Before the Fed decision, markets may become more cautious
EURUSD dropped to 1.1280, losing 100 points from Friday’s highs after the 4.7% rally in the previous two weeks. The RSI indicator is retreating from the overbought area, which often signals a correction rollback. Since February 2019, the pair has reversed several times from levels near 1.1400, that is another sign in favour of correcting pullback.
The Australian dollar is testing 0.7000, but on Friday and earlier today, it faced an increase in sales there.
USDCAD closed early March gap and fell to 1.3400.
Quite possible that up to the Fed’s rate decision, the markets may be dominated by a corrective mood, as investors will close some positions after the previous rally and wait for further policy signals. At the end of last week, chances for the rate increase in June began to grow. So far, the probability of this is modest 9.3%. However, it is an essential signal that markets do not expect negative rates.
EURUSD dropped to 1.1280, losing 100 points from Friday’s highs after the 4.7% rally in the previous two weeks. The RSI indicator is retreating from the overbought area, which often signals a correction rollback. Since February 2019, the pair has reversed several times from levels near 1.1400, that is another sign in favour of correcting pullback.
The Australian dollar is testing 0.7000, but on Friday and earlier today, it faced an increase in sales there.
USDCAD closed early March gap and fell to 1.3400.
Quite possible that up to the Fed’s rate decision, the markets may be dominated by a corrective mood, as investors will close some positions after the previous rally and wait for further policy signals. At the end of last week, chances for the rate increase in June began to grow. So far, the probability of this is modest 9.3%. However, it is an essential signal that markets do not expect negative rates.
Bitcoin is trying to break through the glass ceiling
Bitcoin kept relatively calm on the weekend, showing a rather narrow price range of $9,500-$9,750 during the last day. At the same time, it is possible to note a rather significant growth of trading volumes by 37% to $26 bln.
The charts clearly show that the upward trend is gaining strength. However, for the time being, the price bumps into the glass ceiling at 10K, as the miners sell their assets.
Selling bitcoins by miners looks like a temporary price pressure factor.
Bitcoin kept relatively calm on the weekend, showing a rather narrow price range of $9,500-$9,750 during the last day. At the same time, it is possible to note a rather significant growth of trading volumes by 37% to $26 bln.
The charts clearly show that the upward trend is gaining strength. However, for the time being, the price bumps into the glass ceiling at 10K, as the miners sell their assets.
Selling bitcoins by miners looks like a temporary price pressure factor.
OPEC + ramping up Oil production, the US may follow
OPEC + over the weekend agreed to extend the period of the lowest quotas for another month. This news pushed Oil price by 3.5% on Monday to $43.30 for Brent, and above $40 for WTI, the highest since March 6.
However, during the day, optimism of buyers faded somewhat, as incoming news noted increased competition between manufacturers.
It must be said that so far, the weekly data on the number of operating rigs in the USA have noted a further decline. On Friday, Baker Hughes reported a drop of working oil rigs to 206, more and more approaching the 2009 lows (176). The total number (oil + gas) has been rewriting historical lows every week for a month and a half, reaching 284.
OPEC + over the weekend agreed to extend the period of the lowest quotas for another month. This news pushed Oil price by 3.5% on Monday to $43.30 for Brent, and above $40 for WTI, the highest since March 6.
However, during the day, optimism of buyers faded somewhat, as incoming news noted increased competition between manufacturers.
It must be said that so far, the weekly data on the number of operating rigs in the USA have noted a further decline. On Friday, Baker Hughes reported a drop of working oil rigs to 206, more and more approaching the 2009 lows (176). The total number (oil + gas) has been rewriting historical lows every week for a month and a half, reaching 284.
