Chapter 6 “Expanding Trade.”

The Story?

But if there a story to be told, its the Phase One trade deal brings with it several issues for global trade. First, existing tariffs on the majority of Chinese goods remain in place. More importantly, if the overly ambitious purchase targets are reached, it suggests other countries will lose out as Chinese demand for their products rotates towards the US.

Still, the questions around the US tech in the supply chain remains unanswered. So, can China realistically hit these targets, especially when US firms are more motivated to produce abroad while China is trying to wean itself off a dependence on US technologies? Or does it even matter?? But it’s all here in black and white The Trade Agreement  chapter 6 is worth a read.  

But Phase one is not BAD  for risk and should boost global growth, plus the Feds will add all the money in the world to keep risk sentiment afloat, and when the ship lists, remember its an election year when US policy always turns positive. So onwards and upwards!!

China Credit

China December aggregate financing CNY2,100.0 bn vs. CNY1,650.0 bn consensus. December new yuan loans CNY1,140.0 bn vs. CNY1,200.0 bn consensus. December M2 money supply +8.7% y/y vs. +8.3% consensus. No noticeable impact on the forward market so far, although rates could nudge a little bit higher.

Asia currency markets

Fading short-term trade-war concerns and evaporating geopolitical risks continue to bolster global equity and credit markets. However, FX markets are more cautious; the rally in Asian currencies took a breather today.

The Chinese Yuan 

There was a test lower for USDCNH on the open, but no follow-through.

As we anticipated on this morning note, some clients are taking profit on their USD/EM downside positions, mainly in USDCNH and USDKRW, on the signing of the trade deal. I also think the proximity to LNY (I know it’s a week away) is causing traders to pare back risk as we know RMB liquidity will be sparse. With bullish targets reached, it’s unlikely we will see any significant move lower for no other reason than P2 discussion are unlikely to start until the LNY has passed.

My clients were asking me why I closed out of CNH so early, partly because I think we’ve hit a temporary floor on USDNCH, but primarily I don’t want to end up paying through the nose on a one-week funding squeeze carry. It could ease, but then again, it might not.

Plus, I’m weighing the odds of going dollar strategically long for only the 2nd time vs. the CNH since October 11. I think there is more risk tail risk than meets the eye, but no rush to trade given EM Asia vols continue moving lower across the board with the selloff accelerating in the last two days. One-month USDCNH is now at 3.9 from 4.6 at Wednesday’s open, 1m USDKRW at 6.0 from 6.6

The Korean Won

USDKRW is trading bid, with chatter on the street of corporate buying going through at the onshore fix market in the morning

The Indonesian Rupiah

Indonesian President Jokowi giveth and taketh after USDIDR gapped down to new lows as local bonds rally. President Jokowi hit the IDR rally pause button, saying a quick rupiah appreciation may hurt exports, so they must be cautious of rapid currency gains. Which immediately raised the yellow intervention flags and one-month USDIDR trades to 13700 from 13650 on this.

G10 Currency Markets

There has been a ton of USD selling across the board in the past 24 hours, but the market reaction has been “Meh.”

The Swiss Franc

Yesterday was the first day this year massive USD selling against EUR and CHF went through. The Euro flow is entirely uninteresting, given the tight follow-through ranges. But the fact there is any CHF buying at these lofty levels is the surprise indicating a considerable break down in the correlation with risk asset, which is both odd and bewitching. After all, positioning does seem to be the wrong way, but the resilience is unlikely to be offset by the SNB after the US Treasury report.  

British Pound 

Weaker UK inflation data yesterday has helped nudge market expectations of a BoE rate cut this month to above 65%. However, the UK PMIs on January 24 will remain important ahead of the MPC meeting on January 30. But I continue skeptical about building shorts as if we get a UK rate cut, it would not be the start of a cycle, but instead, a one-and-done insurance move before Mark Carney clocks out.

Despite the dovish BoE retort and weak data, policy transmission to FX markets has been poor lately. But the market could be getting that sense of déjà vu all over again that the opportunity of capital flows drifting back to the UK in 2020 is too big to ignore.

UBS Strategist Lefteris Farmakis suggests Governor Carney, rubberstamps a return to the ‘old normal’ for sterling, where the influence of economic data on monetary policy is its primary driver, and there you have it apparently  

Gold markets

The Stone Roses “Fools Gold” long hedge unwind trade is trying to unfold as gold is down around $5.00 buck from entry, although nothing to get excited about until the market clears the chunky stack of bids at $1550. So far, the 50 and 200 EMA have given way, but the bids are reasonably impressive down here.

Although we saw large dollar selling yesterday, there was a limited reaction, and at the heart of the trade deal, in my view lies a mildly positive dollar outlook on the margins over the short term. And I think this will be slightly negative for gold, but ultimately for gold, it’s where yields go and how the economic data evolves.

Time for the Stone Roses Trade, long gold hedge unwind “Fools Gold”?

Not all signals are aligned as risk sentiment endures, and while the long-term outlook for gold remains constructive, still, I’m struggling with the long gold strategy at the current price levels (1557-1558). In my view, the approach remains completely ill-defined at the moment, especially with S &P 500 making record highs. Until the yield on 10-year Inflation-indexed Treasuries starts to flash buying signals, bid on a deep dips remains a preferred strategy.

CTA’s are maxed long gold in their gold strategies, ETF positioning is stretched as is the IMM and given the Big gold trading banks’ ability to ramp up a gold paper and free up margins, the market could be ripe for a reversal if US bond yields don’t move lower quickly. It wouldn’t be the first time we’ve seen this set up in the last 4-6 weeks.

This article was written by Stephen Innes, Asia Pacific Market Strategist at AxiTrader

Strong Swiss Franc Might Become Tougher Challenge for SNB

The Swiss Franc strengthened beyond 1.075 per Euro for the first time since April 2017 on Wednesday after the U.S. Treasury put the nation back on its currency watch list and urged the country to adjust its macroeconomic policies.

In its report, the Treasury called on Switzerland to “more forcefully support domestic economic activity.” It said the country has been under using fiscal policy to spur growth. Switzerland has interest rates of minus 0.75%.

“As monetary policy approaches its limits, Treasury urges Switzerland to use its ample fiscal space…to cut taxes and pursue structural reforms to spur investment,” the report said.

On Thursday at 05:22 GMT, the EUR/CHF is trading 1.0755, up 0.0007 or +0.06%.

EURCHF
Monthly EUR/CHF

Swiss National Bank Responds

Some say Washington’s complaints over Switzerland’s currency policy may actually make it harder for the Swiss National Bank (SNB) to stay out of the foreign-exchange market. According to Bloomberg, strategists say Switzerland’s growth and inflation data may leave the SNB no choice but to buy foreign currency in an effort to curtail the Franc’s advance.

SNB data in August suggested the bank had pumped billions of Francs into markets, buying foreign currency in an effort to curb the Franc’s strength. A stronger Franc can make it harder for Swiss companies to export their products.

