GBP/USD. China is deliberately "finishing off" America, seeking a change of power in the country.

Trading 06 juin 2020 Commentaire »

24-hour timeframe

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Over the past week, the British pound has also continued to rise in value in pair with the US currency and this is the most surprising event (from our point of view). We believe that the only reason that can explain it is the technical need for correction. Although the current movement can not be called a correction in the literal sense of the word, nevertheless, technical factors can be named as the reason. The fact is that no important news or reports are coming from the UK at the moment. Not to mention positive messages and strong statistics. Thus, traders simply cannot buy British currency based on the fundamental background of the UK. Thus, the fundamental reasons can only be hidden in the United States. On the one hand, it would seem that the answer to the question is obvious and lies on the surface – rallies and protests have been raging in America for two weeks in a row. Despite the fact that it was initially stated that police stations were burned, pogroms, and looting, in most cases these are really completely peaceful rallies. However, the reaction of traders to them could be exactly this - the sale of the dollar. However, in the article on the euro/dollar, we have already asked a reasonable question: why is the Swiss franc almost not getting more expensive when paired with the dollar, and the yen is getting cheaper at all? There may be two answers. Either market participants use only the euro and pound as assets after exiting dollar positions or the "foundation" has nothing to do with it at all. If the first option, then the question arises, why again the pound? If there are a much more stable Japanese yen and Swiss franc, which are often used for protection? Thus, we believe that the basis for the growth of the British pound is a little bit of everything. And if so, this process can end at any time, unless really important and serious information is received from the US, which will force traders to go to new sales of the US currency.

And potentially such information could have already been made available to traders last week. The fact is that the Chinese authorities have instructed Chinese companies to stop purchasing certain categories of agricultural products in America. Immediately after that, China also received reports that companies still continue to purchase American products, but no one can say for sure whether China continues to adhere to the agreements reached and signed on January 15, 2020? If official Beijing has given such an instruction, it has already questioned the implementation of agreements with Donald Trump. Given the fact that we have previously written about China's desire to terminate the first phase of the trade agreement due to the "coronavirus" pandemic and the global crisis, it all looks true. And if so, this is a new blow to America and personally to Donald Trump. The fact is that a country like America will certainly withstand such a blow from Beijing as a refusal or reduction in the volume of purchases of agricultural products. Of course, American farmers will not have a sweet time, they will have to provide support, but still, the world's largest economy will withstand such a blow. The termination of the trade deal now will be another blow to the American economy, which, unlike the Chinese one, will lose up to 10% in 2020 and it will further hit Trump's political ratings, which have already suffered so much in recent weeks. Thus, we are talking about the fact that China is seeking to strengthen its role in the international arena, as well as "finishing" Donald Trump personally, so that he will not be re-elected in November 2020 in any case. After all, if you look at the situation as if from the outside, it was China that dealt America the strongest blow with the "coronavirus". It is clear that the whole world suffered, but America also suffered, which, in principle, was what Beijing needed (we do not say that the spread of the virus was intentional).

It should also be noted that it is American farmers and private households, which depend very much on agricultural exports, and are the main electorate of Donald Trump. If China stops purchasing these products or reduces the volume, it will cause great frustration among farmers, who may refuse to choose Trump as the next president of the country. In addition, the country has been in a trade war with China for two years, and the shaky truce that was reached in January may collapse in June. And if it collapses, then it turns out that the American government has not made any progress in the confrontation with China, which has been trumpeted for a long time. There is no result, except that both sides will again impose duties and sanctions on each other, from which in most cases ordinary citizens will suffer. And on this issue, it should also be noted that American businesses are also suffering from a trade war with China. And if business suffers, it means that it will support someone who can improve relations with China, that is, Joe Biden.

Thus, all this means only one thing. Any attempts by Trump to impose sanctions against China, Chinese companies, Chinese officials will somehow be followed by a response. At the same time, it is completely unclear when and in what form it will follow. But Beijing will definitely not remain in debt. It may seem that Beijing is taking a weaker position in the confrontation with Washington. However, it is not. Beijing simply makes much less official statements, in other words, Beijing shouts and threatens much less. However, it also has plenty of tools to put pressure on the US. Thus, there is no doubt that any attempts by the White House to expel Chinese companies from American stock exchanges, to impose sanctions against Hong Kong, against Beijing, and against financial corporations will definitely provoke retaliatory measures. This means that both the world's largest economies, as well as the entire world economy, will continue to suffer from the confrontation of two giants who cannot agree between themselves. At least as long as Donald Trump is President of the United States.

