Dramatic Times for GBP Ahead of Brexit

In two months Britain will have to leave the EU and emotions run high. Prime Minister Boris Johnson plans to suspend Parliament from September 12 until Oct. 14.

The general understanding is that Johnson is trying to prevent Parliament from obstructing his Brexit plans, although the PM has denied that. Members of Parliament (MPs) are just finishing their recess. Now that another pause is on the agenda, the lawmakers will have little time to discuss the upcoming separation with the European Union. According to Johnson and his supporters, Parliament was going to be on hold for party conferences anyway and the suspension will only add three days to the break. Still, political tensions are definitely rising. An environment like this is negative for the GBP.

The main thing that is keeping the GBP from the deeper declines during these uncertain times is the fact that it’s already significantly oversold. In addition, investors hope that MPs who are against Brexit will be able to think of some solution when they meet next week. In particular, the Labour Party plans to hold an emergency debate on Brexit. Labourites may also call a no-confidence vote in the government. As a result, there are no doubts that starting from Monday the political atmosphere in the UK will become even more heated.

Don’t forget about the EU

The risk of a no-deal Brexit exists because it’s difficult for Britain and the European Union to agree on how their trade and other relations will work after the UK gets out of the bloc. The biggest bone of contention is the so-called Irish border backstop. In short, there’s a border between British Northern Ireland and the Republic of Ireland that is and will remain the part of the EU but it used to be only a formality for a long time. Now, this has to change.

Some analysts believe that Boris Johnson thinks that the EU waits for the British Parliament to reach out with a compromise or ask to postpone Brexit. As a result, by suspending Parliament he hopes to strip the European policymakers of such expectations and thus make them concede to the British conditions. For now, we haven’t heard much from the European Union on the matter. Perhaps the EU got tired of the entire Brexit affair?

The fate of the GBP

Obviously traders are alert and looking forward to the further developments of the situation. The GBP will probably continue to ignore the economic data releases and focus on political news. All in all, although the majority of MPs are opposed to leaving the EU without a deal, so far they have failed to vote for one. Consequently, we have reasonable doubts that Brexit opponents will be able to form a united front, especially given the fact that the time they have is limited.

The odds that opposition policymakers will resort to a no-confidence vote have increased. If Boris Johnson loses such a vote, the initial reaction of the GBP could be negative as uncertainty would increase. If Johnson remains in power, the GBP will continue having support. Yet, it will have no force to strengthen as, for now, the market doesn’t believe that Britain and the EU will be able to reach a deal. Brace yourself for more GBP volatility in the upcoming days!

Short the CNH?

“Those who speculate and short the yuan will for sure suffer heavy loss.” – said Xiao Yuanqi, the spokesman for China’s Banking and Insurance Regulatory Commission (CBIRC).

Besides, Mr. Yuanqi declared that higher US tariffs even if they reach the maximum level, will have a “very limited” impact on the Chinese economy and will affect American one about same.

A top financial regulatory official and a vice information technology minister confirmed that the effect of US sanctions is under control. A former deputy commerce minister assumed that Chinese firms will be able to survive the sudden escalation of the trade tensions without problems.

The government keeps encouraging the nation while the economic data continues worsening and trade talks are at a dead end.

Such provocative comments make investors take thought about the future of the Chinese yuan.

Should investors believe these words or the facts say the opposite?

On May 17, the USD/CNH pair was near the critical high of 7.0 but it turned around and moved down. As a result, a logical question appeared: for how long the pair will stick below critical 7.0?

We all remember that in the past Chinese authorities indicated that level as a floor. This month, both the offshore and onshore Chinese yuan are among the worst performing Asian currencies. At the beginning of May, Mr. Trump raised levies on Chinese goods despite rumors of the possible agreement between the US and Chine. A further escalation of the trade war and worsening of the Chinese economic data don’t leave hope for the CNH.

Are there possibilities of the 7.0 breakthrough?

Last time USD/CNH was above 7.0 in 2008. After that, the Chinese currency managed to stay quite steady. However, the Sino-US trade war has been leading the currency to a precipice. A breakthrough is possible as there are no doubts that trade tensions will not end in the near future causing a following slowdown in the Chinese economy. We all have already seen that the Chinese government is not scared to sacrifice the domestic currency due to prevent further economic depreciation. As a result, the country may let the Chinese yuan fall below the crucial level.

However, such a fall may lead to negative consequences. Usually, a weak currency is good in the case of slowing economic growth. The Chinese economy has already represented a great economic slowdown. However, this time, the weak currency may cause another reaction from investors. Devaluation of the currency or other easing measures such as selling of US Treasuries may cause fears of further problems in the country. As a result, foreign investors may not want to invest in China.

Why the government may keep the currency below the critical level?

A breakthrough beyond 7.0 of the USD/CNH pair may make the US accused China of the cheap currency.

Furthermore, stable yuan will attract long-term foreign investments that will support its further growth.

Moreover, we should remember the “price-in” effect. A negative impact of trade tensions is not a surprise not only for China but also for the rest of the world. As a result, economies are already prepared for that. It will allow Beijing to hold the domestic currency at appropriate levels.

Technical setup

On May 17, USD/CNH reached 6.9491 and rebounded. Up to now, it has been trading below the support at 6.9098. A break below this level will give a chance to the Chinese currency. In this case, we can see a further decline towards 6.8680. If trade tensions increase, we may see a weakness of the CNH. Bulls will try to push the pair towards the critical level of 7.0. Before that, we will consider previous supports as resistances. Also to reach 7.0, the pair needs to overcome the previous high at 6.9491. Next resistances will lie at 6.9580 and 6.9800.

To conclude, we can say that the Chinese currency will definitely stay under pressure. The current recovery is short-termed. Trade tensions and the slowing economic growth are factors that will keep affecting the currency. The 7.0 level will remain the critical point. A break above it will mean a great devaluation of the Chinese yuan that will significantly worsen the economic situation.

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The Australian Dollar Keeps Loosing

The Australian dollar can’t find a way out of the darkness. The AUD has been falling since January 2019 and it seems that the situation only worsens. Let’s see what factors will affect the currency in the middle term.

On May 20, the AUD firmed on the unexpected results of parliamentary elections. However, the rally was limited and the currency continued its downward movement. RBA meeting minutes (May 21) just worsened the situation. Comments by the central bank that the low cash rate is positive for the national economy were not new but this time they were more than just words. And although markets had already expected the rate cut on the June meeting, confirmation from the central bank pulled the currency further down. The meeting is on June 4, risks of the cut are high, what would prevent the plunge?

Before June 4, we don’t anticipate releases of any important economic data that can change the decision of the central bank. As a result, it’s more likely that the RBA will not change its decision and will cut the rate. However, as the rate cut is already priced-in there are high odds that a great fall will not occur.  

Any chances that the RBA will not cut the rate? Yes, the decision is not taken. That’s why chances still exist.

Technical picture

On the daily chart of AUD/USD, the pair has been moving towards the lows of January 2016 at 0.6832. The level is crucial for the aussie. If the pair slumps below it, the next support will lie only at 0.6287 – lows of the first quarter of 2009.

The recovery of the pair will be likely if only the pair is able to stick above 0.6952.  Until then, any rise below this level will be considered as only a consolidation.

Nevertheless, the Australian dollar depreciates against most of the currencies; it has chances against the GBP.

GBP/AUD

GBP/AUD began its movement down on May 6.  Negative meeting minutes pushed the pair up. The pound/Australian dollar rate showed the volatility of 243 pips but it didn’t turn the downtrend. The pair tested the upper boundary of the trend but rebounded and continued sliding. And although the Aussie is weak, the GBP seems to be on worse levels because of the Brexit deal.

The first support is located at 1.8320. A breakthrough will strengthen the downtrend. After the level is broken, bears will lead the pair to the support at 1.8148. The downward trend will be ended as soon as bulls manage to keep the pair above 1.8410.

Making a conclusion, we can say that we can anticipate a further weakness of the Australian dollar in the middle term because of the lack of economic data and threats of the rate cut. Moreover, the US-China trade war puts additional pressure on the risky asset. However, the AUD will be stronger than such currencies as the British pound.

Euro: Long-Term Projections

The actual release outperformed the forecast by 0.1%. Spanish flash GDP figure exceeded estimates too. Even Italian data was quite promising – prelim GDP level was placed at 0.2% against -0.1% forecast. German prelim CPI level beat the forecast by 0.5%. Sound good but the long-term picture may be not that shiny.

On May 7, the European Commission published its economic forecasts*. According to them, the European economy will keep suffering during 2019 with a rebound in 2020 only. The GDP growth is anticipated to be at 1.2% comparing to 1.9% in 2018. Unemployment rate should stay at 7.7%. This figure is better than previous ones but not the best. Summary budget deficit in the eurozone is expected to rise to 0.9% of GDP. Although debt of the eurozone will likely decrease, it’s not enough to boost the euro.

In April, eurozone economic sentiment fell to its lowest level in more than two years. What more negative for the European currency is a prediction of low inflation levels both in 2019 and 2020 that is below the ECB’s targets.  

Moreover, we should remember about the external factors that will be adding pressure during the year. Trade wars leading to the weakness in emerging markets, especially in China. The Brexit deal that is constantly prolonged may end with a no-deal at all.

All factors mentioned above are signs of the weak EUR.

CFTC EUR speculative net positions keep moving down from week to week signaling weakness of the euro. What is next?

