manifestation of the effect of turning off the government and the fading of the fiscal stimulus suggest that the indicators will deteriorate.

Technically, the idea of implementing the target of 161.8% using the AB = CD pattern is still relevant, there is no reason to doubt the upward strength. Therefore, it makes sense to use kickbacks to support for $1,310 and $1,300 per ounce in forming long positions.

Gold daily chart

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Control zones of AUD / USD pair 02/06/19

Trading 06 fév 2019 Commentaire »

Yesterday's closing of the American session occurred below the 1/2 CZ of 1.2034-1.3005. This indicates a change of priority to downward. Any growth must be used to find favorable prices for the sale of the instrument. It is important to understand that the weekly CZ of 1.2832-1.2793 is now the medium-term target. The probability of the testing this zone is 70%, which allows you to search for sales above current marks.

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It is important to note that at a distance of 70 points below the current price is the zone of the average progress for the current week. A test of this zone can lead to a halt of the fall until Friday, hence, it is worth considering with caution on sales below yesterday's low.

An alternative model will be developed if yesterday's fall is absorbed by growth, and the American session closes above the level of 1.3030. This will allow considering the formation of a local accumulation zone. The new target for the work will be the a CZ formed from today's minimum. This model is not a high probability but it must be considered as an auxiliary.

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Daily CZ - daily control zone. The area formed by important data from the futures market that change several times a year.

Weekly CZ - weekly control zone. The area formed by marks from important futures market which change several times a year.

Monthly CZ - monthly control zone. The area is a reflection of the average volatility over the past year.

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AUD / USD: Lowe and Trump knocked down the Australian pair

Trading 06 fév 2019 Commentaire »

The main outsider in the Asian session was the Australian dollar, which, together with its American namesake, collapsed more than 100 points in a few hours as it heads for the main psychologically important support level of 0.70. It is noteworthy that Ozzy actually ignored the meeting of the Reserve Bank of Australia and even grew a little after it. However, it could not stand the dovish mood of Philip Lowe, who did not rule out a reduction in interest rates in the foreseeable future. The flat was replaced by a southern impulse that could "grow" into a southern trend, especially if the bears push the above level of support.

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It should be noted that the sharp decline in the Australian is in particular because of the "surprise factor". After all, just a day ago, the RBA summed up the first meeting this year and the voiced theses did not surprise traders. The regulator left the key interest rate unchanged at a record low one-and-a-half percent level and also reduced economic growth forecasts to 3% from the previous forecast of 3.5%. In general, this result is widely expected. Let me remind you that at its November meeting, the Australian regulator predicted economic growth by 3.5% in 2018, while the real numbers were significantly lower - 2.8%. Therefore, many experts did not doubt that the RBA will revise the forecast for 2019 in the direction of deterioration. Moreover, some analysts warned that the Central Bank would rather substantially revise its position, however, these concerns were not justified. Yet, the Australian regulator focused on a number of other negative factors.

First, it is a slowdown in inflation and a decline in retail sales. Thus, the consumer price index in annual terms in the fourth quarter of last year came out at 1.8% with a forecast of 1.7%, continuing the trend of its decline for the second quarter in a row. The level of retail sales fell to 14-month lows, coming out in December at around 0.4%. Trends in the real estate market are also disturbing: housing has fallen in price in almost all major Australian cities (especially in Sydney and Melbourne). Prices have been falling for 13 of the last 15 months and over the past three months, the rate of decline has accelerated significantly. Since the peak recorded in the fall of 2017, the real estate in Australia has fallen by more than six percent.

At first glance, data on the labor market also did not impress the members of the Australian regulator. The fact is that the growth in employment in December was entirely due to part-time employment. But on the contrary, full employment declined by three thousand, continuing the negative trend. This factor adversely affects the dynamics of wage growth since full-time positions offer higher wages.

Summing up all the above factors, the Reserve Bank lowered the forecast for economic growth but did not talk about possible mitigation of monetary policy conditions. But a day after the meeting, the head of the Central Bank, Philip Lowe, did not rule out this scenario. He acknowledged the heightening of both external and internal risks. The trade war between China and the United States could flare up with a new force in the spring, pulling the world economy and the commodity market. Ascertaining this fact, Law stated that the regulator can react to external circumstances accordingly and the option of lowering the interest rate cannot be ruled out. It is worth noting here that earlier in the text of the accompanying statement of the RBA, there was a phrase that "the next action regarding the interest rate will most likely be upward. Now the reverse option is not excluded.

Given the current fundamental picture, short positions in AUD/USD pair looks quite justified. However, caution should be observed at the base of the 70th figure. As a rule, this level is given to bears hard, therefore, a corrective pullback is possible from this target. The behavior of the American dollar also speaks in favor of the southern Ozzy movement. Contrary to expectations, Donald Trump did not exert downward pressure on the national currency. He did not threaten the state of emergency, although he hinted at the high probability of a new shutdown, at the same time caused the anxiety of traders about the negotiations between the US and China. As a result, the US dollar index jumped to the border of 96 points, reflecting the demand for the US currency.

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In technical terms, the first level of support is located at around 0.7090 on the bottom line of the Bollinger Bands indicator on the daily chart. However, in my opinion, the strongest level in this context is lower, at around 0.70. If the bears break through and consolidate within the 69th figure, we can talk about the resumption of the southern trend for the pair.

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