Treasuries Close Roughly Flat After Seeing Early Strength

Trading 10 mai 2019 Commentaire »

After moving moderately higher in early in the session, treasuries gave back ground over the course of the trading day on Friday.

Bond prices pulled back well off their highs of the session before ending the day roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down less than a tenth of a percent to 2.455 percent after hitting a low of 2.426 percent.

Treasuries initially benefited from renewed concerns about the impact of a U.S.-China trade war after President Donald Trump followed through on his threat to raise tariffs on Chinese imports.

The U.S. hiked the tariff on $250 billion worth of Chinese goods from 10 percent to 25 percent after the U.S. and China failed to reach a trade deal by a midnight deadline.

Additionally, Trump noted in a post on Twitter that the process has begun to place tariffs on the remaining $325 billion worth of Chinese imports.

Trump praised the massive tariff payments to the U.S. Treasury and said there is "absolutely no need to rush" to reach a trade agreement with China.

However, treasuries gave back ground after Treasury Secretary Steven Mnuchin wrapped up a second day of trade talks, calling the discussions "constructive."

The pullback by treasuries reflects how sensitive the markets are to the sentiment regarding the escalating trade dispute, with traders generally still optimistic a deal will eventually be reached.

The developments on the trade front largely overshadowed a typically closely watched report from the Labor Department showing consumer prices increased by slightly less than expected in April.

The Labor Department said its consumer price index rose by 0.3 percent in April after climbing by 0.4 percent in March. Economists had been expecting another 0.4 percent increase.

Excluding food and energy prices, core consumer prices inched up by 0.1 percent for third consecutive month compared to economist estimates for a 0.2 percent uptick.

Compared to the same month a year ago, consumer prices in April were up by 2.0 percent, reflecting a modest acceleration from the 1.9 percent growth in March.

Any news regarding trade talks could impact the markets next week, although traders are also likely to keep an eye on reports on import and exports prices, retail sales, industrial production, and housing starts.


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Oil Futures Pare Early Gains, Settle Flat

Trading 10 mai 2019 Commentaire »

Crude oil futures ended slightly lower on Friday amid speculation a shortage in supply due to OPEC-led output reduction could push up oil prices in the near term.

Discussions between the U.S. and Chinese officials ended today with the countries not reaching any agreement to end the trade tensions, but traders appeared to be betting on hopes a deal will happen sometime soon.

After the U.S. decided to increase tariffs from 10% to 25% on over $200 billion worth of Chinese goods and said it might levy new tariffs on more China imports, China responded by saying it would impose sanctions on U.S. products.

Still, crude oil prices managed to edge higher intraday on hopes tighter supply due to OPEC-led production cuts and the ongoing U.S. sanctions against Iran and Venezuela would push up energy prices in the near term.

West Texas Intermediate Crude oil futures for June ended lower by 4 cents at $61.66 a barrel, after rising to a high of $62.49 a barrel intraday.

Brent Crude oil futures for June edged up $0.30 to $70.69 by mid afternoon.

For the week, WTI oil futures shed about 0.5%.

According to a report from Baker Hughes, oil rig counts dropped for the third time in four weeks, with the number of oil rigs operated by U.S. energy firms going down this week.

The report said drillers cut two oil rigs in the week to May 10, bringing the total count down to 805, well short of 844 rigs a year ago. With several independent exploration and production companies deciding to focus on earnings growth instead of higher output, the rig count has been falling since the beginning of this year.

Recent data from the Energy Information Administration (EIA) showed crude inventories in the U.S. fell by 4 million barrels in the week to May 3.

The EIA report said gasoline stocks declined by 596,000 barrels in the week, while distillate inventories dropped by 159,000 barrels.


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Gold Futures Settle Higher Again

Trading 10 mai 2019 Commentaire »

Gold prices edged higher on Friday as U.S. stocks declined amid escalation in U.S.-China trade war after the U.S. increased tariffs on Chinese goods and China said it would retaliate by imposing sanctions on U.S. goods.

