GBP/JPY Price Forecast – British Pound Stalls Against Yen

The British pound has shown itself to be a little overextended against the Japanese yen during early trading on Monday, as the ¥139 level offers resistance yet again. That being said, this is a market that I think will eventually go looking towards the ¥140 level, and if we can clear that level continue to go much higher. I like buying dips, and quite frankly I would like to see a little bit bigger of a pullback in order to get involved. Nonetheless, if we break the ¥140 level to the upside it is likely that we go much further.

GBP/JPY Video 04.08.20

The 200 day EMA underneath has been cleared quite handily over the last couple of days, so I think it is only a matter of time before that would offer a longer-term support level, just as the ¥135 level has been previously. In fact, the 50 day EMA is sitting there at the ¥135 level, so I think that also offers a bit of psychological support as well. Ultimately, this pair desperately needs to take a break, and that might be what we are seeing right now.

Ultimately, I think that you will see a lot of volatility but given enough time I expect this market to go much higher. After all, we have seen a lot of bullish pressure in the British pound in general, so it is hard to imagine why that would change suddenly. In the meantime, I am simply observing what is going on and I recognize that we are in a massive move just waiting to happen.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Price Forecast – Euro Pulls Back Finally

The Euro has initially tried to rally during the trading session on Monday but found the 1.18 level to be a bit too much, and then pulled back towards the 1.17 level. This is an area that will probably cause some support, but quite frankly it still a bit elevated. I think at this point we need to see the Euro consolidate a bit if nothing else.

EUR/USD Video 04.08.20

That being said, I do not like the idea of shorting this pair regardless. Even if we break down below the 1.17 level, it is very likely that we will find plenty of buyers underneath. In fact, I think there is a lot of support all the way down to the 1.15 level, so I am hoping to see a little bit more of a deeper correction and then take advantage of it.

To the upside I believe that we are going to go looking towards the 1.20 level eventually, but quite frankly I do not think that we get there overnight. This is a market that has been overbought for some time, so I think the healthiest thing we can do is either consolidate or pull back. After all, markets cannot go in one direction forever, despite the fact that they often tried to. I believe that the 1.15 level is now the “floor” in the market, and therefore I have no interest in shorting until we get well below that important figure.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Price Forecast – Australian Dollar Pulls Back

The Australian dollar has pulled back a bit during the trading session on Monday, as we have breached the 0.71 level to the downside heading into the New York session. That being said, there is significant support just below and I think that will continue to be the case. With that in mind I am looking to take advantage of any type of supportive action here as we have decidedly changed the overall attitude of the Aussie dollar over the last several months.

AUD/USD Video 04.08.20

Keep in mind that there are a lot of concerns about the coronavirus out their still, but it seems like the FX markets are more or less worried about the Federal Reserve and its loose monetary policy above all else. That has benefited the Aussie dollar over the last couple of weeks, and should continue to do so, despite the fact that Melbourne Australia is currently under a bit of a lockdown due to the virus outbreak.

Federal Reserve liquidity is a main driver of markets around the world, and FX markets are not going to be any different. Quite frankly you need to buy other things to protect your wealth that based in US dollars, so the Australian dollar is probably as good as any other asset that you can think of. This could also be a bit of a play on the Chinese economy getting a bit better, but at this point I think that is just the sideshow and not the main attraction.

For a look at all of today’s economic events, check out our economic calendar.

Price of Gold Fundamental Daily Forecast – Ripe for Correction During Dollar Short Squeeze

Gold futures are taking a breather on Monday from its tremendous rally to record highs in July. The catalyst behind the weakness is a stronger U.S Dollar that is weighing on foreign demand for the dollar-denominated precious metal. A sharp rise in 10-year U.S. Treasury yields is also weighing on gold prices after the benchmark hit a record low yield late last week.

At 13:03 GMT, December Comex gold futures are trading $1984.70, down $1.20 or -0.06%.

Dollar Jumps after Weakest Month in a Decade

The dollar is trading higher against a basket of major currencies on Monday as a squeezing-out of crowded short positions combined with safe-haven demand gave the U.S. currency some respite after its weakest monthly performance in ten years. The greenback lost more than 4% in July, its biggest monthly drop since September 2010.

Dollar Short-Squeeze

Speculators’ net shorts on the U.S. Dollar have soared to their highest since August 2011 at $24.27 billion, Reuters calculations and U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday.

A partial squeezing out of that crowded short position may be the reason for the dollar’s rally and gold’s subsequent reversal to the downside earlier today.

Essentially, the dollar ran out of sellers. Traders could sense it because the downside movement was a bit cautious late last week. It seemed that nearly every short in the Forex market decided to cover at the same time on Friday, creating a tremendous reversal to the upside.

Treasury Yields Bounce Slightly from Last Week’s Record-Setting Drop

Probably exerting the most pressure on gold is a rise in U.S. Treasury yields after last week’s decline pushed some of the front-end rates to record lows.

Yields were pressed lower last week on the hopes of fresh fiscal stimulus from Congress, but members went home for the week-end without reaching deal. Policymakers are likely to have a deal in place this week, but it’s probably being priced into the market already.

Daily Forecast

We’re going to be keeping an eye on the U.S. Dollar, but an even closer watch of Treasury yields. Right now the dollar is going through the early phase of a short-covering rally that could lead to at least a 50% retracement of the recent sell-off. If this were to take place then gold could mirror the move with a 50% retracement of its current rally.

Traders shouldn’t fear a normal 50% to 61.8% correction in gold. In fact, they should embrace it because it would likely lead to a break back into a value area where it would become attractive to long-term investors.

The fundamentals are there for higher prices over the longer-term. However, over the short-run, I can build a case for a near-term correction.

For a look at all of today’s economic events, check out our economic calendar.

