Treasuries Pull Back Off Best Levels But Remain Firmly Positive

Trading 07 août 2019 Commentaire »

After taking a brief pause in the previous session, treasuries resumed their recent strong move to the upside during trading on Wednesday.

Bond prices gave back ground after an early jump but remained firmly in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 5.5 basis points to 1.684 percent.

While the ten-year yield climbed off its intraday low of 1.595 percent, it still ended the session at its lowest closing level in almost three years.

The initial spike by treasuries came as traders reacted to aggressive interest rate cuts by central banks in India, New Zealand and Thailand amid concerns about the global impact of the U.S.-China trade war.

Citing the overseas rate cuts, President Donald Trump claimed in a series of posts on Twitter that the problem is "not China" but rather a Federal Reserve that is "too proud to admit their mistake of acting too fast and tightening too much (and that I was right!)"

"They must Cut Rates bigger and faster, and stop their ridiculous quantitative tightening NOW," Trump tweeted. "Yield curve is at too wide a margin, and no inflation!"

"Incompetence is a terrible thing to watch, especially when things could be taken care of sooo easily," he added. "We will WIN anyway, but it would be much easier if the Fed understood, which they don't, that we are competing against other countries, all of whom want to do well at our expense!"

The escalating U.S.-China trade war also has investors paying close attention to daily developments on the currency front.

The People's Bank of China set the midpoint for onshore yuan trading at 6.9996 per dollar, slightly stronger than the key 7.00 per dollar level but 0.4 percent weaker than 6.9683 on Tuesday.

Treasuries gave back some ground in afternoon trading after the Treasury Department revealed its auction of $27 billion worth of ten-year notes attracted below average demand.

The ten-year yield note auction drew a high yield of 1.670 percent and a bid-to-cover ratio of 2.20, while the ten previous ten-year note auctions had an average 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.

Developments on the trade front are likely to remain in focus on Thursday, potentially overshadowing reports on weekly jobless claims and wholesale inventories.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auction of $19 billion worth of thirty-year bonds.


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Crude Oil Futures Settle Sharply Lower

Trading 07 août 2019 Commentaire »

Crude oil prices plunged sharply on Wednesday as the deepening U.S.-China trade crisis raised possibilities of a prolonged slowdown of the global economy and concerns about a likely drop in near term energy demand.

Also, data showing an increase of crude stockpiles in the U.S. after seven weeks of declines raised prospects of excess supply in the market.

West Texas Intermediate Crude oil futures for September ended down $ , or 4.7%, at $51.09 a barrel.

Brent crude futures fell to seven-month lows and were down by about 4.4% at $56.40 a barrel around mid afternoon.

Crude prices have been sliding despite OPEC-led output cuts and the U.S. sanctions on Iran and Venezuela, as fears of the impact of the ongoing trade war on global energy demand continue to weigh on the commodity.

Data released by the Energy Information Administration this morning showed crude inventories in the U.S. rose 2.39 million barrels in the week ended August 2. Markets were expecting a draw of 2.8 million barrels in the week.

The data also said gasoline inventories were up 4.4 million barrels last week, while distillate stockpiles increased by 1.53 million barrels, more than thrice the expected rise.

The American Petroleum Institute's report, that came out Tuesday evening, said U.S. crude inventories fell by 3.4 million barrels in the week ended August 2 to 439.6 million barrels.


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U.S. Consumer Credit Climbs Less Than Expected In June

Trading 07 août 2019 Commentaire »

With a slight drop in revolving credit partly offsetting a notable increase in non-revolving credit, the Federal Reserve released a report on Wednesday showing U.S. consumer credit rose by less than expected in the month of June.

The Fed said consumer credit rose by $14.6 billion in June after climbing by an upwardly revised $17.8 billion in May.

Economists had expected consumer credit to increase by $16.0 billion compared to the $17.1 billion jump originally reported for the previous month.

Non-revolving credit, such as student loans and car loans, shot up by $14.7 billion in June after rising by $10.3 billion in May.

Meanwhile, the report said revolving credit, which largely reflects credit card debt, edged down by $0.1 billion in June after increasing by $7.5 billion in the previous month.

Compared to the same month a year ago, consumer credit in June was up by 4.3 percent, as non-revolving credit jumped by 5.8 percent but revolving credit dipped by 0.1 percent.


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*U.S. Consumer Credit Climbs By $14.6 Billion In June

Trading 07 août 2019 Commentaire »

U.S. Consumer Credit Climbs By $14.6 Billion In June


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Gold Settles Higher, Logs Biggest Single-session Gain In 7 Weeks

Trading 07 août 2019 Commentaire »

Gold prices rose sharply on Wednesday as investors continued to seek the safe haven asset amid mounting worries about the likely impact of the deepening rift between the U.S. and China on the global economy.

Several central banks across the globe have reduced their key lending rates to bolster growth, and this has raised concerns that slowdown is likely to last much longer than earlier thought.

With the U.S. President Donald Trump calling for more aggressive rate cuts from the Federal Reserve, the dollar retreated after a positive spell. The dollar index was last seen at 97.50, down by about 0.14% from previous close.

Meanwhile, the 10-year Treasury yield slid to its lowest level since 2016. The benchmark 10-year Treasury yield traded at 1.63% after having stayed above 2% last week.

