NZDUSD reverses lower as expected

Trading 23 Nov 2020 Commentaire »

In our last analysis we noted the bearish divergence in the RSI of NZDUSD. We warned bulls that a pull back was close by and this week started with Dollar strength pushing NZDUSD towards the key support of 0.6875. So far price has made a low at 0.6892 and as long as support holds, bulls could make a come back.

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Blue lines -bullish channel (broken)

Red rectangle - target if green support fails to hold

Green rectangle- short-term support

Red line - bearish divergence

NZDUSD has broken the bullish channel. The RSI is providing bearish divergence signs. The most probable scenario is for price to break below support at 0.6875 and head towards the first target area of 0.68. At current market conditions we do not prefer long positions. A pull back towards 0.68 and maybe lower is highly likely, so we prefer to be neutral if not bearish.

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UK Household Finance Perceptions At 6-month Low

Trading 23 Nov 2020 Commentaire »

UK households' finance perceptions weakened to a six-month low in November as savings and earnings declined sharply, survey data from IHS Markit and Ipsos MORI showed on Monday.

The household finance index, which measures households' overall perceptions of financial well-being, fell to 40.0 from 40.8 in October.

The decline signaled a more intense strain on the household finances amid a second lockdown in England and ongoing restrictions across the rest of the UK, IHS Markit said.

The outlook remained negative in November, with UK households on average expecting their financial situation to worsen in 12 months' time, though the level of pessimism was the weakest since March, the survey added.

Households' disposable income fell the most since May and at a sharp rate as suggested by cash availability and credit demand. As households dipped into savings to finance some purchases and compensate falling incomes, the level of savings dropped sharply at the quickest rate in seven years.

Further, the income from employment fell faster to its lowest level since July amid business activity declining in workplaces at the steepest rate in four months. The trend may have been partly driven by renewed use of furlough due to business closures in the hospitality and retail sectors, IHS Markit said.

That said, job perceptions recovered further from April's survey low and households were the least pessimistic since March. But the index measuring job security remained noticeably below the 50 mark.

The extension of the furlough scheme to March 2021 appears to have helped to moderate the degree of job insecurity among UK households, IHS Markit said.

The survey also found that around a quarter of surveyed households foresee the next move by the Bank of England to be a rate cut at some time, despite the record low base rate at present.

"The latest data paint a worrying picture for household finances across the UK, with no sign yet of a recovery from the blow caused by the pandemic," Lewis Cooper, economist at IHS Markit, said.

"The easing of lockdown measures will likely elevate some of the strain we saw in November, but until the economic recovery becomes more sustainable it is unlikely households will see much improvement in their financial situation."


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Analytics and trading signals for beginners. How to trade EUR/USD on November 24? Review of Monday deals. Getting ready for

Trading 23 Nov 2020 Commentaire »

1-hour chart of EUR/USD

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In the first half of the trading day, EUR/USD resumed its downward move, surpassed 1.1890 from which it had rebounded three times earlier. Afterwards, the price climbed to 1.1903 which remains the upper border of the trading range. Then, it rebounded in an expected move and took a nosedive. Thus, the currency pair again reversed in the opposite direction at one of the borders of the trading range. I urge beginners not to be confused about this slump because it was not caused by any serious fundamental event. At least, in the recent few hours nothing extraordinary was reported by the mass media. Indeed, what could actually have happened to cause the US dollar gain of 100 pips in 2 hours? I guess this is just the market response to testing the upper border of the trading range. The thing is that most retail traders and large investors rushed to sell the euro at near the upper border of the channel. This accounts for a serious reinforcement of the US dollar. Well, there are no other reasons behind such moves. Perhaps, something will come into play later ...

In the first day of the trading week, the economic calendar contains a few important reports. For example, the eurozone's services PMI fell steeper than expected to 41.3. For your reference, any reading below 50 indicates contraction in the sector. No wonder, a slowdown in any sector stalls expansion of the whole national output. Besides, the eurozone's manufacturing PMI also declined a bit. Unlike the EU, the US reported upbeat data. The US services PMI grew to 57.7 and the manufacturing PMI rose to 56.7. To sum up, these publications today lie behind a slump of the single European currency and growth of the US dollar. Indeed, such data underscores not only trends in business activity but also indicate changes in the US and EU economies in the short term.

On Tuesday, the economic calendar is nearly empty for the EU. Germany is due release a few reports that is one country of 27 EU members. Nevertheless, metrics on Germany's economy could shed light on the overall background of the EU economy. Besides, the US also will not provide any news. Moreover, there is no burning issue to be of vital importance to market participants. The election topic is losing its influence to market sentiment. Investors are less interested in the coronavirus information than earlier. The veto on the 7-year EU budget and the recovery fund is not so thorny because the EU policymakers have plenty of time to settle it.