#NZDUSD broke resistance area
Likely to rise to 0.6640
https://fxpro.news/market-snapshots/nzdusd-wave-analysis-8-june-2020-20200608/
Likely to rise to 0.6640
https://fxpro.news/market-snapshots/nzdusd-wave-analysis-8-june-2020-20200608/
Copper (#CUU) broke key resistance level 250.00
Likely to rise to 262.00
https://fxpro.news/market-snapshots/copper-wave-analysis-8-june-2020-20200608/
Likely to rise to 262.00
https://fxpro.news/market-snapshots/copper-wave-analysis-8-june-2020-20200608/
Over the last day, 107.3K new cases of COVID-19 were detected worldwide vs 113.4K day earlier and 104.6K one week ago. The number of recovered was 75.3K vs 48.6K earlier. The total number of cases exceeded 7.2M, of which 3.25M is active, 3.54M recovered, and 408.7K died. The five countries with the highest daily growth are the US (19.0K), Brazil (18.9K), Russia (9.0K), India (8.4K), Pakistan (4.7K). Besides Brazil, India is showing an accelerating in contagion. Nevertheless, mortality in India is still noticeably lower than European and American, accounting for only 5% of closed cases and 2.8% of all known cases.
Markets jump on the weakest sectors
The US employment report shifted the attention of market participants to previously most beaten sectors. The stocks of the social distance beneficiaries – Amazon, Microsoft, and Apple are updating or close to their historic highs. However, the real rally on Friday and Monday was in Aviation and Banking sectors.
Boeing took off by 25% and Airbus shares spiked by 13.7% above Thursday close. Rolls-Royce, an aircraft engine maker, climbed by 23.3% during the same period.
The banking sector in June has a positive sentiment compared to the market as a whole, as the worst fears on the labour market did not realize, which reduced the risks of a wave of delays and defaults on loans.
The market euphoria risks switching US politics into “election mode”. They have previously demonstrated cohesion in approving stimulus packages. However, now they can start to pursue their interests: Democrats are in favour of support of the people, while Republicans prefer to help businesses.
The US employment report shifted the attention of market participants to previously most beaten sectors. The stocks of the social distance beneficiaries – Amazon, Microsoft, and Apple are updating or close to their historic highs. However, the real rally on Friday and Monday was in Aviation and Banking sectors.
Boeing took off by 25% and Airbus shares spiked by 13.7% above Thursday close. Rolls-Royce, an aircraft engine maker, climbed by 23.3% during the same period.
The banking sector in June has a positive sentiment compared to the market as a whole, as the worst fears on the labour market did not realize, which reduced the risks of a wave of delays and defaults on loans.
The market euphoria risks switching US politics into “election mode”. They have previously demonstrated cohesion in approving stimulus packages. However, now they can start to pursue their interests: Democrats are in favour of support of the people, while Republicans prefer to help businesses.
#Apple broke multi-month resistance 328.00
Likely to rise to 350.00
#WaveAnalysis
https://fxpro.news/market-snapshots/apple-wave-analysis-9-june-2020-20200609/
Likely to rise to 350.00
#WaveAnalysis
https://fxpro.news/market-snapshots/apple-wave-analysis-9-june-2020-20200609/
Gold reversed from support area
Likely to rise to 1765.00
#WaveAnalysis
https://fxpro.news/market-snapshots/gold-wave-analysis-9-june-2020-20200609/
Likely to rise to 1765.00
#WaveAnalysis
https://fxpro.news/market-snapshots/gold-wave-analysis-9-june-2020-20200609/
#EURAUD reversed from support area
Likely to rise to 1.6500
#WaveAnalysis
https://fxpro.news/market-snapshots/euruad-wave-analysis-9-june-2020-20200609/
Likely to rise to 1.6500
#WaveAnalysis
https://fxpro.news/market-snapshots/euruad-wave-analysis-9-june-2020-20200609/
Over the last day, 120.4K new cases of COVID-19 were detected worldwide vs 107.7K day earlier and 115.7K one week ago. The number of recovered was 66.5K vs 75.3K earlier. The total number of cases now exceeded 7.34M, of which 3.30M is active, 3.62M recovered, and 414.0K died. The five countries with the highest daily growth are Brazil (31.2K) the US (19.0K), India (8.8K), Russia (8.6K), Pakistan (4.6K). The number of serious and critical cases fluctuates around 54K for about three weeks now.
Does the dollar face global selling-off?
In the run-up to the Fed meeting, markets are keeping pressure on the Dollar. DXY has fallen to its lowest levels since March 11.
USDJPY fell 2.1% after a failed attempt to rush 110 last Friday. EURUSD show growth in the 12th session of the last thirteen.
