Hot Forex - Market Analysis and News.

[HFM.]

Date : 12th May 2020.

Second wave of Covid infections? – Risk-off position in play.

US Equity futures and European bourses are recovering from losses in Asia and are in the green, with the exception of the CAC 40. Many markets in the Asia region have seen a paring in declines during their respective afternoon sessions after China announced a new list of US imports eligible for tariff waivers. China’s state-run Global Times had earlier reported that “unidentified advisers” on the Chinese side were keen to invalidate the “Phase 1” trade deal and renegotiate it, to which President Trump responded with, “not interested. We signed a deal.”

Aside from the fraying in relations between the world’s two biggest economic superpowers, markets are concerned about the risk of a second wave of coronavirus infections as economies reopen from lockdowns. Wuhan in China, the origin of the virus, reported new infections yesterday, as did South Korea, and Russia reported a record daily increase in confirmed cases. GermanY has also seen its “R rate” (the reproduction rate of the virus) rise back above 1, indicating that the virus is spreading exponentially again.

The combo of trade and geopolitical tensions, as well as fears of a second wave of coronavirus infections, looks set to keep risk-off positioning in play, which in turn should be supportive of the Yen versus most other currencies. Meanwhile, USDJPY has been playing a narrow range just below the 19-day low seen yesterday at 107.78, but above its PP at 107.30. The Yen has been losing against commodity and many developing-world currencies so far today, however EURJPY, for example, edged out a five-day high at 116.70 on the back of Yen weakness, breaking above yesterday’s peak, the 61.8% Fib. retracement level since the May drift and the mid of the 1-week upwards regression channel.

The MACD and RSI are positively configured intraday, with the MACD line posting a bullish cross while RSI is sloping northwards above 60. The fast MAs meanwhile are aligned higher. Intraday the next Resistance levels for EURJPY are set at 116.80, 117.00 and 117.35.

The daily/long term picture meanwhile remains on a negative outlook, with the asset having been following a downwards channel since December 2019. The momentum holds at a deep negative area, as MACD and RSI are negatively configured, suggesting that near term outperformance could be proven as another lower high in this long term decline. In the medium term the asset needs to sustain a move above the 20-day SMA but more precisely we need to see a break of the 200-day SMA at 118.00, in order for the overall picture to turn positive.

If sellers manage to gain back the control of the asset, initial support could occur at the 116.00, 115.44 and 115.20 level ahead of a revisit of the multi-year new low of 114.42.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM.]

Date : 13th May 2020.

FX Update – May 13 – Sterling Struggling.

GBPUSD & EURGBP, H4
The Pound has been unaffected by dismal UK data, with markets long since desensitized to bad economic figures, which, as the UK finance minister Sunak put it, “are not a surprise,” given the domestic and global lockdowns. UK preliminary Q1 GDP contracted 2.0% q/q while March industrial production contracted 4.2%. Sterling had been trading heavily into the data release, and has remained heavy since. Cable edged out a three-week low at 1.2251, with the UK currency concurrently printing a three-week low against the Euro. The uncertain tone in global equity markets has translated to weakness in the Pound, which has developed a quite strong positive correlation with stock market direction during the pandemic era so far. At prevailing levels Cable is in the lower reaches of the range that’s been prevailing since early April, which in turn marks a consolidation of the gains seen out of the 35-year low at 1.1409 that was seen in mid-March. The key 61.8 Fibonacci retracement level at 1.2450 marks the top of the consolidation whilst the 50.0 level at 1.2250 provides a floor.

Despite the high infection rate and death total in the UK, this week the country has initiated a baby step toward reopening its economy this week, with non-essential manufacturing reopening. However, the government continues to struggle to clarify and simplify its “stay alert” message as many workers try to return today.

The UK and EU are, meanwhile, amid the next round of trade talks. The British government has continued to insist that there will be no delay in the UK’s end-of-year departure from its Brexit transition membership of the EU’s customs union and single market. The UK has until July 1st to commit to this, so the pressure is on negotiators. Markets will continue to factor in the risk that the UK will leave the EU at the end of the year without a new trade deal, as many analysts see there is insufficient time to negotiate a new deal, even though the two sides are starting from perfect equivalence.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM.]

Date : 14th May 2020.

AUDJPY Continues as Risk Bellwether.

AUDJPY, H1
US equity markets fell another 1.75% yesterday after Tuesday’s 2% fall as worries about a second wave of the coronavirus persist and Fed Chair Powell offered a pragmatic assessment of the economic consequences and continued his scepticism towards a negative interest rate policy. Today this has followed through with Asian and European stock markets weaker; the Nikkei225 (JPY225) closed down 1.74% earlier at 19,914. In Europe stock markets are also selling off, with the GER30 (DAX) down -1.7% and the FTSE 100 (UK100) down -2.1%. Bond markets meanwhile have extended yesterday’s gains, although both Bunds and Gilts are underperforming versus Treasuries, as Eurozone spreads narrow again with Greek bonds outperforming this morning, likely also thanks to the ECB’s bond buying program, which is likely to be extended as central banks remain on high alert and focused on the devastating impact of lockdown measures on economies. 10-year yields are down -0.4 bp in Germany and the UK, while Treasury yields have dropped -3.4 bp to 0.619%.

In the FX markets the USD and YEN are in demand with pressure on GBP, EUR and AUD with EURUSD edging out a two-day low at 1.0788, driven by dollar firmness amid a bout of risk-off positioning in global markets. The pair is trading to the south of the halfway mark of the volatile range that was seen during the height of the global market panic in March, which was marked by 1.0637 on the downside and 1.1494 on the upside. Expectations are for EURUSD to lack sustained directional bias for now, though the somewhat frayed politics of the eurozone tips the balance toward downside risk. There is little divergence in central bank policy currently, with both the ECB and the Fed pursuing aggressive easing policies, and both Europe and the US facing significant economic headwinds from virus-containing lockdown measures. Europe and the US are now in the early stages of economic reopening strategies, which is being accompanied by concerns that this might spark a second wave of coronavirus infections.

The biggest mover, so far today, remains the risk sensitive AUDJPY, currently down some 0.36% and recovering from a 0.50% decline earlier. The pair remain rangebound on the Daily time-frame from mid April between the 61.8 Fibonacci level and psychological 70.00 and the 50.0 Fibonacci level at 68.00. The 50-day moving average resides at 68.80, the RSI is neutral at 51 and MACD is also neutral although the signal line remains over the 0 line from April 24. The MFI oscillator is declining out of the overbought zone from May 1.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM.]

