Technical analysis of ETH/USD for February 06, 2021

Trading 06 Fév 2021 Commentaire »

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Technical market outlook of Ethereum (cryptocurrency) :

Trading Ethereum (ETH/USD) :

Since three weeks ETH/USD increased within an up channel, for that Ethereum hits new highs $1,513, $1,571 and $1,650.

Ethereum price had a significant breakout above the price of $1,513, $1,571 and $1,650. So, the support levels are seen at $1,513, $1,571 and $1,650 on the H1 chart.

Ethereum price is bullish but climbing higher will be strict, our next traget $2,000.

Also, it should be noted that some news said : the trust fund has added around 25,000 ETH right after opening worth around $37 million.

From this point, we guess there are some positive metrics in favor of ETH as well.

Ethereum continues moving in a bullish trend from the support levels of $1,571 and $1,650. Currently, the price is in a bullish channel.

This is confirmed by the RSI indicator signaling that we are still in a bullish trending market. As the price is still above the moving average (100), immediate support is seen at $1,571, which coincides with a golden ratio (61.8% of Fibonacci).

Consequently, the first support is set at the level of $1,571. Hence, the market is likely to show signs of a bullish trend around the spot of $1,571.

Signal :

Buy orders are recommended above the golden ratio ($1,571) with the first target at the level of $1,757. Furthermore, if the trend is able to breakout through the first resistance level of $1,757. We should see the pair climbing towards the double top ($1,757) to test it. The pair will move upwards continuing the development of the bullish trend to the level $1,800. It might be noted that the level of $1,900 is a good place to take profit because it will form a new double top in coming hours.

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Crypto industry news (Ethereum News - (Source : Bloomberg))

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Ethereum's recent gains have been supported by an ever-increasing level of futures open interest. As CoinTelegraph reports, open interest on Ether futures reached a record $6.5 billion, which is a 128% monthly increase.

This suggests short-sellers are likely fully hedged, taking benefit of the futures premium, instead of effectively expecting a downside.

Professional investors using the strategy described above are essentially doing cash and carry trades which consist of buying the underlying asset and simultaneously selling futures contracts.

These arbitrage positions usually do not present liquidation risks. Therefore, the current surge in open interest during a strong rally is a positive indicator. Tyler Durden Sat, 02/06/2021 - 11:25

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GBP/USD. Waiting for a « ticket to the north »: pound may test the 38th figure

Trading 06 Fév 2021 Commentaire »

The pound-dollar pair jumped towards the end of the trading week, rising to 1.3730. Buyers of GBP/USD actually returned all positions that were lost during the previous five days. It is noteworthy that the pair's growth was caused not only by the dollar's weakness, but also because the pound strengthened, which received support from the British central bank. Therefore, the pound had a double advantage on Friday, although the prospects for its succeeding growth are still very vague.

On Friday, the GBP/USD pair failed to approach the resistance level of 1.3770 - this is the upper line of the Bollinger Bands indicator on the daily chart. This target is a tough nut to crack: traders have tried to test it several times since January 20. But as soon as the price rose to the middle of the 37th figure, sellers entered the market and pulled the pound to the area of the 36th price level. However, as soon as the bears pulled down the price to the bottom of the 36th figure, the downward momentum also faded out rather quickly. As a result, the pair fluctuated in a wide price range of 1.3610-1.3750 for almost three weeks.

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The Bank of England held its first meeting of 2021 on February 4. The central bank ruled out a rate cut in the negative area in the foreseeable future, but with one "but" - if the key macroeconomic indicators do not show a downward trend. First of all, we are talking about the indicators of inflation, the labor market and the economy as a whole.

As for inflation and the labor market, quite good results were reported. Now there is one more key test left. The fact is that data on UK GDP growth in the 4th quarter of last year will be published on Friday. If this release is also in the green zone, then the pound will rise against the dollar, opening the way to the 38th figure. Let me remind you that the British economy showed record growth in the third quarter, rising by 16% on a quarterly basis. In the summer, as well as in early autumn, the country got a little respite in a series of lockdowns. The quarantine was significantly relaxed, the economy revived, and macroeconomic indicators began to grow. Unfortunately, the situation changed for the worse again in the second half of autumn: in October, Britain was ranked ninth in the world in the number of cases of coronavirus and third among European countries. Prime Minister Boris Johnson was forced to tighten quarantine restrictions again.

