Hot Forex - Market Analysis and News.

[HFM.]

Date : 15th October 2020.

European Equities Heavy on Covid-19 Resurgence.

Trading Leveraged Products is risky
GER30, UK100, H1

European stock markets are selling off, with the GER30 now down 3%, the UK100 2.3%, as investors price out stimulus hopes in the US and prepare for fresh economic setbacks as the second round of Covid-19 hit Europe and leads to increasingly strict restrictions. France has announced a curfew for Paris, that confines citizens to their homes between 9 pm and 6 am for four weeks, in the U.K. regional lockdowns are widened with London moving to tier 2 (No household mixing indoors anywhere from midnight on Friday. People are discouraged from using public transport. Schools, universities and places of worship remain open. All businesses and venues can continue to operate) and in Germany Chancellor Merkel has urged citizens to stick to the rules while signalling that official measures will be tightened if cases continue to rise at the current rate. Officials are eager to avoid full lockdowns, but despite the respite over the summer, they failed to prepare appropriate alternative measures to deal with the spike in cases that is now starting to show up in hospital admissions. Central bank officials continue to signal the willingness to do more if needed, but that hasn’t prevented Eurozone spreads from widening this morning, as peripheral bond markets feel the pressure from the pick-up in risk aversion. The Italian 10-year yield is up 3.4 bp, although still below the 0.7% mark, while German 10-year yields have dropped back -3.8 bp and -3.2 bp so far today.

The GER30 spiked below 12,600 from a close yesterday at 12,970, the UK100 pushed below 5,800 from highs yesterday over 6,000.

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 : 16th October 2020.

Election2020 – Only Three Weekends Remain.

A little over 2 weeks – 12 trading days – until the US Election, and the Town Hall meetings co-hosted on the two main US national TV networks provided nothing really new with regards to policy or outlook. However, it did provide the opportunity to have both meetings running consecutively side-by-side. President Trump was in Miami, in the must-win state of Florida (29 Electoral College votes) with NBC, while former Vice President Biden was in Philadelphia, Pennsylvania, another key swing state with 20 Electoral college votes available to the victor, with ABC.

President Trump said “I know nothing about QAnon”, that he WILL accept a peaceful transfer of power, ”Yes, I will. But I want it to be an honest election, and so does everybody else.” and commented on whether he took a coronavirus test on the day of his last debate with Mr Biden, saying: “Possibly I did, possibly I didn’t.”

Candidate Biden continued to avoid answering if he would move to increase the size of the supreme court (the third arm of US government) with judges if, as seems likely, the Senate confirm judge Amy Coney Barrett to the court before election day. “I have not been a fan of court packing. I’m not a fan.” He admitted that the 1994 crime bill, which he helped draft, which the Black Lives Matter Movement has claimed is one of the reasons for mass jailings of African Americans, was a “mistake” but continued to defend his record “It [the bill] had a lot of other things in it that turned out to be both bad and good.”

So attention is turned to a weekend of high intensity campaigning, the final two-week onslaught of media messages and no-holds-barred advertising. The pair are still expected to meet face to face for the final time before polling day on Thursday in Belmont University, Nashville, Tennessee (a strongly Republican state with 11 electoral college votes, almost guaranteed for the President).

The Pandemic, Economics, Foreign Policy, and even the environment are likely to be key topics in what is expected to be a much less raucous and chaotic affair than their first encounter. The most powerful job in the world is up for grabs, and it impacts us all, regardless of where we live.

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 : 21st October 2020.

USD Down, GBP & Crypto’s Higher, CAD data.

The Dollar underperformed while the Pound outperformed and the Yen, diverging from its usual close correlation with the Dollar, was measuring as the second strongest of the main currencies. Global stock markets have been skittish, with European indices dropping and US equity index futures giving back gains in returning to near net unchanged levels.

Sterling has rallied quite strongly, showing a 1.0%+ gain on the Dollar at prevailing levels, as it rallied to test 1.3100. EURGBP is back under 0.9100 and down over 0.5% and testing 0.9050. The market reacted to remarks from EU trade negotiator, Barnier, that talks with the UK could continue “day and night.” There was also news that US Trade Representative Robert Lighthizer said that a trade agreement with the UK would come “reasonably soon.” The currency market evidently remains bullish on the EU and UK reaching an agreement, although the game of chicken between the two sides is continuing. Boris Johnson’s position is that the EU must fundamentally change its stance, while France’s European affairs minister Clément Beaune asserted yesterday that there would be “no new approach.” USDJPY tumbled under 105.00 en-route to printing a one-month low at 104.55. EURUSD lifted to a one-month high at 1.1868.

USDCAD posted a new low for a fourth consecutive day in pegging a six-week low at 1.3080 before recouping back above 1.3100 amid a near 2% drop in oil prices. USOil fell from the $41.88 highs seen on Tuesday to a low of $40.86 in London morning trade. The API reported a 600k bbl weekly inventory build after the close yesterday, versus expectations for a 2.0 mln bbl draw, which weighed on prices some. Inventories at the Cushing, OK storage hub were up by 1.2 mln bbls. Concerns over Covid related demand destruction, along with increased crude production from Libya, should keep a cap on prices for now. The EIA weekly inventory report is due at 14:30 GMT.

Canada’s CPI accelerated and retail sales grew, but both measures were on the tame side. CPI rose 0.5% y/y in September after the 0.1% gain in August. But CPI dipped -0.1% on an m/m basis (nsa) after the -0.1% slip in August and flat (0.0%) reading in July. CPI last rose on an m/m basis in June, rising 0.8%. The average of the three core CPI measures was 1.7% y/y, matching the 1.7% average seen in August. The CPI report remains consistent with ample slack in the economy, with a long way to go before activity returns to pre-pandemic levels across all industries. Meanwhile, retail sales rose 0.4% in August (m/m, sa) after a 1.0% gain in July (revised from 0.6%). Statistics Canada’s preliminary estimate is for little change in September retail sales. Sales have returned to more typical growth rates following the initial pop that followed the reopening of the economy — sales surged 21.2% in May after plunging -24.8% in April and falling -10.0% in March. Retail sales jumped 22.5% in June, an all time high growth rate. The ex-autos sales aggregate gained 0.5% in August. Both measures undershot expectations for stronger gains. Tame annual CPI growth along with the deceleration in retail sales is consistent with steady, accommodative policy from the BoC for an extended period.

Elsewhere, BTCUSD moved to 2020 highs after Paypal confirmed it will allow cryptocurrency buying, selling and shopping on its network.¹ The press release stated it “signaled its plans to significantly increase cryptocurrency’s utility by making it available as a funding source for purchases at its 26 million merchants worldwide. The company is introducing the ability to buy, hold and sell select cryptocurrencies, initially featuring Bitcoin, Ethereum, Bitcoin Cash and Litecoin, directly within the PayPal digital wallet. The service will be available to PayPal account holders in the U.S. in the coming weeks.”

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 October 2020.

