Dollar Gains On Strong Data

Trading 11 avr 2019 Commentaire »

The U.S. dollar exhibited strength against most major currencies on Thursday, buoyed by encouraging data on jobless claims and producer prices.

The greenback's gains were also due to the euro's decline after the European Union officials granted a "flexible" six-month extension to the U.K. for withdrawing from the EU.

The U.S. dollar was up more than 0.2% at 97.16, slightly off a high of 97.29 it touched earlier.

The euro was down 0.18% at $1.1256, after having traded at $1.1289 earlier.

Against the pound sterling, the greenback was up 0.24%, at 1.3057, strengthening from a low of 1.3109.

The dollar gained against the safe haven Japanese yen as well, after having eased in the previous session. A dollar fetched 111.66 yen in late afternoon trade today, way up from 111.01 yen late Wednesday.

The dollar gained about 0.06% against Swiss franc, with the pair trading at 1.0033. The dollar/loonie was trading at 1.3376, giving a gain of over 0.4% to the greenback.

Data released by the Labor Department this morning showed jobless claims in the U.S. fell to their lowest level in five decades triggered the sell-off in gold futures.

The Labor Department's report said initial jobless claims fell to 196,000, a decrease of 8,000 from the previous week's revised level of 204,000.

The drop surprised economists, who had expected jobless claims to rise to 211,000 from the 202,000 originally reported for the previous week.

Another report released by the Labor Department on Thursday showed a spike in energy prices contributed to a bigger than expected increase in U.S. producer prices in the month of March.

The Labor Department said its producer price index for final demand climbed by 0.6% in March after inching up by 0.1% in February. Economists had expected prices to rise by 0.3%.

The bigger than expected increase in producer prices came as energy prices skyrocketed by 5.6% in March following a 1.8% jump in February. Gasoline prices soared by 16%.

The report also showed a rebound in food prices, which rose by 0.3% in March after falling by 0.3% in the previous month.

Compared to the same month a year ago, producer prices were up by 2.2% in March, reflecting an acceleration from the 1.9% increase in February.

In economic news from Europe, house price inflation in eurozone slowed in the fourth quarter of 2018 after remaining unchanged in the previous three months, preliminary data from Eurostat showed.

Final data from INSEE confirmed that France's consumer price inflation slowed to its weakest level in 17 months in March, coming in at 1.1%, compared to 1.3% in February.

Germany's consumer price inflation slowed in March, as initially expected, latest figures from the Federal Statistical Office showed.

The consumer price index rose 1.3% year-on-year following a 1.5% climb in February. That was in line with the flash estimate.

In Brexit news, the European Union has extended the deadline for Brexit to October 31, 2019. The extension has helped avert the prospect of the UK having to leave the EU without a deal on April 12.

British Prime Minister Theresa May has defended her decision to delay the UK's exit from the EU. May said if the deal agreed with the EU was passed, the UK could leave the EU "as soon as possible".

But then, the UK must hold European Parliament elections in May, or face the prospects of leaving the EU without a deal on June 1.

According to reports, May and Labour Party Leader Jeremy Corbyn had a short meeting today.


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Crude Oil Futures Settle Lower On Demand Growth Concerns

Trading 11 avr 2019 Commentaire »

Crude oil futures drifted down sharply on Thursday on worries about a possible drop in demand for crude due to slowing global economy.

After finishing at over 5-month high on Wednesday, oil futures struggled today after the International Energy Agency's monthly report cautioned that sluggishness in economic expansion could erode crude appetite.

West Texas Intermediate Crude oil futures for May ended down $1.03, or 1.6%, at $63.58 a barrel.

On Wednesday, crude oil futures for May settled at $64.61 a barrel, gaining $0.63, or 0.98%.

Data released by the Energy Information Administration on Wednesday showed crude supplies in the U.S. increased by 7 million barrels last week, significantly larger than the expected rise.

The report said U.S. crude stockpiles rose to their highest level since November 2017, amid rising imports.

In its monthly report released today, the International Energy Agency said, "Although the main sources of growth are doing well, there are mixed signals from elsewhere."

A day earlier, the OPEC released a report that said Venezuela's oil output dropped to a long term low of below 1 million barrels per day last month, a drop of almost 500,000 barrels per day, due largely to U.S. sanctions and power shortages.

