Instaforex Analysis

Forex broker related topics and discussions

Re: Instaforex Analysis

Postby IFX Gertrude » Fri Sep 15, 2017 12:56 am

Fed will not help the dollar

Encouraged by hopes of stimulating the US economy under the influence of Donald Trump's stimulating programs, the "bears" of the EUR/USD pair went into a counter-attack. The consequences of hurricanes "Harvey" and "Irma" were not as terrible as initially expected. Besides, history shows that "Katrina" was stronger against the two, at a time when the Fed raised the federal funds rate in 2005. Natural disasters are temporary and in the end the result of the restoration work can benefit the GDP. Simultaneously, the idea of tax reform, which in late 2016 pushed up the USD index, has returned to the market.

Judging by the comments of the Republicans, the bill on changes in the taxation system will become public for a week by September 25. Up to this point, one can only guess at the basic provisions of the reform and how far it will spread in the American economy. The president only hinted that the rich should not expect special preferences, which contrasts with previous statements about the reduction of corporate tax and real estate tax. However, the fact that Trump changes his mind like a glove, throughout it should be expected.

The rise in US GDP growth rate entails a more rapid tightening of the monetary policy by the Fed, compared with what the markets are currently waiting for. While the regulator is concerned about inflation, it must be understood that conditions are constantly changing. If in the 1970s, its average level was 7.1%, in the 1980s - 5.6%, in 1990 - 3%, in the 2000s - 2.6%, but now it is below the 2% mark. The liability is globalization and new technologies that increase competition and force producers to cut prices. In correlation with this, raising the federal funds rate to 3-3.5% or higher, as it was before, is not necessary. The cycle of monetary restriction of the Fed can be completed much earlier, and the realization of this fact will attract new sellers of the US dollar to the market.

Dynamics of inflation and federal funds rates

Image

Source: Trading Economics.

The outlook for the euro, on the contrary, appears optimistic. In fact, due to the lag in the economic cycle in the eurozone compared to the United States, the ECB is at the same pace as the Fed in 2014. The European Central Bank is ready to normalize monetary policy, and the current EUR/USD pair correction only increases the likelihood of it. In October, Mario Draghi will report on the curtailment of the quantitative easing program. This will be a new occasion to buy the euro.

It should be noted that during its last cycle of tightening monetary policy in 2005-2008, the regional currency strengthened against the US dollar by 30%, and if history repeats itself, the current +13% is just the beginning. In this regard, it makes sense for traders to stick to the previous strategy in the main currency pair - buying on payoffs.

Technically, the inability of bulls to move prices above the target by 161.8% on the AB = CD pattern indicates their weakness. The formation of the double vertex increases the correction risks in the direction of at least the lower boundary of the upstream trading channel.

EUR/USD, daily chart

Image

Analysis are provided byInstaForex.
Best regards, PR Manager

Learn more about InstaForex Company at http://instaforex.com
IFX Gertrude
 
Posts: 5198
Joined: Wed Nov 07, 2012 6:25 am

Re: Instaforex Analysis

Postby IFX Gertrude » Mon Sep 18, 2017 2:25 am

US Dollar: bulls ready for revenge

The US dollar was sold at the close of the week on Friday after an unexpectedly weak report on retail sales and industrial production for the month of August. The data cast doubt on the prospects for the recovery of the US economy.

Retail sales decreased by 0.2% compared to July. Moreover, the July growth of 0.6% was revised downwards to 0.3%. Meanwhile, the report for June was a;so revised from + 0.3% to -0.1%. Thus, the dynamics of retail sales over the past three months was significantly worse than the market expected, casting doubt on the ability of the US consumer sector to maintain demand at the same level.

For the first time since January, the volume of industrial production has decreased. The decline in August was 0.9%, which is the maximum monthly decline since May 2009, causing the manufacturing industry fell by 0.3%. The reason for such a weak data, according to experts, is the consequences of hurricane "Harvey", which broke out on the southern coast of the United States and contributed to a decline in the oil refining and chemical industries.

The GDP growth rate in the third quarter was now under attack. The GDPNow model from the Atlanta Federal Reserve forecasts an increase of 2.2% in the third quarter, which is noticeably worse than the 4% growth expectations of just 6 weeks ago. Meanwhile, weak economic growth casts doubt on the Fed's plans to normalize monetary policy.

