Pound After Brexit: Where To Go

The agreement between Britain and the EU does not guarantee that Brexit occurrence on October 31. So there are still some level of uncertainty around the British currency.

The deal is yet to be approved by the British Parliament on Saturday.

The agreement in its current form has more supporters than the options agreed by the EU and Theresa May in the past. However, the Northern Ireland’s DUP remains dissatisfied with the current version, promising to vote against it. DUP support is considered critical to go ahead with the Brexit on a legislative level. Boris Johnson’s conservative party does not have a majority in Parliament; therefore, it needs the support of other parties.

It is also important to remember that the whole Brexit story is full of surprises and shocks. As in the case of the referendum, the optimism of the market may turn out to be premature. Yet one cannot rule out the possibility of a new voting failure and another delay. A jump in uncertainty can play a trick on the British Pound and quickly wiped out all its gains over the past week from 1.2200 to 1.2840 now. The initial reaction of the foreign exchange market can be enhanced by reduced liquidity during the Asian session on Monday morning.

The approval of the Parliament has the potential to help Sterling to develop its rally, finally removing the risks of the chaotic Brexit from the agenda. In this case, GBPUSD has the opportunity to gain a foothold in1.3200 area – this year highs, where it rose during the periods of enthusiasm regarding the Brexit. An important factor in favour of purchases may be the closing of many short positions in the British currency, built in anticipation of a no-deal Brexit.

But “what will happen next question” is more and more of the minds of analysts. And the answer to it unlikely seem positive now. Most likely, the Bank of England will have to cut interest rates to support an economy facing shocks in demand. The Bank of England can then act like the ECB and the Fed, which are taking active steps to ease their monetary policy.

Besides, observers are inclined to believe that without the EU, the British economy could lose part of its growth potential. Lower growth potential risks turning into a long-term factor of pressure on the British currency, as it will make the policy of the Bank of England softer than earlier. The British Prime Minister vigorously deny this point of view. But as the markets agree with this, it may swiftly return pressure on the Pound after the initial positive reaction. Potentially, this factor may keep GBPUSD from growing, leaving it at 1.32 until the end of the year.

Weak data and Tariffs Escalation demands more ECB and Fed easing

The S&P 500 lost 1.8% on Tuesday, while the FTSE 100 and Euro 50 collapsed more than 3.2% last day after the US Presidential Administration announced new tariffs to some European goods. This step imposes tariffs on Airbus, as well as other goods, including whiskey and cheese, the production of which is subsidized by the state. This step triggers fears of a new round of escalation of tariff wars, raising concerns about a possible European response.

The tariff announcement proved to be very untimely news for the markets that had previously been under pressure from weak economic data from the US and Europe. The introduction of tariffs and fears of tit-for-tat steps could further suppress business sentiment, which is already at the lowest levels for years.

The new statistics are increasing pressure on the Fed and ECB to continue its easing, as it indicates weakness in the areas to which these central banks pay the most attention. Eurozone inflation fell to 0.9% YoY, about half the ECB target levels, and weakness of business sentiment indices in Germany suggests that this decline may continue in the foreseeable future. It is also worth noting the return of oil to $57 for Brent, the 3-month lows area, which can curb producer prices in the coming months.

It is impossible to pass by the weakening of the Chinese yuan, which increases global deflationary pressures together with declining energy prices. The U.S. Federal Reserve is paying much more attention to business than to inflationary signals (which are heavily distorted by tariffs) and in this area, the Fed is facing a series of worrying news this week. In addition to the decline of the ISM index in the real sector, it is also worth noting the apparent slowdown in employment growth in September, as reported by ADP the previous day. A recent report closely correlating with the official statistics published yesterday noted a 135K increase in employment last month, shows the weakness persist after the drop in May.

Today’s data may further shed some light on the dynamics of inflation in Europe and business activity in the U.S. In the afternoon, the prices of eurozone producers will be released, which are expected to show year-to-year decline for the first time since 2016. At the beginning of the U.S. session, investors will be watching for weekly unemployment claims, and Non-Manufacturing ISM later. The latest represent about 80% of the U.S. economy, so a significant deviation from previous results and expectations could have a major impact on the markets, reinforcing or, conversely, unfolding the current negative sentiment.