CFTC

What levels to expect for the euro

Last time, the EUR/USD pair was at current lows in May-June 2017. The pair keeps trading in the downtrend and although some analysts were sure that accommodative monetary policy of the ECB and external threatens are already priced in, the European currency can’t recover. On the weekly chart, awesome oscillator and MACD formed a bullish divergence with the price chart that was reflected on the chart with a rebound of the pair. The rebound from 1.1137 is positive for the currency but the downward pressure will likely continue.  During the upcoming months, we can anticipate a further decline. A breakthrough below 1.1137 will provoke a further decline towards 1.0926 – the bottom line of the previous consolidation. If EUR/USD plunges below 1.0926, the next support will lie at 1.0495. The level is far but additional pressure may lead the pair to it. Recovery of the EUR/USD may happen if only there is a progress in external threats that will cause an improvement in the European economy. Bulls need to push the pair above 1.1448. Only after the pair is above this level, we can hope for the recovery of the European currency.

EURUSD Weekly

To conclude, the euro is anticipated to suffer during the year. Negative economic forecasts, easing monetary policy of the ECB and external factors don’t give the currency a chance to recover. If only the situation improves, the EUR will get an opportunity to recover.

* EU Economic Forecasts is the report that includes economic forecasts for EU member states over the next 2 years.

Future of American Stocks: Buy or Sell?

Last year was difficult for the whole equity market. The trade war between the US and China, a slowdown in the global economic growth, global uncertainties that worsened the market sentiment, too tight policy of the Federal Reserve affected stocks a lot. Usually, after the rain, the sun always shines. Has the time of the sun come or it’s still rainy weather for the stock market?

S&P 500 Index

Source of the chart: CNBC

Points for the rise

  • The tight monetary policy of the Federal Reserve in 2018 led to the strength of the US currency and the slump of the stock market. In 2019, the Fed will unlikely to raise the rate even once. It gives hope to equities.
  • A trade deal is close. It seems like the trade relationship between the US and China has been improving. Comments on the soon deal come up daily. There are no doubts that it’s early to talk about the trade truce but improved market sentiment may push stocks up.
  • It can’t be considered as a strong economic factor but at the same time, it can’t be avoided. Recently, Mr. Trump tweeted his accusation of the Fed at a lower level of stocks than it could be. It means that Mr. President is interested in high stocks and will support their future rise.
  • BMO found an interesting trend. When the S&P 500 gained 10% or more in the first quarter since 1935, stocks climbed up 6% more on average for the rest of the year. The first quarter of 2019 gave a chance to put this theory into practice. 13% rise of the S&P 500 in the first three months of this year let hope for the bright future.

Based on the factors above, world financial institutions and financers made their forecasts on stocks.

Credit Suisse calmed markets with optimistic comments on the lack of the stock recession in 2019.

Jeremy Siegel, the Wharton School finance professor, doesn’t see signs of the recession, too. Moreover, Mr. Siegel doesn’t pay a lot of attention to possible Fed rate hikes. An uptick of 5-15% is highly likely by the end of this year.

Byron Wien, the Wall Street veteran, predicted new highs for the stock market in 2019. A gain of 15% is highly anticipated by Mr. Wien.

According to a CNBC survey, the stocks market will end 2019 around 3,000.

Points for the fall

Up to now, the S&P 500 shows a solid rise. However, the situation may be not that rosy for the stock market if the factors mentioned above turn around. The trade deal is not reached yet, global issues such as Brexit deal keep putting pressure on markets, especially risky ones. As a result, there is an opinion that the stock market may decline or even fall into recession.

Bank of America Merrill Lynch lowered its S&P earnings forecast for the year to a growth of 4% compared to its earlier forecast of 5%.

Morgan Stanley warned about two or more quarters of the negative or flat growth. According to the bank’s analysts, the forecasts for the first quarter of 2019 were lowered. It means that even if the actual earnings readings outperform, it won’t be a sign of the great surge in the future.

Many analysts see the upcoming recession in the horizon but it doesn’t mean that it’s bad for traders. Falling stocks may be used as a good buying opportunity.

In conclusion, we can say that the future of equities will highly depend on three major factors such as Fed monetary policy, the trade war and the global sentiment. There are no doubts that the situation will change from time to time during the year. To predict the market moves, follow the news to be up to date. As soon as the global situation worsens, be ready for the fall of the stock market. Use it as an opportunity to buy cheap stocks. In the case of the risk-on sentiment, prepare for the stocks’ surge.

Market Outlook: April 15-19, 2019

As soon as you are ready to meet with something that no one expected, you will win. Let’s consider all possible variations for market moves in the upcoming days.

This week started with a bright sky for the stock market. Optimistic Chinese data that were released on Friday eased worries about the slowdown in the global economy. Treasury Secretary Steven Mnuchin provided hints on the close trade deal between the US and China. It became another important factor that improved market sentiment.

Traders’ eyes are on the renewed earnings season that will show the strength of the American companies. Check the earnings calendar and trade stocks with FBS.

Let’s focus on the Forex.

USD

On Monday, the US dollar index had been moving down after the attack of Mr. Trump on the Fed. American president claimed that it was a fault of the Fed that the stock market hasn’t been up 5,000 to 10,000 additional points as it was supposed to be.  As a result, the USD has depreciated against most of the currencies.

Events to watch:

  • Wednesday (April 17). Retail Sales readings.
  • The news as there are no other factors that may help to forecast what will happen to the US dollar.

The direction of the USD will determine the moves of major currency pairs.

CAD

Last week didn’t determine either strength or weakness to the Canadian dollar. The CAD index didn’t surprise with significant moves. The beginning of the week isn’t shiny for the loonie, too. Although the USD was a loser against most of the currencies, the Canadian dollar wasn’t among them.

Events to watch:

  • Wednesday, April 17. CPI and Trade Balance.
  • Thursday, April 18. Core Retail Sales.
  • The situation in the oil market.

Levels to watch: on Monday, during Asian and European sessions, the trading was limited with the lack of both bulls and bears strength. The further direction of the pair will depend on Monday closure price. If bulls manage to hold USD/CAD above 1.3334, odds of the further rise will prevent on the market. The first strong resistance lies at 1.3384 – the upper boundary of the consolidation zone. As soon as 1.3384 is broken, the USD traders will be able to push the pair towards 1.3346. However, technical indicators signal risks of the decline. MACD and Awesome Oscillator are near to cross the 0 level upside down. Bears need to pull the pair below 1.3305 (50-day MA and the bottom line of the previous consolidation). Next supports are at 1.3272 and 1.3221.

AUD

Although the USD isn’t strong and the market sentiment improved, the Australian dollar couldn’t use the situation in its favor.

Events to watch:

– Wednesday, April 17. Chinese GDP. There is a strong correlation between the situation in the Chinese economy and the direction of the Australian dollar.

– Thursday, April 18. Employment change and unemployment rate.

Levels to watch: Monday trading was weak. To prove their strength, bulls need to push the pair above 200-day MA at 0.7197. The next resistance will lie at 0.7212. After the breakthrough, AUD/USD will get a chance to climb to 0.7255 and higher. Technical indicators don’t signal the fall of the pair. However, the rise may be limited if the US dollar recovers. In this case, AUD/USD will return to the consolidation range between 0.7107 and 0.7170. A break below 0.7107 will provoke a decline to 0.7044 (pay attention to the trendline).

GBP

Traders are quite tired of the GBP trading. Did you hear the news that software robots crashed because of the many Brexit headlines? Not surprising. However, up to now, it seems like the situation has softened after UK and EU managed to agree on the prolonged Brexit last week.

Events to watch:

  • Tuesday, April 16. Average Earnings Index.
  • Wednesday, April 17. CPI.
  • Thursday, April 18. Retail Sales.

Levels to watch: during Monday, the GBP/USD pair had been rising based on the weak USD. However, last week, the price formed several candlesticks with long upper shadows that were a sign of low bullish strength. Bulls need to push the pair above 1.3125 to cut risks of the downtrend. A breakthrough above 1.3186 will confirm a forming upward movement. However, the pressure is high and the pair may turn around towards 1.3072. Consider the trendline as it will add additional pressure on the pair. Moreover, MACD and Awesome Oscillator formed a bearish divergence. It’s not strong but signs of it exist. Next supports are at 1.3012 and 1.2959. 200- and 100-day MAs are located near 1.2959, as a result, the pair may rebound.

Is it Time For The long Bitcoin?

Finally, Bitcoin managed to leave the bearish consolidation zone. The digital currency had been trading sideways since November 2018. Since the beginning of the year, the cryptocurrency didn’t differ with big liquidity. Several spikes during 2 months couldn’t determine the direction of the BTC/USD pair. Now it seems that the time has come… or not?

Bitcoin managed to cross the psychological level of $4000. Many experts associate the boost of bitcoin with the JPM Coin. JPM Coin is the own cryptocurrency of JPMorgan. One of the banking giants announced it created and successfully tested a cryptocurrency that would have a value equivalent to one USD. It’s not a surprise that such news boosted the BTC. But was it enough to push bears from the market?

Although bitcoin left the correction zone, it’s too early to talk about the uptrend. Firstly, the cryptocurrency has to confirm the bullish market mood. The upward movement will be possible if only there is encouraging news for the cryptomarket. For example, if Nasdaq launches bitcoin futures contracts in the first quarter of this year.

Technical side

On the daily chart of BTC/USD, the pair managed to break above the psychological level at $4000. After the surge, the rise of the pair started slowing down. To prove the further rise the pair needs to break above $4080. Until then the consolidation is likely. The RSI indicator has been placing above the 70 level that is a strong sign that the pair is overbought. MACD indicator has formed the bearish divergence with the price that signals a potential reversal as well. To confirm the uptrend the pair needs to overcome the $4200 level. $4380 is the reversal point. As soon as it’s broken, we can anticipate a resume of the upward movement. Until the uptrend is confirmed, the pair may test support at $3930. Next supports will lie at $3775 and $3645. A break below $3422 will resume the downtrend.

