Dollar Rises To Over 2-year High After Powell Comments

Trading 31 juil 2019 Commentaire »

The U.S. dollar rose to a two-year high in late afternoon trades on Wednesday after the Federal Reserve cut interest rate as expected by 25 basis points and its chief Jerome Powell said that the rate cut should not be seen as "the beginning of a lengthy cutting cycle."

In his post meeting press conference, Powell described the rate cut "essentially as a mid-cycle adjustment to policy," and not the beginning of a lengthy cutting cycle. "That is not what we're seeing now, that's not our perspective now," he added.

The central bank's FOMC's vote to cut rate was not unanimous, with Kansas City Fed President Esther George and Boston Fed President Eric Rosengren preferring to keep rates unchanged.

The Fed decided to cut rates even though its assessment of the economy was largely unchanged, noting that data received since the last meeting indicates the labor market remains strong and economic activity has been rising at a moderate rate.

The central bank's statement did note that market-based measures of inflation compensation have declined after previously saying the measures remain low.

While the Fed said a sustained expansion of economic activity, strong labor market conditions, and inflation near its 2% objective are the most likely outcomes, the central bank said uncertainties about this outlook remain.

The Fed said it will continue to monitor the implications of incoming information for the economic outlook and reiterated that it will act "as appropriate to sustain the expansion."

The dollar index rose to a high of 98.68, beginning its climb immediately after the Fed announced its rate decision and Powell made his comments. Till then, the dollar was a bit sluggish, although it stayed above the flat line much of the time.

Against the euro, the dollar strengthened to 1062, gaining more than 0.8%.

Against Pound Sterling, the greenback recovered from a low of 1.2249 to 1.2134 before retreating slightly to 1.2153, near its previous close.

The Japanese currency Yen was down 0.16% with a dollar fetching 108.77 yen. Immediately after the Fed's rate announcement, the dollar rose to 109.00 yen but gave up some gains subsequently.

Against the loonie, the dollar was up 0.33% at 1.3195. Earlier in the daym the loonie had gained against the greenback after data from Statistics Canada showed that Canada's gross domestic product rose for a third consecutive month in May. GDP rose 0.2% month-on-month in May following a 0.3% rise in April. Economists had expected a 0.1% rise.

Against the Aussie, the dollar gained nearly 0.5%, with the the AUD-USD pair hovering at 0.6840, while against Swiss franc, it was up 0.35%, at 0.9940.

Data released by payroll processor ADP on Wednesday showed private sector employment in the U.S. climbed by 156,000 jobs in July after rising by an upwardly revised 112,000 jobs in June.

Economists had expected employment to increase by 150,000 jobs compared to the addition of 102,000 jobs originally reported for the previous month.

Meanwhile, MNI Indicators released a report that showed a continued contraction in Chicago-area business activity in the month of July.

The report said the Chicago business barometer tumbled to 44.4 in July from 49.7 in June, with a reading below 50 indicating a contraction in regional business activity. Economists had expected the barometer to edge back above 50 to 50.6.


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Treasuries Close Firmly Positive Following Late-Day Volatility

Trading 31 juil 2019 Commentaire »

Treasuries drifted higher over the course of the trading session on Wednesday before seeing considerable volatility going into the close.

After showing wild swings over the final hour of trading, bond prices ended the day in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4 basis points to 2.021 percent.

The late-day volatility came after the Federal Reserve announced its widely expected decision to lower interest rates by a quarter point.

The Fed said it decided to lower the target range for the federal funds rate to 2 to 2-1/4 percent, down 25 basis points from the previous range of 2-1/4 to 2-1/2 percent. This marks the first rate cut by the Fed since December of 2008.

The implications of global developments for the economic outlook as well as muted inflation pressures were cited as reasons for the rate cut.

The vote to cut rates was not unanimous, however, with Kansas City Fed President Esther George and Boston Fed President Eric Rosengren preferring to keep rates unchanged.

Traders expressed some uncertainty about the outlook for future rate cuts as they digested the wording of the Fed's statement as well as comments from Chairman Jerome Powell.

In his subsequent press conference, Powell described the rate cut "essentially as a mid-cycle adjustment to policy."

Powell suggested that today's rate cut should not be seen as "the beginning of a lengthy cutting cycle," adding, "That is not what we're seeing now, that's not our perspective now."

The Fed decided to cut rates even though its assessment of the economy was largely unchanged, noting that data received since the last meeting indicates the labor market remains strong and economic activity has been rising at a moderate rate.

The central bank's statement did note that market-based measures of inflation compensation have declined after previously saying the measures remain low.

While the Fed said a sustained expansion of economic activity, strong labor market conditions, and inflation near its 2 percent objective are the most likely outcomes, the central bank said uncertainties about this outlook remain.

