U.S. Consumer Sentiment Unexpectedly Improves In December

Trading 11 Déc 2020 Commentaire »

Consumer sentiment has unexpectedly improved in the month of December, according to a preliminary report released by the University of Michigan on Friday.

The report said the consumer sentiment index climbed to 81.4 in December from 76.9 in November. The increase surprised economists, who had expected the index to edge down to 76.5.

Surveys of Consumers chief economist Richard Curtin said the unexpected improvement in consumer sentiment was due to a partisan shift in economic prospects.

"Following Biden's election, Democrats became much more optimistic, and Republicans much more pessimistic, the opposite of the partisan shift that occurred when Trump was elected," said Curtin.

He added, "As has been documented in the past four years, self-identified Independents adopted more balanced views, maintaining their economic expectations in December at the same unfavorable levels as when the covid crisis began nine months ago."

Cutrin called it "surprising" that the recent resurgence in coronavirus infections and deaths was overwhelmed by partisanship.

The report also said the current economic conditions index rose to 91.8 in December from 87.0 in November, while the index of consumer expectations climbed to 74.7 from 70.5.

On the inflation front, one-year inflation expectations slumped to 2.3 percent in December from 2.8 percent in November. Five-year inflation expectations were unchanged at 2.5 percent.


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*U.S. Consumer Sentiment Index Rises To 81.4 In December

Trading 11 Déc 2020 Commentaire »

U.S. Consumer Sentiment Index Rises To 81.4 In December


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U.S. Producer Prices Inch Slightly Higher In November

Trading 11 Déc 2020 Commentaire »

Producer prices in the U.S. edged slightly higher in the month of November, according to a report released by the Labor Department on Friday.

The Labor Department said its producer price index for final demand inched up by 0.1 percent in November after climbing by 0.3 percent in October. Economists had expected producer prices to rise by 0.2 percent.

The uptick in producer prices was partly due to a jump in energy prices, which surged up by 1.2 percent in November following a 0.8 percent increase in October.

The report also showed food prices rose by 0.5 percent in November after spiking by 2.4 percent in the previous month.

Excluding food and energy prices, core producer prices still crept up by 0.1 percent in November, matching the uptick seen in October. Core prices were expected to increase by 0.2 percent.

The Labor Department said the index for final demand services was unchanged in November after rising by 0.2 percent in October.

Prices for trade services and transportation and warehousing services decreased by 0.3 percent and 0.9 percent, respectively, while prices for other services rose by 0.2 percent.

Compared to the same month a year ago, producer prices in November were up by 0.8 percent, reflecting an acceleration from the 0.5 percent growth in October.

The annual rate of growth in core producers also accelerated to 1.4 percent in November from 1.1 percent in the previous month.

"Inflation remains in check, and high frequency data suggests that households are still hesitant to spend at pre-virus levels, signaling that price dynamics will continue to undershoot the Fed's 2% target in the near-term," said Mahir Rasheed, Associate U.S. Economist at Oxford Economics.

On Thursday, the Labor Department released a separate report showing a modest increase in U.S. consumer prices in the month of November.

The Labor Department said its consumer price index rose by 0.2 percent in November after coming in unchanged in October. The uptick in consumer prices matched economist estimates.

Excluding food and energy prices, core consumer prices still edged up by 0.2 percent in November after showing no change in the previous month. Economists had expected core prices to inch up by 0.1 percent.

The report said the annual rates of growth in consumer prices and core consumer prices were unchanged from the previous month at 1.2 percent and 1.6 percent, respectively.


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U.S. Producer Prices Inch Up 0.1% In November

Trading 11 Déc 2020 Commentaire »

Producer prices edged slightly higher in the month of November, according to a report released by the Labor Department on Friday.

The Labor Department said its producer price index for final demand inched up by 0.1 percent in November after climbing by 0.3 percent in October. Economists had expected producer prices to rise by 0.2 percent.

Excluding food and energy prices, core producer prices still crept up by 0.1 percent in November, matching the uptick seen in October. Core prices were also expected to increase by 0.2 percent.


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*Canadian Industrial Capacity Utilization Climbs To 76.5% In Q3

Trading 11 Déc 2020 Commentaire »

Canadian Industrial Capacity Utilization Climbs To 76.5% In Q3


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Dollar Little Changed After U.S. PPI

Trading 11 Déc 2020 Commentaire »

Following the release of U.S. producer prices for November at 8:30 am ET Friday, the greenback changed little against its major counterparts.

The greenback was trading at 104.13 against the yen, 0.8893 against the franc, 1.2121 against the euro and 1.3148 against the pound around 8:33 am ET.


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*U.S. Producer Prices Inch Up 0.1% In November, Core Prices Edge Up 0.1%

Trading 11 Déc 2020 Commentaire »

U.S. Producer Prices Inch Up 0.1% In November, Core Prices Edge Up 0.1%


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Dollar Climbs Ahead Of U.S. PPI

Trading 11 Déc 2020 Commentaire »

The U.S. producer prices for November are due at 8:30 am ET Friday. Ahead of the data, the greenback advanced against its major counterparts.