A weaker dollar too contributed to the uptick in price of the safe haven asset.

The dollar index declined to a low of 97.13 before recovering some lost ground. It was down by about 0.1% at 97.32 a little while ago.

Gold futures for June ended up $2.20, or 0.2%, at $1,287.40 an ounce.

On Thursday, gold futures ended up $3.80, or 0.3%, at $1,285.20. For the week, gold futures gained about 0.5%.

Silver futures for July ended up $0.017, at $14.790 an ounce, while Copper futures for July settled at $2.7745, up $0.0030 from previous close.

The U.S. increased tariffs to 25% from existing 10%, on over $200 billion worth of Chinese goods today, even as talks between the two countries continued.

U.S. President Donald Trump said he is in no hurry to sign a trade deal with China. Meanwhile, China has responded to the tariff hike by the U.S., saying it would retaliate by imposing sanctions on U.S. goods.

In U.S. economic news today, data from the Labor Department showed consumer prices in the U.S. increased by slightly less than anticipated in the month April, rising 0.3% after climbing by 0.4% in March. Economists had been expecting another 0.4 percent increase.

Compared to the same month a year ago, consumer prices in April were up by 2%, reflecting a modest acceleration from the 1.9% growth in March.

The annual rate of growth in core consumer prices also crept up to 2.1% in April from 2% in the previous month.


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May 10, 2019 : EUR/USD Intraday technical analysis and trade recommendations.

Trading 10 mai 2019 Commentaire »

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Few weeks ago, a bullish Head and Shoulders reversal pattern was demonstrated around 1.1200.

This enhanced further bullish advancement towards 1.1300-1.1315 (supply zone) where significant bearish rejection was demonstrated on April 15.

Short-term outlook turned to become bearish towards 1.1280 (61.8% Fibonacci) then 1.1235 (78.6% Fibonacci).

For Intraday traders, the price zone around 1.1235 (78.6% Fibonacci) stood as a temporary demand area which paused the ongoing bearish momentum for a while before bearish breakdown could be executed on April 23.

Currently, the price zone around 1.1235-1.1250 has turned into supply-zone to be watched for bearish rejection.

On April 24-26, another bullish head and shoulders pattern was being demonstrated around 1.1140 on the H4 chart.

Moreover, the market has failed to sustain bearish pressure below the price Level of 1.1175.

That's why, conservative traders were suggested to wait for another bullish pullback towards 1.1230-1.1250 where a valid SELL entry can be offered.

Trade recommendations :

Conservative traders can look for a valid SELL entry anywhere around the price level of 1.1235-1.1250.

S/L should be placed around 1.1260.

Initial Target levels should be located around 1.1200, 1.1175 and 1.1140.

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EUR/USD: US inflation did not help the dollar

Trading 10 mai 2019 Commentaire »

Growth data of American inflation could not support either the EUR/USD bulls or bears pair. Due to the lack of confident inflation growth, the market continued to get rid of the dollar by inertia, so that the price rose to the middle of the 12th figure. But the published figures can be interpreted in two ways, so it is too early to talk about the turn of the southern trend. In addition, today's growth of the pair is due to the fairly confident rhetoric of the ECB representative Hansson, who optimistically assessed the growth prospects of the European economy. Thus, the situation on the pair is uncertain, especially in the light of increasing tensions between China and the United States.

But let's start with macroeconomic reports. The US consumer price index did show a controversial result. In annual terms, it rose to two percent but did not reach the projected level (2.1%). On a monthly basis, the indicator showed a negative trend – instead of the expected growth to 0.5%, the index fell to 0.3%. Core inflation also turned out to be "mixed": if on an annualized basis, the figure rose to 2.1% (as predicted by experts), then on a monthly basis, the core index unexpectedly slowed down to 0.1% (instead of the expected growth to 0.2%).

