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Currency market on December 10

Check the charts: http://bit.ly/359OBnB

10.12.2019

Clouds are gathering

Today is expected to be a relatively quiet day in terms of economic announcements. The big events start on Wednesday, while at the background the December 15 deadline for imposing new tariffs by the US on the Chinese goods will keep the market dynamics warmed up through the rest of the week. Such a layout represents a future sentiment among many within the financial circles: nothing really disastrous, but a general outlook of uncertainty, misbalance, and slowdown. Essentially, these are the reasons why Goldman Sachs analysts predict the price of gold to rise in 2020.

More specifically, they say it may soar up to $1600, which actually is quite a worrying prediction. The last time gold was in that area were the years 2011-2013, which means crisis and post-crisis period. And the level itself is substantially far away from the current area of $1470 per troy ounce. However, the upward trend is visible since 2016, and it seems that even without any major disappointments in the global economic environment the market would gradually get to the heights of $1600.


Nevertheless, below are some of the noteworthy events of regional impact, which may become the market movers to a certain extent today.

British Balance of Trade (11:30 MT time (09:30 GMT))

German ZEW Economic Sentiment Index (12:00 MT time (10:00 GMT))

You can have a closer look at these events in the economic calendar.
Clear picture for the euro

Since August this year, the euro has been dropping against the British pound and has not made an exception recently. In fact, it may find more reasons to continue the same direction. The pre-election polls show that the Conservative party of Boris Johnson is gaining strength, which in turn supports the GBP. While the questions about the bond purchasing program within the quantitative easing by the ECB keep rising, not leaving much space for positive expectations on the coming press-conference by Christine Lagarde. Altogether, this weakens the EUR/GBP pair. Technically, it is expected to keep falling in any case in the long-term. In the mid-term, however, we may see a surge up to the levels of the 50-period and 100-period Moving Average, to which it came every time before dropping further during the last three weeks. Today, although a recoil up to the resistance of 0.8455 is still a possible scenario, more probably the price will crawl a little further up and then drop. On the H4, we already see that the level of 0.8400 was touched during the trading process previously, and the price is consolidating along the current level in a sideways movement. So watch out for a minor local upswing followed by the continuation of the downtrend.

US news come first

Against the US dollar, the euro has been rising since the end of November, even despite the strong NFP data released by US labor authorities on December 6. On the H1, this marked trend is visible and currently coincides with the 200-period moving average, supporting the price movement. It would be tempting to assume that the price would continue the same direction. However, we have to take into account the news coming. On Wednesday, the Fed will announce the interest rate and give a press conference. That is, after a positive NFP data, showing the resilience of the US economy. On Thursday, the European Central Bank will do the same for the Eurozone, but the expectations are hardly positive. Therefore, it will be safer to price-in the downward reversal later on. But for now, the resistance of 1.1078 is a feasible target for the price to reach.


 
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SebsCubs

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Currency market on December 10

More at: http://bit.ly/359OBnB

10.12.2019
Clouds are gathering

Today is expected to be a relatively quiet day in terms of economic announcements. The big events start on Wednesday, while at the background the December 15 deadline for imposing new tariffs by the US on the Chinese goods will keep the market dynamics warmed up through the rest of the week. Such a layout represents a future sentiment among many within the financial circles: nothing really disastrous, but a general outlook of uncertainty, misbalance, and slowdown. Essentially, these are the reasons why Goldman Sachs analysts predict the price of gold to rise in 2020.

More specifically, they say it may soar up to $1600, which actually is quite a worrying prediction. The last time gold was in that area were the years 2011-2013, which means crisis and post-crisis period. And the level itself is substantially far away from the current area of $1470 per troy ounce. However, the upward trend is visible since 2016, and it seems that even without any major disappointments in the global economic environment the market would gradually get to the heights of $1600.

Nevertheless, below are some of the noteworthy events of regional impact, which may become the market movers to a certain extent today.

