GBP/USD. Trump is going to vaccinate some categories of the population on November 1.

Trading 05 sept 2020 Commentaire »

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The US currency continues to win back the positions lost in recent months and the news continues to flow from the States. Most of the news is completely unclear. However, let's start with the news flow from the UK, where everything is simple. First, traders continue to ignore most of the news coming from the Foggy Albion. The same applies to macroeconomic statistics, which are ignored by traders. Market participants do not want to "remember" all the economic problems of the UK, which the country has already faced and may still face in the very near future. Among the pressing issues, we highlight the very high probability of a new easing of monetary policy by the Bank of England in the second half of 2020. Despite the fact that Andrew Bailey assured the markets that he is not going to introduce negative rates this week, everyone understands that if the situation requires it, the Bank of England will introduce them. As for the new expansion of the quantitative stimulus program, there is almost no doubt that this will happen. You should also pay attention to another failed round of negotiations between the groups of David Frost and Michel Barnier. London and Brussels again failed to agree on any of the key issues, and London's unwillingness to concede is visible to the naked eye from the speech of Frost, who managed to "positively assess the results of the negotiations", but at the same time "note the lack of progress". We have been asking ourselves for several weeks why we should continue negotiations at all if they do not bring any results? However, Frost and Barnier know better.

All these topics that are fundamental to the UK and the pound remain in the shadow of the "four American crises", which clearly concern traders more. The elections in the United States remain the hottest topic because it matters to everyone who will become the next president of the country with the largest economy in the world. At least because it affects the foreign policy of the United States, which concerns every other individual country. The only chance for Donald Trump to raise his political ratings before the election remains the invention of a vaccine against the "coronavirus". Americans remember how their president treated the epidemic in its first months, all his masterful comments that "the coronavirus is no worse than a cold", that it "will disappear in the warm season". Many people were misled by the president's carelessness. People did not observe the quarantine. They did not listen to the country's chief epidemiologist, Anthony Fauci, and other doctors who openly clashed with Trump over his attitude to the "coronavirus". As a result, almost 190,000 deaths from this disease were recorded in the United States. Every day in the United States, 40-50 thousand new cases continue to be recorded, which is extremely high even for such a huge country like America. Trump continues to try to reassure Americans, saying that a vaccine will soon be found, and the death rate from the virus has "decreased by 87%". Trump's comments in the first months of the pandemic were absurd and untrue. Many statistical companies and publications like YouGov and the Washington Post have calculated that during his presidency, Trump was misled by his comments at least 20,000 times. Thus, few people believe the US leader now. All 50 states of the country have received instructions from the US Department of Health to prepare for vaccination from COVID-2019 on November 1. Recall that the presidential elections will be held on the third of November. You don't have to be an analytical genius to see the political implications of this decision. According to documents that were sent to the governments of all American states by the Center for Disease Control and Prevention, the vaccine will be given first of all to employees of medical institutions, people over 65 years of age, and those who are in high-risk groups. At the same time, many epidemiologists have already criticized such an initiative of the White House, since none of the three vaccines currently being developed has passed all the necessary clinical trials. There simply wasn't enough time for this, as some tests last for several months. Many epidemiologists fear that states will start vaccinating with an unverified vaccine that may not be safe for people's health. Side effects may not appear immediately but after some time. No one knows for sure, since there was no necessary research. However, Trump is going to start vaccination at any cost, and this is just the case when it is unclear whether it is good if the vaccine is invented in America before November 3? In general, we can only monitor the development of the situation and hope that common sense will still prevail over the desire to get power for another 4 years.

Based on this, we would say that only technical factors speak in favor of further strengthening of the US currency. Namely, the technical need for a correction after fairly strong growth of the British currency. The fundamental situation in America is not changing. In the UK – also does not change and is still ignored. Accordingly, if it is the fundamental background that led the pound to its eight-month highs, then this background can continue to have a positive impact on the pound. Moreover, according to the Ichimoku indicator, the price worked out the Senkou Span B line and bounced off it. Thus, there are also reasons to assume the end of the downward correction and the resumption of the upward trend.

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Recommendations for the GBP/USD pair:

The pound/dollar pair corrected to the Senkou Span B line and failed to overcome it on the first attempt. Thus, there are reasons to assume that the upward movement will resume, but as confirmation, we should wait for the price to consolidate above the critical Kijun-sen line. Bears will get a new opportunity to sell the pair only if the price still goes below the Senkou Span B line. We also note that in recent months, the pair has had serious difficulties updating previous local lows. Therefore, it is not a fact that the quotes will be able to fall below the level of 1.3050.