Predictions

The most interesting thing about the cryptomarket and especially about bitcoin is forecasts.

Analysts of Fundstrat predict bitcoin not lower than $36,000 in 2019 mentioning $64,000 and $20,000 as its maximum and minimum respectively.

Michael Novogratz, Galaxy Digital CEO, forecasts bitcoin above $10,000 by the end of the first quarter of 2019 with an additional rise to $20,000 and higher during 2019.

And one more prediction that seems the craziest one. Billionaire investor Tim Draper predicts that in just 5 years we all will use bitcoin instead of fiat currencies. The interesting thing is that he claims that only criminals will hold on fiat. Previously, Mr. Draper predicted bitcoin to soar to $250,000 as soon as in 2022.

As we can see, two of the predictions are not that impossible. However, the cryptomarket needs more encouraging events.

Making a conclusion, we can say that it’s early to talk about the bullish market. However, a recovery of the digital currency is already a good sign. We need supportive news and additional confirmations from levels to be sure that it’s worth being long on BTC.

Venezuela – Are There Real Chances for Oil?

Venezuela is in chaos. Traders and investors are curious about the future of the Venezuelan crisis and its impact on the oil market. Venezuela has never differed with outstanding economic growth and living conditions. Moreover, the country had been intensively plunging into recession. However, what the country suffers now has significantly intensified the economic and humanitarian crisis.

Short brief: at the end of January, the opposition leader Juan Guaido proclaimed himself interim president who will fight against poverty and the economic disaster. It put the country on the threshold of the civil war.  Don’t forget that Mr. Maduro is still a Venezuelan president. Moreover, the opposition leader is supported by many countries including the US, which worsens the situations even more. The US has imposed sanctions on Venezuela’s state-owned oil and natural gas company PDVSA and it seems like there will be more actions.

The suffering Venezuelan production was supposed to push oil prices up. However, the effect wasn’t that strong. Does it mean that even a decline in the production of one of the biggest oil suppliers won’t support oil prices? Let’s figure it out.

The situation in the country is anticipated to become worse. The crisis keeps increasing and it’s highly unlikely that Mr. Maduro steps down without a fight. A further escalation will definitely hurt the domestic oil production. But will it affect the global oil market a lot?

Short/medium-term perspective

In the short- and the medium-terms, oil may suffer big volatility. In the case of the negative news on the Venezuelan crisis and sanctions on the Venezuelan oil, prices may gain momentum. However, the effect is expected to be limited, especially when we consider the outcome the crisis has on the oil market now.

Moreover, the Venezuelan crisis should be taken into consideration together with other factors. The US production, OPEC cuts, demand/supply forecasts will shake the market as well.

Take a look at the technical side. On the weekly chart of Brent, we see that the oil benchmark keeps trading sideways. As we mentioned above, the Venezuelan problems didn’t boost prices a lot. However, the Venezuelan crisis together with supportive factors such as a decline in the supply or forecast on an increasing demand may affect oil prices more.

The first resistance is anticipated to lie at $67. The next level will lie at $71. If we talk about the medium-term, the important resistance will lie near the $80 level.

What if oil suffers based on the increased supply and decreased demand? In this case, the fall may slow near $55. The next support will lie at $51. In the case of the breakthrough, the slump below $45 will be likely.

Brend Oil, Weekly Chart

Long-term perspective

It’s rare efficient to predict something especially when talking about politics, however, we will try. The production in Venezuela has already significantly declined. Just 4 years ago the country produced 2.4 million barrels and now we have just 1.3 million. An escalation of the political crisis will cause a further slump in oil production. No matter how long the crisis will continue, the reduction of Venezuelan production is anticipated. Does it mean that this reduction will support oil prices in the long-term? Again highly doubtful.

What should we pay attention to?

Firstly, of course, the US production. There are no doubts that the US will keep increasing its oil extraction. It’s not a secret that America tries to take the leading role in all spheres and the oil market is not an exclusion.

Secondly, OPEC production. OPEC+ is one of the most effective mechanisms that control oil prices. In the case of the fall of oil prices, the alliance will cut the oil supply. If there is a space for a price increase, they will raise oil production. However, as we already could see, Saudi Arabia announced additional cuts in March 2019 despite the Venezuelan crisis. It means that Venezuela’s factor isn’t affecting the market a lot.

Thirdly, the demand issue. Just recently, OPEC cut the oil demand forecast based on the slowing economies and expectations of faster supply growth from rivals. OPEC members claimed challenges to prevent a surplus even in the case of the additional production cuts.

In a conclusion, we can say that the Venezuelan crisis will definitely hurt the country’s economy. However, odds that it will encourage oil prices are low. An increasing US production, the global economic slowdown, the falling oil demand won’t let oil prices jump. Periodic volatility caused by an escalation of the conflict is anticipated. However, the long-term positive effect is doubtful.

EM Currencies to Invest in 2019

We have come to the second month of 2019 and it’s time to take a deep breath after the crazy run of the year, evaluate what has already happened and made some precisions on the upcoming months.

Last year appeared to be struggling for the emerging market currencies. And there were several reasons for that. Firstly, it was the aggressive pace of rate hikes by the Fed. Secondly, the escalation of the US-China trade war and slowdown in the global economic growth. Thirdly, the global risk-off sentiment. Moreover, we all remember crises in Turkey and Argentina that made traders more cautious about the emerging markets.

2019 seems shinier for the EMs. Reasons are hidden in the relief of the Fed monetary policy and the possibility of the deal between the US and China. As a result, it seems like bears started easing their grip. Does it mean that the time to invest in developing economies has come?

Where to invest and why?

Brazilian Real

The Brazilian currency may become one of the most attractive ones in 2019.

Last year, the Brazilian market was under the pressure of the global market sentiment and the presidential elections. However, all these factors seem to start vanishing in 2019. There are no doubts the Federal Reserve will ease its monetary policy. Trade disputes between the US and China have started improving. There are no proves that they won’t escalate in the future again but the melting confrontation is already a good sign. Also, experts see a policy of Mr. Bolsonaro (elected in 2018) as a booster for the Brazilian economy. The pension reform is anticipated to become one of the main drivers. Experts believe that the policy of the pro-business president could contribute to the faster GDP growth and investment flows in Brazil.

Mexican Peso

Mexica has a similar situation to Brazil. Last year the country elected a new president. This year will show whether the new political force will encourage the economic growth or pull it down. Uncertainties around the policy of the new president will add pressure on the currency, but as soon as the new government confirms its reliability, investment flows will come to the country.

Turkish lira

2018 appeared to be the hard year for Turkey and its economy. Disputes with the US, problems with the monetary policy made the Turkish lira depreciate by around 30%.

Up to now, economic data are not encouraging. However, there is a chance. On its last meeting, the central bank decreased its 2019 inflation forecast by 0.6% to 14.6%. Moreover, the central bank promised to not cut the interest rate until there is an improvement in the inflation level.

It’s early to talk about the strong recovery of the Turkish currency, but it’s worth following the economic releases.

What investments to avoid?

Although most of the factors signal the recovery of the EMs, it doesn’t mean that all currencies will appreciate. Risks for some currencies still exist.

Possible stones for the South African Rand.

The first thing that may affect the currency is the continuation of the slowdown in the Chinese growth. China is the close partner of South Africa. As a result, the suffering Chinese economy may put downward pressure on the South African one.

The second factor is the possible credit downgrade. And this factor is highly connected with another one – May elections. Elections always create high volatility in the domestic market. Moreover, the results of the elections will affect the economy in general. The pace the elected government committed to will affect the future of the country.
Analysts say that it’s unlikely Moody’s will cut the ratings before the elections but the further slowdown of the South African economy and the risks of the further fiscal slippage may push the agency to do that to the end of the year.

Making a conclusion, we can say that there are good opportunities for emerging markets to recover. However, not all EM currencies have the same chances to appreciate. The further direction of them will depend on economic releases, political news, and the market sentiment.

JPY or USD: Who is Stronger?

Why the Japanese currency couldn’t use its chance? Is there any hope on the JPY’s rise?

Although usually, currency moves depend on the economic data, it barely applies to the JPY.

The Japanese yen mostly depends on the market sentiment. In times of the risk aversion, it strengthens. In case of the risk-on sentiment, it suffers.

The market sentiment had been varying, why it didn’t support the JPY a lot?

Previously, both the USD and the Japanese yen were considered as safe-haven currencies that rose in times of uncertainties. Up to now, it seems like the USD has been losing its status of the safe-haven because the Fed is going to slow its rate hikes’ pace. However, the USD is still stronger than the JPY.

We could see that at the beginning of 2019. Although there was a risk-off market sentiment and the USD was weak, the USD/JPY pair didn’t move to crucial lows.  Later, the American currency managed to turn around. It pulled USD/JPY up and cut the chances for the JPY.

The improved market sentiment of the several past days affected the JPY even more. Clues on the progress in the negotiations between the US and China pushed all risky assets up and made safe-havens suffer.  Moreover, climbing Treasury yields increased the spread between US government bond yields and Japanese government bond yields that made the USD more attractive.

What to expect in the upcoming days.

At the beginning of the week, the market sentiment was shaken by the weak economic data from China. It seems strange that the Chinese economy affects the strength of the Japanese currency. But it doesn’t for certain. The weakness of the Chinese economy signals the harmful effect of the US-China trade war. The Chinese economy is one of the leading in the world. It’s not a surprise that the slowdown of it will affect other countries. As a result, the Japanese yen gained some points against the USD.

Is it enough to pull the USD/JPY pair down and encourage the JPY?

The rise of the USD isn’t that extensive. However, the currency keeps trying to move upwards. Furthermore, more news on the progress in the deal between China and the US will support pull the JPY down.