Crypto Market Clings To Straw

At the moment ETH is trading above $182, partially recovering after declining from $220 to $150 last week. Maintaining the positive dynamics significantly strengthens the chances for Ethereum (ETH) to return the recent highs of $230 in the coming days in case of further growth. Thus, the recent correction looks rather fleeting, and speculative demand in the market is still high.

The greed and fear index of BTC is now at the level of 38, which indicates the approaching exhaustion of the demand impulse, showing a rather sharp recovery from the levels of “extreme fear” when the index fell to 12 at the end of last week.

The flow of news about crypto trading volume falsification by exchanges does not run out. This uncomfortable truth has been revealed a long time ago but market participants still prefer not to “think seriously” about these facts. According to the Blockchain Transparency Institute, about 90% of the volume is fake, while the most honest crypto exchanges are Coinbase, Poloniex, and Kraken. If the daily volume of trading is not $61 billion, but $6 billion, then it becomes clear how vulnerable digital currencies are to manipulation.

The price of ZCash (ZEC) is even lower now than it was during the crypto winter. The coin is traded around $39 and is now considered one of the most undervalued on the market. The new data showed that the cryptocurrency has problems with anonymity: it is possible to determine the IP-address of the full node in transactions, which raises fundamental questions to the project. Probably, for these reasons, the cryptocurrency is not redeemed at current lows.

Once a revolutionary XRP project is also going through some bad times, as it turned out that the XRP token itself is not used for international transactions. The price of the coin can not detach itself from 25 cents, so the company’s management is trying to breathe life into the project through grants and investment. Thus, it became known that Ripple bought the Icelandic cryptographic firm Algrim to provide a liquidity XRP channel in the EU. The problem is that the longer the crypto projects try to find their way into the traditional market, the more likely it is that the traditional market will update its own technologies.

Ultimately, the crypto market now acts as a global casino, with very few projects will succeed, while the rest will have to disappear in history.

Markets As Puppets Of The Macroeconomy

EURUSD slipped to 1.0880 on the background of the growing gap between the data from the U.S. and Europe in favour of the former. Endless and tangled political disputes seem to be tiring the markets more and more, and the macroeconomy is coming to the fore again. From this perspective, the United States appears to be the least affected by the recent downturn compared to Europe and Asia. To a large extent, this explains why stock indices and the dollar have been going up together more and more lately, although they often move in opposite directions.

Today we will see the final PMI and inflation estimates published throughout the day, but there is little doubt that they will be below initial market expectations amid weak preliminary estimates. It was not surprising to see EURUSD slipping into the area of lows since May 2017 to the lower bound of the downtrend trading range. Weak inflation is spurring expectations that the ECB will continue to soften its policy in an attempt to boost the economy and inflation.

Chinese yuan and Shanghai stock exchange indices are moving down due to growing fears of an economic slowdown. At the same time, the dollar index exceeded 99.10, also rising to the highs of two and a half years, while the major U.S. indices added about 0.5% over the past day and are developing an increase at the beginning of the day. The dollar index is traded near the psychologically important round level of 100, which causes increased attention of market participants. It depends on the further data, whether we will see a sharp reversal or a decisive breakthrough and further dynamic to the area of multi-year highs.

However, the U.S. still has enough reasons to worry. Today the production ISM will be published – an important indicator of business activity. It has been losing ground over the past year, and the August data was below 50 waterline. These data often serve as a reliable indicator of Friday’s statistics on the labour market in the U.S. and often cause a violent reaction of the market.

Further strong data from the U.S. in contrast to the European statistics will be favourable for the dollar, becoming an argument for a pause for the Fed after two rate cuts. But at the same time, strong macroeconomic reports may support the stock market on expectations of strong company reporting.

Oil is able to head down to $50 by 2020

The recovery of production levels was a matter of honour for Saudi Aramco, which has been cherishing its IPO plans for more than a year. An unexpected attack on oil refining capacities became a real test of the market in “combat conditions”. This news has caused a sharp jump in oil and supported forecasts for further growth. But, in our opinion, it held more harm than good to oil.

Brent has returned to a downward trend, that prevailed during the last five months. And the spike in the middle of September turned out to be impressive but not a long episode in the overall downward trend.

China’s performance indicators over and over again reflect the burden of trade wars. Data released on Friday showed a drop in profits in China’s industry. The official PMI estimates on Monday morning marked the fifth month in a row of declining production activity. The combination of these data with the growing signs of recession in Germany and the collapse of business activity indices in the eurozone make us keep a cautious view on the prospects of oil.

