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Week in a Glance: Bank of England, pandemic and the second waveLast week was full of various events, both economic and political, such as the meeting of the Bank of England, Powell’s testimony in Congress, the armed conflict between China and India, protests in the United States, the outbreak of pandemic in Beijing and a general worsening of the world epidemiological situation. This is not a complete list of what happened last week. Despite the fact that most of these and other events had a rather negative impact for the economy, this already habitually did not prevent the stock markets from growing. Millions of “noise” traders supplied by platforms like Robinhood are doing their job and continue to blow bubbles. Powell in his testimony before Congress did not say anything fundamentally new and only tried to cool the hottest heads, recalling that you should not count on a quick economic recovery. Even the “witching day” did not help on Friday afternoon - the massive expiration of futures and options contracts on the US stock market could not stop the current frenzy. Despite the fact that we are once again going against the will of the market, we continue to recommend sales in the US stock market and will open short positions on major US stock indices this week. Moreover, the situation with the pandemic is not something that has not improved during last week, but rather worsened and quite strongly. The outbreak of disease in Beijing, in which for a couple of months they forgot about the coronavirus and now about 150 new cases in literally 1-2 days. Germany's R number rockets again - from 1.79 to 2.88. US has 30K new cases per day again. So the fear of the second wave has acquired a completely material form. Main European currencies had problems last week. The pound was under the pressure from weak statistics and the lack of progress in negotiations with the EU, and even the Bank of England, with its additional 100 billion pounds to expand its quantitative easing program, could not reverse the negative market sentiment. As for the euro, the ECB's record injection of money (the largest refinancing operation in 22 years of the ECB's existence), in which 724 banks received 1.308 trillion euro loans from the regulator, provoked downward pressure on the euro. The negative for the euro intensified on Friday on news that the EU countries did not agree on a program of assistance of 750 billion euros to the economies of the countries affected by the coronavirus.
DJ:DJIShort
by Trade24Fx
Witching day, Bank of England and jobless claimsThe main event of yesterday was the announcement of the Bank of England decision on monetary policy parameters. Rates as expected remain unchanged - the Central Bank is not ready yet for negative rates. No less than expected, Bank of England expanded the quantitative easing program, increasing it by 100 billion pounds to 745 billion. These moves were expected by the markets, and the pound decided to work out the negative that has accumulated recently and has been actively declining. Accordingly, we see no reason to revise our “sell” recommendation for the pound. What else is worth selling, in our opinion, is the Australian dollar. Yesterday's data on the Australian labor market did not come out very well. Unemployment is at its highest level in almost two decades, and the reduction in employment turned out to be greater than experts expected. Today is interesting day first because it is one of the four so-called witching days of the year. The third Friday of the third month is the expiration of all major derivatives in the US market. This day is called "witching day". This event is fraught with illogical and sharp movements in the US stock market, as players randomly close their positions, as a result trading volumes and volatility can increase significantly. According to BMO Capital, since 1990 in such weeks the S&P 500 has lost an average of 3.1%. So, the day is ideally suited for the start of sales on the US stock market that we have been expecting for quite some time. Moreover, the reasons for this have long accumulated a critical mass: starting from an unprecedented economic crisis in the country, which resulted in a wave of bankruptcies of large companies, ending with a pandemic and mass protests in the United States. Yesterday's data on jobless claims is a confirmation of this: an increase of 1.5 million new applications, which is higher than forecasts, and the number of actually receiving unemployment benefits remains above 20 million.
FOREXCOM:NAS100Short
by Trade24Fx
2
Pandemic, Bank of England, Indian Issues and the EU MeetingThe pandemic situation continues to deteriorate. The number of new cases in the world is keep on growing. Significant share of this “success” belongs to Brazil, which breaks new records, bringing the daily number of cases to 35,000. Concerns are also giving China, where a new outbreak of the pandemic has been recorded. So far, there are hundreds, not thousands of cases, but all this does not look very good, especially in light of the main fear of the markets - the second wave. Situation in India is stably bad (10K-11K per day). A pandemic is far from the only problem of the country. The sluggish conflict with China over the “neutral” border territories is growing from hand-to-hand fighting and throwing stones into full-fledged armed clashes with dozens of dead. We will multiply this by problems in the economy and get a recommendation to “sell” for both the Indian rupee and the Indian stock market. Yesterday a lot of inflation data was published. And in general, they are rather bleak: the current economic crisis is not only a decline in production, but also deflation. And this is very bad, since it entails a full-fledged economic depression. Today it is worth paying attention to the statistics on jobless claims in the USA (analysts expect that the number of new unemployed in the USA will replenish with another million). But the main event of the day is the meeting of the Bank of England. The markets do not expect the Central Bank to move interest rates into the negative zone, but expect the expansion of the quantitative easing program from £ 645 B to £ 745 B. If this happens, the pound will receive the first positive news in the last couple of weeks. Otherwise, the disappointment will be so great that the pound selloffs will be inevitable. On Thursday-Friday there will be an EU summit. The fate of the proposal to create an aid fund of 750 billion euros will be decided. If the majority can convince a minority (Austria, the Netherlands, Denmark and Sweden), then the euro will receive an excellent opportunity for growth.
