GBP/USD. "Ultra-dovish" performances by Jerome Powell and Andrew Bailey. A new political scandal in the United States.

Trading 20 juin 2020 Commentaire »

4-hour timeframe

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The British pound also continued to fall in quotes throughout the past working week. Thus, if a week ago the euro and the pound were growing synchronously, now they are falling synchronously. And it turns out that with a high probability, the reasons for the movements of both pairs in the last three weeks are hidden in the US currency. That is, it was the US dollar that first fell in demand, and now it is growing. In principle, we initially said that the euro and the pound, from our point of view, are growing quite unreasonably. The reasons could only be technical since the pair can not constantly move only in one direction. Therefore, there must be periods of growth. However, in the case of the British currency, everything is much more complicated, since it is one of the weakest and most exposed to external shocks of currencies in recent years. In the United States, as we have said many times, there are more than enough problems now. Rallies and protests based on the racist scandal do not subside, the country is sliding into a serious political crisis that threatens to turn into a constitutional one. Future presidential elections threaten to become the most scandalous in recent decades. Donald Trump is losing 13% to his Democratic opponent, but for some reason, it seems that he has not yet said his last word. China and the US continue to move confidently towards the "cold war" or, at least, a new trade conflict. In general, there are plenty of those that can potentially harm the US dollar. However, all these topics are what is called "general". They are of great importance for the country, its economy, foreign economic policy, and currency exchange rate, but not in the short term. They are "dangerous" but not "destructive" right now. But in the UK now everything is exactly the opposite. Brexit, which is now in its fourth year, continues to ruin the British Treasury. Although at this time, Britain continues to trade with the European Union without duties and any restrictions. However, from January 1, 2021, it will trade under WTO rules, which will mean another blow to its economy. Thus, the economy of the Kingdom has suffered in recent years without the "coronavirus" and another global crisis. That is why we believe that in the long term, the pound has only one road to the south.

Indirectly, these assumptions were confirmed last week by the Bank of England and its Governor, Andrew Bailey, personally. With this, both the regulator and its head tried to present it under the "sweet sauce". The Bank of England simply expanded the quantitative easing program by 100 billion pounds and brought its volume to 745 billion. At the same time, most traders and analysts continue to stand their ground – sooner or later, the British regulator will have to resort to negative rates, as has long been practiced in the European Union. Andrew Bailey himself said that negative rates are not a panacea and an inevitable future for the UK. He believes that this issue should be seriously studied. This line reads something like "we want to lower the key rate, but we are afraid of this "ultra-soft step". Also, the head of the Bank of England said that the fall in GDP in the first and second quarters will probably be 20% instead of -27%, which was expected in May. Andrew Bailey believes that there are some signs of recovery in economic activity at the moment, with the inflation curve set to fall to a very low level.

Meanwhile, in the United States on Friday, the third speech of Jerome Powell, head of the Fed, took place this week. And his rhetoric was also "dovish". Powell said that the recovery of the American economy will be long and difficult, "there will be no quick solution to the problem". "Lives and livelihoods have been lost and great uncertainty looms," Powell said. As before, the head of the Federal Reserve reiterated that the latest statistics on jobs and consumer spending should not be overly encouraging, and the full recovery from the crisis will depend on the results of the fight against the "coronavirus".

At the same time, a new political scandal continues to flare up in America, based on the publication of a book by Trump's former adviser John Bolton, in which he describes many of the president's actions, his incompetence, and unfitness for the role of leader of the nation. According to the latest information on this topic, John Bolton wrote in his book that Donald Trump is completely unfit to be president. Bolton believes that "all the actions of the president were aimed only at his re-election, and all the strategic considerations and interests of the country in the long term took a back seat". Bolton said that during a meeting with North Korean leader Kim Jong-un in 2018-2019, Trump was more concerned about the photos and media reaction to his meeting than the results of the negotiations themselves. Also, according to the former presidential adviser on national security, Trump had different attitudes to world leaders. For example, he respected Boris Johnson and the Prime Minister of Japan Shinzo Abe, with absolutely no respect for the President of France Emmanuel Macron. Bolton's book, "The room where it happened: a White House memoir," is expected to go on free sale on June 23. At this time, the administration of the president is trying to impose a ban on the distribution of this book, considering that it is full of secret information that a former employee of the White House has no right to publish. A criminal investigation may be opened against John Bolton himself.

