EUR/USD. Pennsylvania contention: Biden and Trump fight over key state

Trading 04 Nov 2020 Commentaire »

Dollar pairs continue to show impulsive and contradictory price movements in response to news flow from the US. The euro-dollar pair was no exception - over the past 24 hours, traders of this pair have visited both the bottom of the 16th figure and almost the boundaries of the 18th price level (the price high was fixed at 1.1770). But in the end, the American elections disappointed both bulls and bears: buyers were unable to develop the growth trend, while sellers were unable to gain a foothold at price lows. Now the pair is frozen at the bottom of the 17th figure, waiting for the next information drivers.

analytics5fa3231ba6552.jpg

Take note that at the moment the market evaluates primarily the likelihood of a political crisis in the United States. Whereas the "Trump or Biden" dilemma is discussed in the second paragraph. The fact is that the dollar is now growing only on the outbursts of anti-risk sentiment. This is facilitated by the absence of a clear winner in the elections, while the uneven counting of votes either strengthens or weakens the position of Joe Biden. Donald Trump, in turn, only adds fuel to the fire - he declared himself the winner ahead of schedule and announced an appeal to the Supreme Court "if his victory is stolen."

In other words, unless the Democrat demonstrates a clear and undeniable victory, Trump is likely to get involved in a legal battle, questioning the results of the vote count (especially with regard to the "mail vote"). In this case, the dollar will be in high demand, since the country will live in a regime of political uncertainty for several weeks. Conversely, if Biden decisively widens the gap (so much so that the lawsuit will be unpromising), then the market will be dominated by risk interest, while the US currency will weaken against the basket of major currencies.

That is why, as soon as Biden wins this or that local battle (that is, wins in this or that state), anti-risk sentiment decreases, and dollar bulls retreat. When a mirror situation occurs, the greenback tries to regain lost ground. This state of affairs does not bring profit to either bears or bulls. For example, if we talk directly about the euro-dollar pair, then by the end of the previous day it returned to the same values where it stayed. At the same time, the range of price fluctuations is almost 200 points. Each side is trying to seize the initiative, but in the end EUR/USD stands still.

However, the latest reports from the electoral front suggest that Joe Biden's positions are gradually strengthening. As you know, in order to win one of the candidates needs to receive 270 electoral votes (their number is unevenly distributed across the states of the country). At the moment, Trump has 213 votes, Biden has 238. The main struggle has unfolded for Pennsylvania, which may present 20 electoral votes. This will be enough for Biden to consolidate his success and eventually get the presidency of the United States. If Pennsylvania gets to Trump, then the uncertainty about the election results will increase again (and, therefore, the dollar will strengthen again on the wave of rising anti-risk sentiment).

analytics5fa3231f20a3a.jpg

According to the latest official data, Trump is now leading in Pennsylvania, and by a significant margin - almost 10% of the vote. But there is bad news for a Republican too. The fact is that many votes in this state have not yet been counted (about 25%), and we are mainly talking about those ballots that came by mail. Whereas, according to American sociologists, remote voting is mostly preferred by supporters of Democrats. This means that Biden has a sufficiently large gap that could ultimately change the results of elections in the state. At least the calculations of the influential newspaper The New York Times confirm that the so-called mail votes will be enough for Biden to win the Pennsylvania electors. The situation is similar in North Carolina and Georgia. At the same time, the leader of the Democrats has already managed to gain leadership in two other key states - Wisconsin and Michigan.

Dollar pairs are very sensitive to news from US polling stations - and the euro-dollar pair is no exception. Trading is extremely risky under such conditions, given Biden's fragile position, Trump's statements and looming street protests. In the short term, the vector of the EUR/USD price movement will depend on the results of the counting of votes in Pennsylvania. If Biden gains a foothold in this state, the pair may jerk upward, updating this week's high (roughly to the borders of the 18th figure). But there is also a flip side of the coin: after losing to Pennsylvania, Donald Trump will significantly toughen his rhetoric: the general leitmotif of his statements will be that the results of the mail vote are falsified. In this case, buyers of EUR/USD will not be able to hold the conquered positions, and the pair will collapse into the area of the 16th price level. And this is just one of several possible scenarios for the development of events. Given such a high degree of uncertainty, it is not advisable to open any trading positions for the pair.