Gold futures for December ended at $1,519.60, up $35.50, or about 2.4%, the biggest single-session gain in about seven weeks, and recording its first close above $1,500 since April 2013.

On Tuesday, gold futures for December ended up $7.70, or 0.5%, at $1,484.20 an ounce.

The People's Bank of China set the midpoint for onshore yuan at 6.9996 per dollar, slightly stronger than the key 7.00 per dollar level, but 0.4% weaker than Tuesday's 6.9683.

Following several central banks cutting rates, Trump tweeted that the problem is "not China" but rather a Federal Reserve that is "too proud to admit their mistake of acting too fast and tightening too much."

He tweeted further, "They must cut rates bigger and faster, and stop their ridiculous quantitative tightening NOW. Yield curve is at too wide a margin, and no inflation!"


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Ten-Year Note Auction Attracts Below Average Demand

Trading 07 août 2019 Commentaire »

The Treasury Department continued the release of the results of this month's long-term securities auctions on Wednesday, revealing its auction of $27 billion worth of ten-year notes attracted below average demand.

The ten-year yield note auction drew a high yield of 1.670 percent and a bid-to-cover ratio of 2.20.

Last month, the Treasury sold $24 billion worth of ten-year notes, drawing a high yield of 2.064 percent and a bid-to-cover ratio of 2.41.

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 ten-year note auctions had an average bid-to-cover ratio of 2.44.

On Thursday, the Treasury is due to announce the results of its auction of $19 billion worth of thirty-year bonds.


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August 7, 2019 : EUR/USD Intraday technical analysis and trade recommendations.

Trading 07 août 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 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 demonstrated before bearish breakdown could take place on July 31.

On July 31, Bearish breakdown below 1.1115 allowed further bearish decline towards 1.1025 (lower limit of the depicted recent bearish channel) where significant signs of bullish recovery were demonstrated.

Risky traders were advised to look for bullish persistence above 1.1050 as a bullish signal for Intraday BUY entry with bullish target projected towards 1.1115, 1.1175 and 1.1235.

It's already running in profits. S/L should be advanced to 1.1160 to secure more profits.

Yesterday, the depicted Key-Zone around 1.1235 stood as a prominent Supply Area where a Bearish Engulfing H4 candlestick was demonstrated.

Bearish breakdown below 1.1260 was mandatory to allow further bearish decline towards 1.1125-1.1115 where another intermediate-term bullish position can be offered.

Today, another bullish visit is being demonstrated towards 1.1235 where bearish rejection should be anticipated.

Otherwise, further bullish advancement would be expected towards 1.1275.

Trade recommendations :

Conservative traders should wait for a deeper bearish movement towards 1.1125-1.1115 for a valid BUY entry.

S/L should be placed just below 1.1080 while initial T/P levels should be located around 1.1160 and 1.1200.

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USDCAD bounce continues as expected towards 1.3335

Trading 07 août 2019 Commentaire »

Around 1.31 we saw the bounce is USDCAD coming towards 1.32 at first and then towards 1.3335. Now we see price at our second target which is important resistance.

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Blue lines - long-term bullish channel

Black line - medium-term resistance trend line

USDCAD has respected the lower channel boundary support and reversed higher. Price initially reached our target of 1.32 and now is challenging our last bounce target of 1.3335. Recapturing 1.3340 is important for a continued move higher towards 1.3480-1.35 where we find an important medium-term downward sloping resistance trend line. Support is at the previous resistance area of 1.3230. Breaking below this level would be a bearish sign.

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EURUSD recaptures key 1.12 resistance area and is eyeing 1.13

Trading 07 août 2019 Commentaire »

EURUSD has broken out of the bearish short-term channel and after a short-term back test of the channel break out area, we see price remaining above 1.12 which is a bullish sign.

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Blue lines - short-term bullish channel (broken)

Green rectangle - short-term target

Black line - upper wedge boundary

Red line - lower wedge boundary

Red rectangle- pivot area

EURUSD has recaptured 1.12 and is trying to break above recent highs at 1.1250. Resistance is at 1.1270 where we find the 61.8% Fibonacci retracement of the recent decline. Breaking above it will surely push price towards the green rectangle area and the black downward sloping trend line around 1.13. The bounce from 1.10 area is progressing as expected. It remains to be seen now if we see a larger break out above the long-term downward sloping wedge pattern or another rejection around the upper wedge boundary and a new lower low.

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Gold breaks above $1,500 reaching inside our target area

Trading 07 août 2019 Commentaire »

Gold price was expected to reach $1,500-$1,525 area once it broke above $1,430-45 area. The bearish divergence is now gone but this does not cancel the chances for a pull back. Trend remains bullish.

analytics5d4af6475042d.png

Black lines - bullish channel

Red line- RSI resistance broken

Yellow rectangle -pull back target and major support

Red rectangle - short-term target

Gold price could reach $1,530-35 before pulling back towards $1,450-$1,430. Trend is bullish as price is inside the black bullish channel making higher highs and higher lows. The RSI broke to new highs canceling the bearish divergence. This is an important medium-term bullish signal implying that Gold has much more upside but for the medium-term. So far there is no reversal signal as we pointed out in our last analysis and trend remains bullish.

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