U.S. Dollar Moves To The Downside As Trump Plans New Tariffs

Trading 01 août 2019 Commentaire »

After moving to the upside in the morning, the value of the U.S. dollar came under pressure over the course of trading on Thursday.

The U.S. dollar is currently trading at 107.42 yen compared to the 108.78 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1092 compared to yesterday's $1.1076.

The downturn by the dollar came as U.S. President Donald Trump announced plans to impose a 10 percent tariff on the remaining $300 billion worth of Chinese imports. Trump revealed the plan shortly after U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin wrapped up the latest round of trade talks in Shanghai.

The president accused China of failing to follow through on pledges to buy large quantities of U.S. agricultural products and stop the sale of Fentanyl to the U.S.

The greenback had moved higher earlier in the day as weaker than expected U.S. economic data resurrected investors' hopes for future interest rate cuts by the Federal Reserve.


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Treasuries Move Sharply Higher On Weak Data, Trump's New Tariff Threat

Trading 01 août 2019 Commentaire »

After moving modestly higher early in the session, treasuries saw further upside over the course of the trading day on Thursday.

Bond prices jumped to new highs in mid-afternoon trading before closing substantially higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, plunged by 12.7 basis points to 1.894 percent.

With the steep drop on the day, the ten-year yield closed below 2 percent for the first time in a month, ending the session at its lowest closing level since Election Day of 2016.

Treasuries initially benefited from the release of some weaker than expected U.S. economic data, including a report from the Institute for Supply Management unexpectedly showing a continued slowdown in manufacturing growth in the month of July.

The ISM said its purchasing managers index dipped to 51.2 in July after edging down to 51.7 in June. While a reading above 50 still indicates growth in manufacturing activity, economists had expected the index to inch up to 52.0.

With the continued decrease, the purchasing managers index dropped to its lowest level since hitting 49.6 in August of 2016.

A separate report from the Commerce Department showed U.S. construction spending plunged by 1.3 percent to in June after falling by 0.5 percent in May.

Treasuries saw further upside in afternoon trading as traders looked for safe havens after President Donald Trump announced plans to impose a 10 percent tariff on the remaining $300 billion worth of Chinese imports.

Trump revealed the plan in a post on Twitter on Thursday shortly after U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin wrapped up the latest round of trade talks in Shanghai.

"Our representatives have just returned from China where they had constructive talks having to do with a future Trade Deal," Trump tweeted.

He added, "We thought we had a deal with China three months ago, but sadly, China decided to re-negotiate the deal prior to signing."

Trump accused China of failing to follow through on pledges to buy large quantities of U.S. agricultural products and stop the sale of Fentanyl to the U.S.

"Trade talks are continuing, and during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country," Trump said.

He added, "We look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one!"

Trump noted that products targeted by the new tariffs do not include the $250 billion worth of Chinese goods already being tariffed at 25 percent.

Looking ahead, the monthly jobs report is likely to be in focus on Friday, overshadowing separate reports on the U.S. trade deficit, consumer sentiment, and factory orders.

Employment is expected to climb by 164,000 jobs in July after jumping by 224,000 jobs in June, while the unemployment rate is expected to hold at 3.7 percent.


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Crude Oil Prices Plummet On New China Tariffs

Trading 01 août 2019 Commentaire »

Crude oil prices cratered on Thursday after U.S. President Donald Trump announced plans to impose a 10 percent tariff on $300 billion worth of Chinese imports.

West Texas Intermediate tumbled $3.61 or 6.24 percent to $54.28 per barrel as losses accelerated after Trump's announcement.

Trump accused China of failing to follow through on pledges to buy large quantities of U.S. agricultural products and stop the sale of Fentanyl to the U.S.

The new tariffs announced by Trump represent the latest escalation in the trade war between the U.S. and China, which has led to increasing concerns about the outlook for the global economy.


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Trump Tweets Plans To Impose New Tariffs On Chinese Imports

Trading 01 août 2019 Commentaire »

With the latest round of U.S.-China trade talks failing to result in a breakthrough, President Donald Trump has announced plans to impose a 10 percent tariff on the remaining $300 billion worth of Chinese imports.

Trump revealed the plan in a post on Twitter on Thursday shortly after U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin wrapped up trade talks in Shanghai.

