Upcoming CPIs: Canada & The UK

Tomorrow is a pretty busy day on the economic calendar! Key data is coming out both in Europe and the Americas.

Here we’ll be focusing on inflation data from the UK and Canada.

As most central banks around the world are heading towards an easing bias, if not outright rate cuts, these two countries have managed to buck the trend. Inflation in the UK and Canada remains well within policy targets. And their economies seem to be performing better than their peers.

Canada is especially in a better position given the news over the weekend of the attack on a Saudi refinery that cut 5% of the world’s oil production.

Prices in crude have subsequently spiked, as other producers have signaled they weren’t interested in stepping into the supply gap. We still don’t know how long the Saudi supply will be offline for repairs. This means Canada could expect to benefit from higher crude prices in the short term.

What to Expect From the UK

There are several bits of UK data coming out at once. Therefore, we should expect some seesawing of the market.

Generally, the focus is on the monthly CPI figure. Expectations are for this to jump to 0.7% from 0.0% prior. From there we would expect an annualized rate of 2.0%. This would be a slight decline from 2.1% prior, and exactly at the BOE’s target. If the expectations prove true, it would imply that there will be no major changes from the BOE at their meeting on Thursday.

It’s understood that the BOE would like to have a more accommodative policy given the uncertainties of Brexit and the UK registering negative growth last quarter. But the central bank can’t take action with inflation being as high as it is. And given the increase in crude prices, we could expect further inflationary pressures in the near term.

The Markets

The generalized weakness in the pound due to Brexit uncertainty would usually be expected to help exporters. It would also increase prices for consumers, pushing up the CPI. This would imply that the projections are underestimating the annualized inflation rate, and we could have a beat.

Generally, higher inflation is seen as negative for the pound, despite conventional wisdom. Typically, the idea is that if inflation is increasing, the currency should get stronger due to a tightening bias of the central bank. But the consensus is that the BOE is not in a position to raise rates while Brexit is still being resolved.

What to Expect Out of Canada

Canada has a rather relaxed day on the economic calendar. And the markets are expected to be more interested in other events that could drive the CAD, such as geopolitics.

In any case, the relevant data for the BOC is the monthly core CPI number. Expectations are for this to slow to just 0.1% from 0.3% prior. But that would still put the annualized rate at 2.2%, up from 2.0% prior.

While Canada might benefit from higher crude prices in general, internally, the disruption of supply might pose a problem. Most of the country’s oil-producing facilities are in Alberta and are exported to the US.

There isn’t much infrastructure to bring that crude to the east, where the majority of the population lives (there is only one pipeline that goes as far as Montreal). There, Canada relies on imports, 40% of which come from Saudi Arabia. While the refinery in St. John can switch to other suppliers, we generally expect those to be more expensive. This would imply higher prices at the pump in the coming weeks, and increased inflation going forward.




AUD Crushed By RBA Minutes

USD Waiting Game

The US dollar remains in the green today ahead of tomorrow’s FOMC meeting though the market is widely expecting the Fed to ease by a further .25% in line with commentary from Powell and other policymakers since the last meeting. Optimism around US/China trade negotiations offers some risk to this view though. Given the uncertainty, the Fed is not likely to hold off on easing solely for this reason. USD index trades 98.19 last having bounced off the 97.57 low.

EUR Lower

EURUSD remains subdued today with price hovering just below the 1.1025 level which was broken yesterday under the weight of a resurgent US dollar. EUR has pulled back strongly from the post-ECB highs printed last week. However, any easing from the Fed this week could stem the declines.

GBP Traders Await Supreme Court Decision

GBPUSD has been a little softer today. Although for now, the pair remains above the 1.2382 level. While above here focus remains on a further push higher to test the bear channel top. The market is waiting on the outcome of the UK Supreme Court hearing taking place today. This will determine whether UK PM Johnson acted illegally when proroguing parliamentIf the decision is upheld, this would be firmly bullish for GBP as it could see MPs being returned to parliament ahead of the current October 14th date. Doing so would allow more time for counter-moves against Johnson.

Risk Assets Soften

Risk assets have been a little weaker today as the market remains cautious over the escalating tensions between the US and Iran. Following a suspected Iranian drone strike on the world’s largest oil processing plant in Saudi Arabia, Iran has responded to US accusations with a firm warning that it is ready for war. SPX500 trades 2966.88 last having been capped by a retest of the broken bullish trend line from 2018 lows.