Long
by Trade24Fx
US Retail Sales, Powell and overpriced market The main event of yesterday was Powell's testimony in Congress. More precisely, the first day of testimony. Markets expected his comments for the Fed’s economic outlook issued last week following a FOMC meeting. Powell did not disappoint, saying that a full recovery of the US economy is possible only when the coronavirus is fully taken under control. Against the backdrop of fears of the second wave and the current pandemic peak, which is still not be formed, this is practically a recognition of the fact that economic recovery will be a very long process. In this light, we recall our recommendation “sell” in the overheated US stock market. According to recent survey from Bank of America, about 80% of professional investors consider the US stock market overvalued. By the way, this is a record value since the beginning of the publication of such surveys. In fairness, we note that yesterday there were reasons for the growth of optimism in the US stock market. We are talking about retail sales in the United States, which showed the maximum monthly increase in the entire history of observations. However, this is a chain indicator, therefore this record is actually the merit of the low base of comparison, which was formed as a result of a record drop in retail sales in April. So, it's too early to relax. This is also supported by data on industrial production in the USA: grew by 1.4% in May which is twice as low as the average forecast of analysts. That is, there is no explosive growth after the lockdown in the economy yet. UK labor market data was also released yesterday. The data came out mixed, but the growth in the number of claimant counts, which was almost 2 times higher than the expectations of the markets. In our opinion, this inclines the weight against the British pound. So, our recommendation to sell the pound remains relevant.
FOREXCOM:NAS100Short
by Trade24Fx
Market sentiments, UK labor market and the FedLast week, financial markets closed in a rather gloomy mood. The pandemic still cannot reach the second peak, and the countries that defeated the epidemic begin to doubt it, that is, the second peak goes hand in hand with the second wave. Even the seemingly successful countries in terms of the fight against coronavirus like China and Germany have reasons for concern. In China, this is an outbreak of diseases in Beijing, and in Germany, an increase of the infection rate above a threshold value of 1. Some words about China. Yesterday's data on industrial production and retail sales were rather disappointing. In May, retail sales fell by 2.8% (analysts expected a decrease of 2%), while industrial production grew by 4.4%, which is below growth forecasts of 5%. China is hinting to the rest of the world that it is not worth counting on a quick and painless economic recovery. Protests in the United States continue and even became more active after the next murder by police of an unarmed black. But despite all this market sentiments on Monday have changed dramatically. As a result we saw a sharp decline in the level of fear in the markets, growth of stock markets, a decrease in the dollar and the growth of commodity markets. In general, the swing swayed the other way. One of the reasons for such a sharp turn was FED press-release that the US Central Bank began buying bonds in the secondary market. And although plans for this have been voiced for quite some time, the markets took the news as an occasion for optimism growth. Today Fed Chairman Jerome Powell will testify in Congress and report for the first half of the year. And although the FOMC meeting was less than a week ago and everything seems to be said, Powell's comments are extremely important. As for macroeconomic statistics, the main attention should be paid to data on the UK labor market. A pound, which already has an extremely negative fundamental background, may not be able to withstand another portion of weak data and will fall again. A few words about the pound. Yesterday, Boris Johnson agreed with the EU on the need to intensify the negotiation process. That is, there is reason for the emergence of hopes, but there is no any breakthrough. After yesterday, our positions only added relevance, as they significantly improved entry points: we sell the pound against the dollar and the euro, we sell in the US stock market, we buy the dollar against emerging and also commodity currencies (for example, we will sell AUDUSD around 0.70) .
Short
by Trade24Fx
Week in a glance: gloomy forecasts, fear returns, and protestsLast week can hardly be called rich in fundamentally new fundamental events. But the markets were very volatile. The reason for the strong movements was not a change in objective reality, but rather a change in sentiments towards it. If for a long time the markets ignored the fact that the world economy is experiencing the worst crisis in the last 100 years, then last week after the publication of forecasts from the World Bank (global GDP will shrink by 5.2% in 2020), OECD (at best, the world GDP will lose 6% in 2020, and at worst to 7.6%), as well as updated forecasts from the Fed following the FOMC meeting (the US Central Bank expects the country's GDP to decline by 6.5%), market sentiment has changed dramatically. Greed was replaced by fear. If you believe that the veil of optimism will not again obscure the vision of the markets, then this week we should expect a further decline in the stock markets, the growth of safe havens (gold and the Japanese yen), the growth of the dollar, lower prices on commodity markets, primarily prices for oil, as well as the subsidence of currencies of developing countries. At least that is how financial markets have reacted to rising fear recently. Moreover, the markets have enough causes for concern: this is the protests in the USA, the new peak of the pandemic, the sharp increase in the number of cases in Latin America and India, the fear of the second wave, and tensions between the USA and China. Another important event of the week in terms of macroeconomic statistics was the publication of data on UK GDP and industrial production in April. The data were even worse than the extremely pessimistic forecasts. A 20.4% drop in Britain’s GDP was a record for the entire history of observations. In this light, this week we will continue to look for opportunities for pound sales. The upcoming week in the news plan promises to be quite eventful. The Central Bank of Japan and the Bank of England will announce their decisions on monetary policy parameters, a lot of inflationary statistics will be published, in addition, data on retail sales in the US and the UK for May, as well as Canada for April, will be released. Plus Powell's testimony, negotiationsbetween EU and UK. This week not going to be boring. Our recommendations this week are essentially a bet on growing fear in the financial markets. So, we will sell in the US stock market, search for opportunities to buy safe haven assets, as well as the US dollar (primarily against the British pound).