In response to Washington’s declaration, the SNB said on Tuesday that its interventions were designed only to offset the ill effects of too strong a currency. The interventions, which aren’t aimed at giving the nation a competitive advantage, are disclosed in an annual report, the SNB said in a statement.

“They are not aimed at conferring advantages on Switzerland by undervaluing the franc,” the SNB said.

Traders Bracing for Volatile Swiss Franc Swings

In the aftermath of the U.S. Treasury Department’s announcement on Monday, Forex traders are bracing for swings in the Swiss Franc in the weeks ahead. One-month implied volatility in the Euro/Franc Forex pair climbed to its highest level in nearly two months on Wednesday, up by as much as 11 basis points to 4.27%, according to Bloomberg.

Traders Challenging SNB to Make a Move

The U.S. decision “encouraged market participants to test the SNB’s appetite to keep intervening to dampen Swiss Franc strength,” said Lee Hardman, a strategist at MUFG Bank Ltd. in London. “We still think the SNB will continue to intervene after the U.S. Treasury announcement, but it has created some additional uncertainty in the near-term which the market is testing now.”

Slim Pickings

However, removing China from the currency manipulator list, a thorny issue for the mainland , eliminates one of the significant obstacles in the way to the next phase of the comprehensive agreement.

On the more one-sided tails for Asian FX, particularly in the more trade/ growth/tech-oriented North. China is expected to toe the line on any weakness in the RMB as we move forward to negotiating Phase Two.

Meanwhile, a more on the nose surprise, like an explicit roadmap for a further rollback in tariffs, could open the way for more definite appreciation where the CNH and the KRW will shine.

The market is more convinced about the direction of travel than it is about the shape and form of the next step of the deal, so market momentum will be critical to sustaining the rally as will trade calming headlines. Of course, none of this would have been made possible without the Fed’s dovish impulse, and given the lack of policy uncertainly as we move through 2020, the “low for longer” narrative will continue to support risk markets.

So far, so good from corporate America with earnings beats from both JPMorgan and Citi. JPMorgan’s net income for 2019 rose 12% after making $8.5 bn in the fourth quarter, far better than the $7.45 bn expected by analysts who submitted forecasts to Bloomberg. Trading revenues rose 56% y/y to $5 bn, led by an 86% rise in fixed income.

Citi, meanwhile, posted quarterly revenue of $18.4 bn, well ahead of the $17.9 bn that Wall Street had expected and up 7% from a year ago.

Oil markets

After falling for the past few sessions, on the continued perception of easing tensions in the Middle East, Oil prices initially moved gingerly higher overnight on trade deal optimism. As well, traders received new bullish fundamental news from the demand side, with Chinese customs data showing crude imports were up 10% in 2019. And despite some base effect in the overall Import/Export data, overall, the data points to the domestic Chinese economy in a continuing uptrend helping sentiment ahead of the signing of a phase 1 trade deal today.

Investors are incredibly concerned about the well documented non-OPEC supplies coming to market in 2020, and those worries came to the fore as oil prices headed lower after a bearish to consensus inventory build was reported early this morning.

Gold markets

Safe-haven assets are again under pressure, with treasuries weaker across the curve. Gold weakens as risks recede but continue to find buyers on dips, and the thought of resurfacing of threats continues to support prices, but for the next little while, it’s hard to see gold markets trade anything but sideways.

Gold markets eased on the cusp of the “phase one” trade agreement between the US and China as equities are holding firm, and the USD remains stable in G-10.

No impulse for gold from the US CPI data as the inflation trend was broadly neutral for gold. According to the Commerce Department, headline CPI rose 0.2% m-o-m in December, which was just below consensus expectations of 0.3% (Bloomberg). Core CPI rose 0.1% m-o-m, which was also just below consensus expectations of 0.2%

Currency markets

The Euro

With all the demand for Yuan, why isn’t the EUR higher? This is the most asked question from my clients that are for the most part left scratching their heads as to why the USD is not weaker in G-10

US government’s public consultation on EU tariffs has closed, and the Trump administration’s action is imminent, which could end up one of the more significant tail risks for the Euro in months ahead. Bloomberg reported it best that the U.S., EU Square Up for Trade Brawl After Trump’s China Deal,” With that in mind. Europe’s trade chief flew into Washington yesterday for talks; ties have frayed over issues from French tax to aircraft

The Japanese Yen

Overall, nothing has changed, and buying on dips is still the way forward. Expect the buyer in around 109.80 with more interest ahead of 109.50 and only a break of 109.00 to change the current scenario. As for short term dynamic, USDJPY touched 110.22 yesterday on Fixing demand before giving way to export seller as 110 continued to be a fundamental psychological level for both exporters and speculator market participants

I was twitting to my Tokyo based FX trading followers yesterday as everyone was trading USDJPY, which is excellent to see.!! When I was trading forex USDJPY for Sumitomo Bank, there is a well-known but still amazingly persistent tendency for USDJPY to go down in Tokyo, possibly due to exporter and reversion selling and up in New York on speculative demand.

With Japanese investors very much involved again in USDJPY since the turn of 2020. And primary using reversion strategies, so it will be worth keeping an eye on this tendency. The USDJPY massive volumes going through the big Japanese domestic retail brokers very much influence USDJPY in Asia.

Euro Swissy cross

EURCHF spot has seen big selling on the US Treasury’s semi-annual report, which put Switzerland back on the monitoring list for currency manipulation, and gamma continues to go better bid. A lot of market participants are caught long and wrong EURCHF, but stops are thought to be 1.07 level.

The Yuan

The move has run further than most bullish expectations anticipated based on the current level or anticipated level of tariff rollback, suggesting markets could base and probably consolidated in the near term. But equity inflows have caught more than a few traders by surprise. However, yesterday Inflows into the onshore stock market slowed, and if this continues, it may take some pressure off of funding, and USDCNH could gravitate 6.9 level.

With funding, a bit tight due equity inflows, and possible CNH overshoot, as a result, Traders will be on the lookout for potential PBoC injections ahead of the Chinese New Year holidays. Because of the overshoot, profit-taking was always on the cards and provided an excellent level for long USDCNH defensive positioning as the market pivots to phase 2 with stops just below 6.85

The Ringgit

The Ringgit will continue to track the underlying movement of the Yuan, but inflows have dried up a bit on the cusp of the phase one deal as there remains a lot of uncertainty about the road map for step 2 in the trade deal process. But on a positive note, China is expected to toe the line on any weakness in the RMB as we move forward to negotiating Phase Two, which should provide a floor on any MYR weakness

This article was written by Stephen Innes, Asia Pacific Market Strategist at AxiTrader

Keep Calm, Less Than 24 Hours To Go.

I have no details at this time, but like yesterday’s opening narrative, I expect this to be the norm as we will be on heightened risk alert around possible rogue or proxy escalations given that  the increased level  of Anti-US sentiment is  running thick amid  Iran’s crescent of influence

Other than the widely expected announcement that a Chinese trade delegate led by Vice Premier Liu is heading Washington to sign in to affect the P1 trade deal, there hasn’t been a great deal else for markets to feed off. So, today’s critical payroll data comes as a most welcome distraction and will provide an essential update on the pace of US job gains. With US economic growth mostly dependent on the consumer, a healthy labor market is crucial to any constructive “risk-on” narrative. 