Volatility and US elections.

US Elections had been and always expected to be an event historically extremely volatile globally. Elections similar to other political or banking sector events are notably treated by market participants with anticipation and speculation. As discussed in our HF Markets Q4 Outlook, markets look to have already pricing in the possibility of Biden’s victory even though they overall maintain an increasing cautious optimism, holding US Dollar basket to 2018 low territory.

Historically, it has been noticed that during election years, market participants due to the heightened uncertainty, shift their investments into Money market funds instead from the safety of stock and bond funds, AS THEY waiting out. The 2020 is not any different but it’s been a unique one as we have seen an extreme money flow into currency assets in comparison with past election years, due the sluggish US and worldwide economic activity as the Covid-19 crisis resumes, the truce with China again which is under scrutiny, the lockdowns in several areas, the lack of additional fiscal stimulus from central bankers, Brexit frictions and the fear of double dip recession in Europe.

That said, cash balance into money funds spike to $980 in 2020 as of June 30, given the large risk premia. However as soon as uncertainty recedes we might see equity market’s volatility and volume to spike again since they consider to be attractive and more stable assets in period which there are historically low interest rates. If we emphasize on the medium term thought it is expected that if current conditions sustained, market volatility will extend beyond Election days with any potential outcome, i.e. a Biden win and Democrat majority in Congress, a Biden win but split Congress, or a Trump victory with split Congress.

Meanwhile, a very chart from Wells Fargo Investment Institute, shows the USA500 implied Volatility index along with USA500 index performance prior and post the Election Day based on the election since 1988 with 2008 recession year excluded. This chart interestingly suggest that typically the USA500 tends to eased/consolidate a bit a month prior elections despite a extremely high volatility, while USA500 price continue their upwards move after the election day even though volatility declines significantly.

WELLS FARGO INVESTMENT INSTITUTE



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 October 2020.

Dollar Dips as Equities escalate.

EURUSD, H1

The Dollar fell back concomitantly with rallying European stock markets and US index futures, which was likely a repositioning dynamic after declining over the last two weeks.

EURUSD rebounded quite strongly, rising back above 1.1850 from a three-day low at 1.1787. Preliminary October PMI data in the services and composite readings out of the Eurozone and UK undershot the median forecast of economists, but didn’t impact the Euro or Sterling. Technically, the H1 chart has moved over the 50-hour moving average (1.1835) to test R1 at 1.1852; above here is Wednesday’s high and R2 at 1.1885. Today’s pivot point is next support at 1.1830, below the 50-hour moving average. The MACD histogram has broken the zero line and the signal is starting to rise, although still south of the zero line, RSI is positive and trades at 64.50, Stochastics are moving into the OB zone.

Cable settled at near net unchanged levels around 1.3090-95 after dropping back from a high at 1.3124. The UK currency remains comfortably up on week-ago and month-ago levels against the Dollar and Euro, and others, with market participants anticipating a limited trade deal between the EU and UK. The two sides are amid intensive face-to-face discussions. The UK and Japan today signed the trade deal that was agreed in principle a month ago.

USDJPY is modestly softer after upside forays over the last day stalled at 104.93-95. At levels around 104.70, the pair remains down by 1% on the high seen on Wednesday. AUDUSD rallied to an eight-day high at 0.7158, floated by higher stock markets in Europe and an above-forecast composite PMI reading out of Australia. Global asset markets are likely to remain skittish, notwithstanding the rally today, with investors pondering the uncertainties presented by the surge in Covid cases in Europe and elsewhere, including now in many US states and in Canada, and which are leading to ever more restrictive countermeasures. The ongoing delay in new US fiscal stimulus and the event risk posed by the upcoming US elections are also in the mix. Regarding the elections, polls point to a Biden presidency, but it is less clear if his Democratic party can take control of the Senate. If not, then Congress will remain split at least until the mid-term elections in two years, which will limit the scope for policy changes and crimp Democrat ambitions for expansive fiscal policy.

US data later is topped by flash PMI data, Manufacturing numbers are expected to show a slight rise to 53.5 from 53.2 last time, whilst the more important and significant Services numbers are expected to increase by a single tick from 54.6 to 54.7. The data is due at 13:45 GMT.

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 : 26th October 2020.

Events to Look Out for This Week.

A gigantic week is coming with FAANGs reporting their Q3 earnings, along with the rate decisions and monetary policy statements from three key Central Banks (ECB, BoJ, and BoC) as the second wave of Covid-19 is hitting the world with full force. Across the Atlantic, all eyes will be also on what emerges from the Brexit talks and how markets will reform in the final week prior to the US Elections. Focus will be on inflation data from the biggest economies in the world, including the US, China and Europe.

Monday – 26 October 2020

• German IFO (EUR, GMT 09:00) – German IFO business confidence is expected to slip slightly to 92.9 in October after the jump seen in September to 93.4.
• New Home Sales (USD, GMT 14:00) – New home sales are seen at -1.1% in September after a drop-back to a 1,000k pace from a 14-year high of 1,011k in August, versus a prior high of 965k in July. With the economy’s reopening, the recovery for new home construction and sales is proving much faster than for the rest of the economy, partly due to solid fundamentals going into the crisis, and even lower mortgage rates now.

Tuesday – 27 October 2020

• ECB Bank Lending Survey (EUR, GMT 09:00)
• Durable Goods (USD, GMT 12:30) – Durable goods orders are expected to drop -0.7% in September with a 3.0% decline in transportation orders. The durable orders rise ex-transportation is pegged at 0.4%. A defense orders gain is pegged at 4.0%, following a -3.6% August correction. Boeing orders fell back to zero planes in September from 8 in August and zero in July.

Wednesday – 28 October 2020

• Consumer Price Index (AUD, GMT 00:30) – Australian inflation data in Q2 was moderate but in line with projections and remained within the average rate of increase between 2% and 3% that the RBA targets over the medium term. The RBA trimmed mean CPI for Q3 is seen at 0.1% q/q.
• Interest Rate Decision and Conference (CAD, GMT 14:00) – In September, the Bank of Canada maintained an aggressive stimulus posture, reiterating forward guidance and the continuation of its QE program until “the recovery is well underway.” However, the BoC removed its promise to “provide further monetary stimulus as needed,” keeping its commitment to hold rates at current levels and maintain the asset purchase program at the current pace. The policy rate was held steady at 0.25%, and it is expected to be maintained in this meeting as well.