Bitcoin Shots to A New Yearly Highs in July

Indeed, the flagship cryptocurrency endured a prolonged stagnation period. It traded mostly within a narrow range defined by the $9,000 support and the $9,500 resistance level. But on July 22nd, the bears gave up and could no longer contain Bitcoin from achieving its upside potential. Thus, its price finally broke out of the consolidation phase, indicating that it was the beginning of a new bullish cycle.

As the buying pressure behind Bitcoin rose exponentially, so did its market value. BTC shot up over 20%, smashing through the infamous $10,000 resistance barrier. The high levels of demand were so significant on July 27th that it allowed the pioneer cryptocurrency to rise to a new yearly high of $11,488. This day was the most profitable 24 hours period of the month.

Investors appear to have taken advantage of the bullish price action to realize profits. The spike in selling pressure triggered a 7.9% correction on July 28th, which saw Bitcoin drop to a low of $10,580. As the month came to an end, sidelined investors seem to have re-entered the market, pushing prices back up. BTC was able to close July at $11,343.68, providing a monthly return of 22.86%.

Ethereum Enters Massive Bull Rally

Like Bitcoin, most of Ethereum’s price action took place in the last nine days of July. The smart contracts giant kicked off the month at $225.56 and immediately started making a series of higher highs and higher lows. This price behavior, accompanied by the boom in the DeFi sector and speculation over ETH 2.0, saw many investors grow optimistic about Ether.

Despite the positivism around this altcoin, the $245 resistance level was able to absorb any upward pressure impeding it from advancing further. On July 8th, for instance, Ethereum rose to this hurdle, but it was quickly rejected. The rejection was followed by a 7% correction pushing Ether down to $229.84.

It was not until July 22nd that Ethereum finally turned the $245 resistance wall into support. Moving past this major barrier was the catalyst that triggered FOMO (fear of missing out) among investors. As buy orders began to pile up, the second-largest cryptocurrency by market cap entered an impressive bull rally.

Ethereum skyrocketed by 42.46% to reach a new yearly high of $349.83 on July 31st. Only a few hours before the monthly close, Ether’s price dropped by 0.97%. As a result, ETH was able to end July at $346.42 and provide investors a monthly return of 53.58%.

Further Gains on the Horizon

The price action seen throughout July sent investors into “extreme greed.” Historical data reveals that when greed reigns the crypto market, exhaustion points are reached, followed by steep corrections. Although everything seems to indicate that Bitcoin and Ethereum have entered a new bull market, investors must be aware of the high probability of a retracement.

If this were to happen, market participants would likely take the opportunity to “buy the dip” and grow their long positions. A new influx of capital could propel these cryptocurrencies towards new yearly highs. As the crypto market currently stands, there are more reasons to be bullish than bearish, but it is imperative to use stop-loss orders to avoid adverse conditions.

Konstantin Anissimov, Executive Director at CEX.IO

EUR/USD Mid-Session Technical Analysis for August 3, 2020

The Euro is trading lower on Monday as a squeezing-out of crowded short U.S. Dollar positions combined with safe-haven demand is driving investors into the greenback following its weakest monthly performance in ten years.

In other news, manufacturing activity across the Euro Zone expanded for the first time since early 2019 last month as demand rebounded after more easing of the restrictions imposed to quell the spread of the new coronavirus, a survey showed on Monday.

At 12:40 GMT, the EUR/USD is trading 1.1732, down 0.0040 or -0.33%.

Factories appear to be playing their part in the recovery in the Euro Zone. IHS Markit’s final Manufacturing Purchasing Managers’ Index bounced to 51.8 in July from June’s 47.4 – its first time above the 50 mark that separates growth from contraction since January 2019. An initial “flash” release had it at 51.1.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, Friday’s closing price reversal top and subsequent follow-through to the downside has shifted momentum to the downside. This could trigger a 2 to 3 day correction of between 50% and 61.8% of the last rally.

The minor trend is also up. A trade through 1.1371 will change the minor trend to down and confirm the shift in momentum.

The minor range is 1.1371 to 1.1909. Its retracement zone at 1.1640 to 1.1577 is the first downside target zone.

The main range is 1.1185 to 1.1909. Its retracement zone at 1.1547 to 1.1462 is the primary downside target zone.

Combining the two retracement zones creates a price cluster at 1.1577 to 1.1547. This zone also represents value so it should be attractive to buyers if tested.

Daily Swing Chart Technical Forecast

The closing price reversal top is not a change in trend, but often used as a means to alleviate some of the excessive upside pressure.

Our work suggests a 2 to 3 correction is likely with 1.1640 to 1.1577 the first downside target zone. Since the main trend is up, buyers are likely to show up on a test of this level.

The EUR/USD should hit 1.1640 to 1.1577 if the downside momentum continues. If the downside momentum pauses or shifts back up then look for a retracement of the first leg down. This price is approximately 1.1812.

For a look at all of today’s economic events, check out our economic calendar.

Oil Fixed Between $43-44

A new stage of the OPEC+ agreement is coming into effect. Starting from August 1st, the daily reduction of oil production is 7.7 million barrels, which is lower than the previous value, 9.7 barrels. This restriction is supposed to be valid for countries members of OPEC+ until the end of the year.

Market players are worried by the possibility of oversupply. It may well be that a stable price for oil might sooner or later boost the USA to increase oil extraction. This is exactly what is putting pressure on the oil right now.

Another thing that pushes the oil price is the coronavirus: the number of new cases is going up, which means that all pandemic-related risks are not going away anywhere.

In the H4 chart, Brent is still correcting towards 42.80. After reaching this level, the asset may form one more ascending wave to break 44.04 and then continue trading upwards with the short-term target at 45.33. Later, the market may correct towards 44.50 and then start another growth to reach 46.46. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is moving below 0 in the histogram area. After the line leaves the area and breaks 0 to the upside, the correction may be over.

Изображение выглядит как карта, текст Автоматически созданное описание

As we can see in the H1 chart, Brent is consolidating around 43.30; it has already broken this level to the downside and may continue falling to reach the correctional target at 42.80. After that, the instrument may start a new growth to break 43.30 and then continue trading upwards to reach 44.04. And that’s just a half of another ascending wave.

