GBP/USD. Pound plunges down: British press insiders make investors nervous

Trading 08 sept 2020 Commentaire »

The British currency is expected to sharply fall throughout the market, even against the dollar. The devaluation of the pound was predictable, given the disposition of the upcoming negotiations between London and Brussels. But, apparently, traders were hoping for a miracle that did not happen. In my opinion, the prospects for the pound were clear last Friday, when the heads of the negotiating groups voiced their assessment of the results of the previous round of talks.

The "test shot" was fired over the weekend when Prime Minister Boris Johnson once again called for a deal in the Canadian or Australian scenario (Brussels repeatedly rejected both options) and announced a new deadline for the deal - October 15th. In turn, the head of the European negotiating group said that he was disappointed with the previous dialogue with the British, accusing them of not wanting to compromise. Such a peremptory position of the parties a priori could not lead to any significant breakthrough in the negotiation process. Moreover, today there is information that Johnson may initiate a revision of the deal that was already signed at the end of 2019. Some experts call this a bluff, but do not forget that after the last snap election, the Conservatives control the majority in the House of Commons, and therefore do not depend on the votes of any other parties. Therefore, in my opinion, traders underestimated the existing risk - apparently, many refer to Johnson's initiative as "raising the stakes before the game."

analytics5f5806ba335ae.jpg

Let me remind you that Northern Ireland was the main stumbling block in the four-year talks between London and Brussels. As a result, Johnson was able to find a compromise between Leo Varadkar (who at that time was the Prime Minister of the Republic of Ireland), the local authorities of Northern Ireland, the British Parliament and the leadership of the European Union. According to the compromise reached, there will be no border between Ireland and Northern Ireland, and all goods destined for export to Ireland from England, Wales or Scotland will pass customs control en route to Northern Ireland. In other words, the parties will establish a maritime border "within" the UK.

Now Johnson intends to destroy this fragile structure. At least, according to the influential publication The Daily Telegraph, the British prime minister is going to announce this to Brussels in the near future. This initiative will formally be presented under the guise of the fact that the concluded deal on the part of the Irish border undermines the foundations of the integrity of the state structure of Great Britain, since de facto Northern Ireland becomes part of the European Union. But there is another reason that Johnson will not say this in the public plane - the fact is that, within the framework of the agreement concluded, Brussels can prevent Britain from subsidizing business in the UK in full, since Northern Ireland will de jure obey the economic rules of the EU.

According to The Daily Telegraph, this week the British Parliament may consider a corresponding amendment, which will allow the government to bypass such restrictions on subsidizing companies and entire industries. How Brussels will react to this is an open question.

As mentioned above, many experts do not believe that Johnson will really decide on such shifts that will hit not only the authority of the British government in the world, but also hit the positions of the Conservatives themselves within the country. Therefore, the market's reaction is currently muted, even despite a 150-point decline in the GBP/USD pair. If the concluded deal were under a real threat, the pair would fall by 300-500 points.

Nevertheless, Johnson knows how to bluff. And he can convince politicians (and along with them traders) of the firmness of his intentions. The prime minister can indeed submit a relevant bill to the House of Commons, accompanying his actions with anti-European rhetoric. In this case, the pound will continue to lose its positions, even contrary to common sense - the Conservatives will probably not shoot themselves in the foot by revising the points of the long-suffering deal.

According to analysts, if London violates the terms of the agreement, the political dispute will end with a lawsuit in the Luxembourg court. According to a court decision, the British can receive significant fines, and a trade war may begin between the UK and the European Union, within which the EU will impose sanctions on British exports.

analytics5f5806bda9524.jpg

But even if we exclude Johnson's possible political maneuver, it is worth recalling that there are many unresolved issues between London and Brussels at the moment. These include the access of European agricultural producers to the British market, regulation of the activities of European automobile giants, access of the French, Germans, and Spaniards to British waters for fishing, relations between Gibraltar and Spain, and so on. Such fundamental questions require careful and scrupulous study, and in this context, a 4-week time frame (remember that the deadline is set to October 15) looks too short. Obviously, the parties will not have enough time to discuss all the points of the upcoming deal. Therefore, tension regarding the prospects for Brexit will only grow in the near future, putting pressure on the pound.