In our view, the British pound may continue to strengthen if a new escalation of the conflict between China and the United States occurs in the near future. However, if this does not happen, the pound will likely start a new decline. As before, we do not recommend trying to guess the pair's turn down, but rather follow the trend. Moreover, both trading systems that we regularly review the pair for are trend-oriented ("Ichimoku" and "linear regression channels").

Trading recommendations:

On the 24-hour timeframe, the pound/dollar pair started a new upward trend. Thus, it is now recommended to consider long positions with the goals of resistance levels 1.2865 and 1.3129. It is recommended to keep the longs open until the pair begins to show signs of a downward turn, which is best tracked on a 4-hour timeframe.

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

EUR/USD. Donald Trump vs Joe Biden vs "Coronavirus". The American president dug a hole himself.

Trading 06 juin 2020 Commentaire »

24-hour timeframe

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On the Forex market, another trading week has ended, during which the European currency has risen in price in an unprecedented way in pair with the US currency. If you do not take into account the first six weeks of the "coronavirus" epidemic, when almost every currency was thrown from side to side by hundreds of points, it is difficult to even remember the last time the euro increased so strongly and quickly. As we have already said, the reasons for this strengthening of the euro currency are ambiguous. If we take into account the fact that the pound has also become more expensive, we can conclude that the US currency has fallen. If this hypothesis is correct, then why, for example, the Swiss franc fell in price over the past week much more modestly? Why is the Japanese yen generally cheaper against the dollar? It turns out that rallies and protests in the US do not have such a strong impact on the demand for the dollar. Or do market participants sell the dollar based on these events, and buy only the pound and the euro, although in this case, the question remains: why do they buy the pound, which is clearly one of the weakest currencies in recent years with absolutely vague prospects? There has been no reason to cheer from the UK in recent weeks, so why is the pound in demand? In general, what is happening now in the market is very difficult to explain logically. Yes, formally, any movement of any pair can be "tied" to some fundamental or macroeconomic event, however, this is more called "pulling by the ears". No one denies that the events in the US have had an impact on the foreign exchange market, but this impact is very ambiguous.

Since we have already figured out that the rallies and protests in the United States, caused by another racist scandal, are not the main reason for the fall of the dollar, it remains to find out what is the reason? And there are quite a large number of topics claiming to be "reasons". First, we believe that for the rest of 2020, the most important topic will be the election campaign and the US presidential election. If you try to judge from the US side, it will be better if Donald Trump loses the election. The current US president is an excellent businessman, but as the leader of the nation, he is unlikely to be remembered by Americans with a good side. Further US foreign policy will depend on whether Trump wins or loses (Joe Biden can count on establishing ties and dialogue with China), which is now expressed in the phrase "we will threaten everyone, let everyone dance to our tune". We can all clearly see what this strategy has led America to. Secondly, while the US president has not yet been replaced, this is the topic of the confrontation with Beijing, which is getting hotter and hotter every day, but it has not yet "exploded". Today we will focus in detail on the first topic.

If the whole world was not covered by the epidemic, then America would have already begun and was preparing for elections. It's time for both presidential candidates to travel around the states, hold rallies, and attract voters to their side. However, the coronavirus pandemic has made its adjustments. Before the outbreak of the epidemic, Donald Trump's ratings were high, however, Joe Biden was also nearby. When the epidemic began, Donald Trump poured arrogant statements in his style every day and in all directions. Then the American president said that the virus will not survive even April. Then the US leader said that the Americans have nothing to fear. However, as it turned out just 2 months later, there was something to fear. The number of deaths from the COVID-2019 virus in the United States at the moment is about 100 thousand people. Also, at least 25 million people lost their jobs in the country due to the quarantine. The US Congress and the Fed had to pour trillions of dollars into the economy, while Donald Trump continued to pour statements in the style of: "I will build a country even stronger than it was before the pandemic." But even though the current crisis is visible to the naked eye, and is visible to every American, Donald Trump still had fairly high political ratings, about 45-49%. That is, literally until recently, most Americans were happy with the way the authorities cope with their responsibilities. However, after Trump began actively promoting the idea of restarting the economy and ending the quarantine, his support among the population began to decline. Here you should understand the motivation of ordinary Americans. No one wants to risk their health and the health of their loved ones at a time when the pandemic has not even begun to wane. Thus, the decision of the leader of the nation to open most of the states and reopen most of the enterprises was not received by the Americans "with a bang". Of course, some were happy about the end of the quarantine, but most people still understand the danger of such measures. And what do we see now, a few weeks after the US economy eased quarantine measures? According to the Johns Hopkins Institute, the disease growth curve in America continues to steadily show an increase. That is, the rate of growth of the virus spread across the ocean is not slowing down, and the total number of cases of diseases is already 1.9 million. For example, in Spain and Italy, the most affected EU countries, the authorities first waited for clear signs of slowing the spread of infection and only then began to ease the quarantine. As a result, the "contagion curves" in these countries go sideways, meaning that the spread of the virus slows down. There are fewer and fewer new cases of infection.