Short
by Trade24Fx
Fear returns, the pound is in danger, US unemploymentMarkets have desperately refused to acknowledge reality. Forecasts of the World Bank, OECD, estimates of leading investment banks - all were by no means. But the gloomy Fed estimates of the future US economy in 2020 (-6.5%) seem to have been able to provide some effect. As a result, the level of fear in the financial markets has risen quite sharply. This was followed by a chain reaction in financial assets: stock markets went down, safe-haven assets (Japanese yen, gold) went up as well as the dollar. Oil was under pressure, as well as emerging currencies. It is still difficult to say whether we will get the effect of a snowball and the bubbles will begin to burst, but the fact of a sharp stop of previous trends is quite important and symptomatic. Recall that in addition to the bad macroeconomic data on the horizon, there are still a lot of causes for concern, starting with protests in the USA or tensions between the USA and China and ending with the fear of the second wave. In general, our recommendation to "sell" in the US stock market every day only gets more relevant. Yesterday's data on the jobless claims in the United States (jobless claims grew by 1.5 million) did not generate optimism: nearly 21 million people still receive unemployment benefits. As for today, the hero of the day (or rather anti-hero) is likely to be the pound. UK production and GDP statistics in April are expected. According to OECD estimates, it is Great Britain that takes the first place in the world in terms of the rate of decline in GDP in 2020 (-11.5%). So, there is more than enough reasons to expect devastating data. The pound is already under serious pressure from the failed negotiations between UK and EU. So weak data will almost certainly provoke massive sales. In this light, selling the pound is the # 1 trading idea for today.
Short
by Trade24Fx
6
FED outlook, OECD forecasts, EU vs BritainThe main event of yesterday was the announcement of the results of a two-day meeting of the Federal Open Market Committee. The monetary policy parameters did not change, but the markets were expecting for this. All attention was focused on updated forecasts of US economic growth. Recall that the Central Bank gave the latest assessments back in December 2019. FED gave another reason for the bulls in the US stock market to think about the state of the US economy again. The Fed's forecasts turned out to be very gloomy: a decrease in US GDP by 6.5% in 2020. Note that the Fed is not alone in its pessimistic assessments. Yesterday we wrote about rather gloomy forecasts for the future of the global economy in 2020 from the World Bank, and another respectful organization OECD (Organization for Economic Cooperation and Development) has published its latest forecasts for the global economy. They turned out to be even more pessimistic. If the World Bank expects the world economy to decline by 5.2%, then the OECD expects a decrease of 6% (at best) or 7.6% if the second wave of the epidemic follows. The US economy in a best case scenario will shrink by more than 7%, and the UK economy by 11+%. In this light, we recall our recommendations “sell” in the US stock market and “sell” pounds in the foreign exchange market. Speaking of the pound. The EU’s chief Brexit negotiator yesterday walked very hard on Britain’s position in the negotiation process. In short, his idea boiled down to the fact that Britain wants to have all the advantages of an EU member, but not have any obligations of an EU member. In recent years, since the referendum and the mass of negotiations between Britain and the EU, this is perhaps the most aggressive statement by the European Union. So, the question of the "hard" Brexit is not so hypothetical. If Britain continues to stand its ground, it risks being left with nothing.
Short
by Trade24Fx
1
FOMC, World Bank and stock marketsThe US stock market in the technology sector (Nasdaq) this week showed a new historic high. The more traditional and wider SP500 index reached the marks where the year began. Just like there was no lockdown and pandemic, economic halt and 42 million unemployed, there were no mass bankruptcies of companies with 100 or even 200 years of history (thousands of large stores are planned to be closed in the near future), etc. The reason for this madness is not only human greed and stupidity, but also the actions of the Central Banks, including the Fed, which flooded the markets with cheap money. If you believe the story (Japan of the 80s of the last century) and the old expression “I gave birth to you, I will kill you”, the giant bubble in the US stock market which started with the FED should collapse also after the actions of the Central Bank. That is why every FOMC meeting is important both tactically and strategically. However, markets do not expect much from today. Powell made it clear enough that the Fed is not going to switch to negative rates. As for the expansion of the quantitative easing program, following the example of the ECB (it increased the program last week by 600 billion euros, i.e. almost 2 times), Powell prefers to transfer the initiative to the Government so that they solve problems with fiscal instruments, rather than monetary ones. What will happen today? The Fed is likely to announce updated forecasts for the US economy, and may also clarify its plan of action in the context of monetary policy. In the United States, protests continue, the consequences of which are beginning to take on an openly idiotic-populist form, which ultimately will not do well: all these ostentatious kneeling or attempts to dissolve the police as such will ultimately result in a sharp increase in crime against the backdrop of general impunity. In fact, the current situation in the United States continues to look like an ultra-combo for the collapse of the price bubble: the strongest economic crisis and its consequences in the form of massive bankruptcies and unemployment, multiplied by mass protests in the country and the domestic political crisis. The whole question is in the last straw that will break the ridge of this crazy bull who is now hosting Wall Street. So, we keep on recommending to sell in the US stock market. And finally. The World Bank recently announced its vision of the global economy in 2020. And the vision is very gloomy. The world economy will shrink by 5.2 percent, which will be the deepest recession since 1945-1946. Moreover, it will be more than twice as deep as the economic downturn associated with the global financial crisis.