OPEC, Russia and other non-member producers have committed to reduce output by 1.2 million barrels per day for six months, from the beginning of this year. The OPEC members are scheduled to meet in the last week of June to review the pact.

The lowering of global growth forecast for the year by the International Monetary Fund and the ECB's warning about a slowdown have already raised concerns about energy demand. The minutes of the Federal Reserve's March meeting too showed members were concerned about sluggish U.S. growth and a weaker global economy.


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Treasuries Move Back To The Downside

Trading 11 avr 2019 Commentaire »

After moving higher over the two previous sessions, treasuries gave back some ground during the trading day on Thursday.

Bond prices moved to the downside early in the session and remained in negative territory throughout the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.7 basis points to 2.504 percent.

The pullback by treasuries came after the Labor Department released a report showing first-time claims for U.S. unemployment benefits once again slid to their lowest level in nearly 50 years in the week ended April 6th

The report said initial jobless claims fell to 196,000, a decrease of 8,000 from the previous week's revised level of 204,000.

The continued drop surprised economists, who had expected jobless claims to rise to 211,000 from the 202,000 originally reported for the previous week.

With the unexpected decrease, initial jobless claims fell to their lowest level since hitting 193,000 in October of 1969.

Meanwhile, a separate Labor Department report showed a spike in energy prices contributed to a bigger than expected increase in U.S. producer prices in the month of March.

The Labor Department said its producer price index for final demand climbed by 0.6 percent in March after inching up by 0.1 percent in February. Economists had expected prices to rise by 0.3 percent.

Core producer prices, which exclude food and energy prices, also rose by 0.3 percent in March following a 0.1 percent uptick in February. Core prices had been expected to edge up by 0.2 percent.

Compared to the same month a year ago, producer prices were up by 2.2 percent in March, reflecting an acceleration from the 1.9 percent increase in February.

Meanwhile, the annual rate of growth in core consumer prices edged down to 2.4 percent in March from 2.5 percent in the previous month.

"The upshot is that the producer price data are consistent with consumer price inflation remaining slightly below the Fed's target," said Paul Ashworth, Chief U.S. Economist at Capital Economics.

Treasuries saw continued weakness following the release of the results of the Treasury Department's auction of $16 billion worth of thirty-year bonds, which attracted average demand.

The thirty-year bond auction drew a high yield of 2.930 percent and a bid-to-cover ratio of 2.25, while the ten previous seven-year note auctions had an average bid-to-cover ratio of 2.28.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

Trading on Friday may be impacted by reaction to reports on import and export prices and consumer sentiment.


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Gold Futures Close Sharply Lower

Trading 11 avr 2019 Commentaire »

Gold prices declined sharply on Thursday, a day after surging to a more than 2-week high. The dollar's rise after data showed jobless claims in the U.S. to have fallen to their lowest level in five decades triggered the sell-off in gold futures.

The dollar index rose to 97.15, gaining more than 0.2%.

Gold futures for June ended down $20.60, or 1.6%, at $1,293.30 an ounce, the lowest settlement so far this month.

On Wednesday, gold futures ended up $5.60, or 0.4%, at $1,313.90 an ounce.

Silver futures for May ended down $0.377, at $14.867 an ounce, while Copper futures for May settled at $2.8870 per pound, down $0.0385 from previous close.

The Labor Department's report said initial jobless claims fell to 196,000, a decrease of 8,000 from the previous week's revised level of 204,000.

The drop surprised economists, who had expected jobless claims to rise to 211,000 from the 202,000 originally reported for the previous week.

Another report released by the Labor Department on Thursday showed a spike in energy prices contributed to a bigger than expected increase in U.S. producer prices in the month of March.

The Labor Department said its producer price index for final demand climbed by 0.6% in March after inching up by 0.1% in February. Economists had expected prices to rise by 0.3%.

The bigger than expected increase in producer prices came as energy prices skyrocketed by 5.6% in March following a 1.8% jump in February. Gasoline prices soared by 16%.

The report also showed a rebound in food prices, which rose by 0.3% in March after falling by 0.3% in the previous month.

Compared to the same month a year ago, producer prices were up by 2.2% in March, reflecting an acceleration from the 1.9% increase in February.


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Thirty-Year Bond Auction Attracts Average Demand

Trading 11 avr 2019 Commentaire »

Following auctions of three-year and ten-year notes earlier this week, the Treasury Department sold $16 billion worth of thirty-year bonds on Thursday, attracting average demand.

