Tag: Fundamental Analysis

Daily Crypto Review, Sept 22 – Crypto Sector Plummets Alongside Stocks and Gold; Markets Preparing for the US Presidential Election

The cryptocurrency sector has dropped severely as the traditional markets tumbled and caused the crypto market to do the same. Bitcoin is currently trading for $10,458, representing a decrease of 4.38% on the day. Meanwhile, Ethereum lost 7.68% on the day, while XRP lost 5.87%.

Daily Crypto Sector Heat Map

If we look at the top100 cryptocurrencies, only three have actually increased in value. Orchid gained 25.73% on the day, making it the most prominent daily gainer. Loopring (5.88%) and Hyperion (5.03%) also did great. On the other hand, Celo lost 19.17%, making it the most prominent daily loser. It is followed by Uniswap’s loss of 19.04% and Aave’s loss of 16.93%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level experienced an increase since our last report (as it always happens when the market drops), with its value currently being at 61.29%. This value represents a 0.67% difference to the upside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization has lost value over the course of the past 24 hours. Its current value is $330.84 billion, which represents a decrease of $21.61 billion when compared to our previous report.

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What happened in the past 24 hours?

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Technical analysis

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Bitcoin

Bitcoin has spent the day in a bearish pullback, which stopped at the 23.6% Fib retracement. However, its current position is just below that line, which makes it possible that it will continue its drop towards $9,300 to $9,500 levels. This push towards the downside was a bit premature, and most likely caused by the traditional market plummeting. Traditional markets have historically been slightly bearish before the presidential election, while they quickly recovered shortly after.

BTC/USD 4-hour Chart

If we take a look at the 4-hour time frame, the largest cryptocurrency by market cap has bounced off of the pink line after failing to break it, pushing further towards the downside, and ultimately breaking the 23.6% Fib retracement level. Bitcoin’s immediate position will be determined by whether it can break the 23.6% Fib retracement, but its overall short-term position is still bearish.

BTC/USD 4-hour Chart

Bitcoin’s short-term technicals have turned bearish as BTC dropped in price. However, its longer-term technicals are still bullish. With that being said, we can expect Bitcoin to drop a bit further before turning towards the upside.

BTC/USD 4-hour Technicals

Technical factors (4-hour Chart):

Price is far below its 50-period EMA and its 21-period EMA
Price slightly above its bottom Bollinger band
RSI is extremely close to being oversold (34.92)
Volume is slowly descending from a massive spike

Key levels to the upside Key levels to the downside

1: $10,630 1: $10,500

2: $10,850 2: $10,015

3: $11,000 3: $9,880

Ethereum

While fundamental traders are calling for ETH’s price increase, most traders that take technical indicators into account are calling for a pullback towards $300. Etherum has lost over 7% of its value in the past 24 hours, with the move towards the downside ending at $340.

ETH/USD 4-hour Chart

Ethereum’s short-term technicals are still extremely bearish, while its mid-term technicals are tilted towards the bear side just a bit. With that being said, we can expect Ethereum to push towards the $300 level, unless Bitcoin pulls out of its bearish sentiment and pushes the market upwards.

ETH/USD 4-hour Technicals

Technical Factors (4-hour Chart):

The price is far below both its 21-period and its 50-period EMA
The slightly above its bottom Bollinger band
RSI is recovering from being oversold (32.42)
Volume is descending from its spike during the downswing

Key levels to the upside Key levels to the downside

1: $360 1: $340

2: $371 2: $300

3: $400 3: $289

Ripple

XRP has spent the day (as almost every single cryptocurrency) pushing towards the downside. While the overall market move seemed premature and looked like it was pushed by the traditional markets, that may not be the case with XRP. If we take a look at the 4-hour chart, XRP’s 4th leg of the Elliot impulse wave has ended, which prompted the price to go towards the downside. Traders can most likely expect XRP’s price pushing towards $0.21.

XRP/USD 4-hour Chart

Taking a look at the technicals, XRP is showing bearish sentiment with both its short-term and long-term indicators. Its indicators change from just bearish to extremely bearish the longer we go in time, which implies an inherent bearishness when it comes to XRP.

XRP/USD 4-hour Technicals

Technical factors (4-hour Chart):

The price is well below both its 21-period EMA and its 50-period EMA
Price is slightly above its bottom Bollinger band
RSI is oversold but recovering (27.50)
Volume is coming back to normal after a huge spike (low)

Key levels to the upside Key levels to the downside

1: $0.235 1: $0.227

2: $0.2454 2: $0.221

3: $0.266 3: $0.214

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Market Analysis

Daily F.X. Analysis, September 21 – Top Trade Setups In Forex – Fed Chair Powell in Focus!

Post author By Ali B.
Post date 21 September, 2020
1 Comment on Daily F.X. Analysis, September 21 – Top Trade Setups In Forex – Fed Chair Powell in Focus!

The market’s fundamental side is likely to offer us a Fed Chair Powell Speech later during the New York session. Federal Reserve Chair Jerome Powell is due to speak, along with the rest of the FOMC board members, about rule-making for the Community Reinvestment Act, via satellite. It may drive volatility in the market today.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.18404 after placing a high of 1.18703 and a low of 1.18258. Overall the movement of the EUR/USD pair remained bearish throughout the day. The Euro U.S. Dollar exchange rate dropped on Friday amid the declining U.S. stock and risk sentiment. The Dow Jones Industrial Average dropped by 0.2%, and the Nasdaq Futures also fell from its record high. The risk sentiment was affected by the rising number of coronavirus cases in Europe.

According to Johns Hopkins University, the number of coronaviruses confirmed cases across the globe have raised to 30 Million, and it raised fears of the second wave of coronavirus. Since the outbreak started in China late last year, the death toll has risen more than 940,000.

After the United States, India, and Brazil, Europe has reached the most confirmed cases as it has seen a renewed spike in the infections. The World Health Organization has also issued a warning that Europe could see many deaths from coronavirus over November and October. This has weighed heavily on the Euro currency, and the EUR/USD pair has been under pressure since then.

The rising number of coronavirus cases in Europe, some European countries imposed new lockdown measures to slow down the virus spread, and it raised fears for a quick economic recovery that also kept the EUR/USD prices on the downside on Friday.

Meanwhile, at 11:00 GMT, the German PPI in August remained flat with a projection of 0.0% on the data front. At 13:00 GMT, the Current Account Balance from Eurozone also showed a surplus of 16.6B against the projection of 12.0B and supported Euro.

On the U.S. front, the Current Account Balance from the U.S. dropped by -171B against the forecasted -158B and weighed on the U.S. dollar. The C.B. Leading Index also declined to 1.2% from the forecasted 1.3%, and the Prelim UoM Consumer Sentiment rose to 78.9 against the forecasted 75.0. The Prelim UoM Inflation Expectations came in at 2.7%.

Apart from that, the U.S. dollar’s safe-haven status gained traction on Friday after the tensions between the United States and China raised amid the tech war. The U.S. government attempted to ban the Chinese WeChat app’s download in the United States, which was, however, failed due to rejection from the Judge. China may react to such action with anger, and this fear raised safe-haven appeal, and the U.S. dollar advanced that added pressure on EUR/USD prices on Friday.

Daily Technical Levels

Support Resistance

1.1772 1.1889

1.1696 1.1930

1.1655 1.2007

Pivot point: 1.1813

EUR/USD– Trading Tip

The EUR/USD pair trades bullish at 1.1868 level, holding right below an immediate resistance level of 1.1870 that’s extended by a triple top pattern. On the hourly timeframe, a bullish crossover of 1.1870 level may lead EUR/USD prices towards the next target level of 1.1882 level. Conversely, selling bias remains strong below 1.1870 until the 1.1840 level today.

GBP/USD – Daily Analysis

Today in the Asian trading hours, the GBP/USD currency pair extended its previous bullish trend and took some further bids around above the mid-1.2950 level. However, the currency pair’s bullish trend could be associated with the weaker sentiment surrounding the broad-based U.S. dollar ahead of the U.S. Federal Reserve official’s speech. Adding to the U.S. dollar’s problem is its latest tussle with Iran and an on-going tension with Beijing.

This, in turn, boosted the sentiment around the currency pair. Moreover, the currency pair gains could also be associated with the latest reports that the U.K. Finance Minister Rishi Sunak is again stepping forward to help businesses. On the contrary, the growing worries over a nationwide lockdown in the wake of rising coronavirus cases became the key factor that kept the lid on any additional currency pair gains. Apart from this, the on-going Brexit pessimism also keeps challenging the currency pair bullish bias. Moving on, the currency pair traders seem cautious to place any strong position ahead of the Fed policymakers’ comments during the American session,

The fears of rising COVID-19 cases in the UK, Spain, and some of the notable Asian nations like India continually fueling worries that the economic recovery could be halt, which eventually weighed on the market trading sentiment. Apart from this, the on-going political impasse over the shape and size of the next U.S. fiscal recovery package also played its role in declining equity markets. Elsewhere, the renewed conflict between the U.S. and China and the US-Iran tussle and Trump’s latest warnings to the firms helping Iran build arms also exerted downside pressure on the market risk-tone and underpinned the safe-haven Japanese yen.

Despite the risk-off market sentiment, the broad-based U.S. dollar failed to gain any positive traction and edged lower on the day ahead of the U.S. Federal Reserve official’s speech, which is scheduled to happen later in the week. Besides, the decision over the inclusion of Chinese government bonds in the FTSE Russell World Government Bond Index (RWGBI) also keeps the USD bulls on the defensive. However, the losses in the U.S. dollar kept the GBP/USD currency pair higher.

At home, the upcoming speech of British Chief Medical Officer Chris Whitty suggests that the coronavirus return is not only halting the economic recovery but also pushes the country towards another lockdown and a “very challenging winter.” On the other hand, London Mayor Sadiq Khan also said that they’re “catching up” with Covid-19 hotspots in northern England.

Additionally, capping the gains could be the fresh warning by the U.K. Transport Minister Grant Shapps about the rising odds of a nationwide lockdown, as the country’s coronavirus situation is at a critical point. At the Brexit front, the long-lasting Brexit pessimism is still looming over the GBP traders. Having initially showed a willingness to hear the Internal Market Bill (IMB), mainly due to the UK PM Boris Johnson’s offer to ease fisheries, the European Union (E.U.) is repeating the warning if London moves ahead to overcome the Brexit Withdrawal Agreement Bill (WAB). These renewed fears also weighed on the GBP currency.

Looking forward, the Chicago Fed National Activity Index, which is expected 1.95 against 1.18 prior, will be key to watch on the day. Apart from this, the traders will also keep their eyes on the speech from the U.K.’s health authorities, at 10:00 AM GMT will be the key to watch. Whereas, the continuous drama surrounding the US-China relations and updates about the U.S. stimulus package will also be closely followed.

Daily Technical Levels

Support Resistance

1.2890 1.3025

1.2810 1.3080

1.2756 1.3160

Pivot point: 1.2945

GBP/USD– Trading Tip

On Monday, the GBP/USD is trading at 1.2941 mark, staying within an upward channel that’s supporting the pair at 1.2909 level. The closing of the recent Doji candle above the EMA and upward trendline support level of 1.2909 level signals chances of upward direction in the market. Thus, traders should consider looking for a buying trade with a target of 1.2996 level. Violation of 1.2909 level can trigger selling bias until 1.2828 level.

USD/JPY – Daily Analysis

The USD/JPY currency pair extended its early-day losing streak and hit the intra-day low around the 104.28 regions in the last hours. However, the reason for the currency pair bearish bias could be attributed to the risk-off market sentiment, which tends to underpin the safe-haven Japanese yen and contributed to the currency pair decline. Hence, the market trading sentiment was being pressured by the coronavirus (COVID-19) and downbeat catalysts from America.

Apart from this, the absence of any major data/events from the rest of the Asia-Pacific nations also kept the currency pair’s performance confined. On the other hand, the broad-based U.S. dollar weakness ahead of the U.S. Federal Reserve officials scheduled to speak could also be considered a key factor that dragged the currency pair lower.

Elsewhere, the market risk tone has been sluggish since the day started, possibly due to the worsening coronavirus (COVID-19) conditions in the U.K. and Europe. Meanwhile, the renewed conflict between the U.S. and China and the US-Iran tussle and Trump’s latest warnings to the firms helping Iran build arms also exerted downside pressure on the market risk-tone and underpinned the safe-haven Japanese yen. As per the World Health Organization’s (WHO) regional director Hans Kluge, Europe reported 300,000 new infections, the most significant weekly rise ever, including the first spike in spring. Furthermore, France, Poland, the Netherlands, and Spain are facing the second wave. The U.K. is already considering a new lockdown, while countries from Denmark to Greece announced new restrictions on Friday. These headlines add an extra burden on the market risk tone.

Across the ocean, the positive remarks from Chinese President Xi Jinping and hopes of further stimulus for the Asian major under the presidency of Yoshihide Suga might help the market trading sentiment to limit its deeper losses. At the USD front, the broad-based U.S. dollar failed to gain any positive traction and edged lower on the day ahead of the U.S. Federal Reserve official’s speech, scheduled to happen later in the week. Besides, the decision over the inclusion of Chinese government bonds in the FTSE Russell World Government Bond Index (RWGBI) also keeps the USD bulls on the defensive. However, the losses in the U.S. dollar kept the USD/JPY currency pair lower. Whereas, the U.S. Dollar Index that tracks the greenback against a bucket of other currencies fell by 0.16% to 92.870 by 9:55 PM ET (2:55 AM GMT).

Looking forward, the Chicago Fed National Activity Index, which is expected 1.95 against 1.18 prior, will be key to watch on the day. Apart from this, the continuous drama surrounding the US-China relations and updates about the U.S. stimulus package will also be closely followed. In the meantime, the USD moves and coronavirus headlines will not lose their importance as they could play a key role in the currency pair movements.

Daily Technical Levels

Support Resistance

104.44 105.10

104.15 105.47

103.78 105.76

Pivot point: 104.81

USD/JPY – Trading Tips

The USD/JPY pair had disrupted the double bottom support mark of 104.650, and presently it’s holding beneath 50 periods EMA, implying chances of selling bias in the USD/JPY. On the 4 hour chart, the downward channel is anticipated to drive selling sentiment in the USD/JPY pair. On the downside, the support lingers at 104.100 level, and a bearish breakout can lead USD/JPY price further lower towards 103.700 level. The eyes will remain on the Fed Chair Powell’s speech as it may drive further market trends. The MACD and EMA are also in support of selling bias.