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If we talk about the structure of indicators, the situation is as follows. The positive inflation dynamics is primarily due to the increase in energy prices (by 2.9%) – in particular, gasoline has risen by 5.7%. But many other products have fallen in price. Thus, for the second month in a row, the cost of clothing is reduced (in April – 0.8%, in March – 1.9%), medical services fell by 0.3%, food – by 0.1%. In other words, if energy prices begin to decline, inflation will not be able to keep the pace, as the consumer activity of Americans leaves much to be desired. In particular, the most important indicator for determining inflation – the basic price index of spending on personal consumption in the US – in March slowed immediately to 1.6%, amid weak wage growth.

Thus, today's figures have not shown a clear deceleration of the CPI, but have indicated an alarming trend. I believe that after this release, the White House will increase pressure on the Fed, pointing to weak inflationary results. Let me remind you that US President Donald Trump called on the Federal Reserve to reduce the interest rate by one hundred basis points. His Deputy – Vice President Mike Pence announced similar requirements, focusing on the weak inflation component of NonFarms. Commenting on the growth of wages, he said that the White House "does not see the economy inflationary processes."

It is worth noting that such "wishes" (which are voiced almost in an ultimatum form) has been expressed by Trump since the summer of last year. On the one hand, the members of the regulator show firmness, demonstrating independence from the White House. But on the other hand, the Fed's position has noticeably softened over the past six months: the regulator paused the rate increase process and at least until the end of the year, pledged not to tighten the monetary policy conditions. Jerome Powell, in his rhetoric, "broke away from the team," so to speak, and expressed confidence that the decrease in inflation is due to temporary/seasonal factors. But the other members of the Fed believe otherwise: in their opinion, it is a problem of a systemic nature. Today's figures can only heighten concerns about inflationary trends.

It would seem that taking into account such prospects, buyers of EUR/USD open the way to the North. But in this case, it is necessary to remember the "Chinese factor". Without waiting for the end of negotiations with China, Trump still raised duties on Chinese goods, increasing geopolitical tensions. The States accuse China of abandoning part of the agreements reached in the negotiations (in particular, it is about the reluctance to change national laws for the protection of intellectual property of companies from the United States). So far, the market is not in a hurry to react to this fact with panic, as the negotiations are still ongoing. But if next week, the anti-risk sentiment among traders will increase, the continuation of the Northern dynamics of EUR/USD can be forgotten.

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At the same time, it is worth noting that Friday's controversial release helped the EUR/USD bulls to gain a foothold above the resistance level of 1.1220 (the average line of the Bollinger Bands indicator). This suggests that the EUR/USD pair has the potential for its further recovery unless concerns about US-China trade relations return to the market. On the technical side, the pair is fixed above the middle line of the Bollinger Bands indicator. Also, the price is above the Tenkan-Sen and Kijun-Sen lines, which are under the Kumo cloud, thus forming a "Golden Cross" signal, which signals the increased probability of a trend change from the South to the upward one. The nearest resistance level is 1.1275 – the lower boundary of the Kumo cloud. The support is located at the base of the 12th figure, where the middle line of the Bollinger Bands coincides with the Kijun-Sen line.

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EURUSD medium-term trend technical analysis

Trading 10 mai 2019 Commentaire »

EURUSD is trying to break out and above the downward sloping bearish channel. Bulls are challenging the upper channel boundary around 1.1260. As long as price remains below the 1.1260 level trend will remain bearish.

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Red lines - bearish channel

Green rectangle -short-term support

Blue rectangle - horizontal resistance

EURUSD is challenging previous short-term highs and the upper channel boundary at 1.1250-1.1260. A rejection here could pull back prices towards 1.12 or lower. However a break above the resistance will open the way for a move towards 1.13-1.1350 where the big test will be. In the short-term price has an upward momentum after bottoming around 1.11. In the medium-term price remains inside a bearish channel making lower lows and lower highs. For this sequence to stop and trend to reverse to bullish, we will need to see prices break above 1.1330.

