Oil at Four-Year High Ahead of US President’s Iran Deal Announcement

The indications are that he will withdraw from the agreement, calling it one of the “worst deals ever made”. This is despite strong pressure from European allies to stay the course and make amendments if necessary. The price is up 10% over the last month due to this concern so it is possible that there is a “buy the rumor sell the fact” trade taking place, as the price has dropped back from yesterday’s high.

Swiss Consumer Price Index (YoY) (Apr) came in at 0.8% against an expected 0.9%, from the previous 0.8%. Inflation has been rising since it bottomed in 2015, with the current level not seen since 2011. Increases in fuel prices are among the main contributors to the higher readings. USDCHF moved higher from 1.00233 to 1.00294 following this data release.

US Consumer Credit Change (Mar) came in at $11.62B v an expected $16.00B, against a previous $10.60B, which was revised up to $13.64B. This data release shows a continued decline in consumer credit, with the data down from last month when the higher revision is taken into account. The data missed its consensus by a wide margin and the metric has more than halved since the January high of $28.05B. Credit card debt fell by the largest amount in more than five years, down $2.6B. GBPUSD fell from 1.35664 to 1.35541 after this data release.

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Australian Retail Sales (MoM) (Mar) fell to 0.0% against a consensus of 0.3%, from 0.6% previously. The lower number suggests that the RBA will have to continue its policy of holding rates steady for some time. This came after the beat last month, with the AUD reacting badly to the data release, falling from 0.75212 to 0.74918.

Fed Takes Slightly Hawkish Tone

The Monetary Policy Statement set a slightly hawkish tone, tempered by the Fed saying it would let inflation run a bit above their 2% target. But the underlying factors in the market soon re-established themselves and the market was caught off-guard as the initial reactionary trade post FOMC reversed. EURUSD initially moved higher from 1.19546 to 1.20252 before creating a new low at 1.19376, while USDCAD initially fell from 1.28570 to 1.28097 before moving to a high of 1.28867. Asian equities are lower again today, as markets worry about US/China trade talks. US Equities have failed to follow European Equity markets higher, as the impact of FX is felt.

UK Construction PMI (Apr) came in at 52.5 v an expected headline number of 50.5, from 47.0 prior. The consensus was for a recovery in the numbers after a softening from the high of 53.1 created in December. The industry had slipped under 50.0 from the high level of 64.6 in 2014, showing a contraction in the index. This data is strong as we head into summer. GBPUSD moved higher from 1.36295 to 1.36655 after this data release.

Eurozone Unemployment Rate (Mar) was as expected, unchanged at 8.5%, a level not previously seen since April 2009. Gross Domestic Product s.a. (QoQ) (Q1) was as expected at 0.4%, from 0.6% previously. Gross Domestic Product s.a. (YoY) (Q1) was also as expected at 2.5%, against 2.7% previously. GDP numbers matched estimates and, although they are down on the previous readings, as these are quarterly figures the decline can be explained somewhat by severe weather in Europe. EURUSD moved up from 1.19932 to 1.20096 following this data release.

US ADP Employment Change (Apr) was 204K versus an expected 200K, against 241K previously, which was revised down to 228K. This data has remained above 200 for the last four months, showing that the US economy is continuing to add jobs. However, this was a decline on the previous month and the smallest monthly increase since November. USDCAD moved higher from 1.28210 to 1.28825 after this data came out. Tomorrow, US job employment will be released.

This article was written by FxPro

US Dollar Pairs at Key Levels Ahead of Fed Interest Rate Decision

The USD is unwinding some of its moves from yesterday, with the EURUSD back above 1.20000 and GBPUSD back above 1.36000. Trading overnight was sluggish but some pairs are at decisive levels, with the AUDUSD back above 0.75000 and NZDUSD back above 0.70000, as New Zealand jobs data came in largely as expected.

UK Markit Manufacturing PMI (Apr) came in at 53.9 vs an expected 54.8, from 55.1 prior, which was revised down to 54.9. This miss sent the data point to a seventeen-month low, continuing to soften from the high created in December at 58.2. This is despite a beat in the previous two readings. Seasonally, Q1 is a time where this data point has tended to weaken over the last few years. Slower output growth was a factor cited in the weakening number, despite stronger new order inflows, strengthening job creation and demand. Also released at this time were UK Mortgage Approvals (Mar) which came in at 62.914K, softer than the 63.000K expected and down against a previous reading of 64.000K, which was revised down to 63.781K. GBPUSD fell from 1.37308 to 1.36661 after the data release.

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Canadian Gross Domestic Product (MoM) (Feb) was 0.4% against an expected 0.3%, from -0.1% prior. This data shows that growth remains in expansion and is turning higher from last month’s low. USDCAD fell from 1.38667 to 1.38312 after being moved by this release.

US ISM Prices Paid (Apr) came out at 79.3 against a consensus of 78.3, from a previous reading of 78.1. This shows a continued increase in the cost of goods and services. ISM Manufacturing PMI (Apr) was also out at this time coming in at 57.3 against an expectation of 58.4, from 59.3 prior. This number is falling after reaching a high of 60.8 in February. Finally, Construction Spending (MoM) (Mar) was down at -1.7% against an expected 0.5%, from the previous reading of 0.1%. EURUSD fell from 1.20200 to a low of 1.19810 following the data release.