The thirty-year bond auction drew a high yield of 2.930 percent and a bid-to-cover ratio of 2.25.

Last month, the Treasury also sold $16 billion worth of thirty-year bonds, drawing a high yield of 3.014 percent and a bid-to-cover ratio of 2.25.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

The ten previous seven-year note auctions had an average bid-to-cover ratio of 2.28.

Today's thirty-year bond auction came after the Treasury sold $38 billion worth of three-year notes on Tuesday and $24 billion worth of ten-year notes on Wednesday.


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April 11, 2019 : GBP/USD Intraday technical analysis and trade recommendations.

Trading 11 avr 2019 Commentaire »

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On January 2nd, the market initiated the depicted uptrend line around 1.2380.

This uptrend managed to initiate two successive bullish waves towards 1.3200 (Jan. 25) then 1.3350 (Feb. 27) before the bearish pullback brought the GBPUSD pair towards the uptrend on March 8th.

A weekly bearish gap pushed the pair below the uptrend line (almost reaching 1.2960) before the bullish breakout above short-term bearish channel was achieved on March 11.

Shortly after, the GBPUSD pair demonstrated weak bullish momentum towards 1.3200 then 1.3360 where the GBPUSD failed to achieve a higher high above the previous top achieved on February 27.

Instead, the depicted bearish channel was established.

Significant bearish pressure was demonstrated towards 1.3150 - 1.3120 where the depicted uptrend line failed to provide any bullish support leading to obvious bearish breakdown.

On March 29, the price levels of 1.2980 (the lower limit of the depicted movement channel) demonstrated significant bullish rejection. This brought the GBPUSD pair again towards the price zone of (1.3160-1.3180) where the upper limit of the depicted bearish channel as well as the backside of the depicted uptrend line were located.

Bearish rejection was anticipated around these price levels (1.3160-1.3180).

Further bearish decline is expected towards 1.2920-1.2900 where the lower limit of the depicted channel is located.

Trade Recommendations:

Any bullish pullback towards 1.3160-1.3180 should be considered for another SELL entry. TP levels to be located around 1.3100, 1.3020 then 1.2950 - 1.2920.

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Elliott wave analysis of GBP/JPY for April 11, 2019

Trading 11 avr 2019 Commentaire »

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The extension of the Brexit deal to October 30 has given GBP a lift. We were looking for renewed GBP strength, but this extension should give GBP/JPY an extra push towards the upside.

We are looking for a clear break above minor resistance at 146.05 to confirm a corrective low is in place near 144.90 and renewed upside strength should push GBP/JPY towards 147.00 and 148.50 near term.

Support remains seen in the 144.90 -145.10 area.

R3: 147.00

R2: 146.50

R1: 146.00

Pivot: 145.55

S1: 145.00

S2: 144.62

S3: 144.15

Trading recommendation:

We are long GBP from 146.51 with our stop placed at 144.80

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April 11, 2019 : EUR/USD Intraday technical analysis and trade recommendations.

Trading 11 avr 2019 Commentaire »

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On January 10th, the market initiated the depicted bearish channel around 1.1570.

Since then, the EURUSD pair has been moving within the depicted channel with slight bearish tendency.

On March 7th, recent bearish movement was demonstrated towards 1.1175 (channel's lower limit) where significant bullish recovery was demonstrated.

Bullish persistence above 1.1270 enhanced further bullish advancement towards 1.1290-1.1315 (the Highlighted-Zone) which failed to provide adequate bearish pressure.

On March 18, a significant bullish attempt was executed above 1.1380 (the upper limit of the Highlighted-channel) demonstrating a false/temporary bullish breakout.

On March 22, significant bearish pressure was demonstrated towards 1.1280 then 1.1220.

By the end of last week, a bullish Head and Shoulders reversal pattern was demonstrated around 1.1200.

This will probably enhance further bullish advancement towards 1.1300-1.1315 where price actions should be re-assessed for a possible bullish breakout.

For Intraday traders, the price zone around 1.1235 stood as a significant demand-zone where significant bullish rejection was demonstrated during Yesterday's consolidations.

Short-term outlook remains bullish towards 1.1300 unless bearish breakdown below 1.1250 is achieved on H4 chart.

Trade recommendations :

Conservative traders were suggested to have a valid BUY entry around 1.1235. It's running in profits now.

