Treasuries Close Modestly Higher After Recovering From Initial Drop

Trading 06 sept 2019 Commentaire »

After recovering from an early move to the downside, treasuries moved modestly higher over the course of the trading session on Friday.

Bond prices spent much of the afternoon hovering modestly above the unchanged line. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.5 basis points to 1.550 percent.

Treasuries bounced off their early lows following the release of a closely watched report from the Labor Department showing weaker than expected job growth in the month of August.

The report said non-farm payroll employment rose by 130,000 jobs in August after climbing by a downwardly revised 159,000 jobs in July.

Economists had expected employment to increase by about 158,000 jobs compared to the addition of 164,000 jobs originally reported for the previous month.

The weaker than expected job growth came as notable increases in employment in healthcare and financial activities were partly offset by the loss of mining and retail jobs.

The report said government employment climbed by 34,000 jobs, largely reflecting the hiring of temporary workers for the 2020 Census.

Meanwhile, the Labor Department said the unemployment rate held at 3.7 percent in August, unchanged from July and in line with economist estimates.

The report also said average hourly employee earnings climbed by $0.11 to $28.11 in August following 9-cent gains in both June and July.

"Payrolls growth is slowing but wages are picking up, which underlines the difficult decision facing the Federal Reserve," said ING Chief International Economist James Knightley.

He added, "The risks from a deteriorating international backdrop and a manufacturing recession mean we still look for September and December rate cuts."

Meanwhile, traders largely shrugged off comments from Federal Reserve Chairman Jerome Powell, who argued the central has helped keep the economy on solid ground amid the uncertainty caused by President Donald Trump's trade war with China.

"The Fed has through the course of the year seen fit to lower the expected path of interest rates," Powell said during a forum in Zurich, Switzerland. "That has supported the economy. That is one of the reasons why the outlook is still a favorable one."

Powell argued that the uncertainty caused by the escalating trade dispute between the U.S. and China has caused some companies to hold back on investment

"We've been hearing quite a bit about uncertainty," Powell said. "So for businesses, to particularly make longer-term investments in plants or equipment or software, they want some certainty that the demand will be there."

Despite the uncertainty cause by the trade war, Powell noted the Fed does not currently anticipate a recession, noting the labor market and consumer spending remain strong.

"We're not forecasting or expecting a recession," the Fed chief said. "The most likely outlook is still moderate growth, a strong labor market and inflation continuing to move back up."

Powell also reiterated his oft-repeated pledge that the Fed will "act as appropriate" to sustain the U.S. economic expansion.

Next week's trading may be impacted by reaction to reports on producer and consumer price inflation, retail sales, and consumer sentiment.


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Crude Oil Futures Settle Higher

Trading 06 sept 2019 Commentaire »

Crude oil futures moved higher on Friday, rebounding from early losses, after a report from Baker Hughes said the oil rig count dropped for a third straight week.

Recent data showing a drop in U.S. crude stockpiles played a role as well in pulling oil prices up from lower levels.

Prices had moved lower earlier in the session due to concerns about near-term energy demand outlook.

West Texas Intermediate Crude oil futures for October ended up $0.22, or about 0.4%, at $56.52 a barrel, recovering after early weakness.

On Thursday, WTI crude oil futures for October settled flat at $56.30 a barrel.

Oil futures gained 2.6% in the week, moving higher for a second straight week.

Data released by Baker Hughes today said the oil rig count in the U.S. dropped by 4 to 738 this week. With this, the rig count has dropped for three straight weeks.

Oil was also supported by comments from the Federal Reserve Chairman Jerome Powell who said the economy remained strong and that the central bank would "act appropriate" to support economic expansion.

The weekly oil report released by the Energy Information Administration on Thursday showed crude inventories in the U.S. fell by 4.8 million barrels in the week ended August 30, nearly twice the expected drop.


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Gold Pares Early Gains, Settles Lower After Powell's Comments

Trading 06 sept 2019 Commentaire »

Gold futures failed to hold early gains on Friday, weighed down by positive comments about the U.S. economy from the Federal Reserve Chairman Jerome Powell.