In the U.S. consumers are refraining from spending. In August spendings grew by 0.1% in contrast to a 0.4% jump in revenues.

These are all signs of problems for oil in the coming months. It is worth recalling that the most aggressive drop in black gold prices in the last five years was launched in the final quarter of the year. This was in 2014, 2015, as well as in 2018.

It is also worth paying attention to the trend of ever-lower peaks. In 2008, oil started to turn from $140. In 2012 it was dumped from levels above $120. In 2014 it unsustained above $100. In 2018, these were levels at $80 per barrel of Brent.

Several technical factors increase negative expectations. Crude Oil failed to consolidate above the 200-day average. The break-down of this line or the inability to consolidate above in recent years was accompanied by increasing downward pressure. Now the oil is moving down within the downward channel with the upper limit to $61 and lower – at $51. In July and May, it took about a month to move from the upper to the lower bound. That is, by the end of October, Brent price may decline to $50 per barrel which corresponds to the lows of October last year.

So this time too, the oil may face a very turbulent end of the year with risks caused by both technical factors and long-running concerns about global oil demand.

Crypto Investors Focus on a Fewer Big Players

It is extremely difficult to make an investment decision to buy at the moment of reaching the bottom when the whole market is in the final stage of depression. Those who decided to buy Bitcoin above $3K now have a good reward for their courage. When the most impatient people leave the market, as well as investors who decided to fix losses and Bitcoin will reach the local bottom, which, according to the CEO of Galaxy Digital Mike Novogratz is at $8,500, then the market consolidates around the reached levels for some time, and after the BTC can get a new impulse from buyers.

All of this about the medium-term perspective, while during the last day Bitcoin lost 3% and trades around $9,700. Once again, the MA50 is being tested, passing through 9630. Bitcoin is finding it harder and harder to stay above $10K. Everything is happening within the framework of tech analysis and logic (adjusted for the special nature of the cryptocurrencies), and there was no complete duplication of the 2017 rally.

The altcoin market follows the first cryptocurrency. TOP-10 altcoins lose within 3% during the last 24 hours. In a broader perspective, some altcoins are in a very tight situation. For example, ZCash (ZEC) is now only $25 (or 50%) above this year’s lows (or 92% below highs in early 2018). Other stars of the rally 2017th, while feeling better, are also experiencing an investor’s confidence crisis.

Perhaps it would not be an exaggeration to say that the cryptocurrency market is at the phase of funds consolidating, as is often the case in difficult times. The undisputed beneficiary is Bitcoin, whose market share has almost doubled since February. While the top 10 altcoins struggle to duplicate the dynamics of the BTCUSD, 2nd and 3d tens look more and more on the sideway of the investor’s focus. This is easily explained by the fact that the market of cryptocurrencies is considered as an investment, where leaders receive the main attention and, as a consequence, investors’ money. This also explains the scrupulousness of Bitcoin in following the tech analysis signals and ignoring the news.

Hopes of Facebook’s attempts to launch its cryptocurrency support the optimism of market participants. Even if the final product is worse than the initial high-profile plans, the momentum for the entire sector should not be underestimated.

In addition, Telegram should launch its blockchain by the end of the year. It is possible that the launch of these products will return the interest of serious players who will monitor the potential of the projects, not just the signals of tech analysis.

Rate decision launched a Euro Cardiogram

The Euro fell to 1.11001 after the ECB posted a comment on the rate, but on the decline to 26-month lows, EURUSD received support, managing to jump to 1.1170 at the time of writing.

It is worth noting that Draghi’s comments indicated a willingness to soften policy, as well as noting the deterioration of economic forecasts. Also, in his speech, the ECB President said that the risks are tilted downwards and the chances of a recovery of growth and inflation in the second half of the year are declining.

Markets sold the Euro throughout the week, as bond yields declined, with the chances of a rate cut growing to 50% on Thursday, prior to Draghi’s ECB speech. Without meeting these expectations, the single currency rebounded from the round level of 1.1100, as it did before in April and May.