From the technical point of view, this idea is confirmed by Stochastic Oscillator: its signal line is moving to rebound from 50 to the downside. Later, the line is expected to fall to reach 20 and rebound from it. After that, the correction may be over. If later the line breaks 50, the price chart may boost its growth.

Изображение выглядит как текст, карта Автоматически созданное описание

For a look at all of today’s economic events, check out our economic calendar.

Author: Dmitriy Gurkovskiy, Chief Analyst at RoboForex


Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

Clorox Sales Up 22% in June Quarter Amid COVID-19 Panic-Buying; Target Price $256

Clorox, a $9 billion market cap consumer products company, reported that its sales surged 22% in the June quarter, including double-digit growth across all reportable segments as people spent more time cleaning and disinfecting their homes due to the COVID-19 pandemic, sending its shares up over 1% pre-market trading.

Clorox said it delivered earnings of $310 million, or $2.41 diluted EPS in the fourth quarter, which ended June 30, 2020, compared to $241 million, or $1.88 diluted EPS, the same quarter a year earlier, representing a 28% increase in diluted earnings per share. The company’s fourth-quarter gross margin increased 170 basis points to 46.8% from 45.1% in the year-ago quarter.

The board of directors of the Clorox Company also announced that, effective Sept. 14, 2020, Linda Rendle will be promoted to chief executive officer and elected to the company’s board of directors. Benno Dorer will continue serving as the board’s executive chair.

Clorox shares closed 2.27% higher at $236.51 on Friday, increased more than 50% since the beginning of 2020.

Clorox stock forecast

Nine analysts forecast the average price in 12 months at $202.89 with a high forecast of $256.00 and a low forecast of $164.00. The average price target represents a -14.22% decrease from the last price of $236.51. From those nine, three analysts rated ‘Buy’, four analysts rated ‘Hold’ and three rated ‘Sell’, according to Tipranks.

Morgan Stanley target price is $193 with a high of $259 under a bull scenario and $145 under the worst-case scenario. Deutsche Bank raised its target price to $223 from $174. Several other equity analysts have also updated their stock outlook. Clorox had its price target raised by investment analysts at JPMorgan Chase & Co. to $235 from $203. BofA Global Research raised price objective to $235 from $215.

We think it is good to buy at the current level with a target of $256 as 100-day Moving Average and 100-200-day MACD Oscillator signal a mild buying opportunity.

Analyst comment

“Structural Long-term Topline Challenges Relative to HPC Peers: While CLX’s near-term topline is likely to be robustly supported by a COVID-related demand boost for cleaning products (we project +17.5% for 2H20e, driven by the 25% of CLX’s business related to cleaning), we believe that longer-term, Clorox remains over-indexed to low-growth product categories, with high exposure to the US,” said Dara Mohsenian, equity analyst at Morgan Stanley.

“Valuation Too High: We view CLX valuation of 20.5x CY21e EV/EBITDA and 30x CY21e P/E as too high (in comparison to PG at 23x CY21e P/E) considering limited LT EPS growth and strategic potential relative to peers post a beneficial COVID impact,” he added.

Upside and Downside Risks

Topline and margin upside from improved pricing, longer-lasting COVID-related demand impact, better than expected volume, declining commodity costs, successful innovation driving recaptured shelf space, consolidation potential, and cost-cutting, Morgan Stanley highlighted as upside risks to Clorox.

Pricing doesn’t take hold, worsening volumes, higher than expected commodity inflation, heightened competition from private label, Morgan Stanley highlighted as downside risks.

Daily Gold News: Monday, August 3 – Gold’s Consolidation – a Topping Pattern?

The gold futures contract reached another new record high on Friday at the price level of $2,005.40. The market has slightly extended its recent advance again. The market gained 0.97%, but the closing price was at around $20 below the daily high. Gold reached the highest in history following U.S. dollar sell-off, among other factors.

Gold is 0.4% lower this morning as it is slightly retracing Friday’s advance. What about the other precious metals? Silver gained 3.66% on Friday and today it is 1.3% lower. Platinum gained 0.69% and today it is 0.3% higher. Palladium gained 0.49% on Friday and today it’s 1.2% higher. So precious metals trade within a short-term downward correction this morning. The gold price remains within a week-long consolidation along $1,950-2,000.

Friday’s Personal Income/ Personal Spending data release along with the sentiment numbers have been mixed. Today we will get the ISM Manufacturing PMI number at 10:00, among others. Expectations are at 53.6 – one point above the previous month’s release. The ISM Manufacturing PMI got back above the neutral level of 50 following steep declines in May and June.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Monday, August 3

  • 9:45 a.m. U.S. – Final Manufacturing PMI
  • 10:00 a.m. U.S. – ISM Manufacturing PMI, Construction Spending m/m, ISM Manufacturing Prices
  • All Day, Canada – Bank Holiday

Tuesday, August 4

  • 00:30 a.m. Australia – Cash Rate, RBA Rate Statement
  • 10:00 a.m. U.S. – Factory Orders m/m, IBD/TIPP Economic Optimism
  • 9:45 p.m. China – Caixin Services PMI

Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter. Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

GBP/USD Eases Back After a Strong Performance in July

The British pound was the best performer among the seven major currencies in July, gaining 5.5% against the greenback.

The dollar was under pressure throughout the month, weighed by optimism that central banks and governments would continue to support the global economy. The greenback is known as a safe-haven currency and often underperforms when the market’s appetite for risk is higher than usual.

In the UK, the economy took a firm step in a positive direction as lockdown restrictions were eased in July and businesses started to reopen.

The latest PMI report, released earlier today, showed the manufacturing sector growing for a second consecutive month. Data on Friday revealed a strong rebound in the services sector and a sharp push higher in UK house prices.

On the other hand, ongoing talks in reaching a trade deal with Europe have not been going so well. Last month, several media outlets reported that the UK government expects an agreement won’t be reached by the deadline. Further, the UK waived its right in June to extend the transition and negotiating period beyond December.

