Oil Ends Slightly Up For The Session, But Gains Almost 6% In Week

Trading 20 sept 2019 Commentaire »

Crude oil futures settled lower on Friday, but still managed to record a gain of nearly 6% for the week.

Oil futures pared early gains today as traders weighed the impact last week's attack on Saudi oil infrastructure and the likely scenario of lower energy demand due to the ongoing trade dispute between the U.S. and China.

Concerns about supply after the devastating drone attacks on Saudi oil facilities last Saturday lifted oil prices sharply earlier this week, but reports about restoration of production resulted in prices taking a retreat for a couple of sessions.

Still, the steep climb on Monday proved solid enough to guide oil futures to a weekly gain.

West Texas Intermediate crude oil futures for October ended down $0.04, or 0.07%, at $58.09 a barrel on the expiration day.

Crude oil futures for November ended down $0.10, or about 0.2%, at $58.09 a barrel.

For the week, WTI crude oil futures gained 5.9%, the biggest weekly gain in nearly three months.

According to a report from Baker Hughes, U.S. oil rig count declined for a fifth successive week, with the number of active rigs falling by 14 to 719 this week. The total rig count dropped to 868, down 18 from previous week.


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Gold Futures Settle Notably Higher

Trading 20 sept 2019 Commentaire »

Gold prices rose on Friday as an escalation in geopolitical tensions and uncertainty about the U.S. and China agreeing on a trade deal anytime soon forced traders to seek the safe haven asset.

A steady dollar limited gold's uptick. The dollar index rose to 98.60, gaining about 0.33%.

Gold futures for December ended up $8.90, or about 0.6%, at $1,515.10 an ounce.

For the week, gold futures gained about 1%, registering their first weekly gain in a month.

Silver futures for December ended down $0.035, at $17.849 an ounce, while Copper futures for December settled at $2.6065 per pound, down $0.020 from previous close.

U.S. President Donald Trump today announced more sanctions on Iran. Following Trump's orders, the Treasury Department imposed sanctions on Iran's central bank in response to the attacks on Saudi Arabian oil facilities last weekend.

The Treasury Department claims Iran's Central Bank has provided billions of dollars to the Islamic Revolutionary Guards Corps, its Quds Force, or IRGC-QF, and its terrorist proxy, Hizballah.

Sanctions were also imposed on Iran's National Development Fund, or NDF. The Treasury also took action against Etemad Tejarate Pars Co., an Iran-based company allegedly used to conceal financial transfers for MODAFL's military purchases, including funds originating from the NDF.

Meanwhile, on the trade front, China reportedly cut short its trade negotiations with the U.S. According to reports, Chinese agricultural officials plan to return to China earlier than originally scheduled.

Earlier in the day, Trump had stated that he was looking for a complete trade deal with China and that it didn't need to come before the 2020 election.


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Treasuries Turn Higher As Chinese Negotiators Cut U.S. Trip Short

Trading 20 sept 2019 Commentaire »

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

Bond prices turned higher as the day progressed, extending a recent upward trend. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 1.9 basis points to 1.755 percent.

With the turnaround, the ten-year yield closed lower for the fifth straight day, pulling back further after ending last Friday's trading at its highest closing level in over a month.

Treasuries moved to the upside following news that Chinese trade negotiators canceled a scheduled visit to U.S. farm states next week.

The Chinese delegation was in Washington this week for deputy-level trade talks and had been scheduled to visit American farms next week as a gesture of goodwill.

However, the Montana Farm Bureau revealed that the visit has been canceled, as the delegation is heading back to China sooner than expected.

The news offset some of the recent optimism about a potential end to the U.S.-China trade war, with the deputy-level talks expected to help pave the way for more productive high-level talks next month. Comments from President Donald Trump indicating he is not interest in a "partial deal" with China also dashed hopes of a possible "interim deal."

Trump also told reporters he doesn't think he needs to reach a trade deal with China before the 2020 elections, claiming the U.S. is not being affected by the trade war.

Next week's trading may be impacted by a batch of key U.S. economic data, including reports on consumer confidence, new home sales, durable goods orders and personal income and spending.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auctions of two-year, five-year, and seven-year notes.


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Rosengren Warns Of Risks Of Further Monetary Policy Accommodation

Trading 20 sept 2019 Commentaire »

With U.S. economic growth continuing at a solid rate despite the U.S.-China trade war, Boston Federal Reserve President Eric Rosengren has argued that it is not necessary and potentially risky for the central bank to lower interest rates.

Rosengren, who has voted against the last two interest rate cuts by the Fed, explained his decision in a speech at the Stern School of Business at New York University on Friday.

"Current economic conditions are quite favorable, and stable, and private forecasters expect those conditions to remain quite similar through the end of the year," Rosengren said.