Actually, for this reason, analysts do not expect anything extraordinary from the fourth quarter, Britain has actually been closed for quarantine since November (London extended the lockdown again on January 5). Nevertheless, according to general forecasts, GDP should remain above zero on a quarterly basis. Analysts expect 0.5% growth in the quarter from the previous period. If we talk about the December indicator, then a positive trend is also expected relative to the failed November (+1.0% in December against -2.6% in November). We will also learn the indicators of industrial production. Similarly, analysts plan to see signs of recovery (+0.5% vs. -0.1%).

In other words, most analysts are confident that the British economy has withstood another coronavirus blow that hit Great Britain at the end of last year. Analysts expect marginal growth. And the pound will be under significant pressure if the UK economy does not meet these expectations. At least, the path to the 38th figure for GBP/USD buyers will be closed again.

After all, by and large, the results of the Bank of England's February meeting can be interpreted in different ways. On the one hand, the central bank has ruled out the introduction of a negative rate in the near future. On the other hand, the central bank did not rule out such a scenario in principle. Moreover, the central bank will now work with the country's financial institutions to develop appropriate tactical solutions - "in order to prepare all authorized firms for the introduction of a negative rate regime" with a 6-month time gap.

This suggests that the BoE has left the door open for a negative rate, although it has acknowledged that this scenario is more critical than the main one. Everything will depend on the dynamics of the key macroeconomic indicators of Britain.

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Given the current fundamental background, we can assume that before the release of data on the growth of the British economy (February 12), the pound will move in the wake of the dollar, but switch to its own fundamental factors.

In turn, the greenback ended the trading week with a significant decline, against the background of a disappointing Nonfarm payrolls report and optimism about the fate of the almost $2 trillion package of assistance to the US economy. The general risk appetite + weak data on the growth of the US labor market weakened the position of dollar bulls. And in my opinion, the market has not yet fully played out Friday's events.

The technical picture of GBP/USD also indicates the priority of long positions: the price on the daily chart is located between the middle and upper lines of the Bollinger Bands indicator, as well as above all the lines of the Ichimoku indicator, including the Kumo cloud. All this suggests that you can consider long positions on the pair – with the first target as 1.3770 (the upper line of the Bollinger Bands on the same timeframe). Iit is better to close long positions in the area of the borders of the 38th figure, since there will be a separate struggle for this price barrier. The stop loss can be placed either at 1.3600 (Kijun-sen line on D1). If the price goes below the middle of the 36th figure, the growth scenario will lose its relevance, at least in the medium term.

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GBP/USD. Results of the week. Pound happy to play with results of the Bank of England meeting and Friday’s US reports

Trading 06 Fév 2021 Commentaire »

4-hour timeframe

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The situation with the pound continues to surprise and amaze. We have already said many times that it is possible to explain the reasons for the euro's growth in the last ten months, but it is still necessary to think of the reason why the pound is rising. In fact, those global fundamental factors that we talked about in the euro/dollar article also work for the pound, but do not forget that the European economy lost 11% in the second quarter of 2020, the American - 31%. and the British - 20%. The pound should feel a little worse than the euro, against the dollar. But in practice, the pound continues to rise. Clumsy, unsightly, incomprehensible, difficult to predict, but still growth. The pound returned to 2.5-year highs and it has hardly done so fairly and reasonably. If you do not take Friday into account, when there were reasons for the dollar's fall (we will talk about this below), the pound rose out of the blue on Thursday (we will figure out why), and before that it was getting cheaper for three days, giving hope would be a small, short-term downward trend. But, as usual, these hopes were not destined to come true.