Gold prices had edged higher earlier in the session after data from the Labor Department showed a much less than expected growth in U.S. jobs in August.

Gold futures for December ended down $10.00, or about 0.7%, at $1,515.50 an ounce, well off the day's high of $1,536.20 an ounce.

On Thursday, gold futures for December ended down $34.90, or 2.2%, at $1,525.50 an ounce, suffering the biggest single-session loss in dollar terms, since November 11, 2016.

For the week, gold futures shed about 0.9%.

Silver futures for December ended down $0.688, at $18.119 an ounce, while Copper futures for December settled at $2.6340 per pound, losing $0.0080.

Speaking at a forum in Zurich, Switzerland, Fed chief Powell said the central bank has helped keep the economy on solid ground amid the uncertainty caused by Trump's trade war with China.

Powell said that despite the uncertainty caused by the trade war, the Fed does not currently anticipate a recession, noting the labor market and consumer spending remain strong.

"We're not forecasting or expecting a recession," the Fed chief said. "The most likely outlook is still moderate growth, a strong labor market and inflation continuing to move back up." He also reiterated that the Fed will "act as appropriate" to sustain the U.S. economic expansion.

Data released by the Labor Department today showed employment in the U.S. increased by 130,000 jobs in August, after climbing by a downwardly revised 159,000 jobs in July.

Economists had expected employment to increase by 158,000 jobs compared to the addition of 164,000 jobs originally reported for the previous month.

The Labor Department also said the unemployment rate held at 3.7 percent in August, unchanged from July and in line with economist estimates.


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Powell: Fed's Shift Toward Lower Rates Supporting Economy Plagued By Uncertainty

Trading 06 sept 2019 Commentaire »

President Donald Trump has repeatedly sought to blame the Federal Reserve for signs of a slowdown in U.S. economy growth, but the head of the central bank has argued the Fed's shift toward lower interest rates is actually supporting the economy.

Federal Reserve Chairman Jerome Powell suggested Friday during a forum in Zurich, Switzerland, that the central has helped keep the economy on solid ground amid the uncertainty caused by Trump's trade war with China.

"The Fed has through the course of the year seen fit to lower the expected path of interest rates," Powell said. "That has supported the economy. That is one of the reasons why the outlook is still a favorable one."

Meanwhile, Powell argued that the uncertainty caused by the escalating trade dispute between the U.S. and China has caused some companies to hold back on investment

"We've been hearing quite a bit about uncertainty," Powell said. "So for businesses, to particularly make longer-term investments in plants or equipment or software, they want some certainty that the demand will be there."

Despite the uncertainty cause by the trade war, Powell noted the Fed does not currently anticipate a recession, noting the labor market and consumer spending remain strong.

"We're not forecasting or expecting a recession," the Fed chief said. "The most likely outlook is still moderate growth, a strong labor market and inflation continuing to move back up."

Powell also reiterated his oft-repeated pledge that the Fed will "act as appropriate" to sustain the U.S. economic expansion.

Ahead of Powell's remarks, Trump continued his attacks on the Fed and specifically his nominee to lead the central bank in a post on Twitter.

"They were WAY too early to raise, and Way too late to cut - and big dose quantitative tightening didn't exactly help either," Trump tweeted. "Where did I find this guy Jerome? Oh well, you can't win them all!"

Trump has repeatedly urged the Fed to slash interest rates, claiming the central bank is holding the U.S. economy back and questioning whether Powell is a "bigger enemy" than Chinese President Xi Jinping.

For his part, Powell said the Fed is "committed to nonpolitical decision-making based on the best analysis we can muster."

"It's a great place that has a very strong ethic and very high morale because of that commitment to nonpolitical public service," he added.

After cutting interest rates by a quarter point at its last monetary policy meeting in July, the Fed is widely expected to cut rates by another quarter point at its next meeting later this month.