Let’s take a look at the technical setups for the upcoming days.

USDJPYDaily

At the beginning of the week, the USD/JPY pair has been losing some points. This week won’t differ with the crucial events either for the JPY or for the USD. As a result, the trading will base on the market sentiment.

If there is further progress on the trade war between the US and China, the USD will strengthen and the Japanese yen will keep suffering against the American currency. On the daily chart, the Parabolic SAR indicator signals the upward movement. The first resistance is at 110.45. In case of the breakthrough, the pair will move towards 111.1320. The 200-day MA lies at this level, so the resistance may become a reversal point for the pair.

However, there are odds that the currency may firstly meet lows and then resume its upward movement. In this case, we can anticipate a fall to the pivot level at 109.2140. In case of the break, the next support lies at 108.5320.

Making a conclusion, we can say that according to the analysis, the USD is still stronger than the JPY and the near-term trend for the USD/JPY pair is bullish despite possible declines.

Will Oil Outperform its Triumph Reaching $100 in 2019?

During 2018, the world was waiting for oil at $100. However, the oil market ended the year at lows of 2017. Will 2019 bring the momentum to oil prices? Let’s figure it out.

The fall of oil prices was caused by several factors. Actions of Mr. Trump who was the one who didn’t want the oil to rise, an increased oil supply caused by a limited effect of US sanctions on Iran and growing oil production from OPEC+ members, global economic slowdown, and risk-off sentiment turned the market upside down.

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What about 2019?

The key drivers of the oil movement are anticipated to be the same. But will they have a different effect?

OPEC+

A plunge of oil prices made OPEC+ members agree on cutting the oil production by 1.2 million barrels a day since January 2019. We all remember that such policy of the OPEC+ was highly effective previously. But will it be enough for investors to return the upward sentiment?
Even if the market doesn’t recover after OPEC+ measures come into force, the members may create additional measures. The next meeting is scheduled for April. However, if the situation worsens, members may meet earlier. As a result, we can anticipate that prices will be supported.

Should we wait for oil at $100? Hardly. Firstly, there are many negative factors that may pull the prices down. Secondly, we remember that Russia claimed that it’s not interested in oil at $100, the range of $60-80 is enough for the country. As Russia is one of the biggest oil producers, this factor creates more worries.

The supply issue

Do you remember how the oil market was supported by rumors about the US sanctions on Iran? But what did we get? Mr. Trump, as usual, shocked the world. Imposing tariffs on Iran, he let eight countries keep importing oil from Iran temporary. As a result, oil prices moved down. This “temporary” is supposed to end in May 2019. But no one knows either this “grant” will be extended or Mr. Trump will tighten its sanctions. If the US removes the grant, oil prices will be supported as the Iranian export will suffer a lot. Otherwise, prices may extend their plunge dramatically. Mr. Trump is interested in cheap oil, so, we can anticipate that he will use its prices in his games.

The US production is one more crucial factor that affected the supply issue in 2018. It was hardly expected but in September 2018, the US became the largest oil producer in the world outperforming Russia and Saudi Arabia. Moreover, it seems like the States are not going to slow their pace. In the case of the further rise of the US supply, prices will stay under big pressure.

Demand issue

Analysts predict economic growth to remain strong in early 2019 and slow heading into 2020. If this forecast becomes real, oil prices will significantly decline to the end of 2019.

Moreover, it’s worth saying about trade wars. Despite China and the US had been trying to come to an agreement on trade tensions, all attempts appeared to be unsuccessful so far. Trade disputes affect markets negatively in several ways. First of all, an economic slowdown in China would have a dramatic impact on the oil market because Asia is the engine of oil consumption. Secondly, trade wars are a reason for the global economic slowdown and as a result, a risk-off sentiment. As a result, an escalation of tensions will pull oil prices lower and lower.

Let’s take a look at the forecasts of the leading financial institutions.

As we can see from the chart below, the oil prices are supposed to stick in the range of $60-70 per barrel. Not bad levels, but at the same time, hope for oil at 2018 highs vanishes.

Source: CNBC
Source: CNBC

Making a conclusion, we can say that the US policy regarding the oil market will be one of the major drivers of the prices in 2019. Mr. Trump doesn’t want the oil to rise, that’s why he will take different actions to prevent prices from rising. Moreover, the strong economic slowdown will be an additional factor pulling prices down. Even if the OPEC+ members introduce new measures to support oil at relevant levels, it may be not enough to pull oil to levels above $80.

Unpredictable Predictions 2019

Everyone wants to know what to expect in the New Year. Traders are not an exclusion. This time we created something new and interesting for you. We think that it’s boring to talk about things you can expect yourself. That’s why we gathered events that no one expects but they can happen in 2019 and turn markets upside down.

Donald Trump – perhaps the most interesting POTUS!

Mr. Trump can be called the most charismatic, unpredictable, shocking person of 2018. Trade wars, the crash of the oil market, sanctions, new NAFTA are all about the US president.

Ever since the day he took office, Trump sought to roll back the foreign policy held by Barack Obama. In addition to having a rigid attitude when it comes to foreign policy, Trump also implemented intriguing strategies in the sectors of technology, energy, and finance that are considered as a foundation of the US economy. Although Trump and his policy got criticism, the US economy made tremendous progress during his term as POTUS.

Trade wars were the most significant power play of Donald Trump that he put forward in 2018. Stating that the US was losing a great amount of money in the trade with China, Trump enacted a series of tariffs. Looking at the data on the US-China trade, we can say that Trump had a valid point. Although many experts predicted a decline in the US economy caused by tariffs, the actual figures appeared to be opposite. Moreover, the US dollar was regarded as a safe haven asset during the time of trade wars’ escalation.

We suppose that Mr. Trump will continue with similar noteworthy strategies in 2019. We could expect more stories on “Iran sanctions” and Middle East issues. An increasing the 2019 budget for the Pentagon is an important indicator that the risk of global crises may rise. If Trump keeps a steady course with his strategies, we may have a year where the risk appetite will be low. It will lead to big losses in all risky assets. As the demand for safe commodities will grow, we can see a sharp surge in gold prices.

Is the parity for the EUR/USD pair possible?

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2018 was characterized by increasing interest rates in the United States. Since the mid-year, the US dollar has become a profitable currency for the carry trade because of uncertainties in other countries and their weak interest rates.
However, the situation may differ in 2019. Despite the Fed is anticipated to raise the interest rate to 3.50% in 2019-2020, the American economy may slow down in the midst of a global deceleration environment. It will negatively affect the national debt. As a result, the US will need cheaper money to be able to repay its debt. Such a return in the monetary policy will cause a slide of the US dollar.

Another important factor we should take into consideration is political uncertainties. Donald Trump may face a possible impeachment, giving an extra push to large traders to increase their short positions for the US dollar.

On the other hand, at the end of 2018, the European central bank finally tapered its quantitative easing policy. As a result, in 2019, the ECB is supposed to increase interest rates for the first time in many years giving support to the euro. There are odds that the EUR will be set as the main payment currency in its trades with the rest of the world.
Taking into consideration all the factors above, we can say that the EUR/USD could be far from parity in 2019. If all events above are met, the euro will take revenge on the USD pushing the pair to 1.30.

Financial market instability will boost the gold market to $1480/ounce in the Q3 2019.

The US economy has been developing in 2018. In the second quarter of 2018, the US GDP growth reached 4.2% that is the highest level since the third quarter of 2014. The unemployment rate reached the lowest level in nearly 50 years, while the number of jobs in October rose by 250,000 and the average wage increased by 3.1%, the highest rise in nearly 10 years.

However, the economic growth in 2019 may be not as bright as it used to be in 2018. It seems like the policy of Mr. Trump is highly effective but he might risk a quick victory without paying attention to the long-term and big price of its policy. The current policy may destabilize the global financial system. In 2018, the world financial market was chaotic and this is just the beginning of the whole damage. In the end, it can also speed up the deterioration of the dollar power.

What about the Fed?

The strong US economy let the Federal Reserve raise the interest rate 4 times in 2018. However, we all know that Mr. Trump is unsatisfied with the current Fed’s monetary policy. There are risks that if the Federal Reserve keeps its pace unchanged, the Chairman will be fired. However, not only Mr. President puts pressure on the monetary policy. There are talks about more caution rate lifting have appeared among FOMC members. However, no matter either the Fed tightens its pace or the chairman will be fired, it will hurt the USD.

Will the weak USD boost the gold market?

The rising dollar was one of the reasons for the gold’s decline in 2018. However, there are many reasons to say that the USD will lose its positions in 2019. Moreover, gold managed to play a role of the safe haven asset in 2018. As we said before, during the 2019-2020 period the global financial market will suffer a lot because trade wars will heat up. The riskier the world is the better conditions for the gold market are. As a result, XAU/USD pair can reach $1480/ounce in the third quarter of 2019.

The only hope for the crypto

We guess, the questions “Will Bitcoin recover during the next year” or “Will Bitcoin reach $2,000” are the most popular ones among the crypto community. Let’s shed some light on the future of cryptocurrencies in 2019.
The oldest cryptocurrency has suffered huge losses during 2018, falling from the January’s highs at $17,200 to December’s lows at $3,200. Among many reasons for this bearish market, analysts name the fear of high taxes on digital assets. After Donald Trump signed the tax plan which made all of the crypto assets taxable, investors lost confidence in their holdings and that resulted in a crypto sell-off.

A new trick of Mr. Trump?