"Our representatives have just returned from China where they had constructive talks having to do with a future Trade Deal," Trump tweeted.

He added, "We thought we had a deal with China three months ago, but sadly, China decided to re-negotiate the deal prior to signing."

Trump accused China of failing to follow through on pledges to buy large quantities of U.S. agricultural products and stop the sale of Fentanyl to the U.S.

"Trade talks are continuing, and during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country," Trump said.

He added, "We look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one!"

Trump noted that products targeted by the new tariffs do not include the $250 billion worth of Chinese goods already being tariffed at 25 percent.

On Wednesday, White House Press Secretary Stephanie Grisham described the latest U.S.-China trade talks as "constructive" and said negotiations on an enforceable trade deal were expected to continue in Washington, D.C., in early September.

The new tariffs announced by Trump represent the latest escalation in the trade war between the U.S. and China, which has led to increasing concerns about the outlook for the global economy.

The Federal Reserve's decision to cut interest rates by a quarter point on Wednesday was partly due to the potential impact of the ongoing trade dispute.

The move by Trump would also seem to violate the "trade truce" he reached with Chinese President Xi Jinping during the G20 Summit in Japan in late June.

(Photo: Gage Skidmore)


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Gold Prices Surging From Two-Week Lows

Trading 01 août 2019 Commentaire »

Gold prices rebounded sharply on Thursday, recovering from near two-week lows after Fed Chairman Jerome Powell dampened hopes of further rate cuts later this year, sending risk assets down and the dollar higher.

But the precious metal is soaring after U.S. President Donald Trump announced a new round of tariffs on Chinese goods in an effort to turn up the heat in the ongoing trade war between the two nations.

China is likely to respond in kind, dramatically enhancing the desire for safe haven gold.

Spot gold jumped $25.00 or 1.77 percent to $1,438.40 per ounce, bouncing from its lowest level since July 17 at $1,405.50 this morning. U.S. gold futures were up 0.87 percent at $1,450.60 an ounce.

The U.S. dollar rose above ?109 for the first time in some two months in Tokyo trading after Fed Chairman Jerome Powell described the U.S. central bank's 0.25 percentage-point interest rate cut as "a mid-cycle adjustment to policy," tampering market expectations of a lengthy easing cycle.


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August 1, 2019 : GBP/USD Intraday technical analysis and trade recommendations.

Trading 01 août 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.

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 are being demonstrated around 1.2100. 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 are advised to look for early bullish breakout above 1.2230 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 1.2130.

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August 1, 2019 : EUR/USD Intraday technical analysis and trade recommendations.

Trading 01 août 2019 Commentaire »

analytics5d430d095af26.jpg

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 previous bullish channel) which failed to provide enough bullish support for the EUR/USD pair.

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

Shortly after, evident bearish momentum (bearish engulfing H4 candlestick) could bring the EURUSD back below 1.1235.

Early bearish breakdown below 1.1175 facilitated further bearish decline towards 1.1115 (Previous Weekly Low) where temporary 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 where early signs of bullish recovery are being demonstrated.

A bullish pullback should be expected towards 1.1115-1.1140 where a confluence of recent SUPPLY levels are located.

Risky traders can watch for bullish persistence above 1.1050 as a bullish signal for Intraday counter-trend BUY entry with bullish target projected towards 1.1115-1.1140.

Trade recommendations :

Conservative traders should wait for a bullish pullback towards 1.1115-1.1140 for a valid SELL entry.

S/L should be placed above 1.1175 while initial T/P level should be located around 1.1025.

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U.S. Construction Spending Unexpectedly Plunges 1.3% In June

Trading 01 août 2019 Commentaire »

Partly reflecting a steep drop in spending on public construction, the Commerce Department released a report on Thursday unexpectedly showing a sharp decline in total U.S. construction spending in the month of July.

The Commerce Department said construction spending plunged by 1.3 percent to an annual rate of $1.287 trillion in June after falling by 0.5 percent to a revised rate of $1.303 trillion in May.

Economists had expected construction spending to rise by 0.3 percent compared to the 0.8 percent drop originally reported for the previous month.