Good luck!

Tags Daily Brief, EUR-USD, Forex, Fundamental Analysis, GBP-USD, Support and Resistance, Technical Analysis, Technical Outlook, USD-JPY

Forex Fundamental Analysis

The Impact Of ‘Total Vehicle Sales’ Data On The Forex Market

Post author By Reddy Shyam Shankar
Post date 21 September, 2020
No Comments on The Impact Of ‘Total Vehicle Sales’ Data On The Forex Market

Introduction

Vehicle sales figures offer us much insight into the consumer demand and overall health of the economy. Changes in vehicle sales figures could also be used for predicting the near-future direction of economic growth. Understanding how vehicle sales figures can be used to infer upcoming trends in crucial economic indicators could always give us the advantage of being ahead of the market trend.

What is Total Vehicle Sales?

Total Vehicle Sales represent the overall number of domestically produced vehicles that have been sold. The reports could be monthly, quarterly, or even yearly, depending on the reporting vehicle manufacturing companies. In other words, Total Vehicle Sales is the annualized new vehicles sold count for a given month.

The automotive industry represents a vital component of the United States economy. It makes up about 3% of the total GDP and remains the largest industry in the manufacturing sector. It is responsible for employing lakhs of people in the United States and transacts in billions each year.

How can the Total Vehicle Sales numbers be used for analysis?

At first, the importance of the vehicle sales figure may not be apparent, but vehicle sales serve useful for economic analysis. A vehicle is a significant purchase for people. People buy vehicles when they are confident about their ability to make payments. It is possible only when they have considerable disposable income or procure loans at lower interest rates.

When people’s disposable income is considerable, it means the people are affluent financially and reflects the good health of the economy. On the other hand, when loans are available to more people at lower interest rates, it means there is sufficient monetary stimulus from Central Banks to promote economic growth and money is easy to come by. Such inflationary pressures stimulate economic growth and indicate that the economy is likely to grow steadily.

The increase in vehicle sales figures reinforces the positive affirmations forecasted by other economic indicators like consumer spending or interest rates. As consumer spending comprises more than two-thirds of the GDP, an increase in vehicle sales likely indicates a healthy two or three quarters that are going to continue in the economy.

Equity markets respond and perform exceptionally well around the Total Vehicle Sales figures, as the increasing figures in sales imply increasing profits for the related companies. The increase in profits due to sales is doubled down by the stock prices soaring higher, and vice-versa also holds. Hence, the vehicle sales figures are given much-deserved attention every month by the equity traders and the media. To some degree, currency markets feed off from the equity markets, but the effect is noticeable only when the changes are significant.

Vehicle purchases are considered to be discretionary spending, and when people are paying for such items, it indicates the economy is flourishing. The relation between vehicle sales and economic growth also becomes more apparent during recessions, where vehicle sales drop significantly. During the Great recession of 2007-2009, vehicle sales fell by 3 million.

With rapid development in the automobile industry, more durable vehicles that last longer, unlike older models, are coming into the market. It means people need not buy new vehicles as frequently as before. Hence, recent trends should incorporate this factor also into the statistics.

Alongside this, there is a shift in the industry due to disruptive brands like Tesla introducing electric cars as a contrast to combustion engines. It affects the industry and the dependent oil and gasoline industries as well. Self-driving and Artificial Intelligence equipped automobiles are catching up with the people, and this could soon invalidate many traditional jobs that came as a result of the regular gasoline cars and trucks.

The current COVID-19 pandemic already cost the economies of most countries much than they could handle, and many industries suffered heavy losses. The silver lining for the automotive industry is coming from the fact that as people resume their regular life by going back to their work require a safe commute. Things are looking brighter for the automobile industry as more people are considering the safety assured through private commute over the risk involved in the public transportation system.

Impact on Currency

Vehicle Sales acts as a coincident indicator that reflects the health of the economy at the current state. The currency markets are focused more on the leading indicators before the trends pick up. Total vehicle sales prove to be more useful for the equity markets for trading on the automobile and other related industries, but currencies require more than just vehicle sales.

Hence, overall Total Vehicle Sales are a low-impact indicator for the FOREX market and are useful in double-checking or reaffirming our leading indicator predictions. Economists and business analysts will use total vehicle sales data to report current economic health, but currency traders can overlook this indicator for other macroeconomic leading indicators.

Economic Reports

The Bureau of Economic Analysis (BEA) provides monthly reports on total vehicle sales on its official website. Apart from this, the St. Louis FRED website also details the same figures historically in a more comprehensive and visually depictive way.

Sources of Total Vehicle Sales

We can obtain Total Vehicle Sales figures for the United States from BEA.

For analysis purposes, the St. Louis FRED website offers better resources and ease of access for Vehicle Sales figures.

We can obtain Global Total Vehicle Sales figures for the majority of the countries from Trading Economics.

How Total Vehicle Sales Data Release Affects The Price Charts

In the US economy, total vehicle sales data is an important leading indicator of consumer spending and consumer confidence. It measures the annualized number of new vehicles sold domestically in the reported month. The most recent data related to this was released on August 3, 2020, at 7.00 PM ET. The total vehicle sales is a combination of all car sales and all truck sales data and can be accessed from Investing.com here. The historical data of total vehicle sales can be accessed from Trading Economics here.

The screengrab below is of the monthly total vehicle sales from Investing.com.

As can be seen, the total vehicle sales data is expected to have a low impact on the USD upon its release.

The screengrab below shows the most recent changes in the monthly total vehicle sales data in the US. In July 2020, the monthly total vehicle sales were 14.5 million compared to 13.1 million in June 2020. This increase is expected to be positive for the USD.

Now, let’s see how this release made an impact on the Forex price charts.

EUR/USD: Before Monthly Total Vehicle Sales Release on August 
2020, Just Before 7.30 PM ET

From the above 15-min EUR/USD chart, the pair can be seen to be trading on a neutral trend before the release of the total vehicle sales data. This trend represents a period of relative market inactivity with candles forming near a flattening 20-period Moving Average.

EUR/USD: After the Monthly Total Vehicle Sales Release on 
August 2020, 7.30 PM ET

After the data release, this Forex pair formed a 15-minute bearish candle, indicating that the USD became stronger as expected due to the increase in total vehicle sales. The data release was, however, not significant enough to cause any market volatility as the pair continued to trade in a neutral trend with the 20-period Moving Average flattening.

GBP/USD: Before Monthly Total Vehicle Sales Release on August 
2020, Just Before 7.30 PM ET

Similar to the trend that we have observed with the EUR/USD pair, the GBP/USD was trading in a neutral pattern before the data release with candles forming around a flattening 20-period MA.

GBP/USD: After the Monthly Total Vehicle Sales Release on 
August 2020, 7.30 PM ET

After the news announcement, this pair formed a 15-min bearish candle but continued trading in the neutral trend observed before the data release.

AUD/USD: Before Monthly Total Vehicle Sales Release on August
2020, Just Before 7.30 PM ET

AUD/USD: After the Monthly Total Vehicle Sales Release on 
August 2020, 7.30 PM ET

As observed with the EUR/USD and the GBP/USD pairs, the AUD/USD traded within a subdued neutral trend before the data release. The pair formed a 15-minute bearish candle after the news release, but unlike the other pairs, it continued trading in a weak uptrend.

Although it plays a vital role as an indicator within the economy, it is evident that the total vehicle sales indicator does not cause any significant impact on the price action in the forex markets.

Tags Education, Forex, Forex Fundamental Analysis, Forex Trading, Fundamental Analysis, GDP, Macro Economic Indicators, Macro Economics, Sales, Total Vehicle Sales, trading, Vehicles

Crypto Market Analysis

Daily Crypto Review, Sept 21 – Crypto Market is Preparing For a Bearish Move; UNI Token Booming

Post author By Ilija Rankovic
Post date 21 September, 2020
1 Comment on Daily Crypto Review, Sept 21 – Crypto Market is Preparing For a Bearish Move; UNI Token Booming

The cryptocurrency sector has mostly stayed at the same place over the weekend as Bitcoin was trying to break the psychological $11,000 resistance. Bitcoin is currently trading for $10,935, which represents an increase of 0.28% on the day. Meanwhile, Ethereum lost 1.58% on the day, while XRP lost 1.27%.

Daily Crypto Sector Heat Map

If we look at the top100 cryptocurrencies, Celo gained an astonishing 45.37% on the day, making it the most prominent daily gainer. ZB Token (33.20%) and DigiByte (15.24%) also did great. On the other hand, HedgeTrade lost 13.52%, making it the most prominent daily loser. It is followed by Flexacoin’s loss of 12.67% and yearn.finance’s loss of 9.63%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level experienced a slight increase since our last report, with its value currently being at 60.62%. This value represents a 0.48% difference to the upside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization stayed at virtually the same place over the weekend. Its current value is $351.13 billion, which represents a decrease of $3.37 billion when compared to our previous report.

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What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin has spent the weekend trying to get past the psychological resistance of $11,000, but failed to do so. The daily chart shows a possible resistance level at the 61.8% Fib retracement from the Head and Shoulders pattern. If that happens, we may expect lows of $9,300 to $9,500.

BTC/USD 4-hour Chart

If we take a look at the 4-hour time frame, Bitcoin fell under the pink ascending line, which is now acting as resistance. However, this resistance is not as strong and may be surpassed with ease. Bitcoin is still struggling and trading within the range bound by $11,000 and $10,850 to the upside and downside, respectively.

BTC/USD 4-hour Chart

Bitcoin’s short-term technicals are showing bullish sentiment, while its mid-term technicals are slightly more bearish. While Bitcoin shows the most bullish sentiment out of the top three cryptocurrencies, we can expect a rebound from the current highs as BTC is unable to gain any meaningful bull push.

BTC/USD 4-hour Technicals

Technical factors (4-hour Chart):

Price is above its 50-period EMA and just slightly above its 21-period EMA
Price is at its middle Bollinger band
RSI is flat but overextended to the upside (53.96)
Volume is slowly descending

Key levels to the upside Key levels to the downside

1: $11,000 1: $10,850

2: $11,090 2: $10,630

3: $11,460 3: $10,500

Ethereum

Ethereum’s price has been squeezed out of its current levels over the weekend, pushing it below the yellow bottom support (now resistance) line. However, the bears didn’t do much either, with ETH’s price descent ending after failing to break $371 to the downside. If this level breaks, we can expect a push towards the $360 support level.

ETH/USD 4-hour Chart

Ethereum’s technicals have turned towards the bear side as the price went down. While the DeFi surge should be taken into account, Ethereum looks like it will push towards the downside in the short-term.

ETH/USD 4-hour Technicals

Technical Factors (4-hour Chart):

The price is below both its 21-period and its 50-period EMA
The price below its middle Bollinger band
RSI neutral and stabilizing (45.44)
Volume is average (two-candle spike during the downswing)

Key levels to the upside Key levels to the downside

1: $400 1: $371

2: $415 2: $360

3: $445 3: $340

Ripple

When taking a look at the 1-day chart, XRP has continued its Elliot Wave impulse pattern, nearly ending the fourth part of the wave. It is expected for XRP to push towards the downside (most likely towards $0.21) as a final leg of the impulse wave.

XRP/USD 1-day Chart

XRP spent its weekend in a slow push towards the upside as a continuation of its 4th leg of the impulse wave. With that being seemingly done, we can expect more bears to enter the market quite soon. This prediction is also confirmed by XRP finding much resistance at its 21-period and 50-period moving averages.

Taking a look at its technicals, XRP is (just as Ethereum) tilted towards the sell-side. Unlike Ethereum, however, XRP is showing even more bearish sentiment on longer time frames.

XRP/USD 4-hour Chart

XRP/USD 4-hour Technicals

Technical factors (4-hour Chart):

The price is below both its 21-period EMA and its 50-period EMA
Price is slightly below its middle Bollinger band
RSI is neutral and stabilizing (43.93)
Volume is average (low)

Key levels to the upside Key levels to the downside

1: $0.266 1: $0.2454

2: $0.285 2: $0.235

3: $0.31 3: $0.227

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Fundamental Analysis

Understanding What ‘GDP Deflator’ Is & Its Relative Impact On The Forex Market

Post author By Reddy Shyam Shankar
Post date 18 September, 2020
No Comments on Understanding What ‘GDP Deflator’ Is & Its Relative Impact On The Forex Market

Introduction

Investors and traders are continuously trying to determine which country is growing relatively faster to make currency investment decisions. Assessing growth for capitalist economies that use inflation as fuel can be tricky to understand. The differentiation between nominal and real growth, effects of inflation, and the role of a deflator are necessary to understand to arrive at correct conclusions from statistics.

What is GDP Deflator?

Most of the economies that we have today are capitalist economies and use inflation as the primary fuel for growth. Currency traders want to go “long” on currencies of countries that are experiencing relatively higher growth than other countries. Hence, a correct assessment of growth is crucial.

The broadest and most widely used measure of the growth of economies is the Gross Domestic Product (GDP). The GDP is the monetary measure of all goods and services produced within a country for a given period (quarter or year). Although, before GDP, Gross National Product (GNP) was widely used to compare growth amongst economies. GNP measures growth beyond borders and has certain limitations in its usage as a growth measure.

GDP Deflator

It is also known as GDP Price Deflator or Implicit price deflator. It measures the price changes in all goods and services produced within an economy. It measures inflation at the macroeconomic (or national) level. As prices of commodities increase over time, the GDP values are “inflated” over time.

For instance, a country that has a GDP of 10 million dollars for the year 2019 and 12 million dollars for the year 2020 would appear to have grown 20%. If the inflation rate for the duration was 10%, meaning the prices rose by 10% for all the commodities, then 1 million dollars out of 12 million dollars came purely through increased prices and not increased production. Hence, in 2020, the real GDP was only 11 million dollars. Therefore, real growth was only 10% instead of 20%.