The Fed said it will continue to monitor the implications of incoming information for the economic outlook and reiterated that it will act "as appropriate to sustain the expansion."

President Donald Trump has repeatedly urged the Fed to lower rates, claiming in a post on Twitter on Monday that the central bank has "made all of the wrong moves" and that a "small rate cut is not enough."

Since the rate cut comes amid signs of continued economic growth, the Fed is likely to face accusations of bending to political pressure.

However, the Fed previously indicated several members believe a near-term rate cut is appropriate from a risk-management perspective, as it could help cushion the effects of possible future adverse shocks to the economy.

The Fed said the timing and size of future adjustments to rates will be determined based on realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective.

In addition to cutting rates, the central bank revealed the reduction of bonds it is holding on its balance sheet will conclude in August, two months earlier than previously indicated.

The Fed is scheduled to make its next monetary policy decision following a two-day FOMC meeting on September 17 and 18.

Trading on Thursday may continue to be impacted by reaction to the Fed announcement, although traders are also likely to keep an eye on reports on weekly jobless claims, manufacturing activity, and construction spending.


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Oil Ends Higher After Data Shows Drop In Inventories

Trading 31 juil 2019 Commentaire »

Crude oil futures settled higher on Wednesday, extending gains to a fifth straight session, after data showed a drop in crude stockpiles in the U.S.

West Texas Intermediate Crude oil futures for September ended up $0.53, or about 0.9%, at $58.58 a barrel.

On Tuesday, WTI crude oil futures for September ended up $1.18, or about 2.1%, at $58.05 a barrel.

According to the data released by U.S. Energy Information Administration this morning, crude inventories in the U.S. dropped by about 8.5 million barrels in the week ended July 26, nearly 2.5 times more than the expected drop.

The data also showed that gasoline inventories were down by 1.8 million barrels in the week, while distillate stockpiles declined by 900,000 barrels.

Late Tuesday, the American Petroleum Institute reported a 6 million-barrel drop in crude stockpiles last week.

The Federal Reserve's Federal Open Market Committee voted to lower interest rates by 25 basis points, as widely expected.

The Fed said it decided to lower the target range for the federal funds rate to 2 to 2.25%, down 25 basis points from the previous range of 2.25 to 2.5%.

The bank cited implications of global developments for the economic outlook as well as muted inflation pressures as reasons for the rate cut.


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*Fed Chairman Powell Holding Post-Meeting Press Conference

Trading 31 juil 2019 Commentaire »

Fed Chairman Powell Holding Post-Meeting Press Conference


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July 31, 2019 : EUR/USD Intraday technical analysis and trade recommendations.

Trading 31 juil 2019 Commentaire »

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Back in June 24, the EURUSD looked overbought around 1.1400 facing a confluence of supply levels.

Thus, a bearish movement was initiated towards 1.1275 followed by a deeper bearish decline towards 1.1235 (the lower limit of the newly-established bullish channel) which failed to provide enough bullish support for the EUR/USD.

In the period between 8 - 22 July, sideway consolidation range was established between 1.1200 - 1.1275 until a double-top reversal pattern was demonstrated around the upper limit.

Recent Bearish breakdown of the pattern neckline confirmed the short-term trend reversal into bearish towards 1.1175.

Fortunately, evident bearish momentum (bearish engulfing H4 candlestick) could bring the EURUSD back below 1.1235 which stands as an Intraday Supply zone to be watched for Intraday SELL entries upon any upcoming bullish pullback.

HOWEVER, Early bearish breakdown below 1.1175 facilitated further bearish decline towards 1.1115 (Previous Weekly Low) where evident bullish rejection was recently demonstrated on July 25.

That's why, Intraday bullish pullback was demonstrated towards 1.1175-1.1200 where a valid SELL entry was suggested in a previous article. It's already running in profits.

This week, bearish persistence below 1.1115 was mandatory to allow further bearish decline initially towards 1.1025.

However, the EUR/USD pair failed to establish a successful breakdown below 1.1115. Instead, a short-term bullish double-bottom pattern was established around 1.1115 (Weekly Low).

The EUR/USD remains trapped between the depicted zones (1.1115-1.1175) where a bullish pullback towards 1.1175 should be expected in the near future.

Conservative traders should look for a bullish Head & Shoulders pattern being demonstrated around the current price levels as an early sign of intermediate-term trend reversal where the right shoulder of the pattern is probably being established around 1.1125.

Trade recommendations :

Conservative traders should wait for a bullish breakout above 1.1175 for a valid BUY entry with initial bullish target around 1.1235.

Risky traders can have a BUY entry anywhere around the current price levels (1.1124).

Initial bullish target should be placed at 1.1170 with tight S/L to be located below 1.1090.

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

July 31, 2019 : GBP/USD Intraday technical analysis and trade recommendations.