Date : 15th May 2020.

Mixed outlook for Metals – Base VS Precious.

The Commodity market is mixed, with precious metals finding a near-term lift following the announcement of a double QE program from RBNZ, the comments from Fed Chair Powell on Wednesday and the US Jobless claim release this week. Gold spiked today to its April 23 high at the $1,738 level on safe haven demand, but interestingly according to RBC the poor jobs data yesterday has translated to a boost for Gold. According to RBC comments to Bloomberg, the jobless claims, from the human perspective, translated to more stimulus in the near future and to continued lower interest rates , and things that are ‘very friendly for gold’.

The concerns for more stimulus measures to cushion the fall out of the coronavirus outbreak were also raised after the mixed Chinese data, with production rebounding while retail sales remain under pressure. Chinese production figures are normally considered a bellwether data release, both for the Asia-Pacific region and the globe, though the scope for an enduring recovery in activity looks to be limited, with many world economies remaining in a state of semi-lockdown. Hence the uneven recovery picture from China signalled a still bumpy road ahead, especially as new virus hotspots seem to be emerging.

Copper
Other than Gold, Copper prices advanced today on data showing a solid recovery in top consumer China and hopes of more stimulus measures in the global economy. Copper retested the week’s high at 2.3731 (above 50% retracement level on downleg from 2.4270). However from the technical and fundamental perspective , Copper in contrast with Gold faces a limited boost. The 50% retracement level could provide a reversal level for the asset, while from the fundamental perspective, the large copper inventory inflows into LME warehouses and reports of the restarting of mining operations in Peru are adding to the overall bearish sentiment for the asset. As ING stated, LME warehouses yesterday saw copper inflows of around 55.7kt. These large inflows made up for the withdrawals that the market had been seeing since mid-April, and pushed inventories to YTD highs of 282.7kt.

However, for all commodities and energy assets, demand hits and supply hits are what matters the most .Hence for as long as the economy doesn’t get back to pre-virus levels and as long as smelters and refiners do not resume full operations in China, raw materials are expected to remain in tight supply.

Other precious metals including platinum and palladium are also suffering from weak industrial demand amid lockdowns around the world. Price movements for all three have been negative year to date. Palladium prices have fallen around 35% from the recent highs seen in February, given the pressure that the global auto industry is under at the moment – a key source of demand for palladium.

Therefore, beyond this near-term lift, we assume that the demand-hit from the coronavirus will remain bigger than the supply hit into mid-year, leaving a downward impact on net for global commodity prices. A firm Dollar provides an additional headwind.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM.]

Date : 20th May 2020.

Positive Factors Pushing USOil above $30.

USOil, H4
Oil prices have risen continuously since the big price drop in late April, as the May Futures contracts expired and the concerns over storage capacity peaked. Also demand was lost because of the Covid-19 outbreak and the lockdowns that followed and the trade war between the major oil producing countries.

However, the relaxation of lockdown measures from early May can be considered as the starting point for the return of oil consumption of large countries like China, which yesterday reported demand is now back to normal levels at 13 million barrels per day. The beginning of May also coincided with the major oil-producing countries implementing the reduction of agreed production estimates. This has enabled USOil prices to push above 30 US Dollars per barrel this week.

Another good thing that will benefit the price of oil at this time is the current weakening of the US Dollar.

From a technical standpoint, H4 now sees bullish pennant patterns that tend to keep oil prices going up. The first resistance is at 33.00, which, if able to break through, is likely to continue to Fibonacci 161.8 at 34.15, which is in line with the MACD that is now in the positive territory. And the price is still running within the uptrend channel.

However, resilience to the second wave of the Covid-19 outbreak remains a risk that the market must keep an eye on, after China’s Jilin city was locked down due to an outbreak of 34 new virus cases.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Chayut Vachirathanakit
Market Analyst
HF Educational Office
Thailand

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM.]

Date : 21st May 2020.

Market Update | 21 May.

Wall Street had closed higher yesterday, but risk appetite started to wane in quiet trade during the course of the Asian session. The US Senate passed a bill that could bar some Chinese companies from listing on US exchanges and fresh criticism from U.S. President Trump of China’s leadership added to concerns that we are heading for a new trade war. The minutes of the last Fed meeting also highlighted the risk to not just economic growth, but also financial stability.

More precisely, the Holding Foreign Companies Accountable Act requires that Chinese companies show that they are not controlled by a foreign government, reports MarketWatch. Moreover, the firms would have to produce an audit that conforms to the standards of the Public Company Accounting Oversight Board.

FOMC minutes had a few points of interest, but none that suggested any changes to the policy stance any time in the foreseeable futures. The minutes of course headlined the economic and human hardships, and worried about potential risks to financial stability. There was the usual run-down on what’s been done in terms of the rate cut and QE. There were a few interesting points of discussion, though the ideas mostly came from the minority on the Committee. The minutes reiterated that while the current stance was seen as “appropriate,” the Committee could “clarify” its forward guidance (which it didn’t really give because of the unprecedented uncertainties). Some participants though they could make guidance more explicit by either adopting an “outcome-based” approach that specified macro outcomes including a certain level of unemployment or and inflation rate. A “date-based” approach could also be used considered and would specify that the target range could be raised after a certain time had elapsed. Several also thought the Fed might also have to further clarify its asset purchase plans, as without which there could be increased uncertainty over time. An ongoing program of Treasury purchases could also be used to “keep long term rates low” — that boarders on yield curve control. And a few suggested the balance sheet could be used to to cap shorter and medium term yields. And of interest, the Open Market Desk surveys showed respondents “attached almost no probability to the FOMC implementing negative policy rates.” Some survey respondents indicated that they expected modifications to the Committee’s forward guidance, but not at the current meeting.

Against that background Wall Street had come off its best levels after FOMC and White house reports, though the major indexes are holding gains of better than 1%. Topix and Nikkei are down -0.07% and up 0.06% respectively, the Hang Seng is down -0.05% and the CSI 300 unchanged on the day, while the ASX is down -0.03%.

In FX markets , the Dollar has picked up safe haven demand as stock markets flagged in the Asia-Pacific region, and with S&P 500 futures correcting most of the gains seen during Wednesday’s regular session on Wall Street. The narrow trade-weighted USD index rebounded to a high at 99.43, up from the 17-day low seen yesterday at 99.01.