Thursday – 29 October 2020

• Interest Rate Decision and Conference (JPY, GMT 03:00) – The Bank of Japan remains pledged to do whatever it takes to support the recovery. The BoJ minutes last time highlighted that some council members are becoming concerned that virus developments will negatively impact the recovery. On the political front, PM Suga is expected to maintain policy continuity.
• Gross Domestic Product (USD, GMT 12:30) – Gross Domestic Product should advance in Q3 and reveal headline growth of 33.5%, with a reversal in the inventory trajectory from a record-liquidation rate of -$287 bln in Q2 to a $12 bln accumulation rate in Q3, as the inventory figures begin a long rebuild into early-2021.
• Interest Rate Decision and Conference (EUR, GMT 12:45 & 13:30) – More than data releases, it is developments on the virus front that will have strengthened the dovish camp at the ECB. The number of new infections, but also hospital admissions and deaths, continues to rise across Europe, with Ireland just announcing a full lockdown until early December. Developments are adding to pressure on the central bank to act sooner rather than later, and the debate at next week’s ECB meeting will likely be lively, although on balance Lagarde is expected to hold fire for now and focus on a dovish presser that will lay the ground for a PEPP extension in early December.

Friday – 30 October 2020

• Retail Sales and GDP (EUR, GMT 07:00) – The German Retail sales are seen at 4.2% y/y in September from 3.7% y/y last month. The final Gross Domestic Product in Germany for Q3 is seen at -8.9% q/q from 9.7%.
• Gross Domestic Product and Consumer Price Index (EUR, GMT 10:00) – Fears of a double dip recession are on the rise, with preliminary Q3 GDP s.a. numbers likely to show the index down to 16.9% y/y from -14.7%. The Euro Area preliminary CPI is anticipated at -0.4% y/y in October with core reading at 0.5% y/y from 0.2% y/y last month.
• Personal Income/Consumption (USD, GMT 12:30) – A 0.3% increase in personal income in September is anticipated after a -2.7% decrease in August, alongside a 1.1% climb in consumption after a 1.0% bounce in August.

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 : 27th October 2020.

USD improves, GBP Mixed, CB decisions & TRY.

The Dollar firmed up into the London open and beyond, paring declines seen earlier in pre-Europe trading in Asia. The move drove gold and oil prices lower, too, indicating there has been some depth in dollar buying, although the magnitude of movement hasn’t been great.

US equity index futures have managed modest gains after the S&P 500 closed with a 1.9% loss yesterday, though investor sentiment in global markets remains decidedly restive. Most Asian stock markets declined, and Australia’s ASX 200 equity index closed with a 1.7% loss in its worst single day performance in a month. Soaring positive Covid tests and the associated trend toward increasingly restrictive countermeasures, along with the risk of next week’s US election results being contested, and the delay in US stimulus relief, are keeping markets on edge. Overall strong Q3 economic data are being overlooked as markets look to what is appearing to be a grim winter ahead in the northern hemisphere, with risks of a double dip recession being factored in, especially in Europe. Amid this, the Dollar has been holding up, despite a narrowing in nominal US yields relative to peers in recent days, including Bunds and JGBs, revealing that the US currency is functioning as a safe haven currency again.

The USDIndex index lifted back above 93.00, though remains down on yesterday’s and Friday’s highs at 93.11-13. EURUSD tipped back to levels around 1.1800 after posting a high at 1.1836. USDJPY remained settled in the upper 104.00s in what could be termed a consolidation of the steep decline seen last Wednesday but has tested below S1 below to 104.60. The pair remains about 0.7% down from week-ago levels. Sterling continued to trade without direction, overall, holding over 1.3000 around 1.3020. EU and UK trade talks continue in London through to tomorrow before relocating to Brussels. They are reportedly working to a mid-November deadline.

Taking a step back, the currencies that are showing the biggest gains on the year-to-date are the ones that most would expect to have risen against the backdrop of the global pandemic crisis, being currencies of current account surplus economies, specifically ones that don’t have a high commodity export component. Thereby the Euro, Swiss Franc and Yen are the biggest gainers, while the dollar bloc and the likes of the South African Rand and Russian Ruble, among others, are showing the biggest year-to-date declines, save the politically savaged Turkish Lira. Turkey seems to be in dispute with all its neighbours and some further afield. The Central Bank holding rates last week has not helped its predicament – USDTRY printed a new all time high earlier at 8.1580.

USDCAD lifted out of a correction low at 1.3169, with oil prices, although up yesterday’s lows, coming under moderate pressure during the early London session. WTI benchmark crude prices are down 6.5% from week-ago levels, and prospects for a sustained rebound look to be limited given the supply glut and weakening demand as Covid-containing measures intensify across Europe and some parts of North America. This backdrop should keep USDCAD underpinned. The pair has been trending lower since March, though we have been noting trend derailing risks. A run to levels around 1.3500 and above seems possible, as the BOC decision tomorrow and the US Election next week remain the key immediate fundamentals .

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 : 28th October 2020.

Alphabet Q3 earnings: Focus on advertising revenue.

Once again the FAANGs excluding Netflix plan to report their earnings the same day within 30 minutes of each other. FAANGs illustrate 20% of the S&P500’s total value. Even though most of them face increasing antitrust scrutiny, all posted an impressive rally this year as their shares have surged and sustained close to record highs as the pandemic reckoned with online services such as shopping, streaming, clouds.

Hence in addition to our earnings articles, today we will focus also on Alphabet’s third quarter earnings for 2020 which will be reported along with the rest of the giants. Just a quick reminder, Alphabet Inc. is a holding company and Google’s parent company. The company’s businesses include Google Inc. (which is the largest one) and its Internet products, such as Access, Calico, CapitalG, GV, Nest, Verily, Waymo and X. The company’s segments include Google and Other Bets.

Alphabet’s report will be key after its first year-over-year revenue decline in company history in Q2 as a result of the lack of advertisement demand from the majority of businesses amid the economic slowdown globally. However the forecasts for Q3 have the company well positioned with the consensus recommendation “strong buy”, corresponding to the majority of the consensus recommendation from Reuters Eikon, as 30 out of 36 analyst firms recommend “buy” and “strong buy”, while only 6 recommend ‘hold’. Hence, no analyst firm is making a “sell” or “underperform” recommendation for the company.

GROWTH FOR ALPHABET INC

According to Zacks Investment Research and Reuters Refinitiv, the information service is expected to have $11.33 in earnings per share during the third quarter of 2020, which represents a yearly rise of 12% since the reported EPS for the fiscal quarter ending September 2019. Focus should also turn onto the revenues number which is projected to hit a 6% yoy spike, to around $42.8 billion, from the $40.49 billion reported last year. Net sales meanwhile are seen at $35.26 billion.

Revenue by business segment:

• Google Search & Other (ad revenue, dominated by Google Search) – consensus of $24.96 billion*
• YouTube ads – consensus of $4.38 billion*
• Google Network (ad sales on third-party websites/apps) – consensus of $5.07 billion (down 4%)
• Google Cloud – consensus of $3.32 billion*
• Google Other (Play Store, hardware, YouTube subscriptions) – consensus of $5.11 billion*
• Other Bets (Google Fiber, Verily, Waymo, etc.) – consensus of $153 million (down 1%)

Despite the huge diversification of its portfolio, Alphabet Inc earns nearly 71% of its revenue from advertising. Hence even though, the travel sector is still weak the majority of the analysts remain bullish on the advertisement services of Alphabet into Q3 given the slightly ‘temporary as it seems’ recovery that we have seen as the pandemic eased over the summer and business began reopening. Morgan Stanley stated also that they came into earnings season positive about the online ad market recovery but grew more optimistic following Snap’s blowout ad revenue beat and better-than-expected ad results from Verizon subsidiary AOL, Sirius-owned Pandora, and Interpublic Group.