The greenback was worth 104.13 against the yen, 0.8892 against the franc, 1.2121 against the euro and 1.3142 against the pound at 8:25 am ET.


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USDCHF bullish idea still valid

Trading 11 Déc 2020 Commentaire »

In a previous analysis we noted that at 0.89 USDCHF we prefer to be bullish with stops at 0.8850 and target at 0.90-0.9050. Price moved all the way to 0.8850 but at the end of the week price is back at 0.89. I believe bears need a break, that is why I continue to support this short-term trend reversal.

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Blue lines - bullish divergence

Green line - resistance

As long as price is below the green trend line resistance trend is bearish. However the bullish RSI divergence makes me expect a bounce towards the green trend line resistance around 0.90-0.9050. If next week USDCHF does not bounce strongly towards 0.90 then I do not believe we are going to see this bounce soon. Support and stop for our bullish view is now confirmed at today's low at 0.8850.

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GBP/USD. Brexit negotiations have entered a crucial phase

Trading 11 Déc 2020 Commentaire »

The pound is falling like a stone again. And this is not the case when the southern momentum of GBP/USD can be used as a reason to open longs. The risk of a deeper drop is quite high, despite the current price pullback. Therefore, on the last trading day of the week, it is best to take a wait-and-see attitude, as the passion for Brexit reaches its peak.

The British currency has been subject to strong volatility since the beginning of December, showing quite powerful price fluctuations - both in the direction of growth and in the direction of the south. Most recently, on December 4, buyers of GBP/USD updated this year's high at 1.3538, while today sellers were trying to get close to the borders of the 30th figure. In other words, the pair "walked" almost 500 points down during the week. However, the bears also had to be nervous, as corrective pullbacks reached 150-point values. Therefore, it is not necessary to talk about any reliability in the context of long or short positions: by and large, the pair's traders are now playing the lottery by entering the market. It is impossible to predict which way the pendulum will swing in the end, despite the bellicose and pessimistic statements of Boris Johnson and his European colleagues.

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It is worth recalling that the Brexit epic has been going on for the fifth year since the historic referendum that took place in June 2016. Throughout this time, the pound has repeatedly experienced increased price turbulence during key decision-making periods. For example, powerful price spurts were observed in October 2018, when the parties were one step away from signing a deal. The price jumped from the 33rd to the 42nd figure in a few weeks. At the end of 2019, the volatility was even stronger – if in September the price was at the level of the 19th price level, then traders met the New Year in the area of the 32nd figure. Almost fifteen hundred points in just a few months.

And each time, the price turbulence was due to Brexit. The mood of investors ranged from "everything is lost, there will be no agreement" to "the deal is about to be signed". In each case, the pound reacted sharply to numerous newspaper rumors, comments from top politicians, and statements from negotiators.

Now events are not developing so rapidly, although the overall situation is similar. London and Brussels are currently unable to agree on three key issues: fishing regulations, competition rules, and dispute resolution mechanisms. The most difficult issue is fishing. London rejects all proposals from the European side. The British consider unacceptable the requirements of the European Union to provide access for European fishermen to British fishing areas. According to the head of the British negotiating group, such a model is incompatible with the status of the UK as an independent coastal state.

Brussels, in turn, insists on its own terms. Many compromise options were rejected during the negotiations. In particular, London rejected the model of "zonal binding", when the British quota shares would depend on the length of stay of fish populations in the waters of the Kingdom.

London considers any option offered by the Europeans through the prism of its conditions. Boris Johnson is lobbying for an annual review of the relevant clause of the deal on the issue of fishing. However, the European Union does not agree to such a scenario, insisting on linking the possible revision of the above paragraph to the entire trade agreement. In other words, if one point of a trade transaction is corrected, the parties can also change other sections of the agreement.

Let me remind you that the negotiators are currently holding another round of talks. The deadline is set for December 13, which is next Sunday. And judging by the statements of key politicians, this round will repeat the fate of all previous ones. European Commission chief Ursula von der Leyen said today that the talks appear to have reached an impasse. According to her, the absence of an agreement is becoming an increasingly likely scenario. A similar statement was made by Boris Johnson, who called for preparing for a no-deal scenario.

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There are two options: either we are witnessing a political game in which the stakes are rising every day, or Britain is really ready to switch to the "WTO rails", with all the consequences that follow. The intrigue will be resolved in the next few days, most likely on Sunday (perhaps even on Saturday). If the parties do not come to a decision but extend the negotiations, the chances of a deal will remain. In this case, the pound paired with the dollar can show a northern correction, up to the 34th figure. If the parties declare that they have exhausted all possible options for reaching a compromise, the British pound will lose several figures, falling first to the base of the 30th figure, and then to the support level of 1.2890. It is not known which of the above scenarios will be implemented. Therefore, it is very risky to trade the GBP/USD pair now, as the pendulum can swing both in one direction and in the other.

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