The Nominal and Real GDP figures are vital to understand and measure the level of inflation by calculating the GDP deflator. The following formula gives the GDP deflator:

Here, the nominal GDP is the total dollar value of all commodities produced in an economy without accounting for inflation. It is a direct monetary measure of goods and services. Real GDP is the inflation-adjusted value of GDP. It strips away the effect of inflation from Nominal GDP to show real growth.

Deflators like the Real GDP also have a base year against which all other years’ figures are compared. For the United States, 2012 is the base year, meaning GDP deflator value for the year 2012 would be 100 (as nominal and real GDP would be equal due to zero inflation). Subsequent years will have higher or lower values accordingly to indicate inflation and deflation, respectively. The base year varies from country to country.

How can the GDP Deflator numbers be used for analysis?

It is essential to understand how inflation masks the real growth and leads us to make the wrong conclusions. As seen in the above example, countries may show higher and higher GDP figures, but in reality, they may have only achieved little or no growth at all. When comparing growth over several years, the GDP deflator is key to the analysis to strip away the effects of inflation. By employing the equation above, if we get a deflator score of say 110, it would indicate there is a 10 percent inflation during the observed period.

The Consumer Price Index (CPI) is the most popular and widely used indicator to measure inflation. The GDP deflator has some advantages over the CPI. As the CPI measures inflation for a fixed basket of goods and services, which does not change frequently, the GDP is a macroeconomic aggregate measure of inflation. The GDP deflator factors in any change in economic output and investment patterns. Any new change in the goods produced or change in the consumption patterns of people is accounted in by the GDP deflator, unlike CPI. The CPI basket is static and cannot account for commodities price changes that are not in the basket, whereas the deflator is all-inclusive in this regard.

It is also necessary to know that CPI includes the most commonly used goods and services that have an impact on the economy. It updates its basket as patterns change over the years. Hence, over time the GDP deflator and the CPI have similar trends and can be used interchangeably.

Impact on Currency

The GDP deflator is a basic measure of inflation that erodes currency value. It is an inversely proportional lagging indicator. High values of the deflator are bad for the currency value and vice-versa. Since it is one of the measures of inflation, it is a low-impact lagging indicator as it is not as popular and as frequent as the CPI. It is a quarterly statistic, whose effects are already priced in through more frequent inflation measuring statistics.

Economic Reports

The Bureau of EA releases quarterly reports of the GDP price deflator alongside the quarterly GDP figures on its official website for the United States. GDP and deflators are essential macroeconomic indicators, and therefore are available on the World Bank and many other international organizations like the OECD, IMF, etc.

Sources of GDP Deflator

The BEA releases its quarterly GDP deflator statistics on its official website for the public.

The World Bank also maintains GDP and GDP deflator statistics for most countries on its official website.

Deflator figures for most countries can be easily found on the Trading Economics website.

How GDP Deflator Data Release Affects The Price Charts

In the US, the GDP deflator is released by the Bureau of Economic Analysis quarterly, about 30 days after the quarter ends. It measures the annualized change in the price of all goods and services included in gross domestic product; and is the broadest inflationary indicator. The most recent data was released on July 30, 2020, at 8.30 AM ET can be accessed at Investing.com here. An in-depth review of the GDP deflator data release can be accessed at the Bureau of Economic Analysis website.

The screengrab below is of the GDP deflator from Investing.com. On the right, a legend indicates the level of impact the fundamental indicator has on the USD.

As can be seen, GDP deflator data is expected to have a medium impact on the USD after its release.

The screenshot below shows the most recent changes in the GDP deflator in the US. The GDP deflator changed by -2.1%, worse than analysts’ expectations of a 1.1% change. This change is expected to the negative for the USD.

Now, let’s see how this release made an impact on the Forex price charts.

EUR/USD: Before the GDP Deflator Data Release on July 30, 
2020, Just Before 8.30 AM ET

Before the news release, the EUR/USD pair traded in a neutral pattern. This trend is evidenced by the 15-minute candles forming on an already flattened 20-period Moving Average, as shown in the above chart.

EUR/USD: After the GDP Deflator Data Release on July 30, 
2020, at 8.30 AM ET

After the data release, the pair formed a 15-minute “hammer” candle. This trend is as expected since the USD weakened against the EUR. The data release was significant enough to cause a change in the market trend. The market adopted a steady bullish stance as the pair traded in an uptrend with the 20-period Moving Average steeply rising.

GBP/USD: Before the GDP Deflator Data Release on July 30, 
2020, Just Before 8.30 AM ET

Unlike the EUR/USD pair, the GBP/USD pair was trading in a steady uptrend before the data release.

GBP/USD: After the GDP Deflator Data Release on July 30, 
2020, at 8.30 AM ET

After the data release, the pair formed a bullish 15-minute candle. It subsequently traded in a renewed uptrend with the 20-period Moving Average steeply rising similar to the EUR/USD pair.

NZD/USD: Before the GDP Deflator Data Release on July 30, 
2020, Just Before 8.30 AM ET

NZD/USD: After the GDP Deflator Data Release on July 30, 
2020, at 8.30 AM ET

The NZD/USD pair was trading in a similar neutral pattern as the EUR/USD pair before the data release. Similar to the EUR/USD and the GBP/USD pairs, the NZD/USD pair formed a 15-minute bullish candle after the data release. Subsequently, the pair adopted an uptrend with the 20-period Moving Average steadily rising.

Bottom Line

As observed in this analysis, the GDP deflator has a strong impact on the price action, enough to alter the prevailing market trend upon its release. Forex traders should avoid having any significant open positions before the GDP deflator data release to avoid being caught on the wrong side of the news release.

Tags Education, Forex, Forex Fundamental Analysis, Forex Fundamentals, Forex Trading, Fundamental Analysis, GDP, GDP Deflator, Gross Domestic Product, trading

Crypto Market Analysis

Daily Crypto Review, Sept 18 – Uniswap’s UNI Token Surges Over 100% After Launch; Bitcoin Continues Fighting For $11,000

The cryptocurrency sector has mostly stayed at the same place as Bitcoin was fighting for the psychological $11,000 resistance. Bitcoin is currently trading for $10,938, which represents an increase of 0.46% on the day. Meanwhile, Ethereum gained 1.8% on the day, while XRP gained 1.33%.

Daily Crypto Sector Heat Map

If we look at the top100 cryptocurrencies, |Uniswap gained an astonishing 112.59 % on the day, making it the most prominent daily gainer. ABBC Coin (28.18%) and SushiSwap (21.75%) also did great. On the other hand, Hyperion lost 19.78%, making it the most prominent daily loser. It is followed by Flexacoin’s loss of 12.93% and Celo’s loss of 11.74%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level experienced a slight decrease since our last report, with its value currently being at 60.14%. This value represents a 0.16% difference to the downside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization stayed at the same place in the past 24 hours. Its current value is $354.50 billion, which represents an increase of $0.59 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin has spent the day trying to confirm its position above $11,000 or to push above it yet again after it dropped below the level. The largest cryptocurrency by market capitalization struggled to cross this psychological resistance but confirmed the $10,850 support, which puts it in a narrow range that traders can use to their advantage.

Bitcoin’s short-term indicators are a bit less bullish than a couple of days ago, as Bitcoin did not manage to break the $11,000 mark. However, its long-term technicals are still extremely tilted towards the upside.

BTC/USD 4-hour Chart

Technical factors:

Price is above both its 50-period EMA and 21-period EMA
Price is right between its middle and top Bollinger band
RSI is flat but overextended to the upside (64.35)
Volume is slowly descending

Key levels to the upside Key levels to the downside

1: $11,000 1: $10,850

2: $11,090 2: $10,630

3: $11,460 3: $10,500

Ethereum

Ethereum has followed its tight movement towards the ascending trend line, which took its price a bit higher than yesterday. Technicals, as well as the influx of people using Ethereum due to UNI token launching, bumped its price up to around 2% towards the upside.

With this being said, Ethereum’s technicals have turned extremely bullish as many traders called for the double bottom that formed, propelling ETH’s price up towards $400.

ETH/USD 4-hour Chart

Technical Factors:

The price is above both its 21-period and its 50-period EMA
The price slightly closer to its top Bollinger band than the middle one
RSI slowly descending (60.41)
Volume is average

Key levels to the upside Key levels to the downside

1: $371 1: $360

2: $400 2: $340

3: $415 3: $300

Ripple

XRP has continued its push towards the upside and has continued heading towards the $0.266 resistance level. The steady push has slowed down a bit due to a decrease in volume but has shown no signs of completely stopping. XRP is in quite a good spot now, as many traders are calling for long positions (mostly on the 1-day and 1-week charts).

XRP saw a change of its short-term technicals to extremely bullish, while its mid-term technicals (1-month) are still tilted towards the sell-side. With that being said, more and more traders are slightly less bearish on XRP in the mid-term.

XRP/USD 4-hour Chart

Technical factors:

The price is well above its 21-period EMA and its 50-period EMA
Price is very close to its top Bollinger band
RSI is pushing towards overbought (64.37)
Volume is descending

Key levels to the upside Key levels to the downside

1: $0.266 1: $0.2454

2: $0.285 2: $0.235

3: $0.31 3: $0.227

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Market Analysis

Daily F.X. Analysis, September 18 – Top Trade Setups In Forex – Consumer Sentimentin Focus!

Post author By Ali B.
Post date 18 September, 2020
1 Comment on Daily F.X. Analysis, September 18 – Top Trade Setups In Forex – Consumer Sentimentin Focus!

On the news front, the focus will remain on the U.S. Prelim Consumer Confidence and C.B. Leading Index m/m, which are expected to report mixed outcomes and may drive choppy movement in the U.S. dollar. Let’s focus on technical levels today.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD closed at 1.18474 after placing a high of1.18522 and a low of 1.17371. On Thursday, the EUR/USD pair fell in the early trading session to the lowest level since August 12 but managed to reverse its direction and recover its daily losses. The shared currency Euro remained appealing this week and has been driven more by movements in rival currencies like the U.S. dollar. A rise in demand for the U.S. dollar was the primary cause of the EUR/USD pair’s early losses.

In the early trading session, the U.S. dollar saw a jump in demand in reaction to the latest Fed’s decision to keep interest rates near zero until 2023. Fed also decided not to announce any stimulus package that lifted the demand for the greenback. This rise in the U.S. dollar pressured the EUR/USD pair, and the pair saw a sudden decline to its lowest level since mid-August.

After this decision to not add more stimulus to advance the Fed’s goal of spurring inflation, the U.S. stocks fell sharply on Thursday as the risk sentiment faded away. This decreased risk sentiment also added further weakness in the EUR/USD pair.

The sudden decline in the EUR/USD could also be attributed to the latest warning from the World Health organization that cautioned on Thursday and said that there were alarming rates of transmission of coronavirus across Europe. This warning came in against the shortening quarantine periods from countries across Europe. After this warning, the concerns and fears of a resurgence of coronavirus raised and the local currency suffered that dragged the currency pair on the downside.

However, the Eurozone market outlook remains optimistic due to the bloc’s handling of the coronavirus pandemic. The Eurozone data has not been influencing this week as the Eurozone inflation data released at 14:00 GMT came in line with the expectations of -0.2%. The Final Core CPI for the year also remained flat with a projection of 0.4%. Whereas, the Italian Trade Balance rose to 9.69B against the forecasted 5.20B and supported the shared currency that pushed the EUR/USD pair’s prices on the upside.

Another factor involved in the upward movement of currency pair in the late trading session was the negative macroeconomic data releases from the United States. At 17:30 GMT, the Unemployment Claims from the U.S. last week rose to 860K from the forecasted 825K and weighed on the U.S. dollar. The Building Permits also declined to 1.47M from the projected 1.51M and weighed on the U.S. dollar. The Housing Starts dropped to 1.42M against the forecasted 1.47Mand weighed on the U.S. dollar. These negative reports from the U.S. pushed the pair EUR/USD higher in the late trading session.o increase the 2030 target of emission reduction to 55%, and investment for digital technologies.

Daily Technical Levels

Support Resistance
1.1772 1.1889
1.1696 1.1930
1.1655 1.2007
Pivot point: 1.1813

EUR/USD– Trading Tip

The EUR/USD pair has traded sharply bullish to trade at 1.1849 level, and now it’s trading sideways within a narrow trading range of 1.1865 level to 1.1849 level. Violation of this range may determine further trends in the market. On the higher side, the EUR/USD can go after the 1.1898 level. Conversely, a bearish breakout of the 1.1840 support level may extend selling bias until the 1.18200 level.

GBP/USD – Daily Analysis

The GBP/USD closed at 1.29723 after placing a high of 1.29990 and a low of 1.28647. Overall the movement of the GBP/USD pair remained flat but slightly bullish throughout the day. On Thursday, the GBP/USD pair extended its bullish streak for 4th consecutive day. However, the gains were very short on Thursday as the pair dropped in the first half of the day amid broad-based U.S. dollar demand. In the second half of the day, the pair bounced back on the upside amid Bank of England’s latest monetary policy decision and weak U.S. economic data.

During the Asian and European trading session on Thursday, the pair faced high pressure due to the broad-based U.S. dollar strength driven by the latest Federal Reserve monetary policy decision. The Fed decided to hold its interest rates near zero until inflation reached 2% or above, projected to reach till 2023. Fed also decided not to announce any stimulus measure against the expectations, so the U.S. dollar rebounded.

The U.S. dollar strength dragged the pair EUR/USD on the downside; however, the pair managed to recover its daily losses and bounced back in the late trading session. The British Pound recovered from session lows on Thursday as the Bank of England kept the rates unchanged. The Bank kept the rates at 0.1% and the asset purchase target at 745B Pound and hinted that it was ready to adjust monetary policy to meet to support the recovery.

As per the Bank of England, the U.K. economic data justified that Bank’s policies supported the recovery and acknowledged that GDP and inflation had recently been running above the estimates given in the August monetary policy report. However, despite the faster pace of economic recovery in the U.K., the Bank left the door open for negative interest rates as additional policy measures to keep the economy on track if the second wave of coronavirus emerged and affect the labor market that could trigger the slowdown.