The positive consensus for Q3 could also be driven by the shift of Alphabet to Google Play and YouTube to help its partners support their businesses. The majority of the analysts believe that we could see strength in YouTube ad pricing and the return of brand spending in its channel checks.

Alphabet CEO Sundar Pichai however highlighted in his latest statements GOOGL’s focus on non-advertising segments. Like tech giant and its cloudspace rival Microsoft Corporation (NASDAQ: MSFT), GOOGL has the capacity and resources to strategically pivot, from a large “legacy” company to an aggressive emergent; in this case, from search to various ‘other segments’ offering potential growth.

Meanwhile, the risks that Alphabet faces ahead of the report is the solid competition from Amazon in advertising business and cloud services but also the cold headwinds on the earnings front in addition to emerging regulatory challenges. Coming off a not-so-stellar Q1 reporting season, GOOGL fell short in Q2, reporting its first ever year-over-year quarterly decline.

Earlier this week, the Justice Department, along with 11 Republican state attorneys general, filed an antitrust lawsuit against Google, alleging an unlawful monopoly on search services and advertising. US Deputy Attorney General Jeffrey Rosen called GOOGL, “the gateway to the internet” and said the company “has maintained its monopoly power through exclusionary practices that are harmful to competition.”

At this stage, we have to point out that a consensus recommendation, similarly to economic data forecasts, has a significant effect on the near-term stock price, as it represents a company’s wealth picture. Hence on every earning report, stock price is highly influenced by the comparison between the outcome and the expectations. The market tends to react positively if the outcome comes in better or at least in line with the forecast, while the price moves lower if the reported earnings miss expectations.

Technically, the current Google price action has posted a sharp rally since the March panic with the stock rebounding from the $1,000 area to record highs at $1,732.41. Currently the asset is traded at the $1,524 area which is just a 23.6% loss from all-years highs. The overall bias remains strongly positive even though medium term momentum indicators signal a potential pullback lower.

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 : 29th October 2020.

Apple – Earnings Tonight.

APPLE, Daily
The world’s largest company, APPLE (APPL), report their 4th quarter earnings ending September 30th after the close of the New York stock market later today The consensus among analysts is for revenues of $64 billion versus $64 billion in Q4 2019 and earnings per share (EPS) of $0.69 (with estimates ranging from 0.54 to 0.8) versus $0.76 in the same quarter last year.

Apple hardware has been clearly hit from the disruption in the supply chains, starting with factories and shops in China and rippling out across the wider distribution and production facilities in Asia, Europe and then North and Latin America. iPhone sales are likely to miss estimates, but likely to be compensated for by increases in services and possibly other hardware.

Style, design and being the best premium product has always been at the core of what Apple does and the big move in recent years has been away from this dominance of hardware (even though the iPhone still accounts for over 60% of revenues) to invest significantly in services. The initial move was a partnership in 2015 with IBM and Cisco to try to break into the corporate market; this has been followed by Apple Pay and more recently the long awaited upgrade for Apple TV.

Apple TV+ was launched in November 2019. Initially it was only to be in the USA but it was then made available to 100 countries at an extremely competitive $4.99 per month. Apple has entered a very crowded video-streaming marketplace, which remains dominated by Netflix, but includes Amazon and Disney. Apple Services is a growing revenue stream within the technology giant and TV+ marks its latest attempt to diversify its dependence from the ubiquitous iPhone. The aggressive pricing structuring, undercutting its competitors, is a break from traditional Apple pricing models. However, the poor reviews and weak content in the first few months of launch have been disappointing. Disney+ with a huge back-catalogue and equally as aggressive pricing has been the new winner in the streaming wars. Netflix missed expectations last week, but as subscriber numbers continue to grow, what will we see for AppleTV+?

However, this quarter saw the delayed launch of the much heralded iPhone 12 with (finally) 5G capabilities. The buzz word from Apple is the dawn of a new “super cycle” of upgrades, as many in the companies home country of the USA have delayed upgrading awaiting the 5G model. However, 5G coverage in the US is patchy and sporadic and with a highly diffused network of poor signal areas. A lot could depend on the iPhone 12, is the pent-up demand there to be taken advantage of ? Early market gossip and market news suggest their is indeed that demand.

As ever, guidance and outlook will be key with some analysts expecting a hit on revenues because of the iPhone 12 delay and figures could be as low as $60.00 billion. (JP Morgan).

Overall the services and wearables business, including sales of AirPods and Apple Watch consumables is expected to show a hefty 17-24% growth year on year.

In the midst of the Pandemic, Apple announced the launch of the iPhone SE retailing at $399.00, the issue of the cut price iPhone proved a significant success and offered simple churn of existing sales rather than any enhancement of new replacement units. can signs of the upgrade cycle be announced tonight ?

The major Wall Street banks have price targets for the stock ranging from $150 down to $49. The consensus among 41 analyst is a target price of $122 with 23 of the 41 recommending a Buy or Strong Buy rating and none of the 41 with a Sell rating. The stock currently trades at $114.00.

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 : 4th November 2020.

FX Update – Election Uncertainty = Risk Off.

If there is one thing markets (all markets) hate, it’s uncertainty, and that’s what we have at the moment in both the Presidential and Senate races. As things stand at 08:30 GMT the morning after the USA Election 2020, there are 87 Electoral votes still available. Trump, with 213, needs 57, and Biden, on 238, needs 32, to reach the key 270 votes required to become President of the USA. States yet to declare results are:-

• Pennsylvania 20
• Michigan 16
• Georgia 16
• North Carolina 15
• Wisconsin 10
• Nevada 6
• Alaska 3
• Maine 1

The Senate (with 100 votes) stands at 47 each for the Republicans and Democrats with 6 decisions awaited.

So it’s very much risk aversion on a closer than expected US election, and Trump agitating the process with claims that his rivals are attempting to manipulate the results has driven the dollar higher on a safe haven bid, while US Treasuries have surged, driving the 10-year T-note yield down by 12 bp. The DXY dollar index rose by over 0.7% in making a high at 94.30. The S&P 500 E-mini has also racked up a 1% decline, reversing over half of the gain that the cash version of the index saw on Wall Street yesterday.

There is potential for the US to be in limbo for days as the closeness of the race means a drawn-out process of vote counting. Political pundits warned ahead of the election that if Biden won a close contest, the risk of Trump formally contesting the outcome would rise. This backdrop should keep the risk-off positioning theme in play, unless there is any clear-cut outcome. The Democrats are looking set to retain their dominance in the House, though it’s looking less certain that they will flip the Senate.