Ironically, major banks see Trump’s actions as the main factor which will push the price for Bitcoin higher at the beginning of 2019. After facing with the possible impeachment (yes, it can be possible), Trump might try to get the public sympathy back by the announcement of the crypto tax cuts. According to analysts, he has been holding this ace in the hole for quite a while after investing in Bitcoin back in 2017. He will plan crypto and blockchain to make the perfect base for the trade relationships between the US and other countries. That is why the price for Bitcoin is expected to rise towards the $10,000 level in February-April of 2019.
However, that happiness might not last for a long time. According to the recent news, Iran, which is one of the countries accepting crypto, plans to use cryptocurrencies to avoid the US sanctions since June 2019. They will follow the approach of Venezuela and create their own currency backed by the crude’s price. Iran will use it instead of the US dollar to conduct the operations with oil. If Iran makes it possible, it will disappoint the US president in crypto assets. His further comments and actions will probably pull the price of Bitcoin back to the levels near $6,000.

What if the RBA eases its monetary policy even more?

The Reserve Bank of Australia has been keeping the interest rate on hold since August 2016. Moreover, it wasn’t a rate hike since November 2010.

The central bank doesn’t change the interest rate mentioning a positive effect of the weak AUD on economic data.

What does the market expect?

Although the RBA keeps claiming uncertainties and a continuation of the easing monetary policy, the market still hopes for a rate hike in 2019. And even if the rate hike doesn’t happen in 2019, 2020 should bring an increase.

But what if the central bank turns more pessimistic and cuts the interest rate?

It may happen for 4 reasons.

The first reason is the weak economic data. Despite the central bank says that the low rate of the Australian dollar supports the rise of the economy, actual figures don’t confirm that. Falling house prices, weak inflation, and a bigger decline in the Australian economy are crucial factors to cut the interest rate.

The second reason is a possible escalation of trade wars. The trade war between the US and China is highly negative for the Australian dollar because China is the major trade partner of Australia. As a result, the cautious tone of the central bank may prevail.

The third reason is hidden in risks of the global economic turmoil. Therefore, the fall of risk appetite may become even bigger than in 2018. Global economic instability and a plunge of the AUD may let the Reserve Bank ease its policy even more.

The last but not least reason is the Fed monetary policy. The Federal Reserve significantly increased the interest rate in 2018. However, there are risks that this pace will slow down in 2019. As a result, the difference between interest rates will stop increasing, letting the RBA hold its loose monetary policy.

Moreover, as the central bank has been keeping the interest rate unchanged for more than 2.5 years, it won’t be a big surprise if the rate cut happens.

What fall can we expect?

The Australian dollar/US dollar pair started recovering in October 2018. In the case of the rate cut, the recovery will be stopped. If that case a fall to 0.6345 will be highly possible.

What if the UK and EU fail to agree on the Brexit deal on March 29, 2019.

During 2018 the British pound was under the highest pressure from the Brexit negotiations it has ever suffered and it’s not surprising because the deadline for the negotiation is scheduled on March 29, 2019. Time flies but the agreement is moving away.

The final Parliament vote for the Brexit deal was planned for December 11, however, Theresa May canceled it. Why? Because the PM knew that the deal would be rejected. As a result, May returned to negotiations with the EU.

The worst scenarios for the UK.

The first scenario is the second referendum. Although Mrs. May doesn’t consider a possibility of the second referendum, it might happen. The second referendum will bring more uncertainties to markets and chaos in the UK government. Moreover, the results of the referendum will be unpredictable. If there is a decision that the UK still should leave the EU, the country comes back to where it was. If people vote for staying in the EU, the British government will fall.

The second scenario is related to the first one. The UK may decide to stay in the EU without the referendum. Do you think that it will support the GBP? Hardly. The British economy and the pound have been suffering a lot because of the Brexit deal. If in the end, the country doesn’t get the deal, it will be a crash of the UK government that will negatively affect the British currency.

The third and worst scenario is “no deal”. The UK has been fighting for the Brexit since June 2016. If the country fails to agree on any deal with the EU, it will be a further collapse for the British pound that will continue until there are any certainties in a relationship between parties.

Making a conclusion, we can say that if the UK and EU can’t come to an agreement, the British government, economy, and pound will crash.

2019 will be a challenging year for oil.

The volatile commodity is of great interest to traders. Let’s review the past and outline the prospects for the future providing you with an edge on the oil market.

The story of 2018

Price levels of 2014 above $100 a barrel remain an unaffordable luxury for oil. In 2018, Brent only managed to approach $90. Crude prices were growing until the end of September. The market was supported by production cuts of the Organization of the Petroleum Exporting Countries (OPEC for short) and its allies as well as by US sanctions on Iran. Provocative tweets from President Donald Trump led to occasional chaotic price swings. Then the factors which pushed oil upward turned out to be false and its price collapsed losing a third of its value.

The year ahead

Although the oil will rebalance after OPEC announced new output limits starting from January, this support looks fragile. The deal made by the oil exporters will be reviewed in April. The US will reconsider the exemptions it granted to eight countries to continue importing Iranian oil at around the same time. Donald Trump has clearly expressed the desire to keep oil prices low and $80 for Brent and $70 for WTI look like a ceiling for him. America itself is pumping a lot of oil and will likely produce even more in 2019. At the same time, the solid demand enjoyed by oil during the last couple of years may diminish given the global economic slowdown. The resulting oversupply is to keep crude prices under negative pressure, though the fall in prices will be smoothed by the fact that demand will rise as the price goes down. All in all, $70-$50 a barrel is the price range of Brent crude oil we project for 2019.

The worst-case scenario: OPEC falls apart

Survival of the fittest is deemed the key principle of the natural selection. It’s evident that the

OPEC has either to evolve or die. Its countries are currently divided by competing national differences and political disputes. Saudi Arabia and Iran hate each other, and Qatar has already left. Unlike the United States and Russia, OPEC nations lack the competitive advantage of low-cost production. The trend is for the global economy’s reliance on OPEC oil to decline. As a result, the bloc will keep losing its market share and the ability to influence the prices. What can the demise of OPEC mean for the oil market? If centralized production cuts are out, it will pull the rug from under the crude’s price and lead to a 50% price crash.

P.S.: looking at these forecasts, don’t forget that we considered unpredictable events. The probability of them is not too high but if they happen, it will cause crucial changes on markets.

What Central Bank Meetings will Bring to the Markets?

This week will bring us 3 central bank meetings. Let’s consider how they may turn out for market moves.

  1. The first and the major event is the FOMC rate statement. The Fed will meet on December 19 at 19:00 GMT. The market anticipates an increase in the rate, however, the confidence isn’t as high as usual. Usually, the probability of the hike is more than 95% but this time it hardly exceeds 80%. Moreover, mostly when the central bank changes the interest rate, the market doesn’t consider the monetary policy statement a lot, but this meeting is anticipated to be different. Recent comments from Fed members that the central bank will tighten its rate hikes’ pace made traders worry. Moreover, Mr. Trump is still unsatisfied with the Fed monetary policy. As a result, the market will look for comments from Mr. Powell to get clues on the rate path in 2019.

How to trade on the FOMC statement

Since the beginning of the week, the EUR/USD pair has been gaining based on the weak US dollar. However, the situation may differ ahead of the Fed meeting. If the Fed lifts the interest rate and gives clues on the future monetary policy, the USD will be supported. On the daily chart, we see the bearish pennant. As soon as the pair breaks below 1.1280, the further decline is highly expected. The next supports will lie at 1.1233 and 1.1164. Moreover, the parabolic SAR signals the strengthening downward movement.

However, we should remember about the strength of the market sentiment. If the Fed sounds cautious, the investors will be disappointed. In this case, after the rise based on the rate hike, the USD will depreciate. The EUR/USD pair will be able to stick above 1.1338; the resistances are at 1.1408 and 1.1513.

  1. The second event is the BOJ meeting that will take place on December 20. Of course, the interest rate will be kept on hold, as the bank hasn’t tapered the quantitative easing. And in this case, it’s predictable that comments of the central bank will determine the direction of the Japanese yen. According to recent comments, the central bank doesn’t feel uncomfortable keeping the ultra-loose monetary policy. Neutral or cautious comments from BOJ will weaken the JPY especially if the USD rises after the Fed meeting.

How to trade on the BOJ statement

The weakness of the USD pulled USD/JPY down. The further direction of the pair will depend on the Fed meeting. The hawkish US central bank will let the pair to recover. As a result, the pair will be able to return to the 112.49-113.98 channel. The resistances are at 113.10 and 113.98.

In the case of the negative outcome, the pair will keep falling. The first support is at 111.61.

  1. And the last but not least, the BOE meeting holding on December 20 at 12:00 GMT. Same as the BOJ, the Bank of England doesn’t plan to change the interest rate. However, it is worth looking at MPC official bank rate votes. Any changes in the number of members voted for the increase in the rate will signal the coming rate hike. In addition, we should pay attention to the tone of the statement. The uncertainties around the Brexit deal may make the BOE cautious. Negative central bank’s comments will provoke a fall of the GBP.

How to trade on the BOE statement

The rise of the USD will definitely pull the GBP/USD pair to lows of April 2017 that the pair met last week. Supports lie at 1.2605 and 1.2452. A break of 1.2452 will be dramatic for the pair, however, technical indicators don’t signal a plunge. If the USD isn’t that strong after the Fed meeting and the Bank of England forecasts the economic growth for 2019, the GBP will get a chance to fight against the USD. To break the sideways channel, the pair needs to rise above 1.2735, a breakthrough will support a further appreciation of 1.2888.

To conclude we can say that the Fed meeting will become the main driver for the markets. However, the BOJ and BOE meetings won’t go unnoticed. Follow the statements of the central banks and the market sentiment to predict the market moves correctly.

Advantages of the stock market

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When people hear about stocks, they imagine the Wall Street, stock exchanges with the fuss, thousands of shouting people that try to get a piece of the pie. Admit you think the same! But is it really like that? Is there another possibility to work with stocks? There is. And in this article, we will tell you how to trade stocks without difficulties and stress.