The biggest mover out of the main currencies has been AUDUSD, which dropped by nearly 0.5% in printing a low at 0.6549, correcting from yesterday’s 10-week high at 0.6618. Another ratchet higher in the U.S. attacks on China catalysed a risk-off mood in markets, with the White House publishing a 20-page dossier of complaint on China, accusing Beijing of predatory economic policies, military build-up, disinformation, human rights violations. A senior administration official was reported a saying that this does not signal a shift in US policy, and while some may downplay it as part of President Trump’s election strategy, it is clear that the US, and other Western nations, have been growing uneasy about China’s power on the world stage, and are feeling a need to reassert themselves.

Given the potential and realized impact on trade, this is fostering a re-emergence of nervousness in markets. In other news, RBA Governor Lowe warned that without a Covid-19 medical breakthrough the economic recovery will be slow. The New Zealand government said it will allow bars to reopen, and that it is considering a four-day work week. On the data front, preliminary PMIs reported from Australia and Japan showed predictably sharp contractions for manufacturing along with and a deeply contracted but slightly improved reading for services. Export data from South Korea and Japan were also weak. New Zealand credit card spending for April fell 41.3% m/m.


Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM.]

Date : 22nd May 2020.

EURUSD – Rejection, Retrace, Sell-Off.

EURUSD, H1
EURUSD has drifted down to a fresh four-day low at 1.0886, driven lower by a broad haven-bid for Dollars as Hong Kong re-emerges as a flash point in US-China, and West-China, relations. The narrow trade-weighted USDIndex (DXY) rose to a three-day high at 99.62, extending the rebound from the 18-day low seen on Wednesday at 99.01. EURUSD continues to trade in a broad consolidation range near the halfway mark of the volatile range that was seen during the height of the global market panic in March, which was marked by 1.0637 on the downside and 1.1494 on the upside. Expectations are for the pair to lack sustained directional bias for now, though political tensions among Eurozone members, coupled with the dollar’s role as a haven, suggest the risks are to the downside, as demonstrated in the H1 chart. Below we can see that there was a rejection of 1.1000 yesterday (1) and a retrace of the initial fall to the 50-hour moving average (2), followed by the sell-off during the Asian and European sessions today (3).

There is little divergence in central bank policy currently, with both the ECB and the Fed pursuing aggressively accommodative policy, with both Europe and the US facing significant economic headwinds from virus-containing lockdown measures. Both are amid the early stages of reopening from lockdowns.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM.]

Date : 01st June 2020.

Events to Look Out for This Week.

Geopolitics are back in the picture giving the markets pause and adding another layer of uncertainty to a shaky global outlook. However other than US-China tension, next week the global data dockets are heavy and results are likely to underscore the cratering in global economies this quarter. The calendar includes the US Jobs Report and Monetary policy meeting from RBA, BOC and ECB.

Monday – 01 June 2020

• Caixin Manufacturing PMI (CNY, GMT 01:45) – The Caixin manufacturing PMI is expected to slightly improve to 49.6 from 49.4 in May.
• ISM Manufacturing PMI (USD, GMT 14:00) – The ISM index is expected to slip to 40.0 in May from 41.5 in April, compared to a recession-low of 34.5 in December of 2008.

Tuesday – 02 June 2020

• Interest Rate Decision & Statement (RBA, GMT 04:30) – The RBA meet and are unlikely to move rates below historic lows at 0.25%, as RBA Gov. Lowe is his recent statement repeated that negative interest rates extraordinarily unlikely. RBA will maintain its expansionary monetary policies until progress is made towards full employment and we are confident on inflation .

Wednesday – 03 June 2020

• Gross Domestic Product (AUD, GMT 01:30) – GDP is the economy’s most important figure. Q1’s GDP is expected to slow down at 0.3% q/q and 1.9% y/y.
• Unemployment data (EUR, GMT 07:55-09:00) – The German unemployment rate in May is expected to have increased to 6.2% from 5.8%, while unemployment change is expected to have declined to 194K from April’s 373K. Meanwhile, Eurozone’s April unemployment rate should rise to 7.7% from 7.4% last month.
• ADP Employment Change (USD, GMT 12:15) – Lasts month, ADP report revealed a -20,236k April drop that undershot the -19,520k private payroll decline by -716k. For May a -9,000k drop is seen, since nearly all measures of activity rose in May from a trough.
• ISM Non-Manufacturing PMI (USD, GMT 14:00) – The ISM-NMI index is expected to rise to 46.0 from 41.8 in April. Most producer sentiment reports should show May rebounds after huge April declines due to mandatory closures, on top of the demand hit initially associated with the pandemic, and the oil price plunge with the OPEC price war, as re-openings are underway in most states. The April drop in the ISM survey was much smaller than the declines seen in other measures, however, and this is why we expect a further drop in May for that measure.
• Interest Rate Decision and Monetary Policy Statement (CAD, GMT 14:00) – On April 15, the Bank held rates steady at 0.25%, matching widespread expectations. In the next policy statement, the BoC is expected to leave rates unchanged, the Bank of Canada Governor Poloz said is his last interview that negative rates are needed only in extreme conditions.

Thursday – 04 June 2020

• Interest Rate Decision, Monetary Policy Statement and Press Conference (EUR, GMT 11:45 & 12:30) – Given that Lagarde buried any hope of a “mild” recession, the stage seems set for an extension of the PEPP program in size and duration at next week’s council meeting with an end date next year giving the economy more time to recover and EU aid programs to come into effect. Given that the ECB is no longer putting much hope in a quick recovery it is already clear that with the current time frame until the end of December that would risk a sharp widening of spreads in the second half of the year, when there is also the risk of a second wave of Covid-19 infections.
• Jobless Claims (USD, GMT 12:30)– US initial jobless claims contracted last week by -323k to 2,123k in the week ended May 23 after tumbling -241k to 2,446k previously. Claims have been declining since surging to 6,867k in the March 27 week.