The less dovish comments from BoE and cooling expectations that easing in November was a forgone conclusion raised the British Pound, and the pair GBP/USD started moving in an upward direction. Furthermore, the U.S. dollar came under pressure on the data front after the negative macroeconomic data releases on Thursday. The Unemployment claims from the U.S. rose during last week to 860K against the expectations of 825K and weighed on the U.S. dollar. The Building Permits also declined along with the Housing Starts in August to 1.47M and 1.42M, respectively. These negative economic figures also helped the GBP/USD pair to move on the upside and recover its early losses.

On the other hand, on the Brexit front, the Pound got an unexpected boost from the latest comments from E.U. Commission President Ursula von der Leyen, who said that she believes a trade deal with the U.K. was still possible despite the distraction caused by Boris Johnson’s Internal Market Bill. These comments also helped the GBP/USD pair to reverse its early daily movement on Thursday.

Daily Technical Levels

Support Resistance
1.2890 1.3025
1.2810 1.3080
1.2756 1.3160
Pivot point: 1.2945

GBP/USD– Trading Tip

The GBP/USD pair is trading at 1.2945 level, holding within an upward channel supporting the pair at 1.2909 level. The closing of the recent Doji candle over the EMA and upward trendline support level of 1.2909 level suggests odds of upward movement in the market. Considering this, we may have some upward trend in the Sterling ahead of the BOE rate decision. Thus, we should look for a buying trade with a target of 1.2996 level. Violation of 1.2909 le el can trigger selling bias until 1.2828 level.

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 104.737 after placing a high of 105.172 and 104.523. The pair USD/JPY extended its losses for the 4th consecutive day on Thursday and dropped to its lowest level since July 31 on the strong demand for the Japanese Yen. The pair was rather unaffected by the modest pickup in the U.S. dollar demand after the Federal Reserve kept its rates neat zero for likely until 2023 and refrained from announcing further monetary stimulus package.

On late Wednesday, the global risk sentiment was hit after the Fed failed to offer any clues about additional stimulus measures with the S&P 500 index down by 0.6% on the day. The Fed also upgraded its economic outlook and projected a much shallower contraction in 2020. This supported the rise in the U.S. dollar; however, it failed to impress the USD/JPY pair’s bullish traders as the focus was shifted to Japan’s monetary policy.

On Thursday, the Bank of Japan left its aggressive monetary stimulus on hold and upgraded its view of the pandemic-hit economy. The Bank of Japan announced its monetary policy decision a day after Mr. Yoshihide Suga took over as Prime Minister and pledged to continue his predecessor’s stance on monetary and fiscal policy.

As expected, the Bank of Japan kept its interest rates at -0.1% and left its asset purchases unchanged. Mr. Suga said that there was no need for any immediate changes in BOJ policies as they have helped to keep the financial markets stable and get credit to companies amid the coronavirus crisis. The Central Bank’s economic assessment was upgraded for the first time on Thursday since the coronavirus hit the economy and sent it to the bottom. BOJ said that economy has started to pick up with activity resuming gradually. However, the pace for recovery was likely to be only moderate as the pandemic is continuously affecting the countries worldwide. The BOJ decision came after hours the Federal Reserve unveiled its latest policy guidance, and the traders followed more the BOJ’s statement as it was the latest and the pair USD/JPY continued declining.

Another reason behind the decreased USD/JPY prices was the negative and depressing U.S. economic data on Thursday. At 17:30 GMT, the Philly Fed Manufacturing Index remained unchanged and came as expected 15.0. The Unemployment Claims last week advanced to 860K against the anticipated 825K and weighed on the U.S. dollar. In August, the Building Permits also dropped to 1.47M from the forecasted 1.51M, and the Housing Starts declined to 1.42M from the expected1.47M and weighed on the U.S. dollar. The weak U.S. economic data weighed on the U.S. dollar and added further in the USD/JPY pair’s losses on Thursday.

Daily Technical Levels

Support Resistance
104.44 105.10
104.15 105.47
103.78 105.76
Pivot point: 104.81

USD/JPY – Trading Tips

The USD/JPY pair had violated the double bottom support level of 107.750, and now it’s holding below 50 periods EMA, suggesting odds of selling bias in the USD/JPY. On the 4 hour timeframe, the downward channel is likely to drive selling bias in the USD/JPY pair. On the lower side, the support stays at 104.500 level, and a bearish breakout can lead USD/JPY price further lower towards 104.300 level. The focus will remain on the Prelim UoM Consumer Sentiment data as it may drive further market trends. The MACD and EMA are also in support of selling bias.

Good luck!

Tags Daily Support and Resistance, EURUSD, Forex, forex review, Fundamental Analysis, GBPUSD, Technical Analysis, Technical Outlook, USDJPY

Forex Market Analysis

Daily F.X. Analysis, September 17 – Top Trade Setups In Forex – Brace for BOE Policy!

Post author By Ali B.
Post date 17 September, 2020
1 Comment on Daily F.X. Analysis, September 17 – Top Trade Setups In Forex – Brace for BOE Policy!

On the news front, the eyes will remain on the U.K. Monetary Policy reports due during the late European hours. BOE isn’t expected to change the rates, and it may keep them at 0.10%; however, it will be important to see MPC Official Bank Rate Votes. Besides, the European Final CPI data will remain in focus today. During the U.S. session, the Unemployment Claims and Philly Fed Manufacturing Index will be the main highlight to drive further market movement.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD closed at 1.18161 after placing a high of 1.18824 and a low of 1.17873. The EUR/USD pair continued following its previous day bearish trend on Wednesday ahead of the FOMC meeting. The pair posted losses on the day despite upbeat macroeconomic data from Europe.

The U.S. dollar became strong in response to the Federal Reserve’s rate decision. The Fed left its monetary policy unchanged and signaled no changes to borrowing costs potentially through 2023. The growth projections by Fed pointed a return to pre-pandemic levels by the end of 2021.

The Federal Reserve Chairmen, Jerome Powell, said that the current bond-buying level was appropriate and said that more fiscal support was likely to be needed. The U.S. dollar index found support at 92.8 level and spiked to 93.15 level and weighed on EUR/USD pair.

On the data front, At 14:00 GMT, the Trade Balance from the Eurozone showed a surplus of 20.3B against the forecasted 19.3B in July and supported single currency Euro. However, the upbeat data failed to reverse the pair’s movement as the focus was all on the FOMC meeting and Fed decision.

On the U.S. front, the Core Retail Sales in August declined to 0.7% from the forecasted 1.0%, and the Retail Sales in August also dropped to 0.6% from the projected 1.2% and weighed on the U.S. dollar. Whereas, the Business Inventories in July dropped to 0.1% from the projected 0.2% and supported the U.S. dollar. The NAHB Housing Market Index advanced to 83 from the anticipated 78 and supported the U.S. dollar. The mixed macroeconomic data from the U.S. also failed to impact on EUR/USD prices on Wednesday.

As the WHO has warned that the death toll in Europe is likely to increase in October and November, the local currency has come under pressure since then. On Wednesday, the regional health authorities announced that Madrid’s Spanish capital would introduce selective lockdowns in urban areas where the coronavirus has spread widely. This also weighed on local currency and added further pressure on EUR/USD pair.

On Wednesday, the European Commission President Ursula von der Leyen came to the European Parliament in Brussels to deliver her first state of European Union Address. She announced new plans that included measures to tear down single market restrictions, a new strategy for the Schengen zone, a proposal to increase the 2030 target of emission reduction to 55%, and investment for digital technologies.

Daily Technical Levels

Support	Pivot	Resistance
1.1773	1.1828	1.1869
1.1732		1.1924
1.1676		1.1966

EUR/USD– Trading Tip

The EUR/USD pair has traded sharply bearish at 1.1750 area, and now the same level is extending solid support to the pair. On the higher side, the EUR/USD may soar until 1.1780 level that marks 38.2% Fibo and 1.1810 level of 61.8% Fibonacci retracement. Conversely, the support stays at 1.1699 level today.

GBP/USD – Daily Analysis

The GBP/USD closed at 1.29666 after placing a high of 1.30070 and a low of 1.28749. Overall the movement of the GBP/USD pair remained bullish throughout the day. The pair GBP/USD extended its previous daily gains and rose above 1.3000 level on Wednesday amid dovish hopes for the FOMC meeting. The strong CPI report from the U.K. negative Retail Sales report from the U.S. also added further gains in the GBP/USD pair on Wednesday.

As investors have digested the recent developments surrounding Brexit and the internal market bill, the heavy tone surrounding the U.S. dollar also helped the GBP/USD pair to surgeon Wednesday. The heavy bearish pressure on the U.S. dollar was exerted by the release of disappointing U.S. monthly Retail Sales figures for August.

At 17:30 GMT, the Core Retail Sales dropped to 0.7% from the anticipated 1.0%, and the Retail Sales were declined to 0.6% from the projected 1.1% and weighed heavily on the U.S. dollar that helped GBP/USD pair to move on the upside. Meanwhile, from the U.K., at 11:00 GMT, the Consumer Price Index for the year rose to 0.2% from the expected 0.1% and supported the Sterling. The Core Consumer Price Index also rose to 0.9% from the expected 0.7% and supported British Pound.

Whereas the PPI Input in August was declined to -0.4% from the forecasted 0.1%, and the PPI Output also declined to 0.0% against the forecasted 0.2% and weighed on local currency. The year’s RPI declined to 0.5% from the expected 0.6% and weighed on British Pound. However, the Housing Price Index for the year rose to 3.4% from the projected 3.2% and supported British Pound that added further gains in GBP/USD pair.

On the Brexit front, the head of the European Commission said on Wednesday that the chances of reaching a trade deal with Britain were fading by the day as the British government pushes ahead with moves that would breach their withdrawal agreement.

Brussels have warned Prime Minister Boris Johnson to scrap the Internal Market Bill, or it would sink the talks on future trade arrangements before Britain finally leaves the E.U.’s orbit on December 31. However, Johnson has refused to step back from issuing an Internal Market Bill.

The President of the European Commission, Ursula von der Leyen, said that the timely agreement’s chances have started to fade with the time passing, which raised the fears on no-deal Brexit. However, this failed to cap the additional gains in GBP/USD pair as markets have already priced the no-deal Brexit worries. Moreover, the U.S. dollar was also under pressure on Wednesday ahead of FOMC meeting results and the speech of Fed Chair Jerome Powell. This added further strength in the GBP/USD pair.

Daily Technical Levels

Support	Pivot	Resistance
1.2890	1.2949	1.3024
1.2815		1.3083
1.2757		1.3157

GBP/USD– Trading Tip

The GBP/USD pair is trading at 1.2909 level, holding within an upward channel supporting the pair at 1.2909 level. The closing of the recent Doji candle over the EMA and upward trendline support level of 1.2909 level suggests odds of upward movement in the market. Considering this, we may have some upward trend in the Sterling ahead of the BOE rate decision. Thus, we should look for a buying trade with a target of 1.2996 level. Violation of 1.2909 le el can trigger selling bias until 1.2828 level, but it depends upon the policy decision today. Let’s keep an eye on it.

USD/JPY – Daily Analysis

The USD/JPY Pair was closed at 104.944 after placing a high of 105.432 and a low of 104.799. Overall the movement of the USD/JPY pair remained bearish throughout the day. The pair USD/JPY extended its bearish trend for the 3rd consecutive day and fell to its lowest since July 31. The U.S. Dollar Index fell 0.3% on Wednesday ahead of the U.S. Federal Reserve policy meeting outcome.

The decline in the U.S. dollar was due to the expectations that the Federal Reserve Open Market Committee will maintain a dovish stance on the economy’s outlook. Last month during the Fed’s annual Jackson Hole Symposium, the Federal Reserve unveiled a major change in policy and said it would now target an inflation rate that averages 2% over time. Previously the Fed’s target was to maintain inflation at 2%; the current U.S. consumer inflation is at 1.3%.

The Market Participants do not expect any rise in the Fed’s benchmark interest rate of 0.25% for a longer period; however, they were keenly awaiting the meeting to conclude whether the central bank issues any surprise economic projections. The dovish expectations kept the local currency under pressure that weighed on the USD/JPY pair on Wednesday.

Meanwhile, the Trade Balance from Japan showed a surplus of 0.35T from the anticipated 0.01T and supported the Japanese Yen that added further pressure on the USD/JPY pair on the data front. On the U.S. side, the Core Retail Sales in August fell to 0.7% from the anticipated 1.0% and weighed on the U.S. dollar that exerted further pressure on the USD/JPY pair. In August, the Retail Sales also fell to 0.6% from the anticipated 1.1% and weighed on the U.S. dollar that kept the pair USD/JPY on the downside.

However, in July, the Business Inventories that were released at 19:00 GMT dropped to 0.1% from the forecasted 0.2% and supported the U.S. dollar. The NAHB Housing Market Index also favored the U.S. dollar when it rose to 83 from the anticipated 78 and capped further downward movement in the USD/JPY pair.

On Wednesday, the U.S. President Donald Trump urged Republicans to hold a larger coronavirus package as this will increase the chances of striking a deal with Democrats. The comments from Trump showed a need for stimulus and raised hopes that the stimulus package will be announced soon, and hence, the U.S. dollar came under fresh pressure that ultimately weighed on USD/JPY pair prices.

On the other hand, the USD/JPY pair’s losses were limited by the latest news that supported the risk sentiment in the market. The U.S. Federal Government drew a sweeping plan on Wednesday to make vaccines for the coronavirus available for free to all Americans. The federal health agencies and the Defense Department offered plans for a vaccination campaign that will start in January or later this year. The market participants are waiting for his speech to find fresh clues about the economic condition and further monetary policy decisions by the U.S. government. Hence, the local currency remained under pressure ahead of it and kept weighing the USD/JPY currency pair.

Daily Technical Levels

Support	Pivot	Resistance
104.6700	105.0600	105.3300
104.4100		105.7100
104.0200		105.9800

USD/JPY – Trading Tips

The USD/JPY pair had violated the double bottom support level of 105.300 level, and closing of the candle below 105.300 level may drive more selling bias in the USD/JPY. On the lower side, the support stays at 104.780 level, and a bearish breakout can lead USD/JPY price further lower towards 104.300 level. The focus will remain on the U.S. Jobless claims data as it may drive further market trends. The MACD and EMA are also in support of selling bias.

Good luck!

