Strong Chinese data caused the yuan to rally and supported markets
The Chinese data once again helped to boost buying on the financial markets, noting that the economy is roaring ahead after the coronavirus crisis. The optimism around economic recovery has also led to a sharp increase in interest in the Chinese yuan.
The decline of USDCNH to 6.80 overnight, triggered a wave of stop orders that led to further deterioration of the pair.
From the technical analysis perspective, the double top formation near 7.19 area was confirmed, which shows the potential for a decline to 6.50. However, the next important stop could be 6.70, where the pair spent two and a half months in early 2019.
https://fxpro.news/daily-forex-outlook/strong-chinese-data-caused-the-yuan-to-rally-and-supported-markets-20200915/
The Chinese data once again helped to boost buying on the financial markets, noting that the economy is roaring ahead after the coronavirus crisis. The optimism around economic recovery has also led to a sharp increase in interest in the Chinese yuan.
The decline of USDCNH to 6.80 overnight, triggered a wave of stop orders that led to further deterioration of the pair.
From the technical analysis perspective, the double top formation near 7.19 area was confirmed, which shows the potential for a decline to 6.50. However, the next important stop could be 6.70, where the pair spent two and a half months in early 2019.
https://fxpro.news/daily-forex-outlook/strong-chinese-data-caused-the-yuan-to-rally-and-supported-markets-20200915/
German ZEW index goes above expectations, but EURUSD is in no hurry to climb above 1.1900
The positive mood of the markets got another boost during the day after the German ZEW Indicator of Economic Sentiment publication. Estimates for September showed an increase to 77.4 from 71.5 a month earlier. These numbers are the highest in 20 years, despite new rising COVID-10 cases and stalled Brexit talks.
The current sentiment index continues to recover after its extreme dip between February and March. The sharpest indicator drop in history is followed by an unprecedented speedy recovery, which is encouraging.
The publication of ZEW triggered a new buying wave in EURUSD, sending it back to test 1.1900. But the bulls are not yet in a hurry to cross this line, above which the pair has not been able to develop steady growth for a month and a half. It seems that the outcome of this fight will be delayed until after the Fed's comments are published tomorrow evening.
The positive mood of the markets got another boost during the day after the German ZEW Indicator of Economic Sentiment publication. Estimates for September showed an increase to 77.4 from 71.5 a month earlier. These numbers are the highest in 20 years, despite new rising COVID-10 cases and stalled Brexit talks.
The current sentiment index continues to recover after its extreme dip between February and March. The sharpest indicator drop in history is followed by an unprecedented speedy recovery, which is encouraging.
The publication of ZEW triggered a new buying wave in EURUSD, sending it back to test 1.1900. But the bulls are not yet in a hurry to cross this line, above which the pair has not been able to develop steady growth for a month and a half. It seems that the outcome of this fight will be delayed until after the Fed's comments are published tomorrow evening.
Fed may return the dollar to a slippery slope
Later in the evening, the FOMC will be presenting its monetary policy commentary, which will focus on the labour market by looking over the threat of inflation.
Without an expectation that the Fed will tighten its policy in response to inflation, a vicious spiral can be created in which high inflation causes an outflow of dollar assets, generating further price pressure. This is a frequent problem in emerging markets but is a long-forgotten one for developed countries.
Suppose the Fed’s strategy change turns out to be as straightforward as Powell’s sounded last month. In that case, it may renew pressure to the dollar, and very quickly return it to the late August lows with the risk of EURUSD passing through 1.2000 this week, as well climbing above 1,2500 by the end of the year.
https://fxpro.news/daily-forex-outlook/fed-may-return-the-dollar-to-a-slippery-slope-20200916/
Later in the evening, the FOMC will be presenting its monetary policy commentary, which will focus on the labour market by looking over the threat of inflation.
Without an expectation that the Fed will tighten its policy in response to inflation, a vicious spiral can be created in which high inflation causes an outflow of dollar assets, generating further price pressure. This is a frequent problem in emerging markets but is a long-forgotten one for developed countries.
Suppose the Fed’s strategy change turns out to be as straightforward as Powell’s sounded last month. In that case, it may renew pressure to the dollar, and very quickly return it to the late August lows with the risk of EURUSD passing through 1.2000 this week, as well climbing above 1,2500 by the end of the year.
https://fxpro.news/daily-forex-outlook/fed-may-return-the-dollar-to-a-slippery-slope-20200916/
#WaveAnalysis
#AUDUSD reversed from support level 0.7200
Likely to rise to 0.7400
https://fxpro.news/market-snapshots/audusd-wave-analysis-15-september-2020-20200915/
#AUDUSD reversed from support level 0.7200
Likely to rise to 0.7400
https://fxpro.news/market-snapshots/audusd-wave-analysis-15-september-2020-20200915/
The dollar is retreating against franc and yen, which is often a signal of increased demand for safe assets.