Friday – 05 June 2020

• Event of the Week – Non-Farm Payrolls (USD, GMT 12:30) – A -2,200k May nonfarm payroll drop is anticipated, following a -20,527 April collapse, and a -701k drop in March. The jobless rate should rise to 17.5% from 14.7% from April, versus 4.4% in March. Nearly all measures of activity rose in May from a trough just after the April BLS survey week, but the initial and continuing claims data suggest a weaker labor market in mid-May than mid-April. Average hourly earnings are assumed to fall -1.0% with a partial unwind of the April distortion from layoffs being concentrated in low-wage categories. This would translate to a drop in the y/y gain to 6.6% from 7.9%.
• Labour Market Data (CAD, GMT 12:30) – Canada employment plunged -1993.8k in April, nearly doubling the -1010.7k tumble in March to leave a massive and rapid reversal in the labour market as firms cut jobs as most of the economy ceased to function amid the stay at home orders the began around the middle of March. For May employment should revealed a 4,000k drop in jobs, doubling again last months number.

B]Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.[/B]

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM.]

Date : 2nd June 2020.

FX Update – June 2 – Weaker USD.

Trading Leveraged Products is risky

AUDUSD, H1
The Dollar has remained soft, with risk sentiment in global markets holding up, albeit with a weakening grip. Wall Street finished with modest gains yesterday, while the USA500 is moderately in the negative, and while Asian and European markets have gained, they are up by only a limited extent. US President Trump is weighing military action and imposing curfews in cities across the country in an effort to quell rioting, while there are glass-half-full market narratives arguing that, with many assets having recouped to pre-pandemic levels, there may be less upside potential with most economies across the world not expected to fully recover until such time as there is a vaccine or cure for the coronavirus.

Despite the flagging risk-on tone, the narrow trade-weighted USDIndex edged out a new low, at 97.74, which is the lowest level seen since March 16th. EURUSD has remained buoyant, and has breached yesterday’s 11-week high at 1.1155, to trade to 1.1178. USDJPY remained in a narrow range in the mid-to-upper reaches of the 107.00s, which has been the case for about two weeks now. Sterling has outperformed on Brexit-related news, with the London Times reporting that the UK government is expected to signal a compromise on fisheries and “level playing field” trade rules if the EU backs off from its “maximalist” demands on regulatory alignment and fishing access, according to unnamed sources. Cable printed a one-month peak at 1.2555, while EURGBP fell to an 18-day low at 0.8865. AUDUSD edged out a fresh four-month high, at 0.6844. The RBA did the expected and left monetary policy unchanged at its June review today, maintaining the cash rate at 0.25%, while signalling that “the accommodative approach will be maintained as long as it is required.” USDCAD printed a fresh trend low at 1.3507, the lowest seen since March 9th. The Canadian Dollar, like other oil-correlating currencies, remains supported by the ongoing buoyancy in oil prices, ahead of the rescheduled OPEC+ meeting this week, while USOil trades at $36.00 currently.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM.]

Date : 08th June 2020.

Events to Look Out for This Week.

The focus will remain on the monetary and fiscal stimulus measures, as FED rate decision and meeting will be the highlight of the week, even though no major changes are expected, as negative rates are off the table for now. Chinese trade figures, the US and Chinese inflation, and GDP out of UK and Europe are over the course of next week’s agenda.

Monday – 08 June 2020

• Industrial Production (EUR, GMT 08:00) – German Industrial Production is expected to decline further at 15.5% in April compared to the -9.2% decline seen in March.

Tuesday – 09 June 2020

• Gross Domestic Product (EUR, GMT 09:00) – GDP is the economy’s most important figure. Q1’s GDP is expected to confirm a contraction to -3.8% q/q and -3.2% y/y.

Wednesday – 10 June 2020

• Consumer Price Index (CNY, GMT 01:30) – Chinese inflation is expected to grow in May at 3.7% y/y, despite the -0.5% drop in the monthly basis.
• Consumer Price Index (USD, 12:30) – The US May headline CPI is seen to drop with a flat core price rate, following respective April readings of -0.8% and -0.4%. The headline will be restrained by an estimated -2.2% May drop for CPI gasoline prices. As-expected May figures would result in a headline y/y increase of 0.3%, steady from 0.3% in April. Core prices should set a 1.3% y/y rise, a down-tick from 1.4% y/y last month.
• Interest Rate Decision and Press Conference (USD, GMT 18:00-18:30) – In the last FOMC minutes of April 28-29 policy meeting, the committee made it clear that they are not considering implementing negative policy rates anytime soon. The minutes reiterated that while the current stance was seen as “appropriate,” the Committee could “clarify” its forward guidance (which it didn’t really give because of the unprecedented uncertainties). A “date-based” approach could also be considered that would specify a time period for current policy accommodation. As Chair Powell has indicated, the Fed is fighting to make sure that lasting damage isn’t done to the economy, so that liquidity problems don’t turn into solvency problems.

Thursday – 11 June 2020

• Producer Price Index (USD, GMT 12:30) – The PPI, the headline inflation figures will be depressed by oil prices, while the core figures face divergent pressures that have thus far been downward on net, via diminished demand, though with risk of price boosts from supply disruptions for some components. The Fed will have plenty of elbow room for an easy money policy over the coming quarters.
• Jobless Claims (USD, GMT 12:30)– US initial jobless claims fell -249k to 1,877k in the week ended May 30 after declining -320k to 2,126k (was 2,123k) in the prior week. This is the 9th straight week of declines.

Friday – 12 June 2020

• EcoFin Meeting (EUR, Full Post) – European Finance Ministers are to convene on a variety of topics.
• Michigan Sentiment (USD, GMT 15:00) – US consumer sentiment slipped to 72.3 in the final May print from the University of Michigan Survey, weaker than expected and down from 73.7 in the preliminary May report. However, it’s still a little better than the 8-year low of 71.8 from April. June’s preliminary release is expected to show an increase to 75.0.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM.]

Date : 9th June 2020.

FX Update – June 9 – Sterling rally stalls.

GBPUSD, H1
The Pound has taken a turn lower, racking up a 0.5% loss to the Dollar and about a 1% decline versus the Yen, while also softening a little against the Euro. The backdrop of sliding stock markets in Europe has weighed on the Pound, which has established a pandemic-era proclivity to underperform its main currency peers during risk-off periods. Attention also remains on the UK-EU trade negotiation front. The decision by EU fisheries ministers not to change course on their position — to maintain the “status quo”, as the EU’s chief negotiator Barnier put it, has “skewed things late in the process,” according to a Downing Street source cited by the Guardian. London is frustrated by Barnier’s inability, thus far, to convince various member states to look for a compromise. The UK is insisting that it will be an independent coastal state, and that there needs to be a new relationship with the EU with regard to fishing, pointing to Norway as a working example. The EU, on the other hand, wants to emulate the common fisheries policy (CFP), under which fishing quotas are agreed at an annual negotiation. This is a major issue for the UK which ran large in the pro-Brexit campaign. The UK government, for instance, points out that the scheme has led to France having 84% of the cod quota in the English Channel. The EU is now expecting the talks to drag on until October, regardless of whether the UK asks for an extension of its post-Brexit transitory access to the single market (which it has to decide on by July 1st). Unless there is a breakthrough in trade negotiations, the pound’s upside potential is likely to remain limited.