So, let's start with the British macroeconomic statistics, and without discussing it too long, we can say: all of it was ignored, as well as the European one. The package of British reports did not include such important ones as GDP or inflation. There were indexes of business activity in the service sector and production, and, in fact, everything. Therefore, there is nothing surprising at all. But the events of Thursday require more careful consideration and analysis. As we have said in our previous fundamental articles, the Bank of England did not make any important decisions at its first meeting in 2021. All the parameters of monetary policy remained unchanged. Moreover, none of the nine members of the monetary committee voted "in favor" of changing any parameter. Thus, there is unity in the opinions of the committee members, although, for example, previously Silvana Tenreyro openly supported the idea of negative rates. However, it doesn't seem like the time is right yet. And here lies the most important factor that traders overlook. A matter of time. Traders react to statements made by BoE Governor Andrew Bailey or other committee members in real time. And the comments that the BoE members make relate to the time that will come in a few months at least, and may not come at all. For example, Tenreyro said that she supports negative rates and so the pound fell. Bailey said that negative rates are too problematic and the pound has risen. However, none of them made a precise and clear statement that rates would not be lowered for the next six months or something like that. During the BoE meeting, there were theses that can be interpreted as you like. For example, they said that the central bank continues to study negative rates, and the UK banking system and other financial companies will need about six months to prepare for a possible downgrade. And at the same time, the central bank said that most companies are already quite well prepared, and the words about "six months" should not be considered as an inevitable future. That is, in fact, the BoE just poured water, without saying yes or no. But market participants felt that the central bank is not going to ease monetary policy in the coming months and rushed to buy the pound. And now remember, dear traders, when did the markets react to the statements of the central bank that it is not going to change monetary policy? They usually react to changes in monetary policy or to the announcement of these changes. In our case, the markets were happy that there might not be a rate cut.

Now consider the US macroeconomic statistics. The report on the ISM manufacturing PMI was published on Monday, which slightly fell, but at the same time, it remained at a very high value of 58.7. The report on business activity in the ISM manufacturing sector was published on Wednesday, which increased compared with December, and also reached 58.7. Thus, business activity in the United States is in perfect order, which is not surprising, since the second lockdown was not even introduced in the country. Neutral data on applications for unemployment benefits were published on Thursday, the number of which reached 779,000. The number of secondary applications decreased from 4.785 million to 4.592 million. But the most interesting data was published on Friday. To begin with, the official unemployment rate unexpectedly fell from 6.7% to 6.3%. However, the disappointing news went further. The main report of the week-NonFarm Payrolls - which shows the number of new jobs created outside the agricultural sector, was only 49,000 with a forecast of +85,000. In fact, this is not such a big deviation from the forecast. It is clear that the actual value is worse, but not by much. For example, a value of -227,000 was recorded a month earlier. The Nonfarm indicator has been declining since June, and only increased in January compared to the previous month. So, in fact, not everything is so bad. The report on wages also turned out to be worse than the forecast values. It was predicted +1.0% m/ m, it turned out +0.2% m/m. However, this report was the least important of all.

What do we have in the end? The pound and the euro had every right to rise on Friday. And this is almost the only case in recent times when the markets still worked out the statistics. The same Nonfarm Payrolls report has been mercilessly ignored in recent months. If in the case of the euro, the single currency's growth fits into the overall technical picture, then in the pound's case, the growth does not fit into any picture, it's just there.

Thus, the pound/dollar pair has returned to its highs, both local and 2.5-year, so now the question arises, whether the bulls will be able to overcome the 1.3745 level. If so, the upward movement is highly likely to continue. If not, a new round of downward movement within the framework of the remaining "swing".

Recommendations for GBP/USD:

For long positions:

On the 4-hour timeframe, the GBP/USD pair is trying to resume the upward trend. Thus, the targets for long positions are now the levels of 1.3768 and 1.3837, but this means that the price should surpass the 1.3745 level, which is a local high, and from which the price rebounded at least five times.

For short positions:

You can open short positions in small lots while aiming for the support level of 1.3619 (according to the Ichimoku system), if the price rebounds from the 1.3745 level. However, take note that in any case, the pair is still moving erratically, which means that opening any positions is associated with increased risks.