Elsewhere among currencies, EURUSD has seen volatile price action, dropping sharply from levels in the mid 1.1700s to a 1.1602 low before recouping to the mid 1.1600s. The pair still remains down by around 0.5% on the day. The biggest currency losers include the Australian Dollar, which is down by over 1%, and the likes of Mexican Peso, which is showing a 3% loss, and the South African Rand, which is nearly 2% lower versus the US Dollar. The Yen has been mixed, losing ground to the Dollar while holding steady versus the Euro and gaining on the more risk-sensitive, higher beta currencies. Amid all this, the Pound has been underperforming peer currencies, that is the Euro, Dollar, Yen, and others. Cable dropped over 1% to a 1.2915 low while EURGBP rallied out of two-month lows and back above the 0.9000 level. We have been earmarking Sterling as being a currency at particular risk given the upcoming drop in the UK’s terms of trade when the country exits the single market and customs union, the impact of which will be compounded by Covid lockdowns in the UK and across Europe.

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 : 5th November 2020.

NOW WHAT?

Global stock markets are rallying and sovereign bond yields, led by US Treasury yields, are tumbling as investors warm to the idea of a split government that could finally bring additional stimulus, but keep overall spending and debt under control and thus support a low yield environment for longer. Markets are discounting a Biden presidency and a split Congress.

Although Democrats still have a narrow path to taking control of the Senate (there is a 48 versus 48 deadlock currently, with four seats left to be decided), most political pundits think it unlikely. At the same time Biden is the favourite to win the presidency, although there is still some way to go before vote counting will be complete, while Trump is mounting legal challenges. The general view is that Biden will reach the 270 winning electoral college vote threshold (he’s currently at 264 to Trump’s 214), as well as that Trump’s litigation efforts will come to naught.

Without the Senate, the Democrats big fiscal stimulus plans will be kept in check. This means both a reduced prospect for bond issuance and a reduced prospect for inflation, which is why Treasuries have been rallying strongly. The yield on the 10-year T-note has plunged by nearly 17 bp from the high seen just ahead of Tuesday’s election. The combo of lower yields, loose labour market conditions, the prospect of less competition for resources from the government, excitement about tech and the growing fad for WFH (work from home) stocks, and prospects for a Covid vaccine are among the factors underpinning Wall Street.

Hence since so far no one can celebrate a victory, you should focus on markets and how the scenario with US President Biden with a Republican Senate and a Democrat House might affect them in the near and long term future.

In the above scenario, there is firstly the concern whether US President Trump may chase some policies prior to Biden’s establishment in the White house. For example trade policy falls under the President in power, in contrast with fiscal policy and regulatory policy which fall under the US Senate in the face of a divided Congress. Another concern in a divided Government, in the long term, is the strive to achieve a sustainable fiscal position, as so far due to Covid-19 this has not been possible to accomplish. Meanwhile even without a final election outcome so far, questions have been raised in regards to prejudice, which would be corrosive to US competitiveness according to UBS.

However despite all this potential uncertainty and regardless if any of the above become true, the US economy is expected to show growth next year. According to Morgan Stanley,

"In short term, the business cycle dominates the political cycle, especially when we’re so early in a recovery. Secondly, a viable vaccine is now close to being approved. This approval, along with a better understanding of the disease and how to treat it with therapeutics, should allow us to manage a second wave better than the initial outbreak. That means by spring, we should be fully open in the economy, with safe participation by most people. The timing and pace of reopening is perhaps the most important variable and driver of economic activity next year. It’s also what financial markets continue to look forward to and why they’ve traded so well this year."

Not exactly like March, but definitely a sell off has been seen in equity markets due to the election and as the virus and restrictions remain headwinds. Despite the latest swing higher, we could state that so far the pandemic’s second wave might not have been discounted from global markets. Hence since the Election will be soon be out of the way, then if the pandemic is settled within the year Equity markets could be boosted as business will not suffer anymore. As this implies the reopening of economies globally, stocks – not solely technology ones, but all others from the tourism sector, services sector, industrial sector, etc – could finally recover.

Just to highlight however that there is the risk still of a divided Congress with Mr Biden in the House. This would limit his ability to deliver a big fiscal stimulus package as he desires to raise corporate taxes to 28%, after Mr Trump cut the rate from 35% to 21% in 2018. However the drop in taxes increased corporate profits, spurring a jump in stock buybacks that has helped to boost share prices over the past two years. These repurchases increase earnings on a per-share basis, which can boost the stock price.

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 : 6th November 2020.

NFP Friday on a US Election week!

Treasury Action: losses on Treasuries have accelerated even as stocks sag. Some of the action is a function of unwinding of some of this week’s big moves. But there’s some renewed concerns creeping back into the markets as the expectation for a split Congress is coming into doubt as special elections are likely necessary in January.
The US Dollar headed a bit higher after the jobs report, which revealed a higher than consensus NFP print, and saw the unemployment rate fall to 6.9% from 7.9%. USDJPY rallied to 103.48 from 103.35, while EURUSD dipped toward 1.1865 from 1.1880. Equity futures remain in the red, though off earlier lows, while yields ticked slightly higher before pulling back.

https://www.facebook.com/video.php?v=390059935451192

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 November 2020.

Events to Look Out for This Week.

Uncertainty and doubts soared in November as the virus surged, the FED and ECB have been unable to deliver more stimulus yet, and the US election is indicating a Biden presidency and a split Congress, with Republicans likely to retain the Senate and Democrats retaining the House. More volatility looks to be in store for next week as the market monitors economic data and events for signs of faltering growth in the US and Europe into a recession.

Monday – 09 November 2020

• BoE Governor Bailey speech and BoE Haldane (GBP, GMT 10:35 & 14:00) – The BoE in November topped up its asset purchase program by a further GBP 150 bln. That was a pretty clear indication that the BoE is not expecting to go down the negative rate route and that the weapon of choice remains asset purchases, which will help the government to raise the funds necessary to finance the costly labour market support and stimulus program.

Tuesday – 10 November 2020

• Consumer Price Index (CNY, GMT 01:30) – Chinese inflation data in September was lower at 0.2% m/m and 1.7% y/y. October’s reading however is expected to grow to 1.8% y/y as China shows recovery in key sectors.
• Average Earnings (GBP, GMT 07:00) – Average Earnings excluding bonus are expected to have grown by 1.2% (3Mo/Yr) in September. The ILO unemployment rate is expected to have declined to 4.3% from 4.5% in the three months to September.
• Economic Sentiment (EUR, GMT 10:00) – German ZEW economic sentiment for September is expected to have spiked to 67.7 in November. The Eurozone presents a picture of a split economy in general with manufacturing holding up and services struggling, and that effect will also widen the gap between Eurozone economies, as countries relying more on services and tourism will struggle much more than Germany.