The sale of dollar assets is also noticeable in the US debt markets. The yields on government bonds have increased along the whole yield curve, especially noticeably rising at the longer end of the curve.
On the surface, global investors have worried about the ability of the US to pay its debts, especially in light of growing tension with China.
But this hypothesis does not stand up to criticism.
In the run-up to the Fed meeting, markets are keeping pressure on the Dollar. DXY has fallen to its lowest levels since March 11.
USDJPY fell 2.1% after a failed attempt to rush 110 last Friday. EURUSD show growth in the 12th session of the last thirteen.
The sale of dollar assets is also noticeable in the US debt markets. The yields on government bonds have increased along the whole yield curve, especially noticeably rising at the longer end of the curve.
On the surface, global investors have worried about the ability of the US to pay its debts, especially in light of growing tension with China.
But this hypothesis does not stand up to criticism.
US CPI: retreat continues
The US inflation fell short of expectations, noting a 0.1% m/m decrease to just 0.1% y/y for CPI. The fact is weaker than expectations for the third month in a row. Analysts had expected to see numbers 0.1 percentage point higher.
The same can be said about the core inflation index, which slowed in May to 1.2% y/y, the lowest since 2011. The collapse in fuel prices and auto insurance continues to push overall inflation lower. At the same time, the cost of food at home continues to take off, adding 1.0% in May after a jump of 2.6% in April. Over 12 months, the growth of this component is 4.8%. More substantial annual growth is only in the prices of medical care services, but it has added more evenly - by 0.5%-0.6% in the last three months.
Weak inflation rates give the Fed room to maintain a stimulating mood in monetary policy, while impressive food prices can increase subjective estimates of price increases and increase inflation expectations.
The US inflation fell short of expectations, noting a 0.1% m/m decrease to just 0.1% y/y for CPI. The fact is weaker than expectations for the third month in a row. Analysts had expected to see numbers 0.1 percentage point higher.
The same can be said about the core inflation index, which slowed in May to 1.2% y/y, the lowest since 2011. The collapse in fuel prices and auto insurance continues to push overall inflation lower. At the same time, the cost of food at home continues to take off, adding 1.0% in May after a jump of 2.6% in April. Over 12 months, the growth of this component is 4.8%. More substantial annual growth is only in the prices of medical care services, but it has added more evenly - by 0.5%-0.6% in the last three months.
Weak inflation rates give the Fed room to maintain a stimulating mood in monetary policy, while impressive food prices can increase subjective estimates of price increases and increase inflation expectations.
#USDJPY broke daily up channel
Likely to fall to 106.80
#WaveAnalysis
https://fxpro.news/market-snapshots/usdjpy-wave-analysis-10-june-2020-20200610/
Likely to fall to 106.80
#WaveAnalysis
https://fxpro.news/market-snapshots/usdjpy-wave-analysis-10-june-2020-20200610/
#Silver reversed from support level 17.50
Likely to rise to 18.35
#WaveAnalysis
https://fxpro.news/market-snapshots/silver-wave-analysis-10-june-2020-20200610/
Likely to rise to 18.35
#WaveAnalysis
https://fxpro.news/market-snapshots/silver-wave-analysis-10-june-2020-20200610/
#USDCHF broke key support level 0.9500
Likely to fall to 0.9400
#WaveAnalysis
https://fxpro.news/market-snapshots/usdchf-wave-analysis-10-june-2020-20200610/
Likely to fall to 0.9400
#WaveAnalysis
https://fxpro.news/market-snapshots/usdchf-wave-analysis-10-june-2020-20200610/
Over the last day, 134.7K new cases of COVID-19 were detected worldwide vs 120.4K day earlier and 120.5K one week ago. The number of recovered was 131.3K vs 66.5K earlier. The total number of cases now exceeded 7.46M, of which 3.26M is active, 3.78M recovered, and 419.0K died. The five countries with the highest daily growth are Brazil (33.1K) the US (20.9K), India (12.4K), Russia (8.4K), Chile (5.7K). The number of active cases decreased overnight but built by 278K over the week.
As correction starts, indices may lose more than 10%
On Thursday morning, financial markets saw an increasing demand for safe assets. Investors seem to be taking profits on an increasingly wide range of assets. American Nasdaq fell back to 10,000, losing 1.5% of its peak levels after the Fed meeting.