On November 24, the following scenarios are possible

1)Long positions on EUR/USD still make sense. Today the bulls were trying to push the price above the level of 1.1903, but their efforts were in vain. In means that traders should refrain from buying EUR. Before opening long positions on EUR/USD, it is recommended to wait until a new uptrend emerges again or a downtrend is evidently over.

2)Trading amid the downtrend is reasonable at present because the bias reversed downwards a few days ago. Today the MACD indicator formed a sell signal with a minor delay (it is marked by a circle on the chart). However, even in this case beginners have gained a profit of nearly 55 pips now. I guess this is a decent profit level. So, it would be better to close long deals. New long positions should be opened after the pair corrected upwards a bit.

What's on the chart:

Support and Resistance levels are the levels that are targets when opening buy or sell orders. Take Profit levels can be placed near them.

Red lines are channels or trend lines that display the current trend and show which direction it is preferable to trade now.

Up / down arrows show whether the pair should be traded up or down when reaching or overcoming particular obstacles.

MACD indicator (10,20,3) - a histogram and a signal line. When they are crossed, this signals a market entry. It is recommended for use in combination with trend lines (channels, trend lines).

Important speeches and reports in the economic calendar can greatly influence the movement of the currency pair. Therefore, during their release, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.

Beginners in the forex market should remember that every trade cannot 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

UK Private Sector Contracts Most Since May

Trading 23 Nov 2020 Commentaire »

The UK private sector contracted the most in six months in November due to the fastest reduction in service sector output since May amid temporary closures among leisure and hospitality companies, flash survey results revealed Monday.

The IHS Markit/Chartered Institute of Procurement & Supply composite output index dropped to 47.4 in November from 52.1 in October.

A score below 50 indicates contraction. However, the score was above economists' forecast of 42.5.

The service sector contracted notably in November as the second lockdown weighed heavily on leisure and hospitality sector. In contrast, manufacturing production expanded at a robust pace in November and the rate of growth accelerated since the previous month.

The services Purchasing Mangers' Index slid sharply to 45.8 from 51.4 in the previous month. The score was seen at 52.3.

Meanwhile, the manufacturing PMI rose to 55.2 in November from 53.7 a month ago. The expected reading was 53.3.

Demand from export markets, especially from China and the EU underpinned the manufacturing sector growth.

According to Markit, the underperformance of the service economy relative to the manufacturing sector was the widest in almost 25 years of data collection.

The deterioration in the overall private sector was less severe than reported during the first round of restrictions back in the spring, James Smith, an ING economist said.

For 2021, the outlook looks better, albeit still mixed. Initial supply chain disruptions from Brexit remain a clear possibility, the economist said. While this is unlikely to deliver a Covid-19 style hit to GDP, it will drag on the recovery.

Meanwhile, the news on vaccines offers a clear upside to 2021, but for the economy, a lot will also hinge on how and when the unprecedented furlough support is unwound, Smith added.

Total new work received by UK private sector firms decreased for the second month. Job shedding accelerated across the private sector, with the rate of decline in staffing numbers the steepest for three months.

Looking ahead, private sector companies remain optimistic that business activity will increase during the next 12 months. The degree of optimism was the strongest since March 2015.


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EUR / USD: euro remains positive, while dollar prepares for harsh winter

Trading 23 Nov 2020 Commentaire »

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The US dollar starts the week on a minor note, continuing to slide down, close to the important support near 92 points.

The pressure on the protective greenback is coming from positive news about the COVID-19 vaccine, which allays fears of economic restrictions to curb the spread of the virus.

Moncef Slaoui, the chief scientific adviser for Operation Warp Speed, said on Sunday that the FDA may approve Pfizer's vaccine candidate drug in mid-December, and the country's first vaccination will begin the day after that.

On Monday, it was announced that the COVID-19 vaccine, developed by AstraZeneca in partnership with Oxford University, is 90% effective when patients are first given half the vaccine dose and then the full dose. In addition, it is reported that the drug can be stored without special refrigeration equipment.

Against this background, the USD index dipped to its lowest values since the beginning of September - around 92 points.

A vaccine that provides adequate protection against infection is expected to fuel the global recovery and boost stocks and other risky assets. This outlook undermines the dollar, which tends to win in times of heightened uncertainty.

However, market participants can either overestimate the speed of vaccine availability or underestimate some of the risks associated with it, said Tim Courtney of Exencial Wealth Advisors.

"Even if an effective vaccine appears in the near future, there may be problems with its production and distribution. In addition, a sharp deterioration in the epidemiological situation in the world creates the risks of introducing new lockdowns that will strike the global economy even before the widespread introduction of the COVID-19 vaccine. I doubt that any of these risks are included in the quotes. In my opinion, the market is pricing in a too calm float in the coming months," Courtney said.