At the same time, the markets remain positive overall. Does this mean that there is an flee to safety on the FX? It seems unlikely for now.
It is more akin to an individual weakening of the American currency as we see the GBP recovering against the USD, as well as the outstanding performance of CNH along with a strengthening AUD.
Interestingly, the EUR is obviously in no hurry to stand out against this background. Its losses against the pound, the yen and the franc reflect the indecision of traders near an important level for EURUSD. The pair briefly crossed the 1.2000 level at the beginning of the month but was knocked down by bears with a six-day decline. In the last month and a half, the pair has been repeatedly thrown from 1.1900.
This only intensifies attention to 1.2000, as overcoming this level can result in the surrender of the American currency in the following days or even weeks.
At the same time, the markets remain positive overall. Does this mean that there is an flee to safety on the FX? It seems unlikely for now.
It is more akin to an individual weakening of the American currency as we see the GBP recovering against the USD, as well as the outstanding performance of CNH along with a strengthening AUD.
Interestingly, the EUR is obviously in no hurry to stand out against this background. Its losses against the pound, the yen and the franc reflect the indecision of traders near an important level for EURUSD. The pair briefly crossed the 1.2000 level at the beginning of the month but was knocked down by bears with a six-day decline. In the last month and a half, the pair has been repeatedly thrown from 1.1900.
This only intensifies attention to 1.2000, as overcoming this level can result in the surrender of the American currency in the following days or even weeks.
#WaveAnalysis
#USDJPY broke support area
Likely to fall to 104.20
https://fxpro.news/market-snapshots/usdjpy-wave-analysis-16-september-2020-20200916/
#USDJPY broke support area
Likely to fall to 104.20
https://fxpro.news/market-snapshots/usdjpy-wave-analysis-16-september-2020-20200916/
Fed gave a helping hand to the dollar but for how long?
In the wake of the FOMC meeting last night, dollar purchases increased in the markets, and stock indices began to fall. EURUSD was briefly below 1.1740 at the start of trading today, a low for more than a month.
The S&P500 lost around 0.46% on Wednesday and futures on the index lost 1% more this morning and moved close to the 50-day MA, support where it bounced from last week.
It remains to be seen how sustainable this impact will be.
Recently, USDJPY quickly went below 105 after a brief jump. The EURUSD gained support after touching the 50-day average.
Closing the day, or better, the week, above the 50-day average for EURUSD, S&P500 and Nasdaq100 could be an essential signal of sustained dollar pressure and a sign of renewed market optimism.
https://fxpro.news/daily-forex-outlook/fed-gave-a-helping-hand-to-the-dollar-but-for-how-long-20200917/
In the wake of the FOMC meeting last night, dollar purchases increased in the markets, and stock indices began to fall. EURUSD was briefly below 1.1740 at the start of trading today, a low for more than a month.
The S&P500 lost around 0.46% on Wednesday and futures on the index lost 1% more this morning and moved close to the 50-day MA, support where it bounced from last week.
It remains to be seen how sustainable this impact will be.
Recently, USDJPY quickly went below 105 after a brief jump. The EURUSD gained support after touching the 50-day average.
Closing the day, or better, the week, above the 50-day average for EURUSD, S&P500 and Nasdaq100 could be an essential signal of sustained dollar pressure and a sign of renewed market optimism.
https://fxpro.news/daily-forex-outlook/fed-gave-a-helping-hand-to-the-dollar-but-for-how-long-20200917/
#WaveAnalysis
#WTI rising inside wave (ii)
Likely to reach 43.55
https://fxpro.news/market-snapshots/wti-wave-analysis-16-september-2020-20200916/
#WTI rising inside wave (ii)
Likely to reach 43.55
https://fxpro.news/market-snapshots/wti-wave-analysis-16-september-2020-20200916/
The Dollar sticks to its weakness for good
As we noted previously, the impulse for the strengthening of the US currency has proved to be very unstable. The dollar index has turned down many times since late July from 93.60 over the last month and a half. Yesterday was no exception. For EURUSD the support lies at 1.1750.
