Ichimoku cloud indicator Daily analysis of EURUSD for September 16th, 2020

Trading 15 sept 2020 Commentaire »

EURUSD remains near its 2020 highs. Price remains in a bullish trend as it stays above the Daily Kumo (cloud). However price is now stuck between the two key short-term indicators (tenkan-sen and kijun-sen).

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The tenkan-sen (red line indicator) provides support at 1.1835 while the kijun-sen (yellow line indicator) provides resistance at 1.1860. Breaking either level will provide momentum towards the same direction. Key Daily support by the cloud is found at 1.17. This is the target if price breaks below the tenkan-sen on a daily basis. The Chikou span (black line indicator) is testing support at the candlestick pattern. This means that breaking below 1.1830 will be a bearish sign. Another worrying sign for bulls is the fact that the tenkan-sen (Red line indicator) is below the kijun-sen (yellow line indicator). Bulls want to see the tenkan-sen cross above the kijun-sen. This would be a bullish signal.

Conclusion: Although trend remains bullish, traders should keep a close eye on the key short-term support at 1.1830-1.18 as a break below this support area will open the way for a move towards 1.17. On the other hand if bulls recapture 1.1860-1.19 area then the chances for a move towards new 2020 highs will be higher.

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Technical analysis of Gold for September 16th, 2020

Trading 15 sept 2020 Commentaire »

Gold price has broken out of the triangle pattern. This is a bullish sign. Price has now pulled back for a back test. Price should now bounce higher and break above recent highs at $1,972. The horizontal resistance at $1,990 remains intact.

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Pink lines - triangle pattern

Gold price is out of the triangle pattern. Price is on top of the upper triangle boundary as a back test. For price to continue higher we need to see immediate bounce off the triangle boundary and a break of the horizontal resistance at $1,972 and next at $1,990. Unless price breaks these two levels, we cannot expect a move above $2,000 towards $2,100. Support is found at $1,940 and next at $1,910. Breaking below $1,940 will put $1,910 in danger. Breaking below $1,910-$1,900 will open the way for $1,800-50.

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Trading plan for USDJPY

Trading 15 sept 2020 Commentaire »

In our last analysis on USDJPY we noted that the bearish rejection at 106.30 has turned us bearish and if price were to break below 105.90 and 105.35 we should next see a move towards 104.

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Pink line - resistance

We remain bearish USDJPY as long as price is below the long-term downward sloping trend line resistance. Price got rejected and has now broken below the first important short-term support at 105.90. Now it is challenging the next important support at 105.35. Breaking below it will open the way for a move towards 104.

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EUR/USD. Calm before the storm: intrigue on the September Fed meeting

Trading 15 sept 2020 Commentaire »

The euro-dollar pair is behaving extremely cautious ahead of the announcement of the results of the September Federal Reserve meeting. Tomorrow traders will be able to assess the US central bank's mood, which has recently become more and more dovish. And although the US macroeconomic reports suggest a gradual recovery of the country's economy, most of them are belated. Meanwhile, the prospects for further revival of key indicators remain vague, especially in the context of the political clinch in which the Democrats and Republicans find themselves in. The long-suffering bills on additional financial injections into the US economy remain as drafts: congressmen failed the proposals of both the Democratic Party and the Republican. The last vote on this issue took place last Thursday. As a result, it became clear that the American economy will remain without an additional aid package in the foreseeable future.

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This factor is an absolute disadvantage for the greenback. On the other hand, key macroeconomic indicators have recently been in the green zone, showing stronger growth relative to preliminary forecast values. The unemployment rate fell from 10.2% to 8.4%. Although according to experts' forecasts, this key indicator should have fallen to only 9.8%. In addition, the dynamics of wage growth was pleasing. This fact is especially important right now, when the Fed has revised its monetary policy strategy, becoming more tolerant of rising inflation. According to forecasts, the level of wages was expected to fall to zero (on a monthly basis). But in reality, this indicator came out in the green zone: instead of declining, it rose to 0.4%.