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

U.S. Services Index Dips More Than Expected October

Trading 04 Nov 2020 Commentaire »

Growth in U.S. service sector activity slowed by more than expected in the month of October, according to a report released by the Institute for Supply Management on Wednesday.

The ISM said its services PMI dipped to 56.6 in October from 57.8 in September, although a reading above 50 still indicates growth in the service sector. Economists had expected the index to edge down to 57.5.

"There has been a slight pull back in the rate of growth in the Services Sector in the month of October," said Anthony Nieves, Chair of the ISM Services Business Survey Committee.

"Respondents' comments are cautiously optimistic about business conditions and the economy," he added. "There is a degree of uncertainty due to the pandemic, capacity constraints, logistics and the elections."

The bigger than expected decrease by the headline index came as the new orders index slid to 58.8 in October from 61.5 in September and the business activity index dropped to 61.2 from 63.0.

The report said the employment index also fell to 50.1 in October from 51.8 in September, suggesting employment in the service sector was nearly unchanged.

Meanwhile, the ISM said the prices index jumped to 63.9 in October from 59.0 in September, indicating a notable acceleration in the pace of price growth.

The ISM released a separate report on Monday showing growth in U.S. manufacturing activity accelerated by much more than expected in the month of October.

The purchasing managers index climbed to 59.3 in October from 55.4 in September, with a reading above 50 indicating growth in manufacturing activity. Economists had expected the index to inch up to 55.8.


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

*U.S. Crude Oil Inventories Tumble 8.0 Million Barrels In Week Ended 10/30

Trading 04 Nov 2020 Commentaire »

U.S. Crude Oil Inventories Tumble 8.0 Million Barrels In Week Ended 10/30


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

*ISM U.S. Services Index Dips To 56.6 In October

Trading 04 Nov 2020 Commentaire »

ISM U.S. Services Index Dips To 56.6 In October


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

Analytics and trading signals for beginners. How to trade EUR/USD on November 5. Analysis of Wednesday deals. Getting ready

Trading 04 Nov 2020 Commentaire »

EUR/USD hourly chart

analytics5fa2ee74398f0.jpg

EUR/USD trading was very hectic on Wednesday, November 4. In our morning review, we recommended that novice traders wait for the markets to calm down. Actually, this was the right decision. Although the price was moving in one direction, a sharp change in the trend could happen at any time. The markets are still excited. In such conditions, the price can abruptly change its direction by 100-150 pips. There is no clear trend at the moment, and we cannot say for sure whether there is an uptrend or a downtrend. On the chart, no trendlines or trend channels are observed. Even the MACD indicator fails to keep pace with the price and generates signals with a delay. Therefore, we believe that beginners should stay out of the market now and wait for the trend formation and average volatility levels.

On Wednesday, several major economic reports were published in the US and the European Union. Let's pay attention to the Services PMI in the EU, which remained below the 50.0 mark. Likewise, a similar ISM index in the US remained above the 50.0 mark. Thus, the EU services sector stays rather weak, and the situation may deteriorate in the near future due to the introduced lockdowns in many European countries. However, there was a negative factor for the US dollar, as the ADP report on private employment sector turned out to be worse than expected. During the day, market participants were mainly focused on the votes counting in the US presidential election. At the moment, the calculation has not been completed yet, which means that markets can immediately react to any new data. The final results will be ready in several days due to the postal vote system. Letters with ballots may arrive late at polling stations. This means that the markets may stay in an agitated state for several more days.

On Thursday, November 5, a report on retail sales is due to be published in the EU. However, it is unlikely to cause any market reaction. Later in the day, a more important event will take place. The US Federal Reserve will release the minutes of its latest meeting. The Fed is expected to leave its monetary policy unchanged. However, markets will look for important clues during the press conference. This will be happening in the evening, while during the day, the update on the ballots count will be available. It doesn't really matter who of the two candidates will be leading. In any case, trading will be extremely hectic tomorrow.