With the market backdrop remaining supportive – namely, improving macro, central bank easing, and receding tail risk around Trade, Brexit, and the Middle East, the path of least resistance remains up. 

If truth be told, I can’t wait for this hectic week to end, And I don’t think I’m alone in that view, so traders will be excused if they decided to sit this one out electing to do little more their pre NFP position housekeeping chores.

Oil markets

Oil markets are trying to stage a come back after prices continued to sell off hard in the wake of President Trump’s de-escalation White house address. And what seems to happen so often in oil markets, when things turn upside down, they head south in a big way. This week’s additional piling-on to the crude market was the EIA inventory data showing a surprise build in oil and more substantial than expected builds in gasoline and distillates.

The compounding effects have been pretty gnarly for oil bulls over the past 48 hours. And while it is challenging to quantify what, if any, residual risk premium is left priced into crude markets for political risk. However, given prices had retraced back to mid-December levels overnight. I think that infers that there is now very little risk premia left to sell-off.

The precedent of the attack on Abqaiq in September was the template the market has chosen to model this week with low 70’s on Brent capping out buying appetite and the initial price response reversing despite the lingering geopolitical effect likely to persist for a few months. So, with Brent at $65, the market is probably not fully pricing in supply risk factors. And with this risk skewed to the upside with the chance of proxy or rogue threat of disruption to physical supply still elevated, we could see a floor start to build around current levels. At the same time, traders will now turn the focus back on the relatively pedestrian views around trade and data, which remain positive for oil. 

Gold Markets

A key factor driving gold was the turnaround in oil as both commodities remain highly correlated to middle east geopolitical risk. But for gold, unlike oil markets, a variety of underlying uncertainties around data, trade, the Fed on hold narrative, and even the lingering effects of the middle east fracas has cushioned further losses so far. In addition, with the house in gridlock, President Trump has two areas of policy control under the commander in chief powers – trade and military policy. So, it could be wise to assume these areas will remain in the market’s focus for some time. And the uncertainty around these shifting dynamics given the President’s mercurial nature will likely support gold for the time being.

With that said, it might be worth keeping an eye on the new war powers measures legislation tabled by Pelosi, which would limit Trump’s power to take military action against Iran.

However, with a stronger USD, surging equities, and higher US yields greeting Asia market this morning it makes for a compelling reason to sell not buy gold.

Despite the fast money meltdown to $1541 oz on the back of a considerable “risk-on” cross-asset move, yesterday’s net flows were still into buying territory, so it seems like the technical levels appear to be good contrarian entry points for gold bulls. On the technical scrim, look for $1550/oz pivot with $1530 the next primary level of support.

Critical to that long gold view, traders are keeping an eye on the US dollar, which is currently being viewed as the global barometer of risk Finally, we could traders adopt a wait and see approach as the market pivots to tonight’s critical NFP report.

Currency markets

FX flows this week have been characterized by risk-on buying of USD.

One notable exception that I’m a bit puzzled by is CHF, which is trading very bid as large flows are going through the market during European hours despite the risk-on tone. Other than to suggest hedge funds view the franc as fair value at current levels and an excellent hedge against all the ills of the word, I’m a bit perplexed.

The Euro and Swiss Franc 

None the less, there has been a lot of interest in EURCHF topside structures. The feeling here is that since the Swissy benefitted disproportionately from recent tensions in the Middle East, perhaps because Japan’s dependency on oil imports from the Persian Gulf (c. 85%) made the yen an unreliable haven. So, as the middle east tensions de-escalated, the EURCHF could fly on a more pronounced long CHF unwind. But it hasn’t worked out that way so far. 

The Japanese Yen 

Long USDJPY has worked out well, and I still don’t see any reason not to play if from the long side. The markets should remain in buy on dip mode with stop losses getting moved up to 108.50 now. On the topside, I expect a lot of two-way interest to come in around 110, but it looks like a matter of time before we test it.

The Australian dollar and the Yuan 

If you were looking to get into the global growth for 2020 trade, it could be worth looking at the divergence in CNH and AUD as the Aussie has been hammered over the past four days on bushfires and Iran fears while the Yuan has remained firm. With the CNH likely to bounce after signing of the trade deal positively, the AUD shouldn’t be that far behind, and the correlation could play some significant catch up in the days ahead. Even more so with risk on lights flashing green

The Malaysian Ringgit 

With regional risk sentiment improving and the US-China trade deal still on course to be signed January 15, despite softer oil prices, the Ringgit will likely coattail the Yuan positive skew into the P1 trade dea

This article was written by Stephen Innes, Asia Pacific Market Strategist at AxiTrader

EUR/CHF is Bearish Below 1.1050

Dear Traders,

The EUR/CHF has reached the bearish trend line confluence and the price is overbought with ecs.Oscillator so we might see a drop.

1.1035-55 is the zone where the price should reject if it still wants to remain bearish. 1.1062 held the price from going up, and we could see a rejection — trend line with ecs. Oscillator dot show rejections so pay attention to 1.1022 as the first target. 1.1008 and 1.0994 are next if the trend holds. Only above 1.1080 we might see a deeper correction in the pair that might jeopardise the bearish trend.

The analysis has been done with the CAMMACD.MTF template.

For more daily technical and wave analysis and updates, sign-up up to our ecs.LIVE channel.

Many green pips,
Nenad Kerkez aka Tarantula FX
Elite CurrenSea

Key Risk Events for June

I hope it helps put a few key events on your radar I feel could shape the narrative.

Chart to watch

EURUSD (daily chart) – It’s hard to be long EURUSD with the ECB meeting in play tomorrow (21:45aest), but price is currently testing the neckline of the double bottom (1.1264), and with triple divergence, one of the best reversal indicators, potentially playing out, we could be eyeing a technical long for a move above 1.1400 shortly. This could have far-reaching implications for global markets, albeit a bit more work needs to take play out in the move. 

Looking ahead at the key risk events for June

ECB rate decision (6 June)

In reality, no one expects the ECB to change interest rates, but we could easily see Mario Draghi, once again, push out the banks forward guidance on when rate hikes are expected to go up. Currently, the bank has committed to keeping interest rates at current levels until at least the end-2019. However, the risk is that this guidance is pushed out into 2020, or we could even see the calendar-based guidance removed altogether. But a failure to push out its view on rates could be seen as a EUR positive.

EURCHF weekly – Will this bounce off or crash through key support?

If we look at EU inflation expectations (see chart below), an input the ECB look at closely, we can see expectations have fallen to 1.31% and the lowest levels since 2016. So, one questions how the ECB can be anything but dovish and is a growing consideration for the ECB, with the market questioning if we get colour on the ECB’s appetite to restart its asset purchase program. There will also be focus on any further clarity on the targeted liquidity program to European banks.
 