Real stocks.

There are two options: either you buy real stocks or you trade a price change.

Buying real stocks is quite a difficult deal. Firstly, you need to have a lot of money. Secondly, you need to have a representative who will help you with all the procedures and will act for you. Or what is more stressful you will have to participate in real deals and stress a lot trying to grab stocks at a perfect price.

Now you have a question: what if I don’t want to deal with all these difficulties and I don’t have that much money to buy stocks? In this case, you have a great opportunity.

You won’t get real shares but you can speculate on the movement of prices on the stock market. When trading this way, you do not actually buy stocks, but instead, you need to predict the price and trade on your forecasts. You will place an order to buy or sell and a broker will make a deal on behalf of you.

Maybe you would like to own shares and you are sad now, but you shouldn’t be. The first advantage is you don’t need a big budget to start. Moreover, a broker will always help you by offering a good leverage. Secondly, you are out of stress. You have time to analyze, take a decision and then open a position. And what is more attractive, you can earn both on a rise and a fall of stock prices.

What affects stock prices.

Every market has its own criteria that determine its direction. There are four main factors you need to follow to forecast stock moves successfully.

  1. Company earnings.

It’s not a surprise that the amount the company earns affects the value of its stocks. Earnings are a profit of the company. This profit determines the financial health of it.

How to follow. In the US, publicly traded companies are required by law to report their quarterly financial results.

How to trade. Before a company makes a release, analysts predict results. All forecasts are gathered by research companies in a consensus earnings estimate. Check the estimate and follow the actual figures. If the actual data outperforms the forecast, prices will go up. In the case of the weak earnings release, they will fall.

  1. Internal issues.

One of the most important factors is internal issues. Problems and uncertainties of a company will affect the value of its stocks as well. Changes in the CEO, speeches, and comments of company’s members, potential mergers and acquisitions will create a high volatility of the stocks.

Let’s consider an example. Do you remember Elon Musk tweeted he wanted to take Tesla private at $420? After that tweet, the stocks of Tesla surged significantly and NASDAQ halted Tesla stocks. The funniest thing is that it was just a message on twitter but it shook the market dramatically.

Supply and demand (S/D) point may be added as a part of the internal issues.

S/D factor is considered by traders and analysts no matter what market they analyze. If a company declares it buys shares back, it will encourage a rise of stock prices. If a company is going to offer more shares, the prices may go down.

How to follow. Check news related to the company whose shares you would like to trade.

How to trade. Estimate the effect of the news, wait for the market reaction and follow a market sentiment.

  1. Industry news.

Not only an internal environment of a company affects the value of its stocks, but the external one as well. News regarding a specific sector may affect companies’ stocks a lot. That’s why traders need to check industry news. For example, if you want to trade stocks of Facebook, you should check the news on the technology sector.

How to follow. Check news related to the sector you chose.

How to trade. Determine whether the news is important or not and what impact it may have on the company. Open positions following the market sentiment.

  1. Analyst ratings.

Analysts consider many factors that affect stock prices. Then they provide recommendations on whether to buy, sell or hold stocks. Even if you don’t buy real stocks, such recommendations will help you to trade on the price difference because you can catch the market sentiment.

How to follow. All you need to do is to check recommendation on trust-worthy sources.

How to use. Analysts’ ratings are highly useful materials. If analysts give a deep explanation of their forecasts mentioning important factors that affect the price, it’s a big fortune. Firstly, you don’t need to research by yourself. Secondly, you can use that information to make your own predictions. Moreover, as we mentioned above, using recommendations you will be able to predict the market sentiment and use it in your favor.

One small tip: always remember about the human factor. Don’t follow forecasts blindly. We all make mistakes and forecasts may be wrong as well. It’s better to combine predictions of analysts with your own ones.

How to predict the price?

The stock market differs in factors that affect it but doesn’t differ in ways of analyzing and predicting market moves. Have you ever tried to trade currency pairs or commodities? Have you used fundamental analysis or technical indicators? If you have, you won’t have any difficulties trading stocks. Place your favorite technical indicators and follow fundamental factors.

Why you should invest in the stock market.

Stocks are a subject to a high volatility and you can use it in your favor. The high volatility is the possibility to earn a lot. However, don’t forget about big losses the high volatility can bring. To be successful on the stock market, you just need to follow the market sentiment, be up to date to not miss releases that may affect the price, react fast to crucial news and of course, use stop losses.

The stock market is related to such big names as Apple, Amazon, Facebook, Google and etc. Don’t you feel proud of being closer to such giants? And of course, a chance to become a guru of the stock trading is attractive, isn’t it?

To conclude, we can say that trading price differences on the stock markets is an exciting option. Firstly, you always can earn no matter if the price goes up or down. Secondly, the market is highly volatile that gives you an opportunity to boost your profit significantly. Thirdly, it’s an interesting market full of stocks of world giants that makes you closer to the Wall Street!

Questions that will Lead you to Win Trades

When a person comes to a market, he/she has many questions: how to start trading, how to open an account, which strategy to choose, what indicators to use and more. We are sure, you had the same questions or maybe you still have them. You can find the basic information for beginner traders here.

But have you ever thought about such vital questions as what type of trader you are, what timeframe suits you more, what market is right for you? No? But these are the first questions you should ask yourself and find answers. Don’t you think that you can suffer losses because you don’t have a clear idea about your trading personality, your character, and your trading style?

We want to introduce you 4 important questions you should answer yourself to turn trading in your favor.

  1. What type of trader am I?

Answering this question, think about your personal qualities.

If you are used to following rules, you can’t deal with psychological pressure, you don’t rely on your intuition, you are a system trader.

System trading is a rule-based trading. Such a trader has an accurate strategy. If all criteria are met, it’s time to open a trade. The trader doesn’t consider a market sentiment or a current situation on the market. If the systems give a signal to buy, he/she will buy without doubts.

The main advantage of being a system trader is a possibility to spend less time in front of the screen. You can even create an automated system that will open and close positions for you. All you need to do is to set criteria of your trading. In addition, a system like that reduces your emotional involvement and makes trading less stressful for you.

However, a disadvantage is hidden here. Neither a system trader nor a system reacts to the market sentiment. Yet, crucial news may cause a great volatility and the strategy won’t work in this case.

If you rely on your intuition, if you prefer to consider the current situation, if you can easily adapt to market changes, you belong to another type of traders – a discretionary trader.

A discretionary trading is a decision-based trading. A discretionary trader has a trading strategy as well. But the difference is that such a trader applies the strategy based on market conditions. Even if the trader sees that all criteria are met but there are factors that may affect the market moves, they may decide to adjust the trade or even stay out of the market.

The biggest advantage of being a discretionary trader is adaptability. He/she follows the market sentiment. However, such trader should be sure that he/she won’t change the decision and won’t second-guess. If you are self-confident, you are a discretionary trader.

  1. What timeframe suits me?

Many traders ask us what timeframe is better for trading. However, there is no common answer.

Your lifestyle will play a major role.

If you are a dynamic person and love action, you should trade on small timeframes such as M15, M30, and H1. You will be able to get profit quickly BUT you should remember about risks. You will have to deal with a bigger amount of swings and drawdowns. If some swings don’t matter while trading on bigger timeframes, they will be crucial while trading on small timeframes. If you are ready for stress in return for quick money, small timeframes are for you.

However, if you prefer thinking and proving your ideas and don’t like stressing, bigger timeframes are for you. BUT here you should remember about the disadvantages. You will reduce the level of stress but will have to wait for a longer time until the market reaches your targets. Are you a patient person? If yes, then choose daily, weekly and monthly timeframes.

  1. What market will give me a bigger profit?

Sometimes traders even don’t know what market will give them better opportunities. Do you know that markets differ by volatility? Do you know that there are markets where you can trade long-term trends and there are markets where it’s better to catch the short-term momentum to get profit?

If you trade only EUR/USD because you have heard somewhere that it’s the most popular pair and you are sure that’s this pair offers a stable profit, you may be fooled.

If you have a great profit trading EUR/USD, it’s okay, don’t change anything. However, if you lose, it’s time to think about other markets. Maybe oil with its high volatility is your key to success or AUD/JPY with long-term trends is your chance. Check trading instruments provided by FBS.

  1. What type of analysis will give me more reliable information?

The market offers a huge amount of information that will help you make a profitable trading. However, it’s too complicated to catch everything… or maybe not?

Here your personality will play a leading role again.

Do you feel more comfortable reading news and checking economic data? The fundamental analysis is for you.

Do you believe in technical instruments, do you think that technical indicators are more trustworthy? The technical analysis is for you.

Are you sure that you can analyze a big amount of information? If you answered yes, you can use both types of analysis. But be sure you can cover the full amount of information and make right conclusions.

If you are still not sure, check the market analysis and find out what is more suitable for you.

Have you answered all these questions? If yes, it’s time to check whether you’ve found out your trading personality.

How to Be Successful on the Oil Market

A magic word CFD

Considering investments into the oil market, you will see three magical letters CFD.

CFD is an abbreviation of the contract for difference. We know that oil is counted in barrels. But you should understand that when going to the oil market, you won’t get the real oil in a container. But what will you get? The idea is to predict the price of the asset and win on the right forecast. As a result, when you come to the market, you earn money but not buy goods.

How does the price of the CFD form? The price matches with the prices of the so-named futures on the Intercontinental and New York Mercantile Exchanges.

Brent and WTI

Did you know that you won’t find just a single chart of the oil market? There are two major oil benchmarks you can invest in. They are Brent and WTI.

Brent is a standard for European and Asian markets. This benchmark consists of more than 15 oil grades produced on the Norwegian and Scottish shelf blocks of Brent, Ekofisk, Oseberg, and Forties.

