Crude Oil Futures Settle Modestly Higher

Trading 25 juil 2019 Commentaire »

Crude oil futures ended modestly higher on Thursday, after having settled lower a session earlier despite a larger than expected drop in U.S. crude stockpiles in the week ended July 19.

However, lingering concerns over energy demand outlook amid global economic slowdown limited the commodity's gains.

European Central Bank's President Mario Draghi's comments the eurozone economy was getting worse, more due to a weak growth in the manufacturing sector, and that the central bank was preparing to deliver more stimulus soon weighed on crude oil prices.

West Texas Intermediate Crude oil futures for September ended up $0.14, or about 0.3%, at $56.02 a barrel.

On Wednesday, WTI crude oil futures for September ended down $0.89, or about 1.6%, at $55.88 a barrel.

Crude's uptick was also halted by news that officials from Saudi Arabia and Kuwait discussed ramping up oil production in the southern neutral zone.

Data released by the U.S. Energy Information Administration (EIA) on Wednesday showed U.S. crude inventories fell by 10.84 million barrels in the week to July 19, compared to forecast for a draw of 4 million barrels.

The EIA report also said that gasoline inventories decreased by 226,000 barrels last week, while distillate stockpiles rose by 613,00 barrels.


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Treasuries Show Notable Downturn After Seeing Initial Strength

Trading 25 juil 2019 Commentaire »

Treasuries showed a notable downturn over the course of morning trading on Thursday following an early move to the upside.

Bond prices climbed off their worst levels but remained firmly in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.4 basis points to 2.074 percent after hitting a low of 2.012 percent.

Treasuries initially moved higher after the European Central Bank left interest rates unchanged but signaled a future rate cut.

The ECB's statement said the bank expects rates to remain at "present or lower levels at least through the first half of 2020" after previously saying it only expected rates to remain at "present levels."

However, ECB President Mario Draghi's subsequent comments calling the risk of a recession "pretty low" offset optimism about a sharp reduction in rates.

The ECB has signaled that it is likely to cut rates to address persistently low inflation rather than an economic downturn.

A report from the Commerce Department showing a substantial rebound in U.S. durable goods orders also dented investor optimism about a near-term rate cut by the Federal Reserve.

The Commerce Department said durable goods orders spiked by 2.0 percent in June after plunging by a revised 2.3 percent in May. Economists had expected durable goods to climb by 0.7 percent. . The report also said orders for non-defense capital goods excluding aircraft, an indicator of business spending, jumped by 1.9 percent in June after edging up by 0.3 percent in May,

"Nevertheless, with the incoming global data still deteriorating and domestic capacity utilization falling, we still expect overall investment to remain weak in the second half of the year," said Michael Pearce, Senior U.S. Economist at Capital Economics.

A separate report from the Labor Department showed an unexpected pullback in initial jobless claims in the week ended July 20th.

Meanwhile, the Treasury Department revealed this month's auction of $32 billion worth of seven-year notes attracted below average demand.

The seven-year note auction drew a high yield of 1.967 percent and a bid-to-cover ratio of 2.27, while the ten previous seven-year note auctions had an average bid-to-cover ratio of 2.48.

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 auctions of $40 billion worth of two-year notes and $41 billion worth of five-year notes both attracted below average demand.

Trading on Friday may be impacted by reaction to the Commerce Department's preliminary report on U.S. GDP in the second quarter. GDP is expected to climb by 1.8 percent.


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Gold Futures Retreat After Positive Start, End Notably Lower

Trading 25 juil 2019 Commentaire »

Gold futures failed to hold early gains and ended notably lower on Thursday, with traders reacting to ECB President Mario Draghi's comments and better than expected economic data out of the U.S.

The dollar's rebound from a low of 97.50 too contributed to the yellow metal's retreat.

The dollar index, which advanced to around 97.90 in early trades, dropped down to 97.50 swiftly thereafter, but began edging higher gradually around mid morning. The index was last seen hovering around 97.82, up by about 0.1%.

Gold futures for August ended down $8.90, or about 0.6%, at $1,414.70 an ounce.

On Wednesday, gold futures for August ended up $1.90, or 0.13%, at $1,423.60 an ounce.

Silver futures for September ended down $0.215, at $16.411 an ounce, while Copper futures for September settled at $2.7035 per pound, losing $0.0085.

In economic news, data from the Labor Department showed an unexpected pullback in initial jobless claims in the week ended July 20th.