The ECB aggressively lowered its growth forecasts in the March meeting to 1.1%, so it would surprise if they went downgraded expectations again, but the market will be keen to assess any new changes to its growth and inflation forecasts.

(Source: Bloomberg)

May Nonfarm Payrolls (7 June 12.30 GMT)

US Nonfarm payrolls US Unemployment rate

Forecast 183,000

Previous 263,000

Forecast 3.60%

Previous 3.60%

Traders always anticipate the US non-farm payrolls report as a potential volatility event and given the growing calls for tougher economic conditions in the US, the last thing the USD bulls want to see is an unexpected deterioration in the labour market. We can see that the consensus estimate sits at a healthy 183,000 net jobs (economist range 215,000 to 80,000) created in May, which is a slight discount to the six-month average of 209,000 and one-year average of 214,000. As always, the magnitude of moves in the USD and US equity markets will be driven by the extent of the beat/miss relative to this consensus figure.

Daily chart of the USD index/USDX

 
The unemployment rate is probably the more influential variable to the Fed though, given the importance of the labour market for Fed thinking. Again, it seems unlikely to concern traders too much unless the unemployment rate comes in above of 3.8%, which would be a surprise and one would then have to consider the influence of the participation rate here. The fact that the US unemployment rate sits at a multi-decade low unemployment rate is simply not resulting in significant wage pressure, which is the backbone of the Fed’s assessment of inflation. With this in mind, keep an eye on average hourly earnings which is expected to remain at 3.2% and again, if this comes in hotter or colder could have an influence on the USD.

  • White histogram – Net monthly change in US payrolls
  • Red line – average hourly wages (YoY)
Source: Bloomberg

EU Summit (20 June)

With Mario Draghi due to step down as ECB president on 31 October, there is much speculation as to who could be Draghi’s replacement. The market has seen time-and-time again that when it comes to producing dovish surprises, Draghi wears the crown as king of the central bank doves. It has become almost too predictable that the EUR will fall in the wake of Draghi’s speeches. There is some market chatter that we could get an announcement of Draghi’s successor at this EU Summit, and with monetary hawk, Jens Weidmann considered a front runner, perhaps this Summit could prove to be a volatility event for the EUR and German DAX.

With genuine concern that the ECB lacks have the monetary toolkit to navigate the Eurozone through another major economic downturn, who leads this organisation really matters to FX pricing.

G20 meeting (28/29 June)

With trade relations at the epi-centre of markets, and Trump seemingly taking on all comers, the market is looking for a circuit breaker, and an excuse to cover shorts and put risk back on the table. While it hasn’t been confirmed, there is much speculation President Trump and Xi could meet face-to-face in Japan, with the risk skewed that we finally see some convergence in the narrative and a bond to achieve a deal. At this stage, Trump’s action is breeding huge uncertainty not just in markets, where the talk has moved from ‘if’ to ‘when’ we will see the first rate cut in this cycle from the Fed. But, more prominently at a corporate level, so how Trump interacts with Xi, should it play out makes this event a must-watch.

OPEC meeting (Vienna – 25/26 June)

Oil markets have been savaged since 23 April, with traders focused on poor China demand indicators, amid the backdrop of broad negative financial market sentiment, better supplied US inventories and supply dynamics driven by risks in Iran, Libya and Venezuela. Compounding the poor sentiment towards crude, Russian authorities have raised concerns about its ongoing commitment for production curbs of production.
 
With WTI crude (XTIUSD) eyeing a possible test of $50 and Brent $60, the market will be keen to assess if OPEC tries and get in front of the move lower and support prices. How crude tracks from here will not just have huge implications for equities, but, in FX markets, a lower oil price means headwinds for the NOK, CAD and a lower USDJPY, given the impact oil has on US inflation expectations. And, vice versa.

Source: Bloomberg

The June Federal Reserve meeting (19 June)

Arguably the marquee event through June, and an event risk for most of Pepperstone’s tradable markets. It’s incredible how quickly things have deteriorated, with US interest rates now pricing 2.5 rate cuts this year. While some would say the move in rates pricing has gone a little too far, we head into the June FOMC meeting with the implied probability of a cut now set at 20%, although it feels far too early to really expect a cut and we look at the 31 July FOMC meeting as a truly ‘live’ meeting, with expectations for a cut currently at 62%.

The influence US interest pricing is having on USDJPY

  • Red line – Interest rate cuts (basis points) priced between June and December 2019
  • Yellow line – USDJPY

Fed vice chair Richard Clarida offered insight in a speech (on 30 May) that the US economy “is in a good place”, however, he did caveat that by saying that should inflation remain below target and global conditions change, then the Fed should assess its policy stance. St Louis Fed president James Bullard went one further with narrative (on 3 June) that “a downward policy rate adjustment may be warranted soon to help re-centre inflation and inflation expectations at target and also to provide some insurance in case of a sharper-than-expected slowdown.”

Importantly, we have also heard from Fed governor Powell (4 June), who detailed “closely monitoring the implications of these developments for the US economic outlook and, as always, we will act as appropriate to sustain the expansion, with a strong labour market and inflation near our symmetric 2% objective.”

The idea the Fed will act as “appropriate” is interesting and while it doesn’t suggest the bank are looking at cutting anytime soon, if economics do respond then we will see cuts. The June FOMC meeting should explore this in more detail with the help of additional data.

Chris Weston, Head of Research at Pepperstone

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PrimeXBT Bridges the Divide Between Crypto and Traditional FX, Indices and Commodities Markets

As the demand for more sophisticated trading features grows within cryptocurrency markets, and as traditional traders continue to explore the unique opportunities present within digital currencies, PrimeXBT is now positioned as a global bridge between these two groups of asset classes.

PrimeXBT already provides unprecedented access to advanced cryptocurrency-based features and functionality such as the ability to short the top crypto-assets, ultra-fast order execution and aggregated liquidity from 12 sources concurrently.

The inclusion of traditional financial instruments signals the expansion of the platform’s offering to include access to opportunities at the cross-section between traditional and crypto-asset markets.

These new listings are now live at PrimeXBT and include:

Forex 

With global trading volumes of over $5 Trillion daily, PrimeXBT has tapped into the largest money markets in the world and now provides crypto-asset traders with access to global forex pairs, all within a single interface.

Forex has a low correlation with crypto-asset markets, providing traders with alternative trading options during downwards digital currency trends.  This allows traders to diversify strategies and holdings and provides a robust risk-balancing mechanism for portfolio selection.

PrimeXBT now lists forex trading pairs for:

  • USD (AUD/USD, EUR/USD, GBP/USD, USD/CAD, USD/JPY, USD/CHF)
  • EUR (EUR/AUD, EUR/CAD, EUR/CHF, EUR/GBP, EUR/JPY, EUR/USD)
  • AUD (AUD/USD, AUD/CHF, AUD/JPY, AUD/USD, EUR/AUD, GBP/AUD)
  • GBP (GBP/AUD, GBP/CAD, GBP/CHF, GBP/JPY, GBP/USD, EUR/GBP)
  • CHF (AUD/CHF, EUR/CHF, GBP/CHF, USD/CHF)
  • JPY (AUD/JPY, EUR/JPY, GBP/JPY, USD/JPY)
  • CAD (CAD/USD, EUR/CAD, GBP/CAD)

Unlike crypto, forex markets are low volatility. So to maximize profit potential PrimeXBT offers up to 1000x leverage to all FX trading pairs.

