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Forex Week Ahead

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Country

US

The focus in the US stays with the coronavirus response, reopening process and sluggish economic recovery.  COVID-19 continues to batter the Sunbelt and that is starting to derail the economic recovery.  Much attention will go to California and their recent restrictions which will hopefully slow the rapid spread.  Americans need to show signs they can change their behavior otherwise, the revival of the economic recovery will stall even further.

Earnings season will also be closely watched as corporate America will likely need to downgrade their outlook and as the risk for job cuts grow.  The recovery was not as quick and strong as hoped and businesses may be forced to shrink their labor force.  Key updates will come from Microsoft, IBM, Lockheed Martin, UBS, Tesla, Novartis, Unilever, Twitter, and Coca-Cola.

US Politics

President Trump’s new re-election strategy will likely go strongly on the offensive against former-VP Biden.  Trump had to shake up his campaign after a disappointing rally turnouts and abysmal polling numbers.  President Trump will likely remain on the offensive with the rhetoric against China and that will see a tit-for-tat response.

Democrats are eagerly awaiting former-VP Biden’s decision on his running mate.  Prior to COVID-19, the Democratic National Convention was originally scheduled in July, meaning we should have found out his decision by June.  Since the convention was delayed till August 17th, he will have more time to evaluate his candidates.  Biden will turn 78 a few weeks after the election, so his VP selection will be critical for many voters.

EU

EU leaders will hopefully finalize their historic stimulus package, solidifying the strength of the union and providing a strong bid for European assets.  On the data front, close attention will be paid on Friday’s flash PMI readings.  Europe is fairing much better than the US with COVID-19 and expectations are growing for their economic rebound to outperform.

UK

The British pound could start to feel heavy as Brexit negotiations will unlikely see any immediate breakthroughs on which trade agreement to seek.  Brexit will need to show some progress by late September, but some investors may want to abandon their sterling bets.

Excessive weakness for the British pound seems unlikely as the UK economy is starting to look more attractive than the US as the UK has several promising vaccine candidates and their fiscal response has been stronger.

Russia

The Russian ruble could be vulnerable to some pressure with a correction in oil prices and since the Bank of Russia has room to cut rates further due to inflation running below their target.

South Africa

South Africa is expected to cut rates after inflation fell below the target range for the first time in 15 years.  The SARB has noted they expect inflation to remain low over the next quarter and may not signal additional cuts unless inflation drops more strongly. The rand continues to benefit from the broader emerging market rally, which will likely take its cue from China.

China

Ongoing geo-political tensions with the US, although the market appears to be building herd immunity to developments from both sides.

China Loan prime Rate decision Monday the highlight of a dull data week.

Hong Kong

Danger of increasingly stringent lock-down conditions hampering economic activity as Covid-19 cases reappear. Ongoing fallout from security law continues. Yet to see mass exodus of multinationals, but it is a multi-month evolving situation. China decided to tax PRC nationals globally at national rates seen as a blow to the SAR, possible mass returns of PRC nationals.

India

Covid-19 cases continue skyrocketing. India is now in top 4 for infections. INR remains under pressure as stress on the government budget and banking sector continue. Very real possibility that India will repeat Indonesia’s recent playbook, and get the central bank to directly purchase new government bond issues. Negative currency and stocks.

No significant data.

Australia

Australian Dollar range trading. Stock market holding steady as Covid-19 localised to Melbourne environs. Danger of impact to fragile consumer sentiment though.

China relations continue to deteriorate. Unlikely to escalate to barring mineral ore or major agricultural exports, but an increasing risk.

Japan

USD/JPY range trading. Equity markets holding near highs. Trade balance and PMI are expected to confirm Japan remains in recession.

Covid-19 cases are increasing in Tokyo but the government is refusing to declare an emergency causing disquiet amongst domestic investors.

Markets

Oil

OPEC+ did the right thing, but it’s a whole new ballgame. The decision to taper production cuts gives them some room to maneuver in case a second wave of the coronavirus forces a return of lockdowns that will shock crude demand.  Oil prices are slumping as the global economic recovery is threatened by risks of new closures and as US unemployment remains high and China’s consumer struggles to bounce back.

WTI Crude remains trapped in the low-$40s but that could break if the slow labor market recovery is not met with a strong fiscal response next week.  Right now, oil prices will take their queue primarily on demand headlines, which means it’s all about coronavirus lockdowns and travel restrictions.

Gold                

Gold’s slump may turn into further weakness tentatively if risk aversion continues to drive the dollar rebound.  Gold prices fell after US retail sales beat forecasts and on President Trump’s comment that he would not sign the next COVID relief bill without a payroll tax.  It is widely expected for the US to see another fiscal stimulus package, but Trump’s comment threatened the immediacy of one passing.  Gold’s fundamentals still support the climb to record high territory, but in the short-term prices could see a retest near last week’s low.

Bitcoin

Bitcoin and the entire crypto space are selling off as investors question the safety in dealing with cryptocurrencies.  Yesterday’s Twitter hack was a great reminder of how vulnerable cryptocurrency traders are too hacking incidents.  Malicious activity has always been a concern for Bitcoin and those concerns are not going away anytime soon. Despite the selling pressure, Bitcoin is still respecting its two-month trading range.  Wednesday’s Twitter hacking incident will likely not derail institutional interest as many crypto experts believe that blockchain technology is needed to enhance security efforts.

Source: marketpulse

Earnings season will also be closely watched as corporate America will likely need to downgrade their outlook and as the risk for job cuts grow. The recovery was not as quick and strong as hoped and businesses may be forced to shrink their labor force...

READ MORE

EUR/USD continues to look at the 1.1495 March high

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EUR/USD is showing no changes on the day as trades at 1.1384. Despite having fallen below the June peak at 1.1422, Commerzbank’s Axel Rudolph expects the pair to look for the March high at 1.1495.

Key quotes

“EUR/USD slid back below the June peak at 1.1422, having briefly risen to 1.1452 earlier this week. Despite this the cross still has the March high at 1.1495 in its sights. It represents quite formidable resistance which we would expect to cap at first.”

“However, a break higher is eventually favoured and would target the 2019 high at 1.1570, then 1.1815/22, the 61.8% Fibonacci retracement of the move down from the 2018 peak and the September 2018 high. These levels will remain in play while the cross remains above the two-month support line at 1.1302 and, more importantly, above the 1.1168 June 22 low.”

“Immediate upside pressure should be maintained above Friday’s low at 1.1255.”

Source: fxstreet

“EUR/USD slid back below the June peak at 1.1422, having briefly risen to 1.1452 earlier this week. Despite this the cross still has the March high at 1.1495 in its sights. It represents quite formidable resistance which we would expect to cap at first.”

READ MORE

AUD/USD to remain resilient in the near-term

AUDUSD_to remain-resilient_forex_FXPIG

AUD/USD remains resilient, rounding out the week just below 0.70, despite second wave virus concerns in the US and Australia – raising doubts about recovery momentum – and the ongoing breakdown in US-China relations, per Westpac.

Key quotes

“Apart from vaccine hopes, resilient commodity prices continue to cushion the aussie. Admittedly thermal coal prices are weak, but iron ore prices rose to $108/t this week, a 12-month high. Copper is probing multi-month highs, while gold is around $1800/ounce, a 12-year high. Oil prices remain stable around $40/bbl too, though OPEC’s decision to taper production cuts is a risk to watch. More importantly, China’s economy continues to rebound. Having been first to be hit by Covid-19, China’s economy has been first to attempt a V-shaped recovery. Headline GDP jumped 11.5% in Q2 after -10% in Q1, leaving the economy up 3.2% over Q2 2019.”

“By their own admission most central banks do not expect their labour markets to return to pre-Covid levels by end-2022, so further rounds of global monetary stimulus in the year ahead seem very likely, underpinning the supportive global liquidity backdrop and keeping interest rate differentials firmly in A$’s favour.”

“The US administration retains a very combative public tone toward China, but their actions are mostly political statements and at this stage President Trump is reportedly leaning against further China sanctions.”

“The overall impression then is that beyond the daily barrage of negative virus and US-China headlines the underlying picture for AUD remains positive. The global monetary policy backdrop along with ongoing resilient commodity prices point to an AUD that should hold its own near-term.

Source: fxstreet

AUD/USD remains resilient, rounding out the week just below 0.70, despite second wave virus concerns in the US and Australia – raising doubts about recovery momentum – and the ongoing breakdown in US-China relations, per Westpac....

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Forex Today: Dollar dominates ahead of EU Summit, updated look at the US consumer amid rising cases

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Here is what you need to know on Friday, July 17:

The US dollar has been consolidating its gains following a retreat of US stocks amid mixed US data, rising coronavirus cases, and as the ECB left rates unchanged. The crucial EU Summit and US consumer sentiment figures are eyed as the week draws to an end.

US retail sales beat expectations with an increase of 7.5% monthly in June and 1.1% yearly, completing a V-shaped bounce. However, the resurgence of coronavirus has kept jobless claims elevated at 1.3 million in the week ending July 10.

US COVID-19 cases hit a new daily high of 75,000 while deaths continue rising, nearing 1,000 daily. Texas, California, and Florida have been experiencing a high number of infections.

An updated look at the state of the US shopper comes from the University of Michigan's preliminary Consumer Sentiment Index for July. A minor increase is projected.

EU leaders will hold their first face-to-face summit since coronavirus took over and they will try to agree on a recovery fund. The large countries support the EU Commission's plan which included controversial mutually funded grants worth €500 billion. The Netherlands leads a group dubbed the "Frugal Four" which objects the move.

The European Central Bank left its policy unchanged as expected and urged governments to act. The ECB reiterated its commitment to help the economies and marches forward with its €1.35 trillion Pandemic Emergency Purchase Program (PEPP).

Tensions between the West and China remain prevalent after the UK decided to phase out the usage of Hauwei's equipment and as the US ponders sanctions on Chinese officials following Beijing's tightening of its grip on Hong Kong.

AUD/USD is trading below 0.70 amid dollar strength, a jump in cases in Victoria state and despite upbeat Australian job figures.

USD/JPY is trading above 107 as infections in Tokyo continue rising. The yen does not seem to benefit from substantial safe-haven flows.

Gold is consolidating its losses under $1,800 while the WTI Crude Oil price is steady above $40.

Cryptocurrencies are stable with Bitcoin holding above $9,100.

Source: fxstreet

The US dollar has been consolidating its gains following a retreat of US stocks amid mixed US data, rising coronavirus cases, and as the ECB left rates unchanged. The crucial EU Summit and US consumer sentiment figures are eyed as the week draws to an end. ..

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Gold probes multi-day lows around $1,790/oz

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  • Gold losses the grip and breaks below the $1,800 mark.
  • Markets’ attention looks to risk trends, US CPI data.

Prices of the ounce troy of the precious metal are fading Monday’s uptick and are resuming the downside in sub-$1,800 levels on turnaround Tuesday.

Gold looks to risk trends, pandemic

The negative price action in the yellow metal comes despite the softer tone in the greenback and amidst the almost-constant bias among investors towards the riskier assets.

Further out, Gold now appears somewhat decoupled from the recent move up in tandem with the riskier assets, which was mainly sustained by the declining opportunity costs of holding the metal in a context dominated by negative real interest rates.

However, the commodity is expected to remain vigilant on bouts of risk aversion exclusively in response to the advance of the pandemic and its impact on the economy as well as geopolitical/trade jitters from the US-China scenario.

Later in the session, investors will look to the release of US inflation figures measured by the CPI for the month of June.

Gold key levels

As of writing Gold is losing 0.49% at $1,793.61 and faces the next support at $1,756.00 (monthly low Jul.6) seconded by $1,737.01 (55-day SMA) and then $1,670.88 (monthly low Jun.5). On the other hand, a breakout of $1,818.14 (2020 high Jul.8) would expose $1,912.29 (monthly high Aug.2011) and then $1,920.94 (monthly high Sep.2011).

Source: fxstreet

Prices of the ounce troy of the precious metal are fading Monday’s uptick and are resuming the downside in sub-$1,800 levels on turnaround Tuesday.Gold looks to risk trends, pandemic...

READ MORE

EUR/USD Price Analysis: A test of 1.1420 appears closer

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  • EUR/USD keeps the firm note in the 1.1365/70 band on Tuesday.
  • A move north should see the 1.14 neighbourhood revisited.

EUR/USD is prolonging the rebound from Friday’s lows near 1.1250, managing well to retake last week’s tops in the 1.1370/80 band.

If the buying bias picks up pace, there is increasing chances of a move to the 1.1400 barrier ahead of June’s high at 1.1422.

Further out, as long as the 200-day SMA, today at 1.1050, holds the downside, further gains in EUR/USD remains well on the table.

Source: fxstreet

EUR/USD is prolonging the rebound from Friday’s lows near 1.1250, managing well to retake last week’s tops in the 1.1370/80 band...

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Forex Today: US dollar seizes control as risk aversion returns, a busy docket ahead

dollar-seizes-control-Forex_FXPIG

Here is what you need to know on Tuesday, July 14:

Broad US dollar strength extended into Asia, as risk-averse market conditions persisted amid intensifying coronavirus fears and US-China tensions. The Asian equities followed the late sell-off on Wall Street while the US stock futures struggled with its recovery.

The sentiment soured in the NY trading after the state of California imposed new restrictions on businesses as coronavirus cases and hospitalizations soared. The shutdown reignited concerns over the growing virus risks on the economic recovery prospects.

Meanwhile, the souring US-China diplomatic ties over the Hong Kong and South China sea issues also dampened the market mood. China accused the US of 'inciting confrontation' after Washington rejected expansive claims in the disputed sea for the first time.

Investors also remained cautious ahead of the US banks’ earnings reports and inflation data due later this Tuesday.

Across the fx board, AUD/USD steadily climbed back to 0.6950 on solid Chinese imports and exports data. The kiwi, however, remained depressed below 0.6550. The Canadian dollar lost ground on the back of over a 2% drop in WTI prices. Oil fell due to demand recovery fears and OPEC+ output cuts easing talks.

EUR/USD traded better bid around 1.1350, expectant of an improvement in the German ZEW Current Situation Index. GBP/USD wavered in a narrow range around 1.2550 ahead of the UK monthly GDP and manufacturing data.

USD/JPY, however, traded on the back foot but held onto the 107 level. Japan is likely considering declaring a state of emergency, as new infections continue to grow.  

Gold posted small losses below $1,800 a troy ounce, as broad US dollar strength capped the upside attempts.

Cryptocurrencies remained heavy, with Bitcoin trading below $9200.

Source: fxstreet

Broad US dollar strength extended into Asia, as risk-averse market conditions persisted amid intensifying coronavirus fears and US-China tensions. The Asian equities followed the late sell-off on Wall Street while the US stock futures struggled with its recovery...