The report said initial jobless claims fell to 206,000, a decrease of 10,000 from the previous week's unrevised level of 216,000. The drop surprised economists, who had expected jobless claims to inch up to 219,000.

The Labor Department said the less volatile four-week moving average also dipped to 213,000, a decrease of 5,750 from the previous week's unrevised average of 218,750.

According to data released by the Commerce Department, durable goods orders spiked by 2% in June after plunging by a revised 2.3% in May. Economists had expected durable goods to climb by 0.7% compared to the 1.3% slump originally reported for the previous month.

Excluding a notable rebound in orders for transportation equipment, durable goods orders still jumped by 1.2% in June after rising by 0.5% in May. Ex-transportation orders had been expected to edge up by 0.2%.

The European Central Bank on Thursday left its interest rates unchanged and altered its forward guidance to signal that they will be reduced in future, and that policymakers are planning a comprehensive stimulus package.

ECB President Mario Draghi stressed the need for significant stimulus for the euro area economy as policymakers assessed that the outlook was getting worse, especially in manufacturing, which is a crucial sector for the big economies in the bloc.

Citing recent data, the ECB chief said that growth is set to slow in the second and third quarters, mainly due to global trade tensions, and hence, a rebound in the second half of the year is less likely.

Responding to reporters' questions, Draghi said the Eurozone "outlook is getting worse and worse", especially in manufacturing and in those countries where this sector is very important.

The slow rotation of the Chinese economy and worries regarding a no-deal or hard Brexit are among the factors that are hurting the outlook, the ECB President said.


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Seven-Year Note Auction Attracts Below Average Demand

Trading 25 juil 2019 Commentaire »

The Treasury Department announced the results of this month's auction of $32 billion worth of seven-year notes on Thursday, revealing the auction attracted below average demand.

The seven-year note auction drew a high yield of 1.967 percent and a bid-to-cover ratio of 2.27.

Last month, the Treasury also sold $32 billion worth of seven-year notes last month, drawing a high yield of 1.889 percent and a bid-to-cover ratio of 2.44.

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 2.48.

Earlier this week, the Treasury revealed its auctions of $40 billion worth of two-year notes and $41 billion worth of five-year notes both attracted below average demand.


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Euro Firms Up After Early Setback Following ECB Draghi's Speech

Trading 25 juil 2019 Commentaire »

The euro strengthened against its major rivals in the European session on Thursday, trimming its recent decline, after European Central Bank President Mario Draghi sounded less dovish than had been expected, indicating that policy makers had not discussed about rate cuts, despite sending a clear signal about an interest rate reduction at the central bank's upcoming monetary policy meeting in September.

In his press conference in Frankfurt, Draghi said that recent economic indicators continue to outline somewhat slower growth in the second and third quarters of this year.

The euro area's ongoing weakness was driven by prolonged global uncertainties, which particularly affect the region's manufacturing sector.

The risks to the euro area growth outlook remain tilted to the downside, reflected by geopolitical factors, the rising threat of protectionism, and vulnerabilities in emerging markets.

Draghi cautioned that inflationary pressures remain muted and indicators of inflation expectations had worsened.

Consequently, the bank is examining measures, which include steps to reinforce the forward guidance on policy rates as well as the design of a tiered system for reserve remuneration and options for the restart of asset purchase program.

Draghi said that the governing Council is determined to act after seeing the next projections in September.

Some of the members had different views on the stimulus package, Draghi said, adding that no discussion on rate reduction was held today.

The ECB kept its key rates unchanged after the rate setting meeting in Frankfurt. The main refi rate is currently at a record low of zero percent, the deposit rate is at minus 0.4 percent and the marginal lending facility rate is at 0.25 percent.

The ECB altered its forward guidance by adding the word "lower" to its expectation over interest rates.

"The Governing Council expects the key ECB interest rates to remain at their present or lower levels at least through the first half of 2020, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to its aim over the medium term," the bank said.

Survey from Ifo Institute showed that Germany's business confidence weakened more-than-expected in July.

The business climate index fell to 95.7 in July from revised 97.5 in June. The score was forecast to fall to 97.2. The initial reading for June was 97.4.

The currency erased its ECB-led losses against its major counterparts in the European session.

The euro appreciated to a 2-day high of 1.1175 against the greenback, up by 0.7 percent from over a 2-year low of 1.1101 seen at 8:30 am ET. The pair was worth 1.1140 when it closed deals on Wednesday. Should the euro rises further, 1.13 is likely seen as its next resistance level.