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Loonie Firms After Solid Canada Jobs Data

Trading 06 sept 2019 Commentaire »

The Canadian dollar strengthened against its major counterparts in the New York session on Friday, as a data showed that the economy created much more jobs than forecast in August.

Data from Statistics Canada showed that employment rose by 81,100 jobs in August, after a drop of 24,200 jobs in the previous month. Economists had expected an increase of 18,900 jobs for the month.

The unemployment rate remained unchanged at 5.7 percent. The rate matched economists' forecast.

The loonie bounced off to 81.12 against the yen and 0.9009 against the aussie, from its early low of 80.59 and a new 5-week low of 0.9053, respectively. Next immediate resistance for the loonie is seen around 83.5 against the yen and 0.86 against the aussie.

The loonie strengthened to a 2-year high of 1.4540 against the euro and more than a 5-week high of 1.3160 against the greenback, off its previous lows of 1.4613 and 1.3244, respectively. The currency is likely to find resistance around 1.42 against the euro and 1.30 against the greenback.


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Hungary Industrial Production Rises; Trade Surplus Grows

Trading 06 sept 2019 Commentaire »

Hungary's industrial production rose at the fastest pace in July and the trade surplus grew from a year ago, data from the Hungarian Central Statistical Office showed on Friday.

Industrial production grew a working day adjusted 8.7 percent year-on-year in July, following a 4.1 percent rise in June.

On an unadjusted basis, industrial production rose 12.0 percent annually in July, after a 1.4 percent fall in the previous month.

On a monthly basis, industrial production rose a seasonally adjusted 1.7 percent in July, reversing a 1.8 percent decline in the preceding month.

Separate data from the statistical office showed that the trade surplus rose by EUR 19 million year-on-year to EUR 276 million in July.

Exports and imports rose by 7.6 percent each in July.

For the January to July period, exports and imports rose by 3.8 percent and 5.8 percent, respectively. The trade surplus was EUR 3.361 billion.


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USD/CAD: faceless Nonfarm and the growth of the Canadian labor market

Trading 06 sept 2019 Commentaire »

Traders were not impressed by American Nonfarm. After some hesitation, investors still decided that "the glass is half empty" than vice versa, after which they began to gradually get rid of the US dollar. However, this process was uneven: if the pair EUR/USD, GBP/USD, USD/JPY remained in place, showing only impulsive, but extremely short-term price "delays", then the pair USD/CAD went down to the bottom, breaking the resistance level of 1.3200 (the lower line of the Bollinger Bands indicator on D1), trying to finally gain a foothold in the framework of the 31st figure. Such a violent reaction is also due to the release of "Canadian Nonfarms." However, first things first.

Data on the US labor market largely fell short of forecast values. The number of people employed in the non-agricultural sector increased by 130 thousand with a growth forecast of 160 thousand. The indicator has been declining for the second consecutive month: the worst situation was only at the beginning of this year when Nonfarm twice fell below the level of one hundred thousandths (February and May). The increase in the number of people employed in the private sector of the economy has also slowed down for the second month in a row, as has an increase in the number of people employed in the manufacturing sector of the economy. All these indicators came out in the "red zone", not meeting the expectations of most analysts.

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The unemployment rate remained at the same level (3.7%), but this indicator is a lagging economic indicator, so today's figures did not have any effect on traders. The only undeniable advantage of today's release is salaries. The average hourly wage level increased both on a monthly and an annual basis, while experts expected a decline in this indicator. This fact restrained the downward dynamics of the US currency in many dollar pairs. Also, traders are waiting for the speech of the head of the Fed Jerome Powell, who will announce at 17:30 (London time) in Switzerland his speech on the prospects of monetary policy. He can focus on the negative consequences of the global trade conflict, leaving macroeconomic reports "out of the blue". In this case, the greenback will increase its dive.