In addition to this, spot contracts for Spot Gold USD (XAG/USD) and Spot Silver USD (XAU/USD) are also now available on PrimeXBT.

Commodities

Further cementing PrimeXBT’s entry into global traditional markets, commodities trading has now also been incorporated into the platform.

The start of this year has already seen strong growth in oil prices, and the addition of further non-cryptocurrency-correlated financial instruments, such as these, provide traders with additional opportunities to monopolize on divergences between the asset classes.

PrimeXBT has now added CFDs for the following commodities:

  • UK Brent Oil (BRENT/USD)
  • US Crude Oil (CRUDE/USD)
  • US Natural Gas (NAT.GAS/USD)

Indices

Complimenting the integration of forex and commodities, many of the world’s leading stock markets are now also accessible directly via PrimeXBT.

Flexible and agile redistributions of funds between crypto-assets such as Bitcoin and national stock indices allow for the development of investment and trading strategies that expose significant new opportunities.

PrimeXBT now offers access to the world’s leading indices with leveraging of up to 100x:

  • US Tech 100 (NASDAQ)
  • US SPX500 (SP500)
  • Germany 30 (GER30)
  • Hong Kong 50 (HK-HSI)
  • Australia 200 (AUS200)
  • Japan 225 (NIKKEI)
  • UK 100 (UK100)

Despite PrimeXBT’s debut as a crypto trading platform the team’s broad experience originally stems from within traditional financial markets. A Prime XBT spokesperson explains:

“Although we got our start in the cryptocurrency market, we built PrimeXBT on decades of experience from traditional financial markets. Traders are starting to see that experience come through on our platform now through these new financial instruments, allowing traders to try their hand in new markets and further diversify their investment portfolios.”

This experience has lead to PrimeXBT’s value proposition consistently reflecting what traders truly want and need. Traditional traders are gravitating towards lucrative crypto investment opportunities, likewise, crypto-asset traders and markets are maturing to incorporate more advanced techniques and strategies.

PrimeXBT simultaneously provides traders with tight spreads (on average 0.7 pips), with the highest leverage allowance and some of the lowest commission fees (just 0.5% to all trades and assets).

What’s more, there are no KYC verifications or sensitive data required to set up a full-featured trading account.  This is unheard of within traditional financial brokerages and acts to significantly lower the barrier to enter into the world’s most popular and profitable investment opportunities.

To learn more about PrimeXBT and the favorable trading conditions it presents, head to https://PrimeXBT.com.

EURCHF With a Fresh Buy Signal. GBPUSD Drops From the Local Highs

Traders were hesitating but the demand finally won. For a while, the bullish sentiment was under heavy pressure. That happened during the ECB conference but eventually, buyers won that battle. The reversal is a part of a bigger double bottom formation on the crucial long-term horizontal support (green). The buy signal is ON here!

Now Cable, which was pretty busy during all those votes in the UK Parliament. The sentiment yesterday was quite positive but the American session brought us a stronger reversal. GBPUSD managed to break the short-term support and later, the dynamic up trendline (black). Price Action is strong here, broken up trendline is today being tested as a resistance. With the price staying below, the sentiment is negative.

The last instrument in this short report is Gold. What a great performance from the buyers! We were expecting that for the past few weeks. After the breakout of the crucial resistance on the 1307 USD/oz, the buyers are fully controlling the situation. 1307 USD/oz should be now the closest support. The aim is on the 1357 USD/oz. Chances that we will get there are pretty high!

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

Technical Overview USD, EUR, AUD & CAD: 24.01.2019

USD/CHF

USDCHF’s pullback from 0.9935 can’t be considered as a sign of its strength unless the pair clears 1.0005-10 horizontal-region on a daily closing basis, which in-turn highlights the importance of 50-day SMA level of 0.9920 and 0.9900, including 200-day SMA as immediate supports. However, pair’s declines past-0.9900 might not hesitate recalling the 0.9860 and the 0.9800 on chart. In case prices rally beyond 1.0010, the 1.0040 and the 1.0085 could quickly appear as quote. Additionally, pair’s successful rise above 1.0085 can flash 1.0130 on buyers’ radar.

EUR/CHF

Unlike USDCHF, the EURCHF bounces off the near-term support-line, at 1.1270 now, which in-turn highlights the importance of 1.1315 and the 1.1355-60 resistance-region. Given the pair’s sustained rally after 1.1360, the 1.1390, the 1.1405 and the 1.1435 are likely consecutive resistances to gain market attention. Meanwhile, break of 1.1270 could trigger the pair’s dip to 1.1240 and then to 1.1210 whereas the 1.1190 and the 1.1180 might entertain sellers then after.

AUD/CHF

Failure to clearly cross the 50-day SMA seem dragging the AUDCHF to 0.7030 support, breaking which 0.6960 and the 0.6930 can offer intermediate halts during its drop to 0.6880-70 area. If at all the pair keep trading southwards under 0.6870, the early-month low of 0.6675 may become Bears’ favorite. Alternatively, 50-day SMA level of 0.7130 may restrict the pair’s adjacent rise prior to escalating its recovery to 0.7190 and the 200-day SMA level of 0.7240. Though, eight-month old resistance-line, at 0.7325, could challenge the Bulls past-0.7240, if not then 0.7400 might please them.

CAD/CHF

CADCHF still follows the “Rising Wedge” break indicating the pair’s slump to 0.7340-45 support-zone but 0.7415 & 0.7375 can act as buffers. Should prices slid below 0.7340, the 0.7300, the 0.7245 and the 0.7175 may be aimed if holding short positions. On the upside, 0.7490 and the 0.7515 could confine the pair’s immediate rise. Given the pair’s ability to surpass the 0.7515 barrier, the 0.7550 and the 0.7585 may lure the optimists.

Three nice setups on with the Swiss Franc!

That was definitely one of the most interesting weeks on the financial markets. Sometimes all you need for proper attractions is low liquidity. Today, we will show You three very promising setups with the CHF, which yesterday got super strong but finishes this week on the back foot.

First setup is on the USDCHF. The pair is creating a flag formation, which in this case is bullish. Flag went as deep as to the long-term up trendline and this is a great place for a bounce. For the proper buy signal, we need to see the breakout of the upper line of this formation first.

Next one is the EURCHF, where the price is creating a hammer on the weekly chart. The place, where the hammer is present is not random. These are the lows from the 2018 and the highs from the 2016. The legitimate buy signal will be triggered, when the price will break the blue down trendline.