Safe Haven Inflows Seen

Safe havens have been a little higher against USD today with both gold and JPY rising in light of the pullback in equities. USDJPY trades 108.19 last with price having lost momentum in the recent rally following the drone strikes over the weekend.  XAUUSD, though in the green today, remains weaker following the rejection from 1522.75. However, the potential for further easing from the Fed tomorrow could see gold prices trading higher again over the week.

Crude Remains Above 61.06

Oil prices continue to hold above the 61.06 level today following the explosive moves seen at the open as the market reacted to around 5% of the global oil supply being wiped out. Following the spike higher on Sunday, price subsequently dipped back down to the 58.27 level which held as support, turning price higher once again. Elevated concerns around the potential for military conflict between the US and China are keeping oil prices supported here.

CAD Capped

USDCAD price action has stagnated over recent sessions with volatility drying up ahead of the FOMC tomorrow, despite the wild moves in oil. USDCAD trades 1.3248 last, with price remaining rangebound between the 1.3207 level and 1.33 level for now.

RBA Minutes Weigh on AUD

AUDUSD has been firmly lower today as the release of the RBA meeting minutes overnight has heightened expectations of further easing in the near term. Indeed, with the latest China data showing severe weakness, the near term picture remains bearish for AUD which is also being weighed on by softer gold prices.




Trade War Hits China’s Industrial Production

The latest economic data this week has once again illuminated the extent of the damage caused by the ongoing trade war between the US and China. Industrial production in China hit a fresh 17 year low over August growing at just 4.4%, down from the prior month’s 4.8% reading. Industrial production is now at its lowest level since February 2002.

The data is particularly worrying given its timing. The reading reflected a move lower in industrial production ahead of the implementation of fresh US trade tariffs which took effect (partially) from September 1st.

Fixed Asset Investment Weakness

The break-down of the data highlights the severity of the downturn in China. Fixed asset investment which includes physical assets such as real estate and infrastructure, grew at just 5.5% in August. This was down from the prior month’s 5.7% reading and was also below analyst expectations.

The slowdown in industrial production was evident across both manufacturing and mining. Manufacturing rose by just 4.3% last month. This was down from 4.4% in July and further still from the 5.2% reading in June. Meanwhile, mining output rose at just 3.7%, down starkly from the prior month’s 6.6% reading.

Exports Down

Furthermore, exports were down over the month, falling 1% in August, while imports declined also by 5.6%. Imports have now fallen in each month of the year besides April, providing a clear commentary on the impact of the trade war. The data also showed that the manufacturing purchasing manager’s index remained in negative territory over the month as expectations of new export orders moved lower yet again.

Retail Sales Fall

Alongside the weakness in industrial production, China’s National Bureau of Statistics also released Retail Sales data. This grew at just 7.5% over the month. This reading marks a decline from the prior month’s 7.6% reading. It further came in below analysts forecasts of a 7.9% print.

Both Sides Making Concessions

The data makes for bleak reading on the Chinese economy which has been rocked by the nearly two-year-long trade war. There is some light at the end of the tunnel, however. Trump recently announced that the planned 5% increase in tariffs on $250bilion of Chinese goods will be postponed from October 1st to October 15thThis comes amidst growing speculation that the two nations might strike a partial deal at the upcoming trade talks this month.  Indeed, China itself has also made some concessions, announcing last week that it will exempt some US products (including some agricultural products) from tariffs.

Cautious Optimism

These positive signs have been met with cautious optimism by traders. The relationship between the two nations has been notoriously volatile and similar periods of progress have resulted in collapse. Until such an interim deal is made, we are unlikely to see much of a price action driver. This is especially true given the backdrop of heightened concerns around tensions in the Middle East.

Technical Perspective

SPX500SPX500

A retest of the broken trend-line from 2018 lows has once again capped the rally in the SPX500. However, while we remain above the broken base at 2941.92, focus is on a further grind to the upside with bulls looking to penetrate above all-time highs at 3028.27 next. The near term bullish bias will only if price slips back below the 2941.92 level.




Gold Prices Subdued Ahead Of Central Bank Meetings

Gold prices were flat to slightly lower on Tuesday as investors await key central bank meetings in the U.S. and Japan.

While the Federal Reserve is expected to cut interest rates by a quarter point in response to slowing global economic growth and muted inflation, the Bank of Japan is likely to leave its monetary policy unchanged.