We believe that such a step by the former adviser to the president is a confrontation with the president himself. Quite often, high-ranking officials in the past publish books, autobiographies, memoirs about their past work, as well as about the work of other high-ranking officials. However, this is often done when this information can no longer hinder or harm anyone's career. Bolton, after almost a year since he was fired, has decided to publish a book that directly affects the current US president and could seriously prevent him from being re-elected in November 2020. So it seems that Bolton started writing the book immediately after his dismissal and has someone's support. And the support can be anyone. Starting from Joe Biden and the Democrats, ending with China, which is ready to take any measures as long as the next US President is not Trump. Thus, we continue to find a lot of evidence that a targeted war is being waged against Trump so that he does not win the election. However, it is difficult to blame all his opponents for this, since Trump himself made a huge number of mistakes during his presidency. And his main mistake is an absolute inability to work with people, subordinates, oppositionists, leaders of other countries, and so on. For Trump, all those who support him and listen to him are "wonderful people", all those who do not are "fools".

Trading recommendations:

In the 4-hour timeframe, the pound/dollar pair continues to move down. Thus, it is now recommended to consider short positions with the goals of 1.2268 and 1.2232 levels. It is recommended to return to the purchase order not earlier than when the Ichimoku cloud is reached by traders, but this development is not expected soon.

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

EUR/USD. The EU summit ended in nothing. Providing assistance to the European economy may take months.

Trading 20 juin 2020 Commentaire »

4-hour timeframe

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The last trading day of the week for the euro/dollar currency pair was held in the same downward trading as the entire week. The fall of the European currency can not be called strong, however, it is confident and almost daily. However, we have repeatedly warned that the previous strengthening of the euro currency is completely unjustified, which means that the euro will have to repay its debts sooner or later. This week, this is exactly what we are seeing. At the moment, a new sell signal has already been formed on the Ichimoku trading system, which means that the chances of continuing the downward movement have increased. On the hourly chart (considered in the "burning forecasts"), the pair continues to trade inside the descending channel. Thus, the bears continue to hold the market in their hands. As for the prospects of the currency pair, it is extremely difficult to outline them now, since traders continue to ignore most of the macroeconomic information. Many fundamental topics can hypothetically have an impact, but in general, the "coronavirus" pandemic and the crisis associated with it continue to rage in the world.

Yesterday was quite boring in terms of macroeconomic statistics. However, there was still one event that made traders look forward to its results. Yesterday, the EU summit was held, during which several pressing issues and problems were resolved, one of which is the provision of assistance to the European economy for 750 billion euros. A day earlier, we said that it is unlikely that any decisions will be made at this summit. Most likely, the EU leaders will meet (not even meet, because the summit was held in the format of a videoconference), discuss and disperse until the next time. In principle, everything turned out that way. First, the head of the European Parliament, David Sassoli, called on the heads of state to approve the 750 billion euro economic recovery plan and the draft seven-year budget for 2021-2027. Mr. Sassoli immediately said that it would not be possible to approve these documents at the current summit, as there are serious disagreements over funding and allocation of funds, so another summit will be needed in the future to make decisions on these issues. Therefore, all those who were waiting for concrete decisions could go to bed at this moment. Also, Sassoli stated: "The recovery fund proposed by the European Commission is a very good starting point and we hope that the summit will accept it and we will start negotiations. This fund and the budget plan for the next 7 years should be the engines of economic recovery in the European Union." Also, it became known that 750 billion euros are planned to be taken on the commercial capital market, and this money will be returned until 2058 by increasing taxes that will go directly to the EU Treasury, bypassing the coffers of the countries where they will be collected. "The European Parliament requires clear clarity on the issue of funding the fund. We will have a great debt to future generations. We must clearly understand how this debt will be paid, what taxes are proposed, and when," added Sassoli. Emmanuel Macron, in turn, said: "If Europe gets bogged down in lengthy and overly complex budget discussions, it will send a bad signal about its effectiveness and ability to respond adequately to the challenges it faces." The French President called for the restoration plan to be approved as soon as possible. European Council President Charles Michel said that the parties will continue discussions at the next summit in mid-July in Brussels.