Much of the future dynamics of EURUSD will depend on the Fed’s comments next Wednesday, as investors will compare the tone of the two influential central banks to act. The current rebound of the Euro is like one that has touched the important level, while the decisive attitude of the ECB to soften policy and launch QE suggests the development of a trend to reduce the Euro against the dollar, after a short period of waiting for the Fed’s comments – set to be made next Wednesday.

In addition to the global unknowns in the form of the world monetary policy, stock markets are now influenced by earnings reports. In general, up to date they are mostly “good”, but within the sectors there is a division. IT-giants like Alphabet, Facebook and Intel are exceeding expectations, while those close to production and retail sales, such as Ford and Tesla, saw a notable decline.

Amazon is traditionally considered to be IT company – rather than an online retailer – but its abundant investments in marketing and online delivery have negatively affected profits. The weakness of the retail and manufacturing sectors is an alarming signal for the economy. Exactly how deep this deceleration will turn out to be, we will discover today, after the first estimate of US GDP for the second quarter.

ECB Day: in Anticipation of the Decision

It is worth noting that the readiness of the largest central banks to help the economy is very commendable and supports optimistic sentiments. However, it is surprising that central banks rush to act on the basis of only a small range of signals, without waiting for the appearance of clear signs of an economic downturn. Such a rush distinguishes this situation from previous historical episodes. There are reasons to believe that financial regulators are led by governments, whose sole purpose is to gain a competitive advantage in international trade.

The EU and US PMI data were released with a decline yesterday. At the same time, composite indexes remain above 50, in the growth territory. In Britain, have seen an increase in the number of mortgage loans issued in the last three months, demonstrating that borrowers maintain a confidence in the future.

Stocks

The Nasdaq and S&P500 closed Wednesday at historic highs, due to speculation around a possible policy easing. Texas Instruments Inc gave hints that the slowdown in the semiconductor industry may not be as long as previously stated. The company’s comments had a strong influence on the indices, as it is considered one of the overall economic situation barometers.

EUR/USD

The single currency continues to be under pressure this week. Since Monday, the markets have been revising their expectations from the ECB’s actions, taking into account that the rate cut is not the only lever in the regulator’s hands. There are other measures that may well be taken in order to maintain liquidity, and of which we could learn about any statement of intent, during today’s Mario Draghi press conference.

AUD/USD

The Australian dollar has been losing ground since last Friday, despite the positive dynamics of the US and Japanese stock markets. The Australian currency has its own reasons for weakening, as investors expect further steps to be taken in reducing rates from the RBA. However, AUD often acts as a reliable indicator of sentiment, and the Aussie now warns that, despite the growth of markets, difficult times may lie ahead.

Fed pushes Stocks, Iran “provokes” Oil

This occurred after the NY Fed clarified that the speech of John C. Williams was not about the FOMC move at the next meeting. Such a turn is rather positive for the US currency, since there is an opportunity to increase short-term interest rates. Also, the dollar gains additional attractiveness as a safe haven amid the return of tension in the Persian Gulf.

Stocks

The markets’ mood for a less aggressive policy easing triggered a sell-off on stocks. At the end of the previous week, the S&P500 fell by 0.6%, while index futures dropped to two-week lows. Asian markets are mixed, with the Nikkei225 grew by 0.6% after the yen weakened.

EURUSD

The single currency failed to develop on the offensive, returning to the 1.1200 area. This week, the ECB meeting will be held, from which analysts expect mainly transparent hints of policy easing in September. According to FxPro analysts, in the light of weaker growth and inflation the European Central Bank has many more reasons to act immediately. The risks of an unexpected rhetoric softening look real enough, making the euro potentially vulnerable to a sell-off.

Brent

Oil is back on the agenda amid increased geopolitical tensions, following reports that Iran seized a British tanker. In addition, Libya announced the suspension of work at the largest field. These events brought fears of down-production to the markets, which helped the oil rate to return to growth. On Monday morning, Brent is trading above $63, rising to $61 after Thursday’s slump. However, oil remains below the 50 and 200-day Moving Averages. It is considered to be a bearish signal, suggesting an increase in the chances of further decline.

Libra problems ≠ Bitcoin problems

Perhaps, in order to restore the belief of the markets in the bullish trend, the Bitcoin will have to step over the next round level by $11K. Altcoins also showed a sharp rise in quotes, but still did not offset the drop since the beginning of the week.