The Swiss National Bank and the Bank of England will also announce their monetary policy decisions this week.

Spot gold held largely unchanged at $1,497.97 per ounce while U.S. gold futures were down 0.4 percent at $1,505.35 per ounce.

Geopolitical developments and U.S.-China trade talks also remained on investors’ radar.

U.S. President Donald Trump said on Monday it looked like Iran was behind attacks on oil plants in Saudi Arabia but stressed that he would “like to avoid” a military conflict with Tehran.

“That was a very large attack and it could be met with an attack many, many times larger very easily by our country, but we are going to find out who definitively did it first,” Trump said.

Deputy trade negotiators for the United States and China will meet in Washington beginning on Thursday, a spokesman for the U.S. Trade Representative’s office said.

That meeting will be followed by a meeting of U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin with China’s top negotiator, Vice Premier Liu He, in early October.

The material has been provided by InstaForex Company – www.instaforex.com

Source:: Gold Prices Subdued Ahead Of Central Bank Meetings




Oil Prices Pause For Breath After Dramatic Rise

Oil prices fell over 1 percent on Tuesday after surging in the aftermath of drone attacks on two major oil facilities in Saudi Arabia.

Benchmark Brent crude declined 1.45 percent to $68.02 a barrel while West Texas Intermediate futures were down 1.4 percent at $61.78 a barrel.

Oil soared as much as 20 percent at one point on Monday after the devastating attacks that knocked out 5 percent of global crude supply.

The rally halted today after the United States hinted at the possible release of crude reserves.

In addition, investors await updates regarding the resumption of operations in Saudi Arabia.

Earlier, it was expected Saudi would be able to restore some of its major output facilities within days. The Bloomberg said later, quoting officials, that it would take weeks or even months.

Meanwhile, U.S. President Donald Trump said that Washington was ready to respond to the strike but he would “like to avoid” a military conflict with Tehran.

“That was a very large attack and it could be met with an attack many, many times larger very easily by our country, but we are going to find out who definitively did it first,” Trump said.

The material has been provided by InstaForex Company – www.instaforex.com

Source:: Oil Prices Pause For Breath After Dramatic Rise




Technical analysis of ETH/USD for Sept 17, 2019

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Crypto Industry News:

India is observing the first signs of an expected brain drain as the government is considering stringent laws that criminalize domestic investment in cryptocurrencies. Today’s press release measured industry sentiment while the proposed general ban – now still in the form of a legislative proposal – is awaiting a formal review process by lawmakers.

The draft ban on cryptocurrencies and the regulation on the official Digital Currency Act 2019 have proposed a 10-year prison sentence for anyone who ‘extracts, generates, holds, sells, transfers, disposes of, or deals with cryptocurrencies.

The severity of the proposed penalty and the extreme position reflected in the document – regardless of whether and in what form it eventually becomes national law – is already prompting local cryptographic companies to take preventive measures to protect themselves.

“As a startup from India, we’ve always wanted to operate from India, but the latter complication made it difficult for domestic cryptographic exchanges to operate in India. So we are a company based in Estonia and no Indian law criminalizing cryptocurrencies will affect us,” said Rahul Jain, an employee former Bitbns national stock exchange.

Meanwhile, Nischal Shetty, CEO and founder of the well-known WazirX Indian Stock Exchange, argued that the proposed bill could destroy the assets of over 5 million Indians who own “cryptographic assets worth thousands of crowns.”

He added that the arbitrary decision to criminalize investments in crypto-assets would destabilize existing lawful businesses and make this country an unfortunate pioneer in its role as “the first major democracy that banned innovative technologies such as crypto.”

Technical Market Overview:

The ETH/USD pair has hit the next target for bulls located at the level of $196.61. The momentum is increasing as well, so the rally might continue even higher, just as Elliott Wave theory scenario proposed last week. The low for the wave Z of the wave 2 of the higher degree is in place at the level of $162.78 already, so now the market might continue with the impulsive wave 3 to the upside. The next target for bulls is seen at the level of $202.47. The nearest technical support is seen at the level of $186.70.

Weekly Pivot Points:

WR3 – $212.96

WR2 – $200.24

WR1 – $196.12

Weekly Pivot – $184.92

WS1 – $179.10

WS2 – $168.22

WS3 – $163.07

Trading Recommendations:

The best strategy in the current market conditions is to trade with the larger timeframe trend, which is still up. All the shorter timeframe moves are being treated as a correction inside of the uptrend. The current cycle is wave 2 of the lower wave degree and it might have been completed, so the uptrend should resume soon. The global investors are waiting for a breakout above the level of $202.59 and $238.68 to confirm the resumption of the uptrend.