Earlier, we mentioned that the major indices have gone into the overbought zone, which made them vulnerable to a correction rollback. There were signs that the rally had gone too far in the currency market as well.
The full correction pullback could send Nasdaq to 9200 (-10%) area or even deeper, to 8800 (-13.3%). For the S&P500, the closest support is 3020, where the 200-day average passes. However, 2950 (-9%) and 2830 (-12.5%) may become more attractive levels for correction.
On Thursday morning, financial markets saw an increasing demand for safe assets. Investors seem to be taking profits on an increasingly wide range of assets. American Nasdaq fell back to 10,000, losing 1.5% of its peak levels after the Fed meeting.
Earlier, we mentioned that the major indices have gone into the overbought zone, which made them vulnerable to a correction rollback. There were signs that the rally had gone too far in the currency market as well.
The full correction pullback could send Nasdaq to 9200 (-10%) area or even deeper, to 8800 (-13.3%). For the S&P500, the closest support is 3020, where the 200-day average passes. However, 2950 (-9%) and 2830 (-12.5%) may become more attractive levels for correction.
Bitcoin quietly sneaking up to $10,000
The first cryptocurrency is again carefully approaching the most critical psychological level of $10K. It is the fourth time Bitcoin is trying to reach this resistance level, and the bulls still have hope for continued growth. Trade volumes in the Bitcoin network have risen by 16% in the last 24 hours and combined with the price growth. This could be an excellent basis for further acceleration. Consistent price dynamics accompanies long-term purchases, as opposed to impulsive and unreliable jumps on FOMO waves.
Analytical companies have recorded an increase in institutional demand for cryptocurrency. In many ways, it can be driven by the halving, which in the perspective of several quarters may lead the cryptocurrency to new highs.
The first cryptocurrency is again carefully approaching the most critical psychological level of $10K. It is the fourth time Bitcoin is trying to reach this resistance level, and the bulls still have hope for continued growth. Trade volumes in the Bitcoin network have risen by 16% in the last 24 hours and combined with the price growth. This could be an excellent basis for further acceleration. Consistent price dynamics accompanies long-term purchases, as opposed to impulsive and unreliable jumps on FOMO waves.
Analytical companies have recorded an increase in institutional demand for cryptocurrency. In many ways, it can be driven by the halving, which in the perspective of several quarters may lead the cryptocurrency to new highs.
Last week, the US initial jobless claims amounted for 1.54M people (near expectations). The number of continued claims amounted to 20.9M, which is significantly worse than the expected 20M.
The continuous decrease in the number of initial applications for benefits over the past ten weeks should not inspire a false sense of optimism. Despite the reopening of the economy, a lot of people continue to lose their jobs. The total number of beneficiaries must remain close to 21M over the past three weeks, which is only 4M below peak levels and contrasts sharply with 1.7 million at the beginning of March.
For the most part, recovery in consumption depends on how people find work. Having no job, people cut costs even if they receive checks from Trump and fall under individual state programs, which may even exceed the level of salaries for particular jobs. This was seen last month, when Americans set aside 33% of disposable income, significantly cutting spending despite income jump.
The continuous decrease in the number of initial applications for benefits over the past ten weeks should not inspire a false sense of optimism. Despite the reopening of the economy, a lot of people continue to lose their jobs. The total number of beneficiaries must remain close to 21M over the past three weeks, which is only 4M below peak levels and contrasts sharply with 1.7 million at the beginning of March.
For the most part, recovery in consumption depends on how people find work. Having no job, people cut costs even if they receive checks from Trump and fall under individual state programs, which may even exceed the level of salaries for particular jobs. This was seen last month, when Americans set aside 33% of disposable income, significantly cutting spending despite income jump.
Natural gas (#NTG) reversed from pivotal support level 1.775
Likely to rise to 1.900
#WaveAnalysis
https://fxpro.news/market-snapshots/natural-gas-wave-analysis-11-june-2020-20200611/
Likely to rise to 1.900
#WaveAnalysis
https://fxpro.news/market-snapshots/natural-gas-wave-analysis-11-june-2020-20200611/