This article was written by FxPro

Tight Ranges in First Day of the Week as Holiday Affect Markets Liquidity

Today, markets are higher across the board, with Equities and Commodities up. There is some movement today in FX but, like other markets, moves are generally small. GBPUSD is stable after is big fall on Friday and AUDUSD is down -0.37%, trading around 0.7554.

The BOJ Press Conference took place with Governor Kuroda saying that the BOJ had not changed their projected timing to reach their target. The timeframe was always just a forecast, not a firm limit. If the momentum towards the 2% target weakens they will consider additional easing. The BOJ Interest Rate Decision was also released, with rates left unchanged at -0.1%. The Monetary Policy Statement was also released with the key take away being the removal of the phrase committing to a time frame on hitting their 2% inflation target. USDJPY moved higher from 109.149 to 109.320 as a result.

UK Gross Domestic Product (QoQ) (Q1) was 0.1% against an expected 0.3%, from 0.4% previously. Gross Domestic Product (YoY) (Q1) was 1.2% against an expected 1.4%, from 1.4% previously. UK GDP has been moving lower since highs of 1.1% and 1.0% in 2010 and 2012 respectively. A slip into negative territory is a clear and present risk with numbers being this low. GBPUSD fell from 1.38798 to a low of 1.38017 after the data was released.

On Friday, US Gross Domestic Product Annualized (Q1) was 2.3% against an expected 2.0%, from 2.9% previously. Gross Domestic Product Price Index (Q1) was 2.0% against an expected 2.2%, from 2.3% previously. These GDP figures were mixed, with the headline number beating expectations, despite representing a drop from the previous reading. Core Personal Consumption Expenditures (QoQ) (Q1) was 2.5% against an expected 2.4%, with a prior 1.9% reading from Q4. Personal Consumption Expenditure Prices (QoQ) (Q1) was 2.7% against an expected 2.6%, from a previous 2.7%. This data showed an increase in headline inflation, with the core data coming in higher than expected and beating the previous number. EURUSD fell from 1.20835 to 1.20632 as a result of this data but currently trading at 1.2115.

This article was written by FxPro

Markets Consolidate This Morning After Recent Volatility

The USD strengthened further, with USDJPY reaching the key 109.500 level and GBPUSD consolidated under 1.40000. The EUR settled into a tighter range as we await the ECB Rate Decision and Press Conference later today. This meeting is expected to be a preamble to the serious business on future policy is done at the June meeting. Today’s meeting should largely address recent economic data weakness but the risk is that any comments will create a volatile move in the EUR.

Swiss ZEW Survey – Expectations (Apr) were 7.2 against a prior reading of 16.7. This data has been weakening since a reading of 52.0 was recorded in December 2017. A reading under 16.7 had not been recorded since December 2016. This illustrates the drop in Economic expectations in Switzerland. GBPCHF fell from 1.37100 to 1.36924 after the data release.

US EIA Crude Oil Stocks (Apr) data was released, coming in with a build of 2.170M against an expectation for a draw of -2.043M barrels, from a previous reading of -1.071M barrels. Oil prices sank on Tuesday, from a high of $69.30 to $67.49, as the private inventories data suggested a surprise build of 1.099M against a consensus of -2.250M and the French and US Presidents discussed a new Iran deal. This build was borne out in this release and prices fell to the $67.05 support, where buyers stepped in and have carried the price back to $68.40. A drop under $67.00 may force downward pressure on prices, but, for now, it marks the bottom of the range up to $69.50.

Bank of Canada Governor Poloz testified along with Senior Deputy Governor Carolyn Wilkins before the Standing Senate Committee on Banking, Trade, and Commerce, in Ottawa. They said that people needed to be prepared for higher interest rates and that they needed to get the timing right to counter inflation. The comment was also made that fiscal stimulus had helped avoid a lower path for rates. USDCAD fell during this event from 1.28657 to a low of 1.28308 as a result but currently is trading at 1.2856.

This article was written by FxPro

The Crypto Market Rally May Lead to Profit Taking, Bitcoin Cash Price Has Doubled over the Last Week

It is likely that recent optimism has inspired investors, who see altcoins as a cheaper and more comfortable way to invest in the market. Nevertheless, the market’s growth has once again become speculative in nature, with no fundamental basis.

Bitcoin (BTC/USD) has gained over 5% in the last 24 hours and is currently trading at around $9,400.

The real bright spot recently has been Bitcoin Cash. The coin has gained more than 9% in the last 24 hours and 100% in the last 7 trading days currently trades at above $1,500. In total, the coin’s price has doubled over the last week, after its developers announced the network’s forthcoming fork. However, analysts have warned that investors may experience a ‘dump’ during the fork.

The crypto market is currently engulfed by a feeling of optimism. Its participants suggest that the worst has passed and that the decrease in trading volumes has cooled the regulators’ interest in the market. It’s also worth noting that the difficulty in mining new coins is growing, so any positive news is likely to provoke price hikes.

These factors point to the potential of cryptocurrencies and may form the basis for the continuation of the current rally. The rally may, however, be short-lived. Despite the plans of major investors, there is a fear in the community, with many participants waiting for the opportunity to take their profits and exit the market.

This article was written by FxPro

US Dollar Weakens Versus Major Currencies

The dollar is currently at session lows with the NZDUSD seeing some of the biggest gains, up 0.47% to 0.70910.