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Weekly break out in EURUSD

Trading 05 sept 2020 Commentaire »

EURUSD has broken a long-term downward sloping trend line resistance starting from 2008 highs and touching major highs until today. Usually when price breaks such important trend lines we usually see a back test.

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Green line - long-term resistance trend line

Despite making a higher high this week, price close lower than last week. Price has broken an important trend line and it is key for bulls to stay above it. Trend remains bullish and we could next see a move towards 1.21. However a pull back towards 1.16 is justified as a back test of this break out. Key short-term support remains at 1.1750. Bulls need to defend this level if they want to see 1.21 soon. EURUSD has made a major low at 1.0640 at the beginning of the year. Holding above this low and breaking above 1.2550 will increase the chances for a multi year up trend. Price is now trading just above the 61.8% Fibonacci retracement of the decline from 1.2550 to 1.0640.

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Bulls need to hold above this Fibonacci retracement as a reversal at current levels would keep the bearish multi year trend still in play.The material has been provided by InstaForex Company - www.instaforex.com

Gold weekly chart remains bullish

Trading 05 sept 2020 Commentaire »

Gold price made a higher weekly high than last week, but price got under pressure and closed in negative territory. Price continues to hold inside the long-term bullish channel and above the key short-term support of $1,900-$1,920.

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Blue lines - weekly channel

Gold price the last three weeks is mostly moving sideways after making a high at $2,074. As long as price holds above recent week's lows, we should expect another run higher towards $2,100 and higher. First important obstacle for bulls is the $1,992 high of this past week. A weekly close above it will increase the chances of seeing $2,100 and higher. Breaking below $1,900 will open the way for a pull back towards $1,850-$1,800.

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EUR/USD. Interim results of the trade war between China and the United States.

Trading 05 sept 2020 Commentaire »

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In recent weeks, the topic of the trade confrontation between Beijing and Washington seems to have been put on pause. Although this confrontation is no longer purely commercial. Washington and Beijing close consulates and representative offices, constantly accuse each other of illegal actions, conflict over Hong Kong, and after the entire world was engulfed by the "coronavirus" epidemic, relations between the two largest economies in the world finally deteriorated. Now it is unclear in which direction the US-China relations will continue to move. Obviously, in the coming months, as long as Donald Trump remains President of the United States, there is absolutely no point in waiting for relations to improve. Negotiations on the "second phase" of the trade deal are not even underway. After all, it would be beneficial for both Beijing and Washington to sign a new trade agreement, remove some more duties, and trade more profitably. However, since the beginning of the year, Washington has held a grudge against Beijing and cannot be denied the validity of these claims. It is still unclear how the Chinese virus broke free. The official version says that it was released absolutely by accident. However, we have repeatedly drawn the attention of traders to the fact that in China itself, according to official data, the number of infected people is extremely small. Taking this factor into account, the question arises: how did it happen that the losses for China are so low? Either the Chinese government is carefully hiding the real numbers or the case is not clear. If option number 2 is true, then you can assume anything further. On this assumption, it is quite possible to write a fantasy novel. Unfortunately, there is only a part of the fiction. We would not be at all surprised to learn that China was purposefully preparing to release the virus and was ready for it. Perhaps, in some sophisticated way, they vaccinated those parts of the population that could have been infected in the first place. Perhaps they localized all the places where the "coronavirus" was raging very quickly because they were ready for it. One way or another, there is a strong impression that China was ready for anything. Washington and the rest of the world cannot fail to understand this. However, you can't make official claims to China, because you need proof. And there is no proof. Thus, the whole world will now have to live in new conditions and new realities.