From a technical point of view, the pair has the potential to fall in the long term - at least to the level of 1.2950 (the lower line of the BB indicator on the daily chart). The next support level is located a hundred points lower at 1.2850, which is the upper border of the Kumo cloud on the same timeframe.

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

GBP/USD. Pound plunges down: British press insiders make investors nervous

Trading 08 sept 2020 Commentaire »

The British currency is expected to sharply fall throughout the market, even against the dollar. The devaluation of the pound was predictable, given the disposition of the upcoming negotiations between London and Brussels. But, apparently, traders were hoping for a miracle that did not happen. In my opinion, the prospects for the pound were clear last Friday, when the heads of the negotiating groups voiced their assessment of the results of the previous round of talks.

The "test shot" was fired over the weekend when Prime Minister Boris Johnson once again called for a deal in the Canadian or Australian scenario (Brussels repeatedly rejected both options) and announced a new deadline for the deal - October 15th. In turn, the head of the European negotiating group said that he was disappointed with the previous dialogue with the British, accusing them of not wanting to compromise. Such a peremptory position of the parties a priori could not lead to any significant breakthrough in the negotiation process. Moreover, today there is information that Johnson may initiate a revision of the deal that was already signed at the end of 2019. Some experts call this a bluff, but do not forget that after the last snap election, the Conservatives control the majority in the House of Commons, and therefore do not depend on the votes of any other parties. Therefore, in my opinion, traders underestimated the existing risk - apparently, many refer to Johnson's initiative as "raising the stakes before the game."

analytics5f5806ba335ae.jpg

Let me remind you that Northern Ireland was the main stumbling block in the four-year talks between London and Brussels. As a result, Johnson was able to find a compromise between Leo Varadkar (who at that time was the Prime Minister of the Republic of Ireland), the local authorities of Northern Ireland, the British Parliament and the leadership of the European Union. According to the compromise reached, there will be no border between Ireland and Northern Ireland, and all goods destined for export to Ireland from England, Wales or Scotland will pass customs control en route to Northern Ireland. In other words, the parties will establish a maritime border "within" the UK.

Now Johnson intends to destroy this fragile structure. At least, according to the influential publication The Daily Telegraph, the British prime minister is going to announce this to Brussels in the near future. This initiative will formally be presented under the guise of the fact that the concluded deal on the part of the Irish border undermines the foundations of the integrity of the state structure of Great Britain, since de facto Northern Ireland becomes part of the European Union. But there is another reason that Johnson will not say this in the public plane - the fact is that, within the framework of the agreement concluded, Brussels can prevent Britain from subsidizing business in the UK in full, since Northern Ireland will de jure obey the economic rules of the EU.

According to The Daily Telegraph, this week the British Parliament may consider a corresponding amendment, which will allow the government to bypass such restrictions on subsidizing companies and entire industries. How Brussels will react to this is an open question.

As mentioned above, many experts do not believe that Johnson will really decide on such shifts that will hit not only the authority of the British government in the world, but also hit the positions of the Conservatives themselves within the country. Therefore, the market's reaction is currently muted, even despite a 150-point decline in the GBP/USD pair. If the concluded deal were under a real threat, the pair would fall by 300-500 points.

Nevertheless, Johnson knows how to bluff. And he can convince politicians (and along with them traders) of the firmness of his intentions. The prime minister can indeed submit a relevant bill to the House of Commons, accompanying his actions with anti-European rhetoric. In this case, the pound will continue to lose its positions, even contrary to common sense - the Conservatives will probably not shoot themselves in the foot by revising the points of the long-suffering deal.

According to analysts, if London violates the terms of the agreement, the political dispute will end with a lawsuit in the Luxembourg court. According to a court decision, the British can receive significant fines, and a trade war may begin between the UK and the European Union, within which the EU will impose sanctions on British exports.

analytics5f5806bda9524.jpg

But even if we exclude Johnson's possible political maneuver, it is worth recalling that there are many unresolved issues between London and Brussels at the moment. These include the access of European agricultural producers to the British market, regulation of the activities of European automobile giants, access of the French, Germans, and Spaniards to British waters for fishing, relations between Gibraltar and Spain, and so on. Such fundamental questions require careful and scrupulous study, and in this context, a 4-week time frame (remember that the deadline is set to October 15) looks too short. Obviously, the parties will not have enough time to discuss all the points of the upcoming deal. Therefore, tension regarding the prospects for Brexit will only grow in the near future, putting pressure on the pound.