Swiss UBS Consumption Indicator (Nov) was released yesterday close to previous at 1.67, with the prior number of 1.54. Swiss ZEW Survey – Expectations (Dec) was released, coming in at 52.0. The previous number was 40.7. USDCHF found support at 0.988868 and went higher to 0.99022 but declined as USD trading took over later in the morning, finishing the day at 0.98616.

US Pending Home Sales (MoM) (Nov) came in at 0.2% from a forecast of -0.5% with a prior reading of 3.5%. Pending Home Sales (YoY) (Nov) data was also released with the number coming in at 0.6%. Last month, this figure was 1.2%. EURUSD made a high of 1.19099 but then moved lower to 1.18851 after the data.

Japanese Retail Sales (MoM) (Nov) was out overnight, up 1.9% from a 0.0% forecast and 0.0% prior. Retail Sales (YoY) (Nov) was in at 2.2% v 1.2% expected and -0.2% previously. Large Retailers Sales (Nov) was 1.4% v -0.6% expected from -0.7% prior. USDJPY tested resistance at 113.2630 as the data was released but sold off soon after continuing to decline through the session.

EURUSD is up 0.39% overnight, trading around 1.19328.

USDJPY is down -0.48% in early session trading at around 112.797.

GBPUSD is up 0.32% trading around 1.34378.

USDCHF is down -0.43% this morning trading around 0.98210.

Gold is up 0.29% early morning trading at around $1,290.85.

WTI is up 0.29%, trading around $59.80.

Major data releases for today:

At 09:00 GMT ECB Economic Bulletin will be released.

At 13:30 GMT US Continuing Jobless Claims (Dec 15) 1.900M expected from 1.932M prior. Initial Jobless Claims (Dec 22) expected to be 240K with a previous reading of 245K. USD pairs could potentially see movement in price action as a result of data missing forecasts.

At 14:45 GMT Chicago Purchasing Managers Index (Dec) with a consensus of 62.0. The prior number was 63.9.

At 16:00 GMT EIA Crude Oil Stocks change (Dec 22) expected draw of -3.970M v the previous reading of -6.495M. This data release was delayed due to holidays on Monday for Christmas. Oil traders will watch for divergence from expected data and trends forming in the market.

This article is written by FxPro

WTI Near 2015 Highs after Libya Blast

US Oil Rig Counts from Baker Hughes was released on Friday evening. The headline number remained unchanged at 747. Natural Gas came in at 184 against the previous figure of 183. Totals were 931 against the previous 930. WTI Crude moved very little after the data release and finished the session on Friday at around $58.31. However, Oil gained after a pipeline in Libya was sabotaged on Boxing Day. The explosion damaged a pipeline feeding the port of Es Sider and reducing supply by 90,000 bpd. The price gained $1 to trade at the highest levels since June 2015 and stopped short of the $60.00 mark.

US S&P/Case-Shiller Home Price Indices (YoY) (Oct) was out on Tuesday at 6.4% v 6.3% from a previous reading of 6.2%. GBPUSD moved higher with the data from 1.33502 to 1.33677. An hour and 30 minutes later, Dallas FED Manufacturing Business Index (Dec) data came in at 29.7 v 20.0 expected. The previous data was 19.4. This sent GBPUSD higher again to the 1.33748 area where there was a brief pause before the next leg up commenced.

Coming up on Thursday 28th, US Initial Jobless Claims are expected to come in at 240K, down from the previous 245K. US EIA Crude Oil Stocks data will be out. The Forecast is for -5.504M compared to -6.495M last week.

EURUSD is up 0.19% overnight, trading around 1.18811.

USDJPY is little changed in early session trading at around 113.197.

GBPUSD is flat trading around 1.3415.

USDCHF is largely unchanged this morning trading around 0.98897

Gold is unchanged in early morning trading at around $1,289.50.

WTI is down 0.17%, trading around $59.58.

Major data releases for today:

At 07:00 GMT Swiss UBS Consumption Indicator (Nov) is expected with the prior number of 1.54.

At 11:00 GMT Swiss ZEW Survey – Expectations (Dec) will be released. The previous number was 40.7. Any deviation from this number may create volatility in Swiss Franc crosses.

At 15:00 GMT US Pending Home Sales (MoM) (Nov) expected at -0.5% from a prior reading of 3.5%. Pending Home Sales (YoY) (Nov) data will also be released. Last month this figure was 1.2%. USD pairs may see movement in price action as a result of data missing forecasts.

This article is written by FxPro

Bitcoin One Step From Recession – Bitcoin Cash Triumphs

Institutional investors kept away from Bitcoin’s abnormal dynamic, concentrating instead on altcoins such as IOTA and Ripple, with Bitcoin’s market share falling dramatically below 50%. Nonetheless, Bitcoin found support at around $15,000, just a step away from the bear territory, often perceived as the loss of 20% from the peak. This pioneering cryptocurrency’s price fell to $16,100 yesterday, down from its peak at $20,053, a drop of 19.7%. Bitcoin is trading at $16,230, down 1.16% at the time of writing.

