Oil market: growth factors and weak points

Trading 12 avr 2019 Commentaire »

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Oil prices continue to hold near five-month highs. How much more can they grow and what can prevent it?

"A more significant than expected reduction in black gold production by OPEC countries, as well as growing geopolitical risks, form the basis for a further rise in quotations. It is possible that next month the United States will impose tougher conditions for buyers of Iranian oil, which were granted exemptions after Washington imposed sanctions against Tehran," analysts at RBC Capital Markets said

They forecast the average cost of a barrel of Brent oil this year at $75, and WTI – $67.

"In the near future, "bullish" factors will not disappear. We expect that the prerequisites for the deficit will continue for 2 quarters. The following now speaks in favor of this: a decrease in the production of raw materials by OPEC countries, a consistent increase in activity on world markets, a further tightening of oil sanctions by the United States and only a moderate increase in shale production at the moment," said Goldman Sachs representatives.

"The cost of Brent crude oil has returned to levels above $70 a barrel. We believe that the "bulls" will not stop and, obviously, will make an attempt to develop movement in the direction of $80," the UBS experts said.

They believe that in the next three months, quotes will stabilize in the range of $70- $80 per barrel.

Meanwhile, despite the fact that the oil market is moving up, not everyone believes that this situation will continue.

"The bullish attitude is gradually increasing, but a vicious circle may form that will prevent a prolonged oil rally. The higher prices rise, especially in such a short period, the more disagreements will appear in the OPEC + group," said Norbert Rucker from Julius Baer Bank.

"OPEC may increase production from July if quotations exceed $80 per barrel," – reports Reuters, citing sources within the cartel.

In addition, one of the obvious weaknesses is a strong backlog of assets in developing countries from a rally in commodity and equity markets. Higher oil prices and a still strong US dollar are putting pressure on a number of EM currencies, which is why in many countries, black gold is much more expensive, which could lead to a decrease in demand for raw materials.

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U.S. Import Prices Climb More Than Expected Amid Spike In Fuel Prices

Trading 12 avr 2019 Commentaire »

Reflecting another spike in prices for fuel imports, the Labor Department released a report on Friday showing U.S. import prices increased by more than expected in the month of March.

The Labor Department said import prices climbed by 0.6 percent in March after jumping by an upwardly revised 1.0 percent in February.

Economists had expected prices to rise by 0.4 percent compared to the 0.6 percent increase originally reported for the previous month.

Prices for fuel imports showed another jump, soaring by 6.4 percent in March after skyrocketing by 9.7 percent in February.

Meanwhile, the report said prices for non-fuel imports edged down by 0.2 percent in March after rising by 0.2 percent in the previous month.

Falling prices for capital goods, consumer goods, and non-fuel industrial supplies and materials more than offset an increase in prices for foods, feeds, and beverages.

The report said export prices also increased by 0.7 percent in March, matching the upwardly revised advance in February.

Export prices had been expected to edge up by 0.2 percent compared to the 0.6 percent increase originally reported for the previous month.

Prices for agricultural and non-agricultural exports both contributed to the overall advance, climbing by 0.9 percent and 0.7 percent, respectively.

The increase in prices for agricultural exports was led by a 34.9 percent spike in vegetable prices, while prices for non-agricultural industrial supplies and materials drove the increase in prices for non-agricultural exports.

The Labor Department said imports in March were unchanged compared to the same month a year ago, while export prices were up by 0.6 percent year-over-year.


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Bitcoin analysis for April 12, 2019

Trading 12 avr 2019 Commentaire »

BTC has been trading sideways at the price of $5.047. We are still bearish and the downward movement is expected to happen.

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According to the H4 time-frame, our analysis from yesterday is still active and didn't change. We found that our support trendline got finally broken, which is sign that sellers are in control and that buyers got exhausted. Also, we found that fake breakout of the resistance at $5.324 in the background, which adds more weakness on the BTC. Our advice is to watch for selling opportunities with the downward targets at $4.651 and $4.133. Key resistance level is seen at the price of $5.445.

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USD/JPY analysis for April 12, 2019

Trading 12 avr 2019 Commentaire »

USD/JPY has been trading upwards as we expected. The price tested the level of 111.95. We are expecting more upside on this currency pair.

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According to the daily time-frame, we found that the neckline at 111.82 from the inverted head and shoulders pattern got broken, which is sign that demand is in control. To confirm even more the breakout, we would like to see USD/JPY to trade at 112.30 before we buy. Support level is seen at the price of 110.85.

Trading recommendation: We are watching for buying USD/JPY if price trades above 112.30. Projected target is set at the price of 113.90.

