EUR/USD: Why did Trump fail in his attempt at uprising?

Trading 16 Jan 2021 Commentaire »

Donald Trump is due to step leave office in mere 4 days (if nothing extraordinary happens). He will make influence neither on politics nor the economy nor international relation of the US. Therefore, he will not be present in the news and will play no role as a market catalyst, at least for the currency market. Before he steps down, I decided to pay tribute to the policymaker who ruled the largest global economy for 4 years, broke down international treaties, built the wall on the border between the US and Mexico, slammed journalists, cursed in the public, lied nearly 15 times a day according to official estimates, etc. Eventually, Donald Trump ventured into an uprising. This is how he ended up, denying the outcome of the presidential election on November 3. Certainly, this social riot cannot be defined as a full-fledged coup, for example like it happened in the USSR in 1991.

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In fact, over the recent 4 years Donald Trump used to "forget" that companies and news agencies did not have to obey his orders. They belong to private entrepreneurs like himself. Actually, he had this last-minute thought that prevented him from orchestrating a real coup on January 6. From my viewpoint, the main cause of all his troubles is mass media. As it was said above, lots of companies in the US are a private property. It means that they perform according to the will of their owners. As soon as Donald Trump took office back in 2016, he behaved as though all mass media in America (including social networks) are state-owned so that he could say whatever he wants. Apparently, he expected journalists to echo his words without trying to contradict him. In fact, Donald Trump was at the helm of the US, not North Korea or China or the USSR where all news agencies have always been under strict supervision of the state. Therefore, 95% of newspapers, periodicals, and TV companies ganged up on him immediately and launched a game. They rushed to find out a lie in the president's words and debunk it. So, for the most part of his term Trump did not use mass media to inform people or make an announcement.

He used to swear at mass media and attacked it. In turn, they published materials to his disadvantage. Trump preferred to deliver his ideas through social platforms. None of the previous presidents exploited social media so actively. Soon after he became the President, people were mulling over whether he was ruling the country or sending messages on Twitter or Facebook. Later, it became clear that a team of PR assistants were acting on behalf of the President. In this case, all those messages lost their value as 10-15 messages were posted every day. In fact, the Internet was flooded with Trump's tweets. Moreover, Trump did not always use social networks to communicate with the population. He used them to accuse, make loud statements, argue with the Democrats, and attack the WHO and China. Trump believed that by these moves he would shape and manipulate public mood. In practice, it turned out that for a very long time no one has taken the president's accounts seriously. Moreover, at the end of the presidential term, Twitter and Facebook simply blocked his profile. Do you see the point? Social networks have blocked the president's account forever!!! Can you imagine this in Russia or China? Thus, those sluggish attempts to keep power in hands using the same methods that led Trump to the heavy defeat were doomed to failure.

Second, Trump didn't have enough support. In fact, from the very beginning. Looking back to the 2016 elections, few believed in Trump's victory as Hillary Clinton was taking the lead. Since then, the level of support for Trump in political and government circles has been waning every year. Only few prominent policymakers and top officials openly clashed with Trump. However, it was clear that Trump failed to achieve complete obedience from his party fellows. Hence, the government had to deal with frequent reshuffle of resignations among top officials. Again, this is not North Korea. Later, the Pentagon was not going to blindly follow Trump and his whims. The Defense Department simply refused to introduce a regular army to suppress rallies and protests across America as Trump demanded. The country's chief immunologist, Anthony Fauci, is not going to indulge Trump and assent to him on serious issues of national health. Jerome Powell was not going to cut rates simply because Trump ordered him to do so and in some other countries they are lower than in the United States. Well, the Democrats were ready to confront any absurd decision and proposal from Trump. Thus, he had to forge ahead with some initiatives through the lower house of Congress.