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EUR/USD. Results of the week. Markets ignored all the European reports. Interest in the dollar began to fall

Trading 06 Fév 2021 Commentaire »

4-hour timeframe

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The trading week has ended in the foreign exchange market, and we are summing up its results. The week started at 1.2170 and ended at 1.2048. Thus, despite Friday's growth, the pair significantly fell during the week, by more than 100 points. Thus, the US dollar continued to strengthen. And from our point of view, it strengthened for only one reason - a technical one. We have repeatedly said that there should be corrections even on strong trends. Now we are seeing such a correction against the upward trend. Any to choose from: a 3-month or 10-month. And since the current movement has the status of a correction, then after it, in theory, the upward movement should resume. It could happen soon, or it could happen in a couple of months. It can start out of the blue, it can start after the Congress and the Senate approve a new package of stimulus measures for the American economy, it can start when this package begins to take effect. Thus, we still keep the option of an upward trend in mind.

Let's go back to summing up the results. Several macroeconomic reports were published in the European Union and not a single interesting and important fundamental event occurred. The European Union is again in the shadow of the United States, where much more important information comes from. The eurozone published the index of business activity in the manufacturing sector, which was 54.7, as well as the unemployment rate, which was 8.3%. These data could be considered positive, as there was no deterioration compared to the previous period. But these reports are not important now. Business activity in the manufacturing sector, in principle, does not cause any concern. As we have mentioned many times, the service sector suffers the most in the context of a pandemic and quarantine. Thus, it was the business activity in the production sector that could make traders react. However, before this indicator was published, on Tuesday the report on the EU GDP in the fourth quarter was released in the first estimate. From our point of view, this is a very important indicator, and it turned out to be better than the forecast values. Analysts predicted a fall in the European economy by at least 1%, and a high of 2.2%. However, in reality, the economy shrank by only 0.7%, which is good news. And a report on business activity in the service sector was published on Wednesday, which did not change much compared to December and reached 45.4. Since the value did not grow much, did not fall much and remained below the 50.0 level, the traders rightly judged that nothing had changed. A more important report for the eurozone was published on the same day. We are talking about the inflation rate for January, which unexpectedly increased by up to 0.9% in annual terms. The forecasts were known in advance (+0.6%), but nevertheless, the consumer price index jumped from a value of -0.3% to a value of +0.9% in a month. Whatever the reasons, this is very good news for Europe. The report on retail sales was released on Thursday, which increased in December compared to November by 2.0%, which is already good, but slightly fell short of the forecast values. And this was the latest report from the European Union this week.

Now let's talk about a more important factor. How the market reacted to the EU macroeconomic reports. In short, they didn't. Moreover, it is understandable that the data on business activity or retail sales were ignored, but why did they ignore the reports on GDP and, most importantly, inflation?! These are very important reports and their meanings were unexpected for traders. One way or another, the euro continued to fall, so it is easy to conclude that the markets ignored all the reports from Europe. Thus, macroeconomics" remains out of favor with traders. The reason for this can only be our hypothesis regarding more important and significant fundamental factors, which simply overlap the simple and ordinary macroeconomics. In previous articles, we have already talked about the fact that there are two important fundamental factors: "the balance of power between the European and American economies" and "a new stimulus package for the US economy." Market participants pay the most attention to these factors. Moreover, it is even better to say that large and institutional traders do, and not ordinary traders. That is why ordinary statistics are now simply not taken into account (with rare exceptions). Thus, we recommend tracking changes in more global factors than inflation and GDP.

What should everyone do with this? First, trade exclusively by technique and not try to guess the reversals of the pair, especially global ones. Second, to closely monitor the topic on a new stimulus package for the US economy. If it is approved and adopted, then, with a high degree of probability, the dollar will fall by another 500-600 points in the near future. New hundreds of billions of dollars will simply pour into the US economy, which will simply increase the supply of this currency in the foreign exchange market. Third, each fundamental hypothesis should be treated as a hypothesis and not as a fait accompli. Therefore, technical confirmation is required. At the moment, the EUR/USD pair, according to the Ichimoku indicator system, has settled above the critical Kijun-sen line. Therefore, we believe that the pair has already made a big step towards a new upward trend on Friday. Of course, there is no need to get ahead of ourselves. Bulls still need to overcome the Senkou Span B line, near which attempts to break the current trend often end. Nevertheless, the first step to moving up has been made.