Image

The failed report on retail sales was unexpected given the acceleration in consumer price growth. In August, inflation rose by 0.4% against a growth of 0.1% for the month of July. Year-on-year growth reached 1.9%. The results were better than forecasts and, it would seem, gave a strong argument for the bulls on the dollar. Good dynamics on consumer activity would add credibility to the leaders of the Fed. This is because after the start of the program to reduce the balance sheet following the meeting on September 20, the market considered the matter resolved,and the dollar should have receive the long-awaited impetus for a turn.

However, the dollar's fate is again in question. Of course, the dynamics of retail sales is unpleasant news for the Fed but it will not affect its position. The plan to reduce the balance sheet was announced in advance and the impact of the hurricane will have be temporary. However, the increase in inflation is a much stronger argument, and it will give an opportunity in the updated forecast of September 20 to indicate higher figures than the market expects.

The weakening of the dollar by the end of the week was also caused by the unexpectedly aggressive position of the Bank of England, which announced the imminent start of the rate hike cycle, and fixing profits before the weekend. At the same time, there is a noticeable recovery in the markets, which is reflected in the growth in demand for risky assets with stock indices growing. The dollar is experiencing a clear deficit of good news, and the beginning of the week before the Fed meeting will be held in anticipation of the positive outcome of the meeting.

At the moment, the dollar is ready to resume growth. All the catalysts for its decline in the current year are already played by the market. There are no new catalysts and there are very few reasons for further weakening. The problem with the level of public debt and government funding is removed from the agenda. The fate of the tax reform is in the hands of the democrats with whom Trump, according to recent data, has managed to find a solution that suits everyone. Any announcement of support for reforms by the Congress will serve as a powerful driver for the growth of the dollar, as it will potentially contain the factor of a rapid inflow of investments into the US economy.

The dollar has good chances, primarily against the yen and the franc. The Central Bank of Japan and the NBS continue to adhere to a soft monetary policy, which, against the backdrop of growing interest in risk, will be an additional argument in favor of sales. Against the euro, the dollar does not yet have strong positions, as the ECB is also preparing to wind down the buyback program. However, the euro's rise before the Fed meeting is virtually ruled out. Trade in the Australian and Canadian dollars will be cautious, with greater chances to go into the lateral range, at least until the support from rising commodity prices ceases.

Analysis are provided byInstaForex.
Best regards, PR Manager

Learn more about InstaForex Company at http://instaforex.com
IFX Gertrude
 
Posts: 5198
Joined: Wed Nov 07, 2012 6:25 am

Re: Instaforex Analysis

Postby IFX Gertrude » Tue Sep 19, 2017 2:31 am

Pound defeated a strong opponent

The British pound was marked by the best weekly dynamics against the basket of major world currencies over the past nine years, strengthening against the US dollar by 3% after the Bank of England signaled it was ready to tighten monetary policy. It is interesting to note that the US dollar did not look like a whipping boy either. The reduction of geopolitical risks around North Korea and the growth of the probability of the Fed's monetary restriction against the acceleration of inflation to 1.9% allowed the "dollar" to finish the five-day session in positive territory against the majority of competitors from the G10. The bigger the gains of sterling!

It's one thing when the market pushes the date of the rate hike and then brings it closer, as in the case of the Fed. It is quite another when the chances of tightening monetary policy grow dramatically, as in the case of the Bank of England. Guided by the need to implement its own inflation projections, the regulator made it clear that it was going to raise the repo rate in the near future. And if someone did not believe him, then the speech of Gertjan Vlieghe forced them to do it.

The most serious "dove" of the Committee on Monetary Policy said that the increase in wages, the growth of the world economy, and the household expenditures make it possible to expect the first increase in rates in the next few months. The derivatives market believes that this will happen in November.

The probability of raising the repo rate

Image

Source: Bloomberg.
When an ardent opponent of monetary restriction speaks the language of the "hawk", it becomes the best driver for currency growth. The pound proved it, having strengthened during the day by 1.5% against the US dollar.

The minutes of the last meeting of the Bank of England and Gertjan Vlieghe proved that the "doves" remained in the minority. Meanwhile, the pound's sensitivity to upcoming releases of macroeconomic statistics should increase. It seems that the BoE is now less worried than before about the problem of reducing real wages. However, if retail sales show a decline in purchasing power, then the problem will remind it of itself. The release of the indicator is scheduled for September 20.

