EUR/CHF. What’s wrong with the franc?

Trading 04 Mar 2021 Commentaire »

The euro-franc cross pair is breaking records: in just three trading days, the price jumped by almost 200 points, reaching almost two-year highs. The pair is currently trading in the middle of the 11th figure - the last time the price was at such heights was back in the early summer of 2019. Such a sharp jump is due to both the strengthening of the euro and the weakening of the Swiss franc. Such multidirectional dynamics of currencies provoked strong volatility, although the EUR/CHF cross shows, as a rule, phlegmatic trading. Given the uncertain situation for dollar pairs (the greenback reacts to Powell's speech, in anticipation of the release of Nonfarm and the adoption of a package of assistance to the US economy), the EUR/CHF cross can be considered as a "temporary alternative". Dollar bulls almost have no impact here, and the focus is on slightly different fundamental factors.

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The driver of the EUR/USD growth is, of course, the franc, which is getting cheaper throughout the market. Both the internal macroeconomic reports and the external fundamental background play against the "chief". As you know, the Swiss currency is a protective asset that is in demand in troubled times - that is, during periods of growing anti-risk sentiment in the market. The main protective instrument is the dollar, but if we talk about cross-pairs, the franc shares the palm with the yen.

Meanwhile, the external fundamental picture does not contribute to the growth of the Swiss currency. Overall optimism in European markets is growing mainly due to the vaccination of the EU population against coronavirus. The European Commission has set a goal to vaccinate about 70% of the adult population of the European Union by the summer of this year. Despite the fact that there are only three months left until June, Brussels expects a significant increase in the rate of vaccination in March. Against this background, the key stock indexes of the European region are showing positive dynamics – in particular, they ended yesterday's session in positive territory.

Macroeconomic reports are also not on the side of the franc. Thus, Swiss inflation continues to be in negative territory, being the headache of the SNB. The consumer price index in February came out at -0.5% (year-on-year), that is, at the same level as in January. At the same time, most analysts were more optimistic, expecting growth to -0.3%. On a month-on-month basis, consumer prices rose 0.2%, following an almost equally weak 0.1% increase in the previous month. At the same time, the overall forecast was at the level of +0.4%.

Swiss National Bank Chairman Thomas Jordan also exerts background pressure on the franc. In the course of his few speeches, he regularly voices dovish theses. First of all, we are talking about currency intervention, which the SNB has repeatedly resorted to. Talk of cutting interest rates further into negative territory has subsided somewhat recently, especially after Washington accused Switzerland of manipulating the national currency. The Swiss central bank has rejected these accusations and continues to insist that the value of the franc is inflated. In addition to the problems mentioned above, there are several more that Jordan focuses on. In particular, this is the low profitability of companies and the associated "caution in hiring new employees". This problem is exacerbated by the coronavirus crisis, which has not spared Switzerland. Thus, the central bank makes a causal link between the coronavirus crisis, the expensive franc, the profitability of enterprises, unemployment and consumer activity, which ultimately affects the dynamics of inflation. Such rhetoric of the head of the SNB puts background pressure on the franc.

But this week's European reports supported the single currency. In particular, PMI indices were released in key European countries this week. These indicators confirmed a certain trend: the manufacturing sector remains afloat and even demonstrates a certain optimism, while the service sector is still a weak link. This is not surprising, since quarantine restrictions, which only intensified at the beginning of the year, hit the service sector first of all. But what is characteristic: the final estimates for February have been revised upward relative to the initial data. And above all, this applies to the service sector (with the exception of the German index).

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From a technical point of view, the euro/franc pair is in a rising channel. The pair is showing a pronounced bullish trend, which is confirmed by the Ichimoku indicator, which has formed its strong Parade of Lines signal. Also, the price is testing the upper line of the Bollinger Bands indicator on all higher timeframes, which is in the extended channel. The trend indicators are confirmed by the MACD oscillator, which is in the oversold area. The support level is the Tenkan-sen line on the daily chart and the 1.1000 level. But the round mark is the closest growth target, the psychologically important 1.1200 (one and a half year high). In this price area, it is advisable to take profits and take a wait-and-see attitude.