FOREXCOM:NAS100Short
by Trade24Fx
1
Euro losses, bottom of the dollar, and oil is at a crossroadsThe start of the week was not the best for the euro. After two weeks of growth, which resulted in the strengthening of the euro against the dollar by more than 600 points, the fuse of buyers has dried up. Firstly, sooner or later it was necessary to take profits anyway, and secondly, yesterday there was a reason for this. We are talking about disastrous data on industrial production in Germany: a figure of -18% relative to the previous month will return anyone to earth. And thirdly, the dollar seems to have groped the bottom, especially after Friday's statistics on the US labor market. Nevertheless, we would not be in a hurry to turn over into euro sales across the entire spectrum of the foreign exchange market. The intraday decrease in EURUSD for us is an occasion for the pair to buy. In addition, we will use the euro reduction as a reason for buying the EURGBP. At the same time, we note that the EURJPY pair seems to us to be a very promising object for sales. Oil yesterday tried to take advantage of the news about extending the maximum decline in oil production for another month, but it did not work. It should be understood that the new agreement by and large does not change much in the overall situation in the oil market and, in fact, this is just a small delay. At least, this is how we perceive it and continue to believe that for the further growth of oil we need more encouraging news about the growing demand in the market. But serious problems are quite possible with this. The fact is that the pandemic is not thinking of dying away, and if the situation in India and Brazil continues to develop as it has been developing for the last 2-3 weeks, then new problems for the oil market are still ahead. In general, we find current prices extremely uncomfortable for new oil purchases under the current conditions. British Petroleum, meanwhile, announced its intention to cut 15% of its staff in 2020. It is about 10,000 employees. This is to the question of what is really happening in the world labor markets and why it is not worth much to please the Friday data on the NFP.
Long
by Trade24Fx
2
Week in a glance: riots in the USA, NFP, ECB billions and OPEC+Last week was extremely busy both in terms of price dynamics in the financial markets and the news. The main political theme was protests in the United States and a sharp decrease in Trump's ratings against this background. All these put pressure on the dollar and brought the Dollar Index to the lowest levels since March. However, not everything was so gloomy for the American currency. At first, data from ADP, and then official statistics in the form of NFP figures showed that the US labor market can not only rapidly fall into the abyss, but also recover quite quickly. At least +2.5 million new non-farm jobs, with the forecast of a decrease in their number by 8 million - this is definitely the strongest positive surprise markets can even imagine. And unemployment rate came out much better than experts expected (13.3% with forecasts of about 20%). In our opinion, this is quite enough for the dollar to stop a protracted fall. So this week we will search for buying opportunities of the dollar (with insignificant stops per each position of course). First of all, we are interested in selling the GBPUSD pair, since the negotiations on Brexit last week ended in nothing. The sides were extremely disappointed with eachother. And this is the best background for pound sales. Note that such data from the United States is not enough for further growth of the US stock market. In the end, if we summarize the data on the NFP for the last 2 months, then we get a figure of -18 million (!). This is much more than the US labor market created in the previous 10 years. And unemployment, which is 3 times higher than the pre-pandemic level, does not mean that everything in the US economy is excellent. So, this week we will continue to sell in the US stock market. The past week can be considered the week of the euro. And for this, there were many reasons: active reopening of the Eurozone economies, the ECB decision to radically expand the program of quantitative easing, increased it by another 600 billion euros and brought the total volume to 1.35 billion euros. In addition, the decision of the German government to allocate 130 billion euros to help the country's economy was also a powerful positive signal. This week we tend to give preference to purchases of the euro, but we will not buy at the maximum, and will do at the time of local corrections. Another important event of the past week was the OPEC + meeting. On the agenda was the issue of extending the period of decline in production by 9.7 mln b / d. The meeting was scheduled for Thursday, but was rescheduled for Saturday due to non-compliance with the agreement by a number of countries, in particular Iraq and Nigeria. At the end of the weekend, oil producers agreed to cut total production by 9.7 million bpd in July. For oil, this is generally a positive signal. Nevertheless, we continue to expect the beginning of correction in the oil market and therefore temporarily avoid purchases. As for the upcoming week, it will be much calmer, so in theory nothing should prevent them from realizing the positions that we have outlined for the week. The main events will be the FOMC Fed meeting on Wednesday, as well as data on the GDP of the Eurozone, Japan and the UK.
TVC:SPXShort
by Trade24Fx
2
ECB surprise, NFP, OPEC + expectations and German 130 blnThe main event of yesterday was the ECB's decision to expand the quantitative easing program by another 600 billion euros (analysts expected an increase of 500 billion euros). As a result, the size of the program has inflated to 1.35 trillion euros. This, of course, is a lot, so the growth of the euro against this background is generally explainable. Moreover, the expectations of an early recovery of the Eurozone economies are becoming more and more rosy. And even a decline in retail sales in the Eurozone by almost 12% by the end of April could not cool the optimists' hot heads. Especially when you consider the fact that the German Government approved a program of assistance to the country's economy in the amount of 130 billion euros. The Fear Index, meanwhile, broke through a new local bottom. Which only confirms how much everyone is focused on a bright future. At the same time, almost 2 million people in the United States applied for unemployment benefits. As a result, the total number of people receiving unemployment payments rose to 21.5 million. Just in case, we note that at the peak of the global financial crisis this number only slightly exceeded 6 million. This is about optimism and reality. The fact that markets do not want to see the negative does not make it less obvious and even more so it does not disappear from it. It is entirely possible that markets will receive another reason to return to reality today upon the publication of official statistics on the US labor market. Unemployment is expected at around 20%, and the NFP at -8 million. After the ADP figures on Wednesday (-2.7 million), the markets are clearly set for a positive surprise, but it may well not be, and we will see in fact -10 million +/-. This can be a strong blow to market optimism with all the ensuing consequences: stock market sales, the rise in the dollar and gold, the strengthening of the Japanese yen, the decline in oil, etc. Speaking of oil, yesterday’s OPEC + meeting didn’t take place, as a number of countries that broke the deal, in particular Iraq, did not give the rest the opportunity to agree on new conditions. According to current information, the meeting was postponed to Saturday. So far, markets are expending for another 1 month of current volumes of contraction. In general, we continue to believe that profit taking on long positions in oil is the best option for oil trading strategy today.