Wednesday – 11 November 2020

• Interest Rate Decision and Conference (NZD, GMT 14:00) – In September, at the last meeting, the RBNZ left its official cash rate and QE program unchanged, as had been widely anticipated, but stressed a willingness to take further stimulus measures if necessary while noting persisting downside risks to the economy, adding that currency strength remains a negative for NZ exporters. The RBNZ indicated it is actively working on a negative rate stance and the expansion of QE.

Thursday – 12 November 2020

• Gross Domestic Product (GBP, GMT 07:00) – The November BoE report took into account the resurgence of Covid-19 case numbers and the resulting restrictions in the UK and elsewhere and hence the GDP is expected to contract again in the last quarter of the year, largely due to “lower consumer spending on social activity, which was assumed to be partially offset by higher spending on other goods and services”. However as per the preliminary report, GDP for Q3 is seen to deteriorate further and present a still dismal -20.5% q/q contraction, and -22.4% y/y from -21.5%.
• Harmonized Index of Consumer Prices (EUR, GMT 07:00) –The final German HICP inflation for October is seen at -0.4% y/y from -0.5%.
• Consumer Price Index (USD, GMT 13:30) – The CPI headline and core are both expected to show with 0.2% October gains, following 0.2% gains for both in September as well. CPI gasoline prices look poised to be flat in October so they’ll have no impact on the headline. As-expected October figures would result in a headline y/y increase of 1.3%, steady from September.

Friday – 13 November 2020

• Gross Domestic Product (GBP, GMT 10:00) – The release of preliminary Q3 GDP numbers for the Eurozone two weeks ago confirmed that economic activity rebounded as lockdowns were lifted with most countries’ data actually coming in stronger than initially anticipated. Hence unchanged number are anticipated for this week’s reading as the activity levels remain far below those seen a year ago, while at the same time there is the resurgence in virus cases and renewed lockdowns across most major Eurozone countries.
• Producer Price Index (USD, GMT 13:30) – As with PPI, a flat October headline gain is forecasted with 0.2% for the core, following 0.4% gains for both in September. The y/y core reading is assumed to rise to the 1.5% area into the turn of the year, with a downward hit from reduced aggregate demand but a boost for prices from supply disruptions. Supply constraints for some sectors will prove increasingly important in Q4.

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 : 10th November 2020.

USA100 holds under extensive pressure

Global stock markets are mostly higher, resuming yesterday’s stellar day on Wall Street as the indexes raced sharply higher on surprisingly positive vaccine news from Pfizer and BioNTech. News from Pfizer that its COVID vaccine is very effective prompted risk-on conditions globally, lifting stocks, yields and crude oil prices.

In the Asian market equities petered out amid the realisation that there are still considerable challenges ahead in the fight against Covid-19, however there is at least a light at the end of the tunnel now that will also reduce the pressure on central banks to add ever more stimulus. Currently however equities other than the European ones have settled in a comparatively narrow range.

The GER30 is up, after correcting some of yesterday’s sharp gains, but is holding above early lows. Other European indices are higher, with the UK100 gaining a further 0.8%, the CAC 40 up 0.5% and the Spanish IBEX 1.8%. The wider Euro Stoxx 600 has risen 7% over the past 5 days, but is still down 6% over the year, highlighting that there is still room for further improvement if and when it is confirmed that the virus situation is under control and Europe doesn’t face a further cycle of lockdowns and restrictions.

On the US side however the USA100 holds in the red after it closed yesterday -1.5% lower. The hopes for a more normal life saw investors pile into travel and leisure sectors, and flee the stay home sectors. Hence, the USA100’s gains lagged through for a second consecutive day and the index fell into negative territory. The USA100 was hit by the rotation out of defensive technology stocks into shares that will benefit most from an end to lockdowns.

The asset is in a dramatic shift this week towards negative sentiment. Selling pressure has ramped up and there has been a significant breakdown on the 20-day SMA and a reversal of more than 50% of last week’s gains. The latest higher high at 12,422 has been rejected suggesting that the 3-month descending triangle is still in place and consolidation is underway. Momentum indicators are now flat to negative in the daily chart, while intraday they are decisively negative, with 4-hour RSI consistently failing under 40 and MACD readying to turn negative. This suggests an outlook of selling into near term strength.

Hence now the November higher low and 100FE at 10,929 and 11,155 are the areas to be seen of overhead supply and a near term sell-zone for any bounces this week. Breaking down below the 10,929 and more precisely 10,700 (September low & 3-month support) could confirm a medium term bearish outlook with immediate support levels on the March-September upleg. There is initial resistance at 12,000 – 12,422 .

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 November 2020.

FX Update – November 11 – USD lifts, JPY drops, & GBP mixed

The Dollar has firmed against the Euro and other European currencies outside the case versus the Pound, with the UK currency posting two-month highs against both the Dollar and Yen, while holding steady-to-lower against the dollar bloc before rotating lower as the news broke that the mid-Nov trade deal deadline looks to be extended from November 15 into next week.

The risk-on mood has continued. Europe’s Stoxx 600 equity index rallied to its best levels in eight months, and S&P 500 E-mini futures were showing a gain of nearly 0.8% as of the early afternoon in London. The 10-year US T-note yield rose 1.5 bp to a new eight-month high at 0.979%. Commodities were mixed, however, though oil prices gained more than 3%.

In forex markets, Yen weakness and outperformance in commodity currencies and those of export oriented economies have been prevailing. USDJPY lifted back above 105.50, though remained shy of the highs seen on Monday, while AUDJPY and NZDJPY posted new two- and 10-month highs, respectively.

A pricing out of negative interest rate expectations in New Zealand following the RBNZ policy review today, which saw policymakers signal that the need for more monetary stimulus has reduced, boosted the Kiwi Dollar, which gained about 1% on the US Dollar and by more against the Yen. But biggest mover today, so far is EURNZD down some 1.5% from early day trades at 1.7350 to 1.7090 lows now.

The Japanese currency’s pronounced underperformance on Monday and continued softness marks a return to form with an inverse correlation of risk appetite in global markets. The success of Pfizer’s candidate vaccine for Covid in trials has been greeted as a game changer by investors. Bank shares, which hit record valuation lows this year, and so-called social-close stocks along with energy shares have rallied strongly, revealing that investors are looking across the valley of the prevailing predicament of Covid-related restrictions and economic weakness, and beyond to a return to normality in 2021. There is naturally some caution (known unknowns include long-term vaccine efficacy and population-wide safety), which has seen asset price gains lose momentum, though the massive fiscal and monetary stimulus that is in the works across the world, and the lower-for-longer monetary policy rubric at the Fed and other central banks (which enhances the value of corporate earnings), is a powerful tonic for higher valuations in cyclical assets. There are also a multitude of other credible Covid-19 vaccine candidates, aside from Pfizer’s, many of which have been reporting encouraging signs in advanced-stage testing.

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 : 12th November 2020.