British Balance of Trade (11:30 MT time (09:30 GMT))

German ZEW Economic Sentiment Index (12:00 MT time (10:00 GMT))

You can have a closer look at these events in the economic calendar.
Clear picture for the euro

Since August this year, the euro has been dropping against the British pound and has not made an exception recently. In fact, it may find more reasons to continue the same direction. The pre-election polls show that the Conservative party of Boris Johnson is gaining strength, which in turn supports the GBP. While the questions about the bond purchasing program within the quantitative easing by the ECB keep rising, not leaving much space for positive expectations on the coming press-conference by Christine Lagarde. Altogether, this weakens the EUR/GBP pair. Technically, it is expected to keep falling in any case in the long-term. In the mid-term, however, we may see a surge up to the levels of the 50-period and 100-period Moving Average, to which it came every time before dropping further during the last three weeks. Today, although a recoil up to the resistance of 0.8455 is still a possible scenario, more probably the price will crawl a little further up and then drop. On the H4, we already see that the level of 0.8400 was touched during the trading process previously, and the price is consolidating along the current level in a sideways movement. So watch out for a minor local upswing followed by the continuation of the downtrend.

US news come first

Against the US dollar, the euro has been rising since the end of November, even despite the strong NFP data released by US labor authorities on December 6. On the H1, this marked trend is visible and currently coincides with the 200-period moving average, supporting the price movement. It would be tempting to assume that the price would continue the same direction. However, we have to take into account the news coming. On Wednesday, the Fed will announce the interest rate and give a press conference. That is, after a positive NFP data, showing the resilience of the US economy. On Thursday, the European Central Bank will do the same for the Eurozone, but the expectations are hardly positive. Therefore, it will be safer to price-in the downward reversal later on. But for now, the resistance of 1.1078 is a feasible target for the price to reach.

 

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Opinion polls cast a shadow on the GBP

More at: http://bit.ly/35oIdc8

11.12.2019

YouGov, the key organization tracking the UK public opinion has released its final report ahead of the vote that will take place on Thursday, December 12. The news made the pound weaken versus most major currencies. Learn more!
Why is it important?

There are three scenarios of the election outcome, which are expected to affect the Brexit process and the GBP as well.

The first one is the victory of the Conservative party. As you may know, this is the party led by Boris Johnson. Analysts expect this scenario to provide certainty in Brexit, and, therefore, to push the GBP up.

The second scenario is a hung Parliament. In that case, the party with most of the votes will form the minority government. At the same time, as the seats will also be taken by the opposition Labour party, the UK will face the risks of having another Brexit deadlock. As a result, the GBP will go down.

Finally, the third scenario is the leadership of Jeremy Corbyn's Labour party. The opposition leader criticizes the inability of the Conservatives to suggest any clear solution over Brexit and plans a second referendum. No surprise for this outcome to be Brexit-negative.
What do the polls say?

According to YouGov, the Tories (the Conservative party) majority has been shrinking. The final poll shows 43% for the Conservatives and 34% for the Labour. These figures increase the possibility of a hung parliament.
How did the GBP react?

The British pound dropped on the news with the wave of panic selling. The 1.32 cliff appeared to be too tough for GBP/USD and the pair has slid to the 1.31 support level.

 

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Top 4 trading opportunities of December 12

More at: http://bit.ly/2PHSZ73

12.12.2019

GBP: the room for surprises

It’s an election day in the UK. Traders will watch exit polls. The results will start arriving after 00:30 MT rime on Friday. The results of the vote will become clear by 4:00-5:00 MT time.

The latest opinion polls showed that the Conservative Party has a small majority. This means that the risk of a hung parliament is substantial and the fate of the GBP is hanging in the balance.

In the meantime, Boris Johnson, Prime Minister and the leader of the Conservatives, was in no mood to talk: he hid in an industrial fridge to avoid journalists’ questions.
EUR: mildly negative risks ahead of the ECB

The first meeting of Christine Lagarde as the President of the European Central Bank. Analysts at UBS expect that she will deal with the divided Government Council and won’t initiate any new policy action. Still, the Lagarde may try to make the news. She may comment on the policy tools available to the central bank. In addition, the ECB may lower growth and inflation forecasts for the euro area.
USD: it’s not so bad

Yesterday, the Federal Reserve kept its interest rate unchanged at a 1.5%-2% range during its meeting. What is more important is that the Fed’s dot plot indicated the federal funds rate at 1.6% in 2020, without any changes. You can read more about the outcome of the meeting here.
Trump’s meeting is ahead

Today, US President Donald Trump plans to meet the top trade advisers to discuss tariffs on China. The meeting will be crucial ahead of the tariffs deadline on December 15. According to an anonymous source, the US administration will raise tariffs on Sunday, but the final word will still belong to Trump. The fresh tariffs will increase uncertainties in the process of the US-China trade deal and be hurtful for the risk-weighted assets, such as the AUD, the NZD, and stocks.
What else happens in the market?