Tags Daily Brief, EURUSD, Forex, forex review, Fundamental Analysis, GBPUSD, Support and Resistance, Technical Analysis, Technical Outlook, trading, USDJPY

Crypto Market Analysis

Daily Crypto Review, Sept 17 – Bitcoin Above $11,000; XRP Skyrocketing

Post author By Ilija Rankovic
Post date 17 September, 2020
1 Comment on Daily Crypto Review, Sept 17 – Bitcoin Above $11,000; XRP Skyrocketing

The cryptocurrency sector has shot up as Bitcoin pushed towards $11,000. Most cryptos ended up in the green, with some even outperforming Bitcoin. Bitcoin is currently trading for $11,019, which represents an increase of 2.72% on the day. Meanwhile, Ethereum gained 5.58% on the day, while XRP gained an astonishing 7.24%.

Daily Crypto Sector Heat Map

If we look at the top100 cryptocurrencies, DigiByte gained 23.07% on the day, making it the most prominent daily gainer. Hyperion (19.61%) and Kusama (11.85%) also did great. On the other hand, SushiSwap lost 15.68%, making it the most prominent daily loser. It is followed by Flexacoin’s loss of 11.46% and UMA’s loss of 11.43%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level experienced a slight decrease since our last report, with its value currently being at 60.30%. This value represents a 0.21% difference to the downside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization has gone up significantly in the past 24 hours. Its current value is $353.89 billion, which represents an increase of $10.48 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin has, as we said in our previous article, pushed towards the upside, attempting an $11,000 break. While it has broken the $11,000 psychological resistance, it got stopped out at the $11,090 resistance level. Bitcoin will have to make a confirmation move in order to stay above $11,000, which may be hard since it will be in such a tight range ($11,000 to $11,090).

Bitcoin’s short-term indicators are extremely bullish, but its longer-term indicators are also tilted towards the bull side. Traders should look out for how Bitcoin handles the $11,000 level and trade off of it.

BTC/USD 4-hour Chart

Technical factors:

Price is above both its 50-period EMA and 21-period EMA
Price is near its top Bollinger band
RSI is overextended to the upside (71.42)
Volume is stable (with a couple of spikes)

Key levels to the upside Key levels to the downside

1: $11,000 1: $10,850

2: $11,090 2: $10,630

3: $11,460 3: $10,500

Ethereum

As we said in our previous article, it would take a strong push towards the upside to pull Ethereum out of the 35% downside prognosis, which many trades called since the ETH/USD pair created a bear flag. However, Bitcoin’s push towards $11,000 prompted Ethereum to push towards the upside and get back into the range.

With this being said, Ethereum hasn’t confirmed its position above the bear flag lower line, which is because the $371 level it passed will remain in our “key level to the upside” section until ETH confirms otherwise. Still, its short-term indicators have changed to a bit more bullish scenario.

ETH/USD 4-hour Chart

Technical Factors:

The price is above both its 21-period and its 50-period EMA
The price is right at its top Bollinger band
RSI is neutral but pushing towards the upside (59.82)
Volume is low and stable

Key levels to the upside Key levels to the downside

1: $371 1: $360

2: $400 2: $340

3: $415 3: $300

Ripple

XRP had an amazing day, with its price pushing over 7% on the day. The third-largest cryptocurrency by market cap has used this influx of bulls to its fullest, confirming its position above $0.2454 and even pushing towards $0.266.

XRP has joined Ethereum in terms of technicals, with the short-term overview changing to a short-term buy, while its long-term technicals are still showing slight bearishness. Traders can look for a pullback that XRP will inevitably make and trade off of it.

XRP/USD 4-hour Chart

Technical factors:

The price is above its 21-period EMA and its 50-period EMA
Price is above its top Bollinger band
RSI is skyrocketing and pushing towards overbought (67.99)
Volume is low (but slowly increasing)

Key levels to the upside Key levels to the downside

1: $0.266 1: $0.2454

2: $0.285 2: $0.235

3: $0.31 3: $0.227

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Videos

The Next Financial Crisis Is Brewing! How Can We Profit From This Debt Bubble?

Post author By Keiran
Post date 16 September, 2020
No Comments on The Next Financial Crisis Is Brewing! How Can We Profit From This Debt Bubble?

https://youtu.be/MPGI1pNEano

The next financial crisis is brewing already; this time, it will be caused by debt!

You will probably have heard the old adage that history repeats itself. We only need to look back to the 2008 financial crash, which decimated some banks and institutions, many of which had been pressured to lend more money to consumers, especially in America, specifically to buy homes. Many of these mortgages were taken out by people who simply could not afford them. Some had clauses offering very low initial interest rates, which ballooned after a few years, which centers around the time of the crash in 2008. These were subprime mortgages, and these bad loans were the spark that lit the fire, which became an inferno.
This lending culture was not restricted to mortgages. Banks were competing against each other to lend money to consumers for everything including renovating or extending homes, car loans, holiday loans, white goods, and other consumer household products. Banks were simply throwing money at consumers. The result was a mountain of debt, which caused a recession in the west. Some banks, including Lehman Brothers, which was founded in 1847, and the 4th largest U.S. investment bank at the time, went under. Many other banks such as the Royal Bank of Scotland and Bradford and Bingley and the Alliance and Leicester came very close to bankruptcy and had to be bailed out by the U.K. Government.

Move on to the 2020 coronavirus epidemic, and we find ourselves in a post-2008 catch-22 position. Companies that have seen growth hammered by the coronavirus, including airlines, car manufacturers, hoteliers, and the entertainment industry, including bars and theatres, have all seen their incomes throttled as a result of the continuing virus. Restrictive legislation and fears by consumers of returning to any kind of normality before a vaccine can be found means one thing: these companies and individuals are being artificially propped up in the form of Government debt. It is either that or there will be carnage in the form of bankruptcies, increased unemployment and people failing to meet their mortgage payments, which will have a potential knock-on effect to those banks providing the finance. Does this sound like a repeating cycle of 2008?

In trying to stop a total financial crash, the only solution which can be found by governments is to issue more debt, which is tantamount to stoking up the fire with more debt. The west is not yet in a situation to offset the need for this debt by economic growth, which is the only way to achieve it properly in economic terms.
Companies that are struggling to survive are borrowing more debt from banks to prop up their companies in the hope that earnings will pick up soon. This increases their debt burden and the longer the virus continues the more it increases their chance of going under.

With a mountain of corporate debt growing in the West, this curtails central banks from increasing interest rates, which is what the Fed did after the 2008 crash, as things return to normal because this could cause companies to fail to be able to meet their debt obligation payments. This is another catch-22.

But, with the virus still in in the grip of Europe and America and much of the world, we are unlikely to see strong economic growth for the foreseeable future. Certainly, the increasing spat between the United States and China is not helping the situation. With the West generally bashing at the door of China over the issue of the Hong Kong national security bill, and Donald Trump banning Chinese owned companies such as tik-tok, WeChat and Huawei, we can expect more tit-for-tat sanctions, tariffs and bans on Chinese and American companies working in respective countries.

One thing is for sure we have a long way to go, it could be many years before things are back to what we used to consider normal. As traders, we must expect the unexpected; this will mean shocks and sonic waves exploding through the financial markets, causing volatility in the stock market and huge swings in currencies, especially the United States dollar, the Great British pound, and the euro.

The Dodd-Frank Act
In the U.S., the Dodd-Frank Act, enacted in 2010, requires bank holding firms with more than $50 million in assets to abide by rigorous capital and liquidity standards, and it sets increased restrictions on incentive compensation.

Tags debt, Education, Forex, Fundamental Analysis

Forex Signals

Gold Trades Choppy Ahead of FOMC – Ascending Triangle in Play!

Post author By Ali B.
Post date 16 September, 2020
No Comments on Gold Trades Choppy Ahead of FOMC – Ascending Triangle in Play!

During Wednesday’s Asian trading session, the yellow metal prices extended its overnight buying bias and gathered some pace around the two-week tops above 1,960. The massive offered tone surrounding the greenback was seen as one of the major factors that helped the dollar-denominated commodity gold. However, the weaker tone around the U.S. dollar was mainly driven by the ongoing risk-on mood, which eventually undermined the safe-haven U.S. dollar. Besides, the U.S. dollar bearish bias could also be associated with traders’ cautious mood ahead of the Federal Open Market Committee (FOMC) meeting. Apart from this, the market trading sentiment was being supported by the news suggesting the AstraZeneca’s restart of the coronavirus (COVID-19) vaccine trials.

Meanwhile, the risk-on sentiment was further bolstered by the University Of Pittsburgh School Of Medicine’s positive news, where experts produced the strongest antibody component for the coronavirus tested over animals. These positive headlines became the key factor that kept the lid on any further yellow metal gains. On the contrary, the Sino-US trade area and coronavirus woes flashed mixed signals, which keep challenging the market risk-on sentiment. Gold prices are currently trading at 1,966 and consolidating in the range between 1,949.99 – 1,962.97. Moving on, the market traders seem reluctant to place any strong position ahead of the U.S. Federal Reserve’s policy meeting, which is due to happen on the day.

Despite the COVID-19’s ongoing global spread and the Sino-American tussle, not to forget the fears of no-deal Brexit, the market trading sentiment extended its early-day positive tone and remained supportive by the positive data from the U.S. and China, which suggesting gradual recoveries in the global economics from China and the U.S. At the data front, China’s Industrial Production and Retail Sales surpassed forecasts for August, the U.S. NY Empire State Manufacturing Index also recovered to 17.00 and pleased the optimists.

Apart from this, the reasons for the risk-on market trading sentiment could also be attributed to the positive headlines concerning the coronavirus vaccine. The AstraZeneca showed readiness for resuming its vaccine trials after a brief “routine” pause, while the Pfizer is confident about getting the cure of the pandemic by the year’s end. Furthermore, the latest news came from the University Of Pittsburgh School Of Medicine, wherein the scientists produced the strongest antibody component for the pandemic. This, in turn, underpinned the market trading sentiment and kept the lid on any further gains in the gold prices.

Across the pond, the tussle between the US-China flashed mixed signals as the Trump administration quietly eased warning towards China and Hong Kong. Whereas, the Dragon Nation extended tariff relief for U.S. imports. This, in turn, the U.S. rolled back the decision to ban some of the productions from Xinjiang. Despite this, the relationship between US-China turned sour after the World Trade Organization (WTO) ruled against the Trump administration’s decision to levy multiple trade sanctions on China. These mixed headlines might exert downside pressure on the market trading sentiment, which could help further the safe-haven assets.

The broad-based U.S. dollar failed to keep its overnight gains and edged lower on the day, mainly due to the risk-on market sentiment. Moreover, the U.S. dollar losses could also be associated with cautious sentiment ahead of the U.S. Federal Reserve’s policy meeting, which is scheduled to take place on the day. It is worth mentioning that the Fed will speak later to hand down its policy decision; as we know, this will be its first meeting since Fed Chairman Jerome Powell announced a more relaxed approach to inflation at the Jackson Hole symposium August 27. However, this stance is broadly expected to be continued and could undermine the U.S. dollar by introducing further stimulus measures. At the coronavirus front, the ongoing rise in COVID-19 cases globally continues to fuel worries concerning the global economic outlook for the foreseeable future.

Looking ahead, the market traders will keep their eyes on Japan’s trade numbers and Aussie housing data. Whereas, investors are also looking to the U.S. Federal Reserve’s policy meeting, scheduled to take place on the day. Meanwhile, New Zealand’s Current Account and the Pre-Election Economic and Fiscal Update (PREFU) will also key to watch. All in all, the updates surrounding the Brexit, virus, and US-China tussle will not lose their importance.

The yellow metal gold traded sharply bullish amid weaker U.S. dollar to trade at 1,961 level. On the higher side, the gold prices may continue to trade bullish until 1,970 and 1,985 and 1,994 resistance levels. On the lower side, the gold may gain support at 1,963 and 1,955 levels. Overall, the trading bias seems bullish. Good luck!

Tags Fundamental Analysis, Support and Resistance, Technical Analysis, Technical Outlook, XAU/USD

Forex Market Analysis

Daily F.X. Analysis, September 16 – Top Trade Setups In Forex – Eyes on FOMC Fed Fund!

Post author By Ali B.
Post date 16 September, 2020
1 Comment on Daily F.X. Analysis, September 16 – Top Trade Setups In Forex – Eyes on FOMC Fed Fund!

On the news front, the eyes will remain on the FOMC Statement and Federal Funds Rate, which is not expected to show a rate change but will help us understand U.S. economic situation and policymakers’ stance on it. Besides, the Inflation reports from the U.K. and Eurozone are also likely to drive some price action during the European session today.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD pair closed at 1.18461 after placing a high of 1.19003 and a low of 1.18393. Overall the movement of the EUR/USD pair remained bearish throughout the day. After rising for four consecutive days, the EUR/USD pair fell on Tuesday amid renewed safe-haven appeal for the U.S. dollar despite the strong Eurozone data. The EUR/USD turned negative for the day as the greenback managed to trim losses versus Euro as the latest statement from WTO weighed down the risk sentiment.

On Tuesday, the World Trade Organization ruled that the U.S. tariffs imposed on Chinese goods in 2018 that led to trade war were inconsistent with international trade rules. The WTO said that the U.S. did not provide evidence that its claims of China’s unfair technology theft and state aid justified the border taxes.

The U.S. condemned and called WTO inadequate to the task of confronting China while Chinese officials cheered the ruling. Due to its safe-haven status on such news and weighed on EUR/USD pair on Tuesday, the U.S. dollar gained due to its safe-haven status.

On the data front, at 11:45 GMT, the French Final CPI in August remained flat with the expectations of -0.1%. At 14:00 GMT, the ZEW Economic Sentiment for Eurozone rose in September to 73.9 from the forecasted 63.0 and Euro. The German ZEW Economic Sentiment in September also rose to 77.4 from the forecasted 69.7 and supported the single currency. These positive reports from Eurozone gave the Euro strength and capped further losses in EUR/USD pair.

On the U.S. front, the Empire State Manufacturing Index for August rose to 17.0 from the projected 6.2 and supported the U.S. dollar that added further losses in EUR/USD pair. The Import Prices in August also advanced to 0.9% from the anticipated 0.5% and supported the losses of the EUR/USD pair.