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Analytics and trading signals for beginners. How to trade GBP/USD on March 5? Analysis of Thursday. Getting ready for Friday

Trading 04 Mar 2021 Commentaire »

Hourly chart of the GBP/USD pair

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The GBP/USD pair was trading like a nightmare on Thursday. There were several signals that could bring a lot of losses, but with careful consideration of the situation, such a scenario could be avoided. In the Wednesday article, we advised you to consider both buy and sell signals, since traders had two trend lines at their disposal. The small, upward trend line was canceled almost immediately, but even earlier, following the release of the previous day's article, the first sell signal was formed (circled in the first circle). The MACD indicator turned to the downside, so novice traders could open short positions. According to our recommendations, the targets were located at a distance of 40-50 points from the entry point. The entry point is around the 1.3969 level. The price dropped 53 points from this level, so the first signal could be closed by Take Profit or in manual mode if novice traders monitored the market at night. The price crossed the rising trend line when this signal was being processed, the upward trend was canceled and so only sell signals should be considered. Such a signal appeared in the morning (encircled by the second circle) and it turned out to be false, since the price did not continue the downward movement after it was formed. However, the pair went 23 points from the entry point (1.3939) to the lowest point within this movement, so if traders set Stop Loss to breakeven in time, they could leave this deal without loss. If we didn't have time, then the losses would have reached 23 points (leave the deal by the reversal of the MACD indicator up). The last two candles in the chart are two more signals, buy and sell, which we did not even bother to mark. The first buy signal is to overcome the downward trend line, however, the price has already gone up about 75 points when it was formed, so the signal is weak and we do not work it out. Immediately after that, the MACD indicator turned down, forming a sell signal, but at this point the downward trend had already been canceled since the downward trend line was surpassed, so we also did not work out this signal. As a result, novice traders could earn 20-40 points on Thursday.

The UK construction PMI was released on Thursday, which supported the British pound. It was after this report that the pair began to move up by 75 points. The quotes started to fall after Federal Reserve Chairman Jerome Powell's speech began.

In addition to macroeconomic reports, US Treasury Secretary Janet Yellen will also deliver a speech on Friday. She might say something interesting, just like Powell today. Thus, the market might significantly react, so you need to be ready to close positions or brace for strong movements and sharp reversals when her speech is about to begin. However, the Nonfarm Payrolls report can also provoke serious movements.

Possible scenarios on March 5:

1) Novice traders should not trade the pound/dollar pair on Friday. . Both trend lines have been overcome, so there is no trend right now. Moreover, Thursday's trading showed that the markets are somewhat erratic, so the direction of movement often changes, and tomorrow, due to reports and Yellen's speech, the storm may intensify.

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 trend lines 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 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 lines (channels and trend lines).

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

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

Treasury Reveals Details Of 3-Year, 10-Year Note & 30-Year Bond Auctions

Trading 04 Mar 2021 Commentaire »

Amid an increased focus on the bond markets, the Treasury Department on Thursday announced the details of this month's auctions of three-year and ten-year notes and thirty-year bonds.

The Treasury revealed its plans to sell $58 billion worth of three-year notes, $38 billion worth of ten-year notes and $24 billion worth of thirty-year bonds.

The results of the three-year note auction will be announced next Tuesday, the results of the ten-year note auction will be announced next Wednesday and the results of the thirty-year bond auction will be announced next Thursday.

Last month, the Treasury sold $58 billion worth of three-year notes, $41 billion worth of ten-year notes and $27 billion worth of thirty-year bonds.

The three-year note auction attracted average demand, while the ten-year note and thirty-year bond auctions attracted below average demand.


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NZDUSD challenges major channel support

Trading 04 Mar 2021 Commentaire »

NZDUSD is trading at 0.7185. Price remains inside the long-term upward sloping channel but after a long time price is now challenging the lower channel boundary. It will be a sign of weakness if price breaks below this channel.

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Blue lines - bullish channel

NZDUSD is in danger of providing a bearish signal that could affect price negatively for the next few weeks. So far price continued making higher highs and higher lows inside the bullish channel. Failure to hold above 0.7150 could imply that a bigger correction is coming. The bearish divergence in the RSI that we mentioned in previous posts makes us believe that the chances of a bigger pull back are higher than continuing the up trend. Bulls need to be very cautious.

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EURUSD breaks below short-term support

Trading 04 Mar 2021 Commentaire »

EURUSD is trading again below 1.20 and has broken recent low. Price action implies that more downside should be expected over the coming sessions and price could fall as low as 1.1860 which is our first target.

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The inability from bulls to recapture 1.2150 and the reversal below 1.20 are both signs of weakness. Price broke below the recent low and we now expect confirmation of this bearish signal by breaking below the February low at 1.1951. Breaking below 1.1950 will increase chances of reaching our target of 1.1860 which is the 100% extension of the recent downward move from 1.2242 to 1.1991. Bears are in control of the trend.The material has been provided by InstaForex Company - www.instaforex.com

U.S. Factory Orders Jump More Than Expected In January

Trading 04 Mar 2021 Commentaire »

Partly reflecting a spike in orders for transportation equipment, the Commerce Department released a report on Thursday showing a bigger than expected increase in new orders for U.S. manufactured goods in the month of January.

The Commerce Department said factory orders surged up by 2.6 percent after jumping by an upwardly revised 1.6 percent in December.

Economists had expected factory orders to advance by 2.1 percent compared to the 1.1 percent increase originally reported for the previous month.