From a technical point of view, the pair has the potential to fall in the long term - at least to the level of 1.2950 (the lower line of the BB indicator on the daily chart). The next support level is located a hundred points lower at 1.2850, which is the upper border of the Kumo cloud on the same timeframe.

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

Analytics and trading signals for beginners. How to trade EUR/USD on September 9? Getting ready for Wednesday session

Trading 08 sept 2020 Commentaire »

Hourly chart of the EUR/USD pair

analytics5f580003c9a5f.jpg

The EUR/USD pair, as a whole, continued to weakly move down on Tuesday, September 8, and eventually it reached the lower line of the small side channel, which is limited by the levels of 1.1790 and 1.1865. The price even managed to gain a foothold below this channel, which we told novice traders to consider as a signal to sell the EUR/USD pair. However, literally on the next candle, the quotes of the pair returned to the channel and are traded there at this time. Thus, the sell signal turned out to be false, as well as the breakout of the lower border of the side channel. The price did not manage to abruptly go up, so losses on this trade should be minimal. In general, the volatility for the pair is extremely low, no more than 60 points a day. Unlike, for example, the pound/dollar pair, which is traded much more actively. Now we need to wait for new possible signals, but in the current situation, when a pronounced rebound from the lower channel line has not occurred, we believe that any signal can be false. Nothing prevents the price from executing a second false breakout at this time.

We only had one report to serve as the fundamental background. The eurozone has released the second estimate of GDP for the second quarter. It turned out that this indicator slightly improved compared to its first estimate and reached -11.8% in quarterly terms and -14.7% in annual terms. However, market participants did not appreciate this improvement, considering it insignificant. Thus, the euro did not receive much support after this report was released. In addition, there was practically no news that could have an impact on the pair's movement. US President Donald Trump has traditionally commented a lot on everything that concerns his country at this time, the upcoming elections and his enemies and competitors, but nothing that was particularly interesting to market participants. Many people have long regarded Trump's words as meaningless speeches. Because what Trump says is very rarely true.

No macroeconomic data at all on Wednesday, September 9. Therefore, the pair can spend the whole day in absolutely indistinct trading without even moving in a trend within the day. Moreover, the pair can produce false signals near the lower border of the side channel, so we advise novice traders to be extremely careful when opening any positions. The results of the meeting of the European Central Bank will be summed up on Thursday, as well as a press conference by its head Christine Lagarde. That day promises to be more interesting.

Possible scenarios for September 9:

1) Novice traders are advised to not consider buy positions at this time, since the trend is formally downward, but in fact - it is going from side to side, but not upward. There are no signals or technical patterns that support the upward movement at the moment. Formally, you can try to trade for a rebound from the lower border of the side channel while aiming for the upper border, but this signal is absolutely indistinct.

2) Sell positions continue to look more relevant despite the fact that the pair is currently within the sideways channel. If quotes settle below this channel again, then formally it will be possible to open short positions again with the targets of 1.1763 and 1.1700. However, today we have already witnessed a false breakout, so we recommend not to make hasty decisions at least until the morning.

On the chart:

Support and Resistance Levels are the Levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.

Red lines are the channels or trend lines that display the current trend and show in which direction it is better to trade now.

Up/down arrows show where you should sell or buy after reaching or breaking through particular levels.

The MACD indicator consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend lines (channels and trend lines).

Important announcements and economic reports that you can always find in the news calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommended trading as carefully as possible or exit the market in order to avoid a sharp price reversal.

Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.