On Tuesday, the U.S. Dollar Index (DXY) erased its previous losses and rose to 93.00 and was up by 0.6% on Tuesday. On the other hand, the Euro was weak against the U.S. dollar; hence, the pair EUR/USD came under pressure. Another factor involved in the sudden fall of EUR/USD pair prices was the World Health Organization’s latest warning. The WHO warned on Monday that Europe would face a rising death toll from the coronavirus during the autumn months as the number of daily infections worldwide reached a high record. This raised the fears and weighed on risk sentiment that dragged the EUR/USD pair on the downside.

Daily Technical Levels

Support	Pivot	Resistance
1.1821	1.1861	1.1883
1.1799		1.1923
1.1760		1.1945

EUR/USD– Trading Tip

The EURUSD pair is bouncing off the support level of 1.1835 level, and now it’s trading at 1.1845 level. For now, the EUR/USD may find support at 1.1815 level, and above this, the continuation of a bullish trend may lead EUR/USD price until 1.1903 level. Bearish correction can be seen until 1.1815 and 1.1764 support levels.

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.28885 after placing a high of 1.29262 and a low of 1.28145. Overall the movement of the GBP/USD pair remained bullish throughout the day. The GBP/USD pair on Tuesday rose and extended its previous day’s bullish track on the back of positive macroeconomic data from the U.K. despite the strong rebound of the U.S. dollar in the market. However, the gains were limited as the issue of the internal market bill was still intact.

The GBP/USD pair rose on the strong U.K. jobs data on Tuesday when at 11:00 GMT, the Claimant Count Change from the U.K. dropped in August to 73.7K from the forecasted 99.5K and supported a single currency, the British Pound.

The Average earning Index for the quarter came in as -1.0% against the forecasted -1.3% and supported the British Pound that helped GBP/USD to gain traction. The Unemployment Rate in July remained flat with expectations of 4.1%.

The strong jobs report from the U.K. gave strength to the local currency Sterling and helped the pair rise for the second consecutive day.

Meanwhile, the U.S. dollar was also strong on the board after the WTO ruled the U.S. tariffs as illegal on Chinese goods imposed in 2018 and triggered the US-China trade war. The U.S. dollar’s safe-haven status supported the greenback and the capped further gains in GBP/USD pair on Tuesday.

Moreover, the mixed U.S. macroeconomic data also helped the GBP/US pair to post gains on Tuesday. At 17:30 GMT, the Import Prices in August rose by 0.9% from the forecasted 0.5% and supported the U.S. dollar. While, at18:15 GMT, the Industrial Production from the U.S. in August fell to 0.4% from the forecasted 1.2% and weighed on the U.S. dollar. The Capacity Utilization Rate also dropped to 71.4% from the expected 71.7% and weighed on the U.S. dollar that ultimately supported the GBP/USD pair’s strength on board.

Furthermore, the concerns related to the availability of coronavirus testing in the country have been raised as the hospital staff has warned about the situation. However, Prime Minister Boris Johnson has unveiled an “Operation Moonshot” that aimed to test 10 million people every day for the coronavirus and restore life to normal by winter.

The U.K. also struggled to impose the latest “rule of six” limit on social gathering as the crime minister urged neighbors to report for any suspected breach of the new rule. This comes after the U.K.’s reproduction or R number escalated between 1 and 1.2 for the first time since March. These ongoing virus updates also capped further upside momentum in GBP/USD pairs.

However, on the Brexit front, the main sticking point, for the time being, was that whether the U.K. will go back on its word over the custom territory in Northern Ireland. The Internal Market bill is undervotes through the House of Commons and the House of Lords. It is not clear whether the bill will pass, but it will break the international law if it does. A deal between the E.U. and the U.K. will still be possible, but it would represent a lack of trust and could impact the future relationship of E.U. & U.K.

Daily Technical Levels

Support	Pivot	Resistance
1.2825	1.2876	1.2937
1.2763		1.2989
1.2712		1.3050

GBP/USD– Trading Tip

The GBP/USD traded sharply lower at 1.2843 level, and now it’s forming a Doji candle, which may trigger buying in the GBP/USD pair. On the higher side, the Sterline may soar to target 1.2928 level, and even above this, the next target for Sterling can be 1.3033 level. The MACD and EMA are still supporting a selling bias; therefore, we should be looking to take selling entry below 1.2928 level today.

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 105.440 after placing a high of 105.812 and 105.299. Overall the movement of the USD/JPY pair remained bearish throughout the day. The USD/JPY pair extended its losses and dropped to its 2-weeks lowest level near 105.200 ahead of the FOMC meeting. The U.S. Dollar Index fell to 92.85 on Tuesday and lost 0.22% as the U.S.’s major equities were higher with the S&P 500 up by 0.7%.

The USD/JPY pair came under fresh pressure after the latest comments from WTO and WHO on Tuesday. China’s upbeat data also boosted risk sentiment, but the market traders ignored it, and the pair USD/JPY continued its downward movement. On Tuesday, the World Trade Organization ruled that the tariffs imposed in 2018 on Chinese goods by the United States were inconsistent with the international rules. This raised the uncertainty and safe-haven appeal, and the Japanese Yen gained traction that ultimately weighed on the USD/JPY pair.

The top American trade Ambassador, Robert Lighthizer, said that the U.S. must be allowed to defend itself against unfair trade practices and that WTO was inadequate with its task to confront China. Whereas, Chinese officials cheered the ruling by WTO.

On the other hand, on Monday, the World Health Organization warned that Europe would see a rise in the daily number of COVID-19 deaths in October and November as the rising number of coronavirus cases worldwide was not slowing down. This also weighed on risk sentiment, and the Japanese Yen gained traction that led to downward momentum in the USD/JPY pair.

Meanwhile, the Chinese Industrial Production and Retail Sales for the year advanced in August and supported the hopes of economic recovery. This supported the risk sentiment and capped further losses in the USD/JPY pair on Tuesday.

On the data front, at 17:30 GMT, the Empire State Manufacturing Index in September rose to 17.0 from the expected 6.2 and supported the U.S. dollar. The Import Prices in August also rose to 0.9% from the forecasted 0.5% and supported the U.S. dollar.

At 18:15 GMT, the Capacity Utilization Rate from the U.S. in August dropped to 71.4% from the forecasted 71.7% and weighed on the U.S. dollar and supported the downward momentum of the USD/JPY pair. The Industrial Production in July also dropped to 0.4% from the forecasted 1.2% and the previous 3.5% and weighed heavily on the U.S. dollar that supported the losses of the USD/JPY pair on Tuesday.

Furthermore, the FOMC meeting for September has started on Tuesday, and it will be concluded on Wednesday with the speech of Jerome Powell, the chairman of the Federal Reserve. The market participants are waiting for his speech to find fresh clues about the economic condition and further monetary policy decisions by the U.S. government. Hence, the local currency remained under pressure ahead of it and kept weighing the USD/JPY currency pair. In July, industrial production also dropped to 0.4% from the forecasted 1.2% and the previous 3.5% and weighed heavily on the U.S. dollar that supported the losses of the USD/JPY pair on Tuesday.

Daily Technical Levels

Support	Pivot	Resistance
105.2100	105.5200	105.7500
104.9800		106.0600
104.6700		106.2800

USD/JPY – Trading Tips

On Wednesday, the USD/JPY currency pair continues to drop to test the

the double bottom support area of 105.250 level. Recently on the 4-hour timeframe, the USD/JPY pair is forming a bullish engulfing candle that’s followed by the bearish candles, suggesting that sellers are exhausted, and the bulls enter the market now. The USD/JPY pair may bounce off over 105.250 level to complete the 38.2% Fibonacci retracement level at 105.545 and 61.8% Fibonacci level of 105.750 level. Later today, the U.S. Fed Fund Rate will remain in the highlights. Therefore, we should be cautious with the trades that we open, and in fact, we should try to close them ahead of the news release. Good luck!

Tags EURUSD, Forex, Fundamental Analysis, GBPUSD, Support and Resistance, Technical Analysis, Technical Outlook, trading, USDJPY

Crypto Market Analysis

Daily Crypto Review, Sept 16 – Ethereum Facing a 35% Drop; Bitcoin Remains Bullish

Post author By Ilija Rankovic
Post date 16 September, 2020
1 Comment on Daily Crypto Review, Sept 16 – Ethereum Facing a 35% Drop; Bitcoin Remains Bullish

The cryptocurrency sector has ended up with almost every single cryptocurrency in the top100 in the red. Bitcoin is currently trading for $10,707, which represents a decrease of 0.52% on the day. Meanwhile, Ethereum lost 5.13% on the day, while XRP lost 3.44%.

Daily Crypto Sector Heat Map

If we look at the top100 cryptocurrencies, ABBC Coin gained 11.74% on the day, making it the most prominent daily gainer. Nervos Network (11.40%) and Hyperion (9.41%) also did great. On the other hand, the SushiSwap lost 34.73%, making it the most prominent daily loser. It is followed by NXM’s loss of 27.55% and Aragon’s loss of 24.48%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level experienced an increase since our last report, with its value currently being at 60.51%. This value represents a 1.04% difference to the upside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization has gone down in the past 24 hours. Its current value is $343.41 billion, which represents a decrease of $6.08 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

After a strong push towards the upside, Bitcoin has tried to consolidate just below the $10,850 mark. The largest cryptocurrency by market cap grazed the RSI overbought territory while failing to push its momentum past the $10,850 level, which held up quite nicely. Bitcoin is now stabilizing around the $10,700 level, where it will try to gather enough bull presence for another push towards $11,000.

Bitcoin’s short-term indicators are showing a bit less bull presence compared to yesterday, while its long-term indicators are still bullish.

BTC/USD 4-hour Chart

Technical factors:

Price is above both its 50-period EMA and 21-period EMA
Price is between the middle and top Bollinger band
RSI is overextended to the upside but descending (63.56)
Volume is stable

Key levels to the upside Key levels to the downside

1: $10,850 1: $10,630

2: $11,000 2: $10,500

3: $11,090 3: $10,360

Ethereum

Ethereum has experienced quite a massive drop, considering it was not caused by a Bitcoin selloff. The second-largest cryptocurrency by market cap started its price descent and confirmed its bear flag formation. If the bear flag prediction comes true, we may experience a 35% move towards the downside from Ethereum. However, if the $360 level holds and pushes the price back up, the current move towards the downside may be called a fakeout.

With this being said, after the price has left the bear flag and confirmed it, the indicators have turned to “strong sell”. This is certainly a strong bearish indicator (or rather a set of indicators).

ETH/USD 4-hour Chart

Technical Factors:

The price is below both its 21-period and its 50-period EMA
The price is right below the middle Bollinger band
RSI is neutral and descending (41.22)
Volume is low and stable

Key levels to the upside Key levels to the downside

1: $371 1: $360

2: $400 2: $340

3: $415 3: $300

Ripple

XRP had quite a wild day when looking at its price movement. The third-largest cryptocurrency by market cap fell below the $0.2454 level, which triggered a massive selloff that brought its price to the $0.235 level. However, XRP bulls quickly reacted and brought the price back up near the $0.24 level, which is where XRP is at.

XRP has joined Ethereum in terms of technicals, with the short-term overview showing a “strong sell” sign.

XRP/USD 4-hour Chart

Technical factors:

The price is below its 21-period EMA and its 50-period EMA
Price is below its middle Bollinger band
RSI is neutral and descending (40.77)
Volume is low (one-candle spike during the selloff)

Key levels to the upside Key levels to the downside

1: $0.2454 1: $0.235

2: $0.266 2: $0.227

3: $0.285 3: $0.221

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Market Analysis

Daily F.X. Analysis, September 15 – Top Trade Setups In Forex – Series of Events in Focus!

Post author By Ali B.
Post date 15 September, 2020
1 Comment on Daily F.X. Analysis, September 15 – Top Trade Setups In Forex – Series of Events in Focus!

On the news front, the eyes will remain on the U.K. labour market report along with EU ZEW Economic Sentiment and German ZEW Economic Sentiment that are forecasted to report negative figures. Later during the U.S. session, the U.S. Capacity Utilization Rate and Industrial Production m/m are expected to support greenback amid positive forecast.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD closed at 1.18633 after placing a high of 1.18877 and a low of 1.18316. The EUR/USD pair moved in an upward direction on Monday and extended its bullish streak for the 4th consecutive day on the back of a weak U.S. dollar and improved the global equity market along with the positive Eurozone economic data.

The S&P 500 futures were up by 1.2%, and Dow Jones Futures was up by 0.9% whereas the NASDAQ rose by 1.6%. The EUR/USD pair moved higher as the equities were marginally higher in Asia and Europe on the back of positive news from the vaccine side. The vaccine developed by Oxford and AstraZeneca has resumed its phase-3 trials, and this improved the market risk sentiment on the renewed hopes of potential vaccine development.

The same vaccine trials were stopped in the previous week after a participant was reported with an unexplained illness. However, the trials have been started this week again, and the hopes for economic recovery have returned with it that gave a push to EUR/USD prices on the upside.

Other than that, July’s Industrial Production from Eurozone showed an improvement to 4.1% against the forecasted 4.0% and supported the single currency Euro. The strong Euro then added further gains in the EUR/USD pair.

Moreover, the U.S. dollar weakness also played an important role in pushing the pair EUR/USD further on the upside. The U.S. dollar was weak on the board ahead of the upcoming Fed’s September monetary policy meeting this week. The two-day meeting of the FOMC (Federal Reserve Open Market Committee) will start on Tuesday and will be concluded by the comments from Jerome Powell on Wednesday.

The market participants are waiting for the comments from the Chairman of the U.S. Federal Reserve on Wednesday, and this has increased the selling pressure against the U.S. dollar. The weak U.S. dollar pushed the EUR. The USD pair is higher on Monday.

The U.S. dollar was under more pressure after the House of Representatives returned from summer break, and the hopes for reaching a consensus on the fifth round of stimulus measure increased. These hopes exerted further pressure on the U.S. dollar and added strength to the EUR/USD pair’s upward movement.