READ MORE

Gold to stay above $1800 fueled by lower real rates

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Gold is trading above $1,800 per ounce and strategists at TD Securities expect the yellow metal to stay above the mentioned level or even higher fueled by lower real rates.

Key quotes

“Gold remains torn between its safe-haven bona fides, which are prompting money managers to sell on risk-on behavior in markets, and its inflation-hedge characteristics, which are driving a swarm of capital to seek refuge in the yellow metal.”

“Ultimately the regime change toward inflation protection has been the stronger force in recent weeks, seeing the shiny metal trade at higher ranges, most recently north of $1800/oz, as real rates continue to churn lower. This has renewed speculator appetite of late, seeing net length increase once again, although both longs and shorts have increased.”

“Moving forward, given positioning is still not extremely stretched, we anticipate that real rates will continue to drive gold prices higher as normalizing inflation expectations and suppressed rates vol provide fuel for the trade.

Source: fxstreet

Gold is trading above $1,800 per ounce and strategists at TD Securities expect the yellow metal to stay above the mentioned level or even higher fueled by lower real rates...

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ECB expected to keep rates unchanged

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Economist at UOB Group does not see the ECB modifying its monetary policy at this week’s event.

Key Quotes

“At its June meeting, the ECB decided to add a further EUR600bn to its EUR750bn COVID-19 rescue plan, bringing the total stimulus package to an astonishing EUR1.5tn.”

“Whilst we are not excluding the possibility of further monetary stimulus down the road, the latest measures announced by the ECB should dent any talks or concerns (for now) about whether or not the ECB is willing to play its role of lender of last resort for the Eurozone.”

Source: fxstreet

Economist at UOB Group does not see the ECB modifying its monetary policy at this week’s event...

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Forex Today: Vaccine, earnings optimism downs the dollar; eyes on COVID-19 stats, BOE’s Bailey

Forex_tpday_earnings-optimism_FXPIG

Here is what you need to know on Monday, July 13:

The risk-on sentiment emerged as the main market driver starting out the week, amid a quiet Asian affair, in the absence of relevant macro news.

US dollar remained on the back foot amid the upbeat market mood, as the coronavirus vaccine optimism, following Friday’s Gilead’s latest report and antiviral drug trials underway in China and Australia, continued to dull dollar’s safe-haven appeal.

Expectations of upbeat US earnings reports this week and reports that President Donald Trump wore a mask for the first time bolstered the appetite for the higher-yielding assets.

The Asian stocks rallied 2% while the S&P 500 futures gained 0.50%. Markets paid little heed to the growing virus count across the globe. The World Health Organization (WHO) reported record daily increase in global cases, up over 230,000. The biggest increases were from the US, Brazil, India and South Africa.

Within the G10 fx basket, the aussie dollar was the outperformer, with AUD/USD heading back towards 0.7000. GBP/USD jumped to near 1.2670 levels amid the risk-on mood and UK stimulus optimism. The kiwi failed to benefit and traded flat around 0.6580.

USD/CAD extended the drop below 1.3600 despite the decline in oil prices. WTI fell nearly 1% to test the $40 mark amid talks of the OPEC+ easing the output cuts at its meeting due later this week.

EUR/USD firmed up above 1.1300 despite the US imposing tariffs on French imports for up to $1.3 billion, in response to France’s digital services tax. USD/JPY, meanwhile, traded listless below 107.00, as traders await fresh impetus from the critical US CPI and Retail Sales due for release in the week ahead.

Gold started the week on the front foot above $1,800 a troy ounce, underpinned by broad US dollar weakness and looming virus concerns.

Cryptocurrencies consolidated the previous spike, with Bitcoin holding up above $9200.

Source: fxstreet

The risk-on sentiment emerged as the main market driver starting out the week, amid a quiet Asian affair, in the absence of relevant macro news.US dollar remained on the back foot amid the upbeat market mood, as the coronavirus vaccine optimism...

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Forex Week Ahead – Bring on Earnings Season

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No Shortage of Event Risk

Next week sees earnings season get underway in the US, with the major banks all reporting on the second quarter and offering insight – if they have any – into the rest of the year. Understandably, US corporates were a little shy on the guidance last quarter but investors may not be so willing to accept a repeat performance this time around, not while turning a blind eye to second quarter performance.

The outlook remains murky but there are signs of promise, it’s possible that the bar is so low now that investors may leap on anything remotely positive and give these markets another kick higher, not that the Nasdaq is exactly in need of such a lift.

Geopolitical risk remains heightened, with China and Hong Kong remaining at the centre of the increasing hostilities. There is no shortage of speculation around the direction of travel on this front but it remains an ever-present risk, one that could escalate in a heartbeat. The fact that Trump is fighting an election in a few months probably doesn’t help the situation. Especially if the President wants to divert attention away from the rising number of Covid cases in a growing number of states.

Country

US

The big banks kick off earnings season and this time the focus might be more on job cut announcements, slashing of dividends, and ending of share buybacks.  With around 80% entering this earnings season with no real guidance in place, investors will look for signs on how strong companies balance sheets are and whether they remain optimistic about the US consumer.  JP Morgan, Citigroup, and Wells Fargo report on Monday, while Goldman Sachs delivers results on Wednesday.  Bank of America and Morgan Stanley report on Thursday morning and Netflix reports after the close. 

A wrath of economic data should also show the US economic rebound continued in June.  Retail sales are expected to remain strong following the biggest monthly increase ever.  Regional surveys from NY and Philadelphia are also expected to show the recovery is heading in the right direction, but further stimulus is still needed. 

No major surprises are expected from the Fed’s Kaplan on Monday, Harker on Wednesday, and Evans on Thursday.  The recovery will likely take a lot longer and policymakers will likely reiterate they are ready to act further if needed.   

US Politics

It is all about the Presidential election.  Former-VP Biden has a growing lead across several key battleground states.  President Trump has an outdoor rally in New Hampshire on Saturday as he will try to convince voters his economic plan is superior to Biden’s recently announced one.     

Democrats are eagerly awaiting former-VP Biden’s decision on his running mate.  Prior to COVID-19, the Democratic National Convention was originally scheduled in July, meaning we should have found out his decision by June.  Since the convention was delayed till August 17th, he will have more time to evaluate his candidates.  Biden will turn 78 a few weeks after the election, so his VP selection will be critical for many voters.

UK

This week Rishi Sunak announced the latest raft of measures aimed at stabilizing the economy and protecting jobs, as a number of major retailers were making an announcement of their own, in the form of thousands of redundancies. This comes on top of the thousands already announced in recent weeks and the many more to come as the Chancellor winds down the furlough scheme.

The full impact won’t be seen in the jobs report next week but as the months go by, the unemployment rate will start rising rapidly. The furlough scheme combined with surveys on how employers expect to act once the scheme comes to an end suggests we could see near double digit unemployment rates. But this will inevitably change as the economy reopens and we see the real impact, for better or worse. More will be needed from the Chancellor in the months ahead. This is just a good start.

EU

EU leaders will meet late next week for further discussions on the recovery fund, with some countries including Ireland pushing for a Brexit fund to be included in the budget in the event of no deal being agreed by the end of the year. We appear to be nearing an agreement, with the details of how countries will apply for grants to be agreed. 

The ECB is unlikely to add any stimulus next week, with the economic prospects seemingly improving. The Pandemic Emergency Purchase Program was already increased by €600 billion to €1.35 trillion in June and extended by six months to the middle of next year so there’ll be no rush to add to it again, although there is an expectation that they will need to later this year.

China

US announces sanctions on Chinese technology companies and Officials associated with minority repression in China. Concerns rising that the US will also try to block China banks access to US Dollars. This is highly unlikely. More measures are surely to come elevating the geopolitical tensions above the usual. The key will be China’s response. Trade negative, equities negative.

China Balance of Trade and GDP next week. GDP undershoot could see markets turn negative across Asia and Australasia.

China stock markets rose by 12% at one stage this week after the government told citizens to buy into China tech stocks. Today government entities have sold stocks to slow down the exuberance. You can’t make this up. Liquidity remains tight and Chinese bond markets remain under strong pressure.

Hong Kong

First week of Hong Kong security law passes without incident. Hang Seng coat tails Mainland stocks higher. Two key concerns. HK to shut schools again after community transmission of Covid-19 increases. International companies are worried about breaching HK security law by complying with new and upcoming China/HK sanctions. Potentially weighing on HK markets.

Talk of the US trying to undermine HKD peg is a storm in a teacup.

India

Covid-19 cases continue skyrocketing. India is now in top 4 for infections. INR remains under pressure as stress on the government budget and banking sector continue. Very real possibility that India will repeat Indonesia’s recent playbook, and get the central bank to directly purchase new government bond issues. Negative currency and stocks.

Australia

Australian Dollar range trading. Stock market concerns mounting over new Victoria State selk-isolation and Melbourne lockdown. Covid-19 cases climbing in Melbourne.

Australia offered a citizenship pathway to Hong Kong students studying in Australia this week and other highly skilled HK migrants. Negative rhetoric is increasing with China. Real threat that China will retaliate through trade bans. Equitys and AUD negative.

Australian unemployment on Thursday.

Japan

USD/JPY range trading. BoJ rate decision on Wednesday, expecting unchanged at -0.1%. Recent poor data suggest BoJ may tweet their QE and lending programmes. JPY negative.

Covid-19 cases remain stubbornly high in Tokyo. Officials say no cause for alarm, but disquiet rising.

Overall direction dictated by geopolitics next week

Markets

Oil

Oil is enjoying a summer break. It was an impressive recovery back to $40 but it’s been relatively uneventful since then. The $40 mark seems to be a widely accepted fair price for now, with WTI seeing resistance around $42 and support in the high 30’s. Similarly, Brent is seeing nice support around the $40 mark and resistance around $44. The fact that we’re seeing rising support may indicate that the path higher is still looking more plausible but many downside risks still remain, including second waves and a messy end to an otherwise successful coordinated production cut.

Gold

Gold is struggling to hang onto gains above $1,800, despite peaking around $1,817 on Wednesday. It’s held above since then but as we head into the end of the week, it’s coming under a little pressure and $1,800 is now being tested from the upside. A weekly close above $1,800 could be very technically significant for the yellow metal. A close below may be a red flag after a decent run for gold over the last month.

Source: marketpulse

Next week sees earnings season get underway in the US, with the major banks all reporting on the second quarter and offering insight – if they have any – into the rest of the year. Understandably, US corporates were a little shy on the guidance ..

READ MORE

Crude Oil Futures: Upside looks limited

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CME Group’s flash figures for Crude Oil futures markets noted open interest shrunk for yet another session on Tuesday, now by around 2.7K contracts. Volume followed suit and went down by nearly 265K contracts offsetting the previous build.

WTI struggles to leave $40.00 behind

Prices of the barrel of WTI keep navigating the $40.00 region so far this week. However, the downtrend in open interest plays against extra gains and could spark some correction in the short-term horizon.

Source: fxstreet

CME Group’s flash figures for Crude Oil futures markets noted open interest shrunk for yet another session on Tuesday, now by around 2.7K contracts. Volume followed suit and went down by nearly 265K contracts offsetting the previous build...

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ECB’s Lagarde: Economic recovery would be constrained, uncertain and fragmented

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In an interview with the Financial Times (FT), the European Central Bank (ECB) President Christine Lagarde caste her doubts on the Euro area economy despite the central bank’s effective measures.

Additional quotes

“Financial markets have calmed down enormously.”

“ECB actions had demonstrated their efficiency, effectiveness.”

“But economic recovery would be constrained, uncertain and fragmented.”

“Some euro area countries will recover more quickly than others.”

“I wouldn't put all my bets on 18 July (on EU recovery fund).”

“Would give it until month-end for a potentially favourable outcome.”

Market reaction

The above remarks have little to no impact on the shared currency, as EUR/USD keeps its range around 1.1275, up 0.07% on the day. Focus remains on the EU budget talks.

Source: fxstreet

In an interview with the Financial Times (FT), the European Central Bank (ECB) President Christine Lagarde caste her doubts on the Euro area economy despite the central bank’s effective measures...

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Forex Today: Gold eyeing $1,800, dollar mixed, as coronavirus, Hong Kong peg move markets

Market-open_forex_FXPIG

Here is what you need to know on Wednesday, July 8:

Markets are looking for a new direction after stocks retreated and the dollar gained some ground on Tuesday. Concerns about coronavirus cases in the US and geopolitical tensions are in play.

US coronavirus: After dipping in Monday's reports, US COVID-19 cases advanced once again in figures released on Tuesday. Infections in California and Texas surpassed the 10,000 marks each and Florida's positive test rate jumped to 16%. Washington will officially leave the World Health Organization in 2021.

Gold remains close to $1,800 after hitting $1,797 on Tuesday, the highest since 2012. Exchange-Traded Funds backed by the precious metal report their seventh consecutive month of positive inflows, adding $40 billion in June or104 tons of gold.

Hong Kong: Reports suggest that advisers to President Donald Trump touted the idea to break the Hong Kong Dollar peg to punish China. Around $5 trillion are deposited in the city-state and China's central bank backs the HK one.

Traders are shrugging off the idea and USD/HKD remains close to the lower end of the range, showing the HKD remains strong. China recently tightened its grip on the financial hub and opened a national security agency there.

UK Chancellor of the Exchequer Rishi Sunak will unveil a stimulus plan later in the day, and some suspect it will fall short of facing the magnitude of the crisis. GBP/USD stood out on Tuesday by recovering its previous losses.

Brexit: UK PM Boris Johnson has told German Chancellor Angela Merkel that Britain is ready to end the transition period without a deal. Both sides remain at odds over trade, regulation, and also fisheries. The call between the leaders came as top negotiations met for dinner in London and reportedly had fish as the main dish.

AUD/USD remains pressured around 0.6950 as Melbourne is in lockdown and daily COVID-19 cases top 100, including in the capital Canberra. Australia has warned its citizens that they may face "arbitrary detention" if they go to China. Strained Sino-Australian relations are also weighing on the Aussie.

USD/JPY is stable around 107.50 as coronavirus cases remain stubbornly high in Tokyo. However, most patients are young and hospitals are coping.

WTI Crude Oil is hugging the $40 level ahead of crude oil inventory figures due out later on Wednesday. USD/CAD has stabilized around 1.36.

Cryptocurrencies are edging up, with Bitcoin trading closer to $9,300.

The economic calendar features speeches from European Central Bank officials US consumer credit. The US JOLTs job opening surprised by standing above five million in May. Weekly jobless claims are awaited on Thursday.

Source: fxstreet

Markets are looking for a new direction after stocks retreated and the dollar gained some ground on Tuesday. Concerns about coronavirus cases in the US and geopolitical tensions are in play...

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Gold Price Analysis: Holds steady above $1775 level, bullish bias remains

Gold-holds-steady_bullish-bias-remains_Forex_FXPIG
  • Gold attracts some dip-buying near the $1770 confluence support.
  • The set-up favours bulls and supports prospects for additional gains.
  • A sustained move beyond $1780 level will reinforce the bullish bias.