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Short-term technical analysis of Gold for May 10, 2019

Trading 10 mai 2019 Commentaire »

Gold price is trading at its weekly highs and above last week's highs. Gold price has found support at $1,266 and is now challenging important short-term resistance and previous top at $1,290 resistance area.

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Red rectangle - major confluence zone

Blue line- important short-term resistance trend line

Blue rectangle - short-term support

Gold price is challenging the blue trend line resistance once again. A break above it will be a bullish sign. The resistance level is the recent high at $1,290 and support is found at the $1,276 area. Holding above the $1,276 level keeps hopes alive for a move above $1,300 or even to new highs above $1,350. Breaking below $1,276 opens the way for a steep decline towards $1,250-20.

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Dollar Slides As U.S. Consumer Inflation Misses Expectations

Trading 10 mai 2019 Commentaire »

The U.S. dollar was markedly lower against its major opponents in the European session on Friday, as the nation's consumer inflation improved less than forecast in April, supporting hopes for the Fed keeping the rate on hold for the foreseeable future.

Data from the Labor Department showed that the consumer price index rose by 0.3 percent in April after climbing by 0.4 percent in March. Economists had been expecting another 0.4 percent increase.

Core inflation inched up 0.1 percent for third consecutive month compared to economist estimates for a 0.2 percent up-tick.

Compared to the same month a year ago, consumer prices in April were up by 2.0 percent, reflecting a modest acceleration from the 1.9 percent growth in March.

Caution prevailed as U.S. decision to raise tariffs on Chinese goods went into effect following a failure to produce a breakthrough in talks held in Washington.

Investors awaited the outcome of negotiations continuing in Washington, in a last-ditch attempt to clinch a trade deal.

U.S. President Donald Trump said that there is "absolutely no rush" to finalize a trade agreement with China and talks were proceeding in a very "congenial" way.

The currency traded mixed against its major opponents in the Asian session. While it fell against the euro and the pound, it held steady against the franc. Against the yen, it rose.

The greenback was trading lower at 109.68 against the yen, following a rise to 110.05 at 9:45 pm ET. The greenback is seen finding support around the 108.00 region.

The greenback fell to 1.0104 against the franc, its lowest since April 18 and marked a 0.5 percent slide from a high of 1.0159 touched at 8:45 pm ET. The pair was valued at 1.0149 when it ended deals on Thursday. If the greenback extends fall, 1.00 is likely seen as its next support level.

The U.S. currency was 0.3 percent lower at 1.1247 against the euro, after having climbed to 1.1214 at 5:45 pm ET. At yesterday's close, the pair was worth 1.1214. The currency is poised to target support around the 1.14 mark.

Data from the Federal Statistical Office showed that Germany's exports rebounded at the fastest pace in three months in March, defying expectations for further decline.

Exports rose 1.5 percent month-on-month in March, after a revised 1.2 percent fall in February.

Following an advance to 1.2991 against the pound at 4:00 am ET, the greenback pulled back 0.3 percent to 1.3029 following the data. The pair was quoted at 1.2997 at Thursday's New York session close. Further downtrend may take the greenback to a support around the 1.325 level.

Data from the Office for National Statistics showed that the UK economy grew at a faster pace in the first three months of the year, in line with economists' expectations.

Gross domestic product grew 0.5 percent from the final three months of 2018, when it rose 0.2 percent.

The greenback fell back to 0.7007 against the aussie, not far from a 4-day low of 0.7019 seen at 9:45 pm ET. The greenback was trading at 0.6989 against the aussie at yesterday's close. Next key support for the greenback is seen around the 0.715 mark.

The greenback eased back to 0.6611 against the kiwi, just few pips short of a 3-day low of 0.6614 recorded at 9:45 pm ET. The kiwi-greenback pair had finished Thursday's trading session at 0.6590. The greenback is likely to target support around the 0.68 mark.

The greenback fell to a 9-day low of 1.3383 against the loonie, as the latter was underpinned by upbeat jobs data for April. The pair was trading at 1.3476 at Thursday's close. Should the greenback continues its fall, it may challenge support around the 1.31 level.