Brian Jacobsen of Wells Fargo Asset Management has a similar opinion. According to him, "The news about vaccines is very enthusiastic, and it is quite logical - the sooner we get an effective vaccine against coronavirus, the sooner we will return to normal life. However, the main problem is that first, we have to get through the winter, which can meet us with unpleasant economic surprises."

"Winter is going to be gloomy. According to our estimates, the US economy will contract by 1% in the first quarter of 2021. Substantial growth will follow in Q3-4, amid the success of the new vaccine and the expected response to the epidemic," strategists at JP Morgan said.

Additional pressure on the greenback is exerted by the prospect of maintaining a long period of soft monetary policy on the part of the Federal Reserve System.

"Low real profitability in the United States echoes the weakening of the US currency after the pandemic. Therefore, we believe that the downward trend in USD will continue in 2021," said BNY Mellon strategist John Velis.

Amid market optimism at the start of the week, driven by news related to the COVID-19 vaccine, EUR / USD hit two-week highs around 1.1905.

The euro needs to break the November high at $1.1919 to continue the upward trend.

Danske Bank believes that the main currency pair will trade at high levels in the coming months, but in the longer term, the US will surpass the eurozone.

"According to our estimates, in a three-month perspective, the EUR/USD pair could trade in the 1.2000 region, thanks to a combination of factors such as positive news regarding Brexit, an improvement in the situation around the coronavirus and a revival of the global economy," the bank experts said.

"However, on the horizon of six to twelve months, the pressure on the euro will begin to intensify, including due to the extinction of the credit cycle in China, which supported the national economic recovery and caused export demand from Asia. As a result, in twelve months the euro may weaken to $ 1,1600," they added.

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Pound Spikes Up On Trade Deal Hopes

Trading 23 Nov 2020 Commentaire »

The pound firmed against its major counterparts in the European session on Monday, as news that UK Prime Minister Boris Johnson is considering to intervene in Brexit talks raised optimism about a last ditch deal.

The Telegraph reported that Johnson is planning to speak to European Commission President Ursula von der Leyen this week in an attempt to "clear away final barriers" to a trade deal.

Markets speculate that a UK-EU Brexit deal was getting closer despite uncertainty over key sticking points.

Talks will resume virtually today after members of the EU negotiating team were diagnosed with COVID-19 last week.

European markets advanced on optimism over the possibility of an early rollout of coronavirus vaccine after the Oxford University and British pharmaceutical giant AstraZeneca announced that their vaccine for the novel coronavirus could be around 90 percent effective under one dosing regimen.

The pound appreciated to 1.3381 against the greenback, its highest level since September 2. The pound is seen challenging resistance around the 1.35 region.

The pound rose to near a 2-week high of 138.88 against the yen, from Friday's closing value of 137.92. The pound is likely to challenge resistance around the 140 level.

The GBP/CHF pair hit near a 2-week high of 1.2186, compared to Friday's closing quote of 1.2100. The pound is poised to find resistance around the 1.25 area.

The pound climbed to near a 2-week high of 0.8874 against the euro, from last week's closing value of 0.8919. Next key resistance for the currency is likely seen around the 0.86 region.

Flash survey data from IHS Markit showed that the euro area private sector contracted sharply in November as member countries reintroduced more restrictions to counter the spread of Covid-19 infection.

The composite output index plunged to a six-month low of 45.1 from the neutral 50.0 in October. The score was forecast to fall to 45.8.

Looking ahead, Markit's U.S. flash composite PMI for November is scheduled for release in the New York session.


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Latvia Producer Prices Decline Slows In October

Trading 23 Nov 2020 Commentaire »

Latvia's producer prices declined at a softer pace in October, figures from the Central Statistical Bureau showed on Monday.

The producer price index fell 1.3 percent year-on-year in October, following a 2.1 percent decrease in September.

Among components, prices of electricity, gas, steam and air conditioning supply declined 8.4 percent annually in October and prices for mining and quarrying decreased 2.4 percent.

Meanwhile, prices for manufacturing rose 0.1 percent and those of water supply grew 0.7 percent.

On a month-on-month basis, producer prices rose by 0.2 percent in October.

Domestic market prices fell 0.4 percent monthly in October, while foreign market prices increased by 0.7 percent.


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*Iceland Oct Wage Cost Index +0.7% On Month Vs. +0.8% In September

Trading 23 Nov 2020 Commentaire »

Iceland Oct Wage Cost Index +0.7% On Month Vs. +0.8% In September


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*Iceland Oct Wage Cost Index +7.1% On Year Vs. +6.7% In September

Trading 23 Nov 2020 Commentaire »

Iceland Oct Wage Cost Index +7.1% On Year Vs. +6.7% In September


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*Latvia Oct Producer Prices Up 0.2% On Month

Trading 23 Nov 2020 Commentaire »

Latvia Oct Producer Prices Up 0.2% On Month


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