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

Analytics and trading signals for beginners. How to trade EUR/USD on September 9? Getting ready for Wednesday session

Trading 08 sept 2020 Commentaire »

Hourly chart of the EUR/USD pair

analytics5f580003c9a5f.jpg

The EUR/USD pair, as a whole, continued to weakly move down on Tuesday, September 8, and eventually it reached the lower line of the small side channel, which is limited by the levels of 1.1790 and 1.1865. The price even managed to gain a foothold below this channel, which we told novice traders to consider as a signal to sell the EUR/USD pair. However, literally on the next candle, the quotes of the pair returned to the channel and are traded there at this time. Thus, the sell signal turned out to be false, as well as the breakout of the lower border of the side channel. The price did not manage to abruptly go up, so losses on this trade should be minimal. In general, the volatility for the pair is extremely low, no more than 60 points a day. Unlike, for example, the pound/dollar pair, which is traded much more actively. Now we need to wait for new possible signals, but in the current situation, when a pronounced rebound from the lower channel line has not occurred, we believe that any signal can be false. Nothing prevents the price from executing a second false breakout at this time.

We only had one report to serve as the fundamental background. The eurozone has released the second estimate of GDP for the second quarter. It turned out that this indicator slightly improved compared to its first estimate and reached -11.8% in quarterly terms and -14.7% in annual terms. However, market participants did not appreciate this improvement, considering it insignificant. Thus, the euro did not receive much support after this report was released. In addition, there was practically no news that could have an impact on the pair's movement. US President Donald Trump has traditionally commented a lot on everything that concerns his country at this time, the upcoming elections and his enemies and competitors, but nothing that was particularly interesting to market participants. Many people have long regarded Trump's words as meaningless speeches. Because what Trump says is very rarely true.

No macroeconomic data at all on Wednesday, September 9. Therefore, the pair can spend the whole day in absolutely indistinct trading without even moving in a trend within the day. Moreover, the pair can produce false signals near the lower border of the side channel, so we advise novice traders to be extremely careful when opening any positions. The results of the meeting of the European Central Bank will be summed up on Thursday, as well as a press conference by its head Christine Lagarde. That day promises to be more interesting.

Possible scenarios for September 9:

1) Novice traders are advised to not consider buy positions at this time, since the trend is formally downward, but in fact - it is going from side to side, but not upward. There are no signals or technical patterns that support the upward movement at the moment. Formally, you can try to trade for a rebound from the lower border of the side channel while aiming for the upper border, but this signal is absolutely indistinct.

2) Sell positions continue to look more relevant despite the fact that the pair is currently within the sideways channel. If quotes settle below this channel again, then formally it will be possible to open short positions again with the targets of 1.1763 and 1.1700. However, today we have already witnessed a false breakout, so we recommend not to make hasty decisions at least until the morning.

On the chart:

Support and Resistance Levels are the Levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.

Red lines are the channels or trend lines that display the current trend and show in which direction it is better to trade now.

Up/down arrows show where you should sell or buy after reaching or breaking through particular levels.

The MACD indicator consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend lines (channels and trend lines).

Important announcements and economic reports that you can always find in the news calendar can seriously influence the trajectory of a currency pair. Therefore, at the time of their release, we recommended trading as carefully as possible or exit the market in order to avoid a sharp price reversal.

Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.

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

France Trade Deficit Narrows In July

Trading 08 sept 2020 Commentaire »

France's trade deficit narrowed in July after widening in the previous month amid sharp declines in both exports and imports, figures from the French Customs showed on Tuesday.

The trade deficit decreased to EUR 6.994 billion from EUR 8.057 billion in June. In May, the shortfall was EUR 7.432 billion.

In July 2019, the trade gap was EUR 5.162 billion.

Exports fell 25.4 percent year-on-year, but grew 9.6 percent from the previous month. Imports dropped 17.2 percent from a year ago, while they grew 5.1 percent from June.

Excluding energy, the trade deficit decreased slightly after strong increase in the previous two months, thanks to a dynamic recovery in external flows.

The post-Covid-19 rebound in trade, which began in May, continued in July with Imports and exports rising to 90 percent and 83 percent of their 2019 average level, the agency said.

Capital goods exports, led by aircraft manufacturing, recovered significantly more than imports, yet deliveries remained 26 percent below their 2019 average.

Export growth in consumer goods surpassed that of imports, which returned to its pre-crisis level.

Due to the slower recovery in deliveries of intermediate goods, the trade deficit in that group increased further after hitting low levels in March to June, the agency added.