Technically, the daily chart remains in bid mode, having closed above the 200-day moving average (1.2676) yesterday (June 8) for the first time since March 11 and completed 8 consecutive days of gains. H4 has moved to test the 20-period moving average on the close of the last candle, whilst the H1 time frame triggered lower on the break of the 20-hour moving average at 1.2700 and moved below yesterday’s low at 1.2627 to test 1.2616.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM.]

Date : 10th June 2020.

US Equity futures and “Fear-Index”.

The pop in the USA100 to the 10k mark for the first time ever was a focal point. However, it was an uneven close on Wall Street yesterday as tech continued to outperform and news that Apple Inc is preparing to announce a shift from its own main processors in Mac computers helped the USA100 future to move higher overnight. Advanced Micro and Nvidia were also posting strong gains.

That gain helped the USA30 and USA500 pare initial losses, though the decline in the broader index knocked it back into the red for the year. Nevertheless, the 3200 level for USA500 was sustained so far. The slide for USA30 and USA500 came as profit taking after the long rally appears to be in play — for now. Technical indicators are suggesting a pull-back is due on Wall Street following the surprising, record breaking rally from March lows.

The slight erosion in risk appetite supported a recovery in Treasuries and reversed the bearish curve steepener. The recent bear steepening trades were reversed too, with a bull flattener knocking the long bond yield down 6 bps to 1.590%. The 10-year Treasury’s reopening went very poorly by every metric. The curve flattened to 61 bps after widening to 72 bps intraday late last week.

In the stock market, close attention should be given to the correlation between VIX Index and the US Futures. As the Dow and S&P sustain their 2-month rally with the NASDAQ fractionally firmer after setting a fresh record high yesterday, the VIX Index (Volatility Index) or otherwise, ‘fear index’ , has also turned higher. VIX represents the expected price fluctuations in the S&P 500 Index options over the next 30 days, and hence a negative correlation has developed between the two indices. Dating back the beginning of the VIX in 1990, the correlation between daily changes in the S&P 500 and VIX was more than -70%, while in the past 10 years the correlation has strengthened further.

Hence the recent reverse of the VIX Index higher as S&P500 is in a rally , has spread doubts over whether the asset will continue advancing. The turn of Volatility higher as per the Reuters picture below, suggest a potential risk appetite erosion that could limit the S&P500 incline and could potential imply to a pullback.

Today, markets remain cautious ahead of the FOMC announcement, although with no change to the rate band expected that also may not provide the catalyst investors seem to need to push stretched valuations further out.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM.]

Date : 11th June 2020.

FOMC: Lower-for-longer stance unchanged.

The FOMC “is not even thinking about thinking about raising rates,” said Fed Chair Powell in his press conference yesterday.

As universally expected, the Fed left the funds rate band unchanged at 0% to 0.25%. But while the policy statement was nearly word for word from April’s, there were some small changes that reflected a rather pessimistic view from Fed officials. That outlook was also underscored by the Fed’s projections, including the dot plot. And while Chair Powell said he was pleasantly surprised by the shocking May jobs data, he stressed the Fed would not react to one report. He was more circumspect of the report and suggested it was more a reflection of the high degree of uncertainties. The only positive in the statement was that financial conditions had improved thanks to the Fed’s and the administration’s relief measures which were “large, forceful, and quick.”

Not surprisingly, the FOMC left the Fed funds rate band unchanged at 0% to 0.25%, and the vote was a unanimous 10-0 for a second straight meeting, after the one dissent on March 15. But the Fed doubled down on its lower for longer stance — not only did the policy statement reiterate that the rate band will be maintained until there is “confidence” that the economy is back on track, but the central tendency dot plot showed no rate hikes through the 2020-2022 time horizon. Additionally, the policy statement repeated from April that the virus will continue to “weigh heavily on the economy, employment, and inflation over the near term.” But this time the Fed added that the pandemic also poses “considerable risks to the economic outlook over the medium term.”

The Fed’s forecasts backed up those more pessimistic views too. The GDP projections were remarkably weak for 2020 across the board, with a central tendency for 2020 of -7.6% to -5.5% which is well below our own -3.2% figure. However, all but the low-end outlier forecasts showed a big GDP bounce in 2021-22. Oddly, the jobless rate estimates were quite optimistic relative to their GDP estimates, with a 2020 central tendency of just 9.0%-10.0%, versus our estimates of 9.9%, perhaps done to avoid aggravating joblessness fears.

In terms of inflation, there were no visible concerns that the massive stimulus and the surge in the balance sheet could drive price pressures higher. In fact, there were big PCE chain price downgrades across the forecast horizon, and the 2020 central tendency was reduced to just 0.6%-1.0%, versus our own 1.2% estimate.

These projections are consistent with the view that the economy is still at risk over the medium term, with the need to keep rates lower for longer, and with the Fed not even thinking about thinking about raising rates, even as financial conditions improve.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM.]

Date : 12th June 2020.

FX Update – June 12 – Risk Off Friday.

Trading Leveraged Products is risky

USDJPY, H1
The Dollar and Yen posted fresh highs against most other currencies, although managed to pare losses as the pre-London session in the Asia-Pacific region progressed, with US equity index futures managing about a 1% rebound after closing sharply lower on Wall Street yesterday. Asian share markets, meanwhile, have been a sea of red, although most of the main indices pared intraday losses, and China’s CSI 300 index managed to creep into the black. Oil prices remain soft, with front-month USOil dropping to an 11-day low at $34.49, which marked a near 15% correction from the three-month high seen on Monday, at $40.40. Investors, having driven many asset prices well into pre-pandemic valuations, are now fretting about a trending rise in new coronavirus infections in some areas where economic reopening has been ongoing for over a month. A surge in new cases in the states of Arizona, New Mexico and Utah (up 40% last week versus the prior week’s levels) are cases in point. With a vaccine and/or effective treatment remaining elusive, the premise for optimism about reopening economies has been based on the r-rate remaining below 1.0 (sub-1 readings indicating a contracting rate of new infections, and above 1 indicating an exponential increase in the rate of new infections). This is now being tested, which is translating into concerns about the possibility for there being another bear phase in the markets.