Recommendations for EUR/USD:

For long positions:

On the 4-hour timeframe, the EUR/USD pair may have started a new upward trend. Most likely, following Friday's growth, at least a slight downward pullback will be required, afterwards the pair will likely strive for the Senkou Span B line (1.2120), to which there are still 80 points. This is a perfectly achievable target for the next two trading days. And you can try to reach it. You are advised to trade bullish as long as the price is above the Kijun-sen line.

For short positions:

You can open short positions when the price has finally settled below the critical line with the initial target at the support level of 1.1943. In this case, the downward trend may try to resume. But much will also depend on the global fundamental factors that we mentioned above.

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EUR/USD. Failed Nonfarm and important Democratic victory in the Senate

Trading 06 Fév 2021 Commentaire »

The bears of the EUR/USD pair renewed their two-month low on Friday, surpassing the strong support level of 1.2000, which corresponds to the lower line of the Bollinger Bands indicator on the daily chart. But de facto the breakout turned out to be false: buyers seized the initiative during Friday's US session and returned the price to the previous day's opening, that is, to the 1.2035 level. Of course, such price dynamics is primarily due to fundamental factors, which we will discuss below. But from a technical point of view, the support level of 1.2000 confirmed its reliability: as soon as the pair fell below this target, the downward momentum began to gradually fade as traders began to take profits. The initiative was seized by the EUR/USD bulls a little later, which managed to turn the tide in their favor. Therefore, despite the onslaught of dollar bulls, it is too early to talk about a trend reversal. In addition, the dollar has lost several fundamental trump cards.

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First of all, the January Nonfarm report turned out to be disappointing. Almost all components of the report came out in the red zone (except for the unemployment rate), and the previous month's indicators were revised downward. Thus, the number of people employed in the non-agricultural sector increased by only 49,000 in January, with a rather weak forecast of 85,000. The December indicator was revised downward, and quite significantly: if initially it was reduced by 140,000, then according to the updated data in December, the number of employees decreased by 227,000. A similar situation has developed in the private sector of the economy. The January result is expressed in a slight increase of 6,000 jobs, while the December result was revised to -204,000 (from an initial estimate of -98,000). In the manufacturing sector of the economy, the growth rate of the number of employed for the first time since April 2020 went into the negative area (-10,000). Average hourly earnings slightly increased, but again - weaker relative to preliminary forecasts. For example, the indicator increased by only 0.2% on a monthly basis.

In response to this release, the US dollar index sharply fell - in a matter of hours, the indicator collapsed from 91.48 to a target of 91.06. Major dollar pairs behaved accordingly. The greenback showed weakness against the Canadian dollar, although the "Canadian Nonfarm" was even worse: unemployment in the country jumped to 9.4% (from the previous value of 8.9%), and the number of employed decreased by 212,000 - this is the worst result since last spring, when Canada was at the peak of the coronavirus crisis. However, the dollar has weakened against the loonie.

The euro-dollar pair followed the general trends, returning to the area of the 20th figure. The threat of a trend reversal has passed (at least in the medium term), since now traders will treat the 1.2000 support level with greater caution, taking profits when approaching this target. There is no doubt that many investors bet on a further decrease in EUR/USD, as indirect macroeconomic indicators did not foreshadow such a failed Nonfarm. For example, the growth rate of initial applications for unemployment benefits has been declining for the third consecutive week - this indicator came out in the green zone, at around 779,000 (the best result since the beginning of January). Therefore, the latest results of the Nonfarm report have become a kind of cold shower for dollar bulls.

In addition, the safe dollar has ceased to be in high demand for another reason. The market has eased concerns about the fate of Biden's "America's Salvation Plan". The $1.9 trillion bill has received the green light for approval. Let me remind you briefly that until now the Democrats depended on the Republicans in this matter, since the Senate required the approval of the super-majority (i.e. 60 senators out of 100). Democrats are known to have 50 votes + the vote of Vice President Kamala Harris. It was not possible to reach an agreement with representatives of the Republican Party, so the White House decided to use a legislative mechanism called "reconciliation.