For the US dollar, the key event of the week will be the FOMC meeting. The open market committee can lower inflation forecasts and change the expected trajectory of the federal funds rate, which will affect the long-term outlook for the USD index. The Fed continues to be concerned about the dynamics of personal consumer spending, and the acceleration of the August CPI may eventually turn out to be the usual market noise. It is hardly to be expected that the signal from Janet Yellen and her colleagues about the act of monetary restriction in December will be the reason for buying the "dollar". The futures market thus pawns 59% of the probability that this will happen.

Technically, the bulls managed to achieve a target of 161.8% in the AB = CD pattern very quickly, after which the correction risks increased in the direction of 1.34-1.345. To continue the northern trend to 1.377 (targeting 200% on AB = CD), customers need to update the September maximum.

GBP / USD, daily chart

Image

Analysis are provided byInstaForex.
Best regards, PR Manager

Learn more about InstaForex Company at http://instaforex.com
IFX Gertrude
 
Posts: 5198
Joined: Wed Nov 07, 2012 6:25 am

Re: Instaforex Analysis

Postby IFX Gertrude » Wed Sep 20, 2017 2:09 am

Does Brent feel the ceiling?

Oil continues in its northern trend, inspired by the increase in the forecast of global demand by 1.7% from the International Energy Agency, the reduction of Saudi Arabia's exports to the lowest levels over the past three years, and the decline in production of Iraq's second-largest OPEC producer by 260 bpd. Baghdad said that it exceeded its plans brought by the cartel, which is a "bullish" factor for black gold. Moreover, another role in its successes is played by the suspended state of the American dollar.

As a rule, autumn is not the best period for Brent and WTI. The completion of the automotive season in the US leads to a reduction in inventories. In addition, the Energy Information Administration reports that there is an increase of production to 6.08 million bpd in October, encouraged by rising prices of producers of shale oil. Nevertheless, hurricanes allowed for adjustments to the seasonal factor. For a long time, black gold finally felt relief under pressure from the growth of drilling rigs from Baker Hughes. The decline of the indicator for two consecutive weeks reached 749 (-7 on the results of the five-day period by September 15).

As the US refineries restart, the demand for oil should gradually increase and support prices because of optimistic forecasts for the global index from the IEA and OPEC. At the same time, $50 per barrel for WTI is a very dangerous figure. It attracts hedgers like honey bears, so it will be extremely difficult to gain a foothold above this mark.

As the value of black gold rises, the question is returned to the market: what are the limits? It is obvious that the end of the hurricanes "Harvey" and "Irma" and the transition of the market to a normal state will return it to the idea of increasing American production with parallel insurance of price risks. This combination of drivers has repeatedly provoked attacks of "bears." I do not think that something will change in the fall. You can talk endlessly about the fulfillment of the obligations to reduce production by OPEC members. You can also discuss about the extension of the agreement beyond March 2017. However, the fact remains: Americans continue and will continue to use the favorable conjuncture for them.

Dynamics of the US dollar is of no small importance. Since Brent and WTI are quoted in this currency, the growth of the USD index leads to a rise in the cost of imports in the largest consumer countries, and vice versa.

Dynamics of the USD Index and Brent

Image

Source: Trading Economics.

In this regard, the expectations of the start of the process of normalizing the balance of the Fed and a rise in the probability of an increase in the rate for federal funds from 33% to 58% is of special joy to "bulls" that black gold is not able to bring. On the other hand, the positions of the euro against the backdrop of the ECB's desire to roll back QE look strong. After all, it has the largest share in the USD index. Thus, consolidation in EUR / USD does not put obstacles on the way of black gold to the upward trend.

Technically, a resistance break at 55.95 will allow Brent bulls to continue the rally in the direction of the following targets (by 200% and 224%) in the AB = CD pattern. On the contrary, the inability of buyers to take an important level by storm will testify to their weakness and will increase the risks of correction to $ 54.7 and $ 53.1 per barrel.

Brent, daily chart

Image

Analysis are provided byInstaForex.
Best regards, PR Manager

Learn more about InstaForex Company at http://instaforex.com
IFX Gertrude
 
Posts: 5198
Joined: Wed Nov 07, 2012 6:25 am

Re: Instaforex Analysis

Postby IFX Yvonne » Thu Sep 21, 2017 4:46 am

B]Technical analysis of USD/CHF for September 21, 2017[/B]

Image

All our targets which we predicted in yesterday's analysis have been reached. The pair is trading above its ascending 20-period and 50-period moving averages, which play support roles and maintain the bullish bias. The relative strength index is calling for a new upleg. The downside potential should be limited by the key support at 0.9645.