Later in the North American session, the US will release its latest PMI figures for the manufacturing sector.

Technical Analysis

GBPUSD Monthly Chart

GBP/USD trades about half a percent lower ahead of the North American open on Monday. The pair reached a high of 1.3170 last week, stopping short of testing major resistance at 1.3262 seen on a monthly chart.

Considering the recent upward momentum, buyers are likely to support the pair on near-term dips. But at the same time, the risk to reward does not appear all that favorable for buyers with a longer-term view since resistance at 1.3262 has held the pair lower for more than two years.

Friday’s daily candle suggests some exhaustion that could cap near-term rallies. Today’s daily close will be important. A close near Thursday’s open, around 1.3000 would result in the formation of a reversal candlestick pattern on a daily chart.

Bottom Line

  • GBP/USD has pushed slightly lower after an impressive gain in July.
  • The decline on Friday ended a 10 consecutive day bullish streak.
  • The pair is weighed by a dollar recovery as the greenback is seen advancing against its major counterparts after hitting a two-year low on Friday.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Daily Forecast – Dollar Rebound Holds Euro Below 1.1800

EUR/USD briefly traded above 1.1900 on Friday but has since eased back as the dollar is rebounding broadly against its major currency counterparts.

Considering that the exchange rate has risen at a much more rapid pace than the norm, it would not be unusual to see a consolidation at this point, or a slight correction lower.

Economic data from Europe was positive today. The latest manufacturing PMI report showed the industry returning to growth after a steep contraction in the second quarter.

The report confirms that the euro area is well on its way to a recovery as the easing of lockdown restrictions has boosted the economy compared to prior months. However, things are still in the early stages and this momentum will need to continue for the economy to eventually get back to the state it was before the virus shock.

The labor market is the biggest risk when it comes to factors that could derail the recovery. For this reason, the next employment report, scheduled for release next week, will be closely watched.

Later today, the US will release data that will provide an outlook on the US manufacturing sector. Similar to the euro area, analysts expect the manufacturing sector to show growth in July.

Technical Analysis

EURUSD 4-Hour Chart

The currency pair shows signs of slowing but there is risk in taking a counter-trend stance, especially in the case of EUR/USD where the recent upward trend has had a lot of momentum behind it.

It might take a further development in price action to determine if the dollar bounce will turn in anything meaningful.

For the session ahead, the 1.1735 level appears to be significant. The price point stems from a weekly chart where it has acted as both support and resistance in the past.

A sustained move below it could clear the path for a broader correction. Considering the trend, buyers may look to defend the level. It may take a move above 1.1850 for the upward momentum to return.

Bottom Line

  • Economic data from the euro area was positive although the exchange struggled to gain following the report.
  • The level to watch in the session ahead is 1.1735. It can act as a line in the sand for a directional bias for today’s session.
  • The US will release it’s latest manufacturing PMI data in early North American trading.

For a look at all of today’s economic events, check out our economic calendar.

GBP/JPY Weekly Bullish Breakout Signals Target at 155

The GBP/JPY is breaking above the key resistance trend line (dotted purple). This occurred after a double bottom around the 125 support. Can the GJ now test the previous top?

Price Charts and Technical Analysis

GBP/JPY Weekly Chart

The GBP/JPY seems ready for a bullish wave C (pink) due to the break above the 21 ema zone and resistance trend line. But the long-term MAs remain bearish. A new break is needed before a full upswing can be confirmed. A bullish break, flag, and continuation would confirm that upside (green checks). The main target could be 155 at the previous top.

Price action should remain last week’s candle low and overall support zone (blue lines). A bearish breakout below that support zone invalidates the bullish outlook (red x). A bearish breakout could trigger an unexpected bearish swing (dotted orange arrow). In that case, price could build an inverted head and shoulders pattern.

GBP/JPY Weekly Chart

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

For a look at all of today’s economic events, check out our economic calendar.

 

Latest Surge in Risk Assets to Be Challenged by Data and US Congress

US futures are steady as investors have lots to digest including important jobs figures, renewed US-China tensions and a key ruling on the new stimulus package from Congress.

In currency markets, the Dollar could not maintain an early morning rally. After marching towards 93.70, the DXY returned to where it started at 93.45. Low interest rates remain the biggest challenge to attracting Dollar inflows, with current 10-year bond yields stuck near 0.5% and real yields sitting around -1% when deducting for inflation. Large twin deficits along with negative real rates is a depressing formula for any currency, even if it is assumed to be a safe haven one. However, given the bearish bet on the USD has risen again to the largest overall since April 2018, we may see some sort of short squeeze going forward leading to some spikes in the US currency.

With the earnings season coming closer to an end, the focus will shift back to data and the decision by Congress on the next Covid-19 stimulus package. Discussions between the Democrats and Republicans are making some progress especially as both are on same page with regards to the direct cash payment of $1,200 to Americans, but unemployment assistance remains a key sticking point and a middle ground doesn’t seem to have been reached yet. Democrats want to keep the federal assistance as the previous package of $600 per week, while the White House is calling for a third of this amount. The longer the disagreement persists, the higher the chances of a market correction.

While most agree that the bottom in economic activity is behind us, the question has now become whether the US recovery is showing signs of cracking and the Non-Farm Payrolls figure due to be released on Friday will probably answer this. After 7.5 million jobs were created over the months of May and June following 22 million job losses in the prior two months, markets expect another 1.65 million jobs to have been added in July. However, expectations vary greatly with some even expecting a contraction given two consecutive weeks of increases in initial jobless claims. The way forward is likely to be bumpy as several US states are re-imposing lockdown measures after spikes in Covid-19 cases. This probably won’t show up in the data until the release of the August figures in September. Investors should also keep their eyes on other US data releases out this week for further evidence on whether the economic recovery is stalling including manufacturing and services activity, motor vehicle sales, factory orders and the weekly initial jobless claims.