Gold reversed an early dip to the $1770 area and turned positive for the day, albeit lacked any strong follow-through and remained below the $1780 horizontal resistance. The emergence of some intraday buying reinforced a confluence support comprising of 200-hour SMA and one-month-old ascending trend-line support, which should act as a key pivotal point for short-term traders.

Meanwhile, technical indicators on the daily chart maintained their bullish bias and have against started gaining some positive traction on hourly charts. This, in turn, supports prospects for additional gains. However, the prevalent risk-on environment held investors from placing any aggressive bullish bets and seemed to be the only factor capping any strong gains for the safe-haven precious metal, at least for the time being.

Hence, it will be prudent to wait for some follow-through strength beyond the $1780 level before positioning for any further appreciating move. The commodity might then aim to test the ambitious $1800/ounce target.

Conversely, a convincing breakthrough the mentioned confluence support near the $1770 region will negate the constructive outlook and accelerate the slide back towards last week's swing low, around the $1758-57 region. The corrective slide could further get extended towards intermediate support near the $1750 horizontal level before the commodity eventually drops to test a previous strong resistance near the $1742-40 zone.

Source: fxstreet

Gold reversed an early dip to the $1770 area and turned positive for the day, albeit lacked any strong follow-through and remained below the $1780 horizontal resistance. The emergence of some...

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BOJ to project economic recovery

BoJ-to-project-economic-recovery_Forex_FXPIG

Citing four sources familiar with the Bank of Japan (BOJ) thinking, Reuters reported that the Japanese central bank is likely to maintain its view that the economy will gradually recover later this year from the coronavirus pandemic impact.

Key takeaways

“The economic views will heighten the chances the central bank will keep monetary policy steady at its rate review on July 14-15.”

“The BOJ's report is expected to warn that risks to the outlook are extremely high, including the second wave of infections that could delay any recovery in global and Japanese growth.”


Separately, Japanese Economy Minister Yasutoshi Nishimura said earlier today that they agreed with virus experts to expand the economic activity further on July 10.

Market reaction

USD/JPY has trimmed gains to trade around 107.60, having hit a daily high of 107.78 in early Asia. Broad US dollar weakness outweighs the broad risk-on market mood.

Meanwhile, the above report seems to put a bid under the yen.

Source: fxstreet

Citing four sources familiar with the Bank of Japan (BOJ) thinking, Reuters reported that the Japanese central bank is likely to maintain its view that the economy will gradually recover later this year from the coronavirus pandemic impact...

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Forex Today: Chinese optimism downs dollar

Forex_today_chinese-optimism-downs-dollar_FXPIG

Here is what you need to know on Monday, July 6:

Markets are optimistic after Chinese media is bullish about the recovery and the stock market. The rise in Asian stocks is carrying S&P futures up and weighing on the safe-haven dollar and yen. Coronavirus continues increasing at a worrying pace and US data is awaited.

Chinese optimism: China's Securities Times is saying that a healthy bull market is more important to the economy than ever while China International Capital Corp is projecting a doubling of shares within the next 5-10 years. Bloomberg reports that the term "bull market" has is ten times its 90-day average on Chinese media according to the Baidu Index.

Other bullishness: Citi is no longer bearish on risk assets and now look to buy US stocks ahead of the earnings season. Goldman Sachs is "very optimistic" about Europe amid positive signs for a rebound, action by the European Central Bank, and the EU fund, which is yet to be approved.

US: GS is not as optimistic about the American economy and revised its Gross Domestic Product growth down to a contraction of 4.6% this year. The influential investment bank notes the new restrictions related to coronavirus and falling consumption.

Coronavirus cases continued rising over the weekend in the US, with the total number of cases nearing 2.9 million and deaths closing in on 130,000. The situation in Houston are being compared to that seen in New York in early April and Florida seeing around 10,000 cases per day.

An update on the US economy comes from the ISM Non-Manufacturing Purchasing Managers' Index, set to show the services sector is recovering. US Non-Farm Payrolls beat expectations with an increase of 4.8 million in June. The recent surge in COVID-19 cases came after the job reports surveys were taken.

Europe: Spain has imposed two localized lockdowns to bring COVID-19 outbreaks under control. Christine Lagarde, PResident of the European Central Bank, said that the eurozone faces two years of disinflation. She vowed to keep supporting the economy. The risk-on mood is pushing EUR/USD toward 1.13.

UK: Andrew Bailey, Governor of the Bank of England, sent a letter asking commercial banks to prepare for negative interest rates, according to the Sunday Times. The BOE added to its QE program but refrained from setting sub-zero borrowing costs. Brits returned to the pubs on Saturday as the country continues opening up. GBP/USD is holding up around 1.25.

Australia has closed to the border between Victoria and New South Wales following the outbreak around Melbourne. Chinese media has said Beijing will retaliate against Canberra with more tariffs as Australia is contemplating hosting Hong Kong residents. Nevertheless, AUD/USD is benefiting from the risk-on mood, zooming in on 0.70.

China has also warned Canada regarding "meddling" in Hong Kong and warned it could backfire against the Canadian economy. The countries are already at odds as Huawei CFO is held in Vancouver, awaiting extradition to the US. USD/CAD is trading steadily above 1.35.

Oil prices are benefiting from optimism, with WTI trading above $40. Gold is also steady above $1,770.

Cryptocurrencies are edging higher, with Bitcoin trading around $9,100.

Source: fxstreet

Markets are optimistic after Chinese media is bullish about the recovery and the stock market. The rise in Asian stocks is carrying S&P futures up and weighing on the safe-haven dollar and yen. Coronavirus continues increasing at a worrying pace and US data is awaited...

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Forex Week Ahead – Economic Reopening Continues

Forex_week_ahead_economic_reopening-continues_FXPIG

Country

US

Most of the attention in the US will remain around the spread of the coronavirus across the Sunbelt and whether more states are forced to reverse prior reopening actions.  Economic data won’t matter much except for weekly jobless claims.  The US is still seeing over 19 million continuing claims and optimism for the US consumer will start to wane if that worsens much following the most recent virus spikes that occurred over the last couple of weeks.  

US Politics

Mexican President Andres Manuel Lopez Obrador visits President Trump at the White House.  This will be a rather ceremonial meeting as both leaders will celebrate their new trade deal which took effect on Wednesday.  

Democrats are eagerly awaiting former-VP Biden’s decision on his running mate.  Prior to COVID-19, the Democratic National Convention was originally scheduled in July, meaning we should have found out his decision by June.  Since the convention was delayed till August 17th, he will have more time to evaluate his candidates.  Biden will turn 78 a few weeks after the election, so his VP selection will be critical for many voters. 

Brexit

We learned a long time ago not to get too caught up in the day to day of Brexit talks, with the big compromises always coming later in the day. Anything in the interim can simply be viewed through the prism of a negotiation. 

This week, the talks ended a day early which has come as a worry to some but there are more weeks of intense negotiations ahead where differences can be resolved. With German Chancellor Angela Merkel warning about the prospect of a no deal and UK Prime Minister Boris Johnson claiming it would be a very good option, the games are hotting up but I’m sure neither will want it as they battle the devastating effects of the pandemic.

China

House Bill on China sanctions passed. Almost certain to pass the Senate today. HK has raised the possibility of tit-for-tat retaliations by both sides. Potentially trade negative. China threatens the US. UK. Aust over HK today. Geopolitical danger persists.

Markets concentrate on vaccines and recovery stories though. China data continues improving. Equites and currency to remain steady. China Inflation Thursday, no other significant data.

Hong Kong

Hong Kong security law poorly received internationally. 400 arrested already. US rescinds HK special status with more sanctions to come. First protesters arrested under new law. Perversely though, this is the end for protest movement = stock market and economy positive. Hang Seng jumped higher today and will outperform. HKD remains at the strong end of the peg.

India

China tensions ease but Covid-19 cases continue skyrocketing. India is now in top 4 for infections. GDP to fall by 12% annualised, non-bank financial sector contracting, soft Govt fiscal position. Indian stocks to under-perform, INR to remain worst performing sian currency. No significant data.

Australia

Australian Dollar remains under pressure as bull-market correction continues. High potential for more downside. Australia stocks and currency capped by concerns over Victoria Covid-19 and China threats of retaliation over HK and Uighur support.High potential to escalate.

Community infections rising Melbourne with partial lockdowns. Markets negative.

RBA tuesday exp. Unchanged. No market impact.

Japan

Tanken and Retail Sales continue the trend of disappointing data. Covid-19 cases rising in Tokyo. Limiting equity gains. Strong resistance USD/JPY 108.00. Heavy data week ahead. Household Spending Tues, Machinery Orders Thurs expected to disappoint. 

Markets

Oil

Oil has ended the week not too far from where it started, having consolidated around the $40 mark into the end of the second quarter. The reopening measures we’re seeing everywhere is certainly giving oil traders cause for optimism but the setbacks we’re seeing means we’re seeing a few false starts around these levels. I imagine there’ll be plenty of stumbles along the way and it will in fact be oil producers that determine what the next wave will be, with there maybe not being the same appetite to extend the cuts as there was previously.

Gold

The story rarely seems to change for gold. It’s continuing to grind its way higher but every time it gathers any momentum, it’s hacked down and starts again. There are marginal gains each time but the big test weas meant to come around the $1,800 mark. At this rate it’s going to take some time before that comes and it’s not going to be much of a battle.

Source: marketpulse

Most of the attention in the US will remain around the spread of the coronavirus across the Sunbelt and whether more states are forced to reverse prior reopening actions. Economic data won’t matter much except for weekly jobless claims. The US is still seeing ...

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Forex Today: Stocks' strength, dollar downing face NFP

Forex_Today_dollar-facing_NFP_FXPIG

Here is what you need to know on Thursday, July 2:

Stocks are bid and the dollar is down amid new hopes for a coronavirus vaccine and mixed data leading to Thursday's all-important Non-Farm Payrolls. Investors are shrugging off record US infections and re-closing in several states.

The US jobs report for June is due on Thursday due to Friday's Independence Day holiday. An increase of around three million jobs is on the cards for June after around 2.5 million in May, extending the recovery after losing approximately 20 million in April. The unemployment rate is set to drop from 13.3% to 12.3%.

The rapid nature of developments around the current crisis and classification errors result in a wide range of outcomes possible. Wage growth will likely remain elevated as mostly low-earning workers lost their positions. The surveys were taken in the week ending June 12.

Data leading toward the NFP were mixed. ADP's private-sector labor market figures missed expectations while the ISM Manufacturing Purchasing Managers' Index showed a return to growth.

US COVID-19 new daily infections have topped 50,000 for the first time, with several states slapping new restrictions and others – such as New York – delaying the reopening measures. Intensive Care Units surpassed 100% normal capacity and some facilities in Miami are also struggling.

Face masks: President Donald Trump has finally endorsed wearing masks, saying he would wear one. The president is following Republican governors that are pushing for using the basic means of protection. Goldman Sachs estimated that they would boost Gross Domestic Product by 5%.

Coronavirus vaccine: One of the market boosters on Wednesday came from new hopes for immunization. Pfizer and BioNTech said their initial trial in discovering a vaccine was successful, and that it is ramping up efforts. Several countries are upset with America's stockpiling of Remdesivir, a medication that helps COVID-19 patients recover.

The Federal Reserve's meeting minutes reiterated the bank's commitment to buying bonds and supporting the economy but rejected Yield Curve Control or negative interest rates. Equities remained bid after the publication but Treasury yields have advanced.

Gold retreated from its attempts to top $1,800 seen earlier in the week. The precious metal is set to move in response to the Non-Farm Payrolls.

EUR/USD is trading above 1.1250, rising amid the dollar's weakness, marginally better PMIs, and the upbeat coronavirus situation in the old continent. Europe extended its reopening to foreign visitors on Wednesday. Eurozone unemployment rate is due out on Thursday.

GBP/USD bounced from the lows, extending their end-of-quarter bounce and despite Brexit and coronavirus uncertainty.

AUD/USD is trading above 0.69, benefiting from the upbeat market mood and despite a smaller than expected trade balance surplus in Australia. Other commodity currencies are also on the rise. WTI Oil continues holding onto the highs around $40.

Hong Kong: The controversial Chinese security law was applied for the first time on Wednesday, prompting anger around the world. The UK may open the door to allowing immigration of millions of people from the city-state an the US proceeding with sanctions. However, HK's financial market is working as usual with money flowing into the financial hub.

Cryptocurrencies: Bitcoin has been edging higher, trading above $9,200.

Source: fxstreet

Stocks are bid and the dollar is down amid new hopes for a coronavirus vaccine and mixed data leading to Thursday's all-important Non-Farm Payrolls. Investors are shrugging off record US infections and re-closing in several states...

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BoE: Activity appears to be coming back

BoE_activity-appears-to-be-coming-back_FOREX_FXPIG

The Bank of England's (BoE) current stance of monetary policy is appropriate but, on balance, risks are to the downside, BoE policymaker Jonathan Haskel said on Wednesday.

Additional takeaways

"Worryingly, the indicators of rising unemployment are already revealing themselves."

"There remains a great deal of uncertainty as to how many of the currently furloughed workers will be able to return to their jobs."

"Activity appears to be coming back faster than we anticipated."

Market reaction

The GBP/USD pair edged slightly lower following these remarks and was last seen trading at 1.2393, where it was down only 0.05% on the day.

Source: fxstreet

The Bank of England's (BoE) current stance of monetary policy is appropriate but, on balance, risks are to the downside, BoE policymaker Jonathan Haskel said on Wednesday.

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GBP Bank Account

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WOT? UK Bank account, with a Sort Code tailored according ALL that you Brits need! Bloody 'ell, of course it is deposit free of charge!

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Forex Today: Gold shines, markets look for direction after a successful Q2, ahead of busy start to Q3

Forex_today_Gold_Shines_markets-look-for direction_FXPIG

Here is what you need to know on Wednesday, July 1:

Markets are mixed after closing the second quarter with the strongest rise since 1998. Upbeat Chinese PMIs are outweighing coronavirus concerns. A busy day features the top-tier US hints toward the Non-Farm Payrolls, the Fed minutes, and more.

Gold ended the second quarter with a blast, jumping above $1,780 to the highest levels since late 2012. The precious metal benefited from end-of-quarter flows and is holding onto the gains.

Chinese Caixin Manufacturing Purchasing Managers' Index beat estimates and scored 51.2, reflecting growth. Alongside Tuesday's release of strong US Consumer Confidence as reported by the Conference Board, economic figures from early June outweigh concerns about coronavirus.

Daily US COVID-19 cases topped 40,000 once again, and epidemiologist expert Anthony Fauci warned it could reach 100,000. In testimony, the expert warned the situation is not under control. and going in the wrong direction. States continue reclosing or halting the reopening. Texas reported nearly 7,000 cases, a record, increase fatalities, and pressure on its hospitals.