Thus, there is already an opinion that Trump hastened to "open" the US economy, and this rush will cost new lives to Americans. Well, the racist scandal that broke out in the United States in recent weeks showed Trump again not on the best side. First, according to polls, most Americans consider Trump a racist. Secondly, the US president proposed to disperse peaceful protestants and protesters with the help of the army, showing his utter disrespect for human rights. Well, the main competitor of Trump in the election race, Joe Biden, has been in the shadows all this time, only a few times giving interviews to various media and television. And according to the latest sociological research, it is Biden's ratings that are the highest. By and large, it turns out that Donald Trump "dug a hole" for himself. And Joe Biden has done nothing to increase his support among the electorate. However, Trump's ratings have fallen and Biden's have risen. So, if there is anyone to bet on now, it is the democratic candidate. Biden's only downside is his age. In the fall, the Democrat will "turn" 78 years old.

Trading recommendations:

On the 24-hour timeframe, the euro/dollar pair worked out the resistance level of 1.1381 and rebounded from it, starting the long-awaited correction. Thus, the correction movement to the critical Kijun-sen line may continue in the new trading week. Further upward movement of the euro currency is still in doubt. However, overcoming the level of 1.1381 (or signals from the 4-hour timeframe) allows traders to trade again for an increase with the goal of 1.1618 (or goals for the 4-hour timeframe).

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

EURUSD remains in bullish trend but could see early pull back next week

Trading 06 juin 2020 Commentaire »

EURUSD is breaking to new short-term highs. Price is in a bullish trend and is making higher highs and higher lows. EURUSD has reached a major resistance trend line while the RSI on a daily basis is now in overbought levels. A pull back is justified early next week.

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Red line - major resistance trend line

Black lines- bearish channel

EURUSD has reached the major resistance trend line. The RSI is at overbought levels. Price will most probably pull back next week after the sharp rise from 1.09 to 1.13. EURUSD should normally pull back towards 1.12-1.1150 area. Such a pull back would not do any harm to the bullish case.

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EURUSD is expected to pull back towards the 38% Fibonacci retracement area. EURUSD will most probably pull back towards the rising tenkan-sen (red line indicator) and the kijun-sen (yellow line indicator). For now these two indicators provide support at 1.1120-1.11 near the upper cloud boundary. It is common to see prices pull back for a back test after a cloud break out. However I do not believe at this stage the pull back will be so much deep. There is no bearish divergence even in the 4 hour chart and that is why I believe any pull back will be short-lived.The material has been provided by InstaForex Company - www.instaforex.com

Short-term Ichimoku cloud indicator analysis of Gold

Trading 06 juin 2020 Commentaire »

Gold price got rejected at major resistance on Friday and pulled back towards our first target at the upper cloud boundary. Gold price reached our $1,670 pull back target given after the initial break below the tenkan-sen and kijun-sen indicators.

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Gold price bounced and bulls tried on Thursday to push price above the tenkan-sen and kijun-sen indicators. Resistance at $1,720-25 was very strong and bulls were unable to break it. The Daily candlestick closed below the resistance giving the opportunity to bears to go short with a tight stop. Resistance was confirmed. Friday was dominated by bears. Price confirmed the rejection at the resistance by the two indicators and price reached the upper cloud boundary which was our initial target. Bouncing off the cloud would be a bullish sign. Resistance is at $1,720. Bulls need to reclaim this level in order to hope for a move towards $1,800.The material has been provided by InstaForex Company - www.instaforex.com

Dollar Exhibits Mixed Trend Against Rivals

Trading 06 juin 2020 Commentaire »

The U.S. dollar turned in a mixed performance against other major currencies on Friday. The dollar reacted to jobs data from the U.S. and Canada, and a report showing a weak reading of Japan's leading index.