Thus, no decision was made at the already concluded summit (except for the extension of sanctions against Russia), and the problem (the stumbling block) remains the same – Austria, Denmark, the Netherlands, and Sweden insist that funds should be provided not in the form of grants, but the form of loans. It seems that it is on this not at all optimistic information that the euro currency resumed its fall in the second half of Friday, although at first, it intended to start an upward correction. Unfortunately, the issue of providing financial assistance to the EU economy is a "cornerstone" issue. You can't just postpone it for a year or two, or reduce the size of the fund or refuse to help the so-called "four misers". The European Parliament and the European Council will have to continue to look for all possible ways to reach an agreement simply because without this money, the European economy will continue to shrink, and countries like Italy, Spain, Portugal, and Greece will be on the edge of a precipice and the verge of default. Since the EU government cannot simply allow several countries to go bankrupt, it will have to find ways to solve this problem. And the longer this process continues, the more the EU economy will shrink without financial assistance.

Meanwhile, riots continue in the United States caused by a racist scandal related to the death of George Floyd at the hands of a white police officer in Minneapolis. Recently, the topics of "coronavirus" and mass rallies and protests in the United States have disappeared from the front pages of periodicals. However, this does not mean that they have ended. There is reason to assume that in recent weeks, the US dollar has become cheaper due to these events, too. Although the United States remains the world's leader in the number of diseases from the "coronavirus" and that the virus continues to spread in this country, official sources say that due to protests and rallies, a new outbreak of the disease has not started. To be honest, this is very difficult to believe, given the fact that the COVID-2019 virus in the United States spread perfectly and easily and without mass gatherings of people that took place in many cities and states. However, this is official information.

There was nothing else interesting for the EUR/USD currency pair on Friday. So far, the entire downward movement can be called no more than a correction, since the previous growth was much stronger. Both in the United States and the EU, there are a huge number of problems now. In Europe, there are mainly problems of a financial nature. In the United States, this is easier, since the US Congress has already adopted several programs to stimulate businesses and the population for more than three trillion dollars and it seems that it is ready to accept new programs, despite the growth of the national debt to 26 trillion dollars. But in the United States in the face of a political crisis that is unlikely to end soon, or rather even months. America is now entering the phase of election campaigns, so all the heat around Joe Biden and Donald Trump is still ahead. The US President, by the way, is going to ride around the country with election rallies, clearly not worried about the safety and health of people during the epidemic.

Trading recommendations:

In the 4-hour timeframe, the euro/dollar pair fell on Friday to the support level of 1.1171, and in general, continues to move down. Thus, short positions with the following goals of 1.1088 and 1.0962 are currently relevant. It is recommended to return to buying the euro currency not before fixing the price above the Ichimoku cloud and the Kijun-sen line. For the "linear regression channels" system - not before overcoming the moving average line.

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

Dollar Gains Against Riskier Currencies

Trading 20 juin 2020 Commentaire »

The U.S. dollar recovered after an early weak spell on Friday and stayed firm right through thereafter on safe-haven demand amid reports showing marked spikes in coronavirus cases in several states in America and in Beijing.

Although reports suggested the virus infection in China is under control, the World Health Organization's warning that the pandemic is "accelerating and the world is in a new and dangerous phase" unsettled the U.S. market post noon on Friday.

Displaying strength during most part of the week, the greenback notched up its best weekly returns in about a month.

The dollar index, down at 97.16 at one stage Friday morning, rallied to 97.72 later on, gaining about 0.3% from previous close.

Against the Euro, the dollar firmed up to $1.1177 from overnight $1.1204. Data from the European Central Bank showed the euro area current account surplus fell to EUR 14.4 billion in April from EUR 27.4 billion in March. This was the lowest since April 2017, when the surplus was EUR 11.7 billion.