The most impressive dynamics was demonstrated by Litecoin (LTC) with +25%. Buyers were interested in this altcoin because of the approaching of halving in August, while after the correction of LTC was very underestimated. At the current price level, Litecoin is 97% below its historic high, although since the beginning of the year the coin has gained 226%. Litecoin is experiencing obvious difficulties with growth amid general disappointment in the altcoin market in general. Nevertheless, the market is still relatively easy to manipulate, despite some growth in trading volumes.

Large-scale correction of the crypto market earlier this week was due to the weak position of David Marcus’ CEO Calibra at the hearings in the U.S. Congress. Officials of all ranks up to the presidents expressed their negative opinion on the cryptocurrency being developed by Facebook. There is a high probability that they will win, limiting the Libra functionality to a minimum, which does not represent a “danger to the stability of the financial system”.

The U.S. House Committee on Financial Services has prepared a bill to ban the issuance of cryptocurrencies by large companies with annual profits of more than $25 billion to make Facebook, Google and others “too big” to release their digital currencies. In case Trump signs the law, the violators will pay a fine of $1 million a day. The paradox is that Facebook’s profit from the full-scale launch of its cryptocurrency may be higher than the fine. However, fundamental factors are already coming into play here: regulators may increase the amount of the fine and limit the company’s activity in general.

The issues of regulation and the attitude of officials towards the crypto sector have become a fundamental factor for the price dynamics of cryptocurrencies this week. However, later it became clear that little had changed for Bitcoin. First of all, the size of the market does not frighten officials.

Secondly, it is decentralized and there is simply no one to ask uncomfortable questions. Third, there are suspicions that the U.S. government itself is using digital currencies to finance its unofficial needs abroad. We live in an era in which the demand and security of an asset transferred into a new dimension in the digital sphere. Market participants expected large corporations to take over the market with cryptocurrencies as competitors to governments, but practice so far indicates that maybe a superstructure over national currencies has already been created and politicians are simply shielding the market from other digital currencies? In this case, Bitcoin maximalists may once again be right about their expectations.

Dangerous Distortions in the Markets due to Fed Softness

About a decade ago, the Fed was criticised for contributing to the formation of a real estate bubble, raising the rates “too little” and “too late.” The Reserve System, in its current composition, risks receiving a similar portion of criticism, choosing those indicators that cause concern. According to FedWatch, the markets quoted a 60% chance of reducing the rate by 50 points at once.

Prospects for lower rates caused the dollar sale, taking away 0.5% of its value overnight. The markets’ mood for a quick resolution of this situation creates a new stage in the ‘hunt for yield’ – supporting the demand for “junk” bonds. In addition, it hinders the sale on the stock markets. Low rates and speculation around a possible new QE round fuel the purchase of risky assets, while bond yields are suppressed by central bank policies.

Stocks

The SPX (futures on the S&P500) added 0.9% on Thursday and is above 3000 on Friday morning. The Nikkei225 adds 1.5% after four days of decline. Chinese stock indices rebounded from local lows.

EURUSD

The single currency experienced a growth momentum, returning to levels above 1.1250. However, it is worth being careful with the euro purchases in the coming days. The Fed gives clear signals of easing, just a week before the ECB meeting. This is a period of silence, when the central banks’ representatives do not make speeches that could affect the monetary policy course. Yet, the European Central Bank is unlikely to hesitate with its portion of “dovish” comments. Most analysts expect to hear a clear hint of rate cuts already in September and some loosening at the end of July. However, without clear signals from the ECB, the euro receives virtual market support.

Gold

Gold completed a three-week consolidation by breaking through the upper limit of the trading range. As a result, quotes rose to 1.450, updating 6-year highs. The FxPro Analyst Team mention that gold may receive strong support through a softer monetary policy, if the economy maintains the growth.

Investors are Buying Up Defensive Assets

In the Beige Book published on Wednesday evening, the Fed noted relatively positive growth forecasts, but also indicated that companies still find it difficult to pass on increased costs to consumers. This, in turn, suppresses the inflation.

Stocks

US indices lost 0.5-0.7% on Wednesday. Index futures continue to lose 0.2% this morning, falling for the third day in a row. SPX retreated below 3000. In addition, RSI has returned from the overbought area, which may further increase short-term pressure. Market anxiety is fuelled by the weak reporting of CSX Corp, whose failures are viewed by investors as a signal of the global economy cooling and reinforcing the investor’s desire of buying up defensive assets.