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OIL Break Below 38.80 is Possible as the Price is Bearish

Oil has moved lower making a swing below 40, which implies a possible bearish continuation. We could see 38.80.

The POC zone is 40.50-41.00. We might see a move towards the POC zone first before the next rejection. If not then a direct drop might happen from 40.00. A bearish rejection off the zone should be targeting 39.60 and 39.31. A retest of 38.80 is important. Continuation below towards 37.26 at the break of 38.80. Only above 41.00, bears will be in danger.

The Analysis has been done with the CAMMACD.Core and Sit Systems

For a look at all of today’s economic events, check out our economic calendar.

 

GBP/USD Daily Forecast – U.S. Dollar Tries To Gain More Ground

GBP/USD Video 03.08.20.

U.S. Democrats And Republicans Fail To Reach Coronavirus Aid Package Deal

GBP/USD trades near 1.3100 as the U.S. dollar is mostly flat against a broad basket of currencies amid continued negotiations about the new U.S. coronavirus aid package.

The U.S. Dollar Index has stabilized near 93.5 after rebounding from recent lows at 92.5. Meanwhile, Republicans and Democrats continued their negotiations during the weekend but failed to reach a deal.

According to White House Chief of Staff Mark Meadows, Republicans wanted to extend some federal unemployment benefits while continuing negotiations on the whole package but Democrats wanted a comprehensive deal.

He also added that he was not optimistic that negotiations would successfully conclude in the near term.

Failure to extend special unemployment benefits poses risks for consumer activity which is the main driver of the U.S. economy. On the other hand, excessive money-printing could put additional pressure on the U.S. dollar and its status as the world’s main reserve currency.

Today, traders will have to digest UK Manufacturing PMI and U.S. Manufacturing PMI reports for July.

UK Manufacturing PMI is projected to increase from 50.1 in June to 53.6 in July.

In the U.S., Manufacturing PMI is expected to grow from 49.8 to 51.3. Numbers above 50 show expansion.

Manufacturing was not hit as hard as services during the current crisis so there’s a good chance that today’s data will be optimistic and provide some additional support to riskier assets.

Technical Analysis

gbp usd august 3 2020

GBP/USD tries to stabilize near 1.3100 following the major upside move.

In case GBP/USD manages to settle above 1.3100, it will have a good chance to test the nearest resistance level at 1.3200.

On the support side, the nearest support level is located at 1.3070. GBP/USD has already made an attempt to settle below this level but this attempt was unsuccessful.

If GBP/USD settles below 1.3070, it will head towards the next support level at 1.3020.

Currently, GBP/USD continues to move in a rather tight upside channel, and the upside trend remains intact.

However, RSI is still in the overbought territory, suggesting that risks of correction remain elevated.

For a look at all of today’s economic events, check out our economic calendar.

Marathon Petroleum to Sell Speedway for $21 billion to 7-Eleven; Target Price $48

Marathon Petroleum, an American petroleum refining, marketing, and transportation company, announced that it has entered into an agreement with 7-Eleven, a wholly-owned indirect subsidiary of Seven & i Holdings, to sell its Speedway gas stations in the United States for $21 billion in cash.

The $21 billion valuation represents a significant value unlock. The 100% cash transaction immediately captures value for MPC shareholders relative to potential valuation risks of other alternatives, the company said.

“We estimate a 17% equity valuation uplift from the transaction with proceeds evenly going to buybacks and debt, though that allocation will not be decided until deal close. Rating and price target under review,” said Jason Gabelman, equity analyst at Cowen.

“We expect MPC to target net debt at <1x mid-cycle EBITDA post-sale. We estimate $2.2 billion mid-cycle refining EBITDA plus $2.2 billion distributions from the MLP. This could mean $7.5 billion of sale proceeds go to debt paydown with the remainder to share buybacks, though one could argue the stable distributions from the MLP mean a higher debt multiple. The equity value change until deal close will impact how many shares will ultimately be repurchased and could be a driver of value creation from this sale.”

The deal is expected to result in after-tax cash proceeds of approximately $16.5 billion. Marathon Petroleum expects to use the proceeds to both repay debt to protect its investment-grade credit profile and return capital to shareholders.

The deal is anticipated to close in the first quarter of next year, subject to customary closing conditions and regulatory approvals. 7-Eleven said the agreement will help bring the total number of stores in the world’s biggest economy and Canada to nearly 14,000.

“We think this is a positive outcome for Marathon Petroleum, with the company receiving a price that’s above expectations (which we peg at ~$17-18 billion pre-tax), crystallizing Speedway value immediately, and bringing in more cash for greater financial flexibility (vs. a spin),” said Benny Wong, equity analyst at Morgan Stanley.

Following this deal, Seven & i shares fell more than 8% to JPY 2937.5 on Monday, the biggest one-day drop since March. Marathon Petroleum shares rose 0.5% to $38.38 in after-hours trading.

Executive comment

“This transaction marks a milestone on the strategic priorities we outlined earlier this year,” Michael J. Hennigan, president and chief executive officer said a press release.

“Our announcement crystalizes the significant value of the Speedway business, creates certainty around value realization and delivers on our commitment to unlock the value of our assets.  At the same time, the establishment of a long-term strategic relationship with 7-Eleven creates opportunities to improve our commercial performance.”

Marathon Petroleum stock forecast

Eleven analysts forecast the average price in 12 months at $47.09 with a high forecast of $61.00 and a low forecast of $38.00. The average price target represents a 23.27% increase from the last price of $38.20. From those 11, nine analysts rated ‘Buy’, two analysts rated ‘Hold’ and none rated ‘Sell’, according to Tipranks.

Marathon Petroleum had its price target trimmed by Scotiabank to $48 from $51 The firm currently has a sector outperform rating on the oil and gas company’s stock. Mizuho lowered its price target to $52 from $54. Jefferies cuts target price to $48 from $50.