However, the gains in EUR/USD pair were capped after the WHO reported a record rise in the daily cases of coronavirus from across the globe. The organization said that 307,930 cases were recorded in a single day. This raised uncertainty around the market related to economic recovery and helped cap further losses in EUR/USD pair on Monday.

Daily Technical Levels

Support	Pivot	Resistance
1.1835	1.1862	1.1894
1.1803		1.1921
1.1776		1.1954

EUR/USD– Trading Tip

The EURUSD pair has violated the double top resistance level of 1.1885 level, and now it’s trading at 1.1895 level. For now, the EUR/USD may find support at 1.1885 level, and above this, a continuation of a bullish trend may lead EUR/USD price until 1.1916 level. Bearish correction can be seen until 1.1885 and 1.1870 before continuation of further buying trend in the EUR/USD.

GBP/USD – Daily Analysis

The GBP/USD closed at 1.28450 after placing a high of 1.2919 and a low of 1.27705. The pair GBP/USD rose in the first trading session on Monday, and after that, it converted its direction in the late trading session and lost some of its daily gains. The rise in prices of the GBP/USD pair on Monday was due to a weak U.S. dollar and improved risk sentiment.

However, the Pound eased from session highs on Monday as Prime Minister Boris Johnson continued to make a case for a controversial bill that threatens to break the terms of the post-Brexit deal with the European Union the following vote later today.

The U.S. dollar came under fresh selling pressure on Monday after the equities rose in Asian and European session due to positive news from the vaccine front. The AstraZeneca and Oxford vaccine resumed its vaccine’s phase-3 trials after they were paused due to an unexplained illness found in one of the shareholders last week.

The resumed trials of the long-awaited vaccine raised hopes for economic recovery and risk sentiment and helped the risk perceived British Pound to gain traction and move the GBP/USD pair on the upside.

However, the GBP/USD pair came under pressure ahead of the parliament vote on the internal market bill when Boris Johnson suggested that the legislation was needed to avoid a situation in which the E.U. counterparts seriously believe that they had the power to break up the U.K.

The expectations are high that the bill will pass the first parliamentary process despite the several party members of the Tory government have refused to back the bill. Furthermore, the upward movement of the Pound was short lives ahead of the Bank of England’s meeting later this week. Market participants have suggested that the central bank would welcome further easing in November and would renew its cautious outlook on the economy.

The hopes for further easing also weighed on GBP/USD pair and capped further gains in the currency pair at the starting day of the week in the absence of any macroeconomic data from both sides.

Daily Technical Levels

Support	Pivot	Resistance
1.2774	1.2847	1.2919
1.2702		1.2992
1.2629		1.3063

GBP/USD– Trading Tip

USD/JPY – Daily Analysis

The USD/JPY currency pair failed to halt its Asian session bearish moves and witnessed some further selling moves near 105.90 level mainly due to the broad-based U.S. dollar weakness, triggered by the doubts over the next round of the U.S. fiscal stimulus measures. Moreover, the upbeat market sentiment, backed by the recently positive coronavirus (COVID-19) vaccine news, also weighed on the safe-haven U.S. dollar, which ultimately dragged the currency pair below 106.00 level. However, the risk-on market sentiment also undermined the safe-haven Japanese yen and became the critical factor that helped the USD/JPY currency pair to limits its deeper losses.

On the contrary, the fears of a no-deal Brexit and the Sino-American tussle keep challenging the market risk-on tone, which might suffer the currency pair into deeper losses.

The ongoing impasse over the next round of the U.S. fiscal stimulus or the upbeat market sentiment, not to forget the record single-day increase in COVID-19 cases, these all factors tend to undermine the broad-based U.S. dollar. The U.S. Senate rejected a Republican bill that would have provided around $300 billion in new coronavirus aid. Democrats voted to block the law as they have been pushing for more funding to control the economic downturn that led the coronavirus pandemic.

Despite the lingering doubts over the U.S. economic recovery and the intensifying tension between the world’s two biggest economies, the market players continue to cheer the optimism about the coronavirus treatment. These hopes fueled after the AstraZeneca’s showed readiness to restart the third phase of coronavirus (COVID-19) vaccine trials.

This, in turn, the broad-based U.S. dollar edged lower on the day as the lack of progress over the U.S. aid package continuously destroying hopes for a quick economic recovery. Meanwhile, the weaker tone surrounding the U.S. Treasury bond yields further weakened the already weaker sentiment surrounding the dollar. At the US-China front, the rising tensions between the United States and China as China’s Commerce Ministry said that it launched an anti-subsidy investigation on certain glycol ethers imports from the U.S., starting September 14.

Besides this, China announced that Beijing had sent a note detailing reciprocal restrictions on the U.S. Embassy and consulates on Friday. These moves came after the U.S. sanctions on Chinese individuals, which fuels worries about worsening US-China relations. These fears keep challenging the market risk-on tone and might suffer the currency pair into deeper losses.

Daily Technical Levels

Support	Pivot	Resistance
105.4500	105.8300	106.1200
105.1600		106.5000
104.7800		106.7800

USD/JPY – Trading Tips

The USD/JPY currency pair has dropped sharply amid increased safe-haven appeal and weakness in the U.S. dollar. The pair fell from 106 to 105.650 level and now it’s facing resistance at 105.795 level. On the lower side, the USD/JPY pair may drop until 105.265. Let’s consider opening a sell trade below 105.750 to target 105.450 and 105.250 level as the MACD and RSI also signalling selling bias. Good luck!

Tags EUR-USD, EURUSD, Forex, forex review, Fundamental Analysis, GBP-USD, GBPUSD, Support and Resistance, Technical Analysis, Technical Outlook, trading, USD-JPY, USDJPY

Forex Fundamental Analysis

The Importance of ‘Wages’ In Determining The Economic Condition of a Nation

Post author By Reddy Shyam Shankar
Post date 15 September, 2020
No Comments on The Importance of ‘Wages’ In Determining The Economic Condition of a Nation

Introduction It is completely fair to say that it would be difficult to sustain a country’s economy in the absence of households’ consumption. The amount of money that employees are typically paid determines their purchasing power and their level of demand. Wages can, therefore, be said to be the best leading indicators of consumer inflation. […]

Introduction

It is completely fair to say that it would be difficult to sustain a country’s economy in the absence of households’ consumption. The amount of money that employees are typically paid determines their purchasing power and their level of demand. Wages can, therefore, be said to be the best leading indicators of consumer inflation. More so, we can establish a direct correlation between the wages paid and the growth of the economy. For this reason, forex traders need to understand how wages drive the economy and the currency.

Understanding Wages

Wages are compensation that an employer pays their employees over a predefined period. It is the price of labour for the contribution to the production of goods and services. Thus, wages can be regarded as anything of value an employer gives an employee in exchange for their services. Wages include salaries, hourly wages, commissions, benefits and bonuses.

There are two categories of wages: nominal and real wages.

Nominal wages: are the amount of money that an employee is paid for the work done. Nominal wages are expressed in terms of pure monetary value.

Real wages: are the wages received by the employees adjusted for the rate of inflation. Real wages show the purchasing power of money. They are meant to guide on how the overall living standards have changed over time.

Therefore, Real wages = nominal wages – inflation

How Wages can be used for analysis

Their levels of disposable income determine the purchasing power of the households. The disposable income is directly proportional to the wages received. Therefore, the amount of wages paid for labour affects not only the quality of life of the households but also economic growth.

Growth in the wages received can be considered as a source of demand. Wages contribute a significant proportion of income for the middle- and low-class households who do not have other sources of income from investments. Assuming no corresponding increase in taxation, an increase in the wages corresponds to an increase in the amount of disposable income. Higher wages also give households the capacity to borrow more from financial institutions at competitive rates. The cheaper loans significantly contribute to increased aggregate demand. In this case, more goods and services will be demanded. The increase in aggregate demand compels producers to increase their scale of production to match the supply and demand. Consequently, the employment levels increase while the economy expands.

Source: St. Louis FRED

Conversely, decreasing wage growth implies that a decrease in disposable income. A reduction in the aggregate demand and supply will follow. Producers will be forced to scale back their operations, increasing the unemployment rate and consequently a slow-down in the economic growth.

Investments and savings rate rise with the growth in wages. These investments create employment opportunities and spur innovation within the economy. Contrary to this, the decrease in wages forces households to prioritise consumption over investments and saving. The resultant effect is fewer new job opportunities and stifled innovation. As can be seen, changes in the level of wages have a multiplier effect on the economy.

A rise in the rate of inflation is primarily driven by a disproportionate increase in demand driven by a rise in wages. Rising wages lead to a wage push inflation. This particular type of inflation is a result of an increase in prices of goods and services by producers to maintain corporate profits after an increase in the wages. Furthermore, since the responsiveness of supply to an increase in demand is not instant, increasing wages results in inflation since more money will be chasing the same amount of goods.

Impact of Wages on Currency

Forex traders monitor the fundamental indicators to gauge economic growth and speculate on the central banks’ policies. Central banks set their average inflation targets which guide their monetary policies. In the US, the inflation rate target is 2%.

When the wages increase, it forestalls a growth in the economy due to increased investments, aggregate demand and supply. An increase in employment levels also accompanies it. Since the value of a country’s currency is directly proportionate to its economic performance and outlook, wages growth leads to the appreciation of the currency. More so, consistent growth in wages is accompanied by wage push inflation. To keep this inflation under control, the central banks may implement contractionary policies to increase the cost of borrowing money and encourage savings and investments. These policies appreciate the currency.

A decrease in wages implies that the economy could be contracting due to declining aggregate demand and supply within the economy. If the central banks fear that this might result in a recession, they will implement expansionary monetary policies such as lowering interest rates. These policies tend to depreciate the currency.

Sources of Data

This analysis will focus on Australian wages. The comprehensive indicator of wages is Australian Wage Price Index which measures Wages, salaries, and other earnings, corrected for inflation overtime to produce a measure of actual changes in purchasing power. Thus, it measures the change in the price businesses, and the government pay for labour, excluding bonuses.

The real earnings data is released quarterly by the Australian Bureau of Statistics. The statistics can be accessed here.

Statistics on the global wages by country can be accessed at Trading Economics.

How Real Earnings Data Release Affects The Forex Price Charts

The most recent real earnings data in Australia was released on August 12, 2020, at 1.30 AM GMT. A summary review of the data release can be accessed at the Australian Bureau of Statistics website. The screengrab below is of the monthly real earnings from Investing.com.

As can be seen, the release of the real earnings data is expected to have a moderate volatility impact on the AUD

The screengrab below shows the most recent change in the Australian wage price index. In the second quarter of 2020, the wage price index grew by 0.2%. This growth is slower than the 0.5% increase in the first quarter of 2020. More so, the change in the second quarter was lower than analysts’ expectations of a 0.3% increase.

In theory, this improvement should lead to depreciation of the AUD relative to other currencies.

Now, let’s see how this release made an impact on the Forex price charts of a few selected pairs

AUD/USD: Before the Wage Price Index QoQ Data Release on 
August 12, 2020, Just Before 1.30 AM GMT

From the above 15-minute chart of AUD/USD, the pair can be seen trading in a subdued downtrend before the data release. This trend is evidenced by candles forming just below an almost flattening 20-period Moving Average.

AUD/USD: After the Wage Price Index QoQ Data Release

After the data release, the pair formed a long 15-minute bearish candle indicating the weakening of the AUD as expected. The weak wages price index data resulted in the selloff of the AUD, which led to the pair adopting a steady trend. This downtrend is shown by the steeply falling the 20-period MA with subsequent candles forming further below it.

Now let’s see how this news release impacted other major currency pairs.

GBP/AUD: Before the Wage Price Index QoQ Data Release on 
August 12, 2020, Just Before 1.30 AM GMT

The GBP/AUD pair traded in a neutral trend before the wages data release. As shown above, the 15-minute candles are forming just around an already flat 20-period MA. This trend indicates that traders were inactive waiting for the data release.

GBP/AUD: After the Wage Price Index QoQ Data Release

As expected, the GBP/AUD pair formed a long 15-minute bullish candle indicating the selloff of the AUD due to the weaker than expected data. Subsequently, the pair adopted a bullish trend as the 20-period MA steadily rising with candles forming further above it.

EUR/AUD: Before the Wage Price Index QoQ Data Release on 
August 12, 2020, Just Before 1.30 AM GMT

EUR/AUD: After the Wage Price Index QoQ Data Release

The EUR/AUD pair traded in a similar neutral pattern as the GBP/AUD pair before the wages data release. 15-minute candles can be seen forming just around a flattened 20-period MA. Similar to the GBP/AUD pair, the EUR/AUD formed a long 15-minute bullish candle immediately after the wages data release. Subsequently, the pair adopted a strong bullish trend as the 20-period MA rose steeply with candles forming further above it.

Bottom Line

From the above analyses, it is evident that the wages data has a significant effect on price action. Although the wage price index is categorised as a medium-impact indicator, its impact was amplified by the ongoing effects of the coronavirus pandemic. The worse than expected wages data indicated that the Australian labour industry is yet to recover from the economic shocks of Covid-19.

Therefore, traders should avoid having significant positions open with pairs involving the AUD before the release of the quarterly wage price index.

Tags Economic Indicators, Education, Forex, Forex Drivers, Fundamental Analysis, Fundamental Trading, fundamentals, Macro Economics, Nominal Wages, Real Wages, trading, Wages

Crypto Market Analysis

Daily Crypto Review, Sept 15 – BTC Heading Towards $11,000; ETH Facing a 35% Drop?

Post author By Ilija Rankovic
Post date 15 September, 2020
1 Comment on Daily Crypto Review, Sept 15 – BTC Heading Towards $11,000; ETH Facing a 35% Drop?

The cryptocurrency sector has mostly been in the green in the past 24 hours, with Bitcoin leading the way towards the upside. Meanwhile, most of the tokens that ended up in the red on the daily were Ethereum (mostly DeFi) tokens. Bitcoin is currently trading for $10,763, which represents an increase of 4.09% on the day. Meanwhile, Ethereum gained 3.41% on the day, while XRP gained 2.42%.