The material has been provided by InstaForex Company – www.instaforex.com

Source:: Technical analysis of ETH/USD for 17/09/2019




Technical analysis of BTC/USD for Sept 17, 2019

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Crypto Industry News:

The first cryptographic ATM in Venezuela was installed on September 10 in the city of San Antonio del Tachira, according to Coin ATM Radar, a website that makes it easy to search online for the nearest one.

Panda BTM installed a Bitcoin ATM in a small grocery store called Viajes e Inversiones HC. The machine supports cryptocurrencies such as Bitcoin, Bitcoin Cash and DASH, as well as the official currency of Venezuela and Colombia.

There were also earlier attempts to install Bitomat in Venezuela. At the end of January, the cryptographic company Cryptobuyer announced the upcoming installation and testing of a new Bitcoin ATM in the city of Caracas. However, for unknown reasons, the ATM was never started.

Neighboring Columbia currently has the most crypto ATMs from all Latin American countries. This number is expected to increase thanks to the partnership between the global Bitcoin peer-to-peer market, Paxful, and Blockchain-based in Medellin, CoinLogiq, which will introduce 20 new cryptographic ATMs to Colombia.

Technical Market Overview:

The BTC/USD pair moved out of the horizontal price range located between the levels of $10,211 – $10,381 and the direction of the movement is to the downside. So far the bulls have only managed to retrace 50% of the last move down in the wave (2) of a higher degree and the momentum is not increasing as well. The next target for them is seen at the level of $10,469 and it needs to be violated in impulsive fashion in order to continue the up move, otherwise, the whole Elliott Wave scenario will be changed and updated.

Weekly Pivot Points:

WR3 – $11,232

WR2 – $10,847

WR1 – $10,552

Weekly Pivot – $10,174

WS1 – $9,851

WS2 – $9,477

WS3 – $9,160

Trading Recommendations:

The best strategy in the current market conditions is to trade with the larger timeframe trend, which is still up. All the shorter timeframe moves are being treated as a correction inside of the uptrend. The wave 2 corrective cycles are about to be completed and the market might be ready for another impulsive wave up of a higher degree. Any violation of the level of $9,231 invalidates the bullish impulsive scenario.

The material has been provided by InstaForex Company – www.instaforex.com

Source:: Technical analysis of BTC/USD for 17/09/2019




Technical analysis of GBP/USD for Sept 17, 2019

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Technical Market Overview:

After making another swing high at the level of 1.2504 (this level is very important from the weekly timeframe point of view as well because it is a weekly technical resistance that the market has hit after a strong bounce from this year’s low at the level of 1.1957), the GBP/USD pair is now doing a local pull-back towards the trendline support around the level of 1.2419. Please keep an eye on how this key level will be played by the market participants, because of the overbought conditions. The momentum remains strong and positive, so the bulls can still make pressure on higher price levels. The nearest technical support is seen at the level of 1.2381.

Weekly Pivot Points:

WR3 – 1.2885

WR2 – 1.268

WR1 – 1.2601

Weekly Pivot – 1.2422

WS1 – 1.2331

WS2 – 1.2133

WS3 – 1.2067

Trading Recommendations:

The best strategy for current market conditions is to trade with the larger timeframe trend, which is down. All upward moves will be treated as local corrections in the downtrend. In order to reverse the trend from down to up, the key level for bulls is seen at 1.2505 and it must be clearly violated. As long as the price is trading below this level, the downtrend continues towards the level of 1.2000 and below.

The material has been provided by InstaForex Company – www.instaforex.com

Source:: Technical analysis of GBP/USD for 17/09/2019




Technical analysis of EUR/USD for Sept 17, 2019

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Technical Market Overview:

After making a new local high in the overbought market conditions at the level of 1.1109, the EUR/USD pair has retraced 61% of the move up and so far hit the level of 1.0997. The nearest support is seen at the level of 1.0978 and if violated, the move down might accelerate towards the key technical support located at the level of 1.0926. In order to continue the move up, the bulls must break through the technical resistance at the level of 1.1027 – 1.1034 and head towards the level of 1.1091 again.