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It doesn’t matter whether the trade war breaks out with a new force or the trade war ends, EUR/USD will rise

Trading 12 avr 2019 Commentaire »

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In the middle of the week, the EUR/USD pair sharply collapsed following the next ECB meeting. As expected, the regulator preferred to maintain the status quo and promised to disclose the details of the new TLTRO program at one of the following meetings. In addition, the Central Bank noted that the risks for growth prospects in the eurozone are still shifted downwards, and the onset of a recession in the regional economy is still unlikely. However, only one mention of this word made the market nervous, as a result of which EUR/USD fell. However, the pullback was short-lived, and soon the pair recovered.

The FOMC "minutes" published this week, in turn, confirmed that the Fed, as promised in February, will adhere to a patient approach to the issue of changing monetary policy.

Since the beginning of this year, the EUR/USD pair has been trading in the range of 1.1200-1.1450, and its range is 392 points, that is less than 4 cents.

According to experts, in the "sleepy kingdom" rates of major currencies will be until the market changes its expectations about what steps the leading central banks intend to take in the future.

"The fall of the euro after the ECB meeting on Wednesday led the pair to approach critical levels. The fact that the regulator is going to analyze whether there is a need for monetary policy easing was regarded by the market as the Central Bank's readiness to resort to such measures in the future, rather than attempts to normalize," said Esther Reichelt, currency strategist at Commerzbank.

"If the ECB does implement a significant easing, then there's no hope of raising interest rates in 2020. This will put pressure on the euro. If EUR/USD decisively breaks down the level of 1.12, this can change the rules of the game," she added.

In addition, the surge in volatility of quotations can lead to the completion of the US trade conflict with China, as well as the transfer of "fighting" from Asia to Europe.

"The market now does not include in the prices a scenario for the de-escalation of the trade war between Washington and Beijing, which implies the abolition of duties. A trade agreement that turns out to be better than what is now expected will contribute to the improvement of the global economy. In this case, the dollar may weaken against the euro," said Ben Randal from Bank of America.

The expert predicts that by the end of the year, EUR/USD will rise to the level of 1.20.

"Although the trade deal between the United States and China is a prerequisite for the euro rally, this may not be enough for investors to enter the "longs" for a single currency, given the continuing risk of aggravation of trade relations between America and the Old World," B. Randall noted.

However, right now the United States is unlikely to impose duties on European goods, because they have not yet solved this issue with China, and it is expensive and difficult to "fight" on two fronts. Therefore, while the claims are solely in the theoretical plane, and for EUR/USD, this information is neutral.

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Euro rose from the ashes

Trading 12 avr 2019 Commentaire »

Despite all the attempts of Mario Draghi to drown the euro, EUR/USD bulls managed to finish the second week of April in the green zone. The vulnerability of the main competitor and positive news from China's inflation and the trade balance, as well as from European industrial production, allowed the main currency pair to consolidate above the base of the 13th figure. Buyers do not intend to stop, hinting that it is time to put an end to the upward trend in the USD index.

At a time when the US economy slows down and the Fed intends to keep the federal funds rate at least until the end of 2019 (according to a consensus assessment of the Wall Street Journal experts, it will not change until 2021), practically nothing depends on the US dollar. It is forced to go with the flow and react to the behavior of other currencies and central banks. In order to resume the normalization cycle, the Fed needs very strong statistics. And how to get it, if the effect of the fiscal stimulus disappears, and the IMF predicts a decline in US GDP growth rates to 2.3% (the Fed forecast + 2.1%). The White House still believes in magical + 3%, but this requires either a new tax reform, or a reanimation of QE, or a weak dollar. The latter option is perhaps the most realistic for Donald Trump, which reduces the risks of a large-scale trade war between the US and the EU because in this situation the USD index will go up again.

For a long time, "American" were afraid to sell because of the weakness of its competitors. Nevertheless, a positive from European business activity and industrial production returned interest in buying EUR/USD. If the economy of the currency bloc groped for the bottom, and the Chinese data would stretch a helping hand to it, then why not increase the share of the euro in investment portfolios? In this regard, the release of data on the GDP of China for the first quarter and for the indexes of purchasing managers in the eurozone in April can disperse the upward movement of the main currency pair. Unless, of course, there are no unpleasant surprises.