The reversal on the third instrument – AUDCHF is the strongest one. Here, it also does not happen in a random place. We are on the long-term support area, respected here in the 2015, 2016 and 2018. As for now, the weekly candle is a very handsome hammer and definitely promotes a further rise.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

Technical Checks For USD/CHF, EUR/CHF, CHF/JPY & NZD/CHF: 19.12.2018

USD/CHF

Multiple failures to rise past the 1.0000-1.0005 region highlights the importance of short-term ascending trend-line, at 0.9900, for USDCHF traders, which if broken can quickly drag the pair to 0.9880 and then to the 0.9860 supports. However, 61.8% FE level of 0.9825 and the 0.9800 round-figure may restrict the pair’s further declines. On the upside, the 0.9960 and the 0.9985 could serve as immediate resistances for the pair before diverting market attention to 1.0000-1.0005 area for one more time. Assuming the pair’s ability to cross 1.0005 mark, the 1.0050, the 1.0080 and the 1.0110 might offer intermediate halts during the rally targeting 1.0130.

EUR/CHF

EURCHF successfully cleared a month old descending resistance-line and is heading towards 1.1355-60 resistance-zone. In case buyers refrain to respect the 1.1360 barrier, the 1.1380, the 1.1400 and the 1.1430 can appear on their radars. Meanwhile, the 1.1290 and the 1.1250 are likely adjacent rests that the pair may avail prior to visiting the 1.1230, the 1.1220 and the 1.1200 consecutive supports.

CHF/JPY

Eight-week long upward slanting support-line and near oversold RSI seem challenging the CHFJPY sellers aiming the 112.90 and the 112.45-40 levels to south. Should prices dip beneath 112.40, the 112.00, the 111.80 and the 111.50 might please the Bears. Given the pair’s U-turn from 113.10 support-line, the 113.45 and the 113.75 may entertain buyers, breaking which 113.95 TL resistance can play its role. If at all the quote surpasses 113.95 hurdle, the 114.35-40 and 114.60 could come back on the chart.

NZD/CHF

Having bounced off the 0.6745-40 region, the NZDCHF is witnessing recovery in direction to 0.6840 and then to the 0.6880-85 resistances. Though, pair’s sustained rally beyond 0.6885 enables it to confront the 0.6935, the 61.8% FE level around 0.6980 and the 0.7000 psychological-magnet. Alternatively, the 0.6755 and the 0.6745-40 can keep limiting the pair’s near-term downside. Let’s say the pair drops below 0.6740 mark, then it becomes vulnerable to plunge towards the 0.6700, the 0.6650 and the 0.6600 supports.

Draghi Can Break the Euro Trend

The demand for risky assets is gradually recovering, supported by the US-China’s “trade truce” which is not in hurry to ends. Futures on S&P500 rose by 0.4% this morning, after growth by 0.8% the day earlier. The Shanghai A50 is growing by more than 2% in hope of Chinese government stimulus.

Positive dynamics of stock markets caused the US Dollar to be rolled back from monthly highs on DXY. EURUSD has received the local support near 1.1300 levels yesterday.

Over the past month, the pair fluctuations’ amplitude has decreased noticeably, but it looks more likely to squeezed spring, rather than calm.

Today, in the EU markets’ focus is the ECB meeting, which often causes strong volatility. Mario Draghi is expected to confirm that the Central Bank will finally stop buying assets by the end of this year. For EUR, definitely, the vital impact will be from any comments on the monetary policy prospects.

Earlier, the ECB was about to start raising rates next autumn at least, but now these dates are in risk to move after the Fed’s rhetoric softening and general slowdown of the world economy. In this case, the euro can be hit, so that the technical factors will come into play.

Falling below 1.13 mark, which was an important support previously, can launch a new wave of decline. Two previous stages of the retreat were turned into the 7%- and 5%- fall of the single currency.

Commensurate with the previous two, the new downward spiral may send EURUSD below 1.08. More distant bearish targets and news key support are possible as well: as low as to 1.05 on the chart.

Note that the ECB tone mitigation seems the most likely to take place.

Also, we can not exclude completely that Draghi will prefer to take a wait and observe how the things unfold: confidence in the EU economic growth and the inflationary pressure build-up will significantly reduce the difference between the ECB and the Fed policies. Under these conditions, EURUSD will be able to rebound to the upper boundary of the November’s trading range near 1.15. Growth above this mark will display clearly a significant outlook revision and, perhaps, become a pivot point of the recent trend.

This article was written by FxPro

Technical Update For USD/CHF, EUR/CHF, CHF/JPY & CAD/CHF: 05.12.2018

USD/CHF

With nearly 100-pip range between 1.0010-05 and 0.9920-15 aptly limiting the USDCHF moves, the pair is presently expected to revisit the 0.9950 rest-point ahead of testing the 0.9915 range-support for one more time. However, pair’s drop beneath the 0.9915 can quickly fetch it to 0.9885 and the 0.9860 marks ahead of highlighting the 0.9845 as a support. Meanwhile, an upside clearance of 1.0010 could propel the quote to 1.0050 and then to the 1.0080 resistances whereas pair’s successful trading beyond 1.0080 enables it to aim for 1.0100 and the 1.0130 numbers to north.

EUR/CHF

Failure to surpass a month-long descending trend-line again drags the EURCHF to 1.1300-1.1295 support-zone, which if broken may further weaken it towards 1.1270 & 1.1260. Though, sellers’ refrain to respect the 1.1260 might not hesitate flashing 61.8% FE level of 1.1225 on the chart. Alternatively, aforementioned TL can keep restricting the pair’s near-term advances at 1.1345, breaking which the 1.1360, the 1.1400 and another resistance-line around 1.1415 may play their roles of resistances. Given the pair’s ability to cross 1.1415 barrier, it can then rise to 1.1435 & 1.1470 figures.

CHF/JPY

CHFJPY’s bounce off the 113.00-112.95 rest-region can help it target the 113.50 and the 113.75 resistances but the 113.95-114.00 may challenge buyers afterwards. Assuming the pair’s sustained rally above 114.00, the 114.20, the 114.40 and the 61.8% FE level of 114.60 could entertain Bulls. If at all prices slide below 112.95, an ascending support-line stretched since late-October might confine additional downturn at 112.70, if not then 112.40 & 112.10 could become Bears’ favorites. Moreover, pair’s extended declines past-112.10 opens the door for its plunge to 111.85 & 111.50.

CAD/CHF

Even if 0.7580-85 acts as a strong resistance-area for the CADCHF, pair’s downside may find it hard to last longer than 0.7470-65. In case the quote dips beneath 0.7465, the 0.7440, the 0.7415 and the 0.7395 can appear on pessimists radars. On the contrary, 0.7555 may cap the pair’s immediate recovery before diverting market attention to 0.7580-85. Should the pair crosses 0.7585 hurdle, the 0.7625 and the 0.7645 are likely following numbers to grab limelight.

Trade Concerns Resurface, Geopolitics Weigh On Stocks, Trump Pushes Forward With Tariff Plans

Asian Markets Are Mixed As Trade Concerns Resurface

Asian indices were mixed on Tuesday as trade concerns resurface. Ex-China was up an average 0.80% in the wake of the US rebound on Monday while Chinese and Hong Kong-based markets were more cautious. The Shang Hai closed with a loss near -0.04%, the Heng Seng near -0.17%, as new shots are fired in the trade war.