Spending on public construction led the way lower, tumbling by 3.7 percent to an annual rate of $324.1 billion in June.

The report said spending on educational construction showed a 6.8 percent nosedive to a rate of $73.0 billion, while spending on highway construction plummeted by 6.4 percent to a rate of $101.9 billion.

The Commerce Department said spending on private construction also fell by 0.4 percent to a rate of $962.9 billion in June.

Spending on residential construction slid by 0.5 percent to a rate of $507.2 billion and spending on non-residential construction dipped by 0.3 percent to a rate of $455.7 billion.

Compared to the same month a year ago, construction spending in June was down by 2.1 percent, with a 4.6 percent slump in spending on private construction more than offsetting a 6.1 percent jump in spending on public construction.


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U.S. Manufacturing Activity Unexpectedly Shows Continued Slowdown In July

Trading 01 août 2019 Commentaire »

Growth in U.S. manufacturing activity unexpectedly showed a continued slowdown in the month of July, according to a report released by the Institute for Supply Management on Thursday.

The ISM said its purchasing managers index dipped to 51.2 in July after edging down to 51.7 in June. While a reading above 50 still indicates growth in manufacturing activity, economists had expected the index to inch up to 52.0.

With the continued decrease, the purchasing managers index dropped to its lowest level since hitting 49.6 in August of 2016.

"Comments from the panel reflect continued expanding business strength, but at soft levels," said Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee. "July was the fourth straight month of slowing PMI expansion."

The unexpected drop by the headline index was partly due to a significant slowdown in the pace of growth in production, as the production index tumbled to 50.8 in July from 54.1 in June.

The employment index also slumped to 51.7 in July from 54.5 in June, indicating a notably slower pace of job growth in the manufacturing sector.

On the other hand, the new orders index crept up to 50.8 in July from 50.0 in June, suggesting a modest demand expansion following one month of no change.

"Respondents expressed less concern about U.S.-China trade turbulence, but trade remains a significant issue," Fiore said. "More respondents noted supply chain adjustments as a result of moving manufacturing from China."

The report also showed a continued contraction in prices, with the prices index sliding to 45.1 in July from 47.9 in June, which the ISM called an indication of lower overall systemic demand.

Next Monday, the ISM is scheduled to release a separate report on activity in the U.S. service sector in the month of July.


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Czech Central Bank Holds Rate Unchanged For Second Time

Trading 01 août 2019 Commentaire »

The Czech National Bank on Thursday left its key interest rate unchanged for a second policy session in a row, as expected, after raising it by a quarter-point in May.

The Bank Board, led by CNB Governor Jiri Rusnok, decided unanimously to keep interest the two-week repo rate at 2 percent, the bank said in a statement. The discount rate was maintained at 1 percent and the lombard rate at 3 percent. The bank expects inflation to stay above its 2 percent target in the coming quarters, yet remain within the tolerance band, due to lingering strong domestic inflation pressures and high growth in administered prices and food prices.

Inflation is projected to start decreasing at the start of next year, due to monetary policy tightening and slower rise in administered prices, and reach near the target in the second half of the year.

That said, the slowing in inflation will be hampered throughout next year by the impacts of changes to indirect taxes, the bank said.

The CNB raised the inflation forecast for the third quarter of next year to 2.2 percent from 2 percent and that for the final three months of 2020 to 2.1 percent from 2 percent. Economic growth is expected to accelerate slightly over the next two years from the 2.6 percent forecast for this year. Growth is expected to be driven by all components of domestic demand except inventories.

The growth forecast for this year was raised to 2.6 percent from 2.5 percent and the projection for next year to 2.9 percent from 2.8 percent. The economy was forecast to expand 3 percent in 2021.

The unemployment rate, which is at a record low, is not expected to fall further, the bank said.

The central bank expects the koruna to firm gradually this year and the exchange rate appreciation to slow next year due to a decrease in the interest rate differential vis-?-vis the euro area. Domestic market interest rates are forecast to rise modestly initially and to fall next year due to deeply negative interest rates in the euro area. Policymakers assessed that the balance of risks to the forecast at the monetary policy horizon were slightly anti-inflationary mainly due to the likelihood of a more pronounced slowdown in demand growth in the Czech Republic's main trading partner countries, the CNB said.


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