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SebsCubs

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Victorious Boris Johnson

13.12.2019

Conservatives win

Finally, the victory of the Сonservative party under the leadership of Boris Johnson is confirmed. They have a 43.6% majority, while the Labour party follows with 32.4% and the Liberal Democrats got 11.4%.

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The consequences?

Boris Johnson had previously commented he had a strong agenda for the United Kingdom should he win the election. One of the pillars of his plan was to “get Brexit done” at the soonest and in the best interest of the UK.

For the UK, it means higher stability and a better economic outlook with all the consequences.

For the world, it means stronger GBP against the related currencies.

All of that, of course, takes place if Mr. Johnson does not fail on his intentions.

GBP celebrating the victory

In the meantime, the British pound reacted immediately to the victory of Boris Johnson.


On the weekly chart, it is visible that the price of GBP/USD rose to the area of 1.35 – a height it has never been to since May 2018. And it is testing the August-2018-December-2019 resistance currently. Crossing this barrier would confirm the market’s intention to go even higher.


In the short term, however, we are expecting a certain correction downwards, as confirmed by the Awesome Oscillator. In any case, whether it is going further upwards now or later, the price would need to make a stop at the resistance it is testing now. On the hourly chart, the level of 1.3500 is going to be capping the bullish direction for a while, while 1.3450 will be the support. Crossing the support would mean a deeper correction downwards. Otherwise, we will observe a more sideways movement of the price.

Watch the news and stay informed!
 

SebsCubs

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260 0
Important events this week will bring us

16.12.2019

Time to cool down

Last Friday has brought us some good news – the phase-one trade deal between the US and China was sealed. Although the official ceremony of signing the text and shaking hands will take place in January, both sides already confirmed to the public that the step is taken.

According to the deal, the US commits to reducing certain tariffs and expanding tariffs exemption for the Chinese goods, while China commits to purchasing more of the US goods, with the focus on the farm industry. Apart from a few specifics like an advancement in regulating intellectual property rights, there was little more detail provided on the deal struck.

Hence, although the announced content of the deal made a lot of analysts highly skeptical about the actual positive effect the agreement brings, at least we have some confirmation that things are not going worse in the observable future. As the old proverb says, a weak peace is better than a strong war.
A quiet week ahead

As the US-China deal announcement, the ECB monetary press conference and the UK parliamentary elections all took place last week, this week has little to offer in comparison. Nevertheless, below are some of the noteworthy events you may be interested to watch out for.
Monday of PMIs

Today, the industrial expansion indicators will be announced by France (10:15 MT time(08:15 GMT)), Germany (10:30 MT time(08:30 GMT)), the UK (11:30 TM time (09:30 GMT)) and the US (16:45 MT time (14:45 GMT)). Although not a primary indicator like the GDP, the PMI is also an important evaluation of country’s economy and may have an effect on the respective currencies depending on how the actual indicator stands against the market expectation.
Australia

On Tuesday, Australian financial authorities will publish the monetary policy meeting minutes at 02:30 TM time (00:30 GMT). It will provide details of the last monetary policy meeting and the reasons behind keeping the country interest rate at 0.75%. More importantly, it will provide a sense of the economic outlook and the directions to look at in the future. In addition to that, Thursday will be the day when the country employment change and unemployment rates are announced (02:30 MT time (00:30 GMT)). Therefore, by the end of the week, we will have a more or less complete economic picture of how Australia is closing this year. A positive impression from the releases should strengthen the Australian dollar.
Inflation

A central indicator of economic and money mass expansion, the inflation rate will be announced by the UK and Canada on Wednesday at 11:30 MT time (09:30 GMT) and 15:30 MT time (13:30 GMT) respectively, and by Japan on Friday at 01:30 MT time (23:30 GMT).

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SebsCubs

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260 0
After election effects on the BOE

17.12.2019

The Bank of England will conduct a meeting and release a monetary policy summary at 14:00 MT time on December 19.

The monetary policy summary is published every month, which helps to keep investors updated with the current economic situation. The summary contains the votes on the interest rate, forecasts, and other policy measures. During the previous meeting, the votes for the rate changes split unexpectedly, as two out of nine members of the bank's monetary policy committee supported a cut of the interest rate. Let's see if the result of the UK general election affects the BOE decision this time.

IF the BOE is optimistic, the GBP will rise;

If the BOE is pessimistic, the GBP will fall.

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SebsCubs

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Did Trump impeachment affect the currency market?

19.12.2019

Good Thursday, world! We’ve got plenty of news and important releases since yesterday. Did they have a major impact on the market, though? Let’s see.
Tough time for the US presidency?

During yesterday’s American trading session, the US House of Representatives voted to impeach US President Donald Trump. Trump was charged with abusing of power. That decision made him the third US president in US history to be impeached. However, the support of impeachment in the House does not immediately remove the 45th US president from the office, as the final word still belongs to the Senate. As the Republicans (Donald Trump’s party) have a majority in that chamber, the vote supported by the Democrats will barely change anything.