WTI is a mark for the Western Hemisphere. It is produced at US oil fields, primarily in Texas, Louisiana, and North Dakota.

There are two differences between these benchmarks. The first one is a location, the second one is a chemical formula. That’s why they differ in price. WTI is cheaper than Brent. However, if you look at their charts, you won’t see significant differences in their moves.

Drivers of the market

Although there are differences between the oil benchmarks, there is no difference in factors that affect them.

Demand/supply

The factor that affects every market is demand and supply. Just remember a simple rule: when the supply declines –price goes up when the supply increases – price goes down.  Vice versa, when the demand declines – price goes down when the demand increases – price goes up.

Why demand/supply may change? A decline in the demand is caused by the weakness of economies of the biggest oil importers.

A decline in the supply is caused by conflicts, sanctions, and problems with oil drilling rigs. A rise of the supply always depends on the decision of the oil exporters to increase the production.

Demand and supply are the fundamental factors and all other drivers are based on them.

Political events

Uncertainties, conflicts, sanctions related to the biggest oil producers always affect the oil prices positively. The idea is clear: conflicts lead to the cut of the supply, a decline in the supply boosts oil prices. All you need to do is to follow the news to be up to date.

Market sentiment

The market sentiment is an ensuing factor from political events. A feature of the oil market is that prices change based on the news not on facts. For example, as soon as there is the news on possible problems with a future supply, prices rise immediately. The market even doesn’t need a data confirmation on the decline in the supply.

As the oil market is affected by the market sentiment, oil producers use it in their favor.
You should always remember this factor while investing in oil. Following the market, the sentiment is the best strategy for the oil investor.

How to predict market moves?

News. As I mentioned above the price depends on the market sentiment. To catch this sentiment, you need to read the news and follow the comments of the US, OPEC and its non-OPEC allies such as Russia.

Reports. To learn more about the demand/supply issue, you should follow reports of the US Energy Information Administration. Here you should take into consideration crude oil inventories data that is published every week (check the economic calendar) and different kinds of forecast on the demand and supply that you can find on its website. Of course, you also remember about the OPEC. The organization delivers reports as well.

What opportunities the oil market gives you?

Volatility is the main factor that attracts the attention of investors. With big daily moves, the market gives great opportunities to boost your income. However, at the same time, you should remember that the high volatility may lead to losses. To avoid negative results, you should remember about the risk management. What is more, the market is highly interesting for gamblers. You will never be bored investing in the oil market. News, reports come daily and the price jumps up and down. If you are inspired by games, investing in the oil market is definitely for you.

In brief

  • Brent and WTI are among the most traded benchmarks in the world.
  • Supply and demand are fundamental factors that determine the direction of the market.
  • Remember about reports from the US Energy Information Administration and OPEC.
  • Following the market’s sentiment is a key to a great profit.
  • Learn how to trade on a high volatility.

How to Trade Ahead of the News

When you Read fundamental articles or news, you may see something like “if the US CPI data is greater than the forecast, the USD will rise”. Is it always as simple as it sounds? Of course not. There are some things you need to know to trade successfully. We will help you to figure it out.

Have you ever heard the phrase “buy the rumor, sell the fact”? It’s a common phrase in the trading world as “trend is your friend”. The idea is simple: a trader should pay attention to the market’s sentiment and trade in the direction of it. Therefore, if you want to trade on news, you have to understand the market’s mood. If the market sees optimistic perspectives for a currency, its price will rise. If the forecast isn’t encouraging, traders will open short positions.

When is the right time to trade on news?

Here we should mention one important thing: the market’s sentiment is built ahead of the news releases. Reading something like “if the data improves, the currency will appreciate”, you may think that it is worth waiting until the news is out and open a position. However, it may be a big mistake. It’s often worth opening a position a day before the release. That’s why you need to catch the market’s sentiment.

But how is it possible? Well, the thing is that the market is built from billions of traders. They make a decision to buy or sell, to invest or to get out of trading according to their expectations of what will happen further with the price. The goal is to buy low and sell high. In simple terms, if everyone expects a good news release in Europe, they will buy the euro ahead of the release when it’s still cheap hoping to sell it at the higher price after the positive event. It sounds logical, doesn’t it?

So what should you do? The solution is simple: you need to pay attention to fundamental analysis. If we talk about economic data, you should check the economic calendar and look at forecasts. If you see that the forecast is greater than the previous data, consider buying the currency. Vice versa, in case of the negative forecast, think about selling the currency. Check H1 timeframes and see whether there are any short-term trends in line with the economic forecasts listed in the calendar. If such a trend exists, you can trade ahead of the actual event. This way you will trade on market’s sentiment.

The actual release

If you trade ahead of the event, it’s wiser to close positions before the actual release for 2 reasons. Firstly, if the release is just as expected, traders may “sell the fact” or, in other words, close positions they have opened ahead of the news. The massive profit taking can lead the exchange rate down even if the release is positive. This may occur when the release was already priced in (the news is already incorporated in price, so the asset doesn’t react to the decision).

You may see a lot of examples with the central banks’ meetings. If the market anticipates a rate hike, the currency moves up before the central bank will announce its decision. As the decision was already priced in, there is a high possibility that the currency will decline after the release, as those traders who anticipated the rate hike will start selling.

Secondly, the economic indicator can always disappoint. As a result, traders who already made bets on a good result will rapidly sell and the price will plummet. If you trade before the event, you won’t have to deal with these risks.

The same considerations make it risky to enter the market right after the news release as markets can be volatile and move not the way you would expect them to.

Remember that you can always read analytics on the fbs.com. Our specialists are doing their best to gather the fullest information about the world’s economies so that you could make a good judgment that would lead to a profitable trade.

Examples

Let’s consider examples. The non-farm payrolls data (one of the most influential statistic indicators) has a great impact on the USD. On August 3, 2018, the NFP data was released. The forecast was negative, and the actual data appeared to be even worse than the forecast. As a result, the 3-day rise was stopped. The USD lost some point that day and the next day continued rising.

US Dollar Index Daily Chart
US Dollar Index Daily Chart

Priced-in news

The Bank of England raised the interest rate on August 2 but it didn’t support the GBP. Moreover, after the release, the GBP/USD pair plunged. First of all, the market already anticipated the rate hike. Secondly, it’s important to tell about another important factor that should be taken into consideration. Waiting for the news releases, you should check the market’s sentiment in general. Such important news as an escalation of trade wars, the Brexit deal may affect the price more than the release of the economic data. That’s why the British pound didn’t rise before the announcement and even fell after the release.

GBP/UD Daily Chart
GBP/UD Daily Chart

Tips

If you want to learn how to boost your profit on the news, you should follow these rules:

  1. Be up-to-date on the upcoming events and economic releases.
  2. Improve your understanding of the market’s sentiment by checking recent economic releases and the market’s reaction.
  3. Learn the correlation between various news releases (for example, how retail sales may influence GDP, PPI, CPI, ext.; if retail sales go ahead of market’s expectation, we may wait for a strong GDP release).

Making a conclusion, we can say that the most important things every trader should remember trading on news releases are to catch the market sentiment and trade ahead of the release.

Economic Events to Trade This Week

Every trader knows that data in the economic calendar affect markets a lot. To predict the direction of the price, it’s important to know what events to look at. Let’s consider the most important events for the upcoming week and their impact on the currency pairs.

This week will give many opportunities to trade on the central banks’ statements.

Tuesday, Nov. 6

Event

Tuesday will be an important day for the Australian dollar. The Reserve Bank of Australia will hold a meeting. It’s not a secret that the central bank will keep the interest rate on hold. However, it will present an outlook on the economic conditions and will deliver hints on the future monetary policy.

Impact

A plunge of the USD that happened at the end of the last week pulled the AUD/USD pair to highs of the beginning of October. However, the pair has been trading within the horizontal channel, as a result, the pressure is too high. If the RBA is hawkish, the currency will go up and the pair will form a new high breaking the downward channel. In the case of the pessimistic comments, the pair will lose a chance to leave the channel. The Relative Strength Index has been moving near the 70 level. As soon as it crosses the 70 level, it will be a signal of the soon reversal of the upward movement.

AUD/USD Daily Chart
AUD/USD Daily Chart

Event

On November 6, the US will vote in the first major elections since Mr. Trump became the president. The midterm elections will display the attitude to his presidency. If Republicans win, it will mean that citizens trust Mr. Trump. If they lose, it will be the first sign of a non-confidence.

Impact

The US dollar index has been trying to recover after the great plunge that happened last week. Therefore, it needs additional support to return to previous highs. However, the event is supposed to make the USD volatile. There are risks of the return to mid-October lows.

Wednesday, Nov. 7

Event

Wednesday will bring several significant events for the New Zealand dollar. At first, the Reserve Bank of New Zealand will announce inflation expectations and to the end of the day, the interest rate will be out. The central bank isn’t anticipated to change the interest rate, but comments will affect the currency a lot.

Impact

The New Zealand dollar is supposed to be volatile during the day. The New Zealand dollar seems to be stronger than the Australian dollar. The NZD/USD pair is supposed to break the downward trend and keep moving up. As a result, if there are positive economic data and the hawkish mood of the central bank, chances of the New Zealand dollar will increase significantly. Negative economic data and the pessimistic central bank will stop a zeal of the NZD. Moreover, the Relative Strength Index has been signaling that the pair is overbought. It may mean a soon reversal.

NZD/USD Daily Chart
NZD/USD Daily Chart

Thursday, Nov. 8

Event

A release of the US interest rate is planned for Thursday. Last time the Fed raised the interest rate in September 2018. The next rate hike is forecast for December 2018. We all remember negative comments of Mr. Trump on the Fed monetary policy. As a result, the market worries about the cancelation of the rate hike. Traders need comments of the central bank to be sure in the December rate hike.