The surplus on trade in goods narrowed to EUR 13 billion from EUR 32 billion a month ago, while the surplus on services doubled to EUR 4 billion from EUR 2 billion.

The Pound Sterling was weaker by nearly 0.6% with a unit fetching $1.2351 compared to $1.2421 Thursday evening. Retail sales volume in U.K. increased at a pace of 12% on month, in contrast to an 18% decrease in April, the data showed. Sales were forecast to climb 5.7%.

Against the Yen, the dollar was down marginally at 106.85 yen a dollar, with the yen's safe haven appeal supporting it.

Against the Aussie, the dollar was stronger at 0.6835, while against the Loonie, it was up marginally at C$1.3609. Data showing a sharp plunge in Canadian retail sales in the month of April weakened the Canadian currency. However, rising crude oil prices limited its weakness.

Against Swiss franc, the dollar fetched CHF0.9523, compared to CHF0.9514 on Thursday.


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Crude Oil Futures Settle Higher Again On Optimism About Supply Cuts, Higher Demand

Trading 20 juin 2020 Commentaire »

Crude oil prices climbed higher on Friday amid continued optimism that the members of the Organization of the Petroleum Exporting Countries and their allies will strictly comply with agreed production cuts to balance demand-supply position and help stabilize prices.

West Texas Intermediate Crude oil futures for July ended up $0.91 or about 2.3% at $39.75 a barrel after hitting a high of $40.50 early on in the session. Midway through the session, oil prices tumbled into the red on concerns the rapid spread of coronavirus infections in the U.S. could put brakes on recovery.

Brent crude futures were up by over $0.60 at $42.14, despite falling from a high of $42.92 a barrel.

The sharp jump in prices Friday morning was due to positive reaction to reports that the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC oil-producing nations on Thursday promised full conformity with oil output cuts from July through September to balance the global oil market.

"Attainment of 100 percent conformity from all participating countries is not only fair and equitable, but vital for the ongoing and timely rebalancing efforts and helping deliver a sustainable oil market stability," the 23-member group said in a statement.

Iraq and Kazakhstan have already submitted their compensation schedules, while other underperforming participants have until next Monday, June 22 to submit their schedules, OPEC said in the statement.

Expectations that energy demand in Europe will gradually increase thanks to reopening of several economies in the continent supported crude prices.

Meanwhile, a report from Baker Hughes said oil rig count in the U.S. dropped by 13 to 266 this week, falling for a seventh successive week and hitting a record low as well.


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

Gold Futures Settle At Over 1-month High On Safe-haven Demand

Trading 20 juin 2020 Commentaire »

Gold prices moved higher on Friday as reports showing a surge in new coronavirus infections raised possibilities of another lockdown.

Despite China claiming that the rise in coronavirus cases reported earlier in the week is currently under control, several states in America have seen marked spikes in new coronavirus cases this week.

The massive stimulus measures announced by global central banks and governments notwithstanding, there are concerns the economic recovery may not be any significantly quick, and this makes gold a strong safe-haven bet.

The dollar index, meanwhile, was up at 97.58, about 0.16% from previous close, after having rallied to 97.72 from an early low of 97.16.

Gold futures for August ended up $21.90 or about 1.3% at 1,753.00 an ounce, the highest finish in more than a month.

For the week, gold futures gained about 0.9%.

Silver futures for July ended up $0.339 or nearly 2% at $17.847, while Copper futures for July moved up $0.0230 or 0.9% to $2.6110 per pound.

"The pandemic is actually accelerating," according to the World Health Organization (WHO). It said reports of a record of more than 150,000 new cases were received on Thursday.

WHO director-general Dr. Tedros Adhanom Ghebreyesu told reporters that about half of those new cases came from the Americas. "The world is in a new and dangerous phase," Tedros said. "We call on all countries and all people to exercise extreme vigilance."

The U.S. has the highest case toll in the world at 2.19 million and the highest death toll at 118,467, with 20 states, including Florida, Texas and Georgia, still seeing daily increases in infections.


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