EUR/USD, GBP/USD – results of the week and future prospects

Trading 19 Déc 2020 Commentaire »

EUR/USD

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The bulls managed to close the week in an optimistic manner. They managed to get out of the correction zone and continue the weekly upward trend. If you manage to keep what you have achieved, then you can focus on monthly results. December was the month when the euro attempted to leave the Ichimoku cloud. When a breakout is made, confirmed on a monthly timeframe, it is possible to consider a new upward reference point - a monthly target for a cloud breakout. At the moment, a closer upward benchmark would be the previous month's high (1.2555), further resistance may be provided by the reference points of the monthly target for surpassing the price chart using the Chinkou line (1.2703-1.2897). In case players fail to rise and when priorities change, strengthening the bearish sentiment will pass through 1.2170 (record level + daily Tenkan) - 1.2018 (border of the monthly cloud) - 1.1937 (weekly Tenkan), the lines of the daily cross will act as intermediate supports , now they are located at 1.2092 - 1.2036 - 1.1980.

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Indicator analysis creates several prerequisites for forming a bearish divergence in the current situation, but you can only take note of the usual bearish divergence, although with a minimal difference when marking a peak, on the CCI (daily timeframe). This circumstance increases the chances of turning Friday's deceleration into a full-fledged downward correction.

GBP/USD

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Upward targets remain relevant for bullish traders, which in the current conditions can be designated at 1.3904 - 1.4181 - 1.4376 - 1.4588. Support for the weekly short-term trend and a good upward gap when the week started has helped bulls in ending the downward trend. They have recently renewed the previous week's high, but they failed to gain a foothold above it and hold positions. There was a correctional decline again on the daily timeframe, having reached the target for the breakdown of the H4 cloud (1.3627), the pair returned to support at 1.3481-1.3538. Getting the pair to settle below the levels will make it possible for us to expect that we can return to the lower border of the monthly cloud (1.3350). Support for the Ichimoku daily golden cross is now at 1.3350. The loss of support for the monthly cloud (1.3350) and the liquidation of the daily golden cross will be a rather large victory for the bears in the current section of the movement, which will allow them to count on a downward correction before the supports of the monthly Ichimoku cross.

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On the daily timeframe, past divergences that form divergences have been discharged in the form of a small correction, but at the current stage there are no divergences and prerequisites for a divergence. Bearish divergences persist on the weekly timeframe, as divergences are still relevant.

Ichimoku Kinko Hyo (9.26.52)

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Dollar Recovers, Firms Up Against Most Of Its Peers

Trading 19 Déc 2020 Commentaire »

The U.S. rebounded from recent losses and firmed up against most of its peers on Friday amid uncertainty over a post-Brexit trade deal, and a lack of positive progress in stimulus talks.

A report released by the Conference Board showed its index of leading U.S. economic indicators increased by slightly more than expected in the month of November.

The Conference Board said its leading economic index rose by 0.6 percent in November after climbing by 0.8 percent in October. Economists had expected the index to increase by 0.5 percent.

The dollar index, which rose to 90.13 around late morning, pared some gains subsequently and was last seen at 89.96, up 0.15% from previous close.

Against the Euro, the dollar was up 0.11% at 1.2256, paring some gains after firming up to $1.2226. The euro area current account surplus rose to EUR 27 billion in October from EUR 25 billion in the previous month, driven by trade in goods and services, data from the European Central Bank showed.

The Pound Sterling was fetching $1.3474 a unit, the dollar firmed up to 1.3474 before paring some gains. The Pound weakened as the U.K. and the European Union expressed pessimism over talks to strike a post-Brexit trade deal.

The Yen was down 0.2% at 103.31 a dollar. The Bank of Japan left its interest rate unchanged and extended the timeframe for corporate funding program by six months due to concerns about an economic downturn caused by the pandemic.

The bank also removed upper limit of JPY 100 billion on funds provided to eligible counterparty against loans that financial institutions make on their own, and retained the interest rate at -0.1%.

Against the Aussie, the dollar pared gains after a notable advance early on in the day. The AUD-USD pair was last seen flat at 0.7622, after trading at 0.7583 at one stage.

The Swiss franc was firmer against the dollar, at CHF 0.8831, up 0.16% from Thursday's close, while the Loonie was down 0.5% at C$1.2783 a dollar.


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Oil Futures Settle Sharply Higher, Posts Gains For 7th Straight Week

Trading 19 Déc 2020 Commentaire »

Despite continued surge in new coronavirus cases across the world, crude oil futures ended higher on Friday amid hopes energy demand will pick up gradually following another coronavirus vaccine getting the nod from the U.S. drug regulator.

The recent data from Energy Information Administration (EIA) that showed a sharp drop in crude oil stockpiles last week continued to support oil prices.