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It seems that Bitcoin Cash, considered by some as the “true Bitcoin”, emerged the winner in the last few days, rising from $1,900 on December 18 to $4,300 on December 20. This was due to several factors, one being the move of Emil Oldenburg, co-founder of Bitcoin.com, to exchange his Bitcoins for Bitcoin Cash. After that, the markets found out about the launch of BCH trading on Coinbase, the largest cryptocurrency exchange, prior to the official press release announcing this development. What’s more, there appears to be a sense of fear in the community regarding tech problems faced by Bitcoin but not by the fork.

This article is written by FxPro

USD Tax Bill Passes, “Status-quo” for the Bank of Japan

The bill passed the House with a vote of 224-201, with no Democrats voting for it and some Republicans members also voting no. The bill now heads to President Trump for his signature. The markets remain concerned as to how much stimulus the bill will give to an already improving US economy. Improved growth could cause upward inflationary pressures which may result in the Federal Reserve increasing the pace of rate hikes which would see USD strength. However, it could increase fiscal deficits with little incentive for businesses to hire more workers which could stunt economic growth and see USD under pressure. Only time will tell what effect the bill will have on USD as the markets are now gradually “winding down” for the Holiday Season.

Earlier today the Bank of Japan released its monetary policy statement opting to keep its policy unchanged. The BoJ stated that it is committed to its 5-year-old 2% inflation target, but suggested inflation expectations to be in a “weakening phase.” It forecast that inflation would likely gradually rise thanks to tightening capacity commenting “Industrial production has been on an increasing trend, and labor market conditions have continued to tighten steadily,” Short-term interest rates will stay at -0.1% and the target for the 10-year government bond yield at zero percent. The statement was expected by the markets although many believe the BoJ will remove its stimulus (QE) in 2018. JPY has strengthened against USD recently and early Thursday trading has seen some of those gains erased as USDJPY has moved higher.

EURUSD is little changed in early Thursday trading around 1.1873

USDJPY is slightly higher in early session trading around 113.55

GBPUSD is relatively unchanged overnight trading around 1.3367

Gold is slightly higher trading around $1,266

WTI is 0.1% higher trading around $58.10

Major data releases for today:

▸At 09:30 GMT: the UK Office for National Statistics (ONS) will release Public Sector Net Borrowing requirement for November. Forecasts are calling for a substantially higher release of £11.163B up from October’s £7.464B. Regardless of the actual release, the markets are likely to see volatility in GBP.

▸At 13:30 GMT: the US Bureau of Economic Analysis at the Department of Labor, will release Gross Domestic Product (GDP) for Q3 both Index and Annualized. The annualized GDP is expected to remain unchanged at 3.3% with the Index expected to be also unchanged at 2.1%.

▸At 13:30 GMT there are a plethora of economic data releases:
The US Bureau of Economic Analysis at the Department of Labor, will release Personal Consumption Expenditures (PCE) Price and Core (QoQ) for Q3. Core is expected unchanged at 1.4% and Prices are expected unchanged at 1.5%

▸The US Department of Labor will release Initial Jobless Claims for the week ended December 15th and Continuing Jobless Claims for the week ended December 8th. Initial Claims are expected to come in at 241K a higher reading than the previous 225K. Continuing Claims are forecast to come in at 1.928M being higher than the previous release of 1.886M.

▸Statistics Canada will release a plethora of month-on-month economic data; For October: Retail Sales are forecast to come in at 0.0% from the previous 0.1% with the ex-Auto reading expected at 0.0% from 0.3%. For November: Consumer Price Index is forecast to come in at 0.0% from 0.1% CPI Core is forecast at -0.7% from the previous 0.3%. Annualized CPI is expected to come in at 1.3%, slightly lower than the previous reading of 1.4%.

This article is written by FxPro

Tax Bill passed by Senate in quiet session

A procedural issue during the vote means the House has to vote on the Bill a second time, as the Bill passed by the house was in violation of Senate rules. Once these violations are amended the House will vote again, with this second vote believed to be only a formality. The Senate voted overnight and the Bill was passed by 51 to 48. The House should hold the second vote on the amended Bill early on Wednesday and President Trump has tweeted that he will hold a press conference subject to a successful outcome at 18.00 GMT.

German IFO business climate released by CESifo Group showed a slight drop to 117.2 from the consensus of 117.5. The previous reading was revised from 117.5 to 117.6. This measure of business morale has been trending strongly in 2017. Expectations came in at 109.5 from the consensus of 110.7 with the previous reading remaining unchanged. Current Assessment was 125.4, higher than the 124.7 figure expected. Prior reading was revised up to 124.5 from 124.4.

The US Census Bureau released Housing Starts (MoM) for November with the headline number coming in at 1.297M, against a consensus of 1.250M. Previous readings were revised to 1.256M from 1.290M. Building Permits (MoM) (Nov) was 1.298M, against the 1.273M expected. The prior number was raised to 1.316M from 1.297M.

Japan All Industry Activity Index (MoM) (Oct) was released earlier today with the number slightly softer at 0.3%, against the expected figure of 0.4%. The previous number was -0.5%.

EURUSD is little changed overnight, trading around 1.18353.

USDJPY is up 0.10% in early session trading at around 113.2.

GBPUSD has little changed, now trading around 1.3397.

Gold was 0.16% higher in early morning, trading at around $1,269.30

WTI is little changed, trading around $57.75.

Major data releases for today:

At 13:00 GMT German Buba President Weidmann will give a speech titled ‘The euro area between short-term momentum and long-term challenges’ at the Analysis Forum in Milan.