Short
by Trade24Fx
2
Encouraging data, ECB and OPEC + meeting The main event of yesterday was the US employment figures from ADP: -2.7 million against the forecast of -9 million and the past value of -20 million - this is definitely a positive surprise. It is important as a signal on the eve of the main block of statistics on the US labor market, which will be published on Friday. So yesterday, the growth of the US stock market is perhaps the first time in the last couple of weeks, when we have no serious complaints in terms of common sense. On the other hand, factory orders fell by 13%, which is not a cause for joy. The PMI and ISM indices, although they were slightly better than forecasts, are generally quite depressing. That is why current prices in the US stock market for us is solely an occasion for sales. Today, European markets may well get another reason for optimism. It is about the ECB meeting and market expectations. Recall, investors are waiting for the expansion of the quantitative easing program by another 500 billion euros. This is a very serious amount, which can push the European stock markets up and give rise to the euro. Returning to the events of yesterday. Statistics on unemployment in Europe and Germany, as well as business activity indexes in Europe, were not a failure. In this light, the continued growth of the euro looked quite logical and expected. In the oil market, all attention is focused on the online meeting of OPEC + (is expected today). If the decrease in production by 9.7 million bpd is extended for at least another couple of months, oil will receive an excellent opportunity for further growth. Otherwise, in our opinion, the fixation of profits in oil cannot be avoided, and the correction in the oil market will become almost inevitable. According to incoming information, Saudi Arabia and Russia reached an agreement to extend the current volume of decline for at least another month. But at the same time, there are serious claims against a number of countries that did not comply with the terms of the transaction. Today, most likely there will be more news on these issues, so volatility in the oil market is expected to be increased. As for our trading preferences, the dollar is still under pressure, so more or less significant dollar growth for us is a sell opportunity. But, on the other hand, paired with the Australian dollar or pound, we will use its decline as an occasion for purchases. For example, we will sell GBPUSD near 1.26. At the same time, we are not going to impose our will on the markets, and put up fairly small stops with options for even entering opposite positions upon taking levels (if that will be, of course).
Short
by Trade24Fx
Central Bank of Australia, data from ADP and German stimulusThere are no changes on the fundamental fronts: protests in the USA continue, the pandemic is still here, as well as the reopening of economies. Against this background, the dollar continues to suffer losses in the foreign exchange market, but the stock markets are growing steadily. At the same time, yesterday yen sharply intensified its decline. Paired with the dollar, it has broken important technical resistance 108. Trump, amid all this, is either hiding in the bunker or threatening to send the military to disperse the demonstrators. In general, the weakness of the dollar is understandable and logical, and the growth of US stock indices is no less incomprehensible and irrational (from the point of real economy). In the oil market, meanwhile, everyone is puzzled by the future of the OPEC + deal. Will the current status quo continue or will the main producers begin to increase production? Future of oil prices depend on the answer to these questions. The fact is that the current agreement on 9.7 million b / d production cuts expire in June and the question of cuts becoming more urgent. Much depends on the position of Russia. The OPEC + meeting is expected to take place online on Thursday. Saudi Arabia insists on keeping current levels of decline longer. German Chancellor Angela Merkel, meanwhile, without waiting for the creation of 750 billion euros European fund, offers another package of measures to help the country's economy in the amount of up to 100 billion euros. Yesterday, the Reserve Bank of Australia left the rate unchanged, but was very optimistic in its assessments of what is happening in the country's economy, which largely contributed to the growth of the Australian dollar. The latter has already added about 20% in April-May, which, in our opinion, is too much and we are starting to prepare for its medium-term sales. But in pair with the dollar, you need to wait at least until downward pressure on dollar in the foreign exchange market will ease. Wednesday is interesting day in terms of macroeconomic statistics: unemployment data in Germany and the Eurozone as a whole. But the main news will be US employment data from ADP. Although this is not official statistics (will be published on Friday), the latest ADP data almost in one to one corresponded to the NFP figures, so they are definitely important. It is also worth monitoring the index of business activity in the United States, the Eurozone and Germany. Also Bank of Canada will meet today and announce its decision on monetary policy parameters. In general, the day promises to be extremely eventful. Despite the current more than obvious problems of the dollar, it seems to us that it has already received enough, and a number of pairs (EURUSD, GBPUSD, AUDUSD, USDCAD, etc.) have approached quite important levels. So today we will buy the dollar in these pairs in the hope of a reversal, but with mandatory small stops.
Long
by Trade24Fx
1
Riots in the USA, the demarche of China and BrexitFundamentally, the current fundamental background in the US stock market is ideal for sales. The economy shows the worst shape in history across the entire spectrum of the economy: from the labor market to GDP and retail sales. Tensions between the USA and China gives an additional gloomy negative not only in the economic, but also in the political sphere. The protests in the United States, which are accompanied by the states of emergency in a number of American towns, only increase the political negative. And the news about the bankruptcies of large chains of retailers, restaurants, gyms, etc. emphasize how bad things are in the economy. We cannot remember such a combination of fundamental negative even in the midst of the global financial crisis of 2007-2009. But the US stock market against this background continues to grow. Especially its technology sector, which seriously intends to test new historical highs. That is why, we continue to go against the market and recommend sales in the US stock market. Moreover, the Chinese authorities recommended large state-owned agricultural companies to suspend purchases of US agricultural products, including soybeans. This is very painful fact for Trump, which he should not ignore. So, the escalation of the conflict between the US and China is still in the process. The week for the British pound began with a positive note - reopening after the lockdown. But today, the EU and Britain will return to the negotiating table. Given how little progress has been made so far, there is every reason to believe that there will be no breakthrough this week either. This means that the pound will be under pressure. That is why this week we will continue to sell the pound primarily against the euro (buying EURGBP), and secondly against the US dollar (selling GBPUSD). In general, the dollar is under pressure, so we will continue to look for opportunities for its sales in the foreign exchange market. First of all, against the euro and the Japanese yen.