Follow the news and our social networks: Telegram and Facebook to stay up to date with the changes!

 

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Victorious Boris Johnson

Check the charts: http://bit.ly/36BCpwu

13.12.2019

Conservatives win

Finally, the victory of the Сonservative party under the leadership of Boris Johnson is confirmed. They have a 43.6% majority, while the Labour party follows with 32.4% and the Liberal Democrats got 11.4%.



The consequences?

Boris Johnson had previously commented he had a strong agenda for the United Kingdom should he win the election. One of the pillars of his plan was to “get Brexit done” at the soonest and in the best interest of the UK.

For the UK, it means higher stability and a better economic outlook with all the consequences.

For the world, it means stronger GBP against the related currencies.

All of that, of course, takes place if Mr. Johnson does not fail on his intentions.

GBP celebrating the victory

In the meantime, the British pound reacted immediately to the victory of Boris Johnson.


On the weekly chart, it is visible that the price of GBP/USD rose to the area of 1.35 – a height it has never been to since May 2018. And it is testing the August-2018-December-2019 resistance currently. Crossing this barrier would confirm the market’s intention to go even higher.


In the short term, however, we are expecting a certain correction downwards, as confirmed by the Awesome Oscillator. In any case, whether it is going further upwards now or later, the price would need to make a stop at the resistance it is testing now. On the hourly chart, the level of 1.3500 is going to be capping the bullish direction for a while, while 1.3450 will be the support. Crossing the support would mean a deeper correction downwards. Otherwise, we will observe a more sideways movement of the price.

Watch the news and stay informed!
 

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Important events this week will bring us

More at: http://bit.ly/2tppZtd

16.12.2019

Time to cool down

Last Friday has brought us some good news – the phase-one trade deal between the US and China was sealed. Although the official ceremony of signing the text and shaking hands will take place in January, both sides already confirmed to the public that the step is taken.

According to the deal, the US commits to reducing certain tariffs and expanding tariffs exemption for the Chinese goods, while China commits to purchasing more of the US goods, with the focus on the farm industry. Apart from a few specifics like an advancement in regulating intellectual property rights, there was little more detail provided on the deal struck.

Hence, although the announced content of the deal made a lot of analysts highly skeptical about the actual positive effect the agreement brings, at least we have some confirmation that things are not going worse in the observable future. As the old proverb says, a weak peace is better than a strong war.
A quiet week ahead

As the US-China deal announcement, the ECB monetary press conference and the UK parliamentary elections all took place last week, this week has little to offer in comparison. Nevertheless, below are some of the noteworthy events you may be interested to watch out for.
Monday of PMIs

Today, the industrial expansion indicators will be announced by France (10:15 MT time(08:15 GMT)), Germany (10:30 MT time(08:30 GMT)), the UK (11:30 TM time (09:30 GMT)) and the US (16:45 MT time (14:45 GMT)). Although not a primary indicator like the GDP, the PMI is also an important evaluation of country’s economy and may have an effect on the respective currencies depending on how the actual indicator stands against the market expectation.
Australia

On Tuesday, Australian financial authorities will publish the monetary policy meeting minutes at 02:30 TM time (00:30 GMT). It will provide details of the last monetary policy meeting and the reasons behind keeping the country interest rate at 0.75%. More importantly, it will provide a sense of the economic outlook and the directions to look at in the future. In addition to that, Thursday will be the day when the country employment change and unemployment rates are announced (02:30 MT time (00:30 GMT)). Therefore, by the end of the week, we will have a more or less complete economic picture of how Australia is closing this year. A positive impression from the releases should strengthen the Australian dollar.
Inflation

A central indicator of economic and money mass expansion, the inflation rate will be announced by the UK and Canada on Wednesday at 11:30 MT time (09:30 GMT) and 15:30 MT time (13:30 GMT) respectively, and by Japan on Friday at 01:30 MT time (23:30 GMT).

 

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After election effects on the BOE

More at: http://bit.ly/34rOF12

17.12.2019

The Bank of England will conduct a meeting and release a monetary policy summary at 14:00 MT time on December 19.