FX Update – November 12 – Sterling Pressured, JPY in Demand

GBPJPY, H1
Some reversal in recent positioning themes has been seen, with the dollar bloc and Pound softening against the Dollar, and the Yen outperforming moderately. This dynamic has been concomitant with global stock markets, outside the case of Japan, flagging. A fall in Chinese tech stocks, sparked by Beijing regulators launching an antitrust investigation, led a broader paring of recent gains in equity markets, which surged over the last week. Some caution had already been creeping back into markets, at least enough to deter investors from entering new positions at the recently heightened levels. The raised level of optimism for a Covid-19 vaccine assisted return to normality remains intact, though there is some way to go and there are known unknowns, including long-term vaccine efficacy and population-wide safety issues. There also appears to be some disquiet about Trump’s refusal to accept the election results, especially with his move to fire his defence secretary, which some fear means that he will try to stay in office. Unnamed Trump aides cited by the Washington Post, however, say that he has no real plan to overturn the results. Japan’s Nikkei 225 gets a special mention for bucking the trend in rallying to a fresh 29-year high.

In currencies, EURUSD has been trading neutrally in the mid-to-upper 1.1700s. The pair completed a more-than 50% retrace of the outsized gain the pair saw last week and through to Monday, which left a two-month peak at 1.1920. USDJPY has ebbed moderately, to the lower 105.00s. The Pound has come under some moderate pressure, correcting recent gains. There is still no breakthrough in EU-UK trade talks. Sources cited by Reuters yesterday reported that the ‘final-final’ deadline is the end of next week, (November 20) so the clock is ticking. The general expectation remains that there will be a last minute climbdown and the two sides will strike a deal. Media networks, meanwhile, are increasingly highlighting the likely disruptive impacts of the UK leaving the single market and customs union, which will happen in just seven weeks’ time. Today’s UK GDP data, although a Q3 record at 15.5%, showed further weakness during September and was 3 ticks below expectations of 15.8%. The current data shows the UK economy is -9.7% smaller than it was at the end of Q4 2019.

Technically, GBPJPY rejected 140.00 yesterday, moving under the 20-Hour moving average into the close. Today the pair have moved under 139.00 and tested S2 at 138.70, and R3 is at 138.05. The fast MAs are aligned and trending lower, RSI is 36 and falling, the MACD histogram & signal line are also aligned lower and breached 0 line this morning. Stochastics have moved into the oversold zone but remain weak. The H1 ATR is 0.1630, and the Daily ATR is 1.3000.

Elsewhere, the Kiwi Dollar dropped back after a short-lived rally following remarks by RBNZ’s Hawkesby, who said that while negative interest rates remain an option, less monetary stimulus now appears necessary than previously thought, which essentially repeated the signalling from the central bank yesterday in the wake of its policy review. NZDUSD printed a 20-month high at 0.6914 before retreating to the mid 0.6800s.

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 : 13th November 2020.

A risk-back-on theme has emerged

The Pound was showing a 0.5% gain on the US Dollar as of the late London morning, and the UK currency was also making gains versus the Euro, Yen and other currencies. Several factors appear to be at play. One is the rebound in equity markets, which, if view edas a revival of the Covid vaccine rally, is a positive for the Pound, with the UK having large pre-orders of the Pfizer candidate vaccine.

The European bourses have recovered and are mostly in the green, albeit slightly having pared gains, with the GER30 up about 0.1%, though the UK100 is -0.6% lower. European stock indices are racking up gains of over 0.5% and USA500 futures are up by nearly 1%, nearly reversing all of the closing losses that the cash version of the index saw on Wall Street yesterday. The UK saw the biggest peak to trough drop in its GDP this year out of the G20 economies, so it may benefit most in the route out of the crisis.

Another consideration is the political developments on Downing Street, with the departure of the government’s director of communications, and news that Dominic Cummings will leave his advisory role by Christmas, being read as a weakening in the influence of the ‘Vote Leave’ campaigners, meaning there could be a softer, more pragmatic attitude to Brexit, although it is not yet clear what shape the new administration set-up will take. As for the ongoing negotiations, there is still no breakthrough with only about a week to go to the ‘final final’ deadline.

Evidently, given the Pound’s performance, the prevailing market expectation remains that there will be a last minute climbdown and the two sides will strike a deal, which is what is anticipated. Both sides will have to make concessions if a deal is to be achieved. All things Brexit go down to the wire, and neither side has been willing, as yet, to make the first move in the concession game. Too much is at stake for both sides, surely, for there to be a failure in statesmanship. It should also be clear that the UK government has the option of exiting the common market in close alignment to EU rules and then diverging in an evolving process over time. The promise of future divergence would serve to mollify the powerful faction of Brexit ideologues.

There is also the possibility of there being a ‘technical delay’, though the political mood seems set against this. UK media, meanwhile, have been increasingly highlighting the likely disruptive impacts to cross border trade that are likely to be seen when the UK leaves the single market and customs union in just seven weeks’ time.

Cable posted a high at 1.3185, which recouped nearly two thirds of yesterday’s decline, while EURGBP dropped to levels under 0.9002, correcting from yesterday’s high.

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 : 24th November 2020.

Macro Events & News – November 24 2020

Market News Today

USD recovered after better than expected PMI’s. – Earlier AstraZeneca vaccine hopes lifted stocks, EZ PMIs worse than expected, UK’s better than expected but both poor. Trump acknowledged that Biden transition should start – Equities rallied further (Nikkei back and up 2.5%) & riskier currencies gained a bid. Biden to name Yellen as Treasury Secretary & Kerry as Climate Tsar. In total a triple whammy for sentiment and risk appetite. USOil followed stocks higher and Gold trades $50 lower than Friday’s close. German GDP revised higher to 8.5% in final reading, from 8.2%.

Shortened Thanksgiving Week Ahead – Highlights – FOMC mins – more significance, after Mnuchin removed emergency funding – possibility of action at their Dec. meeting. Plus – Consumer Confidence, Durable Goods & GDP

USDIndex – Sank to support at 92.00 yesterday – rallied to 92.70, post PMI’s. back under PP now at 92.35. S1 92.10, R1 92.90.

EUR – Rejected 1.1900 & tested down to 1.1800, again yesterday. Now 1.1855 (PP) JPY – down to 103.67 lows yesterday. Rallied to 104.60, now back to 104.40. PP 104.25.

GBP – rallied to a smidge shy of 1.3400, & down to 1.3262. Back to 1.3340 (PP)now all in anticipation of EU-UK Trade announcement this week?

AUD – 0.7340 – 0.7270 range yesterday. Trades at 0.7320 now (R1), PP 0.7295 NZD – down to test 0.6900 yesterday, another good Asian session for king Kiwi, back to test R2 0.6990 earlier, now at 0.6975.

CAD – Back to 1.3040 (S1) ; R1 & 200Ma cap at 1.3090, S2 1.3015 CHF – 0.9075 lows to 0.9150 yesterday. Back to PP and 200Ma now 0.9115, s1 0.9093

BTC – Holds bid at $18,400 (PP). Tested to 18k low yesterday.