Safe haven demand for the US currency lifted the narrow trade-weighted USDIndex (DXY) to a three-day high at 96.93, before cooling to 96.60. EURUSD concurrently ebbed to a three-day low at 1.1277 before recouping to the daily pivot at 1.1330. The risk-sensitive AUDUSD and AUDJPY also printed fresh lows before rebounding from lows, to 0.6910 and 0.7410, respectively.

Sterling has remained in the underperforming column of currencies, partly due to the continued lack of encouraging signs on the EU-UK trade negotiation front, and partly due to the UK currency’s pandemic-era sensitivity to risk-off conditions. Cable printed an eight-day low at 1.2545, before moving north of 1.2600 again. UK April GDP data, released before the London interbank open, showed a 20.4% m/m contraction, which left the rolling three-month trend at -10.4%. April industrial production contracted 20.3% m/m. April should prove to be the nadir, as data from this month captured the full effect of the lockdown, which started on March 23rd in the UK. Economic reopening started in mid May. Although the GDP and production data were even worse than median forecasts, the data has had little bearing on UK markets, which are looking ahead to economic reopening, both domestically and internationally, and how successful this can be in the continued absence of either a vaccine or effective treatment for the SARS Cov-2 coronavirus.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM.]

Date : 15th June 2020.

Events to Look Out for This Week.

Moving into a new week, the focus is now squarely on the EU-UK meeting on Monday and the monetary policy meetings in the world’s major economies (BoJ and BoE) and their potential for guidance regarding future stimulus actions. On the data front, the economic calendar is packed and focus will be on the UK economic data which will be scrutinized for any sign regarding the depth and length of the recession.

Tuesday – 16 June 2020

• RBA Minutes (AUD, GMT 01:30) – The RBA minutes should provide guidance. The bank signalled in its last meeting that “the accommodative approach will be maintained as long as it is required”.
• BoJ Interest Rate Decision and Conference (JPY, GMT 03:00 & 06:00)– No major changes are expected in the BoJ’s policy meeting next week, as the Bank already made it clear that it will do whatever it can, but warned the central bank may not be able to keep interest rates low without trust in Japan’s finances over the long term. Kuroda told lawmakers that the BoJ will actively buy T-bills and government bonds and consider changing rates for its yield curve control if necessary. The BoJ would also consider expanding its special lending programs to further support firms if needed. Monetary easing should be continued until the BoJ’s price target is met, while extraordinary measures in response to the pandemic will fade out post-virus.
• Average Earnings Index & ILO rate (GBP, GMT 06:00) – UK Earnings with the bonus-included figure are expected to rise to 2.6% y/y in the three months to April. UK unemployment is expected higher at 4.4%, as data from this month should capture the full effect of the lockdown, which started on March 23rd – mid May in the UK.
• Economic Sentiment (EUR, GMT 09:00) – German June ZEW economic sentiment is expected to have sharply declined again to 32 from 51.
• Retail Sales (USD, GMT 12:30) – May increases are expected to be seen of 9.5% for headline retail sales and 8.4% for the ex-auto figure, following April drops of -16.4% for the headline and -17.2% ex-autos.

Wednesday – 17 June 2020

• Consumer Price Index (GBP, GMT 06:00) – Prices are expected to move up in May, with overall inflation to increase at 0.9% y/y, compared to 0.8% y/y last month.
• Consumer Price Index (EUR, GMT 09:00) – The final Euro Area CPI for May is anticipated to rise to 0.4% y/y from 0.1%y/y last month. The core inflation is seen at 0.8% y/y from 0.0% y/y (revised from 0.7%).
• Consumer Price Index and Core (CAD, GMT 12:30) – May BoC CPI is expected higher at 0.1% from its -0.4% m/m pace, after it revealed the expected sharp drop in April, as a full month of lockdown savaged the economy.
• Crude Oil Inventories
• Gross Domestic Product (NZD, GMT 22:45) – The Q1 GDP is expected to grow at 0.5%, unchanged from last quarter.

Thursday – 18 June 2020

• Employment Data (AUD, GMT 01:30) – While the Unemployment Rate is projected to have spiked at 8.3% in May, Employment change is expected to have decreased -575K.
• SNB Interest Rate Decision and Press Conference (CHF, GMT 07:30) – SNB is expected to keep rate settings unchanged at the June meeting. The SNB would like to step out of the negative interest rate policy sooner rather than later, but with the world economy still in the grip of Covid-19 and data releases highlighting the fallout from the crisis, there is little the central bank can do if it wants to keep the currency under control. The SNB already signalled in March that it will step up interventions on forex markets to shield the CHF.
• Interest rate Decision and Conference (GBP, GMT 11:00) – The economic data from the UK is expected to add pressure on the BoE to add further stimulus measures at next week’s meeting, even if officials continue to shy away from negative rates. Even though the consensus forecasts suggest no change in the policy rate in this meeting, a cut vote at 9-0 MPC is anticipated.
• Jobless Claims (USD, GMT 12:30)– US initial jobless claims fell -355k to 1,542k in the week ended June 6 after sliding -226k to 1,897k (was 1,877k) previously.
• BoJ Monetary Policy Meeting Minutes (JPY, GMT 23:50) – The BoJ minutes should provide further guidance for 2020.

Friday – 19 June 2020

• European Council Meeting (EUR, Full Post) – The meeting will involve the Heads of State and Governments of member states.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM.]

Date : 16th June 2020.

Equity futures boosted further from US data.

The Dollar rose following the better industrial production figures and Retail sales, leaving EURUSD at session lows of 1.1268 from 1.1285, and USDJPY at session highs of 107.51 from 107.45.

US industrial production rebounded 1.4% in May, shy of expectations, following a downwardly revised -12.5% (was -11.2%) in April, which is a record decline (data go back to 1919. This broke a string of two monthly declines and brought capacity utilization up to 64.8% from 64.0% (was 64.9%); the historic low of 66.7% was set in June 2009. Manufacturing production rose 3.8% versus -15.5% (was -13.7%) thanks to a 120.8% pop in vehicles and parts following a record -76.5% (was -71.7%) April plunge.