As widely expected, the Federal Reserve kept its key interest rates unchanged. It also announced plans to begin in October shrinking its approximately $4.2 trillion in holdings of U.S. Treasury bonds and mortgage-backed securities acquired after the 2008 financial crisis. However, according to projections released at the same time by the Federal Open Market Committee, the central bank will go ahead for one more rate increase this year and three times next year. This blew a surprise to the market, as investors had previously believed a series of weak inflation readings might alter the Fed's monetary tightening plans.

To sum up, as long as this key level is not broken, look for a further advance to 0.9765 and even to 0.9795 in extension.

Chart Explanation: The black line shows the pivot point. The present price above the pivot point indicates a bullish position, and the price below the pivot points indicates a short position. The red lines show the support levels and the green line indicates the resistance levels. These levels can be used to enter and exit trades.

Strategy: BUY, Stop Loss: 0.9645, Take Profit: 0.9765

Resistance levels: 0.9765, 0.9795, and 0.98830

Support levels: 0.9625, 0.9590, and 0.9550


InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.
Best Regards,
PR Manager
InstaForex Companies Group
User avatar
IFX Yvonne
 
Posts: 287
Joined: Sat Mar 02, 2013 12:23 am

Re: Instaforex Analysis

Postby IFX Gertrude » Mon Sep 25, 2017 1:23 am

EUR/JPY dropping nicely, remain bearish

The price continues to test our major resistance at 134.15 (Fibonacci extension, horizontal swing high resistance) and we expect to see a drop form this level to at least 132.01 support (Fibonacci retracement, horizontal pullback support). Do take note of the bullish ascending channel we're seeing as we might see the price bounces off this level and only a break of the channel would see a stronger drop towards our profit target.

Stochastic (34,5,3) is seeing major resistance at 96% and we expect a drop from this level. It also displays good downside potential for our drop.

Sell below 134.15. Stop loss is at 134.92. Take profit is at 132.01.

Image

Analysis are provided byInstaForex.
Best regards, PR Manager

Learn more about InstaForex Company at http://instaforex.com
IFX Gertrude
 
Posts: 5198
Joined: Wed Nov 07, 2012 6:25 am

Re: Instaforex Analysis

Postby IFX Gertrude » Mon Sep 25, 2017 1:24 am

EUR/JPY dropping nicely, remain bearish

The price continues to test our major resistance at 134.15 (Fibonacci extension, horizontal swing high resistance) and we expect to see a drop form this level to at least 132.01 support (Fibonacci retracement, horizontal pullback support). Do take note of the bullish ascending channel we're seeing as we might see the price bounces off this level and only a break of the channel would see a stronger drop towards our profit target.

Stochastic (34,5,3) is seeing major resistance at 96% and we expect a drop from this level. It also displays good downside potential for our drop.

Sell below 134.15. Stop loss is at 134.92. Take profit is at 132.01.

Image

Analysis are provided byInstaForex.
Best regards, PR Manager

Learn more about InstaForex Company at http://instaforex.com
IFX Gertrude
 
Posts: 5198
Joined: Wed Nov 07, 2012 6:25 am

Re: Instaforex Analysis

Postby IFX Gertrude » Tue Sep 26, 2017 12:13 am

Elections in the Bundestag hold back the euro

Over the past week, despite the fact that the market is pretty polychromic, the euro and the pound remained virtually unchanged. The main event of the week was the meeting of the Federal Commission for Open Markets. The meeting saw the Fed leaving the refinancing rate unchanged. It was quite expected so the market almost ignored this event. The strongest influence was caused by the words of Janet Yellen, which was said during the subsequent press conference. The head of the Federal Reserve did not disappoint investors. She stated that the issue of raising the refinancing rate would be considered during the December meeting. Of course, when making a decision, the Fed will rely on the state of the labor market, as well as inflation. So the chances for another rate increase this year are quite high. After all, the labor market is in fairly good condition and inflation has resumed growth. However, the effect was short-term with the dollar literally losing all its gains within a day. Although, Mario Draghi was partly to blame. The head of the ECB said that there is no reason to continue the program of quantitative easing after December this year.