Returning to the American Nonfarm, it is worth noting that we can talk about certain "alarm bells". So, according to most experts, while the American economy creates 200,000+ jobs per month, there is no need to worry about the labor market. Two hundred thousand is a well-established "health indicator", which is used by experts, traders and the Fed. Analysts have repeatedly voiced this figure in the context of assessing the state of the American labor market. Therefore, a significant deviation from this target has a very significant impact on the market.

The last time Nonfarm crossed the 200th line in April (and before that – only in January). The downward trend of this indicator may alert members of the US regulator, many of which have softened their position recently. Now the fate of the interest rate is at stake, therefore, the contradictory dynamics of Nonfarm are considered primarily through the prism of the Fed's monetary policy prospects. There are growing fears in the market that the Fed will resort to aggressive monetary easing measures, and dollar bulls were in dire need of strong labor market data today. But the published release can be called very mediocre, so the intrigue of the September meeting remains.

But the Canadian dollar has "survived" the September meeting of the Central Bank of Canada while strengthening more than 150 points. Stephen Poloz, contrary to numerous rumors, did not announce the interest rate cut, and indeed left this question in the air, in fact: according to him, everything will depend on the dynamics of the trade war, as well as on the incoming data. And if the prospects for resolving the global conflict look vague (the parties agreed only on a high-level meeting in October), the incoming Canadian data continue to please the bulls of the USD/CAD pair.

For example, the growth of the Canadian economy came out in the "green zone", exceeding the forecast values. In particular, GDP for the quarter grew by 3.7% year-on-year (with growth forecast to 3%) – this is the best result since the second quarter of 2017. Before that, inflation indicators were published, which also showed good growth. The data published today on the growth of the labor market in Canada only added to the positive picture. The unemployment rate remained at the same level (5.7%), and the number of employed jumped by 80 thousand, with the forecast growth of only 18 thousand. Although these dynamics were mainly due to the increase in underemployment, this fact did not bother traders. The published figures suggest that the Canadian Central Bank can continue to maintain a wait-and-see attitude against the background of the "dovish" intentions of the Federal Reserve.

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Thus, if Jerome Powell does not encourage dollar bulls with his rhetoric today (which is unlikely), the USD/CAD pair will retain the potential for further decline. After overcoming the support level of 1.3160 (the lower limit of the Kumo cloud on D1), the price will move to the next support level – 1.3090, which also corresponds to the lower limit of the Kumo cloud, but on the weekly chart.

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

Italy Retail Sales Fall In July

Trading 06 sept 2019 Commentaire »

Italy's retail sales fell in July after rising in the previous month, data from the statistical office ISTAT showed on Friday.

Retail sales declined 0.5 percent in July, after a 1.9 percent rise in June. In May, sales fell 0.6 percent.

Sales of food products dropped 0.1 percent monthly in August and that of non-food goods fell by 0.7 percent.

On an annual basis, retail sales rose 2.6 percent in July, following a 1.3 percent increase in the preceding month.


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Dollar Pulls Back As Soft Jobs Data Adds To Rate Cut Hopes

Trading 06 sept 2019 Commentaire »

The U.S. dollar moved off from its early highs against its major counterparts in the European session on Friday, as U.S. job growth accelerated less than forecast in August, supporting the likelihood of an additional rate cut by the Federal Reserve this month.

Data from the Labor Department showed that the non-farm payroll employment rose by 130,000 jobs in August after climbing by a downwardly revised 159,000 jobs in July.

Economists had expected employment to increase by about 158,000 jobs compared to the addition of 164,000 jobs originally reported for the previous month.

The Labor Department also said the unemployment rate held at 3.7 percent in August, unchanged from July and in line with economist estimates.

Today's jobs data undermined optimism triggered by the better-than-expected ISM nonmanufacturing gauge and the Automatic Data Processing's private sector payrolls numbers for August on Thursday.

Traders are also likely to keep an eye on remarks by Federal Reserve Chairman Jerome Powell on the economy and monetary policy at an event in Zurich.

The greenback showed mixed trading against its major counterparts in the Asian session. While it held steady against the euro and the yen, it rose against the franc. Against the pound, it declined.