Several other equity analysts have also updated their stock outlook. Jefferies Financial Group increased their target price on shares of Marathon Petroleum to $48.00 from $50.00. Morgan Stanley target price is $48 with a high of $60 under a bull scenario and $28 under the worst-case scenario. We think it is good to hold for now as 100-day Moving Average signals a mild selling opportunity.

Analyst comment

“Marathon Petroleum offers multiple ways to win. We expect MPC to benefit from the overall decline in crude prices, although we caution refined product demand risk could weigh on valuation. That said, the stock offers idiosyncratic upside as the company is undergoing a strategic review to unlock discounted value, which includes spinning out Speedway,” Morgan Stanley’s Wong said.

“We see a SoTP upside to ~$50/shr. Our SoTP is as follows: we assign $24/shr to retail, $21/shr to midstream, and $24/shr to refining. Adjusted for assets/liabilities, net debt, and synergies, our SoTP suggests a ~$51/shr valuation (>47% upside),” he added.

Upside and Downside Risks

Oil prices stay depressed or decline further; Successful spin-off of Speedway retail fuel business; Potential separation of MPLX and conversion to a C-Corp; Material widening of sweet-sour differentials, Morgan Stanley highlighted as upside risks to Marathon Petroleum.

Demand risk and Sweet-sour differentials narrow materially are two major downside risks.

Can Oil Register a 4th Consecutive Monthly Gain?

Recall that more supply is entering the markets this month, after OPEC+ agreed to ease up on its production cuts from the 9.6 million barrels a day in July to 7.7 million in August. Investors may begin to grow concerned that global demand may not yet be solid enough to soak up the restored supply.

At the time of writing, Brent Oil is dipping further away from the psychologically-important $45/bbl level.

Meanwhile WTI crude is threatening to falter back into sub-$40 territory and test its 5-day simple moving average as a support level.

The PMI readings from around the world due on Monday would offer the latest signals about the state of the global economy. China’s July Caixin PMI posted a better-than-expected reading of 52.8, compared to the median estimate of 51.1. Having now registered a PMI reading above 50 for a third consecutive month, China’s manufacturing conditions are firmly in expansionary territory. However, other major economies must also report a similar trend today in order to offer Oil bulls some measure of solace.

Considering the incoming OPEC+ supply, along with the still-tentative recovery in global demand, markets are already expecting Saudi Aramco to indicate that the world isn’t yet ready to tolerate higher prices. The oil giant is slated to lower its selling prices of Arab Light crude to Asian customers for the first time since May in order to help offset the incoming supply. Such a move would suggest that further gains for Oil would be much harder to come by, potentially bringing an end to Oil’s run of three consecutive months of gains. The official September selling price is set to be unveiled within the first five days of this month.

As things stand, major economies across Asia and the Americas are struggling to break out of the pandemic’s grip, which in turn is choking economic activity and the demand for Oil. The longer that daily lives are disrupted by the pandemic, such as commuters being barred from driving to work or to send students to school, the longer Oil prices risk unravelling recent gains.

At least in the interim, Oil prices can enjoy support from the weaker US Dollar and any bouts of risk-on sentiment, as the world continues to wait for more clarity on the global economic outlook.

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Bitcoin and Ripple’s XRP Weekly Technical Analysis – August 3rd, 2020

Bitcoin

Bitcoin rallied by 11.11% in the week ending 2nd August. Following on from a 7.77% gain from the previous week, Bitcoin ended the week at $11,053.8.

It was a bullish week for Bitcoin and the broader market. Bitcoin slipped to a Monday intraweek low $9,944.9 before making a move.

Steering clear of the first major support level at $9,339, Bitcoin rallied to a Sunday intraweek high $12,097.0.

Bitcoin broke through the week’s major resistance levels before sliding back to sub-$11,000 levels.

Bitcoin fell back through the third major resistance level at $11,835 and the second major resistance level at $10,800.

Steering well clear of the first major support level at $9,339, however, Bitcoin broke back through the first major resistance level.

5 days in the green that included an 11.01% rally on Monday and 4.01% gain on Saturday delivered the upside for the week. A 6.36% slide on Sunday reversed some of the gains, however.

For the week ahead

Bitcoin would need to avoid a fall through $11,032 pivot to bring the first major resistance level at $12,119 into play.

Support from the broader market would be needed for Bitcoin to break out from last week’s high $12,097.

Barring another extended crypto rally, the first major resistance level would likely cap any upside.

In the event of a breakout, Bitcoin could take a run at the second major resistance level at $13,184.

Failure to avoid a fall through the $11,032 pivot would bring support levels into play.

Barring a broad-based sell-off, Bitcoin should avoid sub-$10,500 levels and the first major support level at $9,967.

At the time of writing, Bitcoin was up by 0.87% to $11,150.0. A mixed start to the week saw Bitcoin fall to an early morning low $10,943 before rising to a high $11,200 on Monday.

Bitcoin left the major support and resistance levels untested at the start of the week.

BTC/USD 03/08/20 Weekly Chart

Ripple’s XRP

Ripple’s XRP surged by 33.50% in the week ending 2nd August. Following on from a 7.8% gain from the previous week, Ripple’s XRP ended the week at $0.28764.

A mixed start to the week saw Ripple’s XRP fall to a Monday intraweek low $0.20949 before making a move.

Steering clear of the first major support level at $0.19669, Ripple’s XRP rallied to a Sunday intraweek high $0.32620.

Ripple’s XRP broke through the major resistance levels sliding back to sub-$0.25 levels.

The pullback saw Ripple’s XRP fall through the third major resistance level at $0.27739 and the second major resistance level at $0.24422.

Finding late support, however, Ripple’s XRP broke back through the second major resistance level to end the week at $0.28 levels.

6-days in the green that included a 12.01% rally on Saturday delivered the upside for the week.

For the week ahead

Ripple’s XRP would need to avoid a fall through the $0.27434 pivot to support a run at the first major resistance level at $0.33950.