In fact, there were no other significant events for the week. The final data on inflation in Europe coincided with a preliminary estimate, and inflation accelerated from 1.3% to 1.5%. Apparently, this was the reason for the statements of Mario Draghi. However, such a result was expected so the market did not pay attention to it. Also, the growth rate of retail sales in the UK accelerated from 1.4% to 2.4%. Despite the clearly positive nature of the data, they also did not have a significant impact on the market.

It's all about the German elections which took place on Sunday. The market was waiting for the results. Of course, no one doubted the victory of Angela Merkel and her CDU / CSU. However, the two most influential parties in Germany, the same CDU / CSU and SPD, received the worst result since 1949. Especially since the SPD announced the transition to the opposition. Because of this, Angela Merkel will now have to form a coalition with the Greens and FDP. All three parties have significant differences on a variety of issues, so the coalition is clearly shaky. The German press has already dubbed it "Jamaica". Moreover, the coalition itself does not seem to be the most reliable so the negotiations on its formation will be extremely tough. Obviously, the CDU / CSU will have to make a number of concessions. In such an uncertain situation, investors will not make hasty decisions. Therefore, the potential for strengthening the euro is rather small.

The macroeconomic calendar for the current week does not spoil us with significant news. The preliminary data on the inflation in Europe is worth paying attention to because it may show further acceleration to 1.6%. Given that these data will come out at the very end of the week when the outlines of the new ruling coalition in Germany may be known, the euro will have many reasons for optimism. However, before that, the euro will remain under pressure as the final data on US GDP in the second quarter would show the acceleration of economic growth from 2.0% to 2.2%. Similar data from the UK would confirm the fact of a slowdown in economic growth from 2.0% to 1.7%.

You can also expect a certain reaction to a number of other data. In particular, home sales in the primary market in the US may increase by 3.3% while orders for durable goods may add 1.0%. However, this is about positive news for the dollar. The data on personal incomes and expenses, which should grow by 0.3% and 0.1%, may become negative. Taking into account that the income growth is not ahead of the expense growth, this will be perceived as a signal for a rapid decline in consumer activity. This data will be released on Friday, immediately after the preliminary data on inflation in Europe. The pound has nothing to rejoice for, as a significant reduction in the number of approved applications for mortgages is projected.

In general, the dollar has every chance of strengthening. And only on Friday will it have to give up its position a little. During the week, the EUR/USD pair may fall to 1.1795.

The GBP/USD pair is also waiting for a decline to 1.3395.

Analysis are provided byInstaForex.
Best regards, PR Manager

Learn more about InstaForex Company at http://instaforex.com
IFX Gertrude
 
Posts: 5198
Joined: Wed Nov 07, 2012 6:25 am

Re: Instaforex Analysis

Postby IFX Gertrude » Wed Sep 27, 2017 1:38 am

AUD/JPY right on buying level, remain bullish

Image

The price is now testing major support at 88.52 (Fibonacci retracement, Fibonacci extension, horizontal overlap support, bullish divergence) and we expect to see a bounce above this level to push price up to 89.66 resistance (Fibonacci extension, horizontal swing high resistance).

Stochastic (34,3,1) is starting to bounce nicely from our 5% support and ha good upside potential

Buy above 88.52. Stop loss is at 87.89. Take profit is at 89.66.

Analysis are provided byInstaForex.
Best regards, PR Manager

Learn more about InstaForex Company at http://instaforex.com
IFX Gertrude
 
Posts: 5198
Joined: Wed Nov 07, 2012 6:25 am

Re: Instaforex Analysis

Postby IFX Gertrude » Thu Sep 28, 2017 1:52 am

Daily analysis of USDX for September 28, 2017

USDX is testing upper Bollinger bands across the board and looks forward to testing the next resistance around 94.04. However, we're still expecting a corrective move towards the 200 SMA at H1 chart in a first degree. If the index manages to break above 94.04, we can expect another higher leg to test the 95.00 psychological level.

Image

H1 chart's resistance levels: 93.09 / 94.04
H1 chart's support levels: 91.67 / 90.30

Trading recommendations for today: Based on the H1 chart, place sell (short) orders only if the USD Index breaks with a bearish candlestick; the support level is at 91.67, take profit is at 90.30 and stop loss is at 93.04.

Analysis are provided byInstaForex.
Best regards, PR Manager

Learn more about InstaForex Company at http://instaforex.com
IFX Gertrude
 
Posts: 5198
Joined: Wed Nov 07, 2012 6:25 am

PreviousNext

Return to Forex Brokers



cron