Going back to US-China relations, we can now draw some conclusions about who benefited from this trade war. Recall that it began in 2018 when no one knew about any "coronavirus" yet. By and large, we need to understand only one question: how do Americans feel about the trade war itself? how do they see the confrontation between China and the United States? It is no secret that the opinion of the population is important, especially when the presidential election is about two months away. Here, we have repeatedly drawn attention to the fact that most ordinary people absolutely "don't care" who conflicts with Washington. They are interested in the economic situation in the country, whether there is a job, whether salaries are high, and how well they live in the current conditions. Thus, after the US-China trade war began, it is safe to say that life has become worse for Americans. All duties and trade restrictions are always passed on to ordinary producers and consumers. The White House increases duties on imports from China, Chinese goods become more expensive, and ordinary Americans pay more for them. China imposes restrictions or duties on any goods from America and American manufacturers suffer, which now finds it more difficult to sell their products. In any case, ordinary people, employees, families, and businesses suffer. And it is these people who will have to decide on November 3 whether to vote for Donald Trump, who ignited this war? According to the latest opinion polls, 60% of the US population does not approve of Trump's trade war with China. We have already written above that trade flows between countries have decreased, so there is no obvious profit from the trade war. Yes, China has started to buy more agricultural products, but most of the duties and trade restrictions that apply in both directions remain in force. And we have already figured out that it is ordinary Americans who suffer from any duties and restrictions. Trump has also repeatedly stated that the trade war with China has specific goals. The first is to reduce the trade imbalance. The second is the return of American production to the United States. For the second goal, there is nothing to say, since none of the major companies have returned to the United States, no matter how Trump promised them tax breaks and threatened to introduce higher taxes. The first goal is only partially achieved. It has not been achieved, and this is proved by referring to banal statistics. Open the US trade balance section and look at the data for the last 5 years. Until 2018, the US trade deficit was up to $ 45 billion a month. However, most months ended in the red by about 40 billion. After January 2018, the trade deficit increased to -50 billion, -55 billion, and in July 2020, for the first time in a long time, it reached -64 billion dollars. Now, what was the point of this trade war in principle, if the trade deficit only increased? Maybe it has decreased in terms of trade only with China, but in general, it has increased! And now we add to this the rise in unemployment, the fall in GDP by 32% in the second quarter, mass protests and rallies, the political crisis, the inability of Democrats and Republicans to work as a team, the epidemic of "coronavirus", which continues to infect 40 to 50 thousand Americans every day, and we get that the results of the presidency of Donald Trump are very depressing. And it will be a miracle if he is re-elected for a second term.

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Trading recommendations for the EUR/USD pair:

The technical picture of the EUR/USD pair shows that the price continues to trade in the side channel of $1.17-$1.19, occasionally making attempts to exit it. A slight upward bias is present, however, it is not a trend. At this time, there is a sell signal from Ichimoku, however, the quotes failed to gain a foothold below the level of 1.1803. Thus, further downward movement is called into question.

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Dollar Gains Against Most Of Its Peers On Strong Jobs Data

Trading 05 sept 2020 Commentaire »

After staying somewhat subdued around the flat line in the Asian session on Friday, the U.S. dollar moved up smartly in the European session after data showed another surge in U.S. employment and a significant drop in unemployment in the month of August.

Data from the Labor Department showed that non-farm payroll employment surged up by 1.371 million jobs in August compared to economist estimates for a jump of about 1.400 million jobs.

The report also showed the spike in employment in July was downwardly revised to 1.734 million jobs from the previously reported 1.763 million jobs.

The unemployment rate dropped to 8.4% in August from 10.2 percent in July, while economists had expected the rate to dip to 9.8%.

The dollar index, which rose to 93.24 a little before noon, dropped to around 92.70 by mid afternoon before edging up to 92.82, recording a small gain of about 0.08%.

Against the Euro, the dollar firmed up to $1.1781 but pared gains and eased to $1.1841 as the day progressed, still holding positive with a modest gain.

The Pound Sterling weakened to $1.3176 a unit but later rallied to $1.3278, cutting down its loss. The Sterling had fetched $1.3280 Thursday evening.

The Yen was slightly weaker at 106.26 compared to 1016.19 a dollar yesterday. The currency weakened to 106.50 a dollar after U.S. jobs data, but regained most of the lost ground as the day progressed.

Against the Aussie, the dollar was weaker at 0.7288, easing from 0.7273. The Swiss franc shed more than 0.4% against the dollar, falling to CHF 0.9131 from CHF 0.9094.

The Loonie firmed up to 1.3056 a dollar, after having closed at 1.3128 a dollar on Thursday. Upbeat jobs data buoyed up the Canadian currency. According to official data released Friday morning, employment in Canada increased by 245,800 in August 2020, less than an expected addition of about 275,000 jobs, and addition of 418,500 jobs in July.

Full time employment increased by 205,800 in the month, while part time employment decreased to 40,000 in August from 345,300 a month earlier.

Meanwhile, unemployment rate decreased to 10.2% in August from 10.9% in the previous month.


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Treasuries Pull Back Sharply Following Upbeat Jobs Data

Trading 05 sept 2020 Commentaire »

Treasuries moved sharply lower over the course of the trading day on Friday, giving back ground after trending higher in recent sessions.

