Dollar Recoups Losses, But Stays Flat As Rate Cut Looms

Trading 11 juil 2019 Commentaire »

The U.S. dollar recovered well after an early decline on Thursday, riding on data showing an unexpected increase in consumer price inflation in the month of June, but failed to make significant progress, due to an imminent interest rate cut later this month.

Against the major currencies, the dollar fared reasonably well against the euro and the Japanese yen.

The dollar index, which rose to 97.15, after having declined initially to 96.80, was last seen hovering around 97.05, down 0.05% from previous close.

Against the euro, the dollar recovered to $1.1256 from an early low of $1.1287.

The dollar was down 0.16% at 1.2522 a pound sterling, weakening from an early high of 1.2489 a unit of the British currency.

Against the Yen, the dollar rallied from a low of 107.86 yen to 108.53 before paring gains and dropping to the flat line at 108.46 yen.

The dollar was up marginally against Swiss franc at 0.9902. Against the Aussie, the greenback shed 0.22% with the pair trading at 0.6974, while against the loonie, it was down 0.13% at 1.3065.

On the inflation front, the Labor Department's report said a steep drop in gas prices was offset by an increase in the cost of shelter.

The report said its consumer price index inched up by 0.1% in June, matching the slight increase seen in May. Economists had expected consumer prices to come in unchanged.

The unexpected uptick in consumer prices came even though energy prices tumbled by 2.3% in June after falling by 0.6% in May. Gas prices plunged by 3.6%.

Excluding food and energy prices, core consumer prices rose by 0.3% in June after inching up by 0.1% for four consecutive months. Core prices had been expected to edge up by 0.2%.

Shelter costs rose 0.3%, leading core prices higher, while prices for apparel, used cars and trucks, and household furnishings and operations also showed notable increases.

Despite the unexpected monthly increase, the Labor Department said the annual rate of consumer price growth slowed to 1.6% in June from 1.8% in May.

Another report from the Labor Department showed first-time claims for U.S. unemployment benefits unexpectedly fell in the week ended July 6th, dropping to 209,000, a decrease of 13,000 from the previous week's revised level of 222,000.

Economists had expected jobless claims to inch up to 223,000 from the 221,000 originally reported for the previous week.


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Treasuries Move Notably Lower On Inflation Data, Auction Results

Trading 11 juil 2019 Commentaire »

After ending the previous session roughly flat, treasuries showed a notable move to the downside over the course of the trading day on Thursday.

Bond prices moved modestly lower early in the session and slid more firmly into negative territory as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.9 basis points to 2.120 percent.

The ten-year yield continued to recover from the more than two-year low set last Wednesday to reach its highest closing level in a month.

The weakness among treasuries came after a report from the Labor Department showed an unexpected uptick in U.S. consumer prices in the month of June.

The Labor Department said its consumer price index inched up by 0.1 percent in June, matching the slight increase seen in May. Economists had expected consumer prices to come in unchanged.

Excluding food and energy prices, core consumer prices rose by 0.3 percent in June after inching up by 0.1 percent for four consecutive months. Core prices had been expected to edge up by 0.2 percent.

Andrew Hunter, Senior U.S. Economist at Capital Economics, does not expect the stronger than expected core consumer price growth to prevent the Federal Reserve from cutting interest rates later this month and expressed doubt the strength will be sustained.

"Higher tariffs could yet put some further upward pressure on core goods prices over the coming months but, with growth in unit labor costs slowing, we still think core CPI inflation will remain muted," Hunter said.

He added, "With the latest surveys pointing to a sharp slowdown in activity growth, we expect the Fed to follow a 25bp rate cut this month with further cuts in December and March next year."

A separate Labor Department report showed first-time claims for U.S. unemployment benefits unexpectedly fell in the week ended July 6th.

The report said initial jobless claims dropped to 209,000, a decrease of 13,000 from the previous week's revised level of 222,000. Economists had expected jobless claims to inch up to 223,000.

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

The thirty-year bond auction drew a high yield of 2.644 percent and a bid-to-cover ratio of 2.13, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.26.

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

Earlier this week, the Treasury revealed its auction of $38 billion worth of three-year notes and $24 billion worth of ten-year notes also attracted below average demand.

Inflation data may continue to attract attention on Friday, as the Labor Department is scheduled to release its report on producer prices in June.