Dynamics of European business activity and GDP

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One of them may come from the States, which intend to impose duties on imports of aircraft and other goods from the EU due to non-market subsidies to Airbus. There are rumors in the market about the start of a new trade war, but in fact, in this way, Donald Trump may push Brussels to negotiate the abolition of tariffs on industrial goods. If the parties agree, this will improve the position of international trade, and in fact, its slowdown, according to the IMF, has become the main brake on global GDP. The authoritative organization lowered the forecasts for economic growth in the eurozone from 1.6% to 1.3% in 2019, however, as often happens, the worse the estimate, the more reasons for joy if it is exceeded.

Technically, the second false breakdown of the lower limit of the medium-term consolidation range of 1.125-1.15 testifies to the weakness of the "bears" in EUR/USD. If the opponents manage to return the quotes to the middle of the trading channel and activate, thus, the "Deception-Release" pattern, the risks of continuing the rally in the direction of the "Wolfe waves" target will increase.

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GBP/USD: plan for the American session on April 12. The pound remains in the side channel

Trading 12 avr 2019 Commentaire »

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

Pound buyers managed to form a false breakout from the support level of 1.3052, which I paid attention to in my morning review. Now, their task is to break and consolidate above the middle of the channel 1.3088, which will update its upper limit of 1.3119, where I recommend fixing the profits. In the second half of the day, the scenario of a repeated decline of the pound to the support area of 1.3052, it is best to return to long positions to rebound from the minimum of 1.3021.

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

Bears today will count on a return and consolidation below the support level of 1.3052, which will push GBP/USD to larger lows in the area of 1.3021 and 1.2988, where I recommend fixing the profits. The failure to consolidate and form a false breakdown in the middle of the side channel of 1.3088 will also be a signal to open short positions in GBP/USD. In the scenario of growth above 1.3088 in the second half of the day, it is best to count on the sale of the pound from the high of the week around 1.3119.

Indicator signals:

Moving Averages

Trading is conducted in the area of 30 and 50 moving averages, which indicates the lateral nature of the market.

Bollinger bands

In the scenario of the pound decline, the lower border of the Bollinger Bands indicator in the area of 1.3040 will act as support.

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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 April 12. Bulls managed to get above the key resistance of 1.1290

Trading 12 avr 2019 Commentaire »

To open long positions on EURUSD, you need:

The data on industrial production in the eurozone turned out to be better than economists' forecasts, which allowed euro buyers to cope with the level of 1.1290, which I paid attention to in the morning review. At the moment, the upward trend is stopped in the resistance area of 1.1324, the breakthrough of which will increase the demand for EUR/USD and lead to an update of the highs in the area of 1.1358 and 1.1388, where I recommend fixing the profits. In the case of a downward correction of the euro in the second half of the day, you can take a closer look at long positions after the support test of 1.1295 or a rebound from a minimum of 1.1265.

To open short positions on EURUSD, you need:

Euro sellers are not in a hurry to return to the market from the resistance level of 1.1324, and the stop in growth is only due to profit taking on long positions. Only the formation of a false breakdown in this range in the second half of the day will allow us to count on a downward correction to the support area of 1.1295, the breakthrough of which will lead to a rapid decline in the euro to a minimum of 1.1265. In the scenario of further growth of EUR/USD, it is best to expect short positions to rebound from the maximum of 1.1358.

Indicator signals:

Moving Averages

Trading is conducted above 30 and 50 moving averages, which indicates the resumption of the upward correction in euros.

Bollinger bands

In the case of a euro decline in the afternoon, support will be provided by the average Bollinger Bands indicator around 1.1275.

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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

India Inflation Rises In March; Industrial Production Growth Less-Than-Forecast

Trading 12 avr 2019 Commentaire »

India's consumer price inflation rose in March, figures from the Central Statistics Office showed on Friday.

The consumer price index rose 2.86 percent year-on-year following a 2.57 percent rise in February. The reading matched economists' expectations.

Food inflation rebounded to 0.3 percent in March from a fall of 0.73 percent in February.

Separate data from the statistical office showed that, the industrial production edged up 0.1 percent year-on-year in February, which was slower than the 2.0 percent gain economists had forecast.


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Analysis of Gold for April 12, 2019

Trading 12 avr 2019 Commentaire »

Gold has been trading sideways at the price of $1.291.00 in past 16 hours. We still expecting downward movement.

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According to the H4 time-frame, we found that there is the breakout of the bearish flag pattern in the background, which is sign that selling may continue. There is the breakout of the support trendline in the background, which adds even more weakness on the Gold. Key support level is seen at the price of $1.281.00. Key short-term resistance is set at $1.310.00.

Trading recommendation: We sold Gold from $1.290.80 with the target at $1.281.10. Protective stop is placed above the $1.310.50.

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