Jerome Powell, Chairman of the Federal Reserve, also testified on Capitol Hill, warning that without controlling the disease, the output will not return to pre-pandemic levels. His colleague John Williams from the New York Fed, said there are indicators that states with outbreaks are seeing slower recovery.

The Fed's meeting minutes from its June decision are due out later on Wednesday.

Battling COVID-19: Efforts for discovering a vaccine continue at full throttle and a potential cure, Gilead's Remdesivir, is also being used at a larger scale in the US and in South Korea.

Face masks: Additional states and Republican politicians have called for using masks, leaving President Donald Trump as one of the sole holdouts. The incumbent continues trailing challenger Joe Biden by nearly 10% according to additional polling data. Investors fear a Democratic clean sweep.

US data: ADP's private-sector employment report is set to show a rebound of nearly three million jobs in June, setting expectations for the Non-Farm Payrolls report. It is essential to note that the payroll firm printed a loss of positions in May while the official figure showed a leap. Investors want to see if the US economy continues its recovery.

The US ISM Manufacturing PMI serves as another hint toward the event, and it is projected to nearly reach 50 – the level separating expansion from contraction.

EUR/USD is back to its range ahead of final Markit's Manufacturing PMIs for June, with hopes for recovery. The old continent is coping with coronavirus and will begin welcoming visitors from a select group of countries. Americans – essential for the tourism sector – are currently disallowed.

GBP/USD is trading above 1.23 after a volatile end to the second quarter. Final growth figures for the first quarter disappointed and Prime Minister Boris Johnson's "Build, build, build" speech fell short on details. Final manufacturing PMI is projected to confirm a return to minimal expansion in the sector. Leicester enters its lockdown amid a significant local outbreak.

AUD/USD is under pressure after Australian Building Approvals plummeted by 16.4% in May, worse than expected. Moreover, the land down under is struggling with a COVID-19 outbreak in the suburbs of Melbourne.

Oil prices completed an impressive comeback in the second quarter, with WTI kicking off the third one around $40.

Major cryptocurrencies remain stable with Bitcoin hovering around $9,100.

Source: fxstreet

Markets are mixed after closing the second quarter with the strongest rise since 1998. Upbeat Chinese PMIs are outweighing coronavirus concerns. A busy day features the top-tier US hints toward the Non-Farm Payrolls, the Fed minutes, and more...

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Gold eases below $1770 level, downside seems limited

Gold-eass-below-1770_Forex_FXPIG
  • Gold witnessed a modest intraday pullback amid a recovery in the US equity futures.
  • A pickup in the US bond yields further exerted pressure on the non-yielding metal.
  • Weaker USD might extend some support to the dollar-denominated commodity.
  • The set-up still supports prospects for a move towards the ambitious $1800 target.

Gold struggled to capitalise on its early uptick back closer to multi-year tops and was last seen trading near daily lows, just below the $1770 region.

The ever-increasing number of new cases globally served as a warning that the fight against COVID-19 is not over and indicated that the road to recovery will be much slower than expected. Fading hopes of a sharp V-shaped global economic recovery continued weighing on investors' sentiment and benefited the safe-haven precious metal.

This coupled with the emergence of some fresh US dollar selling further underpinned the dollar-denominated commodity and contributed to the early uptick on the first day of a new trading week. However, a modest rebound in the US equity futures kept a lid on any strong positive move for the metal, at least for the time being.

This coupled with a goodish intraday pickup in the US Treasury bond yields further collaborated towards capping gains, rather exerted some pressure on the non-yielding yellow metal. Despite a modest pullback, the commodity remains well within last week's broader trading range and the striking distance of multi-year tops set last Wednesday.

The range-bounce price action witnessed over the past one-week or so might still be categorised as consolidative. This, in turn, supports prospects for an extension of the near-term appreciating move towards the ambitious $1800/ounce target.

Source: fxstreet

Gold struggled to capitalise on its early uptick back closer to multi-year tops and was last seen trading near daily lows, just below the $1770 region...

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EUR/USD: Europe fights coronavirus and stuns the dollar

EURUSD_fights-coronavirus_Forex_FXPIG

EUR/USD has been advancing as investors shrug off rising US coronavirus cases. There are several topics such as inflation figures or the negotiation about the EU Fund moving the pair, yet coronavirus is by far the most significant one, FXStreet’s analyst briefs.

Key quotes

“Coronavirus is raging in America – Texas' positive test rate has surged above 14%, Arizona and Georgia have reported a record number of cases, and Florida is not far behind. California, the largest and richest state, will be closing bars and in general – US cases topped 2.5 million.”

“Flare-ups have been recorded in various places in the old continent, but the situation is well under control. Per million, infections remain depressed in Europe's four large countries while they are clearly rising in America.”

“Preliminary inflation figures from Germany for June carry expectations for a bounce after substantial falls beforehand. Spain's Consumer Price Index surprised with an annual fall of 0.3% compared with -0.9% projected. Isabel Schnabel of the ECB said that inflation could dip below 0%, potentially triggering more monetary support. On the fiscal front, leaders are gearing up toward another discussion about the EU Fund, after failing to agree beforehand. Emmanuel Macron suffered a defeat in local elections in his country, somewhat weakening his hand.”

“The European Commission is set to release its new travel guidance on Monday or on Tuesday, probably excluding visitors from the US amid the second wave. That would add to trans-Atlantic tensions, following both sides' inability to agree on several trade issues.”

Source: fxstreet

EUR/USD has been advancing as investors shrug off rising US coronavirus cases. There are several topics such as inflation figures or the negotiation about the EU Fund moving the pair, yet coronavirus is by far the most significant one, FXStreet’s analyst briefs...

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Forex Today: Markets attempt to shrug off grim coronavirus developments

Markets-attempt-toshrug-off_Forex_FXPIG

Here is what you need to know on Monday, June 29:

Markets are attempting to shrug off growing concerns about the spread of coronavirus, especially in the US. Robust Chinese industrial profits and hopes for a vaccine are providing some balance. Several economic figures are due out at the beginning of a busy week.

Global coronavirus cases have reached ten million and deaths passed the grim 500,000 level. Investors are concerned about the surge in the US, including a leap in Texas' positive test rate, hitting 14.3%, record highs in Arizona and Georgia, new restrictions in California, and more. Vice President Mike Pence said that wearing a mask is "just a good idea" in a shift from the White House.

China: a new cluster has been reported close to Beijing after another outbreak in the capital earlier this month. Authorities were quick to lock down the region. On the other hand, the world's second-largest economy is advancing with a vaccine candidate called Ad5-nCoV, encouraging news. Moreover, industrial profits are up 6% YoY in May, the first monthly increase since the crisis.

EUR/USD is edging up ahead of preliminary inflation figures from the eurozone for June. Consumer prices have likely remained depressed. Isabel Schnabel of the European Central Bank said that inflation could dip below 0%.

French President Emmanuel Macron suffered a defeat in local elections, somewhat weakening his position as negotiations about the EU Fund continue.

GBP/USD is attempting to move toward 1.24 ahead of Prime Minister Boris Johnson's speech on the economy this week. The government is set to present a large spending program, and that is supporting sterling.

Brexit talks resume on Monday in the new "intensive phase" after four inconclusive rounds about future EU-UK relations. Andrew Bailey, Governor of the Bank of England, will speak later in the day.

AUD/USD is still trading below 0.69 amid a resurgence in cases in Victoria state, the most populous and the one that slapped the harshest lockdown. NZD/USD is above 0.64 as Prime Minister Jacinda Ardern poured cold water on hopes of opening borders.

USD/JPY is trading around 107, as Tokyo reported 60 cases, the highest in over a month, and as the transmission could not be determined.

Gold is holding onto the high ground around 1,770.  WTI Oll is retreating from its previous gains and trades around $37.

Cryptocurrencies are relatively stable after edging lower beforehand, with Bitcoin hovering around $9,100.

US Pending Home Sales for May are forecast to show a substantial rebound after falling by 21.8% in 18.9%. In politics, challenger Joe Biden is holding onto a nine-point lead over incumbent President Donald Trump. Markets are currently focused on other topics but may tune in.

Source: fxstreet

Markets are attempting to shrug off growing concerns about the spread of coronavirus, especially in the US. Robust Chinese industrial profits and hopes for a vaccine are providing some balance. Several economic figures are due out at the beginning of a busy week...

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Forex Week Ahead – Jitters Continue into Busy Week

Forex_week-ahead_jitters-continue_FXPIG

US

The Fed releases the Minutes to their last policy decision and may start to show some signs they are worried about inflation.  Policymakers will likely reiterate they are flying blind given the uncertainty about the course of COVID-19 and will likely keep all options on the table for further easing.  Negative rates are probably not on their radar unless we see the prospects of longer and deeper recession grow.

A lot of attention will fall on Texas and the halting of their reopening of its economy.  Texas was one of their first states to reopen and if they end up having to return to stricter restrictions, Wall Street could anticipate a much deeper recession as the V-shaped recovery could become a W-shaped one.  Coronavirus cases are growing by at least 5% in 31 states and this could see lost reopening momentum mean many-out-of-work Americans will struggle to find employment.

US Politics

With just over four months to go to the US Presidential election, everyone is focusing on former-VP Biden’s strong performance in recent battleground state polls.  President Trump is starting to see the deficit widen in Michigan, Wisconsin, Pennsylvania, Florida, Arizona, and North Carolina.  The coronavirus is surging again and many states may be forced to pause or reverse reopening, as new coronavirus and hospitalizations surge.

Democrats are eagerly awaiting former-VP Biden’s decision on his running mate.  Prior to COVID-19, the Democratic National Convention was originally scheduled in July, meaning we should have found out his decision by June.  Since the convention was delayed till August 17th, he will have more time to evaluate his candidates.  Biden will turn 78 a few weeks after the election, so his VP selection will be critical for many voters.

Brexit

This week there has been some signs this week that compromise is possible on some of the more contentious areas of the trade deal but an agreement is still some way off. Thankfully an intense summer of negotiations are planned. Michel Barnier warned that “the real moment of truth” will come in October, which throws the summer deadline out of the window. But let’s face it, that was never going to happen.

Sweden

The Riksbank meets next week but no change is expected, with interest rates currently sitting at 0%. There may be some movement in the next quarter but a lot can change in that time, in the current environment.

China

China is embroiled in multiple diplomatic conflicts at the moment, from US/China trade, Hong kong’s security law to the standoff with India in the Himalayas. Any of these could quickly escalate and have negative repercussions across markets around the world.

Sunday, China releases Industrial Profits YTD for May. Expected-22.0%, a slight improvement. Worse than expected could see Asia markets sharply lower on Monday morning. Official and unofficial Manufacturing and Non-Manf PMI’s released throughout the week. Potential for short-term volatility.

Hong Kong

Hong Kong security law outline poorly received. 28th June meeting in Beijing to decide exact wording. That has potential to cause market volatility next week when released. Increased protests and depending on wording, negative impact on stock market.

India

Economy continues reopening but Covid-19 cases continue spiking, markets negative. Standoff with China continues in the Himalayas, the situation is tense and could escalate rapidly. No significant data.

Australia

Australian Dollar remains under pressure as bull-market correction continues. High potential for more downside. Australia stocks and currency could have a significant vulnerability to sudden downside shifts in sentiment as a proxy for global risk as momentum in global recovery trade appears to be ebbing.

Community infections are increasing again in Victoria, Supermarkets limiting supplies. Markets negative.

Friday Australia Balance of Trade, short-term volatility only.

Japan

North korean tensions have faded, markets positive. Covid-19 risks in Tokyo and Osaka. Heavy data week ahead. Ind. Prod, Tanken, Ret.Sales. Expected to show Japan’s recovery is very slow. Local markets negative.

Market

Oil

The oil demand recovery story was dealt a blow this week after the US registered the biggest-ever jump in coronavirus cases, suggesting many states may have to visit regional lockdowns soon.  States will do their best to avoid a complete reversal with reopening phases, so the economic recovery should not complete stall out.

WTI crude has not been able to do much after capturing the $40 level and seems destined to continue to consolidate between the $35 and $42 level over the next couple weeks.  The rapid demand rebound is not happening, but stimulus efforts, pauses in reopening of businesses, improved treatments for the virus are limiting the downward pressure on crude prices.

Oil prices are slightly higher in early trade mirroring the broader fluctuations with US equities.

Gold

After nearly testing the $1800 an ounce level earlier in the week, gold prices are consolidating as the US dollar firms up.  Gold will continue to see strong support as the coronavirus situation deteriorates globally and as central banks and governments will continue to pump in more stimulus to avoid strains to the financial system and to salvage as many jobs as possible.

Gold prices (in dollar-terms) seem destined for record high territory as the latest spike in COVID-19 cases will see a much slower economic recovery that will keep the stimulus trade going strong.  The global recession might be deeper than expected, but a scramble for cash (extreme risk aversion forces investors to sell their gold positions for cash) will not likely take place for gold given the optimism with eventual rebound and breakthroughs on the treatment and vaccine front.

Source: marketpulse

The Fed releases the Minutes to their last policy decision and may start to show some signs they are worried about inflation. Policymakers will likely reiterate they are flying blind given the uncertainty about the course of COVID-19 and will likely...

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US Dollar Index clings to gains near 97.50 ahead of data

USD_Clings-to-gains_Forex_FXPIG
  • DXY extends the gradual upside to the vicinity of 97.50.
  • Markets’ attention remains on coronavirus and re-opening of the economy.
  • PCE, Personal Income/Spending, final U-Mich next on the docket.

The greenback, when gauged by the US Dollar Index (DXY), is extending the upside momentum to the 97.50 region at the end of the week.

US Dollar Index targets the 97.90 area

The index is up for the third session in a row on Friday, prolonging the bullish bias seen in the second half of the week on the back of renewed demand for the safe haven universe.

In fact, concerns around the advance of the coronavirus and uncertainty surrounding the re-opening of the economy continue to support the investors’ preference for the buck in a context dominated by the risk-aversion. In addition, swelling effervescence around the trade scenario has been also collaborating with the broad risk-off sentiment in past sessions as well as the absence of improvement in the labour market.

Later in the NA session, inflation figures measured by the PCE for the month of May are due seconded by Personal Income/Spending during the same period and the final June gauge of the Consumer Sentiment gauged by the U-Mich index.

What to look for around USD

The re-emergence of the risk aversion in response to COVID-19 developments and trade jitters have lent extra support to the dollar in the last couple of sessions. In the meantime, price action around the buck is expected to track the performance of the broad risk appetite trends, US-China trade developments and the (lack of) progress of the re-opening of the economy. On the constructive stance around the buck, bouts of risk aversion should support the investors’ preference for the greenback as a safe haven along with its status of global reserve currency and store of value.