Short
by Trade24Fx
2
Week in a glance: second peak, USA vs China, more moneyThe main event of the past week in terms of a pandemic is the formation of a new peak in the number of new cases. That is, the fear of the second wave is replaced by the reality of the second peak. Which of these is worse is hard to say. The second wave did not become less likely because of this, but rather the opposite. So, in this regard, the situation is getting worse. A feature of the second peak is the change of leaders in diseases: developed countries were replaced by emerging countries. Brazil alone at the end of the week generated up to 30K new cases per day. Dynamics in India is also alarming, especially when you consider the information about the country's partial exit from the lockdown. In general, the pandemic continues to be the number one concern in the world. Although based on the dynamics of the Fear Index, the markets have not been worried about this at all. Which is more than strange given the potential consequences and their magnitude. A partial explanation for the optimism was the news that the European Commission recommends the creation of an aid fund for the EU countries in the amount of 750 billion euros, as well as the news that Japan will spend another 1.1 trillion dollars to help the economy. Throughout the past week, markets have been closely monitoring the confrontation between the US and China. The level of tension between the countries rose sharply, and on Friday following the press conference of Trump, everyone was afraid that he would impose sanctions on China and take the escalation to a brand new level. But Trump quite unexpectedly gave the rear, saying that the United States would put an end to the special regime in Hong Kong and did not begin to impose new sanctions on China, while maintaining a trade truce between the United States and China. Trump's softer stance is hard to imagine. So buyers in the stock markets, who were already getting ready to start taking profits, decided to postpone this. Our position over the situation in the US stock market this week remains unchanged: only sales. Reasons: extremely gloomy economic present and even more gloomy economic future (US GDP for the second quarter according to experts' forecasts will decrease by 30-40%, and the earnings season promises to be the most disastrous in the history of the United States). Some words about the economic present. Despite the increasingly active exit of the US economy from the lockdown, the number of unemployed continues to grow at 2+ million per week. That is, there is no any fast economic recovery. Last week a sharp increase in oil reserves in the United States was detected. Recall that last week we closed most of our oil longs, as we expect a correction in the oil market. Buyers have clearly exhausted their potential, while there is something to fix in terms of profits. The upcoming week is primarily interesting for data on the US labor market. NFP figures are traditionally interesting for markets, and in the current conditions this interest is naturally increased. Since the Dollar Index last week consolidated below an important support level, while it is below 99, we will look for opportunities for dollar sales in the FOREX. First of all, against the euro (while it is above 1.10), as well as the Japanese yen (while it is below 108). Accordingly, we will buy EURUSD and sell USDJPY today.
Short
by Trade24Fx
2
Weak data from the US and Japan, rising tensions and dollarYesterday, important statistics on the United States were published. As we warned, the data came out very weak and generally did not inspire any optimism. The increase in jobless claims is still more than 2 million per week. This means that the number of unemployed in the United States for a couple of weeks replenished by 40 million people. US GDP for the first quarter was revised downward (from -4.8% to -5%). Durable goods orders decreased by another 17.2% (after a decrease of 16.6% in March). In general, economic statistics continue to go worse than ever. However, in we can see that situation can go even worse after the data on US GDP for the second quarter will be published. According to various estimates, it will show a decrease of 30-40. This is very hard to imagine, but it’s a part of the current reality. Apparently the impossibility to perceive the scale of what is happening is explained by the stubborn reluctance of stock markets to at least try to take into account the state of the economy in prices. Oil stocks in the United States grew by almost 8 million barrels per week, which was the reason for us to close most of our long positions, since we expect correction and plan to restore these positions by cheaper prices. Friday in terms of data will also be quite a busy day: consumer inflation in the Eurozone, retail sales in Germany, personal income and spending in the USA, as well as Canadian GDP and US sentiment indices practically guarantee that Friday will be a busy day in the financial markets. In addition, data on Japan has already been published. Industrial production in April fell by -9.1% m / m with a forecast of -5.7% m / m, while retail sales in April showed a decrease of -9.6% m / m with a forecast of -6.9% m / m. Actually, we did not expect other data. What we expect is that when the markets begin to respond to the data and at least try to take them into account in prices. Speaking of other news, we note that the United States overcame the 100K deathmark, while the chief infectious disease specialist in the United States noted that the appearance of the vaccine should not be expected earlier than November-December. Chinese lawmakers have approved a proposal to implement new national security legislation in Hong Kong. We are waiting for the US reaction and are preparing for the increase of tensions between the countries to a brand new level. Trump, meanwhile, is attacking social networks. In general, we would like to talk about the good thing, but cannot. Our trading recommendations for Friday: since the Dollar Index broke through the basic support yesterday, while it is below it, we will sell the dollar within the day. Accordingly, today we are looking for points for buying pairs EURUSD, GBPUSD, AUDUSD, as well as selling USDJPY. Sales in the stock market do not lose relevance for us, despite the continuous price growth there.