As for inflation, data for August was published just last Friday. The overall consumer price index slowed to 0.4% on a monthly basis, while experts predicted that the indicator should have fallen to 0.3% (it came out at 0.6% in July). In annual terms, overall inflation accelerated to 1.3%, with growth forecast to 1.2%. As for the core inflation index, which does not take into account volatile food and energy prices, the situation is similar. On a monthly basis, the indicator slowed to 0.4% with a decline forecast of 0.2%; on an annual basis, the indicator increased to 1.7% against a growth forecast of 1.6%. In other words, inflation reached forecast levels - although in monthly terms, the indicators slowed down their growth, while in annual terms, they increased the growth rate. Consumer inflation (CPI) in August increased from 1% to 1.3% per annum.

The market carefully watches the dynamics of wages and the growth of the price index. The logic here is obvious: the more people get, the higher their consumer activity. The higher consumer activity, the faster inflation increases. Well, in the end – the faster inflation increases, the faster the US central bank will increase the interest rate. This causal relationship reinforces the importance of wages in the context of the Fed's monetary policy outlook.

Thus, the intrigue on the September meeting remains. On one side of the scale – the growth of macroeconomic indicators, on the other – political uncertainty and a failed vote in the Senate on the anti-crisis bill. Fed Chairman Jerome Powell can put the appropriate emphasis, supporting the dollar or drowning it with his rhetoric. The market also expects additional comments from the Fed regarding its updated strategy. In particular, we are interested in the question of how high the central bank will "allow" inflation to increase. If specific digital values are announced much higher than the two percent level (which is unlikely), the dollar will be under strong pressure. But most likely, Powell will limit himself to previously voiced phrases that the Fed will "tolerate" inflation just above the target level.

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In general, experts do not expect anything marvelous from tomorrow's meeting: the parameters of monetary policy should remain the same. The dollar will be guided by the general mood of the central bank and comments on the new strategy. If Powell announces more pessimistic forecasts and focuses on political uncertainty, the dollar will come under pressure, and the EUR/USD pair, accordingly, will have a reason to settle within the 19th figure. Otherwise, the price could fall to the first support level of 1.1750 (the lower line of the Bollinger Bands indicator on the daily chart), and in a more optimistic scenario for the greenback, to the support level of 1.1690 (the upper border of the Kumo cloud). In conclusion, take note that buyers were unable to enter the 19th figure today - sellers were immediately attracted to the pair. This suggests that traders are not sure which side Powell will take tomorrow. In view of this uncertainty, trading decisions on the pair can only be made based on the results of Powell's final press conference, which will take place immediately after the results of the September meeting are announced.

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U.S. Industrial Production Growth Slows More Than Expected In August

Trading 15 sept 2020 Commentaire »

After reporting sharp increases in U.S. industrial production over the three previous months, the Federal Reserve released a report on Tuesday showing production rose by much less than expected in the month of August.

The Fed said industrial production climbed by 0.4 percent in August after soaring by an upwardly revised 3.5 percent in July.

Economists had expected production to jump by 1.0 percent compared to the 3.0 percent spike originally reported for the previous month.

Production increased for the fourth consecutive month but remains 7.3 percent below its pre-pandemic February level.

"We are vigilant that future progress toward a full recovery in the industrial sector will be slow and uneven as a health solution remains out of reach and fiscal relief fades," said Oren Klachkin, Lead U.S. Economist at Oxford Economics.

"While the travails are comparatively less severe than in certain services sectors, industrial production risks remain heavily tilted to the downside," he added.

Manufacturing output continued to improve in August, surging up by 1.0 percent, although the Fed noted the gains for most manufacturing industries have gradually slowed since June.

The increase in manufacturing output was partly offset by a sharp pullback in mining output, which plunged by 2.5 percent in August after jumping by 1.4 percent in July.

The steep decline in mining output came as Tropical Storm Marco and Hurricane Laura caused sharp but temporary drops in oil and gas extraction and well drilling.

The report said utilities output also dipped by 0.4 percent in August after spiking by 3.8 percent in the previous month.

Meanwhile, the Fed said industrial capacity utilization crept up to 71.4 percent in August from an upwardly revised 71.1 percent in July.