Impact

Last week the US dollar index suffered a huge volatility. The index reached August highs but couldn’t stick there and plunged. Early this week, the elections would affect the USD. To be able to return to August highs and gain a foothold there, the USD needs only optimistic mood of the Fed. In the case of the pessimistic comments, the index will suffer.

DXY Daily Chart
DXY Daily Chart

Friday, Nov. 9

Event

At the end of the week, traders will get a chance to trade on British economic data. GDP m/m, Manufacturing Production m/m, and Prelim GDP q/q figures will determine the direction of the GBP.

Impact

Last week, the sinking USD supported most of the currencies. And the British pound was among them. However, the British currency is still under pressure because of the uncertainties around the Brexit deal. If the USD recovers, the GBP/USD pair will be under bigger pressure. A greater than expected data will support the GBP and the pair will be able to return to highs of the middle of October. At the same time, the weak data will affect the direction of the GBP/USD negatively and will keep the pair at crucial lows.

GBP/USD Daily Chart
GBP/USD Daily Chart

To conclude, we can say that this week the meetings of the central banks will affect the markets the most. Traders should follow the mood of the central banks and the market sentiment.

When will Bitcoin Come to Life?

On October 31 of 2008, Satoshi Nakamoto (still unknown person or organization) released a paper “A Peer-to-Peer Electronic Cash System” that gave a birth to Bitcoin. During the decade, the crypto world has changed a lot. And today we will consider what Bitcoin has achieved to its 10th anniversary.

Less than one year ago Bitcoin was one of the most discussed topics. However, up to now, the interest of traders has been waning. The number of Bitcoin search queries on Google reached the record low since December 2017 decreasing by 93%. Moreover, the volume of Bitcoin trading has plunged from $23 billion to $3 billion for 10 months. Bitcoin keeps trading within the horizontal channel since September 2018. As a result, traders are curious whether it’s an end of the digital currency or just the lull before the storm.

Fundamental problems

We all remember a triumph of Bitcoin at the end of 2017 when the price was near 20,000. But why Bitcoin couldn’t stick at good levels?

The digital currency suffers several problems that have to be solved. Otherwise, it won’t be able to repeat its success.

  • According to analysts, the biggest problem of Bitcoin is its security. During the first half of 2018, over $761 million Bitcoin was stolen. Of course, other cryptocurrencies suffer this problem as well. But it doesn’t make the Bitcoin’s problem better.
  • Cryptocurrency transactions are considered as something difficult. As soon as the technology is more understandable and easy-to-use, Bitcoin will get a chance to attract more people.
  • Dependence on the market sentiment. The cryptocurrency highly affected by negative news related to cryptocurrency regulation, hacking attacks, theft of money and etc. It happens because the cryptomarket is barely known and understandable.
  • Until countries accept cryptocurrency as one of the payment options, Bitcoin will stay under big pressure.

There are two scenarios

Experts split up into two groups. The first one believes in a rise of Bitcoin. The second one considers a possibility of the further fall.

  1. A rise.

This group of analysts predicts a soon rise of the cryptocurrency.

According to Mike Novogratz, the founder of cryptocurrency investment firm Galaxy Digital Capital Management, a break of the $6,800 level will boost the Bitcoin price by at least 30%. Therefore, we can expect Bitcoin at $8,800 and $9,000 and the level of $10,000 becomes highly possible. Moreover, the investor anticipates a significant rise in the first quarter of 2019.

Tom Lee, the Fundstrat Global Advisors’ Bitcoin analyst, has a more optimistic outlook and says that Bitcoin could end 2018 at $22,000.

Llew Claasen, the executive director of Bitcoin Foundation, claimed that Bitcoin may hit $40,000 by the end of the year.

However, we all understand that only a significant change in the current situation will be able to uplift the price. Above I listed the major problems of Bitcoin. As soon as one of them is solved, Bitcoin will get a chance to become more attractive for traders. Until then, the rise of the cryptocurrency will be highly unlikely.

  1. A fall.

Most of the experts predict a rise in the cryptocurrency market. However, it doesn’t mean that the rise will be reflected in the Bitcoin price. According to this group of analysts, the cryptocurrency may lose its leading position and cut the share in the whole market. Bitcoin may suffer a huge competition as more and more currencies have been launching.  If another cryptocurrency has advantages over Bitcoin, there are risks that the major digital currency will be replaced.

For example, Arthur Hayes, the CEO of BitMEX predicts a depreciation of Bitcoin until 2020.

As we can see, there is no general view of the long-term future of Bitcoin. The rise and fall of it will depend only on changes in current problems of Bitcoin.

Key short-term levels

Since September, the digital currency has been trading within the channel of 6,100-6,800. Indicators don’t signal any reversal of the market. If only there is a shock event on the cryptomarket, the cryptocurrency will leave the channel.

On the daily chart, Moving Averages are going in the horizontal direction that is a sign of the continuation of the trading in the channel. The first support lies at 6,190. If the price breaks this level, it will provoke a break of 6,100 that will be dramatic for the cryptocurrency. This break will pull the price to 5,883 and further down to lows of June 2018. However, positive news will encourage the Bitcoin price. The first significant resistance lies at 6,630. A break of this level will support a further climb to 6,800 – the upper boundary of the channel.

Bitcoin Daily Chart
Bitcoin Daily Chart

Making a conclusion, we can say that the future of Bitcoin is vague. In the near term, it is anticipated to keep trading within the horizontal channel. However, the longer perspectives will depend on the changes to the cryptocurrency market and Bitcoin problems.

GBP Way for the Upcoming Days

In the middle of August, the British pound got a boost to turn the downtrend. And it seemed that despite uncertainties around the Brexit deal, negative forecasts for the UK economic growth, the GBP found a strength to rise. However, up to now, risks that the downtrend has resumed have been increasing.

Source of the chart: FINANCIAL TIMES
Source of the chart: FINANCIAL TIMES

Why the GBP is under pressure?

In the middle of September, the appreciation of the British currency stuck. It’s clear that the Brexit deal is the main driver of the British currency and recent negative events related to the Brexit pulled the GBP down.  What is more, the end of the Brexit isn’t close. As a result, traders are curious whether the GBP will be able to recover or not.

On Monday, October 29, UK finance minister Mr. Hammond delivered the budget. Although comments were optimistic: the minister announced an end of the austerity, predicted the economic growth and real wage growth, which is highly positive for the GBP in the long-term, the GBP wasn’t encouraged.

It means that the market keeps worrying about the impact of the Brexit deal. Until it sees confirmations of the soon disposition of the issue, neither strong economic data nor positive comments on the economy will boost the GBP.

But does it mean that the British currency won’t get a chance to recover at least in the near term?

What to expect in the upcoming days?

Let’s start with the GBP/USD pair.

The plunge of the GBP was caused also by the strengthening of the USD. The US dollar index has reached the August highs.

Traders are waiting for the Super Thursday. The Bank of England will release the interest rate. Of course, the market doesn’t anticipate any changes to the rate, however, it will try to catch the mood of the central bank. If the BOE is optimistic, the GBP will be supported.

However, on Friday the US will release the jobs data. NFP will make the USD highly volatile, but at the same time, it may help the index to gain a foothold on August maximums.

What levels should we expect?

On the daily chart, the price formed a double top pattern. The neckline at 1.2920 was broken on October 24 and as a result, the pair kept falling. However, on October 30 the pair reached the target at 1.27 and rebounded.

Up to now, we have a question: for how long the pair may rise?
Technical indicators don’t give strong signals. RSI is near to cross the 30 level bottom up, it reflects the upward movement of the pair. But the further rise may be limited.

An increase of the GBP will depend on the mood of the central bank. Hawkish Mr. Carney will push the currency up.  The resistance will lie at 1.2895 and only the weakness of the USD will pull the pair to 1.3016.

At the same time, we should remember another scenario. The pessimistic BOE and the strong US jobs data may pull the pair back to 1.27.  Moreover, negative comments on the Brexit deal will affect the currency as well. A break of 1.27 will provoke a fall to April lows at 1.2584.

GBP/USD Daily Chart
GBP/USD Daily Chart

GBP:
Nov 1: BOE Meeting, Manufacturing PMI

Nov 2: Construction PMI

USD:

Nov 1: ISM Manufacturing PMI

Nov 2: NFP

Does the GBP have more chances against the EUR?

The euro has been suffering as well. The most recent event that pulled the euro down was comments of Angela Merkel about her stepping down as a chancellor in 2021. Italy’s budget issue is still a threat to the euro’s rate. However, looking at the chart of EUR/GBP, we see that the British pound is weaker than the EUR.

Events to look at:

On October 31, the pair managed to rebound from the resistance at 0.8791. The RSI indicator is near to cross the 70 level upside down that signals about the downward movement of the pair.

The further direction of EUR/GBP will depend on the BOE statement and the ability of the euro to recover. In the case of the pessimistic mood of the BOE and negative economic figures, the pair will be able to break above 0.8921. The next resistance is at 0.8958.

However, if the euro doesn’t gain momentum and traders consider the BOE statement as positive, the pair may go to the support at 0.8860.

EUR/GBP Daily Chart
EUR/GBP Daily Chart

GBP:
Nov 1: BOE Meeting, Manufacturing PMI

Nov 2: Construction PMI

EUR:
Comments on Italy’s budget

Making a conclusion, we can say that the GBP has a chance to rise. However, in the upcoming day, comments on the Brexit deal, the mood of the BOE, strength of the USD and European news will affect the moves of the GBP/USD and EUR/GBP pairs. Follow the economic calendar and the news to be sure in the further direction of the GBP.