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For this mechanism to come to fruition, it was necessary to pass a budget resolution, which in turn had to be approved by both houses of Congress by a simple majority. And if in the lower house the resolution was approved without any problems (although two Democrats voted against), then there were certain doubts about the Senate. For example, only one debate on this issue in the upper chamber lasted more than 15 hours. The preliminary negotiations reached an impasse, and the votes were divided equally: 50-50. The vice-president used her decisive vote and supported her fellow party members - the Democrats. Now, Democratic officials can approve the nearly $2 trillion aid package with a simple majority in both the House of Representatives and the Senate. This is expected to happen within the next two weeks. Against the background of such news, the dollar found itself under additional pressure, since the greenback was used primarily as a protective tool.

Thus, the fundamental picture for the EUR/USD pair has significantly changed. The bears were unable to develop the downward trend, while the bulls actually held the main support level at 1.2000. Given the problems of the euro (the political crisis in Italy, the ECB's dovish comments, slowing inflation, the epidemiological situation, etc.), the pair is unlikely to be able to demonstrate large-scale growth. However, buyers can look forward to testing the resistance level of 1.2110 - this is the middle line of the BB indicator on the daily chart. It is too early to talk about higher prices.

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Dollar Drifts Lower Against Major Currencies

Trading 06 Fév 2021 Commentaire »

The U.S. dollar lost ground against peers on Friday, weighed down data showing a smaller than expected increase in job additions in the U.S., and rising prospects of additional fiscal stimulus from Joe Biden administration.

Data released by the Labor Department showed a modest rebound in employment in the month of January. The report said non-farm payroll employment edged up by 49,000 jobs in January after plunging by a revised 227,000 jobs in December.

Economists had expected employment to rise by about 50,000 jobs following the loss of 140,000 jobs originally reported for the previous month.

The Labor Department also said the unemployment rate slid to 6.3% in January from 6.7% in December. The unemployment rate was expected to come in unchanged.

A report released by the Commerce Department on Friday showed the U.S. trade deficit narrowed in the month of December, as the value of exports jumped by more than the value of imports.

The Commerce Department said the trade deficit narrowed to $66.6 billion in December from a revised $69.0 billion in November.

Economists had expected the trade deficit to shrink to $65.7 billion from the $68.1 billion originally reported for the previous month.

The dollar index slid to 90.99, giving up nearly 0.6% from previous close.

The dollar weakened to $1.2047 against the Euro, losing about 0.7%.

Against Pound Sterling, the dollar was weaker at $1.3737, after closing at $1.3671 a day earlier. On Thursday, Bank of England cooled hopes for taking the bank rate into negative territory sooner and the progress in vaccine distribution spurred hopes for a gradual economic recovery.

Meanwhile, house prices fell 0.3% in January from a month earlier as the market appeared to lose momentum following a stimulus-fueled surge last year, according to mortgage lender Halifax.

The Yen was firmer at 105.40 a dollar, gaining from 105.55. Japan's leading index declined in December after rising in the previous month, preliminary data from the Cabinet Office showed on Friday.

The leading index, which measures the future economic activity, fell to 94.9 in December from 96.1 in November. In October, the reading was 94.2.

The AUD-USD pair was last seen at 0.7674, down nearly 1% from previous close of 0.7600.

Against Swiss franc, the dollar was weaker, fetching CHF 0.8991 a unit, nearly 0.6% less than CHF 0.9042 on Thursday.

The Loonie firmed up to 1.2765 a dollar from 1.2827, riding on higher crude oil prices.


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Oil Futures Settle Higher For 5th Straight Day, Gains 9% In Week

Trading 06 Fév 2021 Commentaire »

Crude oil prices moved higher on Friday on hopes energy demand will increase thanks the vaccination drive picking up momentum, and on output cuts by the oil cartel.

With the Organization of the Petroleum Exporting Countries and allies agreeing to cut crude output this month and the next, and Saudi Arabia deciding to unilaterally cut production by 1 million barrels per day, oversupply concerns have faded a bit.