US Dollar Index relevant levels

At the moment, the index is up 0.05% at 97.43 and a break above 97.74 (weekly high Jun.22) would aim for 97.87 (61.8% Fibo of the 2017-2018 drop) and finally 98.36 (200-day SMA). On the flip side, immediate contention is located at 96.39 (weekly low Jun.23) seconded by 96.03 950% Fibo of the 2017-2018 drop) and finally 95.72 (monthly low Jun.10).

Source: fxstreet

The greenback, when gauged by the US Dollar Index (DXY), is extending the upside momentum to the 97.50 region at the end of the week.US Dollar Index targets the 97.90 area...

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ECB’s Lagarde: Economic recovery will be a complicated

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European Central Bank (ECB) President Christine Lagarde, while presenting at an Online Summit organised by the European Business Leaders' Convention, said that we probably have passed the lowest point of the crisis.

Additional quotes:

  • Still cautious because of the second wave of infections.
  • Economic recovery will be a complicated matter.
  • Recovery will be incomplete, maybe transformational.
  • We have to use all available policy levers on monetary and fiscal front.
  • This crisis is worse than the 2008-09 financial crisis.
  • The ECB mandate is the same i.e. focus on price stability.

The comments did little to influence or provide any meaningful impetus to the shared currency. The EUR/USD pair was last seen hovering near the lower end of its daily trading range, just above the 1.1200 mark.

Source: fxstreet

European Central Bank (ECB) President Christine Lagarde, while presenting at an Online Summit organised by the European Business Leaders' Convention, said that we probably have passed the lowest point of the crisis...

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Gold sticks to the positive outlook

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Strategists at UOB Group’s Quarterly Global Outlook noted the precious metal could advance to the key $1,800 mark per ounce in early 2021.

Key Quotes

“Amidst the uncertain economic times, gold is probably the only key commodity with a distinctive and clear positive outlook. All the key positive drivers remain in place. Global central banks continue their massive monetary policy easing, providing a strong and steady tailwind for gold. Adding to the tailwind, safe haven allocation demand remains strong amidst the on-going economic uncertainty. As such, the question for gold is not one of whether the recent strength is sustainable? This more pertinent question for gold is how strong the rally will be?.”

“Overall, we maintain our medium to longer term gradual positive outlook for gold. We forecast gold at USD 1,700 / oz in 3Q20, USD 1,750 / oz in 4Q20, USD 1,800 / oz in 1Q21 and USD 1, 850 / oz in 2Q21.”  


Source: fxstreet

Strategists at UOB Group’s Quarterly Global Outlook noted the precious metal could advance to the key $1,800 mark per ounce in early 2021...

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EUR/USD Price Analysis: Focus now shifted to 1.1170

EURUSD_Focus-shifted_Forex_FXPIG
  • EUR/USD keeps correcting lower following weekly tops near 1.1350.
  • Further south aligns last week’s lows in the 1.1165/70 band.

EUR/USD is down for the second session in a row in the second half of the week, accelerating the move from earlier tops in the mid-1.1300s.

If the selling impetus accelerates, then the recent low (and interim support) at 1.1168 should emerge on the horizon ahead of the critical 200-day SMA at 1.1030.

As long as the 200-day SMA at 1.1030 holds the downside, further gains in the pair are well on the table.

Source: fxstreet

EUR/USD is down for the second session in a row in the second half of the week, accelerating the move from earlier tops in the mid-1.1300s...

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Forex Today: Dollar dominates, gold shines as coronavirus rages in the US, triple data release eyed

Forex_today_dollar-dominates_FXPIG

Here is what you need to know on Thursday, June 25:

The market mood is sour as COVID-19 statistics in the American south continue rising at an alarming rate. The dollar and gold are shining stocks and other currencies are down. A triple release of US economic figures and coronavirus data are eyed.

US coronavirus: The number of new cases is accelerating in many other states including Florida, Houston is about to reach full capacity in its hospitals, and Arizona does is unable to keep up with the pace of testing. Moreover, states in the greater New York area want those coming from the infected southern states to quarantine, and even deaths from the disease are on the rise after a constant decline.

Gloomy forecasts: Another factor weighing on stocks is a downgrade of forecasts from the International Monetary Fund, which now projects a downfall of 4.9% in 2020. It also laid out an L-shaped scenario that sees no growth in 2021.

The US dollar is the primary beneficiary, gaining ground against all currencies, including the safe-haven yen. Gold prices are consolidating their gains around $1,770 after hitting new 7.5-year highs on Wednesday. S&P 500 futures and Asian stocks are falling alongside oil and other currencies. David Solomon, Goldman Sachs' CEO, hinted that stock valuations are too high.

The US calendar is packed with three top events: The final Gross Domestic Product release will likely confirm the 5% annualized contraction in the first quarter. Durable Goods Orders are projected to rebound in May after tumbling in April.

The final economic statistic to watch is weekly Jobless Claims, forecast to resume their slide. Continuing claims are also of importance, as they are for the same week when the Non-Farm Payrolls surveys are held.

US elections: Additional opinion polls have confirmed Democrat Joe Biden's solid lead against President Donald Trump, which is above 9%. Investors fear a clean sweep for Democrats. Elections news is having trouble competing with COVID-19 headlines.

EUR/USD is stabilizing at the lower ground ahead of the European Central Bank's meeting minutes release for its June meeting when it decided to boost its bond-buying scheme. The level of concern about the economy and explaining that the move was proportional – answering the German constitutional court  – are eyed. Various European countries are experiencing local COVID-19 outbreaks, which currently seem under control.

GBP/USD is trading above 1.24 but off the highs. The UK government is struggling with criticism about his handling of the crisis. Brexit may grab the headlines ahead of the resumption of talks on Monday.

WTI oil is trading around $37, at lower ground. an increase in inventories joined the risk-off mood. Commodity currencies are retreating from the highs.

Cryptocurrencies are on the back foot, with Bitcoin hovering around $9,100.

Source: fxstreet

The market mood is sour as COVID-19 statistics in the American south continue rising at an alarming rate. The dollar and gold are shining stocks and other currencies are down. A triple release of US economic figures and coronavirus data are eyed...

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EUR/USD: Rising bets for a test of 1.1400 and beyond

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  • EUR/USD managed to visit the mid-1.1300s on Tuesday.
  • Further north is located the next hurdle at June’s top at 1.1422.

The recovery in EUR/USD from the 1.1170 region seems to have met an important resistance at so far weekly peaks near 1.1350 on Tuesday.

If the bull run picks up serious pace, then there is the palpable chance of another visit of monthly peaks in the 1.1420/25 band (June 10th).

As long as the 200-day SMA at 1.1030 holds the downside, further gains in the pair are well on the table.

Source: fxstreet

The recovery in EUR/USD from the 1.1170 region seems to have met an important resistance at so far weekly peaks near 1.1350 on Tuesday...

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EUR/USD recedes from tops above 1.1300

EURUSD_recedes-from-tops_forex_FXPIG
  • EUR/USD extends gains to the area above 1.1300.
  • EMU, German flash PMIs surprised to the upside in June.
  • Attention shifts to fresh coronavirus outbreaks in Germany.

The optimism around the single currency remains unbated so far in the first half of the week, with EUR/USD briefly surpassing the 1.1300 mark although losing some impetus soon afterwards.

EUR/USD bolstered by risk appetite, PMIs

EUR/USD is advancing for the second consecutive session so far on turnaround Tuesday, managing to regain the 1.1300 neighbourhood during early trade. The bullish attempt, however, lacked follow through and sellers dragged the pair back to the current 1.1290/85 band.

In the meantime, further upside in the pair came after preliminary readings from PMIs in the core eurozone surpassed forecasts for the month of June, adding to the idea that the recovery could (well) be V-shaped. These results add to Monday’s better-than-expected reading from the European Commission’s flash Consumer Confidence, also for the current month.

However, the recent coronavirus outbreaks in Germany and China have prompted some cautiousness among investors and appear to have limited the bull run somewhat.

Later in the NA session, Markit will publish its preliminary Manufacturing PMI seconded by New Home Sales for the month of May.

What to look for around EUR

EUR/USD has started the week on an optimistic mood after bottoming out in the proximity of 1.1170 during last week. In the meantime, investors continue to look to the gradual return to some sort of normality in the Old Continent as well as rising concerns over the probability of a second wave of coronavirus contagion.  The constructive view in the euro, however, remains well sustained by the gradual and relentless re-opening of economies in Europe and by the ongoing monetary stimulus announced by the ECB, Germany and the European Commission. On top, the solid performance of the region’s current account is also adding to the attractiveness of the shared currency.

EUR/USD levels to watch

At the moment, the pair is gaining 0.27% at 1.1290 and a break above 1.1306 (weekly high Jun.23) would target 1.1422 (weekly/monthly high Jun.10) en route to 1.1448 (50% Fibo of the 2017-2018 rally). On the other and, immediate contention emerges at 1.1168 (monthly low Jun.19) seconded by 1.1147 (high Mar.27) and finally 1.1028 (200-day SMA).

Source: fxstreet

The optimism around the single currency remains unbated so far in the first half of the week, with EUR/USD briefly surpassing the 1.1300 mark although losing some impetus soon afterwards...

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Gold: Falling US Real Yields fuels bull trend

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Strategists at Credit Suisse look for 10yr US Real Yields to break lower from their sideways range to reinforce the break higher and resumption of the core bull trend in gold for an eventual move to new record highs above $1921.

Key quotes

“With 10yr US Real Yields threatening to break lower we look for Gold to correspondingly break higher from its range above $1765 to confirm a resumption of its core bull trend with resistance seen at $1796/1803 next.”

“Big picture, we continue to eventually look for new highs above $1921, with resistance then seen next at $2000, then $2075/80.”

“Support at $1660 needs to hold to avid a near-term top.”

Source: fxstreet

Strategists at Credit Suisse look for 10yr US Real Yields to break lower from their sideways range to reinforce the break higher and resumption of the core bull trend in gold for an eventual move to new record highs above $1921...

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Forex Today: Risk rides the Navarro rollercoaster, Eurozone/ UK PMIs, virus stats in focus

Risk_rides_rollercoaster_Forex_FXPIG

Here is what you need to know on Tuesday, June 23

The US dollar showed some signs of life amid a wild Asian ride this Tuesday, as the risk sentiment swung dramatically on the US-China trade deal mix-up. The market mood turned upbeat once again after US Pres. Donald Trump assured markets that the US-China trade is fully intact.

White House Trade Adviser Peter Navarro said in a Fox News interview in early Asia that the trade deal with China has fallen apart. He quickly walked back on his comments and clarified that the trade deal remains unchanged while speaking to the Wall Street Journal (WSJ).

Asian stocks and the US equity futures regained the lost ground, benefiting from the Wall Street rally and Trump’s confirmation. Meanwhile, the US Treasury yields traded with modest gains. Expectations on the potential US and Spanish fiscal stimulus bolstered risk trades, which overshadowed looming concerns over the second-wave of coronavirus in the US, China, Australia and South Korea.

Across the fx space, the risk-on mood dominated and drove USD/JPY beyond 107.00.  AUD/USD jumped back to test the multi-day highs of 0.6935 while the kiwi remained capped below 0.6500, as attention turned towards Wednesday’s RBNZ rate decision.

EUR/USD consolidated below 1.1300, with the upside stalled ahead of the Eurozone Preliminary PMIs. GBP/USD pared back gains to trade below 1.2500 ahead of the UK Preliminary PMIs and BOE Governor Bailey’s speech.

Gold prices refreshed monthly highs just above $1760 before turning neutral around $1755. WTI cracked the 41 barrier for the first time in three months but failed to resist above it heading into the API data release.

Cryptocurrencies consolidated the recent surge, with Bitcoin holding up above $9600.

Source: fxstreet

The US dollar showed some signs of life amid a wild Asian ride this Tuesday, as the risk sentiment swung dramatically on the US-China trade deal mix-up. The market mood turned upbeat once again after...

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BoE is seen increasing further the size of QE – UOB

Boe_is-seen-increasing_forex_FXPIG

Economist at UOB Group, assesses the latest BoE event and the prospects of extra easing in the next months.

Key Quotes

“As expected, the Bank of England (BOE) announced, at its June meeting, a boost to its quantitiave easing (QE) programme by GBP100bn. The additional bond purchases will take the total value of the Asset Purchase Facility (APF) to GBP745bn.”

“Meanwhile, all nine MPC members agreed to keep its key benchmark interest rate at the historic low of 0.10%. There is increasing speculation that the BOE might cut interest rates to below zero for the first time as policymakers appear to have become less resistant to this option. However, there was nothing in the accompanying minutes that gave any clues about the MPC’s latest thinking. Whilst tempting, it remains unclear as to how negative rates would aid the recovery, given the negative impact on bank profitability. The decision to introduce negative interest rates will not be taken lightly, although we do not rule out this option should the economic outlook deteriorate further.”

“In all, although the decision to increase the asset purchase target by GBP100bn was within our expectations, the slower pace of purchases came as a surprise. We were expecting the current rate of bond buying to be maintained until August, at which point the MPC would top up its QE program again. Nonetheless, we think the latest move by the BOE is unlikely to mark the end of its efforts to counter the economic slump, and we forecast a further extension of GBP100bn by the November meeting. A further option is for the BOE to make changes to the Term Funding Scheme (TFS). This could give lenders access to funding below the Bank rate, assuming they increase lending to businesses (specifically SMEs).”

Source: fxstreet

“As expected, the Bank of England (BOE) announced, at its June meeting, a boost to its quantitiave easing (QE) programme by GBP100bn. The additional bond purchases will take the total value of the Asset Purchase Facility (APF) to GBP745bn.”..

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Forex Today: Risk-recovery back in play, US dollar recedes with second-wave virus fears

Risk-recovery-second-wave-virus_Forex_FXPIG

Here is what you need to know on Monday, June 22:

The US dollar reversed a part of last week’s gains after starting out the week on the front foot, as the risk-recovery mode returned in Asia. Beijing reported fewer new coronavirus cases and helped lift the market mood.

Wall Street turned south into the weekly close alongside the US stock futures after Apple Inc. announced re-closure to some stores in Florida, North Carolina, South Carolina, and Arizona due to intensifying fears over the coronavirus resurgence.

Asian stocks recovered early losses to trade flat while S&P 500 futures staged a solid comeback in a bid to close the bearish opening gap. Markets shrugged-off the UK terrorist attack, as expectations of the UK easing off the lockdown underpinned the sentiment.

Meanwhile, the Axios report that US President Donald Trump held-off on Xinjiang sanctions for China trade deal also calmed fears over the souring US-China diplomatic ties.

Within the G10 currencies basket, the Antipodeans gapped lower at the open before rebounding sharply in tandem with the risk tone. AUD/USD headed back towards 0.6900 while the kiwi eyed 0.6450. Traders shrugged-off RBA Governor Lowe’s bearish comments on the A$ and PBOC ‘no-rate change’ decision.