Both the dollar index and the EURUSD pair changed the trend sharply after touching the 50-day average. The gold rate, as well as the S&P 500 and Dow Jones, are similarly supported after a dip to their respective 50-DMA.
This behaviour is a sign of investors’ desire to stay within the short-term trend, i.e. within the weakening USD trend.
Assuming that this trend continues to weaken and that there is an overall increase in demand for risk assets, we would not be surprised if EURUSD could soon move beyond 1.2000.
https://fxpro.news/analysis-and-insight/the-dollar-sticks-to-its-weakness-for-good-20200918/
As we noted previously, the impulse for the strengthening of the US currency has proved to be very unstable. The dollar index has turned down many times since late July from 93.60 over the last month and a half. Yesterday was no exception. For EURUSD the support lies at 1.1750.
Both the dollar index and the EURUSD pair changed the trend sharply after touching the 50-day average. The gold rate, as well as the S&P 500 and Dow Jones, are similarly supported after a dip to their respective 50-DMA.
This behaviour is a sign of investors’ desire to stay within the short-term trend, i.e. within the weakening USD trend.
Assuming that this trend continues to weaken and that there is an overall increase in demand for risk assets, we would not be surprised if EURUSD could soon move beyond 1.2000.
https://fxpro.news/analysis-and-insight/the-dollar-sticks-to-its-weakness-for-good-20200918/
#WaveAnalysis
#CHFJPY broke support zone
Likely to fall to 114.00
https://fxpro.news/market-snapshots/chfjpy-wave-analysis-18-september-2020-20200918/
#CHFJPY broke support zone
Likely to fall to 114.00
https://fxpro.news/market-snapshots/chfjpy-wave-analysis-18-september-2020-20200918/
Macroeconomic data for the UK remains on the bright side, despite a recent increase in the number of new coronavirus cases and new restrictive measures.
As in the USA, UK Retail Sales indexes have quickly overcome the coronavirus collapse and are reaching new highs. In August, excluding fuel, sales were 4.3% above the level of the same month a year earlier and slightly better than predicted.
Total sales in the first 8 months of the year were 4.8% lower than in the same period a year earlier. This is an intermediate result between China and the USA. In China, the drop is twice as large, while in the US, it is less than 2%. It is easy to see the reverse correlation between the harshness of lockdown and a decline in retail sales.
On the other hand, production in China is gaining momentum much faster than in the US and the UK, which makes it much more difficult to answer the question of which government response is better for the economy.
As in the USA, UK Retail Sales indexes have quickly overcome the coronavirus collapse and are reaching new highs. In August, excluding fuel, sales were 4.3% above the level of the same month a year earlier and slightly better than predicted.
Total sales in the first 8 months of the year were 4.8% lower than in the same period a year earlier. This is an intermediate result between China and the USA. In China, the drop is twice as large, while in the US, it is less than 2%. It is easy to see the reverse correlation between the harshness of lockdown and a decline in retail sales.
On the other hand, production in China is gaining momentum much faster than in the US and the UK, which makes it much more difficult to answer the question of which government response is better for the economy.
#WaveAnalysis
#Corn rising inside waves (iii) and (3)
Likely to rise to 385.90
https://fxpro.news/market-snapshots/corn-wave-analysis-18-september-2020-20200918/
#Corn rising inside waves (iii) and (3)
Likely to rise to 385.90
https://fxpro.news/market-snapshots/corn-wave-analysis-18-september-2020-20200918/
Why are Asian currencies growing? The answer is fear of endless QE…
Asian currencies are enjoying steady investor demand, continuing to rise against the dollar.
Investors are already accustomed to chronically low inflation in Japan and see that the country’s central bank cannot break it up despite Quantitative and Qualitative Easing being held for years. Its impact has been largely reflected in market expectations and financial instrument quotes. However, at the start, the yen experienced a serious slump, falling from 76 yen to the dollar to above 120 in less than four years.
The Federal Reserve in late August announced a change of strategy for monetary policy. However, as early as March, the FOMC has launched several robust programmes that have turned the US currency towards decline.
For investors in dollars, this could also be the start of a multi-year trend, as it was for the yen.
https://fxpro.news/daily-forex-outlook/why-are-asian-currencies-growing-the-answer-is-fear-of-endless-qe-20200921/
Asian currencies are enjoying steady investor demand, continuing to rise against the dollar.