US President Donald Trump says he may put a 10% tax on Apple products coming out of China and that put pressure on the entire Apple supply chain. Shares of Taiwan Semiconductor and Pegatron were both able to recover their losses before the close of the session but others were not so fortunate. Catcher Technology fell nearly -2.25% while Foxconn, assembler of iPhones, shed -0.42%.

Geopolitics Weighs On European Markets

European markets were drifting lower at midday as trade concerns, Brexit uncertainty, and Italian budget issues weigh on sentiment. Losses were broad but small relative to market moves in recent weeks. The DAX was leading with a loss near -0.35% but the FTSE and CAC were close behind.

On the trade front, President Trump says the Brexit may affect the US ability to trade with the UK and does not appear to support the deal despite the EU’s affirmation over the weekend. Regarding Brexit, Prime Minister Theresa May still has many hurdles to overcome and faces a parliamentary vote on the deal in two weeks.

In Italy, lawmakers are sticking to their 2019 budget plans despite word on Monday they were cutting deficit targets in order to avoid sanctions from the EU. The news, amid other concerns, had the financial sector trading lower led by 3.0% losses in Metro bank and BBVA. In earnings news a profit warning from Thomas Cook. The iconic travel and leisure brand says profit will fall short of guidance and suspended its dividend causing stocks across the sector to fall.

Trump Moves Forward With Tariff Plans

In the US, markets were trading lower in early futures action as President Trump indicates he will move forward with plans to raise tariffs. Trump said in an interview with the Wall Street Journal that it was highly unlikely the US would delay raising tariffs to 25% despite the meeting scheduled for him and Chinese President Xi Jinping. The meeting is not expected to produce concrete changes in trade relations but it is expected to deliver positive developments, Trump’s comments have cast a shadow of doubt on the outcome now.

While traders are focused on the Trump/Xi meeting other events are likely to move the market as well. Tomorrow there is a speech from Federal Reserve Bank Chairman Jerome Powell that will be closely monitored for signs of Fed dovishness. On top of that, Thursday is the release of the PCE Price Index, the Fed’s favored tool for monitoring inflation, as well as the minutes from the last FOMC meeting. The SPX and Dow Jones Industrials were indicated to open with a loss near -0.42% while the Nasdaq was looking at losses near -0.60% on trouble in tech related to the Apple tariff threat.

EURCHF Choose to Go South

In this piece, we will describe the situation on the EURCHF, where a week ago, we were waiting for the buy signal. We did not say that the buy signal is right there, right now but we acknowledged such a possibility: “As long as we stay below the Fibo mentioned above, the sentiment is still negative but the breakout of this line will give us a proper buy signal. “ This is what we wrote back then.

Patience is the virtue of every trader. Usually, you need to wait for the proper signal. In this case, it did not happen and the price went lower. Thursday was decisive here. The price broke the lower line of the flag and the short-term horizontal support. That gave the boost to the sellers and cleared the way south. Monday brings us a breakout of the green line connecting the bottom of the head and the right shoulder. That represents the total cancellation of the positive sentiment and opens us away towards new yearly lows.

EUR/CHF 4H Chart
EUR/CHF 4H Chart

The sell signal will be canceled, when the price will break the black line. That resistance connects the most important lower highs since April. Chances for that are rather limited.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

EURCHF, switch towards the buy signal

Generally speaking, October for the EUR was pretty bad. We are not talking here only about the main pair (with the USD) but about the broad market. The fortune may be changing though. The pair, where we can see the ray of light is the EURCHF.

EURCHF Daily Chart
EURCHF Daily Chart

It seems that the pair is getting ready for a major upswing. Till now, we were quite negative about the future of this instrument but the recent price movements are pointing at other direction. Our pessimistic approach was based on the fact, that the price was in a downtrend and bounced from the 38,2% Fibonacci. What is more, EURCHF broke the lower line of the flag pattern. The drop did not last too long though. 7 out of the last 8 days were positive and the price is aiming the 38,2% Fibo again. That allowed the price to create an inverse head and shoulders pattern (blue).

As long as we stay below the Fibo mentioned above, the sentiment is still negative but the breakout of this line will give us a proper buy signal. On the other hand, the price breaking the 23,6% Fibo will cancel the iH&S scenario and will open us away towards new lows.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

Can Italy Be the Next Greece?

Though there is a significant amount of disagreement regarding the politics of controlling an economy, there are still a few things that fundamentally all economists can agree on: high employment is generally desirable, low inflation is generally desirable, and—perhaps above all else—a stable economy is one that can operate in a predictable way. Any time a national economy deviates from these objectives—and possesses high levels of unemployment and general economic instability—there ought to be at least some reason for outside speculators to be concerned.

Less than one decade ago, the Greek economy experienced one of the worst depressions to ever occur in the developed world. In an incredibly short amount of time, unemployment dramatically increased, the interest rate on government bonds skyrocketed, and seemingly all other economic metrics inspired panic to some degree.

Few economists were able to correctly predict just how bad the Greek economic crisis would actually be, but—especially with 20/20 hindsight—the existence of this crisis still remains relatively unsurprising. When compared to other countries tied to the Euro, the Greek economy had been measurably underperforming for quite some time.

Now, roughly six years following the peak of Greece’s economic crisis, Italy finds themselves in a situation that is all too familiar. In this article, we will briefly compare and contrast the economic situations of Greece and Italy, and also discuss ways active investors can potentially exploit the current situation to their advantage.

Similarities between the Situation in Greece and Italy

In order to understand the risks presented by the Italian economy, it is important to recognize why the situation in 2018 is so familiar to what we witnessed in 2011. Both Southern European nations have experienced relatively high rates of unemployment, though Italy’s current unemployment (about 10.2%) is nowhere near as bad as Greece was during its recent peak (27.9%).

Both nations have also experienced tremendously high amounts of national debt (Italy currently has a national debt over 2.3 trillion EUR, 131% of GDP), which have triggered talks of austerity measures and even declaring independence from the Euro. In 2011, Greece began to impose various austerity measures which—at least according to Keynesian economics—seems to have been the incorrect move for a country that was already tremendously low on working capital.

Consequently, austerity measures in Greece witnessed the government become even more desperate for funds and increase 10-year bond yields from roughly 5% to nearly 40% in less than one year. Italy’s reaction to its current economic situation is yet to be seen, but an increased interest in populist politics (5 Star) and Euro-skepticism suggests that it may be moving in the same direction that Greece once was.

Differences between the Situation in Greece and Italy

The details involved in international economics can be quite complex and comparing Greece to Italy will naturally involve a more nuanced and comprehensive approach. There are still some things that make Greece and Italy significantly different and the effects of these differences will vary tremendously.

Though Italy is suffering from many of the same economic woes that Greece experienced a decade earlier, the degree to which they are suffering is not nearly as bad. The Debt-GDP ratio is more sustainable (suggesting that austerity might not be necessary), unemployment is lower, and Italian bonds have experienced comparatively little volatility. All of these figures suggest that if there is a “tipping point” that caused the Greek economy to collapse, then Italy has not passed it (yet).