Separately, Bank of France reported that the current account deficit narrowed to EUR 6.20 billion in July from EUR 8.60 billion in June.


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

Croatia Producer Prices Fall For Sixth Month

Trading 08 sept 2020 Commentaire »

Croatia's producer prices declined for the sixth month in a row in August, figures from the Croatian Bureau of Statistics showed on Tuesday.

The producer price index fell 4.1 percent year-on-year in August, following a 4.0 percent decrease in July.

Prices in domestic market decreased 2.7 percent annually in August and those in foreign market fell 5.7 percent.

On a month-on-month basis, producer prices fell 0.3 percent in August, after a 0.7 percent increase in the previous month.

Separate data from the statistical office showed that the trade deficit decreased to EUR 6.92 billion in June from EUR 7.45 billion in the same month last year.

In May, trade deficit was EUR 6.53 billion.


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

Taiwan Consumer Prices Fall Further In August

Trading 08 sept 2020 Commentaire »

Taiwan's consumer prices continued to decline in August, albeit at a slower pace, data from the Directorate-General of Budget, Accounting and Statistics showed on Tuesday.

The consumer price index fell 0.33 percent year-on-year in August, following a 0.52 percent decrease in July. Economists had expected a 0.30 percent decline.

Prices of fuels and lubricants fell 15.03 percent as the international oil prices plummeted.

On a month-on-month basis, consumer prices rose 0.18 percent in August.

Excluding fruits, vegetables and energy, core consumer prices increased 0.31 percent annually in August and fell 0.02 percent from the previous month.

Separate data showed that the wholesale prices declined 9.09 percent annually in August, following a 9.15 percent fall in the preceding month.

On a monthly basis, wholesale prices rose 0.50 percent in August.


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

Sweden Industrial Production Decline Slows In July

Trading 08 sept 2020 Commentaire »

Sweden's industrial production decreased at the slowest pace in four months in July, data from Statistics Sweden showed on Tuesday.

Industrial production fell a calendar-adjusted 6.5 percent year-on-year in July, following a 9.1 percent decline in June.

The overall private sector output fell 4.1 percent year-on-year in July.

The largest downward contribution to total private sector development came from the motor vehicle industry, where output decreased by 14.9 percent year-on-year and contributed -0.5 percentage points.

Construction output declined 1.2 percent annually in July, while services output fell 3.5 percent.

On a month-on-month basis, industrial production increased 3.4 percent in July, after a 6.7 percent rise in the prior month.

The total private sector output rose 3.2 percent from the previous month.

Separate data from the statistical office revealed that industrial orders fell a calendar adjusted 6.4 percent annually in July.

Orders received from the domestic market decreased 4.8 percent in July, and those from foreign markets fell 7.6 percent.

On a month-on-month basis, industrial orders rose a seasonally adjusted 5.5 percent in July.


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

Latvia Consumer Prices Fall In August

Trading 08 sept 2020 Commentaire »

Latvia's consumer prices fell in August after rising in the previous month, figures from the Central Statistical Bureau showed on Tuesday.

Consumer prices decreased 0.2 percent year-on-year in August, after a 0.5 percent rise in July.

Prices of goods rose 6.0 percent and that of services increased 15.2 percent.

Prices for transport declined 4.3 percent yearly in August and those of housing fell 4.2 percent.

Prices for clothing and footwear, and education fell by 0.3 percent and 0.1 percent, respectively.

On a monthly basis, consumer prices fell 0.5 percent in August.


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

Mainland-Norway GDP Growth Slows In July

Trading 08 sept 2020 Commentaire »

Mainland Norway grew for the third straight month in July but the pace of growth slowed from June, data from Statistics Norway showed on Tuesday.

Gross domestic product expanded 1.1 percent in July, slower than the 3.7 percent increase in June. This was the third consecutive expansion.

Despite growth over the past three months, activity levels were still 4.7 percent lower in July than in February.

In July, final household spending gained 2.9 percent and government expenditure climbed 1 percent. Gross fixed capital formation advanced 2.2 percent. Exports and imports were up 5.6 percent and 4.4 percent, respectively in July.

Overall Norway GDP also expanded 1.1 percent on month in July.


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