Investors are already accustomed to chronically low inflation in Japan and see that the country’s central bank cannot break it up despite Quantitative and Qualitative Easing being held for years. Its impact has been largely reflected in market expectations and financial instrument quotes. However, at the start, the yen experienced a serious slump, falling from 76 yen to the dollar to above 120 in less than four years.
The Federal Reserve in late August announced a change of strategy for monetary policy. However, as early as March, the FOMC has launched several robust programmes that have turned the US currency towards decline.
For investors in dollars, this could also be the start of a multi-year trend, as it was for the yen.
https://fxpro.news/daily-forex-outlook/why-are-asian-currencies-growing-the-answer-is-fear-of-endless-qe-20200921/
#WaveAnalysis
#NZDUSD reversed from resistance area
Likely to fall to 0.6600
https://fxpro.news/market-snapshots/nzdusd-wave-analysis-21-september-2020-20200921/
#NZDUSD reversed from resistance area
Likely to fall to 0.6600
https://fxpro.news/market-snapshots/nzdusd-wave-analysis-21-september-2020-20200921/
#WaveAnalysis
#Natural gas broke support zone
Likely to fall to 1.800
https://fxpro.news/market-snapshots/natural-gas-wave-analysis-21-september-2020-20200921/
#Natural gas broke support zone
Likely to fall to 1.800
https://fxpro.news/market-snapshots/natural-gas-wave-analysis-21-september-2020-20200921/
Markets dangerously flirt with correction
Yesterday, at the close of the day, the S&P 500 managed to hammer back some of the losses, which should be seen as a sign of optimism by professional market participants, who are most active at the close of trading. The index found some support after a 23.6% correction from the March-September rally. In the case of increased bear pressure, the next significant support for S&P500 is seen in the area of 3100, where the 200-day moving average resides.
The dynamics of the currency market may be an important indicator for stock indices. If the dollar bulls manage to get the upper hand from current levels today, we should be prepared for a new storm in the markets and a sharper recovery of USD.
https://fxpro.news/daily-forex-outlook/markets-dangerously-flirt-with-correction-20200922/
Yesterday, at the close of the day, the S&P 500 managed to hammer back some of the losses, which should be seen as a sign of optimism by professional market participants, who are most active at the close of trading. The index found some support after a 23.6% correction from the March-September rally. In the case of increased bear pressure, the next significant support for S&P500 is seen in the area of 3100, where the 200-day moving average resides.
The dynamics of the currency market may be an important indicator for stock indices. If the dollar bulls manage to get the upper hand from current levels today, we should be prepared for a new storm in the markets and a sharper recovery of USD.
https://fxpro.news/daily-forex-outlook/markets-dangerously-flirt-with-correction-20200922/
RBA considers further ways to support the economy, praising a weak AUD
The Australian dollar lost 1.6% yesterday during the European session, dropping from 0.7320 to 0.72. Today a new wave of decline was launched by RBA Deputy Governor Guy Debelle. In his speech, he considered possible options for the Central bank to further support the economy.
These included FX interventions, negative rates, and to buy bonds further along the curve. The latter option seems the most likely and least risky for the Aussie Dollar.
However, the very fact that RBA is considering new support methods and is talking about the benefits of a lower exchange rate has alerted buyers of the Australian currency.
AUDUSD on Tuesday updated it's one month low at 0.7180, following many other risk-sensitive instruments testing a 50-day average. The result of this bull and bear battle will define whether there will be an early development of the correction to 0.70, or a retest of highs above 0.74.
The Australian dollar lost 1.6% yesterday during the European session, dropping from 0.7320 to 0.72. Today a new wave of decline was launched by RBA Deputy Governor Guy Debelle. In his speech, he considered possible options for the Central bank to further support the economy.
These included FX interventions, negative rates, and to buy bonds further along the curve. The latter option seems the most likely and least risky for the Aussie Dollar.
However, the very fact that RBA is considering new support methods and is talking about the benefits of a lower exchange rate has alerted buyers of the Australian currency.
AUDUSD on Tuesday updated it's one month low at 0.7180, following many other risk-sensitive instruments testing a 50-day average. The result of this bull and bear battle will define whether there will be an early development of the correction to 0.70, or a retest of highs above 0.74.
#WaveAnalysis
#USDJPY reversed from support zone
Likely to rise to 105.20
https://fxpro.news/market-snapshots/usdjpy-wave-analysis-22-september-2020-20200922/
#USDJPY reversed from support zone
Likely to rise to 105.20
https://fxpro.news/market-snapshots/usdjpy-wave-analysis-22-september-2020-20200922/