USD/JPY ranged between 107.00-106.75, divided between the virus concerns and the narrative on the global economic recovery.

EUR/USD bounced-off three-week lows to regain 1.1200 amid renewed dollar weakness and ahead of the European Union (EU)-China Summit and Bundesbank monthly report. The spike in Germany’s new infections and reproduction rate remains a cause of concerns for the EUR bulls.

GBP/USD extended the recovery briefly above 1.2400. UK Chancellor Rishi Sunak is expected to unveil further measures, including the Value Added Tax (VAT) reduction, in another effort to boost the economy.

Gold prices jumped to one-month highs near $1760 while crude oil prices also saw a fresh leg higher, with WTI reclaiming the $40 mark.

Cryptocurrencies traded on the front foot, with Bitcoin gearing up for a test of the $10K level.

Source: fxstreet

The US dollar reversed a part of last week’s gains after starting out the week on the front foot, as the risk-recovery mode returned in Asia. Beijing reported fewer new coronavirus cases and helped lift the market mood...

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Forex Week Ahead – Markets play tug-of-war with Covid-19 concerns and reopening momentum

tug-of-war_trump_market-reopening_Forex_FXPIG

US governors are trying to carefully navigate reopening plans to salvage as many businesses as possible, while several states continue to struggle containing the coronavirus spread.  New York City, once the epicenter of the coronavirus pandemic in the US enters its phase 2 reopening on Monday, with as many as 300,000 employees expected to return to their jobs.  In the UK, PM Boris Johnson will push for an easing of the two-meter social distancing rule if he can get the support from health experts.

The one-way trade of buying risky assets might be over and volatility should remain elevated since the US economic recovery is not accompanied with a stronger rebound in the labor market. Adding to the uncertainty are the current virus resurgence concerns, what to expect in the fall, end of month volatility from the rebalancing of the S&P and Russell indexes, and a wrath of geopolitical risks.

Right now, the Fed has the greenlight to keep deficits on an unsustainable path, but that will only become an issue once the economy improves.  It is amazing how irrational the risk-on rally has been for global equities as the US sees the virus continues its spread across the country and as a second wave hits Beijing, and concerns of a resurgence could trigger more restrictions and cripple consumer confidence.  Financial markets are also constantly fluctuating over every vaccine/treatment update.  The base case remains that a vaccine will be found this year, with high hopes on a few that will have phase 3 vaccine trials starting this summer.

US Politics

Presidential Trump is resuming campaign rallies while the coronavirus pandemic continues to intensify across several states and while protests against police brutality continue.  Public health officials remain skeptical of any mass gatherings and are very nervous over the June 20th rally at the BOK center in Tulsa, Oklahoma, an arena that could hold up to 20,000 people.  President Trump is likely to remain on the attack against China, but Wall Street doubts he will follow through on any of his threats given the vulnerable state of the economy.

Democrats are eagerly awaiting former-VP Biden’s decision on his running mate.  Prior to COVID-19, the Democratic National Convention was originally scheduled in July, meaning we should have found out his decision by June.  Since the convention was delayed till August 17th, he will have more time to evaluate his candidates.  Biden will turn 78 a few weeks after the election, so his VP selection will be critical for many voters.

UK

With the UK economy continuing to feel the devastating effects of the coronavirus pandemic and lockdown that it forced, the Bank of England expanded its asset purchase facility this week by another £100 billion, taking the total to £745 billion. The additional purchases should see it through to the end of the year, with the pace being allowed to slow due to the economic prospects improving since the May inflation report. The country is still in the midst of a severe recession and unemployment will soar as the furlough scheme draws to a close but the Bank is less pessimistic than it was.

Brexit

Brexit negotiations are going to intensify between now and the end of July in the hope that significant progress can be made on some of the more contentious issues, with the end of year deadline fast approaching. An extension was once again ruled out after a discussion between Boris Johnson and Ursula von der Leyen earlier this week.

European Union

Leaders will discuss the draft 2021-27 budget for the first time on Friday but no breakthrough is expected, with the “frugal four” still strongly against the inclusion of grants, rather believing that the recovery fund – which will be raised in the market by the European Commission – should be repaid in full. The current proposition from the EC includes €500 billion of grants and €250 billion of loans, on top of the €1.1 trillion budget. The hope is that discussions lay the groundwork for a deal before the summer recess in August.

Switzerland

The SNB left interest rates unchanged this week and vowed to maintain ultra loose monetary policy and currency interventions for some time, with inflation not expected to return until 2022, and then by only 0.2%. It expects the country to shrink by 6% this year. The central bank has no limit on currency interventions or explicit target levels.

Turkey

The CBRT has been on an interest rate cutting cycle since last July, with rates falling from 24% to 8.25%. Only a 25 basis point rate cut is expected at this meeting.   The cuts have naturally been getting much smaller and the weakness in the currency may act as a deterrent, but that hasn’t held them back before. If there is a cut, it seems unlikely that it would exceed the 50 basis points at the previous meeting.

China

China is embroiled in multiple diplomatic conflicts at the moment, from US/China trade, Hong kong’s security law to the standoff with India in the Himalayas. Any of these could quickly escalate and have negative repercussions across markets around the world.

Monday China announces its one and five-year loan prime rate decisions. Expected unchanged but a surprise cut could boost markets across the region.

No other significant data this week.

Hong Kong

The new security law provisions will be announced shortly and look set to be rammed through the legislature in double quick time. High chance of rapidly increasing protests disrupting the economy and markets in Hong Kong.

India

Economy continues reopening but Covid-19 cases are spiking, markets negative. Standoff with China continues in the Himalayas but negotiations continue. However the situation is tense and could escalate rapidly. No significant data.

Australia

Australian Dollar remains under pressure as bull-market correction continues. High potential for more downside. Australia stocks and currency high vulnerability to sudden downside shift in sentiment as a proxy for global risk

No significant data.

Japan

Tuesday PMI expected to confirm Japan remains in recession. No other tier-1 data. Japanese Yen looks set to strengthen further on risk aversion flows. Geopolitical events elsewhere could rapidly accelerate that move.

Market

Oil

Oil prices rose after US economic data showed large parts of the economy are bouncing back strongly and after the OPEC+ group’s JMMC meeting saw Iraq and Kazakhstan deliver their strategies for bringing their production down to their quotas.  It seems OPEC+ might actually deliver with their biggest ever production cuts as most of the cheaters seem on board.  Nigeria, Angola, and Congo have yet to deliver reduction plans, but that might not matter if the larger producers seem committed.

WTI crude remains elevated but unlikely to break much past the $40 level as surging coronavirus cases across Texas, Florida and several other states raise the risk that reopening momentum will hit stall speed very soon.  Beijing seems they may have their second wave of the virus under control, but that does not seem like it will be the case for the US later in the summer or early Fall.  Global oil demand is recovering quickly but that seems like it might be poised to hit a few bumps as reopenings lose momentum as virus risks remain significant.

Gold

Gold prices continue to consolidate regardless of negative coronavirus headlines and more stimulus being pumped into the global economy.  Despite all the other positive economic releases, the recovery will not boost risky assets unless the Americans are quickly coming back to work.  Gold is in a tricky place but will ultimately see further support if the labor situation remains weak.  The stronger dollar theme will likely be short-lived, and gold should eventually make another attempt at $1750 in the short-term. The virus situation in the US should also provide steady demand for safe-havens such as Treasuries and gold.  Texas saw hospitalizations rise for a record seventh consecutive day, Florida had its largest increase with new cases, while California had their largest single-day increase with infections.

Bitcoin

Bitcoin continues to consolidate in what many crypto-fans are calling the typical accumulation phase that occurs after a halving event.  Bitcoin has struggled despite an overall resilient appetite for risky assets.  The world’s largest cryptocurrency has started to see some traders focus more so on Ether’s network as demand grows for decentralized finance (DeFi) applications.  Bitcoin may struggle as their rival continues to gain momentum.

Source: marketpulse

US governors are trying to carefully navigate reopening plans to salvage as many businesses as possible, while several states continue to struggle containing the coronavirus spread. New York City, once the epicenter of the...

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Forex Today: Coronavirus, weak data outweigh reopening optimism, BOE, jobless claims eyed

Forex-today-weak-outweight_FXPIG

Here is what you need to know on Thursday, June 18:

The market mood is somewhat pessimistic as concerns about coronavirus marginally outweigh optimism about the economic recovery. The BOE, US jobless claims, and coronavirus news are all in the mix.

US Coronavirus: Hospitalizations in Texas and cases in Florida continue rising at an alarming rate. President Donald Trump said he will not shut down the economy while Vice President Mike Pence said the US is not suffering from a second wave. Top medical expert Anthony Fauci commented that America is still in the first wave.

Jerome Powell, Chairman of the Federal Reserve, called on Congress to add support to the economy at the critical point of recovery. In his second day testifying on Capitol Hill he was encouraged by the bounce in retail sales, which revived hopes for a quick bounce.

US Housing Starts poured some cold water on the enthusiasm by remaining under one million annualized. Weekly jobless claims are due out on Thursday and are set to continue the slow improvement.

Trump is fighting to stop the publication of an explosive book by his former National Security Adviser John Bolton. The security hawk claims that the president asked his Chinese counterpart Xi Jinping for help in the elections, and also supported China's building of education camp for Uyghurs, a Muslim minority in the west of the country. Trump is about to sign a bi-partisan law condemning China for the move. Beijing vowed to retaliate.

China continues battling the COVID-19 outbreak in Beijing, with drastic measures to limit transport. The South China Morning Post says a study in Wuhan suggests many humans may never develop immunity against COVID-19

The Chinese central bank cut its reverse repo rate from 2.55% to 2.35% in an attempt to boost the economy. Both China and India have made efforts to defuse tensions following a border clash that cost the lives of tens of soldiers.

AUD/USD is on the back foot, trading below 0.69 after Australia reported a loss of 227,700 jobs, worse than expected. The unemployment rate leaped to 7.1%.

NZD/USD is also struggling, trading around 0.6450 after Gross Domestic Product disappointed with a fall of 1.6% in the first quarter.

GBP/USD is awaiting the Bank of England's rate decision. The "Old Lady" is set to boost its bond-buying scheme by around £100 billion while leaving its rates unchanged. Hints about taking borrowing costs below zero are eyed. The meeting minutes will also be watched.

UK Prime Minister Boris Johnson will meet French President Emmanuel Macron amid efforts to revive Brexit talks. While the European Commission is reportedly readying compromises on fisheries, Britain is preparing a "Shock and Awe" plan for a no-deal. Germany is also urging members to prepare for such an outcome.US Trade Representative Robert Lighthizer cast doubt that a US-UK trade deal can be achieved by year-end.

EUR/USD has stabilized around 1.1250. The European Central Bank's monthly bulletin is due out.

The Swiss National Bank is projected to leave its Libor Rate unchanged at -0.75%, pledging to intervene to weaken the franc is necessary. The SNB has not modified its policy since dropping the infamous "SNBomb" in 2015.

Oil is somewhat pressured with WTI around $37. The OPEC JMMC is scheduled for later in the day. US shale producers will reportedly ramp up oil petrol production by some 500,000.

USD/CAD is around 1.35, ahead of ADP's Canadian jobs report.

Gold prices stick to the range, trading just under $1,730. The precious metal dipped on Wednesday.

Cryptocurrencies have been edging lower, with Bitcoin hovering around $9,400.

Source: fxstreet

The market mood is somewhat pessimistic as concerns about coronavirus marginally outweigh optimism about the economic recovery. The BOE, US jobless claims, and coronavirus news are all in the mix...

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ECB's de Guindos: Better if EU aid is distributed via grants rather than loans

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For countries with a weaker fiscal position like Spain, Italy and Greece, it would be better if the European Union aid is distributed via grants rather than loans, European Central Bank Vice President Luis de Guindos argued on Wednesday.

Market reaction

The EUR/USD pair paid little to no mind to this comment. After slumping to a 1.1226 earlier in the session, the pair staged a recovery and seems to have gone into a consolidation phase near 1.1250.

Meanwhile, the market mood remains upbeat on Wednesday with the Euro Stoxx 50 gaining 0.9% on the day at 3,272 points. Additionally, Germany's DAX 30 and the UK's FTSE indexes are up 0.55% and 0.6%, respectively.

Source: fxstreet

For countries with a weaker fiscal position like Spain, Italy and Greece, it would be better if the European Union aid is distributed via grants rather than loans, European Central Bank Vice President Luis de Guindos argued on Wednesday...

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Gold Price Analysis: XAU/USD slumps toward $1,710 on improving risk sentiment

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  • Gold is struggling to find demand as risk flows start to dominate markets.
  • US Dollar Index clings to small daily gains above 97.00.
  • Wall Street looks to open in the positive territory.

After spending the first half of the day moving sideways above $1,720, the troy ounce of the precious metal started to weaken ahead of the American session. As of writing, the XAU/USD pair was trading at $1,714, losing 0.75% on a daily basis.

Will the risk rally continue?

Improving risk sentiment seems to be weighing on safe-haven gold on Wednesday. German biotech firm CureVac announced on Wednesday that they could have their coronavirus vaccine on the market in mid-2021. Moreover, Germany's Cabinet approved the extra budget to finance the stimulus package and provided an additional boost to the risk-on flows.

Reflecting the upbeat market mood, major European equity indexes are rising between 0.5% and 0.7% on the day. In the meantime, the S&P 500 futures are up 0.45%, suggesting that Wall Street is looking to open in the positive territory.

Building Permits and Housing Starts will be featured in the US economic docket on Wednesday. Nevertheless, investors are unlikely to react to these data. More importantly, Jerome Powell, Chairman of the Federal Reserve System, will be testifying before the Senate on the second day of the semiannual monetary policy report. Ahead of these events, the US Dollar Index is clinging to small daily gains above 97.00, allowing the bearish pressure to remain intact.

Source: fxstreet

After spending the first half of the day moving sideways above $1,720, the troy ounce of the precious metal started to weaken ahead of the American session. As of writing, the XAU/USD pair was trading at $1,714, losing 0.75% on a daily basis...

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Forex Today: Dollar up as health, geopolitics replace consumer optimism, Powell, COVID-19 data eyed

Dollar-up_eyed_Forex_FXPIG

Here is what you need to know on Wednesday, June 17:

The market mood is cooling as concerns about coronavirus outbreaks in the US and China, as well as two geopolitical clashes in Asia replace optimism about a quick recovery of the US economy. US housing figures and potentially more caution from Fed Chair Powell are on the cards.

COVID-19 infections and hospitalizations are accelerating in the US Sun Belt, with markets becoming sensitive to news from Texas, Florida, Arizona, and also Oklahoma, where President Donald Trump is set to hold a large rally on Saturday. The increases are balancing out ongoing improvement in the greater New York area

US data curbed some of the gains triggered by the superb US Retail Sales report for May, which saw a jump of 17.7%, more than double the expectations and serving as a full rebound from the fall in April. Hopes for a V-shaped recovery have resurfaced.