Bond prices came under pressure early in the session and saw further downside as the day progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 9.9 basis points to 0.721 percent.

The sharp pullback by treasuries came after a closely watched report from the Labor Department showed another jump in employment in the month of August contributed to a much bigger than expected drop in the unemployment rate.

The data reinforced the persistent economic optimism among traders, reducing the appeal of safe haven assets like bonds.

The Labor Department said non-farm payroll employment surged up by 1.371 million jobs in August after spiking by a downwardly revised 1.734 million jobs in July and soaring by 4.781 million jobs in June.

Economists had expected employment to jump by about 1.400 million jobs compared to the addition of 1.763 million jobs originally reported for the previous month.

The strong job growth in August was partly due to the hiring of 238,000 temporary 2020 Census workers, which contributed to a significant increase in government employment.

"Census hiring could rise further in September but, as in previous Census years, those workers will be let go again over the following months," said Andrew Hunter, Senior U.S. Economist at Capital Economics. "Nevertheless, there were also solid increases in employment across most of the private sector."

The continued job growth contributed to a much bigger than expected drop in the unemployment rate, which fell to 8.4 percent in August from 10.2 percent in July. Economists had expected the unemployment rate to edge down to 9.8 percent.

The unemployment rate continued to decline from the post-World War II record high of 13.5 percent in April but remains well above the 50-year low of 3.5 percent seen late last year.

Following the Labor Day holiday on Monday, the economic calendar for next week remains relatively quiet. Reports on consumer and producer price prices may attract some attention, although the Federal Reserve has recently indicated it is no longer concerned about inflation.

Bond traders are likely to keep an eye on the results of the Treasury Department's auctions of three-year and ten-year notes and thirty-year bonds.


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Oil Futures Settle Sharply Lower For The Day, Shed Over 7% In Week

Trading 05 sept 2020 Commentaire »

Crude oil prices drifted lower on Friday, extending recent losses amid continued concerns about outlook for gasoline demand and easing of production cuts by leading oil producers.

A slightly firmer U.S. dollar on the back of another increase in U.S. employment, albeit at a slower pace, and a drop in unemployment rate, weighed on crude oil prices.

West Texas Intermediate Crude oil futures ended down $1.60 or nearly 4% at $39.77 a barrel, after hitting a high of $41.87 a barrel early on in the session.

WTI Crude oil futures shed over 7% in the week, recording a weekly loss after four successive weeks of gains.

Brent crude futures drifted down $1.41 or about 3.2% to $42.66 a barrel.

According to a report from Baker Hughes, total weekly active drilling rig count increased by 2 to 256 this week. Weely oil-rig count, meanwhile, was up by 1 to 181 in the week.

Sharp reduction in crude output by OPEC and allies since May pushed up crude oil prices for the past several weeks. However, with oil producers deciding to ease production cuts, output has increased by about 950,000 barrels a day and this is weighing on oil prices for the past few sessions.


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Gold Futures End Lower For 3rd Straight Day, Shed Over 2% In Week

Trading 05 sept 2020 Commentaire »

Gold prices drifted lower on Friday, extending losses to a third straight day as the dollar stayed positive almost right through the session on encouraging jobs data.

The dollar index, which rose to 93.24 a little before noon, later dropped to 92.79, netting a marginal gain.

Gold futures for December ended down $3.50 at $1,934.30 an ounce. Gold futures shed about 2.1% in the week.

Silver futures for December finished lower by $0.163 at $26.712 an ounce, while Copper futures for December settled at $3.0620 per pound, gaining $0.0870 for the session.

Data from the Labor Department showed a substantial increase in U.S. employment in the month of August, although the pace of job growth continued to slow from the record spike seen in June.

The data said non-farm payroll employment surged up by 1.371 million jobs in August after spiking by a downwardly revised 1.734 million jobs in July and soaring by 4.781 million jobs in June. Economists had expected employment to jump by about 1.400 million jobs compared to the addition of 1.763 million jobs originally reported for the previous month.

The strong job growth in August was partly due to the hiring of 238,000 temporary 2020 Census workers, which contributed to a significant increase in government employment.

The unemployment rate fell to 8.4% in August from 10.2% in July. Economists had expected the unemployment rate to edge down to 9.8%.

The unemployment rate continued to decline from the post-World War II record high of 13.5% in April but remains well above the 50-year low of 3.5% seen late last year.


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