Thus, the last months of Trump's rule and his pathetic attempts to stay in power only caused laughter. All the courts, which Trump's team filed to recognize the election as a fraud, denied such lawsuits. The US Supreme Court, to which the state of Texas and 17 other states appealed with a claim (!!!) on fake election results in other (!!!) states, also dismissed the claim. Interestingly, Trump relied on the Supreme Court when he appointed a new Chief Justice to replace the untimely deceased Ruth Ginzburg. Trump has not provided a single evidence of his charges against the Democrats. Moreover, he did not try to do something that would really add weight to his words. If the election was indeed rigged, why did Trump act like a beaten puppy for the past 2 months? Why didn't he really provide any proof of falsification to the public? Why didn't he declare martial law? Why didn't he block the Internet, didn't arrest anyone (at least for election violations), didn't impose a curfew? Precisely because Trump himself knows that he lost the elections and no one will follow his orders. Moreover, Trump understands that Americans no longer want him to remain president. The Capitol assault looked just like the last attempt to change something, and it was also the final nail in the coffin of Trump's political career.

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Trading tips on EUR/USD

The technical picture of EUR/USD reveals that the pair has bearish prospects. Last week, the US dollar rebounded off the lowest level in 2.5 years and asserted strength across the board. Late Friday, the pair passed through 1.2097. Some analysts assume that the US currency has some prospects for recovery, though the fundamental background in the recent days suggests weakness of the US dollar. Curiously enough, the market has got used to unpredictable trajectories. In the last months of 2020, the US dollar was extending weakness without any weighty reasons. To sum up, the greenback has been following the overall downtrend. Hence, you are recommended to trade EUR/USD downwards with the bearish target of 1.2002.

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Dollar Rebounds On Safe-haven Appeal

Trading 16 Jan 2021 Commentaire »

The U.S. dollar was quite firm against its rivals on Friday thanks to its safe-haven appeal amid worries about rising coronavirus cases and stricter lockdown restrictions in several countries.

The Commerce Department said retail sales fell by 0.7% in December after tumbling by a revised 1.4% in November. Economists had expected retail sales to come in unchanged compared to the 1.1% slump originally reported for the previous month.

The Federal Reserve released a report showing U.S. industrial production surged up by 1.6% in December after climbing by an upwardly revised 0.5% in November. Economists had expected production to rise by 0.4%, matching the increase originally reported for the previous month.

The dollar index rose to 90.79, gaining over 0.6%

Against the Euro, the dollar was stronger by nearly 0.7% at $1.2076. Eurozone exports increased for the seventh straight month in November, first estimate from Eurostat showed. Exports grew 2% on month and imports climbed 2.4% from October.

However, compared to the month before restrictions were imposed in February, both flows were still down by 4.4% and 4.8%, respectively.

The Pound Sterling weakened against the dollar, fetching $1.3585, about 0.75% less than Thursday's close of $1.3688 a unit. Official data showed Britain's economy contracted at a slower than expected pace in November. Gross domestic product shrank 2.6% month on month in November but slower than the 5.7% fall economists' had forecast.

The Yen was slightly weaker at 103.87 a dollar. Japan's tertiary activity dropped for the sixth month in a row in November, data from the Ministry of Economy, Trade and Industry showed. The tertiary activity index declined 0.7% month-on-month in November, after a 1.6% increase in October.

On a yearly basis, the tertiary activity index declined 3.7% in November, following a 1.4% fall in the previous month.

The Aussie was down nearly 1% at $0.7707. The Swiss franc weakened to 0.8916 a dollar, losing about 0.4%, while the Loonie was at C$1.2736 a dollar, down 0.75% from previous close, as crude oil prices declined sharply.


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Crude Oil Futures Settle Sharply Lower On Demand Concerns

Trading 16 Jan 2021 Commentaire »

Crude oil futures settled sharply lower on Friday as worries about energy demand resurfaced amid rising coronavirus cases and tighter restrictions on movements in several countries, including China.

West Texas Intermediate Crude oil futures for February ended down $1.21 or about 2.3% at $52.36 a barrel.

Brent crude futures were down $1.40 or about 2.5% at $55.02 a barrel a little while ago.

Coronavirus cases cross two million in Germany today, prompting authorities to consider a "mega-lockdown." Portugal imposed a new nationwide lockdown while Britain said entry into the country will require negative tests. Brazil and Lebanon too tightened restrictions on movements.

Fresh curbs on populations were announced from Brazil to Lebanon. Amid fears of surging cases, Germany is considering a "mega-lockdown".

France is introducing tougher restrictions for anyone entering the country from outside the EU.

Elsewhere, China has put about 22 million people on lockdown due to new outbreaks of Covid-19 in the north and northeastern parts of the country.