Data from Statistics Canada showed that the employment grew much higher than expected in April.

The employment rose by 107,000 jobs in April, up from forecasts for 11,700 jobs.

The unemployment rate declined to 5.7 percent from 5.8 percent. The U.S. monthly budget statement for April is scheduled for release at 2:00 pm ET.


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May 10, 2019 : GBP/USD Intraday technical analysis and trade recommendations.

Trading 10 mai 2019 Commentaire »

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On March 29, the price levels of 1.2980 (the lower limit of the newly-established bearish 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 broken uptrend line demonstrated significant bearish rejection.

Since then, Short-term outlook has turned into bearish with intermediate-term bearish targets projected towards 1.2900 and 1.2850.

Last week, a bullish pullback was executed towards the price levels around 1.3035 - 1.3070 (50% - 61.8% Fibonacci levels) where temporary bearish rejection was demonstrated.

However, by the end of Friday's consolidations, significant bullish momentum was initiated around 1.3000.

Hence, a bullish breakout above 1.3075 was temporarily being demonstrated until bearish breakdown below 1.3035 (50% Fibonacci level) was achieved earlier this week.

Currently, The price zone of 1.3030-1.3060 turned to become a prominent supply-zone to be watched for bearish entries.

On the other hand, H4 bullish breakout above 1.3075 enhances a quick bullish visit towards 1.3150 and 1.3200 where the most recent top was established on May 3.

Trade Recommendations:

Conservative traders should be waiting for signs of bearish reversal around the depicted price levels (1.3035-1.3070) as a valid SELL signal.

T/p levels to be located around 1.2950 and 2880.

Any bullish breakout above 1.3080 invalidates this bearish scenario.

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What to expect from the euro and the pound?

Trading 10 mai 2019 Commentaire »

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Further prospects for the single currency largely depend on the outcome of the US-China trade negotiations. The EUR/USD pair reacted weakly to Donald Trump's Sunday "tweets", the jump of the Japanese yen turned out to be moderate. It is possible that investors continue to believe in the deal between Beijing and Washington. As for the introduction of tariffs, this news brought down excessive optimism and returned traders to a balanced state.

The US-China trade relationship plays an important role in the global economy, and the completion of negotiations (regardless of their outcome) will increase the volatility of the main pair. Failure will result in the escalation of a trade war. If some countries can benefit from it, Europe is definitely not included.

Meanwhile, the news about the deal will support the growth of risk appetite and will be an optimistic signal for the euro bloc economy. This situation is helping to narrow the growing gap between the United States and Europe in the coming quarters. The EUR/USD pair may reach $1.16 in the third quarter and $1.18 in the fourth quarter.

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As for the short-term outlook, on Thursday, the quotes of the pair rose and reached the level of $1.1213 after the publication of a block of statistics from the US with negative coloration, which cast a shadow on the expected inflation rate today. However, such a rapid reaction to the data of secondary importance indicates an excessive reaction of the markets after a long flat. Currently, quotes are in a reversal range for a subsequent decline, but as Donald Trump said, no one knows how today will.

About the pound

Since the beginning of the week, the GBP/USD pair has lost more than a hundred points. Optimism about concluding an agreement Brexit almost dried up. British politicians are still far from compromise, the country's Prime Minister Theresa May is trying to develop a new version of the agreement. She also openly plans her own resignation as a last resort. At the EU summit, at which representatives of England were not present, the question of Brexit was not discussed.

On Friday, a large block of macroeconomic statistics was published in the UK, including the first estimate of GDP growth for the first quarter. However, the expected surge in volatility did not happen, market participants are still deprived of arguments in favor of buying a pound. The pair GBP/USD moves around $1.30. The risk of resumption of the downward movement increases. At the same time, only a breakthrough and subsequent fixation of quotations under the level of $1.2970 will make it possible to seriously consider the downward trend.

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