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Oil Futures Settle Lower After OPEC Lowers Demand Forecast

Trading 11 juil 2019 Commentaire »

Crude oil futures turned weak after a solid start on Thursday, weighed down by a downward revision in demand forecast by OPEC.

Oil prices climbed higher earlier in the session amid concerns that Tropical Storm Barry could derail crude production in the Gulf of Mexico.

Additionally, tensions in the Middle East deepened on reports that three Iranian boats "attempted to impede" a British oil tanker in the Gulf.

West Texas Intermediate crude oil futures for August ended down $0.23, or about 0.4%, at $60.20 a barrel.

On Tuesday, WTI crude oil futures for August ended up $2.60, or about 4.5%, at $60.43 a barrel, a seven-week high.

The Organization of the Petroleum Exporting Countries, in its monthly report, forecast global crude demand from its members in 2020 is likely to be 29.27 million barrels per day, down 1.34 million bpd from this year.

The forecast points to the return of a surplus despite an OPEC-led pact to restrain supplies.

The Iranian Islamic Revolutionary Guard Corps (IRGC) has denied reports that it its naval forces attempted to obstruct the British tanker in the Persian Gulf.

Tropical storm Barry is forecast to intensify quickly in the next couple of days. The system is expected to become the first hurricane of the 2019 Atlantic season, according to forecasters.

Data released by Energy Information Administration (EIA) Wednesday morning showed U.S. crude stockpiles fell by 9.5 million barrels in the week ended July 5, nearly five times the expected drop. That was the fourth straight weekly decline in U.S. crude inventories.

The EIA report also said that gasoline inventories were down 1.5 million barrels in the week to July 5, higher than an expected fall of 1.3 million barrels.

Meanwhile, distillate stockpiles increased by 3.7 million barrels, beating forecasts for an increase of 0.74 million barrels.


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Gold Retreats After Inflation Data, Settles Lower

Trading 11 juil 2019 Commentaire »

Gold prices retreated after early gains on Thursday, as hopes about any steep cut in U.S. interest rates faded after data showed an unexpected increase in consumer price inflation in the month of June.

The U.S. dollar pared early losses and moved towards the flat line, thanks to the data on inflation. The dollar index, which dropped to a low of 96.80, briefly moved past the unchanged line to 97.15 and was last seen at 97.08.

Gold futures for August settled lower by $5.80 or about 0.4%, at $1,406.70 an ounce, well off the day's high of $1,429.40 an ounce.

On Wednesday, gold futures for August surged up $12, or about 0.9%, to $1,412.50 an ounce, the highest settlement in a week.

Silver futures for September ended down $0.080, at $15.146 an ounce, while Copper futures for September settled at $2.6875 per pound, down $0.0065 from previous close.

The Labor Department's report said a steep drop in gas prices was offset by an increase in the cost of shelter.

The report said its consumer price index inched up by 0.1% in June, matching the slight increase seen in May. Economists had expected consumer prices to come in unchanged.

The unexpected uptick in consumer prices came even though energy prices tumbled by 2.3% in June after falling by 0.6% in May. Gas prices plunged by 3.6%.

Excluding food and energy prices, core consumer prices rose by 0.3% in June after inching up by 0.1% for four consecutive months. Core prices had been expected to edge up by 0.2%.

Shelter costs rose 0.3%, leading core prices higher, while prices for apparel, used cars and trucks, and household furnishings and operations also showed notable increases.

Despite the unexpected monthly increase, the Labor Department said the annual rate of consumer price growth slowed to 1.6% in June from 1.8% in May.

Another report from the Labor Department showed first-time claims for U.S. unemployment benefits unexpectedly fell in the week ended July 6th, dropping to 209,000, a decrease of 13,000 from the previous week's revised level of 222,000.

Economists had expected jobless claims to inch up to 223,000 from the 221,000 originally reported for the previous week.


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

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

Trading 11 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 June 4, temporary bullish consolidations above 1.2650 were demonstrated for a few trading sessions.

However, the price level of 1.2750 (consolidation range upper limit) has prevented further bullish advancement.

Moreover, early signs of bearish rejection have been manifested (Head & Shoulders reversal pattern with neckline located around 1.2650).