US Building Permits and Housing Starts for May are due out on Wednesday and are set to show a rebound after a downfall in April.

Jerome Powell, Chairman of the Federal Reserve, warned that the economy may need more time to recover, especially the labor market, echoing his comments from the rate decision last week. He will resume his testimony on Capitol Hill on Wednesday and may urge lawmakers to act.

Robert Kaplan, President of the Dallas branch of the Federal Reserve, said the economy may have bottomed out in May. However, he warned that a full recovery depends on resolving the health issue rather than fiscal or monetary stimulus.

Hope for battling coronavirus comes from research by Oxford University, which showed that a cheap steroid called Dexamethasone proved effective in saving lives in a randomized control trial, the gold standard of scientific research. The road to developing a vaccine is still long.

Authorities in Beijing have taken drastic measures such as grounding hundreds of flights and limiting other transport to curb a new outbreak, potentially stemming from a market. Around 137 people have been infected and come suspect the virus strain in the Chinese capital is more contagious than previous ones.

China and India clashed in the Galwan valley, a remote border region in the Himalayas. The violence resulted in several casualties among the world's most populated countries, which both have nuclear arms. The developments weigh on the mood and efforts to defuse tensions are underway.

South Korea said it will retaliate against any new military action from North Korea after the latter blew up a liaison office. Pyongyang is angered by activists distributing propaganda from across the border.

GBP/USD is trading below 1.26 amid dollar strength and ahead of UK inflation figures, which are forecast to further decline in May. Labor market figures showed a worse than expected increase in claims in May while the unemployment rate remained low in April. Hopes for a Brexit breakthrough persist.

EUR/USD is trading below 1.13, retreating amid dollar strength. Final eurozone inflation figures will likely confirm decelerating inflation.

Gold returned to the $1,730 area, sticking to the range after a roundtrip to the downside.

Oil prices have consolidated minor gains with WTI hovering around $37 and Brent above $40. Inventory data is due out.

USD/CAD is also set to move in response to inflation figures for May, which are predicted to bounce from the lows.

AUD/USD and NZD/USD are edging lower amid the risk-off mood. Both countries were successful in combating COVID-19 but have seen minor outbreaks recently. Flights between the countries may resume in a couple of weeks.

Cryptocurrencies have stabilized with Bitcoin hovering around $9,500.

The market mood is cooling as concerns about coronavirus outbreaks in the US and China, as well as two geopolitical clashes in Asia replace optimism about a quick recovery of the US economy. US housing figures and potentially more caution from Fed Chair Powell are on the cards...

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Gold clings to modest daily gains

Gold_clings-to-modest-gains_forex_FXPIG
  • Gold gained some traction and built on the overnight rebound from multi-day lows.
  • The Fed’s move to expand the bond-buying program remained supportive of the uptick.
  • The upbeat market mood, a goodish picku in the US bond yields capped the upside.

Gold traded with modest gains through the early European session and was last seen hovering near daily tops, around the $1730 region.

The precious metal gained some positive traction on Tuesday and built on the previous day's intraday bounce from multi-day lows that came after the Fed announced to begin buying of investment-grade corporate bonds.

The Fed's move led to some follow-through selling around the US dollar and provided an additional boost to the dollar-denominated commodity, albeit the prevalent upbeat market mood kept a lid on any runaway rally.

The risk-on mood was reinforced by a goodish pickup in the US Treasury bond yields, which further collaborated towards capping gains for the non-yielding yellow metal and warrant some caution for bullish traders.

Hence, it will be prudent to wait for some strong follow-through buying, possibly beyond the $1740 horizontal resistance, before traders start positioning for any further near-term appreciating move.

Moving ahead, market participants now look forward to the release of the US monthly retail sales and the Fed Chair Jerome Powell's testimony before the Senate Banking Committee for some meaningful trading opportunities.

Source: fxstreet

Gold traded with modest gains through the early European session and was last seen hovering near daily tops, around the $1730 region.The precious metal gained some positive traction on Tuesday and built on the previous day's intraday bounce from multi-day lows that...

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Forex Today: Double stimulus talk downs dollar ahead of Powell's power-play, US retail sales

Double-stimulus_powel_forex_FXPIG

Here is what you need to know on Tuesday, June 16:

The market mood is "risk-on" once again, as the Federal Reserve announced buying corporate bonds and lawmakers discuss infrastructure spending. Investors shrug off coronavirus concerns ahead of the Fed Chair's testimony and all-important retail sales.

Monetary stimulus: The Fed announced on Monday that it will buy corporate bonds as part of its Secondary Market Corporate Credit Facility (SMCCF). The Fed previously used the program to buy Exchange Trading Funds (ETF) and now it is going directly for bonds. The $750 billion and also includes buying new bond issuance.

Jerome Powell, Chairman of the Federal Reserve, will testify on Capitol Hill and may refer to the program, the Fed's tools, negative interest rates and also recent economic data. Markets will watch the Retail Sales figures for May, which are set to show a rebound after tumbling in April. Uncertainty is high.

Fiscal stimulus: President Donald Trump is reportedly looking into a $1 trillion infrastructure spending program. While the move may look like a pre-election candy, it could boost the economy. Previous administration promises about building roads have not materialized.

Chinese second wave? Around 100 people have been confirmed to have COVID-19 in Beijing, mostly linked to a large market. Authorities have taken steps to contain the disease, including by banning residents with high risks from leaving the city. The new cluster in the capital is seen as a test for authorities in the world's second-largest economy.

US second wave?: Coronavirus cases continue rising in around 20 US states, including large Texas and Florida. While more infections can be attributed to testing, the increase in the hit rate in these probes and rising hospitalizations indicate underlying issues. Markets have moved to focus on other topics.

Sino-American relations: US Secretary of State Mike Pompeo will reportedly meet his Chinese counterpart Yang Jiechi. The two men are set to meet in Hawaii and may discuss Hong Kong, coronavirus, and more. Also, the US Commerce Department will reportedly allow American companies to work with Huawei on 5G standards. Better relations between Washington and Beijing may boost sentiment.

Brexit breakthrough? Prime Minister Boris Johnson said that there is a "very good chance" or striking a deal with the EU about future relations. He held an hour-long video call with European Commission President Ursula von der Leyen and other top officials. Details are still lacking but talks will resume on June 29. GBP/USD has bounced toward 1.27.

The UK unemployment rate remained low at 3.9% in April, but jobless claims jumped by 528.9K in May. Sterling edges lower amid the mixed data.

EUR/USD is trading above 1.13 amid the better mood and as Europe seemingly has COVID-19 under control. The German ZEW Economic Sentiment is projected to continue its recovery.

The Bank of Japan has left its policy unchanged as expected. The Tokyo-based institution has described the economy as increasingly being in a "severe state." USD/JPY is trading above 107, trading according to the general market mood.

AUD/USD is trading above 0.69 amid the upbeat mood. The Reserve Bank of Australia's meeting minutes reiterated the pledge to support the economy for "some time." The RBA is ready to increase bond purchases and pledged to leave rates unchanged until the economy progresses. Officials noted the Aussie's appreciation.

Gold remains confined to a narrow range of around $1,730, looking for a new direction and shrugging off the recent mood change.

WTI Crude Oil has recovered and trades around $37. Brent is closer to $40.

Cryptocurrencies have been experiencing higher volatility, tumbling early on Monday before bouncing. Bitcoin trades at around $9,500.

Source: fxstreet

The market mood is "risk-on" once again, as the Federal Reserve announced buying corporate bonds and lawmakers discuss infrastructure spending. Investors shrug off coronavirus concerns ahead of the Fed Chair's testimony and all-important retail sales...

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Forex Today: Coronavirus concerns

Coronavirus_concerns_Trigger-dollar_Forex_FXPIG

Here is what you need to know on Monday, June 15:

Markets kick off the week on the back foot as coronavirus cases rise in the US Sun Belt, Beijing, and Tokyo. The dollar and the yen are up, while others, especially commodity currencies, are down. A high-level call on Brexit, several data points, and further COVID-19 figures are of interest.

Coronavirus spreading: Cases and hospitalizations continue increasing in California, Texas, Arizona, and around 20 other US states, causing fears of a slower economic recovery.

Senior White House Adviser Larry Kudlow continues seeing a V-shaped recovery, cheering the economy. On the other hand, he rejected calls to extend the special unemployment payments, which expire at the end of July. That may slow the bounce.

US racial tensions remain high after a policeman fatally shot a black man in Atlanta. Protests continue in the US, and the topic is high on the agenda ahead of the elections.

The Empire State Manufacturing Index and a speech by Robert Kaplan, President of the Dallas branch of the Federal Reserve are on the agenda.

China: A COVID-19 outbreak has been reported in Beijing, and the Chinese capital closed down several sections and markets. Industrial output rose by 4.4% and retail sales fell by 2.8%, both showing the world's second-largest economy is recovering but missing expectations.

Japan: Cases in Tokyo have jumped by 47, the most since early May. The Japanese yen continues benefiting from its safe-haven status.

Europe continues reopening: France and Spain are both relaxing measures and attempting a return to normal. EUR/USD is weathering Monday's dollar strength and holding around 1.1250. The trade balance is due out later.

The UK is opening non-essential shops on Monday as it gradually loosens restrictions. GBP/USD suffered a significant downfall on Friday and has been extending its losses below 1.25.

Brexit: UK Prime Minister Boris Johnson and several leading European officials will hold a video call to discuss deadlocked Brexit talks. Britain told Brussels it will not ask to extend the transition period that expires year-end, yet several lawmakers in London are urging the government to reconsider.

Gold has been edging lower but holding above $1,720. The precious metal benefited from the Federal Reserve's pessimism and ongoing support.

Oil prices continue their decline, with WTI dropping below the $35. The risk-off mood is the primary driver.

Cryptocurrencies have been declining, with Bitcoin holding around $9,100.

Source: fxstreet

Markets kick off the week on the back foot as coronavirus cases rise in the US Sun Belt, Beijing, and Tokyo. The dollar and the yen are up, while others, especially commodity currencies, are down. A high-level call on Brexit, several data points, and further COVID-19 figures are of interest. ...

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Forex Week Ahead – Market Recovery Under Threat?

Forex_week_ahead_Recovery-under_threat_FXPIG

The New Normal

Another crazy week comes and goes and thing that has really stuck with me is how normal the extraordinary suddenly seems. On Thursday, the Dow fell almost 7% and, sure, it was newsworthy but it wasn’t shocking. This is the 22nd biggest ever drop in the index – going back more than 100 years – and yet this year it doesn’t even make the top three.

This could be a sign of the fragility that remains in the markets but then, the NASDAQ hit new record highs in each of the prior four days and breached 10,000 for the first time ever. This comes before the end of what could be the worst quarter in a century for the economy. Incredible.

Speculation around new waves of coronavirus cases is going nowhere any time soon, as countries look to reopen their economies and save businesses and jobs. But next week also brings a plethora of interest rate decisions as well which means more rate cuts and more asset purchases. In other words, more fuel for the fire. The disconnect between the markets and the global economy isn’t going to improve any time soon.

Country

US

It seems a second wave of the coronavirus is hitting the US and could very well derail a lot of the reopening momentum that was taking place.  As states reopen and Americans return to pre-pandemic behaviour, it is expected that a rise in new coronavirus cases would occur.  The White House is convinced they have yet to see any relationship between reopening and increased cases.  If hospitalisations continue to increase, you could see many individuals decide to remain a part of the stay-at-home economy.  If the virus spread intensifies, restrictions will be tightened and that will put a damper on the economic recovery prospects.  

On Tuesday, Fed Chair Powell will follow his downbeat FOMC presser with his semi-annual monetary policy report to the Senate Banking Committee.  With little time between events, it is unlikely for Powell to deviate from Wednesday’s rate decision.  Traders will also pay close attention to the release of US retail sales, which is expected to show a rebound from the record low seen in April.  

US Politics

Economic jitters and virus concerns will likely push the Trump administration into supporting a second round of stimulus payments for Americans.  Coronavirus relief talks were not supposed to happen until late July, but that should change given the recent jump in cases throughout the country. 

On Friday, President Trump returns to the campaign trail in Oklahoma, his first live rally since March.  

Democrats are eagerly awaiting former-VP Biden’s decision on his running mate.  Prior to COVID-19, the Democratic National Convention was originally scheduled in July, meaning we should have found out his decision by June.  Since the convention was delayed till August 17th, he will have more time to evaluate his candidates.  Biden will turn 78 a few weeks after the election, so his VP selection will be critical for many voters.

UK

The UK experienced its sharpest contraction on record in April, the first full month of the lockdown. The economy contracted by 20.4% at the start of the second quarter which is expected to be the worst month of the three. 

Next week the Bank of England is expected to increase its bond buying in response to the pandemic, with £100-200 billion added to its quantitative easing program. This comes as government borrowing spikes to fund the crisis which would have otherwise risked pushing up borrowing costs.

Brexit

High level talks between Boris Johnson and Ursula Von Der Leyen are expected to take place next week, possibly as early as Monday, as the two sides look to reconcile the significant differences ahead of the 31 December transition expiry. As it stands, no deal is the default and the UK is expected to formally rule out an extension once again. We’ve seen this all before though and compromise tends to come late in the day. Still, business could very much do without this in a pandemic year.

Russia

The Central Bank of Russia is expected to cut interest rates by 50-100 basis points when it meets next week, from 5.5% where it currently stands. Like many others, the economy has been ravaged by the coronavirus crisis and contracted 12% in April, and May is not expected to be any better.

Switzerland

The SNB is not expected to cut interest rates next week, with the main policy rate remaining at -0.75%. The central bank is active in FX markets, with its holdings of foreign currencies recently rising above 800 billion Swiss francs – greater than the output of its economy – as it seeks to stop the currency rising too far as a result of safe haven flows. The central bank hasn’t set an official floor for the EURCHF pair – hopefully learning lessons of the past – but 1.05 is believed to represent the informal level. 

Norway

The Norges Bank is not expected to cut interest rates next week, with the main policy rate currently sitting at 0%.

China

China Industrial Production (4.5%E) and Retail Sales (-2.0%E) on Monday. Poor number could see Asian markets weaken depending on Wall Street’s friday performance. Ongoing tensions with the US over HK, trade and Covid-19. 

No other significant data this week.

Hong Kong

Protests have died down for now over the securities law. Possible resurgence this weekend. HSBC and Stan Chart under fire for backing China’s HK security law. No significant data this week.

India

Economy continues reopening but Covid-19 cases are spiking, markets negative. Standoff with China continues in the Himalayas but negotiations continue.

Australia

Australian stocks and Australian Dollar sold heavily on equity correction into the week’s end. Negative results on Friday for Wall Street should see that trend continue into the first part of the week. Australian markets are among most vulnerable to deep bull market correction. RBA minutes Tuesday. Will look for talk about negative interest rates.Potentially bullish for stocks. Unemployment Thursday (6.9% E) will drive intraday volatility. Otherwise what happens in the US will drive sentiment.