Economists had expected capacity utilization to climb to 71.4 percent from the 70.6 percent originally reported for the previous month.

Capacity utilization in the manufacturing sector rose to 70.2 percent, while capacity utilization in both the mining and utilities sectors dropped to 74.5 percent.


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U.S. Import Prices Jump 0.9% In August, Much More Than Expected

Trading 15 sept 2020 Commentaire »

Import prices in the U.S. saw another notable increase in the month of August, according to a report released by the Labor Department on Tuesday.

The Labor Department said import prices climbed by 0.9 percent in August after jumping by an upwardly revised 1.2 percent in July.

Economists had expected import prices to rise by 0.5 percent compared to the 0.7 percent increase originally reported for the previous month.

The stronger than expected import price growth was partly due to a jump in prices for fuel imports, which surged up by 3.3 percent in August after soaring by 15.1 percent in July. Higher prices for both petroleum and natural gas contributed to the advance.

The report said prices for non-fuel imports also climbed by 0.7 percent in August after edging up by 0.2 percent in July, reflecting the biggest increase since April of 2011. Prices for non-fuel industrial supplies and materials led the way higher, spiking by 3.6 percent.

The Labor Department said export prices also rose by 0.5 percent in August following an upwardly revised 0.9 percent advance in July.

Export prices were expected to edge up by 0.4 percent compared to the 0.8 percent growth originally reported for the previous month.

The slightly bigger than expected increase in export prices came as rising prices for non-agricultural exports more than offset falling prices for agricultural exports.

Prices for non-agricultural exports climbed by 0.8 percent in August following a 0.9 percent advance in July, led by higher prices for non-agricultural industrial supplies and materials.

Meanwhile, the report said prices for agricultural exports tumbled by 2.2 percent in August after jumping by 1.6 percent in July. The pullback reflected declining prices for vegetables, corn, and dairy products.

Despite the monthly increases, the Labor Department noted import and export prices were both down compared to the same month a year ago.

Import prices in August were down 1.4 percent year-over-year, while export prices were down by 2.8 percent.


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New York Manufacturing Index Indicates Faster Growth In September

Trading 15 sept 2020 Commentaire »

A report released by the Federal Reserve Bank of New York on Tuesday showed a significant acceleration in the pace of growth in regional manufacturing activity in the month of September.

The New York Fed said its general business conditions index jumped to 17.0 in September from 3.7 in August, with a positive reading indicating growth in regional manufacturing activity. Economists had expected the index to rise to 6.0.

The sharp increase by the headline index partly reflected a turnaround by new orders, as the new orders index surged up to a positive 7.1 in September from a negative 1.7 in August.

The report also showed a notable acceleration in the pace of shipment growth, with the shipments index climbing to 14.1 in September from 6.7 in August.

The number of employees index also inched up to 2.6 in September from 2.4 in August, indicating modest job growth.

On the inflation front, the prices paid index also jumped to 25.2 in September from 16.0 in August, while the prices received index rose to 6.5 from 4.7.

The New York Fed also said firms remained optimistic that conditions would improve over the next six months, with the index for future business conditions climbing to 40.3 in September from 34.3 in August.

On Thursday, the Philadelphia Federal Reserve is scheduled to release its report on regional manufacturing activity. The Philly Fed Index is expected to dip to 15.0 in September from 17.2 in August.


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*Yen Hits 6-day High Of 80.07 Against Canadian Dollar

Trading 15 sept 2020 Commentaire »

Yen Hits 6-day High Of 80.07 Against Canadian Dollar


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*Yen Climbs To Fresh 2-week High Of 105.31 Against U.S. Dollar

Trading 15 sept 2020 Commentaire »

Yen Climbs To Fresh 2-week High Of 105.31 Against U.S. Dollar


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*Yen Rise To 6-day Highs Of 125.04 Vs Euro, 116.15 Vs Franc

Trading 15 sept 2020 Commentaire »

Yen Rise To 6-day Highs Of 125.04 Vs Euro, 116.15 Vs Franc


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