Data showing a much smaller than expected increase in unemployment and a bigger-than-expected increase in jobs growth in the month of May did help the greenback against some currencies, but overall, it was a mixed show by it on.

The Labor Department said non-farm payroll employment jumped by 2.51 million jobs in May after plummeting by a revised 20.69 million jobs in April.

Economists had a loss of another 8.0 million jobs following the nosedive of 20.5 million jobs originally reported for the previous month.

Employment rose sharply in leisure and hospitality, construction, education and health services, and retail trade, according to the Labor Department.

The Labor Department claimed the improvements in the labor market reflected a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus pandemic and efforts to contain the spread of the disease.

With the unexpected rebound in employment, the Labor Department said the unemployment rate dropped to 13.3 % in May from 14.7% in April. Economists had expected the unemployment rate to surge up to 19.8%.

The dollar index, which rose to 97.03, continued to hold firm around 97.00. It was last seen at 96.98, up 0.3% from previous close.

Against the Euro, the dollar firmed up to $1.279 before paring some gains, but was still fairly well placed in positive territory at $1.1290, gaining about 0.4%.

The European Central Bank announced Thursday it will increase its Pandemic Emergency Purchase program by a further 600 billion euros to support funding conditions in the real economy, especially for businesses and households. Markets were expecting an increase of 500 billion euros.

Against Pound Sterling, the dollar weakened to $1.2668, notably down from Thursday's $1.2594.

The Japanese currency weakened to 109.59 from 109.15 a dollar after data from the Cabinet Office showed Japan's leading index declined to the lowest in eleven years.

The leading index, which measures the future economic activity, fell to 76.2 in April from 85.1 in March. Economists had expected a score of 84.5.

The coincident index that reflects the current economic activity decreased to 81.5 in April from 88.8 a month ago. Economists had forecast a score of 90.3.

The Aussie was stronger at US$0.6969, after closing at $0.6942 on Thursday.

Against Swiss franc, the dollar strengthened to CHF0.9623, rising from CHF0.9555.

Against the Loonie, the dollar was weak at C$1.3422, down nearly 0.6% from C$1.3500. Stronger than expected Canadian jobs data lifted the loonie against the greenback. According to the data released by Statistics Canada this morning, the Canadian economy added 289,600 jobs in May, with businesses reopening amid easing public health restrictions.

The unemployment rate rose to a record high of 13.7%, topping the previous high of 13.1% set in December 1982 in more than four decades of comparable data. Economists had predicted a loss of about 500,000 jobs in May and expected unemployment rate to come in at 15%.

Statistics Canada said the number of people who worked less than half their usual hours fell by 292,000 in May.


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

U.S. Consumer Credit Nosedives $68.7 Billion In April

Trading 06 juin 2020 Commentaire »

A report released by the Federal Reserve on Friday showed a breathtaking nosedive in U.S. consumer credit in the month of April.

The Fed said consumer credit plummeted by $68.7 billion in April after falling by a revised $6.9 billion in March. Economists had expected credit to decrease by $14.0 billion compared to the $12.1 billion slump originally reported for the previous month.

The steep drop in consumer credit came as revolving credit, which largely reflects credit card debt, cratered by $58.3 billion in April after plunging by $21.5 billion in March.

Non-revolving credit, such as student loans and car loans, also fell by $10.5 billion in April after climbing by $14.7 billion in the previous month.

Compared to the same month a year ago, consumer credit in April was down by 19.6 percent as revolving credit tumbled by 64.9 percent and non-revolving credit slid by 4.0 percent.


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

Treasuries Extend Sell-Off Following Much Better Than Expected Jobs Data

Trading 06 juin 2020 Commentaire »

Treasuries moved significantly lower during trading on Friday, extending the steep drop seen over the two previous sessions.

Bond prices regained some ground after an early sell-off but remained firmly negative. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 8.4 basis points to 0.904 percent.