US retail sales bounced 17.7% in May, with sales excluding autos jumping 12.4%, both record increases and nearly double expectations. Those follow declines of -14.7% (was -16.4%) and -15.2% (was -17.2%), respectively. Compared to last year, the contraction rate has slowed to -7.7%, with the ex-auto rate at -8.1%, versus double digit rates rates of declines previously.

However Equity futures remain in focus as they continue to indicate a sharply higher Wall Street open, while yields, particularly at the long end of the curve are higher. US equity futures are rallying since overnight session, as risk appetite soared amid firming expectations for yet more massive stimulus globally.

Currently the USA30 is 1.9% higher, the USA500 is up 1.4% and the USA100 has improved 1.3% in pre-market trading. Wall Street rallied into the close yesterday, coming back from sizable losses earlier in the session, following an announcement from the Fed that the bank would begin purchasing individual corporate bonds beginning today. Reports that the US is planning a $1 tln infrastructure program have added to optimism. Meanwhile, the BoJ kept rates steady but extended its lending program, keeping the stimulus taps wide open.

Finally, prospects for a EU and UK compromise agreement on a future trade relationship are seen as on the rise. While equities are wildly enthusiastic about stimulus, worries continue to fester over a second wave of COVID-19 as governments increasing relax restrictions to reopen economies. However, news of the first life-saving coronavirus drug, reported by the BBC, has added to the equity rally.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM.]

Date : 18th June 2020.

Central Banks keep markets choppy.

The SNB held rate settings unchanged at the June policy review, as widely expected. The central bank said in a statement that the “expansionary monetary policy remains necessary to ensure appropriate monetary conditions in Switzerland“. To this extent “and in light of the highly valued Swiss franc it remains willing to intervene more strongly in the foreign exchange market”. Under the SNB Covid-19 refinancing facility (CRF) the bank is also providing the banking system with additional liquidity. Not surprisingly the bank stressed that growth and inflation forecasts come with an unusually high degree of uncertainty at the moment, but under that proviso the bank projects CPI to fall to -0.7% this year and remain negative at -0.2% in 2021 before lifting to 0.2% in 2022. This is based on the assumption that the policy rate remains at -0.75%, which highlights that negative rates are unlikely to disappear any time soon.

SNB is sticking to aggressive fx intervention as the main tool to fight the impact of the coronavirus pandemic. SNB chief Jordan stressed that the currency is “highly valued” and repeated that the central bank will continue to sell it as needed. The bank now expects a contraction in economic activity of 6% this year, the most severe recession since 1970. Inflation forecasts were also cut but while the central bank maintains a dovish bias and previously said rates can be tweaked further, it is pretty clear that officials are reluctant to go below the current level of -0.75% for the key policy rate. Negative for longer remains the main message.

Low for Longer is also the message for Norges Bank. Norges Bank left its policy rate unchanged at zero percent. Norway’s central bank said in a statement that “the committee’s current assessment of the outlook and balance of risks suggests that the policy rate will most likely remain at today’s level for some time ahead”. Lower for longer then is the main message as the pandemic leads to a “sharp downturn in the Norwegian economy”. The statement did say that since the May meeting “activity has picked up faster than expected”, “unemployment has fallen more than anticipated and oil prices have risen”, but despite this activity remains “substantially lower than at the start of the year”. There is also still “considerable uncertainty surrounding the path to recovery”. Against that background the bank argues that “low interest rates are contributing to speeding up the return to more normal output and employment levels”. Norges Bank’s latest policy rate forecast “implies a rate at the current level of the next couple of years, followed by a gradual rise as economic conditions normalise”.

Nonetheless, after today’s SNB conference, the bank is clearly trying to prevent a “disproportionately” strong Swiss franc. That said, as the Swiss franc came under strong upward pressure due to search for safe havens and as it still remains highly valued according to SNB, the Swiss franc is expected to face a limited appreciation as SNB maintained that they will keep intervening strongly to limit the appreciation of the Swiss franc – as they have been doing over the past few months already.

As for today the conference looks to be an uneventful event as CHF has kept steady and USDCHF has stalled since the Asia session within the 0.9481-0.9500 area, while EURCHF has been consolidating between 1.0667 – 1.0689 for 6 consecutive hours.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM.]

Date : 19th June 2020.

FX Update – June 19 – Mixed Markets.

Trading Leveraged Products is risky
Narrow ranges have been prevailing among Dollar pairings and cross rates against a backdrop of uncertainty in global markets. Most stock markets have lifted out of lows over the last day, though many indices still remain below highs seen earlier in the week. China’s CSI managed to edge out a three-and-a-half-month high, but Japan’s Nikkei and South Korea’s KOSPI, while posting moderate gains, remained below highs from earlier in the week. S&P 500 futures gained 0.5%, but remained off yesterday’s highs.

In Forex markets, EURUSD has settled to a consolidation of recent losses, holding a narrow range in the lower 1.1200s, above the 16-day low seen yesterday at 1.1185. USDJPY has been plying a narrow range in the upper 106.00s, holding above yesterday’s one-week low at 106.67. Cable, amid its second week of declines, has steadied in the mid 1.2400s, above yesterday’s 18-day low at 1.2401. EURGBP concurrently settled off its three-week high, seen Thursday, at 0.9044. Both AUDUSD and AUDJPY have been posting narrow ranges well within the confines of their respective Thursday highs and lows. The Canadian Dollar posted modest gains, although USDCAD remained within its previous-day range.

USOil prices printed a nine-day peak at $39.69, buoyed by news that the OPEC+ group agreed to meet their supply cut quotas, along with major oil traders saying that demand is recovering, although both these items should already have been largely factored in. USOil has failed to close over $40.00 since the early days of March. Gold continues to hold over the key $1725.00 zone, and test the $1730 area, in early European trades.

European stock markets are modestly higher in early trades too, with the GER30 up 0.5%, the UK100 0.3%. US futures are now posting gains of 0.4-0.6% and the 10-year Treasury yield is up from overnight lows at 0.71% – up 0.5 bp on the day.

Taking a step back, global market sentiment is grappling with glass-half-empty and glass-half-full arguments. There are signs of new waves of coronavirus infections as economies reopen, which has already seen social restrictions being introduced in some places (such as in Beijing and California). Geopolitical issues remain wildcards. President Trump, for instance, said yesterday that the US could complete a “decoupling” from China. On the “half full” side, there is the expectation that the massive stimulus by global central banks is primed to give risk assets a major boost.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM.]

Date : 22nd June 2020.

Events to Look Out for This Week.