The currency market was not affected by the impeachment process with no effect on the USD.
Australian labor market gets stronger

During the Asian trading session, the Australian dollar was boosted by the release of Australia’s job data. The employment change showed a solid growth by 39.9K (vs. 14.5K expected), and the unemployment rate declined from 5.3% to 5.2%. AUD/USD has risen by around 35 pips since the start of the day.
Bank of Japan: no hurry needed

The Bank of Japan kept its interest rate unchanged at -0.1% during today’s meeting. The BOJ Governor Haruhiko Kuroda expressed the positive views on the economy but noted that the global uncertainties remain. The bank will continue monetary policy easing until the economic conditions get better.
What is ahead

The main focus will be on the Bank of England monetary policy summary at 14:00 MT. It would be interesting to hear the comments by Governor Mark Carney after the election is over. Follow the news and stay updated.

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SebsCubs

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260 0
The undone victory for the GBP

18.12.2019

Yesterday, we were fearing that a strict Brexit deadline announced by the UK PM Boris Johnson and other ministers may put excessive pressure downwards on the GBP in the short-term and the long-term.

Now, we see that all the gains that the GBP won on the Conservatives’ victory are undone. Moreover, the British pound seems to be preparing to continue falling against the major currencies in the observable future.

Against the euro

On the H4, the upsurge of EUR/GBP reached higher than where it dropped from on the day of the UK elections. More so, it crossed the 50-period and 100-period Moving Averages, now testing the resistance of 200-MA. The next big step would be the high of 0.8600, reached in November.

However, we see the consolidation and the slowdown of the current steep rise right at the resistance of the 200-period Moving Average. The Awesome Oscillator also shows that a high may have been reached, and the momentum for this particular upsurge has been exhausted.

Climbing further up requires additional power and most probably additional confirmation from the Conservatives side that they would not back down on their strict agenda. If such news comes in, we may witness the start of a gradual change in the overall trend. In addition, given the context of the situation and the commentaries already provided by the UK PM Mr. Johnson and his colleagues, the absence of any information disproving the rigidity of their plan may also serve as a confirmation of the looming hard Brexit. In this case, it will cause further weakening of the GBP.
Against the USD

Against the USD, the GBP has dropped to the level of 1.3100 where it started its leap on December 12, breaking through the 50-period Moving Average. On the H4, the price is currently testing the support of the 100-period MA, showing signs of consolidation. Same as in the case with the euro, it is likely that the price will stay at the current support level for a while, waiting for additional information to guide the market movement. It may show a slight movement upwards or go sideways. If it does cross the 100-period Moving Average, it would be a sign that the market indeed has little hope for the GBP in the context of hard Brexit.

Against other currencies

Most of the GBP currency pairs show a very similar dynamic, with certain variations. On the H4 of GBP/CHF, the price has crossed the 50-period, 100-period, and 200-period Moving Average on the way down. Currently, it is testing the support of 1.2813, left at the beginning of December. Crossing that line would mean the price aims at the level of 1.2680, along which it has been trading in October-November.

Outcome

The impact of the announced Brexit agenda by the Conservatives is visible at the market. Now, the question is whether it will be a short-term disappointment or a start of a larger trend change.

To answer that, we need to follow the news and keep an eye on the price movement against the mid-term and long-term thresholds.

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SebsCubs

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260 0
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SebsCubs

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260 0
Will the US crude oil inventories push the USD up?

23.12.2019

The American Crude Oil inventories will be announced at 18:00 MT time on December 27.

In view of the OPEC’s last meeting and the ongoing discussions around the world oil production and prices, the American crude oil inventories are an important figure to watch out for. Although it is not a prime indicator like a total US crude oil output, still, it has an impact on the market, especially on the CAD after the USD, due to the robust energy sector of Canada connected with the US. While the USD rises on the expansion of this indicator, the influence on the CAD is inverted; decreasing American oil inventories would put the USD under pressure down and support the CAD.


If the figures are higher than expected, the USD will be supported;

If the figures are lower than expected, the USD will be under pressure down.

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SebsCubs

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SebsCubs

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260 0
Where will EUR/USD head to?

30.12.2019

Morgan Stanley forecasts EUR/USD at 1.16 at the end of March 2020, ahead of a further rise to 1.18 by the end of June 2020. According to the bank, Eurozone growth will pick up as US growth starts to slow. In addition, the euro will be supported by political factors. A 2020 resolution to Brexit should reduce economic uncertainty for the UK and its major trading partners, including the euro area.

Rabobank reminds, however, that the USD is still the only dominant currency on the global payments system and that the US economy continues to perform well relative to other major countries.” The bank foresees EUR/USD at 1.09 in a three month period and at 1.11 in nine months.

BNP Paribas is somewhere in the middle. Its analysts think that the Fed will cut its official rate twice in the first half of 2020 in reaction to a slowing economy, moderate inflation, and high uncertainty. At the same time, the ECB will also keep the accommodative policy and this won’t let the euro strengthen much against the USD. As a result, there will be little change in EUR/USD even though the euro’s fair value is quite higher than current pricing.