The greenback dropped to 0.6847 against the aussie, its weakest level since August 1. Should the greenback slides further, 0.71 is possibly seen as its next support level.

The greenback depreciated to more than a 2-week low of 0.6431 against the kiwi from Thursday's closing value of 0.6373. The greenback is seen finding support around the 0.66 level.

The greenback slipped to more than a 4-week low of 1.3179 against the loonie, from a high of 1.3240 it recorded at 8:30 am ET. The currency is likely to find support around the 1.30 level.

After rising to a 3-day high of 0.9918 against the franc at 7:30 am ET, the greenback eased off slightly to 0.9875. Next likely support for the greenback is seen around the 0.97 level.

The greenback edged lower to 1.1055 against the euro, from a high of 1.1020 seen at 7:30 am ET. Further downward trading may take the greenback to a support around the 1.13 level.

Data from Destatis showed that Germany's industrial production declined unexpectedly in July, adding fuel to worries that the biggest euro area economy entered a recession in the third quarter.

Industrial production fell 0.6 percent in July from June, confounding expectations for an increase of 0.3 percent. Nonetheless, the pace of decline slowed from the 1.1 percent fall in June.

The greenback weakened to 106.65 against the yen, after having climbed to 107.10 at 10:15 pm ET. The greenback is poised to challenge support around the 104.00 level.

Preliminary data from the Cabinet Office showed that Japan's leading index remained unchanged in July.

The leading index, which measures the future economic activity, came in at 93.6 in July, unchanged from June. Economists had forecast a reading of 93.2.

The greenback pulled back to 1.2336 against the pound, from a high of 1.2285 it recorded at 4:45 am ET. Further downtrend is likely to take the greenback to a support around the 1.27 level.

Survey data from IHS Markit and Lloyds Banking subsidiary Halifax showed that UK house prices rose for a second straight month in August, after stagnation in June, and the annual rate of increase was the highest in four months.

The Halifax house price index rose 0.3 percent from July, when they were 0.4 percent higher. Economists had forecast a 0.2 percent increase.

Looking ahead, Canada Ivey PMI for August will be featured shortly.


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

September 6, 2019 : EUR/USD Intraday technical analysis and trade recommendations.

Trading 06 sept 2019 Commentaire »

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Back in June 24, the EURUSD looked overbought around 1.1400 facing a confluence of supply levels which generated significant bearish pressure over the pair.

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

Then, Evident bearish momentum (bearish engulfing H4 candlestick) could bring the EURUSD below 1.1175.

This facilitated further bearish decline towards 1.1115 (Previous Weekly Low) then 1.1025 (the lower limit of the depicted recent bearish channel) where significant signs of bullish recovery were demonstrated.

Shortly-After in Mid-August, the EUR/USD has been trapped between 1.1235-1.1175 for a few trading sessions until bearish breakout below 1.1175 occurred on August 14.

Bearish breakout below 1.1175 promoted further bearish decline towards 1.1075 where the backside of the broken bearish channel has provided temporary bullish demand for sometime (Bullish Triple-Bottom pattern).

Bullish persistence above 1.1115 was needed to confirm the short-term trend reversal into bullish.

However, the depicted Triple-Bottom pattern was invalidated especially after the EURUSD pair bulls have failed to establish Bullish persistence above 1.1115.

Moreover, the recently established short-term uptrend line has been invalidated as well thus rendering the short-term outlook as bearish.

By the end of last week's consolidations, a quick bearish decline was demonstrated towards 1.0965 - 1.0950 where the backside of the broken channel came to meet the EURUSD pair again.

Risky traders were advised to look for a valid BUY entry anywhere around the price levels of 1.0950. All T/p levels were successfully reached.

Trade recommendations :

Conservative traders should be looking for a valid SELL entry around the current price levels 1.1050-1.1070.

S/L should be placed just above 1.1115 while target levels to be located at 1.1025, 1.0988 and 1.0935.

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