Support from the broader market would be needed, however, for Ripple’s XRP to break out from last week’s high $0.32620.

Barring another extended crypto rally, the first major resistance level would likely cap any upside.

In the event of another breakout, the second major resistance level at $0.39135 and $0.40 levels could come into play.

Failure to avoid a fall through the $0.27434 pivot would bring the first major support level at $0.22249 into play.

Barring an extended broader-market sell-off, however, Ripple’s XRP should steer of sub-$0.24 levels in the week.

At the time of writing, Ripple’s XRP was up by 2.59% to $0.29510. A mixed start to the week saw Ripple’s XRP fall to an early Monday low $0.28383 before rising to a high $0.29958.

Ripple’s XRP left the major support and resistance levels untested at the start of the week.

XRP/USD 03/08/20 Daily Chart

European Equities: Economic Data and the U.S Stimulus Bill in Focus

Economic Calendar:

Monday, 3rd August

Spanish Manufacturing PMI (Jul)

Italian Manufacturing PMI (Jul)

French Manufacturing PMI (Jul) Final

German Manufacturing PMI (Jul) Final

Eurozone Manufacturing PMI (Jul) Final

Wednesday, 5th August

Spanish Services PMI (Jul)

Italian Services PMI (Jul)

French Services PMI (Jul) Final

German Services PMI (Jul) Final

Eurozone Markit Composite PMI (Jul) Final

Eurozone Services PMI (Jul) Final

Eurozone Retail Sales (MoM) (Jun)

Thursday, 6th August

German Factory Orders (MoM) (Jun)

IHS Markit Construction PMI (Jul)

Friday, 7th August

German Industrial Production (MoM) (Jun)

German Trade Balance (Jun)

French Non-Farm Payrolls (QoQ) (Q2)

The Majors

It was another bearish day for the European majors on Friday, with the CAC40 sliding by 1.43% to lead the way. The DAX30 and EuroStoxx600 weren’t far behind, with losses of 0.54% and 0.89% respectively.

Negative sentiment towards the economic outlook weighed as the markets responded further to dire 2nd quarter GDP numbers.

The disappointing figures together with the upward trend in new COVID-19 cases continued to raise doubts over a speedy economic recovery.

In the week, Spain and the UK were amongst countries having to reintroduce containment measures.

The negative sentiment ultimately overshadowed upbeat tech earnings results on the day.

The Stats

It was another busy day on the Eurozone economic calendar. Key stats included 2nd quarter GDP from France and the Eurozone. June retail sales figures from France and Germany and Eurozone and member state prelim inflation figures were also in focus.

It was the GDP numbers that weighed, however. In the 2nd quarter, the French economy contracted by 13.8%, with the Eurozone economy contracting by 12.1%.

German retail sales rose by 5.9% in June, following a 12.7% jump in May, with French consumer spending up by 9.0%. In May, French consumer spending had surged by 37.4%.

While both sets of numbers came in ahead of forecasts there were not good enough to shift the mood.

From the U.S

Economic data included June’s personal spending and inflation figures. While inflationary pressures eased, personal spending was on the rise at the end of the quarter.

The increase was not enough to ease concerns over the U.S economic outlook, however.

Personal spending rose by 5.6%, while the annual rate of inflation softened from 1.0% to 0.90% In May, personal spending had jumped by 8.5%.

Late in the European session, finalized consumer sentiment figures were revised down, adding to the market angst.

The Market Movers

For the DAX: It was another particularly bearish day for the auto sector on Friday. Continental and Volkswagen slid by 5.00% and by 4.39% to lead the way down. BMW and Daimler saw more modest losses of 3.85% and 3.67% respectively.

Volkswagen continued to struggle after having reported an operating loss for the 1st half and a dividend cut on Thursday.

It was a mixed day for the banks, however. While Deutsche Bank fell by 0.38%, Commerzbank rose by 1.02%.

From the CAC, it was another bearish day for the banks. Soc Gen and Credit Agricole both fell by 1.43%, with BNP Paribas falling by 0.77%.

It was a more bearish day for the French auto sector. While Peugeot slid by 3.19%, Renault tumbled by a further 7.86% following a 9.26% slide on Thursday.

Air France-KLM joined the broader pack, falling by 2.35%, with Airbus SE ending the day down by 2.10%

On the VIX Index

It was a back into the red for the VIX on Friday. Partially reversing a 2.74% gain from Thursday, the VIX fell by 1.21% to end the day at 24.46.

The downside came as the U.S equity markets brushed off dire economic data in response to positive tech earnings results.

The S&P500 and NASDAQ rose by 0.77% and by 1.49% respectively, with the Dow gaining 0.44%.

VIX 03/08/20 Daily Chart

 

The Day Ahead

It’s a relatively busy day ahead on the Eurozone economic calendar. Key stats July manufacturing PMIs from Italy and Spain.

Finalized PMIs are also due out of France, Germany, and the Eurozone.

While the markets will focus on Germany’s numbers, expect Italy and the Eurozone’s PMIs to also influence.

From the U.S

The markets preferred ISM Manufacturing PMI and finalized Market Manufacturing PMI figures are due out.

Expect the ISM survey figures to have the greatest impact on the markets.

Away from the economic calendar, corporate earnings, and updates from Capitol Hill on the passage of the COVID-19 stimulus package will also influence.

From the weekend, COVID-19 updates were negative, however, which will test the markets early on.

The Latest Coronavirus Figures

According to figures at the time of writing, the number of new coronavirus cases rose by 249,532 to 18,231,469 on Sunday. On Saturday, the number of new cases had risen by 250,087. The daily increase was lower than Saturday’s rise while up from 213,347 new cases from the previous Sunday.

Germany, Italy, and Spain reported 623 new cases on Sunday, which was down from 707 new cases on Saturday. On the previous Saturday, 663 new cases had been reported.

From the U.S, the total number of cases rose by 50,702 to 4,813,647 on Sunday. On Saturday, the total number of cases had increased by 60,171. On Sunday, 26th July, a total of 56,130 new cases had been reported.