The euro was 0.8 percent higher at a 2-day high of 121.05 against the yen, following near a 7-month low of 120.05 it touched at 8:30 am ET. The pair had closed Wednesday's deals at 120.51. Next immediate resistance for the euro is possibly seen around the 124.00 region.

Data from the Bank of Japan showed that Japan producer prices rose 0.7 percent on year in June - shy of expectations for 0.8 percent and down from the upwardly revised 0.9 percent gain in May.

On a monthly basis, producer prices eased 0.1 percent after sliding 0.2 percent in the previous month.

Having dropped to near a 5-week low of 0.8892 against the pound at 8:00 am ET, the euro bounced off 0.6 percent to 0.8945 following Draghi's speech. The euro-pound pair had ended yesterday's trading session at 0.8923. The euro may possibly face resistance around the 0.91 level, if it appreciates again.

Following more than a 2-year low of 1.0962 set at 3:15 am ET, the euro strengthened against the franc, rising 0.8 percent to a 6-day high of 1.1045. At Wednesday's close, the pair was worth 1.0969. Continuation of the euro's uptrend may see it challenging resistance around the 1.13 region.

The single currency added 0.8 percent to a 2-day high of 1.4690 against the loonie, after falling to near a 2-year low of 1.4575 at 8:30 am ET. The euro was trading at 1.4634 against the loonie at yesterday's close. Further uptrend may take the euro to a resistance around the 1.49 level.

The euro was up by 1 percent at an 8-day high of 1.6737 against the kiwi, reversing from a 3-day low of 1.6575 it recorded at 8:30 am ET. At yesterday's trading close, the pair was quoted at 1.6616. The euro is seen challenging resistance around the 1.70 level.

The 19-nation currency spiked higher to near a 2-week high of 1.6091 against the aussie, marking a 1.1 percent rise from a low of 1.5921 seen at 8:30 am ET. The euro was worth 1.5967 per aussie at Wednesday's New York session close. The euro is likely to face resistance around the 1.62 level.

Reserve Bank of Australia Governor Philip Lowe said that the central bank is ready to ease monetary policy further if needed.

".if demand growth is not sufficient, the Board is prepared to provide additional support by easing monetary policy further," he said in Sydney.


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Draghi Says Significant ECB Stimulus Needed As Outlook Getting 'Worse And Worse'

Trading 25 juil 2019 Commentaire »

The European Central Bank President Mario Draghi on Thursday stressed the need for significant stimulus for the euro area economy as policymakers assessed that the outlook was getting worse, especially in manufacturing, which is a crucial sector for the big economies in the bloc.

The central bank left its interest rates unchanged earlier on Thursday and altered its forward guidance to signal that they will be reduced in future, and that policymakers are planning a comprehensive stimulus package.

The ECB staff have been tasked with examining the possibility of further adjustments to forward guidance on policy rates, measures to mitigate the effect of negative interest rates such as a tiering system, and the size and composition of a new asset purchase programme, the bank said.

Economists expect the rate cut to come in September in the form of a 10 basis points reduction in the deposit rate, which is already negative at -0.40 percent. Following Thursday's ECB guidance, economists have scaled up their expectations and are now looking for a full-blown stimulus package in September.

"The prolonged presence of uncertainties, related to geopolitical factors, the rising threat of protectionism, and vulnerabilities in emerging markets, is dampening economic sentiment, notably in the manufacturing sector," Draghi said in his introductory statement to the press conference.

Inflationary pressures remain muted and indicators of inflation expectations have declined, he noted. "A significant degree of monetary stimulus continues to be necessary," Draghi added.

Citing recent data, the ECB chief said that growth is set to slow in the second and third quarters, mainly due to global trade tensions, and hence, a rebound in the second half of the year is less likely. The risks surrounding the euro area growth outlook remain tilted to the downside, Draghi reiterated.

Responding to reporters' questions, Draghi said the Eurozone "outlook is getting worse and worse", especially in manufacturing and in those countries where this sector is very important.

However, the bank still sees signs of strength in the economy, he added. The slow rotation of the Chinese economy and worries regarding a no-deal or hard Brexit are among the factors that are hurting the outlook, the ECB President said.

Earlier on Thursday, the ifo Institute survey showed that the German business confidence weakened to its lowest level in more than six years in July, as companies fear an economic contraction in future. Further, Draghi said policymakers "do not like what we see on the inflation front".