He added, "The data we have in hand suggest instead that the recovery would continue apace even with little monetary policy accommodation."

Rosengren noted that real GDP grew by 2 percent in the second quarter despite trade-related impediments and that forecasts indicate growth will continue at close to 2 percent.

The Boston Fed President argued monetary policy is already accommodative and warned further accommodation in response to risks to the economic outlook entails costs and introduces risks of its own.

"The current situation involves pushing rates lower when asset prices, and in particular some risky asset prices, already seem inflated," Rosengren said. "I don't see current financial risks as causing a downturn, but such conditions have the potential to amplify a downturn should it occur."

He continued, "Additional accommodation is not needed for an economy where labor markets are already tight - and risks further inflating the prices of riskier assets, and encouraging households and firms to take on what may be too much leverage."

Reflecting a divide at the Fed, Rosengren's speech comes the same day St. Louis Fed President James Bullard released a statement explaining his preference for cutting interest rates by 50 basis points at the Fed meeting earlier this week.

The Fed lowered interest by 25 basis points as expected on Wednesday but indicated officials are mixed about whether the central bank should cut rates again before the end of the year.

Bullard attributed his preference for a steeper rate cut to signs that U.S. economic growth is expected to slow in the near horizon.

"Trade policy uncertainty remains elevated, U.S. manufacturing already appears in recession, and many estimates of recession probabilities have risen from low to moderate levels," Bullard said.

He added, "Moreover, the yield curve is inverted, and our policy rate remains above government bond yields for nearly every country in the G-7."

Bullard also pointed to tame inflation, noting readings on consumer price growth continue to run well below the Fed's 2 percent target and that inflation is expected to remain muted.

"In light of these developments, I believe that lowering the target range for the federal funds rate by 50 basis points at this time would provide insurance against further declines in expected inflation and a slowing economy subject to elevated downside risks," Bullard said.

He continued, "It is prudent risk management, in my view, to cut the policy rate aggressively now and then later increase it should the downside risks not materialize."


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Bullard Explains Preference For Bigger Interest Rate Cut

Trading 20 sept 2019 Commentaire »

St. Louis Federal Reserve President James Bullard was one of three voting members of the Federal Open Market Committee that voted against the Fed's quarter-point rate cut on Wednesday, preferring a more substantial rate cut than his colleagues.

Bullard explained his preference for a 50 basis point rate cut in a statement on Friday, citing signs that U.S. economic growth is expected to slow in the near horizon.

"Trade policy uncertainty remains elevated, U.S. manufacturing already appears in recession, and many estimates of recession probabilities have risen from low to moderate levels," Bullard said.

He added, "Moreover, the yield curve is inverted, and our policy rate remains above government bond yields for nearly every country in the G-7."

Bullard also pointed to tame inflation, noting readings on consumer price growth continue to run well below the Fed's 2 percent target and that inflation is expected to remain muted.

"In light of these developments, I believe that lowering the target range for the federal funds rate by 50 basis points at this time would provide insurance against further declines in expected inflation and a slowing economy subject to elevated downside risks," Bullard said.

He continued, "It is prudent risk management, in my view, to cut the policy rate aggressively now and then later increase it should the downside risks not materialize."

Reflecting a divide at the Fed, Kansas City Fed President Esther George and Boston Fed President Eric Rosengren also voted against the 25 basis point rate cut, although they preferred to leave rates unchanged.

The Fed's economic projections suggest that the meeting participants were also divided about the outlook for interest rates.

While seven participants expect another rate cut before the end of year, five expect rates to remain unchanged and another five expect rates to be raised back to 2 to 2-1/4 percent.

Bullard's views on monetary policy seem slightly more in line with those of President Donald Trump, who has urged the Fed to slash interest rates to zero or less

"Jay Powell and the Federal Reserve Fail Again. No 'guts,' no sense, no vision! A terrible communicator!" Trump tweeted shortly after the more modest rate cut.

Fed Chairman Jerome Powell said in his post-meeting press conference that the central bank is prepared for a more "extensive sequence of rate cuts" in the face of an economic downturn but noted that is not currently expected.

Powell also told reporters that he does not foresee the Fed using negative interest rates as a policy tool, as Trump has suggested.

"If we were to find ourselves at some future date again at the effect of a lower bound, again not something we are expecting, then I think we would look at using large scale asset purchases and forward guidance," Powell said.


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Eurozone Consumer Confidence At 4-month High

Trading 20 sept 2019 Commentaire »

Eurozone consumer confidence improved in September to its highest level in four months, after weakening in August, preliminary data from the European Commission showed on Friday.

The flash consumer confidence index climbed to -6.5 from -7.1 in August. Economist had forecast a modest improvement to -7.