At 13:15 GMT Bank of England Governor Mark Carney will testify before the Treasury Select Committee in relation to the November Financial Stability Report. GBP pairs may see an impact from comments made.

At 15:30 GMT US EIA Crude Oil Stocks Change (Dec 15). The previous reading was -5.117M. The expected reading this time is in the region of -3.518M. A smaller draw on stocks would most likely be bullish for WTI prices.

This article is written by FxPro

Altcoins In Green Zone, But Should We Expect A Correction?

QTUM, for example, a coin issued by the Quantum Foundation in Singapore that bridges Bitcoin and Ethereum protocols, jumped 66% in the last 24 hours to $71.38, with a market cap of $5.1 billion.

At the same time, Bitcoin seems to have encountered strong resistance near $19,000-$20,000, with even futures launches on the CME and Cboe exchanges failing to push the cryptocurrency beyond these levels. Nevertheless, and with limited shorting among traders, the drop in Bitcoin price wasn’t major. Investors seem to be waiting for signals regarding Bitcoin’s future, investing in other altcoins with a growing market cap for the time being.

So, the question remains: is this the calm before the storm, or are we on the brink of another stage of growth for the cryptocurrency market?

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The highest level reached by Zcash was $406 on June 20. After that, there was a period of long correction and a sideways trend, before its price doubled from $295 on December 11 to $593 on December 19.

Other altcoins are experiencing similar trends, with the previous dynamic and excessive speculative optimism in the market causing serious concerns that a possible correction period may arrive as a very unpleasant surprise for market participants on New Year’s Eve.

This article is written by FxPro

USD “treading water”, RBA Concerned about Consumer Spending

With the bill likely to be passed into law before the end of the year, many believe there will be no rush for Corporations to move funds back to the US as the repatriation of foreign profits is a permanent measure that companies will avail themselves of over a period of time. Additionally, whilst many US policymakers expect the economy to get a boost from the bill, analysts are suggesting that growth will be 2% by 2020, significantly lower than the Trump Administration’s predictions of growth around 3%. USD is little changed overnight.

Eurostat released Eurozone CPI on Monday that showed inflation inched higher in November but was still below the ECB target rate. CPI rose, in November, at an annualized rate of 1.5%, a slight increase on October’s 1.4%. Core inflation, the more closely watched by policymakers, remained unchanged at an annualized rate of 0.9%. EUR climbed steadily both before and after the release before retracing lower.

The Reserve Bank of Australia (RBA) released the minutes from its latest policy meeting earlier on Tuesday. The RBA has adopted a pessimistic outlook for consumer spending as household debt levels remain high and the economy experiences sluggish wage growth. The minutes stated; “However, growth in consumption was expected to have slowed in the September quarter and the outlook for household consumption continued to be a significant risk, given that household incomes were growing slowly and debt levels were high,” However, the RBA has a more optimistic outlook on the economy, as the global conditions have improved throughout 2017 and employment in Australia is growing at its fastest pace in more than 10 years. AUD is little changed in early Tuesday trading.

EURUSD is little changed overnight, trading around 1.1810.

USDJPY is unchanged, trading around 112.62.

GBPUSD is unchanged overnight, trading around 1.3383.

Gold is trading around $1,265.50.

WTI is 0.1% higher in early Tuesday trading at around $57.32.

Major data releases for today:

At 08:00 GMT: the CESifo Group will release IFO Expectations, Business Climate and Current Assessment for Germany for December. Expectations are forecast to come in at 110.5, a slight reduction from the previous release of 111.0. Business Climate is forecast to come in unchanged at 117.5, and the Current Assessment is forecast to come in at an improved 124.7 from the previous 124.4. Any significant deviation from forecasts will see EUR volatility in the markets.

At 13:30 GMT: the US Census Bureau, at the Department of Commerce, will release Housing Starts, Housing Starts Change, Building Permits & Building Permits Change month-on-month for November. Building Permits are forecast to come in slightly lower at 1.275M from the previous reading of 1.297M, and Housing Starts are forecast to come in at 1.23M lower than the previous reading of 1.29M. Any significant deviation from forecasts will see USD volatility in the markets.

This article is written by FxPro

US Tax Bill Moves Closer to Being Made Law

USD strengthened on reports that the US Tax Bill is moving closer to being ratified. Many top Republicans are confident that Congress will pass the Tax Bill this week. Once the Senate ratifies the bill, which could happen as early Tuesday, President Trump could sign and bring the Bill into law by the end of the week. However, as with most things in politics, there is a degree of concern in the markets that things may not go as smoothly as hoped. With a slim 52-48 Senate Republican majority there are some Republicans that still need to be “swayed” to ensure the bill does indeed get approved. With the bill reducing corporation tax from 35% to 21%, there will be a windfall to US companies. With the possibility of share buy-backs and/or higher dividends by US Corporations, this will, in turn, increase the pace of interest rate hikes and see a stronger USD as a result.