One difference that should be more concerning, however, is the scale at which the Italian economy operates. While, in terms of nominal GDP, the Greek economy is only 53rd largest in the world, the Italian economy ranks 9th (and is the 4th largest in Europe). This means that the relations between Italy and the rest of the economic world will be significantly more important. Furthermore, while Greece’s crisis took place in a “pre-Brexit” world, the fact that Europe has already witnessed one major power (slowly) begin the process of leaving suggests the Italians may consider a similar route as well.

Opportunities for Investment

Though, as a collective, we should be rooting for the world economy to fare well, there is still no doubt that any sign of systematic volatility means there will be opportunities for some highly rewarding (and risky) investments. In response to what has been happening in Italy, there are several good chances to earn a return on your investment:

  • Exploit the likelihood of increased bond yields by shorting Italian 10-year issues
  • Monitor the situation in Italy and invest heavily in other currencies as soon as the Euro begins to lose value
  • Buy the Italian/German bond spread to take advantage of the likely widening differences between them
  • Short Italian stocks (FTSE Milano Indice di Borsa)
  • Wait until the Italian economy reaches its probable low-point (likely in the next few years) and then invest heavily in Italian stocks

These are just a few of the potential options you have available. The investment that makes the most sense for you will depend on your risk tolerance and overall portfolio strategy.

Conclusion

The obvious weaknesses in the Italian economy are reminding investors of similar conditions in Greece not so long ago. Though the probability of a total economic collapse is small, the high probability of there being at least some economic turmoil gives investors a wide range of opportunities to act.

What Does the Euro Expect From Draghi?

The sale on the U.S. stock markets was gaining momentum yesterday. DJI fell by 2.4%, S&P500 lost more than 3%, and Nasdaq plunged by 4.4% in just one trading session. Increased volatility has returned to the markets following the disappointment reports from chipmakers STMicroelectronics (-6.6%) and Texas Instruments (-8.2%).

Moreover, the housing market attracts more and more attention in the latest months. The data published on Wednesday reflected the decline in New Home Sales by 5.5% to the lowest levels in almost 2 years. For today the release of the index of Pending Home Sales is scheduled, and another weak figure of sales can increase worry of investors.

On the one hand, it is hardly expected that banks and homebuyers will quickly forget the lessons of the previous decade. At the peak of the cycle in 2005, the sales of new homes were two and a half times higher. Now, banks and households are likely to be careful about issuing mortgages, despite the lower interest rates. However, stagnation and even declining sales are causing excitement. Earlier this data served as an excellent leading indicator of consumer activity. The current recession is seen as a harbinger of falling household spending in subsequent quarters.

The upcoming publication of Durable Goods Orders is another indicator of Business confidence. The impressive growth of orders for expensive equipment with long-term use reflects confidence in economic prospects and can reduce the degree of anxiety around the prospects of the U.S. economy because of the weakness of the housing market. The indicators of stronger expectations can support USD and the US stock indices.


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In addition, the focus of the markets on Thursday is ECB’s conference. The speech by President Mario Draghi very often causes the increased volatility of the single currency, as the head of the bank gives answers to the most burning questions of journalists. This time, there will probably be questions about the influence of the Italian situation on the plans to minimize QE and higher rates.

The EURUSD pair on Wednesday lost 0.7%, falling to 1.1390 overnight. On Thursday, it finds some support near the psychologically important level on 1.1400, but the trading activity is reduced in anticipation of the ECB press conference.

This article was written by FxPro

Three great sell signals

The first instrument in the video is the NZDUSD, which on Monday bounced from the long-term down trendline. What is more, we do have a head and shoulders pattern here and the smaller pennant. We are very close to breaking the lower line of the pennant along with the mid-term up trendline. Once the price will close below, we will get a proper sell signal.

EURCHF decided to go down after failing to break the horizontal resistance on the 1.148. The price is breaking the horizontal support on the 1.14 and the lower line of the flag. Price closing below those two supports will be a proper sell signal.

The negative situation we have also on the Cable. The sell signal was triggered here on Monday when the price broke the lower line of the triangle. Yesterday we got a confirmation as the GBPUSD tested that line as the closest resistance. The test resulted with a drop so the sell signal is ON!

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

Technical Checks For USD/CHF, EUR/CHF, CHF/JPY & AUD/CHF: 11.10.2018

USD/CHF

In spite of bouncing from the three-week long support-line, USDCHF couldn’t sustain its U-turn and is likely to revisit the 0.9860 rest-point, breaking which 0.9825 & 0.9800 could come back on the chart. Though, the 0.9770 horizontal-line may confine the pair’s declines past-0.9800, if not then 0.9755 & 0.9700 can appear in the sellers radar. In case the quote surpasses 0.9900 immediate resistance, a month old downward slanting TL, at 0.9955, followed by the 0.9985 and the 1.0000 round-figure, might please buyers. Moreover, pair’s successful trading beyond 1.0000 can avail 1.0035 and the 1.0065 as intermediate halts ahead of looking at the 1.01000 resistance-mark.

EUR/CHF

Unlike USDCHF, the EURCHF seems maintaining its reversal from near-term ascending trend-line but the 1.1445-55 resistance-region may challenge the pair’s advances. Should prices rise above 1.1455, the 1.1500 & 1.1525 can act as buffers during its rally to recent high around 1.1555. On the contrary, a dip beneath the 1.1385 TL support highlights the importance of 1.1340 and the 1.1310 numbers before diverting market attention to 1.1260 support-mark. Assuming the pair’s extended south-run below 1.1260, the 1.1220 & 1.1180 could become Bears’ favorites.

CHF/JPY

With the 113.25-15 support-zone triggering CHFJPY’s pullback moves, the pair may target the 114.00 and the 50-day SMA level of 114.10 prior to confronting the 114.70 & the 115.00-115.10 resistance-area. Given the pair’s ability to cross the 115.10 level, the 115.60, the 116.00 and the 116.65 might entertain the Bulls. Alternatively, a D1 close below 113.50 can quickly fetch the pair to 112.80-75 support-confluence, comprising 100-day & 200-day SMA. If at all the quote refrains to respect the 112.75, five-month old support-line, near 112.00, could limit the downside, failing to which can witness multiple supports between 111.50 and the 110.70.

AUD/CHF

AUDCHF’s uptick from 0.6970 may help it revisit the 0.7035 & 0.7060 north-side numbers but the 0.7085 resistance could restrict the pair’s additional upside. Let’s say the pair manages to conquer the 0.7085 hurdle, then it can rise to 0.7130 & 0.7175 levels with 0.7210 & 0.7225 to be observed during its further march. Meanwhile, the 0.6970 & the 0.6925 may confine the pair’s adjacent declines, breaking which 0.6870 become crucial to watch. In case 0.6870 fall short of holding the pair’s downturn, then the 61.8% FE level of 0.6800 could pop-up on the chart.