Bearish breakdown below 1.2650 (reversal pattern neckline) confirmed the reversal pattern with bearish projection target located at 1.2550, 1.2510 and 1.2450.

Short-term outlook remains under bearish pressure as long as the market keeps moving below 1.2650 (mid-range key-level and neckline of the reversal pattern).

In general, the recent Bearish breakdown below 1.2570 - 1.2550 (the lower limit of the depicted consolidation range) confirms a trend reversal into bearish on the intermediate term.

Immediate bearish decline was expected towards 1.2505.

Further bearish decline was expected to pursue towards 1.2450 (the lower limit of the current movement channel) where early signs of bullish rejection were manifested.

The current bullish pullback towards 1.2550-1.2570 should be considered as a valid SELL signal for Intraday traders.

On the other hand, An Intraday bullish position can ONLY be considered if the current bullish rejection manages to bring the GBP/USD again above the price level of 1.2540.

If so, Intraday bullish target would be projected towards 1.2650.

Trade Recommendations:

Conservative traders can have a valid SELL Entry anywhere around the lower limit of the broken consolidation range near (1.2550-1.2570).

T/P levels to be located around 1.2490 and 1.2440.

S/L should be placed above 1.2610.

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

Ichimoku cloud indicator analysis of EURUSD for July 11, 2019

Trading 11 juil 2019 Commentaire »

EURUSD has broken out of the bearish channel but price has stopped its rise right below the 4 hour Kumo (cloud) resistance. Price got rejected and has pulled back to back test the break out area of the channel at 1.1250.

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Red lines - bearish channel

EURUSD is trading above both the tenkan- and kijun-sen (yellow and red line) indicators. Price is below the Kumo (cloud) but has broken the bearish channel. Support is found at 1.1250 area where we find the broken channel and the tenkan- and kijun-sen indicators. Bulls need to bounce from current levels after forming a higher low. Bulls want to break above 1.1285 and enter the cloud area. This would increase the chances of a medium-term trend reversal to the upside and a move towards 1.14 or higher. Major resistance is at 1.1290-1.1320. Support is important at 1.1250 and next at 1.12. Breaking below 1.12 will open the way for a move towards 1.1050.

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

Gold price remains inside trading range

Trading 11 juil 2019 Commentaire »

Gold price has made no real progress today. Price bounced off the trading range support but bulls were not strong enough to break resistance. So far price remains inside a trading range where we prefer to sell near resistance and buy near support.

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Yellow rectangle - resistance

Red rectangle - support

Nothing new for Gold today. Price is trading between our two important areas noted in the 4hour chart above with red and yellow color. Breaking below $1,390-85 will open the way for $1,330-$1,300. Breaking above resistance will open the way for $1,500-$1,525. Simple as that. Until then we trade the trading range with strict stops.

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

July 11, 2019 : The market is offering a valid SELL entry for the EUR/USD pair around 1.1275.

Trading 11 juil 2019 Commentaire »

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On the highlighted period between (May 17th and June 5th), temporary bearish breakdown below 1.1175 was demonstrated on the chart.

This allowed further bearish decline to occur towards 1.1115 where significant bullish recovery brought the EUR/USD pair back above 1.1175 which stands as a prominent DEMAND level until now.

Initially, Temporary Bullish breakout above 1.1335 was demonstrated (suggesting a high probability bullish continuation pattern).

However, the EURUSD pair has failed to maintain that bullish persistence above 1.1320 and 1.1275 (the depicted price levels/zones). This was followed by a deeper bearish pullback towards 1.1175 where significant bullish price action was demonstrated on June 18.

The EURUSD looked overbought around 1.1400 facing a confluence of supply levels. Thus, a bearish pullback was initiated towards 1.1275 as expected in a previous article.

Further Bearish decline below 1.1275 enhanced 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.

The recent bearish breakdown below 1.1235 invited further bearish momentum to move towards 1.1175.

However, significant bullish momentum was earlier demonstrated around 1.1200 bringing the EUR/USD pair again above 1.1235.

That's why, the current bullish pullback was expected to pursue towards the price zone around 1.1275 where a confluence of resistance/supply levels come to meet the pair.

More Bearish price action should be anticipated near the price zone of 1.1275 where a valid Intraday SELL position can be considered.

Trade recommendations :

For Intraday traders, a valid SELL entry can be offered at retesting of the broken key-zone around 1.1275.