UK Prime Minister Theresa May is scheduled to meet her “Brexit Cabinet” to discuss what the UK’s future relationship with the European Union should be. Recently EU leaders agreed that discussions can continue to phase 2 of Brexit. Phase 2, however, that will involve discussions on
long-term future economic co-operation, is not likely to begin until March, although “internal preparatory discussions” on future relations can take place prior to March. Phase 2 will pose the question of a future trading relationship that will involve forging agreement among 27 countries whose economic and political interests will diverge, depending upon the depth and character of their commercial and diplomatic ties to Britain. With the UK PM facing internal opposition and so many questions that remain unanswered GBP has faltered, with GBPUSD dropping nearly 1% on Friday before stabilizing just above 1.33.

President Trump is scheduled to deliver a national security speech on Monday that may “point a finger” at certain countries attempts of economic aggression towards the US. Such comments tend to “stoke the fire” and result in further rhetoric that can cause market volatility.

EURUSD is 0.15% higher in early Monday trading at around 1.1762.

USDJPY is little changed from Friday trading at around 112.65.

GBPUSD is 0.2% higher in early session trading at around 1.3340.

Gold is unchanged in early trading at around $1,255.50.

WTI is little changed, trading around $57.43.

Major data releases for today:

At 10:00 GMT: Eurostat will release Eurozone CPI and CPI Core month-on-month and annualized for November. Annualized: Core is forecast to see an increase to 1.0% from October’s reading of 0.9% and CPI is forecast to remain unchanged at 1.5%. Month-on-Month: Core is forecast higher at 0.2% from the previous reading of -0.1% and CPI is forecast to be unchanged at 0.1%. Any significant deviation from forecast will see EUR volatility.

This article is written by FxPro

Will Bitcoin Collapse or Grow to Reach 100K?

The activation of Segwit and the Lightning Network wasn’t sufficient to cope with the CBOE’s launch of Bitcoin futures, leading to approximately 200K incomplete transactions on the Bitcoin network.

In addition, Bitcoin payment fees have increased approximately 100 times, from 20 cents to $20, and companies have started to react to this change. Steam, the digital distribution platform, has announced that it will no longer accept payments in Bitcoin.

The high speculative demand for Bitcoin could lead to a technical collapse and, as a consequence, investors could start to dump the asset, provoking a large-scale and lengthy correction. If this is the case, the price of Bitcoin may fall to as low as $3,300 in 2018, a price it last reached on 15 September, when the speculative demand surrounding Bitcoin began.

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Altcoins could see significant growth throughout 2018, with DASH in high demand due to its decentralized governance system and Monero due to the anonymity it provides as well as IOTA due to its innovative technology. Waves may also be in demand as, like Ethereum, it allows users to create new tokens on the platform, but with the added benefit of being able to pay transaction fees in the native Waves token.

In fact, Bitcoin may become the ‘Yahoo’ of the cryptocurrency market, once an industry-leader, only to be surpassed by innovative competitors, the ‘Googles’ of the cryptocurrency world. Countless BTC forks could disappear, while the market balance could change drastically, as speculative mania is replaced by demand for the technology itself.

However, if the Bitcoin network’s technical problems can be solved, this may inspire investors and reinforce a rally, which could see Bitcoin soar to reach the popular forecast of 100K per coin.

This article is written by FxPro

Trump Suffers a Setback, Oil Gains and GBP Stumbles

President Trump suffered a major setback as the once strictly Republican state of Alabama has, for the first time in 25 years, elected a Democrat to the US Senate. Democrat Doug Jones staged a stunning come-from-behind win against GOP Roy Moore in, what many believe, will trigger a political earthquake that will be felt nationally and internationally. The vote had been nip-and-tuck and, with 99% of the vote in, Jones was holding a 50% to 49% lead. The win puts the Democrats just two seats away from the majority in the US Senate in 2018. In early Wednesday trading, the markets have not yet digested the news as USD is relatively unchanged against its peers. Once we enter the European trading session we may see a negative reaction to USD, although today’s US inflation data and FOMC meeting may provide some USD support.

On Tuesday, the American Petroleum Institute said crude stocks in the United States fell by 7.4 million barrels last week. That is almost twice the decline of market expectations, which were for a decline of 3.8 million barrels. WTI was higher on the drawdown news, trading up to $57.57 overnight. The markets will now be awaiting today’s Energy Information Administration (EIA) report on Crude Oil Stocks change which could possibly see further strengthening in the price of Oil.

Data from the UK Office of National Statistics (ONS) on Tuesday showed that the annual rate of change in the consumer price index rose to 3.1% in November, compared with 3% in October. With inflation 1.1% above the Bank of England’s 2%, Governor Mark Carney now must write a letter to the UK Chancellor of the Exchequer providing an explanation why the BoE has missed its inflation target after prices increased last month at the fastest rate for more than 5 years. With the UK Monetary Policy Committee meeting this week, the letter will not be published until the BoE publishes its next inflation report in February. GBP lost some ground on its peers following the release but has somewhat stabilized overnight.

EURUSD is 0.1% higher in early Wednesday trading at around 1.1744.

USDJPY is 0.2% lower in early session trading at around 113.42.

GBPUSD is little changed overnight, trading around 1.3322.

Gold is unchanged in early trading at around $1,243.75.

WTI is 0.1% higher, trading around $57.47.

Major data releases for today:

At 07:30 GMT: Destatis will release German Harmonized Index of Consumer Prices annualized for November. Forecasts are suggesting the release will be unchanged from the previous release of 1.8%. Any significant deviation from forecast will see EUR volatility.