The report said orders for durable goods shot up by 3.4 percent in January, led by the 7.7 percent spike in orders for transportation equipment. Orders for non-defense aircraft and parts soared by 389.9 percent.

Orders for non-durable goods also showed a notable increase, jumping by 1.9 percent in January following a 2.0 percent surge in December.

The Commerce Department also said shipments of manufactured goods climbed by 1.9 percent in January following a 2.1 percent increase in December.

Inventories of manufactured goods showed a more modest increase, inching up by 0.1 percent in January after rising by 0.3 percent in December.

The inventories-to-shipments ratio subsequently dipped to 1.36 in January from 1.38 in the previous month.


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*U.S. Factory Orders Jump 2.6% In January

Trading 04 Mar 2021 Commentaire »

U.S. Factory Orders Jump 2.6% In January


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U.S. Labor Productivity Tumbles 4.2% In Q4, Less Than Previously Estimated

Trading 04 Mar 2021 Commentaire »

A report released by the Labor Department on Thursday showed U.S. labor productivity plunged by less than initially estimated in the fourth quarter of 2020.

The Labor Department said labor productivity tumbled by 4.2 percent in the fourth quarter compared to the previously reported 4.8 percent nosedive. Economists had expected the slump in productivity to be revised to 4.7 percent.

The revision to productivity, a measure of output per hour, reflected an upward revision to output and a downward revision to hours worked.

Output shot up by 5.5 percent compared to the previously reported 5.3 percent jump, while hours worked soared by 10.1 percent compared to the previously reported 10.7 percent spike.

Despite the revision, the steep drop in productivity in the fourth quarter still reflected a substantial downturn following a revised 4.2 percent surge in productivity in the third quarter.

"Looking ahead, we expect productivity to strengthen in coming quarters and remain well supported as the economy experiences a mini boom in activity and the labor market lags to overall economic recovery," said Lydia Boussour, Lead U.S. Economist at Oxford Economics.

She added, "Stronger productivity gains should buffer companies' bottom lines against rising input costs and further boost profit growth this year amid an expected surge in companies' sales."

The report also showed the spike in unit labor costs in the fourth quarter was downwardly revised to 6.0 percent from the previously reported 6.8 percent. The revised data was expected to show a 6.7 percent jump in labor costs.

The downward revision to labor costs reflected the revision to productivity as well as a downward revision to hourly compensation, which climbed by 1.5 percent compared to the previously reported 1.7 percent increase.

The sharp increase in labor costs in the fourth quarter reflected a significant rebound from the revised 9.6 percent nosedive in the third quarter.


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U.S. Jobless Claims Inch Up Less Than Expected To 745,000

Trading 04 Mar 2021 Commentaire »

Ahead of Friday's more closely watched monthly employment report, the Labor Department released a report on Thursday showing a modest increase in first-time claims for U.S. unemployment benefits in the week ended February 27th.

The report said initial jobless claims inched up to 745,000, an increase of 9,000 from the previous week's revised level of 736,000.

Economists had expected jobless claims to rise to 750,000 from the 730,000 originally reported for the previous week.

The uptick in jobless claims came after the drop seen in the previous week pulled claims down to their lowest level since the week ended November 28th.

Meanwhile, the Labor Department said the less volatile four-week moving average fell to 790,750, a decrease of 16,750 from the previous week's revised average of 807,500.

The report said continuing claims, a reading on the number of people receiving ongoing unemployment assistance, also slid by 124,000 to 4.295 million in the week ended February 20th.

The four-week moving average of continuing claims dropped to 4.448 million, a decrease of 99,000 from the previous week's unrevised average of 4.547 million.

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

Economists currently expect employment to increase by 182,000 jobs in February after rising by 49,000 jobs in January. The unemployment rate is expected to hold at 6.3 percent.


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March 4, 2021 : GBP/USD Intraday technical analysis and trade recommendations.

Trading 04 Mar 2021 Commentaire »

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Recently, the GBPUSD pair looked overbought while consolidating sideways around the price-levels of 1.3700.

Sideway movement with slight bullish tendency was recently demonstrated while approaching these price levels around 1.3700-1.3750.

Thats's why, Bearish pullback was recently expressed. However, the GBP/USD pair has failed to maintain sufficient bearish momentum.

Instead, Another temporary bullish movement was expressed above the previous WEEKLY High (1.3700).

Further upside movement was expected towards the upper limit of the current movement channel around 1.4100-1.4150 where bearish rejection and a possible SELL Entry are expected to be present especially with the recent overbuying status of the pair.

Short-term outlook can turn into bearish if only the GBP/USD pair could break below and maintain movement below 1.3900 which corresponds to a recent prominent KeyZone.

If so, a quick bearish decline towards 1.3400 would be expected.

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