The ten-year yield closed higher for the fifth consecutive session, ending the day at its highest closing level in well over two months.

The continued weakness among treasuries came as the Labor Department's closely watched monthly jobs report seemed to prove traders were right to be optimistic about a quick economic recovery.

The Labor Department said non-farm payroll employment jumped by 2.51 million jobs in May after plummeting by a revised 20.69 million jobs in April.

The record spike in employment came as a shock to economists, who had expected the loss of another 8.0 million jobs following the nosedive of 20.5 million jobs originally reported for the previous month.

Employment rose sharply in leisure and hospitality, construction, education and health services, and retail trade, according to the Labor Department.

The Labor Department claimed the improvements in the labor market reflected a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus pandemic and efforts to contain the spread of the disease.

James Knightley, Chief International Economist at ING, called the data "simply astonishing given the slow pace of reopening and the fact that more than 12 million people filed a new unemployment claim during the survey period."

With the unexpected rebound in employment, the Labor Department said the unemployment rate dropped to 13.3 percent in May from 14.7 percent in April. Economists had expected the unemployment rate to surge up to 19.8 percent.

The unexpected decrease in the unemployment rate came as the household survey found employment soared by more than 3.8 million persons compared to the 1.7 million person increase in the size of the labor force.

However, Knightley said there are "some oddities in here," as are the number of unemployed fell by only 2.1 million, suggesting "new workers appear to have been magicked up out of no-where."

A note from the Labor Department also revealed the unemployment rate would have been about 3 percentage points higher if not for the misclassification of persons absent from work due to coronavirus-related business closures.

The Federal Reserve's monetary policy meeting is likely to be in the spotlight next week, although traders may also keep an eye on reports on consumer and producer prices, weekly jobless claims, and consumer sentiment.

Bond trading could also be impacted by reaction to the results of the Treasury Department's auctions of three-year and ten-year notes and thirty-year bonds.


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

Oil Futures Settle Sharply Higher On Jobs Data, Production Cut Hopes

Trading 06 juin 2020 Commentaire »

Crude oil prices moved up sharply on Friday amid optimism about increased energy demand after data from U.S. Labor Department showed a higher than expected job additions and smaller-than-expected increase in unemployment in the month of May.

Also, with several businesses across the global reopening after several weeks of lockdown, and the European Central Bank deciding to substantially expand its bond-buying program to support the economy, it is expected that energy demand will see a notable surge over the course of coming months.

Further, traders were also betting on hopes the OPEC will consider extending record production cuts beyond the end of this month. According to Russia's energy ministry, a video conference of a group of leading oil producers, known as OPEC+, would be held on Saturday.

West Texas Intermediate Crude oil futures for July ended up $2.14 or about 5.7% at $39.55 a barrel.

Brent Crude futures were moving up by about $2.10 or 5.2% at $42.10 a barrel.

According to sources from OPEC, Saudi Arabia and Russia have agreed to extend deeper cuts until the end of July. The sources added that there is a possibility of the reductions being extended until the end of August.

Meanwhile, according to a report from Baker Hughes, the number of active U.S. rigs drilling for oil declined by 16 to 206 this week, continuing to fall from mid-March, indicating further declines in domestic crude output.

The total active U.S. rig count now stands at 284 , down 17 from last Friday's count.


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

Gold Futures Settle Notably Lower After Equities Rally On Jobs Data

Trading 06 juin 2020 Commentaire »

Gold prices drifted lower on Friday as better-than-expected U.S. jobs data prompted investors to seek riskier assets such as equities, and pushed up the dollar.

Data from the Labor Department showed U.S. non-farm payroll employment jumped by 2.51 million jobs in May after plummeting by a revised 20.69 million jobs in April.

Economists had expected job losses to be around 8.0 million in the month of May, following the nosedive of 20.5 million jobs originally reported for the previous month.

The unemployment rate dropped to 13.3% in May from 14.7% in April. Economists had expected the unemployment rate to surge up to 19.8 %.

The dollar index rose to 97.03 by mid afternoon, gaining about 0.35%.

Gold futures for August ended down $44.20 or about 2.6% at $1,683.00 an ounce, the lowest settlement since April 3.

Gold futures shed almost 4% this week.

Silver futures for July ended lower by $0.582 at $17.534 an ounce, while Copper futures for July settled at $2.5555 per pound, gaining $0.0660 for the session.


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