Oil prices continued to be supported by recent data from the Energy Information Administration (EIA) that showed U.S. crude inventories dropped by 994,000 barrels last week to 475.7 million barrels, their lowest since March.

West Texas Intermediate Crude oil futures for March ended higher by $0.62 or about 1.1% at $56.85 a barrel, after rising to $57.29. WTI crude futures gained about 9% in the week.

Brent crude futures, which ended the session with a gain of 0.85% at $59.34 a barrel, were trading at $59.47 a barrel a little while ago.

A report from Baker Hughes said the number of active U.S. rigs drilling for oil increased by 4 to 299 this week, rising for an 11th successive week. The total active U.S. rig count rose by 8 to 392.


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Treasuries Close Firmly Negative Following Early Volatility

Trading 06 Fév 2021 Commentaire »

After seeing considerable volatility early in the session, treasuries drifted lower over the course of the trading day on Friday.

Bond prices moved to the downside going into the close, ending the day firmly in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.1 basis points to 1.170 percent.

The ten-year yield closed higher for the sixth time in the past seven sessions, reaching its highest closing level since mid-March.

The lower close by treasuries came as a closely watched Labor Department showing only modest job growth in January added to optimism about more fiscal stimulus, reducing the appeal of safe havens like bonds.

The report said non-farm payroll employment edged up by 49,000 jobs in January after plunging by a revised 227,000 jobs in December.

Economists had expected employment to rise by about 50,000 jobs following the loss of 140,000 jobs originally reported for the previous month.

Meanwhile, the Labor Department also said the unemployment rate slid to 6.3 percent in January from 6.7 percent in December. The unemployment rate was expected to come in unchanged.

The unexpected drop in the unemployment rate came as household employment rose by a solid 381,000 persons compared with a 206,000-person decrease in the size of labor force.

Despite the decrease, Andrew Hunter, Senior US Economist at Capital Economics, said the relatively high unemployment rate "suggests there is still some way to go in the labor market recovery."

"But, as the vaccine rollout allows the economy to reopen and demand is given an additional lift from continued fiscal support, we expect the unemployment rate to reach 4.5% by the end of this year," Hunter said.

The release of the reports comes as Senate Democrats have taken the first steps towards passing a relief package without Republican support, although the Biden administration is still hoping for a bipartisan bill.

The economic calendar for next week is relatively quiet, although traders are likely to keep an eye on reports on weekly jobless claims, consumer prices and consumer sentiment along with a speech by Federal Reserve Chair Jerome Powell.

Bond trading may also be impacted by reaction to the results of the Treasury Department's auctions of three-year and ten-year notes and thirty-year bonds.


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*U.S. Consumer Credit Climbs By $9.7 Billion In December

Trading 06 Fév 2021 Commentaire »

U.S. Consumer Credit Climbs By $9.7 Billion In December


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Gold Futures Settle Notably Higher As Dollar Retreats

Trading 06 Fév 2021 Commentaire »

Gold prices moved higher on Friday amid rising optimism about U.S. stimulus and on data showing a smaller-than-expected increase in non-farm payrolls last month.

The dollar's weakness contributed significantly to the bullion's rise. The dollar index dropped to 91.00, sliding nearly 0.6% from previous close.

Gold futures for April ended up $21.80 or about 1.2% at $1,813.00 an ounce. Gold futures shed 2% in the week.

Silver futures for March closed higher by $0.785 or about 3% at $27.019 an ounce. Silver futures gained 0.4% in the week.

Copper futures for March settled at $3.6260 per pound, gaining $0.0730.

Data released by the Labor Department showed a modest rebound in employment in the month of January. The report said non-farm payroll employment edged up by 49,000 jobs in January after plunging by a revised 227,000 jobs in December.

Economists had expected employment to rise by about 50,000 jobs following the loss of 140,000 jobs originally reported for the previous month.

The Labor Department also said the unemployment rate slid to 6.3% in January from 6.7% in December. The unemployment rate was expected to come in unchanged.


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