Meanwhile, a report from Baker Hughes said the number of active U.S. rigs drilling for oil rose by 12 to 287 this week, rising for an eighth successive weak. The total U.S. rigs count went up by 13 to 373, according to the report.

Concerns over rising Sino-U.S. tensions also weighed on the commodity after the U.S. government blacklisted Chinese smartphone maker Xiaomi Corp and ten other companies over alleged military links.


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Treasuries Move Back To The Upside On Disappointing Retail Sales Data

Trading 16 Jan 2021 Commentaire »

Following the pullback seen in the latter part of the previous session, treasuries rebounded during trading on Friday.

Bond prices saw some volatility early in the session but ended the day firmly in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.2 basis points to 1.097 percent.

The rebound by treasuries came following the release of disappointing retail sales data, with a report from the Commerce Department showing a continued decline in U.S. retail sales in the month of December.

The Commerce Department said retail sales fell by 0.7 percent in December after tumbling by a revised 1.4 percent in November.

Economists had expected retail sales to come in unchanged compared to the 1.1 percent slump originally reported for the previous month.

Excluding sales by motor vehicle and parts dealers, retail sales plunged by 1.4 percent in December after sliding by 1.3 percent in November.

Ex-auto sales were expected to edge down by 0.1 percent compared to the 0.9 percent decrease originally reported for the previous month.

"The further slump in retail sales in December confirms that the continued surge in coronavirus infections is now weighing heavily on the economy," said Andrew Hunter, Senior U.S. Economist at Capital Economics. "Despite the building optimism over fiscal stimulus, the next few months are still likely to be difficult."

The University of Michigan also released a report showing U.S. consumer sentiment has edged down by slightly more than expected in the month of January.

Meanwhile, the Federal Reserve released a separate report showing U.S. industrial production jumped by much more than expected in the month of December.

The Fed said industrial production surged up by 1.6 percent in December after climbing by an upwardly revised 0.5 percent in November.

Economists had expected production to rise by 0.4 percent, matching the increase originally reported for the previous month.

"The December production data underline that while new restrictions are holding back parts of the service sector again, the recovery in manufacturing continues largely unaffected," said Michael Pearce, Senior U.S. Economist at Capital Economics.

Following the long weekend, next week's trading may be impacted by reaction to reports on homebuilder confidence, housing starts, and existing home sales.


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Gold Futures Settle Lower As Dollar Moves Up

Trading 16 Jan 2021 Commentaire »

Gold prices drifted lower on Friday as the dollar firmed up against most of its rivals.

Gold prices moved up early on in the session, riding on U.S. President-elect Joe Biden's announcement of a $1.9 trillion stimulus package proposal and the Federal Reserve's dovish outlook for the next one year.

Risk sentiment weakened due to worries over a rise in coronavirus infections in Europe and China, tighter lockdown restrictions in several cities across the world, and growing tensions between the U.S. and China.

The dollar index rose to 90.77, gaining nearly 0.6%.

Gold futures for February ended down $21.50 or about 1.2% at $1,829.90 an ounce. Gold futures shed about 0.3% this week.

Silver futures for March ended lower by $0.936 at $24.866 an ounce, while Copper futures for March settled at $3.6020 per pound, down $0.0625 from previous close.

Several countries across the world have tightened lockdown measures. France strengthened border controls and extended a curfew to the entire country on Thursday to combat the virus as the situation remains worrying.

China has put millions of people in lockdown in response to new outbreaks of Covid-19 in the north and northeast.

Data from the Commerce Department said retail sales fell by 0.7% in December after tumbling by a revised 1.4% in November. Economists had expected retail sales to come in unchanged compared to the 1.1% slump originally reported for the previous month.

The Labor Department said its producer price index for final demand rose by 0.3% in December after inching up by 0.1% in November. Economists had expected producer prices to rise by 0.4%.

Activity in the New York manufacturing sector unexpectedly grew at a slower pace in the month of January, the Federal Reserve Bank of New York revealed in a report released today.

The New York Fed said its general business conditions index slipped to 3.5 in January from 4.9 in December, although a positive reading still indicates growth in regional manufacturing activity. Economist had expected the index to inch up to 6.0.


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