Weekly Pivot Points:

WR3 – 1.1336

WR2 – 1.1226

WR1 – 1.1152

Weekly Pivot – 1.1040

WS1 – 1.0980

WS2 – 1.0859

WS3 – 1.0789

Trading Recommendations:

The best strategy for current market conditions is to trade with the larger timeframe trend, which is down. All upward moves will be treated as local corrections in the downtrend. The downtrend is valid as long as it is terminated or the level of 1.1445 clearly violated. There is an Ending Diagonal price pattern visible on the larget timeframes that indicate a possible downtrend termination soon. The key short-term levels are technical support at the level of 1.0926 and the technical resistance at the level of 1.1267.

The material has been provided by InstaForex Company – www.instaforex.com

Source:: Technical analysis of EUR/USD for 17/09/2019




Analysis of EUR/USD and GBP/USD for Sept 17, 2019

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EUR / USD

Monday, September 16, ended for the EUR / USD pair with a decrease of 75 basis points. The news background on Monday did not at all imply such strong movements, as it was simply absent. However, from the point of view of wave marking, everything turned out very well. The minimum from yesterday can be considered at least the expected wave 2 or b as part of a new upward trend section. If the current wave marking is correct, then the increase in quotations will resume from current levels within the wave with targets located above 11 figure.

Fundamental component:

On Monday, the time has come for a correction on the EUR / USD instrument. Despite the fact that there was no news background, the markets found the strength to close part of the purchases and even sell the pair. Today is the last day before the Fed meeting, at which everyone is waiting for Jerome Powell to declare a key rate cut. So wave 2 or b should end today to match the news background and current wave count. An unsuccessful attempt to break through the 23.6% Fibonacci level, built on the size of wave 3 or C, indicates the readiness of the forex market for new purchases. If the euro-dollar pair continues to fall today, or the market’s reaction to the Fed’s meeting tomorrow is not the pair’s growth, then the wave picture will most likely require corrections and additions.

Purchase goals:

1.1128 – 61.8% Fibonacci

1.1175 – 76.4% Fibonacci

Sales goals:

1.0927 – 0.0% Fibonacci

General conclusions and recommendations:

The euro-dollar pair supposedly completed the construction of the bearish wave 3 or C. If this is true, then the pair expects the construction of an upward set of waves. I recommend buying a pair with targets located around 12 figures on the MACD up signal. In addition, I expect the construction of the third upward wave.

GBP / USD

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On September 16, the GBP / USD pair lost 70 basis points and made an unsuccessful attempt to break through the 61.8% Fibonacci level, which led to the quotes moving away from the highs reached. Thus, the proposed wave c can already be completed and it can get its development and take a more extended form. This is the case when everything will depend on the news background. In the near future, only two topics may affect the pound-dollar pair. The first, of course, is Brexit, news on which comes almost every day. The second is the Fed meeting and a possible rate cut. On the second topic, everything will become clear tomorrow. If the Fed, as markets expect, will lower the rate, then the dollar may fall even more, both against the euro and against the pound. On the first topic, everything will depend on the nature of the news.

Fundamental component:

On Tuesday, October 17, the GBP / USD pair began and continues to build a correctional wave, which may be internal in s, and the beginning of a new downward wave as part of a new bearish trend section. By and large, the prospects of the instrument remain entirely dependent on Brexit’s progress and on which direction this process is moving. The more the direction shifts towards the hard Brexit, the more chances there are for a new fall of the British currency, and the further away from the hard Brexit, the more chances there are for the instrument to grow. Unfortunately, the vector of Britain’s exit from the EU in recent days has again shifted towards tough Brexit, as Prime Minister Boris Johnson intends to ignore parliament and break the law, but to leave the EU on October 31 with or without a deal.

Sales goals:

1.2016 – 0.0% Fibonacci

Purchase goals:

1.2489 – 61.8% Fibonacci

1.2602 – 76.4% Fibonacci

General conclusions and recommendations:

The downward trend section is still considered completed. Thus, now, it is expected to continue the construction of the rising wave with targets located near the calculated levels of 1.2489 and 1.2602, which corresponds to 61.8% and 76.4% of Fibonacci. Wave C may complete its construction in the near future. Thus, I recommend buying a pair in case of a successful attempt to break through the 61.8% Fibonacci level or after receiving a MACD “up” signal.

The material has been provided by InstaForex Company – www.instaforex.com

Source:: Analysis of EUR / USD and GBP / USD for September 17. Markets remain optimistic about the pound