Oil is also continuing to be supported by the recent decision of the Organization of the Petroleum Exporting Countries and allies to slow the pace of a planned increase in supplies next year.

West Texas Intermediate Crude oil futures for January ended up $0.74 or about 1.5% at $49.10 a barrel.

Brent crude futures moved up nearly 1.5% to settle at $52.26 a barrel.

According to a report released by Baker Hughes, the number of active U.S. rigs drilling for oil rose by 5 to 263 this week, continuing to rise for a fourth straight week.

The total active U.S. rig count, including those drilling for natural gas, increased by 8 to 346.

An U.S. FDA panel recommended emergency approval of Moderna vaccine, paving the way for six million doses to start shipping as soon as this weekend.

Vaccines developed by Pfizer/BioNTech got the nod earlier this month. The U.S., U.K. and Canada have already given the go-ahead and have begun administering the vaccines now.


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Treasuries Move Modestly Lower As Traders Remain Optimistic About Stimulus

Trading 19 Déc 2020 Commentaire »

After initially showing a lack of direction, treasuries moved modestly lower over the course of the trading day on Friday.

Bond prices drifted lower in afternoon trading after spending the morning lingering near the unchanged line. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.8 basis points to 0.948 percent.

Traders remain optimistic lawmakers will eventually reach an agreement on a new stimulus bill, reducing the appeal of safe havens such as bonds.

In remarks on the Senate floor, Senate Majority Leader Mitch McConnell, R-Ken., said an agreement on a new relief package appears to be "close at hand" and suggested lawmakers are likely to work through the weekend to reach a deal.

House Speaker Nancy Pelosi, D-Calif., also told reporters that progress has made been toward an agreement, mirroring other recent optimistic comments from congressional leaders.

Along with agreeing on a new relief package, lawmakers also need to pass a spending bill to avoid a government shutdown. Many expect Congress to pass a short-term bill ahead of the Saturady deadline.

Upbeat news on the coronavirus vaccine front also weighed on treasuries, with an FDA advisory panel giving a positive recommendation to Moderna's (MRNA) vaccine candidate.

Additionally, Johnson & Johnson (JNJ) said the first late-stage trial for its vaccine candidate is now fully enrolled, with the healthcare giant expecting interim data by late January.

On the U.S. economic front, a report released by the Conference Board showed its index of leading U.S. economic indicators increased by slightly more than expected in the month of November.

The Conference Board said its leading economic index rose by 0.6 percent in November after climbing by 0.8 percent in October. Economists had expected the index to increase by 0.5 percent.

"The US LEI continued rising in November, but its pace of improvement has been decelerating in recent months, suggesting a significant moderation in growth as the US economy heads into 2021," said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board.

Developments in Washington are likely to drive trading next week, although traders are also likely to keep an eye on reports on new and existing home sales, personal income and spending, and durable goods orders.

However, trading activity may be somewhat subdued throughout the week ahead of the Christmas Day holiday next Friday.


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Gold Futures Settle Slightly Weak As Dollar Rebounds

Trading 19 Déc 2020 Commentaire »

Gold futures settled slightly lower on Friday as the dollar rebounded from recent losses, but the safe-haven asset recorded a fairly sharp rise in the week amid a surge in coronavirus cases across the world and continued impasse on the stimulus front.

The dollar advanced amid fresh U.S.-China tensions, uncertainty over a post-Brexit trade deal and the continued impasse over a fiscal stimulus in the U.S.

The dollar index rose to 90.13 around mid-morning and despite coming off that level subsequently, remained firmly above the flat line. A little while ago, the index was at 90.02, up 0.21% from previous close.

Gold futures for February ended down $1.50 or about 0.1% at $1,888.90 an ounce. On Thursday, gold futures had settled at 6-week high.

For the week, gold futures gained about 2.5%.

Silver futures for March ended lower by $0.148 at $26.033 an ounce, while Copper futures for March settled at $3.6325 per pound, gaining $0.0310.

According to reports, the U.S. is adding dozens of Chinese companies, including the country's top chipmaker SMIC, to a trade blacklist.

On the stimulus front, U.S. lawmakers continued negotiations to clinch a deal for a new stimulus package, with Senate Majority Leader Mitch McConnell saying talks could spill into the weekend.

In Brexit news, Michel Barnier, the EU's chief negotiator said there was a chance of getting an agreement but the path to such an agreement was very narrow.

European Commission President Ursula von der Leyen said bridging "big differences", particularly on fishing rights, would be "very challenging" while Prime Minister Boris Johnson said discussions were in a "serious situation". Johnson signaled that a no deal continued to be a "very likely" outcome.

Meanwhile, a report released by the Conference Board Friday morning showed its index of leading U.S. economic indicators increased by slightly more than expected in the month of November.

The Conference Board said its leading economic index rose by 0.6% in November after climbing by 0.8% in October. Economists had expected the index to increase by 0.5%.


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