Referring to the symmetry in the inflation target, a new term in the ECB policy statement, Draghi said, "Symmetry means that there is no cap at 2 percent, means that the Governing Council will act with the same determination if inflation is above and below 2 percent." Regarding the Governing Council meeting, Draghi said there was broad agreement on the current outlook in the policy-making body on the latest decisions, meaning policymakers were not unanimous.

Policymakers did not discuss cutting rates today as they chose to wait for the next ECB staff macroeconomic projections before taking action, he noted.

Further, the Governing Council did not discuss the composition of any future asset purchase programme, Draghi said.

Some rate-setters were also having doubts regarding a two-tier system for interest rates, the ECB chief said.

Once again, Draghi stressed on the need for fiscal policy to support the efforts of monetary policy in aiding the economy. If the economic situation continues to deteriorate, fiscal policy will soon be called to action, he added. On the U.S. President Donald Trump's accusation that Europe was engaging in currency manipulation, Draghi asserted that the ECB does not target exchange rates. Early this month, the IMF Managing Director Christine Lagarde was chosen as the successor to Draghi as ECB President. She will be an outstanding president of the bank, Draghi said.

Draghi, whose term ends in October, will be first ECB President who did not raise interest rates during his tenure.


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July 25, 2019 : GBP/USD Intraday technical analysis and trade recommendations.

Trading 25 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.

Moreover, signs of bearish rejection have been manifested near 1.2750 (Head & Shoulders reversal pattern with neckline located around 1.2650).

Intermediate-term technical outlook remains under bearish pressure as long as the market keeps moving below 1.2550 (the lower limit of the depicted consolidation range).

In July 18, a recent bullish movement was initiated around 1.2385 (the lower limit of the depicted movement channel).

A bullish pullback was demonstrated towards the backside of the broken consolidation range (1.2550) where another valid SELL entry was offered by the end of last week's consolidations.

Bearish persistence below 1.2460 (38.2% Fibonacci levels) was mandatory to ensure further bearish decline.

However, lack of sufficient bearish momentum was demonstrated around 1.2430 (23.6% Fibonacci Level) allowed the current bullish pullback to be demonstrated towards 1.2500 (61.8% Fibonacci level) which constitutes a prominent Intraday Supply Level to be watched for bearish rejection & a possible SELL Entry.

Bearish breakdown below 1.2430 (38.2% Fibonacci Level) is mandatory to allow further bearish decline towards 1.2360 where the lower limit of the depicted movement channel comes to meet the GBP/USD pair.

Moreover, Bearish breakdown below 1.2360 is needed to facilitate further bearish decline towards 1.2320 and 1.2270 which correspond to significant key-levels on the Weekly chart.

On the other hand, please note that any bullish breakout above 1.2560 invalidates the previously mentioned bearish scenario.

Trade Recommendations:

For traders who missed the initial trade, another SELL Entry can be taken upon the current bullish pullback towards 1.2500.

Initial T/P levels to be located around 1.2430 and 1.2360.

S/L should be placed above 1.2560.

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July 25, 2019 : EUR/USD Intraday technical analysis and trade recommendations.

Trading 25 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.

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, extensive bullish pullback was expected to pursue again towards the price zone around 1.1275 where a double-top Bearish pattern was demonstrated.

Recent Bearish breakdown of the pattern neckline around (1.1235) confirmed the short-term trend reversal into bearish towards 1.1175.

By the end of last week, lack of enough bearish momentum below 1.1235 brought another bullish pullback towards the depicted key zone around 1.1235 spiking up to 1.1275 (a Weekly High) where significant bearish rejection and a bearish engulfing candlestick were demonstrated.

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

However, early bearish breakdown below 1.1175 facilitated a quick bearish decline towards 1.1115 (Previous Weekly Low) where evident bullish rejection is being demonstrated.

That's why, Intraday bullish pullback is being demonstrated towards 1.1175-1.1200 where a valid SELL entry can be offered.

Trade recommendations :

For Intraday traders, a valid SELL entry can be offered anywhere around 1.1175-1.1200.

Initial Target levels to be located around 1.1175 then 1.1115 while Stop Loss should be placed above 1.1240.