Trading 31 juil 2019 Commentaire »

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Since May 17, the previous downside movement within the depicted bearish channel came to a pause allowing the recent sideway consolidation range to be established between 1.2750 - 1.2550 with a prominent key-level around 1.2650.

On July 5, a bearish range breakout was demonstrated below 1.2550 (the lower limit of the depicted consolidation range). Hence, quick bearish decline was demonstrated towards the price zone of 1.2430-1.2385 (where the lower limit of the movement channel came to meet the GBPUSD pair).

In July 18, a recent bullish movement was initiated towards the backside of the broken consolidation range (1.2550) where another valid SELL entry was offered two weeks ago.

As anticipated, bearish persistence below 1.2460 (38.2% Fibonacci levels) and 1.2430 (38.2% Fibonacci Level) enhanced further bearish decline towards 1.2350.

Moreover, Bearish breakdown below 1.2350 facilitated further bearish decline towards 1.2320, 1.2270 and 1.2125 which correspond to significant key-levels on the Weekly chart.

The current price levels are quite risky/low for having new SELL entries. That's why, Previous SELLERS were advised to have their profits gathered.

Recently, weak signs of bullish recovery were demonstrated around 1.2125. This May push the GBPUSD to retrace towards 1.2260 then 1.2320 if sufficient bullish momentum is maintained

On the other hand, The price zone of 1.2320 - 1.2350 now stands as a prominent SUPPLY zone to be watched for new SELL positions if the current bullish pullback pursues towards it.

Trade Recommendations:

Intraday traders were advised to look for early signs of bullish rejection around the price levels of 1.2125 for a counter-trend BUY entry.

Conservative traders should wait for the current bullish pullback to pursue towards 1.2320 - 1.2350 for new SELL entries.

S/L should be placed above 1.2430. Initial T/P level to be placed around 1.2279 and 1.2150.

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

Treasury Announces Details Of Long-Term Securities Auctions

Trading 31 juil 2019 Commentaire »

Ahead of the Federal Reserve's monetary policy decision this afternoon, the Treasury Department announced the details of this month's auctions of three-year and ten-year notes and thirty-year bonds on Wednesday.

The Treasury plans to sell $38 billion worth of three-year notes, $27 billion worth of ten-year notes and $19 billion worth of thirty-year bonds.

Last month, the Treasury sold $38 billion worth of three-year notes, $24 billion worth of ten-year notes and $16 billion worth of thirty-year bonds, with all three auctions attract below average demand.


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Turkish CB Trims Inflation Forecast

Trading 31 juil 2019 Commentaire »

Turkey's central bank cut its year-end inflation forecast on Wednesday, citing improved inflation expectations due to disinflation and a tight monetary policy stance.

In its latest Inflation Report, the TCMB trimmed the consumer inflation forecast for end-2019 to 13.9 percent from 14.6 percent projected in April.

Downward revisions to import prices and food prices had a positive impact on the forecast, the bank said.

The inflation forecast for 2020 were left unchanged at 8.2 percent, as downward and upward effects balanced out, the bank said. The projection for 2021 was maintained at 5.4 percent.

The bank also lowered the year-end food inflation forecast for this year, to 15 percent from 16 percent. The projections for the next two years were left unchanged.

On July 25, the TCMB slashed its key interest rate by a massive 425 basis points to 19.75 percent, citing an improving inflation outlook.


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*U.S. Crude Oil Inventories Tumble By 8.5 Million Barrels In Week Ended 7/26

Trading 31 juil 2019 Commentaire »

U.S. Crude Oil Inventories Tumble By 8.5 Million Barrels In Week Ended 7/26


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Chicago Business Barometer Unexpected Indicates Sharper Contraction In July

Trading 31 juil 2019 Commentaire »

MNI Indicators released a report on Wednesday unexpectedly showing a continued contraction in Chicago-area business activity in the month of July.

The report said the Chicago business barometer tumbled to 44.4 in July from 49.7 in June, with a reading below 50 indicating a contraction in regional business activity.

The continued decrease came as a surprise to economists, who had expected the business barometer to edge back above 50 to 50.6.

MNI Indicators said four of the five business barometer components were in contraction territory in July, with only the supplier deliveries index above 50.

The production index plunged by 22 percent to a ten-year low, while the new orders index also subsided further into contraction.

The report also said the employment index fell into contraction for the first time since October of 2017, as weaker demand and production led firms to adjust their workforce.

"Global risks, trade tensions, slowdown in demand and sombre growth expectations, all jeopardize business conditions," said Shaily Mittal, Senior Economist at MNI.

"Firms are not panicking yet, but the latest report isn't adding to the cheer," she added. "The above risks lend weight to a monetary easing approach by the Fed, albeit a gradual one."


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