At 13:30 GMT: the US Bureau of Labor Statistics will release a plethora of Consumer Price Index data for November:

  • Core CPI s.a. forecast at 253.961, previously 253.428
  • CPI (MoM) forecast at 0.4%, previously 0.1%
  • CPI ex-Food & Energy (YoY) forecast unchanged at 1.8%
  • CPI (YoY) forecast at 2.2%, previously 2.0%
  • CPI ex-Food & Energy (MoM) forecast unchanged at 0.2%
  • CPI n.s.a (MoM) forecast at 246.660, previously 246.663

Any significant deviation from the forecast will likely see USD volatility in the markets.

At 15:30 GMT: the US Energy Information Administration will release EIA Crude Oil Stocks change for the week ended December 8th, an always impactful data release for both WTI and BRENT.

At 19:00 GMT: the US Federal Open Market Committee will announce its interest rate decision. The markets are fully expecting an increase from 1.25% to 1.5% and such a hike has been “priced-in” by the markets. The markets are keen to hear the Fed’s economic projections, as the US economy experiences healthy economic growth. It is highly likely that there will be USD volatility following the announcement, as existing positions are closed and new positions opened.

This article is written by FxPro

Bitcoin Price Steady above $17,000 as Trading Launches on CBOE, Cryptocurrency Market Rises

The price for Bitcoin futures with a January expiration date went up from $15,000 to $17,780. The CBOE also decided to introduce “automatic stop cranes” for transactions to face the possibility of sharp movements, with trading to be halted for 2 or 5 minutes if price increases or falls more than 10% or 20% respectively.

Prior to the launch of Bitcoin futures, the price of the cryptocurrency had adjusted to $13,309, with market participants speculating that contracts would be massively bought against Bitcoin.

A similar trend was also exhibited by altcoins generally, which may be taken as a sign that investors wanted to wait out this moment in fiat assets. According to Coinmarketcap, today Bitcoin is trading at around $17,040. Though there have been no surprises so far, investors remain cautious, viewing it very likely that the real market activity will start closer to the launch of CME. It is worth mentioning that there are approximately 200K of incomplete transactions on the Bitcoin network, in spite of the higher fees.

Fears that the network has serious scalability problems seems to foreshadow greater problems to appear in the near future.

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Against this backdrop, investors are seen to hedge their risks with assets like DASH, which doesn’t seem to have such problems. The result, so far, is good for it – the price is at $758, up roughly 56% in the last month. Another crypto that attracts attention on Tuesday morning is Litecoin which rises 15.13% to trade at $251.

In general, the cryptocurrency market seems optimistic about staying in the green zone. For now, at least, investors seem eager to ignore any technical concerns regarding Bitcoin, most likely an effort to gain from the current optimistic wave.

This article is written by FxPro

Lackluster Markets Await Central Banks

With the markets “pricing-in” a hike of 0.25%, we are likely to see a degree of USD volatility as positions are squared and new positions opened. The focus will be on the outlook for next year and beyond, with the markets debating the impact of coming policy normalization on global asset markets.

GBP has retreated from recent highs, as optimism has faded following the “deal” made between the UK and the EU last week. The Rand Corporation, an influential US “think-tank”, recently released a study stating that nearly all the possible trading relationships between Britain and the European Union following Brexit would be less favorable than staying in the European Union. The study said the worst option would be a “no deal”, which would leave the UK economy 4.9% poorer by 2029. The study also said that even a “soft Brexit”, which would involve staying in the free market, would not be as positive economically as staying in the EU. According to Rand, there is only 1 option that would leave the UK better off outside the European Union: a comprehensive 3-way free trade deal between Britain, the US, and the EU. However, the report admits that is an extremely unlikely scenario, given that the present trade negotiations between the US and the EU (the Trans-Atlantic Trade and Investment Partnership) are not supported by President Donald Trump and are “in a hiatus”. Charles Ries, VP of Rand and the study’s lead author commented: “The analysis clearly shows that the UK will be economically worse-off outside of the EU under most trade scenarios – the key question for the UK is how much worse-off”.

The Kiwi (NZD) strengthened as the markets reacted positively to the appointment of Adrian Orr as the Next Reserve Bank of New Zealand Governor starting on March 27th, 2018. Mr. Orr is currently the Superannuation Fund chief and was a former RBNZ Deputy Governor and Chief Economist. NZDUSD is 0.25% higher in early Tuesday trading at around 0.6925.

EURUSD is little changed overnight, currently trading around 1.1770.

USDJPY is unchanged in early session trading at around 113.50.

GBPUSD is near to Tuesday lows, currently trading around 1.3338.

Gold is 0.17% higher in early Tuesday trading at around $1,244.25.

WTI is 0.45% higher overnight to trade around $58.33. With a major Brent pipeline “off-line” for major repairs, Brent’s rise has caused WTI to also move higher.

Major data releases for today:

At 09:30 GMT: The UK Office of National Statistics (ONS) will release a plethora of data sets. The major focus will be on the annualized Consumer Price Index (CPI) for November. The previous annualized CPI reading of 3% is well above the Bank of England’s target rate of 2% and the forecast for November is expected to come in slightly higher at 3.1%. Annualized Core CPI is forecast to come in at 2.8%, slightly higher than the previous release of 2.7%. Month-on-Month CPI is forecast to come in at 0.2% from the previous 0.1%. Whilst CPI remains above the BoE target level, there is no expectation that there will be any further hikes in interest rates until Q2 of 2018 at the earliest. The ONS will also be releasing Core PPI & PPI Input and Output (MoM & YoY) for November. Any significant deviation from expectations will see GBP volatility.