Possible scenarios for November 5

1) Buying the EUR/USD pair became relevant after the price had settled above the descending channel. However, at this time, the pair tends to quickly change its direction, and the movement itself can be very strong. The pair has already moved up by 100 pips, and the uptrend is unlikely to continue. In general, it will be extremely difficult to receive clear buy signals today and tomorrow. The fundamental factors will strongly influence the market sentiment on Thursday.

2) Selling the pair is no longer relevant although the probability for a new drop is high. In theory, beginners may try to use a new sell signal from the MACD indicator with the target at 1.1651. Do not forget to set the Stop Loss. We recommend that novice traders wait for the markets to calm down.

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 trendlines 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 (14, 22, and 3) 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 patterns (channels and trendlines).

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

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

U.S. Trade Deficit Narrows In September Amid Jump In Exports

Trading 04 Nov 2020 Commentaire »

A report released by the Commerce Department on Wednesday showed the U.S. trade deficit narrowed in the month of September.

The Commerce Department said the trade deficit narrowed to $63.9 billion in September from a revised $67.0 billion in August.

Economists had expected the deficit to narrow to $63.8 billion from the $67.1 billion originally reported for the previous month.

The narrower deficit came as the value of exports jumped by 2.6 percent to $176.4 billion, while the value of imports rose by 0.5 percent to $240.2 billion.

The spike in exports partly reflected a sharp increase in exports of soybeans as well as a notable increase in exports of capital goods.

Meanwhile, increases in imports of passenger cars and capital goods were partly offset by steep drops in imports of cell phones and other household goods and industrial supplies and materials.

The report said the goods deficit narrowed to $80.7 billion in September from $83.8 billion in August, while the services surplus was nearly unchanged at $16.8 billion


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

U.S. Private Sector Job Growth Slows More Than Expected In October

Trading 04 Nov 2020 Commentaire »

Private sector employment in the U.S. increased by much less than expected in the month of October, according to a report released by payroll processor ADP on Wednesday.

ADP said private sector employment rose by 365,000 jobs in October after spiking by an upwardly revised 753,000 jobs in September.

Economists had expected private sector employment to surge by 650,000 jobs compared to the jump of 749,000 jobs originally reported for the previous month.

"The labor market continues to add jobs, yet at a slower pace," said Ahu Yildirmaz, vice president and cohead of the ADP Research Institute. "Although the pace is slower, we've seen employment gains across all industries and sizes."

The report said employment in the service-providing sector spiked by 348,000 jobs, while employment in the goods-producing sector edged up by 17,000.

Employment at mid-sized businesses climbed by 135,000 jobs, and employment at large and small businesses increased by 116,000 jobs and 114,000 jobs, respectively.

On Friday, the Labor Department is scheduled to release its more closely watched report on employment in the month of October.

Employment is expected to increase by about 600,000 jobs in October after climbing by 661,000 jobs in September. The unemployment rate is expected to edge down to 7.7 percent from 7.9 percent.


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

*Canadian Trade Deficit Widens To C$3.3 Billion In September

Trading 04 Nov 2020 Commentaire »

Canadian Trade Deficit Widens To C$3.3 Billion In September


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

Dollar Little Changed After U.S. Trade Data

Trading 04 Nov 2020 Commentaire »

Following the release of U.S. trade data for September at 8:30 am ET Wednesday, the greenback changed little against its major counterparts.

The greenback was trading at 1.1712 against the euro, 1.2990 against the pound, 104.38 against the yen and 0.9115 against the franc around 8:32 am ET.


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

U.S. Trade Deficit Narrows Roughly In Line With Estimates In September

Trading 04 Nov 2020 Commentaire »

A report released by the Commerce Department on Wednesday showed the U.S. trade deficit narrowed in the month of September.

The Commerce Department said the trade deficit narrowed to $63.9 billion in September from a revised $67.0 billion in August.

Economists had expected the deficit to narrow to $63.8 billion from the $67.1 billion originally reported for the previous month.

The narrower deficit came as the value of exports jumped by 2.6 percent to $176.4 billion, while the value of imports rose by 0.5 percent to $240.2 billion.


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