The monetary policy summary is published every month, which helps to keep investors updated with the current economic situation. The summary contains the votes on the interest rate, forecasts, and other policy measures. During the previous meeting, the votes for the rate changes split unexpectedly, as two out of nine members of the bank's monetary policy committee supported a cut of the interest rate. Let's see if the result of the UK general election affects the BOE decision this time.

IF the BOE is optimistic, the GBP will rise;

If the BOE is pessimistic, the GBP will fall.

 

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Did Trump impeachment affect the currency market?

More at: http://bit.ly/2S8rK8n

19.12.2019

Good Thursday, world! We’ve got plenty of news and important releases since yesterday. Did they have a major impact on the market, though? Let’s see.
Tough time for the US presidency?

During yesterday’s American trading session, the US House of Representatives voted to impeach US President Donald Trump. Trump was charged with abusing of power. That decision made him the third US president in US history to be impeached. However, the support of impeachment in the House does not immediately remove the 45th US president from the office, as the final word still belongs to the Senate. As the Republicans (Donald Trump’s party) have a majority in that chamber, the vote supported by the Democrats will barely change anything.

The currency market was not affected by the impeachment process with no effect on the USD.
Australian labor market gets stronger

During the Asian trading session, the Australian dollar was boosted by the release of Australia’s job data. The employment change showed a solid growth by 39.9K (vs. 14.5K expected), and the unemployment rate declined from 5.3% to 5.2%. AUD/USD has risen by around 35 pips since the start of the day.
Bank of Japan: no hurry needed

The Bank of Japan kept its interest rate unchanged at -0.1% during today’s meeting. The BOJ Governor Haruhiko Kuroda expressed the positive views on the economy but noted that the global uncertainties remain. The bank will continue monetary policy easing until the economic conditions get better.
What is ahead

The main focus will be on the Bank of England monetary policy summary at 14:00 MT. It would be interesting to hear the comments by Governor Mark Carney after the election is over. Follow the news and stay updated.

 

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The undone victory for the GBP

Check it out: http://bit.ly/2tzRkcc

18.12.2019

Yesterday, we were fearing that a strict Brexit deadline announced by the UK PM Boris Johnson and other ministers may put excessive pressure downwards on the GBP in the short-term and the long-term.

Now, we see that all the gains that the GBP won on the Conservatives’ victory are undone. Moreover, the British pound seems to be preparing to continue falling against the major currencies in the observable future.

Against the euro

On the H4, the upsurge of EUR/GBP reached higher than where it dropped from on the day of the UK elections. More so, it crossed the 50-period and 100-period Moving Averages, now testing the resistance of 200-MA. The next big step would be the high of 0.8600, reached in November.

However, we see the consolidation and the slowdown of the current steep rise right at the resistance of the 200-period Moving Average. The Awesome Oscillator also shows that a high may have been reached, and the momentum for this particular upsurge has been exhausted.

Climbing further up requires additional power and most probably additional confirmation from the Conservatives side that they would not back down on their strict agenda. If such news comes in, we may witness the start of a gradual change in the overall trend. In addition, given the context of the situation and the commentaries already provided by the UK PM Mr. Johnson and his colleagues, the absence of any information disproving the rigidity of their plan may also serve as a confirmation of the looming hard Brexit. In this case, it will cause further weakening of the GBP.
Against the USD

Against the USD, the GBP has dropped to the level of 1.3100 where it started its leap on December 12, breaking through the 50-period Moving Average. On the H4, the price is currently testing the support of the 100-period MA, showing signs of consolidation. Same as in the case with the euro, it is likely that the price will stay at the current support level for a while, waiting for additional information to guide the market movement. It may show a slight movement upwards or go sideways. If it does cross the 100-period Moving Average, it would be a sign that the market indeed has little hope for the GBP in the context of hard Brexit.

Against other currencies

Most of the GBP currency pairs show a very similar dynamic, with certain variations. On the H4 of GBP/CHF, the price has crossed the 50-period, 100-period, and 200-period Moving Average on the way down. Currently, it is testing the support of 1.2813, left at the beginning of December. Crossing that line would mean the price aims at the level of 1.2680, along which it has been trading in October-November.

Outcome

The impact of the announced Brexit agenda by the Conservatives is visible at the market. Now, the question is whether it will be a short-term disappointment or a start of a larger trend change.

To answer that, we need to follow the news and keep an eye on the price movement against the mid-term and long-term thresholds.

 

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