Welcome to our weekly agenda, our briefing on all the key financial events globally.Virus jitters will remain a focus along with Beijing and several US states as real data continues to reveal the impact of the pandemic on the economy. Market attention is honed in on any trade escalations but also on next week’s agenda, the high frequency data of the world’s biggest economy remaining a major focal point for markets.
Monday – 22 June 2020

• PBoC Interest Rate Decision (CNY, GMT 01:30) – The People’s Bank of China announced a more aggressive monetary stimulus in its first-quarter report. In this meeting they should provide guidances on the next move in Loan Prime Rates.

Tuesday – 23 June 2020

• Markit PMI (EUR, GMT 07:30-08:00) – The prel. June composite PMI for Germany is forecasted to register an upwards reading to 34.1 from 32.3, while the Eurozone’s number is expected to decline to 25.0 from 31.9.
• Markit PMI (GBP, GMT 08:30) – The May final services PMI was revised up to 29.0 from 27.8 vs 13.4 in April, and final manufacturing PMI revised up to 40.7 from 40.6, vs 32.6 in April.
• New Home Sales (USD, GMT 14:00) – A 1.1% May increase is seen for new home sales to a 630k pace, after a slight rise to a 623k rate in April. We saw a 12-year high of 774k as recently as January. The start of mandated closures in mid-March fueled the March-April pull-back for sales, following robust growth for all the housing measures through the winter, though a big Q2 hit is expected on home sales. As the economy reopens, the recovery for new home construction will likely be faster than for the rest of the economy, given solid fundamentals going into the crisis, and even lower mortgage rates.

Wednesday – 24 June 2020

• Interest rate Decision and Conference (NZD, GMT 02:00) – RBNZ held rates steady at 1.75% in May, and this is expected to remain the case again in next week’s meeting.
• German IFO (EUR, GMT 08:00) – June German IFO business confidence is expected to slow down to 78.3, after it unexpectedly rose to 79.5 in May.
• Trade Balance (NZD, GMT 22:45) – The overall trade deficit of New Zealand is currently at -$2.5B.

Thursday – 25 June 2020

• ECB Monetary Policy Meeting Accounts (EUR, GMT 11:30) –The ECB Monetary Policy Meeting Accounts, similar to the FOMC minutes, provide information with regards to the policymakers’ rationale behind their decisions.
• Jobless Claims (USD, GMT 12:30)– US initial jobless claims fell -58k to 1,508k in the week ended June 13 following the-331k drop to 1,566k (was 1,542k) in the June 6 week. That’s an 11th consecutive weekly decline since the record surge to an all-time high of 6,867k in the March 27 week.
• Durable Goods (USD, GMT 12:30) – Durable goods orders are expected to rise 17.0% in May with a 105% surge in transportation orders, after a -17.7% headline orders decrease in April that included a -48.3% transportation orders decline.
• US Final Gross Domestic Product (USD, GMT 12:30) – No net revision in the -5.0% Q1 GDP growth clip is anticipated. The revised Q1 data will still depict a quarter that was likely posting respectable 2% growth until mid-March, when mandatory shutdowns prompted a dramatic output plunge.
• Tokyo CPI (JPY, GMT 23:30) – The country’s main leading indicator of inflation is expected to have declined at -0.2% y/y in June ex Fresh Food.

Friday – 26 June 2020

• Personal Spending and Consumption (USD, GMT 12:30) – Personal consumption is expected to decrease by -5.7% in May after a 10.5% increase in April, alongside a 5.2% rebound in consumption that follows a -13.6% decrease in April. April income faced a big boost from the CARES Act that will be partly unwind into May.
• Michigan Index (USD, GMT 14:00) – Michigan Index is the main US consumer confidence index and it is expected to remain flat following the lift to 78.9 from 72.3 in May.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM.]

Date : 23rd June 2020.

European Market : EURUSD at 1.1300 again.

The news flow today caused a brief risk-off burst in Asia-Pacific markets followed by a sharp recovery. In currencies, this transpired as a bout of dollar and yen outperformance alongside a sharp drop in risk-sensitive currencies such as the Australian dollar, followed by a quick reversal. The cause was miscommunication from the White House. Trade adviser to President Trump, Pete Navarro, said during an interview with Fox that the trade deal with China was “over.”

This saw risk assets and currencies tumbling, before Navarro quickly walked-back his remarks with the help of White House Economic adviser Kudlow, who affirmed that the trade deal was very much in place. Trump himself then tweeted: “China Trade Deal is fully intact.“

The narrow trade-weighted USDIndex (DXY) dropped to a 96.65 low on the initial remarks by Navarro, which is the lowest level seen since June 17th, before sprinting to a 97.24 high and subsequently settling near 97.00. EURUSD concurrently dropped by over 30 pips in making a low at 1.1244 before rebounding to levels around 1.1305. The pair earlier printed a six-day high at 1.1305.

Followed by overnight news, European stock markets and Euro remain broadly higher, after the stronger than expected Eurozone and UK PMI readings that help to underpin sentiment further.

Eurozone PMIs stronger than expected in preliminary readings for June. The manufacturing PMI lifted to a four months high of 46.9 from 39.4 in May and the services number jumped to 47.3 from 30.5 in May. That left the composite at a 4-month high of 47.5, up from 31.9 in the previous month. Data still points to overall contraction in the Eurozone economy, but the French readings were already above the 50-point no change mark and the pace of the downturn eased markedly as economies further relaxed restrictions. Markit also reported continued strong improvement in business expectations for the year ahead. Hotels, restaurants, travel and tourism remain impacted but with borders gradually opening there seems at least light at the end of the tunnel, which is helping to boost sentiment even if current conditions remain subdued. Nevertheless, we agree with Markit’s comment that the outlook remains uncertain as the “new normal” will likely continue to impact the services sector in particular and it remains to be seen how many companies can survive the downturn, especially if and when government wage support is scaled back

In other news, SNB’s Zurbruegg stated that FX intervention potentially “unlimited”. Zurbruegg said there are no limits to how far the SNB’s balance sheet could expand. He also suggested that the bank is not concerned about the possibility of being named a currency manipulator by the U.S. saying the central bank is in close contact with the United States to explain Switzerland’s special situation and its highly valued currency. At the same time, Zurbruegg said monetary policy can not cushion the blow of Covid-19 – stressing that “this is where fiscal policy comes in. If fiscal policy no longer able to use its instruments, this will lead to a worse overall economic result”.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.