EURUSD

The International Monetary Fund (IMF) noted that the dollar is overvalued by 6%-12%, based on short-term fundamentals. The IMF rarely comments on courses, and therefore, there are growing fears that the Trump administration will seize upon this thought, increasing pressure on the FOMC before the meeting on interest rates in two weeks. At the same time, the growth of the single currency is limited by the expectations of softening ECB policy next week. Central banks continue to play the senseless game of “make it softer than your neighbor.”

Chart of the day

US 10-year Treasury yields have returned to the 2% level, reflecting growing concerns about the American economy growth rate. The reporting season has just begun, however, while the companies’ results are weaker than expected. A further drop in the yield of long-term US government bonds could be an alarming signal for the markets, further increasing pressure on stocks, and also causing a weaker dollar as investors look for more yielding assets.

Strong Data Does Not Interfere With The Dovish CB Policy

External causes seem to be used by central bankers as a rationale for the soft policy position, despite the relatively good internal data of the countries. Time after time, indicators from the US, China, and UK surpassed expectations, but this did not change the markets’ mood: investors are still preparing for the worst.

Stocks

Key indices continue to follow the tactic “the worse the better.” The strong US retail sales data put pressure on quotes, rather than encouraging growth. Despite the fact that Evans’ speech softened investor expectations, market participants seemed to prefer to take profits from the previous rally.

EURUSD

The single currency came under pressure following the sale on the pound. EURUSD returned to July lows around 1.1200. In addition, the dollar received support after strong retail sales figures. In contrast, business sentiment in Germany continued to deteriorate due to fears around global risks. Bears’ attention could switch now to the area of 1.11, from which the pair rebounded in June 2018 and April-May 2019.

Brent

Oil fell sharply by the end of Tuesday, losing 4.8% intraday to $63.5 per barrel. The sale was provoked by rumours of a decrease in the degree of tension between Iran and the United States. In addition, data from an independent company, API, noted a not so sharp decline in inventories as expected, returning to the market’s concerns about an overabundance of commodities. From the technical analysis side, the bearish signal is the fact that Brent has undergone a sale from the 200-day moving average, and this often acts as a significant level.

Pavel Durov Holds Off With TON, Waiting For the Libra Hearings to End

The scale of the decline so far has allowed only a very cautious optimism, however, after the drop below $10K, the crypto-media indicated that the current correction gives the last chance to buy Bitcoin at such a “low” price.

The Block citing informed sources reported about the introduction of a bill in the U.S. Congress to ban the creation of their digital currencies by major IT-companies. Obviously, it will be Facebook, Google, and Telegram, which have the greatest chance of success with such projects. Separately, the market of “first” cryptocurrencies did not cause such fears among officials around the world, but Facebook was able to change the situation. David Markus, CEO of Calibra, will speak at the Congress on July 16-17. It is believed that cryptocurrencies could also decline in this regard, as now there is a question about the future attitude of the authorities to the crypto project as a whole. After all, if such a bill to ban the release of digital currencies will become law, it will also pressure the Bitcoin and the whole market of altcoins.

TON project: the start

The market used to be full of expectations for the new cryptocurrency, but now it is quiet. Facebook decided to be the first among the largest technology companies to dare to challenge the U.S. government’s monopoly on the currency issue. Telegram and other companies have now become observers. This approach can save billions of dollars. The experience of Facebook in cooperation with the U.S. government will be invaluable for all participants. There is no doubt that the position of the authorities will be indicative and will give a clear signal to everyone else.

According to the initial plan, Telegram token is not stablecoin, i.e. the price will be formed in the market, which means that the project may have additional difficulties with the authorities. In addition, the wallet will be available to 300 million instant messenger users with the ability to make micro-payments. Agiotage demand, growth of the price of a token and the subsequent “hodl” can play an evil joke with the project as at parabolic growth nobody will spend the tokens as it mostly occurs with Bitcoin and similar coins.

In 2018, Telegram held a closed ICO. The developers were able to raise $1.7 billion, although they could attract much more if the ICO had been a public one, even there the first place was given to possible problems with the regulators. In May 2019, Telegram officially released its test client TON, which indicates the final stage of testing, and the project itself may be ready for public launch in the second half of 2019.