Long
by Trade24Fx
5
US data, ECB forecasts and a trillion of JapanYesterday, optimism in the financial markets was fueled by information from Japan about the introduction of a new $ 1,1 trillion stimulus package. Thus, the total economic assistance program in Japan reached $ 2.18 trillion (234 trillion yen), which is equivalent to about 40% of the country's GDP. As a result, Japan almost caught up with the United States, where the size of the stimulus package so far is $ 2.3 trillion. The European Commission has proposed its mechanism for assisting the EU economy in the amount of 750 billion, of which 500 billion euros are planned to be given to EU member states in the form of grants, and the remaining 250 billion euros will be available in the form of loans. The number of new coronavirus cases in the United States decreased to the March levels. The second half of the week after being relatively unsaturated in terms of macroeconomic statistics promises to be much more interesting. On Thursday and Friday there are many macroeconomic indicators. So almost certainly the volatility will be quite high, which means that the opportunities for trading will be more interesting. On Thursday, traditionally, the main focus will be on jobless claims in the United States. This is one of the most operational indicators (published once a week), and the labor market has suffered faster and harder than other components of the US economic system. Since the second half of May is the time for the US to partially exit the lockdown, investors are waiting for signals that everything is back to normal. Such a signal will be a sharp decrease in the number of jobless claims. However, forecasts continue to be rather pessimistic - about 2 million unemployed will be added to the total number up to 40 million. In addition, markets are extremely interested in statistics on durable goods orders. Since this is April data, there is every reason to expect disastrous data. The revised data on US GDP for the first quarter will also matter, especially since there is a high probability of a revision for the worse. A portion of weak data is likely to return markets to the ground. First of all, we are talking about stock markets, whose growth has long exceeded all reasonable limits for current conditions. So today we will sell in the US stock market. Also, the growing concern of investors, in our opinion, will lead to an increase in demand for the dollar. Dollar Index is now at the local bottom, so it has much potential to grow. That is why we will sell EURUSD, GBPUSD and AUDUSD today. Sells Euro are especially relevant in light of yesterday's forecasts from the ECB, according to which the Eurozone GDP by the end of 2020 will decrease by 8% -12%. Tensions between the US and China continues. So far, more in verbal form than, in fact, which explains the lack of reaction to them in the financial markets. But everything indicates that this is only the beginning. And no one will definitely like the continuation.
Short
by Trade24Fx
2
Markets again full of optimism: Novavax, Brexit, reopening The idea that the worst is behind completely fulfilled the minds of investors. Certainly there are some reasons for this: restrictions in Europe are being increasingly lifted up to the opening of tourist seasons soon. In addition, the news of the next vaccine trials (we are talking about the Novavax vaccine) reinforces the hope for the best, despite the fact the Novavax only begins trials, and the results will not be known before July (and the results will not necessarily be positive). As a result any information like a new peak in the pandemic generated last week, and or fact at least six months will take the vaccine to appear on the shelves, is ignored by the markets as irrelevant. The same is true to the news about the tensions between the US and China. We still believe that investors should not look at the world exclusively in pink glasses. Last week clearly showed that the situation can change at any time and there are more than enough reasons for this. As for the dynamics of financial markets yesterday, it was extremely typical for such an optimistic sentiments: stock markets were growing and with every new day the growth looks more and more uncontested. Though it is no less divorced from economic reality. Along with stock markets, commodity markets and oil were growing. At the same time, the dollar was under pressure. Emerging currencies are raising their heads on such background. Another piece of news from yesterday are related to information that the EU is ready to compromise with Britain on one of the important issues - fishing in the UK coastline. Now European fishermen are actively fishing there, but Britain is inclined to make fishing in its waters exclusively own prerogative. So the EU is sending signals about willingness to compromise. We are rather skeptical about the idea of a compromise, since any of its options is the cost of the UK and it is not clear why they need it, except in conjunction with concessions on other issues from the EU. In general, so far the growth of the pound seems to us deprived of a fundamental basis and is based on rumors and hopes that, by definition, is quite unsteady ground for further growth.
Short
by Trade24Fx
2
New Cold War and an alternative plan for the EUYesterday was a day off in the USA and Great Britain, so Monday was not rich in events. Therefore, there is time to talk about global things. The US and China are slowly but surely slipping into a new cold war. So far, the parties continue to exchange verbal threats, but literally half a step remains before the transition to actual actions. And then the trade wars will seem like a kindergarten. The situation in Hong Kong is rapidly deteriorating, and Trump still needs the last one, whom he will blame for all the current troubles and problems of the United States. So the escalation of the conflict seems to us inevitable. However, judging by the dynamics of stock markets, this is of little concern to anyone. Which is strange a little more than completely, but a fact. The fate of the European fund in the amount of 500 billion euros after the weekend finally passed into the category of uncertain. We have already written that in the EU there are a number of opponents of the idea of giving money for free, especially to those who are involved in spending extremely randomly and uncontrollably (a stone in the Italian garden). So Austria, Denmark, the Netherlands and Sweden have proposed an alternative plan for economic recovery after coronavirus. In general terms, the concept is simple: give money in the form of a loan with the most favorable conditions, but with a tight repayment period (after two years) and targeted use of funds. The news from Germany somewhat sweetened this bitter pill: despite a recession in the economy, the level of business confidence in May turned out to be quite high (IFO expectations index in May 80.1 with a forecast of 75.0). On the other hand, the oldest car rental company in the USA (Hertz with a fleet of nearly 700K cars and 40K employees) filed for bankruptcy, which reminds us of the price that the economy has to pay for the lockdown.