The Futures

In the futures markets, at the time of writing, the DAX was up by 7.5 points, while the Dow was down by 45 points. A pickup in manufacturing sector activity in China provided the DAX with support ahead of the open.

For a look at all of today’s economic events, check out our economic calendar.

Litecoin, Stellar’s Lumen, and Tron’s TRX – Daily Analysis – August 3rd, 2020

Litecoin

Litecoin slid by 8.02% on Sunday. Reversing a 6.01% rally from Saturday, Litecoin ended the week up by 17.95% to $56.77.

It was a mixed start to the day. Litecoin rallied to an early morning intraday high $65.31 before hitting reverse.

Litecoin broke through the first major resistance level at $63.51 before tumbling to an early morning intraday low $52.70.

The second major resistance level at $65.29 capped the upside in the early morning.

Litecoin fell through the first major support level at $58.79 and the second major support level at $55.85.

Avoiding sub-$55 support levels, Litecoin briefly revisited $59 levels before falling back through the first and second major support levels.

A late move back through the second major support level reduced the deficit on the day.

At the time of writing, Litecoin was up by 0.93% to $57.30. A mixed start to the day saw Litecoin fall to an early morning low $55.72 before striking a high $57.60.

Litecoin left the major support and resistance levels untested early in the day.

LTC/USD 03/08/20 Hourly Chart

For the day ahead

Litecoin would need to move through the $58.26 pivot to support a run at the first major resistance level at $63.82.

Support from the broader market would be needed, however, for Litecoin to break back through to $60 levels.

Barring another crypto rally, the first major resistance level would likely cap any upside.

Failure to move through the $58.26 pivot would bring the 23.6% FIB of $54 and the first major support level at $51.21 into play.

Barring an extended crypto sell-off, however, Litecoin should steer clear of sub-$50 levels. The second major support level sits at $45.65.

Looking at the Technical Indicators

First Major Support Level: $51.21

First Major Resistance Level: $63.82

23.6% FIB Retracement Level: $54

38.2% FIB Retracement Level: $78

62% FIB Retracement Level: $104

Stellar’s Lumen

Stellar’s Lumen slid by 4.85% on Sunday. Partially reversing a 10.76% rally from Saturday, Stellar’s Lumen ended the week up by 3.29% to $0.10265.

A mixed start to the day saw Stellar’s Lumen rise to an early morning intraday high $0.11585 before hitting reverse.

Stellar’s Lumen broke through the first major resistance level at $0.11191 before sliding to an early morning intraday low $0.090025.

The reversal saw Stellar’s Lumen fall through the first major support level at $0.10029 and the second major support level at $0.092920 and 23.6% FIB of $0.0928.

Finding support, Stellar’s Lumen briefly revisited $0.1075 levels before falling back through the first major support level to sub-$0.10 levels.

Finding late support, however, Stellar’s Lumen moved back through the first major support level to reduce the deficit.

At the time of writing, Stellar’s Lumen was up by 2.21% to $0.10492. A mixed start to the day saw Stellar’s Lumen fall to an early morning low $0.10199 before striking a high $0.10573.

Stellar’s Lumen left the major support and resistance levels untested early on.

XLM/USD 03/08/20 Hourly Chart

For the day ahead

Stellar’s Lumen would need to avoid a fall back through the $0.10284 pivot to support a run at the first major resistance level at $0.11566.

Support from the broader market would be needed, however, for Stellar’s Lumen to break back through to $0.11 levels.

Barring a broad-based crypto rally, the first major resistance level would likely limit any upside.

Failure to avoid a fall back through the $0.0.10284 pivot would bring the first major support level at $0.08983 into play.

Barring another extended crypto sell-off, however, Stellar’s Lumen should steer of sub-$0.090 levels on the day.

The 23.6% FIB of $0.09280 should limit any downside on the day.

Looking at the Technical Indicators

First Major Support Level: $0.08983

First Major Resistance Level: $0.11566

23.6% FIB Retracement Level: $0.09960

38% FIB Retracement Level: $0.14336518

62% FIB Retracement Level: $0.2050

Tron’s TRX

Tron’s TRX slid by 7.24% on Sunday. Reversing a 3.92% gain from Saturday, Tron’s TRX ended the week up by 2.29% to $0.019013.

Tracking the broader market, Tron’s TRX rallied to an early morning intraday high $0.021237 before hitting reverse.

Coming up against the first major resistance level at $0.02101, Tron’s TRX tumbled to an early intraday low $0.017800.

Tron’s TRX fell through the first major support level at $0.01969 and the second major support level at $0.01892.

Steering clear of the third major support level at $0.01760, Tron’s TRX revisited $0.01960 levels before sliding back.

The first major support level pinned Tron’s TRX back.

At the time of writing, Tron’s TRX was up by 1.90% to $0.019375. A mixed start to the day saw Tron’s TRX fall to an early morning low $0.018847 before rising to a high $0.019375.

Tron’s TRX left the major support and resistance levels untested early on.

TRX/USD 03/08/20 Hourly Chart

For the Day Ahead

Tron’s TRX would need to avoid a fall back through the $0.01935 pivot level to support a run at the first major resistance level at $0.02090.

Support from the broader market would be needed, however, for Tron’s TRX to break out back through to $0.020 levels.

Barring an extended crypto rally, the first major resistance level would likely cap any upside.

Failure to avoid a fall back through the $0.01935 pivot level would bring the first major support level at $0.01746 into play.

Barring another extended crypto sell-off, however, Tron’s TRX should avoid a return to sub-$0.018 levels on the day.

Looking at the Technical Indicators

First Major Support Level: $0.01746

First Major Resistance Level: $0.02090

23.6% FIB Retracement Level: $0.0322

38.2% FIB Retracement Level: $0.0452

62% FIB Retracement Level: $0.0663

Please let us know what you think in the comments below

Thanks, Bob