The latest reading was the highest since May, when it was at the same -6.5 level.

The consumer confidence indicator for EUR climbed by 0.6 points to -6.4 in September.

The European Commission is set to release the final figure for consumer confidence along with the monthly economic sentiment data on September 27.


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Euro Little Changed After Eurozone Consumer Sentiment Index

Trading 20 sept 2019 Commentaire »

Eurozone flash consumer sentiment index for September has been released at 10:00 am ET Friday. Following the data, the euro changed little against its major counterparts.

The euro was trading at 119.04 against the yen, 0.8832 against the pound, 1.0937 against the franc and 1.1022 against the greenback around 10:02 am ET.


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*Eurozone Sept Flash Consumer Confidence -6.5 Vs. -7.1 In Aug, Consensus -7

Trading 20 sept 2019 Commentaire »

Eurozone Sept Flash Consumer Confidence -6.5 Vs. -7.1 In Aug, Consensus -7


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Canadian Dollar Falls Vs Yen, U.S. Dollar As Core Retail Sales Disappoint

Trading 20 sept 2019 Commentaire »

The Canadian dollar slipped against the yen and the U.S. dollar in the European session on Friday, as a data showed that the nation's core retail sales fell unexpectedly in July.

Data from Statistics Canada showed that core retail sales, excluding motor vehicle and parts dealers, dropped 0.1 percent in July after rising 0.9 percent in the previous month. Economists were looking for a gain of 0.3 percent.

Retail sales rose 0.4 percent on a seasonally adjusted monthly basis in July following a flat reading last month. Economists had forecast a 0.6 percent increase.

Meanwhile, crude oil prices rose amid rising worries about geopolitical tensions in the Middle East.

Traders were weighing the likely impact of Tropical storm Imelda on Texas where a major refinery has cut production and shut a crucial oil pipeline and some terminals, and possible drop in energy demand due to slowing global economy.

The currency was lower against its major counterparts in the Asian session, excepting the aussie.

The loonie dropped to 81.20 against the yen from Thursday's closing value of 81.42. Next key support for the loonie is likely seen around the 80.00 level.

Data from the Ministry of Internal Affairs and Communications showed that Japan consumer prices rose 0.3 percent on year in August.

That was in line with expectations and slowing from 0.5 percent in July - moving further away from the Bank of Japan's target range of 2.0 percent.

The loonie that closed Thursday's trading at 1.3261 against the greenback depreciated to 1.3293. The loonie is seen finding support around the 1.35 region.

In contrast, the loonie remained higher against the aussie, with the pair trading at 0.9007. This may be compared to a fresh 2-week high of 0.8991 seen in the Asian session. On the upside, 0.89 is possibly seen as the next resistance for the loonie.

The loonie was trading at 1.4638 against the euro, up from a low of 1.4684 hit at 3:00 am ET. The loonie is likely to find resistance around the 1.44 level.

Data from Destatis showed that Germany's producer price inflation eased more than expected in August.

Producer prices grew only 0.3 percent year-on-year, slower than the 1.1 percent increase in July. Prices were forecast to rise 0.6 percent.

Looking ahead, Eurozone flash consumer sentiment index for September will be out at 10:00 am ET.

At 11:20 am ET, Federal Reserve Bank of Boston President Eric Rosengren will give a speech about the credit cycle at an event hosted by New York University.


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September 20, 2019 : EUR/USD Intraday technical analysis and trade recommendations.

Trading 20 sept 2019 Commentaire »

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Two weeks ago, 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 within the recent bullish movement during last weeks' consolidations.

Earlier last week, the EUR/USD pair was testing the backside of both broken trends around 1.1060-1.1080 where significant bearish pressure pushed the pair directly towards 1.0940 (Prominent Weekly Bottom).

Bearish Breakdown below the price level of 1.0940 was needed to enhance further bearish decline towards 1.0900 and 1.0840 (Fibonacci Expansion Key-Levels).

However, SIGNIFICANT bullish rejection was demonstrated as a quick bullish spike towards 1.1100 where a recent episode of bearish rejection was expressed.

Currently, the EURUSD is trapped within a narrow consolidation range extending between 1.1090 - 1.0995 until breakout occurs in either directions.

Bearish Breakout below 1.1025 is needed to render the recent bullish spike as a bullish trap.

If so, bearish decline would be expected initially towards 1.0940-1.0920.

On the other hand, Bullish breakout above 1.1080 gives an early signal of short-term bullish reversal possibility as a bullish double-bottom pattern with a projected target towards 1.1175.

Trade recommendations :

Risky traders are advised to have a short-term SELL Entry upon bearish persistence below (1.1015-1.1025). S/L should placed above 1.1090.

Target levels should be located at 1.0980 and 1.0930.

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