Initial Target levels to be located around 1.1235, 1.1200 and 1.1175.

Stop Loss should be placed above 1.1300.

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

ECB Minutes Suggest Policymakers Preparing To Ease Policy Further

Trading 11 juil 2019 Commentaire »

Policymakers at the European Central Bank agreed that they needed to be ready to ease the policy stance further, as uncertainties were likely to continue in the coming months, the minutes of the June 5-6 rate-setting session in Vilnius, Lithuania, showed on Thursday. "There was broad agreement that, in the light of the heightened uncertainty, which was likely to extend further into the future, the Governing Council needed to be ready and prepared to ease the monetary policy stance further by adjusting all of its instruments, as appropriate, to achieve its price stability objective," the minutes, which the ECB calls "account", showed on Thursday.

"Potential measures to be considered included the possibility of further extending and strengthening the Governing Council's forward guidance, resuming net asset purchases and decreasing policy rates."

Rate-setters led by ECB President Mario Draghi also considered the need for "more strategic" measures if inflation continued to remain low and that the bank's communication should stress that deviations of inflation from the bank's target in both directions would be tolerated. "At the same time, the point was made that care needed to be taken to ensure that any considerations of a strategic nature could not be seen as moving the goalposts at a time when it proved challenging to achieve the Governing Council's inflation aim," the minutes said. A discussion surrounding a more symmetric inflation target is set to gain momentum under the new ECB chief Christine Lagarde, ING economist Carsten Brzeski said. Draghi's term is set to end in October.

The ECB targets inflation "below, but close to 2 percent." While, policymakers were united in supporting the policy proposals put forward by the new ECB Chief Economist Philip Lane, the wording "broad agreement" suggest that they were divided regarding future stance. "Some nuances were expressed about individual elements of the policy package," the minutes said. This mainly referred to differing opinions regarding the extension of the calendar element of the forward guidance and the pricing of the targeted longer-term loans under the TLTRO-III. In the June session, ECB priced the targeted longer-term loans under TLTRO III, 10 basis points above the average rate in the main refinancing operations. These loans will mature in two years. "In general, the tone of the minutes both reflects the ECB's concerns about the growth and inflation outlook as well as its determination to do more," Brzeski said.

The economist said the only other option ECB has in the July meeting, than a rate cut, is to tweak the forward guidance, by adding the words "or lower", thus signaling rate cuts ahead. The bank can then unveil a bigger stimulus in September in the form of a 20 basis points cut in the already-negative deposit rate and a restart of asset purchases, Brzeski said, adding that there is an increasing risk that this package would be delivered in two weeks from now.

"Whether it is July or September, Mario Draghi will definitely leave office with a bang," he concluded.

ECB Governing Council's next rate-setting session is scheduled on July 25 in Frankfurt.


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Gold 07.11.2019 – Rejection of the important resistance at $1.425

Trading 11 juil 2019 Commentaire »

Industry news:

"After a string of subdued readings, core inflation bolted back in June. Prices for goods and services rose 0.3% (0.29% before rounding), ending a four-month run of 0.1% gains. The increase reflects payback for undue softness in recent months, rather than the start of a sharp pickup in the trend."

"Gains in core inflation looked more in line with recent trends."

"Today's report is consistent with inflation climbing back toward the FOMC's target in the coming months. But Fed officials are increasingly concerned about the generalized weakness in inflation that has persisted this expansion. Although it is starting to get back on track, Fed officials have grown impatient over the time it is taking inflation to return to target on a sustained basis."

Technical view:

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Gold did find resistance at the well defined resistance cluster at the price of $1.425. I found that there is 12h balance down break and the bear cross on the Stochastic and MACD oscillators, which is sign that sellers took control from buyers. Gold did back below the 3DMA, which is another sign of the weakness. There is potential for downside on the Gold with the targets at $1.394, $1.385 and $1.375. Watch for selling opportunities.

Important upward reference points:

$1.425 – Resistance cluster (yellow rectangle)

$1.438 – Major short-term swing high

Important downward reference points:

$1.394 – Fibonacci expansion 61.8% (support)

$1.385 – Swing low (support)

$1.375 – Fibonacci expansion 100%

My advice is to watch for selling opportunities with the first downward target at the price of $1.394

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