TP levels to be located around 1.1280, 1.1320. SL should be advanced to 1.1245 to offset the associated risk.

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EUR and GBP: euro and pound are traded in the channel amid further uncertainty with the direction

Trading 11 avr 2019 Commentaire »

The European currency failed to break above the key resistance level around which trading is conducted throughout the week. Weak data on inflation in Germany does not please economists.

According to the report of the Federal Bureau of Statistics, the German consumer price index harmonized by EU standards in March of this year increased by 0.5% compared with February and only 1.4% compared with March 2018. The decline is directly related to the weak growth in food prices.

As before, the main driver of growth was energy prices, which increased by 4.2%, while food prices slowed down in March to 0.7%. As for the base index, which does not take into account the prices of energy and food, the growth in March compared to March of the previous year was 1.1%.

Data on producer prices in the United States returned to demand the US dollar in the first half of the day. The growth took place against the backdrop of rising energy prices.

According to a report by the US Department of Labor, the PPI final demand index in March 2019 rose by 0.6% compared with the previous month, while economists had forecast an increase in the index of 0.3% in March. The base index, which does not take into account volatile prices, rose by 0.3% in March compared with February. Compared with the same period of the previous year, producer prices rose 2.2%, while the base index rose 2.4%.

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As for the technical picture of the EURUSD pair, it remained unchanged. Buyers of risky assets will still try to find strength and overcome resistance around 1.1290, which will lead to a strong increase in the euro in the area of the maximum of 1.1325 and 1.1360. With the further development of the bear scenario, support will be provided by the lower border of the side channel 1.1230, and its breakthrough will only increase the pressure on the euro, which will lead to a test of the minimum of the month around 1.1180.

The speech of the former Fed Chairman Janet Yellen was ignored by the market. Yellen noted that the Central Bank has the right policy. In her opinion, there is currently no need to reduce rates, however, it is possible that the Fed will need to reduce rates in the future since it is already clear that the US economy continues to face many uncertainties.

The British pound remains in a narrow side channel, and the volatility gradually decreases. Yesterday's news that the leaders of the European Union agreed to provide a respite for the UK to exit the block until October 31 did not affect the market, as the result was quite expected. In June, the UK will have to report on the progress of the Brexit talks.

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The dollar received a black mark from the Fed

Trading 11 avr 2019 Commentaire »

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For quite a long time, greenback and the Fed have been moving in the same direction. However, the fact that the monetary policy of the regulator is not a one-way street has become much more important for the EUR/USD pair than the readiness of the European Central Bank to allocate another portion of additional stimulus to the economy of the currency bloc.

Published on the eve of the minutes of the March meeting of the Fed indicated that the regulator seems to have set the bar too high to return to a tightening of the monetary rate in the near future. It is assumed that the Central Bank will keep the interest rate at 2.5% at least until the end of this year. In this case, the probability of its decline in the event of a deterioration of the economic situation in the country is not excluded.

It should be noted that the derivatives market has long been a sign of increasing risks of monetary expansion. Sellers of USD needed only a go-ahead from the Fed, and they eventually got it.

The disappointing data on core inflation in the US for March added fuel to the fire. Last month, the indicator increased by 2% in annual terms against a rise of 2.1% in February. By the way, it is precisely the inability of the indicator to continue to grow against the background of the assumed stay of the US economy in a state of full employment that is now the most worrying for the Fed. According to FOMC representatives, the main external threats are slowing global GDP, trade conflicts and Brexit.

According to the ECB head, Mario Draghi, it is the risk of Washington increasing trade duties on cars shipped to America from the Old World, which are the main argument for the fact that the European economy will continue to slow down. The uncertain situation in global trade continues to cloud the outlook for the region. Most likely, the ECB Board of Governors would prefer to wait until June before deciding what amount of incentives will be required for weakening eurozone GDP.

Thus, the leading securities are still relying on incoming data.

It is expected that if the Chinese economy recovers during the remainder of the year, global GDP will go uphill, which in turn will positively affect European exports. In this case, the euro in 3-6 months may well strengthen against the dollar to $1.15-1.16 and reach the mark of $1.18-1.19 by the end of this year. However, the protectionist policy of Washington may confuse the "bulls" on EUR/USD with all the cards. The resumption of trade wars and the associated growth in demand for defensive assets will create prerequisites for the pair to march southwards.

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