Technical difficulties of the project

TON is written in an unusual Fift language. The popularity of any project depends on the developers, and in this case, the founders have deliberately limited the circle of developers, relying on more experienced specialists. This can be both an advantage and a vulnerability of the project. Thus, starting with ICO, the creators of the project clearly point to strict control over its development. At the moment, all views are focused on Facebook, which shows signs of “reverse gear” when faced with severe pressure from officials around the world. This was probably a surprise even for a company. Given the approach of Pavel Durov, it is likely that all FB’s mistakes will be taken into account, the reaction of the officials will be analyzed, and Telegram will be able to offer the market the product in the form that will be accepted by all parties.

Markets are Waiting For The Results of Trade Wars and Brexit

At the same time, the uncertainty around trade wars is already able to leak from the area of business unrest into real indicators. This, in turn, can manifest itself in the revision of plans, as well as in the form of a reduction in sales of some companies producing equipment and raw materials. In addition, the US retail sales and industrial production will be published today, representing the first stroke of the economy’s portrait, in terms of the effects of trade conflicts.

Stocks

US markets closed Monday with a gain of about 0.1%. Index futures mark positive dynamics, leaving indices in the overbought area on daily charts, near the historical highs. However, one should pay attention to the intraday increase in sales after a growth wave, as more players tend to take profits from the previous rally.

Asian stock markets are showing a slight increase since the beginning of the day, in anticipation of a lighter monetary policy, as well as playing back a portion of positive data from China.

EURUSD

The euro rate has changed a little in pair with the dollar over the course of the past day. On Tuesday morning, the EURUSD is trading near 1.1260, in the middle of the previous four trading sessions, waiting for signals of further trend evolvement. Meantime, the scales of buyers and sellers are balanced: hints of easing are heard from both the Fed and the ECB, and economic indicators can be assessed as “slightly weaker than the trend.” In addition to the US data, the assessment of Germany’s business sentiment by ZEW could influence the EURUSD rate today. Note that the sharp failure of this index a month earlier launched the sale wave on the euro.

GBPUSD

The prospects of Boris Johnson – one of the most consistent supporters of a hard Brexit – becoming UK prime minister, took away about 0.5% from the pound. This manoeuvre returned GBPUSD to the area below 1.2500. Investors are also laying in quotes the possibility of the interest rates lowering, in light of economic growth cooling. Johnson’s main message during the Brexit campaign was that this event would not have a negative impact on the economy.

Today, data on employment in Britain will be published, while inflation and retail sales will become known later this week. The irony is that Mr Johnson may become the prime minister at the very point when the national economy shows signs of weakness regarding the uncertainty around Brexit.

Markets in No Hurry to Rejoice in Strong Data From China

The initial market reaction was the strengthening of the purchases of stocks and the yuan, but rather quickly the market participants became more attentive. First, the annual growth rate (6.2%) was the lowest in the last 27 years. Secondly, there were concerns that the Chinese authorities might limit stimulus, noting the success of the measures already taken. Third, the effect of trade conflicts has not yet been fully reflected in the figures, since it was only in the middle of the quarter that new import tariffs were put in place by the United States.

Stocks

Chinese markets, trading back the data above the expectations, managed to rebound from three-week lows, but due to their caution about prospects, the growth did not evolve, leaving the main indices near last Friday’s levels. US stock futures, at the same time, continue to rewrite their historical highs. On the technical side, the S&P500 and Dow Jones are near overbought levels, but the Nasdaq is still lagging behind.

EURUSD

Euro is experiencing temporary difficulties with growth above 1.1270, where it continues trading for the third session in a row. Strong inflation data from the US seems to have tipped the scales towards debt markets, returning the yield on 10-year government bonds to above 2%. The growth in yields of such securities is a sign of market confidence in the long-term growth rate of the economy. Higher interest rates support the dollar, as increase the yield on such bonds.

AUDUSD

News from China supported the growth of the Australian dollar. AUDUSD on Friday returned above 0.7000 and now is testing the early May highs, trading near 0.7030. This pair is often viewed as an indicator of global investor sentiment towards the Chinese economy, since Australia is strongly tied to exports to China. The level of 0.7000 in recent years serves as a kind of indicator, the fall under which occurs during the period of maximum fear around the growth of the Chinese rates. In light of this, a pair reversal for growth may reflect a positive signal.

  The market review was written by the FxPro Analyst Team