Short
by Trade24Fx
Week in a glance: pandemic peak, vaccine and US vs ChinaThe past week was not very rich for the sound macroeconomic statistics, but it turned out to be exceptionally eventful. Traditionally, the coronavirus epidemic has remained the main theme. The barrier of 5 million cases was passed and a new global peak was detected, which was largely due to the sharp increase in the number of cases in Brazil and India, as well as the stably difficult situation in Russia. Even China, which, it would seem, successfully fight the coronavirus, was again forced to implement quarantine measures, with over 100 million people under restrictions. Despite such depressing statistics, the stock markets of developed countries grew, which was largely due to the news about the successful trials of the coronavirus vaccine by Moderna. However, towards the end of the week, optimism faded when it became clear to everyone that this was only the first phase and there are still many months before the potential happy end. And something more about the “magic pills”. A couple of weeks ago, a similar reaction in the markets was provoked by Remdesivir, but last week, Bloomberg published information that it mainly helps healthier patients. Another positive news of the past week was the information from Germany and France who agreed to create a European fund with the amount of $ 546 billion to help countries with economic consequences of pandemic, but here you can find the negative. The fact is that this fund has serious opposition from Austria, Sweden, Netherlands and a number of other countries that are not very eager to sponsor the Italian populists and others. Since the last week the Japanese economy is officially in recession. In addition, a lot of data from the UK was published and by and large all of them can be attributed to the pound liabilities. So this week we will continue to search for opportunities to sell British pound primarily against the US dollar (sell GBPUSD) and the euro (buy EURGBP). The white streak for oil last week continued: US oil reserves fell sharply, as did the number of active oil rigs in the US. So we continue to hold medium-term positions in oil purchases. Recall that our position is multi-stage: the first purchase is from $30, the second from $25 and the third from $20. That is, all three positions are already in plus. The United States and China closed the week. Their relations are rapidly deteriorating. This week we will almost certainly see a further escalation of the conflict. So purchases of gold, the US dollar and the Japanese yen look pretty attractive this week. And, sales in the stock markets this week are among of our priorities.
Short
by Trade24Fx
2
PMI in Europe, unemployed in the USA and trade wars 2.0Yesterday in the news plan was relatively calm. Everyone was already habitually waiting for the next millions of unemployed from the United States. And the States did not disappoint - another 2.4 million joined the 36 million army of unemployed. In general, one can only guess when the US stock market will at least try to take into account these and other negative data in its prices. The situation with the UK PMI indices turned out to be somewhat better. In particular, the PMI index of business activity in the manufacturing sector in May amounted to 40.6 points against the forecast of 37.2, but in the services sector (more importantly), the PMI business activity index reached 27.8, which is somewhat better than the forecast of 24.0 points, but in general extremely weak. In addition, data on CBI Trends (balance of orders) came out in a deeply negative zone (-62 with a forecast of -50). So sales of the pound remain for us the top trading idea for the foreign exchange market this week. Especially when you consider that today will be published data on retail sales in the UK for April, which definitely will be devastating. In the Eurozone, the Composite PMI Index turned out to be rather weak (30.5 with a forecast of 27.0), as well as in the context of individual countries (Germany, France), which did not prevent the euro from pairing with the dollar once again trying to take important resistance of 1.10. Such attempts we recommend to use for sales EURUSD. The US continues to blame China for all mortal sins, and this time the States were as transparent as possible in their statements, indicating that "everything is coming from the top" (meaning President Xi Jin Ping). So the markets are becoming increasingly stronger in the thought that the first phase of trade deal may be the last successful negotiation between US and China. However, she is a big question. So the trade wars version 2.0 seem to be inevitable. Which again, does not add any optimism. As well as overcoming the mark of 5 million coronavirus cases in the world.
TVC:SPXShort
by Trade24Fx
Unpleasant surprise from China, eighth peak, FOMC protocolsLast week, we already wrote about the fear of the “second wave” of the epidemic associated with the opening of economies. Then it led to local sales in the stock markets, as well as the strengthening of the dollar. But then the markets calmed down somewhat and decided to postpone worries about this until actual confirmation of the fears would be received. China, it seems, sends a warning about this to the whole world. The sharp increase in the number of cases in northeast China has already led to new quarantine measures in these regions of China. As a result, more than 100 million people are in the lockdown. According to medics, the virus thoroughly mutated. Now its incubation period is even longer, which means it is more difficult to catch the beginning of the outbreak. And the disease now lasts longer. In general, the news is extremely depressing, especially the surge of optimism associated with the successful passage of the first phase of the coronavirus vaccine test on Monday. The situation in Brazil continues to deteriorate rapidly and the general situation in the world continues to look like a new (already eighth) peak. In Russia, situation continues to remain stably heavy. So the pandemic will be for a long time not only on the headlines, but also harm the global economy. Accordingly, we continue to consider what is happening in the stock markets is a bubble, which sooner or later should burst. Another important event for the markets was the publication of the minutes of the last FOMC meeting. We did not expect anything new from them, because recently Powell had already provided comments on key issues and the picture with the Fed was more or less clear. The minutes confirmed that the Fed’s negative rates are not considered, but options for long-term assistance to the economy are considered, since the pandemic and the damage from it are for a long time. According to official figures, oil inventories in the USA fell again, and very significantly: by -4.982 million barrels, with a forecast of +2.150 million barrels. In Cushing, the decrease was even more significant -5.587 million barrels. So the white stripe for oil continues. Bloomberg announced its forecast for the GDP growth rate in Russia in the second quarter. By growth, of course, we mean a decline. Analysts are waiting for a record in history (even compared to the global financial crisis) drop of 16%. In this light, the current attempt of the ruble to strengthen is a great opportunity for its sales at a higher price.
TVC:SPXShort
by Trade24Fx
4