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SebsCubs

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SebsCubs

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260 0
Cautious moods entering the market

06.01.2020


A shattered hope for a quiet start

As we have observed in the previous article, the escalation of the chronic US-Iran conflict put the Middle East unrest into the focus of the world’s political and economic news. Since the death of the Iranian military commander, general Soleimani, the countries only exchanged mutual threats. That pushed the markets away from the outright positive moods to the risk-aversion scenarios with the corresponding currencies and commodities.
Oil

Brent is already trading at $70 per barrel. We mentioned this level as the expected maximum of the price movement for this year in the 2020 forecast for oil. On the daily chart below, the price reached this high with confidence, having now $73 as the next target. If no better news comes from the US-Iran front, there will be a high probability of the price getting there quite soon.


In general, the oil will be the first item to react to any Middle East news. As it is produced in this region, any shaky movement will push its price upwards (to the joy of OPEC+ and other oil-exporting countries, including the US, by the way).
Gold

Gold rose to where it has not been since 2013. On the weekly chart, it broke the August-2019 high of $1530 per ounce to the levels of $1570. The next resistance lies at $1610 at the level of the March-2013 high. The supports may be kept at $1483 and $1453. However, these are likely to stay untouched if the situation in the Middle East keeps evolving in the same direction.

Swiss franc

On the H1, January 3 is where the local downtrend starts – that’s when the news about the Iranian military commander was released. Before that, the USD/CHF was mostly rising. Now, the currency pair is traded at 0.9713, going into consolidation at the 50-period Moving Average level. That reflects the inner logic of the situation: the otherwise positive market mood waiting to see the US-China deal signed tripped at the sudden Middle East tension surge. If things go the same direction, the Swiss franc will keep gaining strength as the primary safe-haven currency, in line with the other ones.

Conclusion

No one expected the US-Iran relations to receive this sudden blow, but this is how things work. However, it would be an overstatement to say that the market seriously trembled. Yes, we saw related currencies and commodities react to the US-Iran worrying news, but nothing extraordinary happened so far. Now, it will be safe to assume that the market shrugs off an openly positive mood and enters a more cautious mode to receive more news about the Middle East situation and weigh them against the US-China trade deal confirmations.

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SebsCubs

Well-known member
260 0

Eyes on Bank of Canada's decision today​

All eyes are headed toward the Bank of Canada today. Estimates point to no change both for the main rate and the ongoing QE which stands at $3B weekly. Moreover, the bank is likely to keep the forward guidance unchanged, while delaying the 2nd round of tapering until July. Our USD/CAD longs from 1.2060 are already in profit and it would be wise to move the stop to entry ahead of the decision to protect the current positions from any possible loss. On the upside view, the technical indicators are improving gradually, while we maintain our target for the current positions at 1.2145 followed by 1.22.
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References: FBS (09.06.2021) Eyes on Bank of Canda today.
 

SebsCubs

Well-known member
260 0

USD/CAD is over 1.21 after BoC​

The Bank of Canada decided to keep the current policy unchanged as widely expected. However, the bank did not mention anything about tapering again in July. Moreover, the statement mentioned that the recovery still needs an extraordinary stimulus. This was enough to ease the downside pressure on USD/CAD. The pair managed to stabilize and bounced back right from our long entry at 1.2060 all the way to as high as 1.2125 earlier this morning. For the time being, we maintain our bullish outlook and our targets remain at 1.2145 followed by 1.R
View attachment 46018
References: FBS (10.06.2021) usd/cad IS OVER 1.2 AFTER bOC
 

SebsCubs

Well-known member
260 0
Gold prices tumbled on Friday and at beginning of the Asian session today, reaching as low as $1854/Oz, breaking through its upside channel on the daily chart, while the technical indicators are now clearly bearish, which confirms our short-term retracement outlook mentioned before since gold was trading above $1910. In the meantime, the key support for this week stands at $1840 which represents the 200-day MA, where gold is likely to show some stabilization, while we maintain our medium-term long positions that were issued back in April at $1710 and $1725 unchanged with a Stop Loss at $1730/Oz for now.

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Reference: Gold's break down: what's next? (14.06.2021)
 

SebsCubs

Well-known member
260 0
Gold prices tumbled during the first trading day of the week declining to as low as 1844 USD/Oz. However, it was able to trim these losses and closed the day around 1866 USD/Oz. Yet, the daily close is another bearish sign , since gold has broken the upside channel on the daily chart. Such a break remains in line with our expectations and the current downside retracement is not over yet. In the meantime, gold may retest its 200-day MA which stands around 1839 USD/Oz which likely to hold for a while before the uptrend resumes . Yet, we prefer to keep gold under our radar for few more days at least until the Federal Reserve decision, which would confirm whether gold will resume its major uptrend or the downside retracement has more legs to go.
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100%•75%•50%

Reference: FBS (15.06.2021) Gold reached our retreacement traget.
 
 
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