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Wave analysis for EUR/USD and GBP/USD on July 25. A hint of a reduction in rates in the future from Mario Draghi was received

Trading 25 juil 2019 Commentaire »

EUR/USD

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On Wednesday, July 24, the EUR/USD pair ended with a decrease of only 10 basis points. Today, the currency market remained in a downward mood until the ECB announced that the deposit and credit rates remain at the same level at the moment. That is, there were no changes in monetary policy. This, on the one hand, is a positive point, and on the other, ECB Chairman Mario Draghi said that the rates will remain at the current level or below until mid-2020. This means that Mr. Draghi admits their reduction if the economic situation does not improve dramatically until the next meeting, which will be held in September. The ECB also notes low inflationary pressure and allows for an even greater decline in the consumer price index. Economic growth in the second and third quarters of 2019 will also slow down. Thus, I believe that the ECB gave the market more negative than positive, and the growth of the euro can be a short-term reaction and interpreted as a corrective wave in the future wave 3. The current wave layout continues to imply the construction of a downward trend. However, an unsuccessful attempt to break the Fibonacci level of 100.0% led to a departure of the euro/dollar pair from the achieved lows.

Purchases targets:

1.1412 – 0.0% according to Fibonacci

Sales targets:

1.1106 – 100.0% according to Fibonacci

1.1025 – 127.2% according to Fibonacci

General conclusions and trading recommendations:

The euro/dollar pair moved away from its lows amid the ECB meeting and its results. However, the downward mood in the forex market remains. Thus, I recommend selling the pair with targets located near the levels of 1.1106 and 1.1025, which is equal to 100.0% and 127.2% of Fibonacci, when the MACD signal is down.

GBP/USD

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The GBP/USD pair increased by 45 basis points on July 24, thus maintaining the integrity of the current wave marking, which implies the construction of at least three waves upwards. The news background still allows for some growth of the pound sterling, as the vector of market attention is shifted now towards the ECB, and next week, it will be shifted towards the Fed, which can lower the key rate. In the UK, while Boris Johnson officially took office as Prime Minister and will now take the first steps in his new post. Probably, we are waiting for a reshuffle among Ministers, and in his first speech, Johnson has already hinted at new negotiations with the European Union on agreements on Brexit and, in particular, the border between Ireland and Northern Ireland. Thus, it is possible that the negotiations will resume, because, despite all the slogans of Johnson during the elections that Brexit will be held on October 31 in any case, even if the hard option, the new Prime Minister understands that the UK economy could suffer serious losses in this case.

Sales targets:

1.2334 – 200.0% according to Fibonacci

1.2194 – 261.8% according to Fibonacci

Purchases targets:

1.2783 – 0.0% according to Fibonacci

General conclusions and trading recommendations:

The wave pattern of the pound/dollar tool involves the completion of the construction of the downward wave e. Thus, I recommend small purchases of the pair with targets placed over the mark of 1.2550 and with an order limiting losses under the minimum of wave e. I recommend returning to sales after a successful attempt to break through the minimum of wave e.

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U.S. Durable Goods Orders Show Substantial Rebound In June

Trading 25 juil 2019 Commentaire »

A report released by the Commerce Department on Thursday showed a much stronger than expected rebound in new orders for U.S. manufactured durable goods in the month of June, although the report also showed a much steeper than previously reported drop in orders in May.

The Commerce Department said durable goods orders spiked by 2.0 percent in June after plunging by a revised 2.3 percent in May.

Economists had expected durable goods to climb by 0.7 percent compared to the 1.3 percent slump originally reported for the previous month.

The rebound in durable goods orders received a boost from a turnaround in orders for transportation equipment, which surged up by 3.8 percent in June after tumbling by 7.5 percent in May.

Orders for non-defense aircraft and parts soared by 75.5 percent in June after plummeting by 52.2 percent in May, while orders for motor vehicles and parts also showed a significant increase.

Excluding the rebound in orders for transportation equipment, durable goods orders still jumped by 1.2 percent in June after rising by 0.5 percent in May. Ex-transportation orders had been expected to edge up by 0.2 percent.

Orders for machinery and fabricated metal products showed notable increases, while orders for primary metals and computers and electronic products also moved to the upside.

The report also said orders for non-defense capital goods excluding aircraft, an indicator of business spending, shot up by 1.9 percent in June after edging up by 0.3 percent in May,

"Nevertheless, with the incoming global data still deteriorating and domestic capacity utilization falling, we still expect overall investment to remain weak in the second half of the year," said Michael Pearce, Senior U.S. Economist at Capital Economics.

Shipments in the same category, which is the source data for equipment investment in GDP, climbed by 0.6 percent in June following a 0.5 percent increase in May.


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