Japan

BOJ policy meeting Tuesday. Unchanged at -0.10% but looking out for more stimulus measures. Stocks positive. Tankan and Trade Balance Wednesday. Unlikely to impact markets. Markets will be led by Wall Street after sell-offs this week.

Market

Oil

Oil didn’t escape yesterday’s backlash, with crude falling more than 5% on apparent fears around rising case numbers. Again, we have to take this in the context of an asset class that has done rather well over the last couple of months. It’s been some rebound and I think some serious profit taking may have kicked in. It’s creeping higher again today but $40 may remain an upside barrier for WTI.

Gold

Gold has been range-bound for the last couple of months since it first tried to break $1,750 only to quickly run out of steam. It’s tried again a few times since, each as unsuccessful as the last, and it looks to be suffering the same fate again this time. It’s pushing a little higher again as it looks to capitalise on dollar weakness but we could see it run into difficulties once again, unless the greenback continues its journey south.

Source: marketpulse

Another crazy week comes and goes and thing that has really stuck with me is how normal the extraordinary suddenly seems. On Thursday, the Dow fell almost 7% and, sure, it was newsworthy but it wasn’t shocking...

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Forex Today: Houston, we have a problem...

Forex_today_we-have-a-problem_FXPIG

Here is what you need to know on Friday, June 12:

Markets are trying to stabilize after a massive sell-off risk-off Thursday, which saw stocks and oil crashing and the dollar surging. Fears of a second US coronavirus wave, Fed pessimism, and profit-taking are behind the move. COVID-19 figures and Consumer Sentiment are eyed.

The disease is spreading in around two dozen US states, with the most pronounced outbreaks in California, Florida, and Texas – the latter considering reopening a special hospital in Houston. A local official said the city is on the "precipice of disaster" and reinstating stay-at-home orders is on the cards.

US Treasury Secretary Steve Mnuchin said the US will not shut down the economy, as it may cause more damage. He also insisted that tracing and testing capacity has been beefed up. President Donald Trump's campaign announced a rally in Oklahoma, where participants are asked to waive liability for potentially contracting coronavirus.

The University of Michigan's preliminary Consumer Sentiment Index for June will show if shoppers feel confident to spend. Starbucks recently reported that consumption in May, including in the last week, remained subdued despite looser restrictions.

Another reason for the market misery – at least the temporary rout – stems from the Federal Reserve's pessimism. The world's most powerful central bank pledged low rates and ongoing bond-buying as it foresaw a return to pre-pandemic output not before 2022.

Market participants also cite profit-taking as a reason for the sell-off after a quick recovery. The reluctance of Asian markets to follow the magnitude of the fall in Wall Street seems to strengthen the theory of a correction rather than an outright change of course, yet the next moves in the US are critical.

Gold prices have been relatively stable, holding onto gains made after the Fed decision. XAU/USD is around $1,730.

EUR/USD is struggling to hold onto 1.13, showing relative resilience. European countries are working on plans to reopen borders and countries are discussing the fiscal stimulus plan. Eurozone industrial output figures are due out.

GBP/USD tumbled below 1.26 after topping 1.28, partially due to deadlocked Brexit talks and despite the announcement of intensifying talks on post-Brexit relations. Britain said it would not impose strict border checks in 2021, when the transition period expires, due to the struggles with coronavirus.

UK Gross Domestic Product figures for April are forecast to show a plunge of over 18% in the first full month of a lockdown. The economy squeezed by 5.8% in March. The shuttering began late in the month.

USD/CAD has surged to 1.26 amid falling oil prices. WTI slipped below $36, reversing its gains related to the extended OPEC+ agreement.

AUD/USD and NZD/USD have been among the biggest losers and despite their successes with the disease. Tensions between Australia and China persist over Canberra's demand to investigate Beijing's initial cover-up of COVID-19.

Cryptocurrencies have exited their narrow ranges, falling to lower levels. Bitcoin is trading around $9,300.

Source: fxstreet

Markets are trying to stabilize after a massive sell-off risk-off Thursday, which saw stocks and oil crashing and the dollar surging. Fears of a second US coronavirus wave, Fed pessimism, and profit-taking are behind the move. COVID-19 figures and Consumer Sentiment are eyed...

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Killing Hope ( Before it Kills You )

Hope…

We have all heard that old adage: hope dies last.

Thinking about it more deeply, hope is essential in human lives, and you think that is religious -none-of-my-concern crap.... well, you are very wrong.

We go to bed setting up the alarm for the next morning hoping that the morning will come, and life will continue where it stopped last night; we work hard hoping that we will live long and healthy life enjoying the fruits of our work, we get married hoping the love will last a lifetime (pardon me, those who marry out of interest, I guess they hope the money will last for a life time).

So, to resume, hope is good, period.

Except when it is NOT.

I have concluded that HOPE, when is not reasonable, is the most destructive thing that we blindly grapple to.

We, and I may say, probably ALL of us, have a bad habit of deceiving ourselves with hope. I still cannot understand why we do it, but we do it, and maybe more often than we realise.

A friend of mine, divorced some time ago, in one occasion when we were Saturday- night chitchatting (or better said gossiping), was asked by another friend: Why did you marry him in the first place?!...

Surprisingly to some people, and completely different from what most of the people would go justifying their actions and making themselves the victims, my friend, after staring blur for a second, as if she was trying to remember the reason why, simply answered: I don’t know, I guess I hoped it will workout…

Was that a stupid reason? My friends thought so… But is it really?

There is a history behind every story, and I happen to be a witness of this one. After a relationship that was not approved and accepted by any one close,without getting further into private details here, my friend started dating the-soon to be- husband, and pretty soon ex –one. Seemed as a nice guy, to everyone, so it was ok-approved, signed and sealed…Just like those nice statistics you look at myfxbook, but account not verified, or broker suspicious…

After signing the LPOA, the performance changed- ah sorry, again mixing the phraseology… After signing the marriage record, the relationship changed...a lot … I guess, the masks fell down, but my friend was hoping it is just the pressure, momentarily, and it will all come back as it was in the previous period, nice ascending curve, with occasional small draw downs…

But the draw downs got bigger and bigger- my friend hoped that after the children come, it will all be as it should be.

Pretty soon it was all based-on hope, nothing rational, just a non nonsensical hope…

Did she during that time had any doubt that, actually, there was no hope at all? I am sure she did, but she hoped she was wrong…Ironical isn’t it…

Before you go playing smart, think of all the times you hoped, and you knew there was no hope…

I do, always, when I try to understand why would someone use the same losing system, when it already show that is –well, losing…why would someone stay in some PAMM when its giving him heart attack every night when he gets the daily report. It is about hope, hoping that this time, it will go right…

Hope indeed dies last...

Even smart people, like my friend, fail to realise that regardless of the unlimited amount of hope one has, it takes two for a tango; sometimes smart traders and investors fail to realise that it is better to embrace the loss,before the entire account is wiped out.

To add to the surprise of my friends, she continued; I do not regret marring him, I regret not leaving him sooner…
-What??! Of course you should regret marring the idiot, you should be calling him all the worse names you can think of.

But, if a draw down thought you of the flaws in your system, if that helped you improve the system and revamp it to a better one, why should you regret it?

In my infantile forex days I met a guy that was trading forex for many years already. He drew me a table with boxes on a piece of paper and said this is your trading calendar; when you trade, write down your results each day:Monday- loss 30 USD, good... Tuesday – loss 30 USD, good, Wednesday- loss 30 USD, Thursday loss...Friday-loss 30 USD, good…

While he was on the second week “losing my money” I was already looking at him with my mouth half open, not believing what he is saying, is he “teaching”me to lose? …When he started writing the 3-rd week ... Tuesday – loss 30 USD,Wednesday loss 30 USD, great…I yelled from the top of my lungs: STOP!!!

- Are you nuts? I know how to lose; I want to learn how to make money!!!

-I don’t think you know how to lose, but If you come to this date on your calendar, and you still have money on your account, you’ve learned how to win…

Losing is also wining, when you learn from it, and when you learn when to stop hoping. The greatest success in life and in trading comes out of the wisdom we learned from our failures.

The only precondition is to kill the hope before its kills you.

 

HOPE, when is not reasonable, is the most destructive thing that we blindly grapple to. We, and I may say, probably ALL of us, have a bad habit of deceiving ourselves with hope. I still cannot understand why we do it, but we do it, and maybe more often than we realise...

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Euro Fails at Resistance

Euro-fails-at-resistance_Forex_FXPIG

EUROPE OPEN, EURO, EUR/USD, FOMC - TALKING POINTS:

  • Risk-appetite waned as the World Bank forecasted the deepest global contraction since World War II
  • Federal Reserve expanded Main Street Lending Program ahead of Wednesday’s meeting
  • Euro surged into overbought territory but failed to close above key resistance

ASIA-PACIFIC RECAP:

Equities relinquished early gains in Asia trade, as S&P 500 futures reversed after the US benchmark stock index climbed back to the 2020 open, erasing yearly losses.

US 10-year treasury yields fell back below 0.85% and the safe-haven US Dollar and Japanese Yen rose as sentiment soured ahead of Wednesday’s headline FOMC meeting.

The trade-sensitive Australian and New Zealand Dollars dipped as the World Bank downgraded China’s economic growth forecast from 6% to 1% for 2020.

Looking forward, GDP and employment data from the Eurozone headline a rather light day on the economic data front.

DEEPEST GLOBAL CONTRACTION SINCE WWII

Releasing its Global Economic Prospects, the World Bank is forecasting the deepest global contraction since World War II, upgrading the International Monetary Fund’s (IMF) April estimates of a 3% contraction in economic output to 5.2%.

With the baseline scenario used assuming the easing of lockdowns and social distancing restrictions by June, a downside projection in which lockdowns were to continue for a further three months, could result in a global contraction as deep as 10%.

Coming as the S&P 500 rallied to erase yearly losses, the news could dampen the spirits of market participants buoyed by Friday’s record US Non-Farm Payrolls (NFP) report, with 2.5 million jobs created in May versus an expectation of an 8 million cut.

FEDERAL RESERVE EXPANDS MAIN STREET LENDING PROGRAM

Ahead of the FOMC meeting on Wednesday, the Federal Reserve has announced it will be expanding its Main Street Lending Program to support small and mid-sized businesses as the local economy begins to emerge from hibernation.

Despite being announced in March, the program has yet to be launched. The only inkling of a time frame was provided by Chairman Jerome Powell,who stated the facility was only days away from being launched on May 29th.

Image of Main Street Lending Program
Source – Federal Reserve

With the central bank expected to keep rates on hold, Chair Powell’s press conference will be intently scrutinized by market participants to determine if the Federal Reserve will alter its forward guidance for monetary policy, given the recent better-than-expected economic data.

A near-term top may be forming as the Euro fails to continue its surge towards the yearly high (1.1495) against its US Dollar counterpart.

Climbing as much as 7% from the March low (1.0636) has seen EUR/USD enter overbought on RSI for the second time this year, as prices pushed to set the monthly high (1.1384) on the 5th of June.

The reaction of momentum at its highest reading since March could signal a short-term correction, with a zone of support at the December high (1.1220 – 1.1240) possibly providing a base for the exchange to continue its climb towards a key region of interest at the June 2019 high (1.1412).

As the slope of the 50- and 200-day moving averages steepen, the possibility of a bullish ‘golden-cross’ eventuating within the coming days becomes more likely and could provide the impetus needed for the Euro to push higher.

However, a daily close below the 23.6% Fibonacci (1.1202) could signal a further decline is on the cards, with failure to hold above the support zone at the March 30 high (1.1117 – 1.1147) possibly carving a path to test the April high (1.1039).

Source: dailyfx

Ahead of the FOMC meeting on Wednesday, the Federal Reserve has announced it will be expanding its Main Street Lending Program to support small and mid-sized businesses as the local economy begins to emerge from hibernation...

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Forex Today: Can the dollar lick its wounds?

USD_FED_speculations_Forex_FXPIG

Here is what you need to know on Tuesday, June 9:

US stocks are taking a breather after erasing the year-to-date losses and the dollar is licking its wounds. Speculation about the Federal Reserve's decision on Wednesday, coronavirus decisions,  and a mix of figures is on the agenda.

Rally: Equitites continued benefiting from Friday's Non-Farm Payrolls, which showed a surprising bounce in jobs, with the S&P erasing its losses for the year and the NASDAQ hitting all-time highs. The US dollar remained on the back foot and dropped also against the yen. On Tuesday, S&P futures point to correction and the dollar is trying to find its feet.

The recovery is also fueled by the Federal Reserve, which loosened its conditions for the Main Street lending program on Monday. The move comes ahead of its decision on Wednesday, where Chairman Jerome Powell and colleagues will likely leave rates unchanged and reiterate their commitment to the economy.

North Korea has cut off communications with the South, following the distribution of anti-regime leaflets coming from activists in the South. The deterioration in relations is pushing the yen higher.

Libya has halted petrol production at the El Sharara oil field amid an armed incursion. WTI has held onto gains around $38. Iraq's oil minister reiterated his country's commitment to the OPEC+ deal after doubts arose.

Sino-American tensions remain on the back burner, but President Donald Trump's intention to sign the Uyghur human rights bill is adding to tensions. The Uyghurs are a Muslim minority in the Western Chinese province of Xinjiang.

Racial tensions remain high and the US and Trump's handling of them has cost him some support, with rival Joe Biden expanding the gap. The elections remain far but markets may notice if the trend extends.

Gold has stabilized but struggles to recapture the round $1,700 level. Ongoing support may boost the precious metal higher.

The JOLTs job opening figures for April published on Tuesday is a lagging indicator but is followed by the central bank. Other indicators due out are Final Wholesales Inventories and the IBD/TIPP Economic Optimism.

EUR/USD is trading around 1.13, holding onto its range. Christine Lagarde, President of the European Central Bank, called on leaders to adopt the EU Commission's ambitious plans that include mutual borrowing and grants.

The ECB announced €600 billion in additional monetary stimulus last week. Revised Gross Domestic Product and several German and French figures are eyed.

GBP/USD has been clinging onto 1.27 as the British government plans to ease lockdowns amid falling COVID-19 statistics. London reported no new deaths on Sunday. Brexit talks remain deadlocked.

AUD/USD has fallen off the highs, partially in response to ongoing tensions between Australia and China. Beijing warned its citizens against visiting the land down under amid a "significant increase in racist attacks" against Asians.

Cryptocurrencies have been stable, with Bitcoin trading around $9,600.

Source: fxstreet

US stocks are taking a breather after erasing the year-to-date losses and the dollar is licking its wounds. Speculation about the Federal Reserve's decision on Wednesday, coronavirus decisions, and a mix of figures is on the agenda...

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