At 19:00 GMT: The US Financial Management Service will release its Monthly Budget Statement for November. The report summarizes the financial activities of federal entities, disbursing officers, and Federal Reserve banks.

This article is written by FxPro

The Week Ahead – Central Bank Meetings Dominate the Week

Wednesday, December 13th at 19:00 GMT will see the US Federal Reserve released its quarterly economic projections and the Federal Open Market Committee (FOMC) release its statement. The markets have been focusing on the FOMC December meeting and the forecast hike in interest rates by 0.25%. The Fedwatch tool is projecting the probability of such a hike at just over 90%. With the markets already pricing in a hike, they will be focusing on the tone of the statement to determine the pace of further hikes in 2018. The Fed predicted in September that it would increase rates three times in 2018 and two more times in 2019. However, predicting the future is not an easy task with recent economic reports exceeding expectations, including Friday’s estimate by the Commerce Department that employers added 228,000 jobs in November. Such data raise the possibility that the US economy is continuing to gain strength.

Thursday, December 14th at 08:00 GMT will see the Swiss National Bank (SNB) release its Interest Rate Decision. CHF is estimated by the OECD to be nearly 20% above fair value (PPP), as such, the SNB is nowhere near prepared to move away from its current monetary policy as the Swiss economy is growing steadily and the threat of deflation has been averted.

Thursday, December 14th at 12:00 GMT will see the Bank of England (BoE) release its latest Monetary Policy Committee (MPC) summary. It is widely expected that the BoE will leave UK interest rates unchanged. The BoE has signaled that it will raise rates over the next 3 years but the markets expect them to occur at a gradual pace. With UK inflation above the Banks 2% target, the lackluster economic growth will restrict any imminent hike in rates. The BoE’s economic forecasts are currently based on another two 0.25% interest rate rises by the end of 2020, which would leave benchmark rate at 1% up from the current 0.5%.

Thursday will also see the Bank of Mexico’s new Governor Alejandro Diaz de Leon releasing its monetary policy statement. Mexican inflation hit a 16 year high in August (6.66%) but price increases have slowed in the last quarter. The markets are not expecting any rate cuts until August of 2018 at the earliest.

Thursday, December 14th at 13:30 GMT will see the European Central Bank (ECB) releasing its Monetary policy statement. The ECB is not expected to waver from its Quantitative Easing program nor increase rates at any time soon. However, the markets will be reading into the statement, as the ECB discloses its 2020 growth and inflation forecasts that may provide clues as to the pace and timing of future interest rate hikes.

Friday, December 15th will see the Bank of Russia releasing its monetary policy statement. After cutting its benchmark rate by 0.25% in October the markets are not expecting any further cuts. With continued western sanctions and the decline in oil prices, the markets will be keen to see the tone of the statement for clues as to the timing of any future rate cuts as Russia recovers from a slight recession.

EURUSD is 0.1% higher in early Monday trading at around 1.1791.

USDJPY is little changed in early trading at around 113.40.

GBPUSD is 0.1% higher in early session trading at around 1.3370.

Gold is 0.12% higher, trading around $1,249.

WTI is 0.3% lower in early Monday trading at around $57.15.

There are no Major data releases for today.

This article is written by FxPro

Bitcoin Prices Drop Ahead of CME Futures Launch

On December 8th, Bitcoin reached the $18,300 mark, only to drop by $3,000 after experiencing a major correction. Currently, on Sunday morning and ahead of CME Bitcoin’s futures launch, it is headed back to $13,072.60, down -9.80%. It was trading at $10,800 just a week ago. In South Korea, it traded with premiums of around 20%, where previously they hadn’t exceeded 5-10%.

Bitcoin has proven to all that it’s able to overcome gravity. Its exponential rise in value, however, isn’t simply due to the impending arrival of institutional investors. Cryptocurrencies, and Bitcoin, in particular, have become extremely popular with the general public, and as prices move ever higher, the desire to invest continues to grow. Investments of a few hundred dollars on «Black Monday» aren’t dangerous. More dangerous is the adoption of a speculative approach, where investments of tens or even hundreds of thousands of dollars are made to obtain a quick profit.

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This Sunday, the CBOE will launch futures and options on Bitcoin, which may lead to another wave of corrections over the weekend. The first Bitcoin futures transaction will take place on Sunday at 23:00 GMT.

As the cryptocurrency market grows, so do the risks associated with investing in it. On Thursday morning, we received news that the largest site for the provision of computing power, NiceHash, was hacked. According to community data, $62M was stolen from the hot wallet, which led to the service being suspended for 24 hours. After a series of similar breaches throughout the year, investors should reconsider keeping their funds in such exchanges, as well as the process of cloud mining, due to the rise in the number of hacker attacks.

Chief Executive Officer of NEX Group, Michael Spenser, who considers Bitcoin to be a bubble, said that he expects growth to reach $20,000 before experiencing a harsh correction. A month ago, such forecasts may have seemed fantastical, today, however, it would seem this may not be optimistic enough.

This post was originally published by EarnForex