GOLD – Collapsed 3% from 1876 to test S1 at 1820 earlier – now 1830 – PP 1850 USOil – Rallied over R1 to $43.70. Vaccine hopes & OPEC+ production cut noises continue to support prices. R2 today 43.90. Private inventories later, official EIA data tomorrow.

USA500 – Closed +20 (+0.56%) 3577 – USA500 FUTS now at 3605.

Today – German IFO, US Consumer Confidence, BoE’s Haskel, Fed’s Bullard, Williams, ECB’s Schnabel, Lagarde, Lane,

Biggest (FX) Mover @ (07:30 GMT) NZDJPY (+0.79%) –. Holds rally from yesterdays sub 72.00 open, ran to test R3 at 73.05 earlier. Fast MA’s aligned higher but cooling at R2, RSI 68 moving below OB zone, MACD histogram & signal line aligned higher, breached 0-line last week. Stochs. lowering from OB H1 ATR 0.2565 Daily ATR 0.7411.

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 : 25th November 2020.

Caution and profit taking has crept into the market

US equity futures are mixed with modest moves as caution and profit taking has crept into the market following yesterday’s risk on rally. Wall Street surged with gains of over 1.5% on the broader indexes as strong efficacy rates on three vaccine candidates continued to brighten outlooks and increase the potential for a return to normalcy sooner than later. However as the overall outlook remains positive for US futures there seems to be limited appetite to push valuations out further for now, as much of next year’s (expected) recovery is already priced in, while virus developments spell further restrictions for the weeks and likely months ahead.

Expectations that Janet Yellen would be named as Treasury Secretary under a Biden administration was a relief as she’s a known quantity and would likely support hefty stimulus. Treasuries sagged, not surprisingly, on the strength in risk appetite and amid a heavy supply slate this week.

Today features a heavy dose of data ahead of the market closure on Thursday for the Thanksgiving holiday, which could make for choppy action. Of note, Q3 after tax corporate profits came in at a record 27.5% pace, from -10.7% in Q2. The USA30 is off -0.2% but sustained close to 30K area while the USA500 mini has slipped -0.06%. The USA100 mini is 0.3% firmer after underperforming the rally yesterday that saw the USA30 close above 30k for the first time ever.

GER30 and UK100 futures are down -0.1%, and up 0.3% respectively. Governments across Europe are pondering how and if to ease lockdowns over the festive period while the WHO has already warned of a third wave in the winter.

Yields have dipped modestly after disappointing jobless claims data and as stock futures give back some of yesterday’s historic gains. US Advance goods trade deficit widened to -$80.3 bln in October after the unexpected narrowing to -$79.4 bln in September. Advance durable goods orders rose 1.3% in October after climbing 2.1% (was 1.9%) in September. This is a sixth straight monthly gain as orders recover from the pandemic plunge in the spring that saw an -18.3% drop in April, just short of the weakest on record of -18.8% from August 2014. US initial jobless claims rose 30k to 778k in the week ended November 21 after claims gained 37k to 748k (was 742k) in the November 14 week. It is the strongest reading for initial claims in five weeks, as the surge in Covid infections and the consequent increase in restrictions on activity has weighed on the job market. Last the US Q3 GDP growth was left unrevised at 33.1% from the Advance report. Growth has bounced back at an historic pace after cratering at a record -31.4% rate in Q2.

The belly of the curve is outperforming with yields down over 1 bp as the market digests this week’s record supply. The 5-year is at 0.385%, with the 7-year at 0.634%. The 10-year has richened 1 bp to 0.870%, and the bond is flat at 1.60%. The 5s-30s bull steepened to 121.5 bps from 120.8 bps yesterday and 116.7 bps Monday. Bonds should find support from worries over spiking virus cases and more strict lockdowns, along with month-end where Barclays forecasts a 0.16-year extension, the most since 2009.

Attention remains on vaccines and the virus. Additionally, Brexit warnings and comments from central banks suggesting caution on additional rate cuts added to pressures on equities. ECB officials continue to flag the extension of PEPP. Mersch, however, signaled he is not looking to cut the deposit rate further.

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 : 26th November 2020.

Brexit endgame remains in sharp focus!

The USD has remained soft in quiet conditions, while global asset markets have seen little direction. The US Thanksgiving holiday has quelled activity. Europe’s Stoxx 600 traded near flat. Most stock markets in Asia gained, though remained off recent highs. The MSCI World Index is also off its highs, but remained buoyant and on course for a record monthly increase this month. Copper posted a new near 7-year high, and while other base metal prices were also underpinned most remained off recent trend highs. Oil prices saw modest declines after recent gains, which culminated in a nine-month high yesterday.

The Brexit endgame remains in sharp focus!

Sterling has seen limited direction, continuing to hold gains from month-ago levels of around 1.5% to 2.5% versus the Dollar, Euro and Yen. There is still no breakthrough in down-to-the-wire negotiations between the EU and UK, and there are lots of warnings of border chaos and, from external BoE MPC member Saunders, of long-lasting economic consequences in the event of a no deal exit from the common market.

European Commission president von der Leyen said “we are ready to be creative” to get a deal while repeating that “we are not ready to put into question the integrity of the single market.” An Irish government member said that a deal was “imperative” for everyone.

The steadiness in the Pound, the principal conduit of financial market Brexit sentiment, reveals that investors remain unperturbed. One explanation is the real money participants are sitting on their collective hands, positioning for an expected deal but waiting on concrete developments and details, while maintaining vigilance on the possibility of there being a no deal by accident.

Short-term speculative participants, meanwhile, don’t seem to have had a fruitful time in trying to play the fatiguing myriad news headlines and endless deadlines that have come and gone. The latest and supposedly final deadline, is next Tuesday — December 1 — which leaves just one month for a deal to be ratified on both sides of the Channel. We expect to a deal to materialize at the last minute, just as the withdrawal agreement was seemingly pulled out of the hat at the ultimate minute a year ago. There may even be a fudged extension.

Pressure on the UK government is intense. US president-elect Biden warned London that the scope for a deal with the US would be compromised if there is a return of a hard border on Ireland — which is what could happen in a no-deal scenario (the UK government would have the choice between maintaining a free-flowing border on Ireland at the price of breaking up the border integrity of the UK, and possible protests and even violence from loyalists, or breaking the EU withdrawal agreement, which would result in a hard Irish land border).

A leaked Whitehall document warns of a “perfect storm” of chaos in the event of a no-deal in the Covid-19 era. There are also pressures on the other side of the Channel to reach an accord. While French President Macron has political incentive to put up a show of fighting over fishing rights, he is not likely to carry through on his threat to veto any deal as other key EU states don’t see the UK’s position on fishing as being unreasonable. France and other nations, and the UK, also need to maintain good relations for security and many other practical reasons.

As for the market impact of a deal, much will depend on how narrow the deal is. The narrower it is, the bigger the negative impact on both the UK and EU’s terms of trade positions will be on January 1, particularly the UK’s.

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.