Daily Crypto Sector Heat Map

If we take a look at the top100 cryptocurrencies, Hyperion gained 51.28% on the day, making it the most prominent daily gainer. NXM (40.86%) and Bytom (18.97%) also did great. On the other hand, the UNUS SED LEO lost 6.72%, making it the most prominent daily loser. It is followed by Waves’ loss of 6.35% and Band Protocol’s loss of 5.57%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level experienced a slight increase since our last report, with its value currently being at 59.47%. This value represents a 0.1% difference to the upside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization has skyrocketed in the past 24 hours. Its current value is $351.49 billion, which represents an increase of $15.59 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin has made a move towards the upside, passing through its $10,360 and $10,500 levels. As we mentioned in our previous articles, this is a huge bullish sign, and the overall indicators are showing that as well. If the bulls regain momentum, we can expect a push towards $11,000 once the consolidation continues.

With that being said, Bitcoin’s current price movement got stopped at the $10,850 level. While this does mean that Bitcoin bulls have encountered some resistance, it certainly does not mean that the overall trend is over. Bitcoin has shown great resistance at the $10,000 psychological level, which prompted this push towards the upside.

BTC/USD 4-hour Chart

Technical factors:

Price is above both its 50-period EMA and 21-period EMA
Price is right at the top Bollinger band
RSI is overextended to the upside, though with more room to go up (67.45)
Volume is stable

Key levels to the upside Key levels to the downside

1: $10,850 1: $10,630

2: $11,000 2: $10,500

3: $11,090 3: $10,360

Ethereum

Ethereum was extremely volatile in the past 24 hours. Its price movements were quite hectic, with the price pushing past the $371 level and reaching the $385 mark before coming back down to restest the newly-conquered level, only to go up again and down again. Ethereum is currently supported by both the 50-period and 21-period moving averages, which are right below its price level. On top of that, the $371 level was turned to a support level after a clean confirmation move.

While its technicals show a short-term buy opportunity, the long-term technicals are still tilted towards the sell side. On top of that, Ethereum has created a nice bear flag formation, which (if it turns out to be correct) can prompt a 35% move towards the downside.

ETH/USD 4-hour Chart

Technical Factors:

The price is right above both its 21-period and its 50-period EMA
The price is right above the middle Bollinger band
RSI is neutral (53.36)
Volume is low and stable

Key levels to the upside Key levels to the downside

1: $400 1: $371

2: $415 2: $360

3: $445 3: $340

Ripple

XRP has managed to push itself above the $0.2454 level once again, but still hasn’t confirmed its position above it. A confirmation above this level and a slight push towards the upside will be crucial for the future of XRP, as many traders are calling for bearish scenarios and drawing a bearish flag (though this flag is a lot less picture-perfect as the one on the ETH/USD chart).

XRP is showing signs of slight short-term bullishness, while its longer-term technicals are still pointing towards the downside.

XRP/USD 4-hour Chart

Technical factors:

The price is just above its 21-period EMA and its 50-period EMA
Price is right above its middle Bollinger band
RSI is neutral and pushing towards the upside(54.88)
Volume is extremely low, but stable

Key levels to the upside Key levels to the downside

1: $0.2454 1: $0.235

2: $0.266 2: $0.227

3: $0.285 3: $0.221

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Economic Indicators

Why is the Interest Rate Important in the Forex Market?

Post author By Forex Academy
Post date 14 September, 2020
No Comments on Why is the Interest Rate Important in the Forex Market?

The factor that has the greatest influence on the Forex foreign exchange market is the changes in interest rates made by any of the 8 major central banks worldwide. These variations usually respond indirectly to other economic indicators released through the month and have the power to move the market significantly immediately, and with great force. Because surprise changes in interest rates usually have the greatest impact on this market, understanding how to predict and react to these volatile movements can lead to faster responses and higher levels of profit.

Fundamentals of Interest Rates

Interest rates are crucial for traders trading on the Forex market (especially for day traders) for one simple reason: the higher the rate of return, the higher the interest earned on the currency in which it has been invested and the higher the profit.

Of course, the greatest risk to this strategy (known as carry trading) is fluctuations in the price of currencies, which can dramatically counteract any profit derived from the interests of the currencies in which it has been invested and cause losses in positions. It is worth noting that while the investor will always want to buy the currencies with the highest interest rate (buying them with the lowest interest rate currencies), it is not always a smart decision. If trading on the Forex market were so simple, anyone with this knowledge could earn money on a constant basis, which is not the case.

This does not mean that investing in currencies to get money with interest rates is too complex for the average investor; what we want to imply is that it is a form of investment that must be made with care, especially considering that it is based on fundamental economic news that does not always produce the expected result.

How are Interest Rates Calculated?

Each board of directors of central banks controls their country’s monetary policy and the short-term interest rate at which banks have the opportunity to borrow money from other banking institutions. Typically, central banks raise interest rates in order to curb inflation or reduce them to stimulate borrowing of money and inject more capital into the economy. The latter is because in periods when interest rates are low, companies and individuals are more inclined to borrow money from banks as they have to pay less each month to repay the debt.

Generally, the investor can have a general idea about what the bank will decide, by analysing the most relevant economic indicators, such as:

Consumer Price Index (CPI).
Employment levels.
Housing market.
Level of consumer expenditure
Subprime mortgage market (subprime market).
Forecast of central bank interest rates

Based on the data from the indicators mentioned above, a trader can obtain an estimate for a possible change in the interest rate of a central bank such as the FED (Federal Reserve). Usually, if these indicators show better results, this means that the country’s economy is on the right track and therefore it is necessary to either raise interest rates or keep them the same. In the same way, a significant drop in these indicators can mean that it is necessary to lower interest rates to stimulate money lending (indebtedness).

Apart from economic indicators, it is possible to predict a decision concerning interest rates by:

Analysis of predictions.
Monitoring and analysis of economic announcements by central banks and/or other high-ranking authorities and agencies related to the country’s economy.

Major Economic Announcements

Important announcements by central bank bosses usually play a vital role in interest rate changes but are usually overlooked in response to economic indicators. Of course, this does not mean that they should be ignored. Each time the board of directors of one of the top 8 central banks makes a scheduled public statement, it usually gives an idea of how the bank views the inflation situation in the country.

In July 2008, the Chairman of the Federal Reserve, Mr. Bernanke testified on monetary policy before the House Committee. In a normal session, Bernanke reads a prepared statement about the value of the US dollar and answers questions from committee members. This meeting was no exception. In his statement and responses, Bernanke flatly stated that the dollar was good for the time being and that the government was determined to stabilize it even though fears of a recession were influencing all other markets.

The 10 am session was closely followed by traders, and because it was positive, a significant increase in interest rates by the Federal Reserve was anticipated, which led to a sharp rise in the short-term dollar in preparation for the next US interest rate decision.

This caused a fall of 44 pips in the EUR/USD in the time of 1 hour (that is to say, the dollar rose with respect to the euro). If a trader had opened a short position in the EUR/USD with a volume of 1 standard lot (100,000 base currency units), it would have made a profit of $440 for that movement in the market.

Analysis of Predictions

The second way to predict decisions regarding interest rates is through the analysis of predictions. Because changes in interest rates are usually well anticipated, banks, brokers, and professional traders usually have a consensus about the estimate of the possible change in the interest rate before the announcement occurs. And it is for this reason that it is recommended that the trader analyze 4 or 5 of these forecasts (which must be numerically close) and average them in order to obtain a more accurate prediction.

What to do when there is a surprise change in an interest rate?

No matter how good a trader is as a researcher or how many numbers he has analyzed before the announcement of a decision related to a country’s interest rates, central banks can make surprise decisions and bring down all predictions with a rise or fall in the interest rate.

When this happens, the trader must know in which direction the market will move. If there is an increase in the interest rate, the currency will appreciate, which means that investors will start buying it. If the central bank lowers the interest rate, traders will probably start selling the currency and buying currencies with higher interest rates. Once the trader has determined the most likely address, he must do the following:

Act quickly! In these periods, when a surprise occurs, the market moves very quickly, as the vast majority of traders try to buy or sell (depending on whether there was an increase or reduction in the interest rate) as soon as possible to overtake other market participants, which can generate a profit means if done correctly.

Be very careful about a possible reversal movement of the high volatility trend. The perception of the trader tends to dominate the market shortly after the announcement on the interest rate is released, however, over time the logic comes back into play and impose itself, which can cause the trend to move back in the same direction as it did before the announcement, especially if there are other fundamental factors involved that move the price of the currency in that direction. It should be remembered that the exchange rate of currencies is not determined solely by interest rates; there are also other key factors that are of the utmost importance in the long term.

Real-Life Examples

In July 2008, the Bank of New Zealand had an interest rate of 8.25%, one of the highest in the world. The NZD/USD exchange rate remained on the rise for a period of several months because NZD was a currency that investors were buying in large quantities because of the high rates of return it offered compared to other currencies with lower interest rates.

In July, against all odds, the board of directors of the Bank of New Zealand lowered the interest rate to 8% during its monthly meeting. While this 0.25% cut may seem small, Forex traders took it as a sign that there was fear in the central bank of a possible increase in inflation, and immediately began to withdraw their funds, or sold the currency (NZD) and bought others – even if these other currencies had lower interest rates.

In this case, the price of NZD/USD fell from 0.7497 to 0.7414, a total of 83 pips, in the course of 5 to 10 minutes. A trader who had sold only one lot of this currency pair would have made a net profit of $833 in just a few minutes.

However, not long after this fall, NZD/USD began to regain lost ground and continued the previous general trend, which was bullish. The reason the price did not continue to fall was that despite the cut in the interest rate, the NZD still had a higher interest rate (8%) than most other currencies.

As a separate note, it is important to carefully read and analyze press releases in which the central bank has announced a change in interest rates (after determining if there has been a surprise change), as they help to understand the bank’s view of future interest rate decisions. The information in these advertisements usually induces a new trend in the currency after the short-term effects occur.

Conclusion

The monitoring of news and the analysis of the shares of the central banks should be a high priority for any trader operating in the Forex market. This is because the decisions of central banks directly affect the monetary policies of countries, so they tend to cause strong movements in the foreign exchange market, mainly in the exchange rates of the currency pairs that include these currencies. As the market moves, traders have the ability to maximize their profits, not only through the interest earned through carry trading, but also through strong price fluctuations in the market.

Careful research and analysis can help the trader avoid unexpected changes in interest rates and react appropriately to them when they inevitably occur.

Tags forex analysis, Fundamental Analysis, Interest Rate

Forex Market Analysis

Daily F.X. Analysis, September 14 – Top Trade Setups In Forex – U.S. Industrial Production in Focus!

Post author By Ali B.
Post date 14 September, 2020
1 Comment on Daily F.X. Analysis, September 14 – Top Trade Setups In Forex – U.S. Industrial Production in Focus!

On Monday, the focus will remain on the European Industrial Production m/m data; however, the data is low impact and may not drive major market movements. Therefore, the technical side may drive further trends in the market.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD prices were closed at 1.18435 after placing a high of 1.18740 and a low of 1.18099. Overall the movement of the EUR/USD pair remained bullish throughout the day. The EUR/USD pair rose for the 3rd consecutive day on Friday amid the rising risk-on market sentiment and more hawkish comments from the ECB. The market’s attention was on if the ECB would mention the recent appreciation in the local currency.

The ECB President Christine Lagarde said that ECB members had noticed the single currency’s recent strength, but there was no policy change to address given the rise as there was nothing to worry about. The recent rise was attributed to the improving economic data after the restrictions imposed due to coronavirus were lifted and economic activities started.

However, ECB’s more positive comments, even the Eurozone, have entered into a deflationary period, giving further strength to the single currency and the pair EUR/USD posted gains.

On the data front, the German Final CPI in August remained flat with the expectations of -0.1%. At 11:00 GMT, the German WPI in August dropped to -0.4% from the expected 0.5% and weighed on a single currency. At 13:00 GMT, the Italian Quarterly Unemployment Rate dropped to 8.3% in August from the forecasted 8.4% and supported a single currency that helped the EUR/USD pair rise and post gains.

Furthermore, the upward trend in EUR/USD pair on Friday was also supported by the Eurogroup and other European Union finance ministers who met in Berlin on the day and facilitated the growth in Europe.

Whereas, the gains in EUR/USD pair were capped by the improving U.S. dollar strength that was backed by the positive CPI data from the United States on Friday. At 17:30 GMT, the Consumer Price Index in August rose to 0.4% from the expected 0.3% and supported the U.S. dollar. In August, the Core Consumer Price Index also rose to 0.4% against the expected 0.2% and supported the U.S. dollar.

The strong U.S. dollar kept the gains in EUR.USD pair limited at the ending day of the week. Meanwhile, the latest Brexit worries with no progress from both sides also kept the EUR/USD pair’s gains limited on Friday.

On the coronavirus pandemic front, the cases in many European countries rose back to March levels and forced governments to re-impose restrictions to curb the spread. The latest surge in coronavirus cases was attributed to August’s vacations when many tourists visited a handful of destinations. Another reason could also be the fact that schools were reopened in August. These rising cases from many European countries kept the gains in EUR/USD pair limited.

Daily Technical Levels

Support	Pivot	Resistance
1.1831	1.1840	1.1850
1.1820		1.1860
1.1811		1.1870

EUR/USD– Trading Tip

The EUR/USD continues to trade at 1.1835 level as the ECB decided to leave its interest rate unchanged in its monetary policy meeting. On the higher side, the pair may find resistance at 1.1839 level, and above this, the pair may find the next resistance at 1.1860 level along with support at 1.1828 level. Below 1.1828, the EUR/USD may find the next support at 1.1797 and 1.1755 level.

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.27946 after placing a high of 1.28656 and a low of 1.27624. Overall the movement of the GBP/USD pair remained bearish throughout the day. The GBP/USD pair extended its previous day bearish trend and posted losses on Friday amid the strong U.S. dollar and lingering Brexit worries. Prime Minister Boris Johnson reportedly pushed ahead with the bill that would seek to override the withdrawal deal despite threats from the European Union.

According to the Guardian report, Prime Minister Boris Johnson attempted to whip up demand for their internal market bill. He told his lawmakers that the legislation was necessary to stop a foreign power from breaking up the United Kingdom. He also insisted that there was no time for questions. Prime Minister Boris Johnson also faced a rebellion from his party, who have tabled an amendment that would give Parliament the right to veto the bill. After the E.U., this move came in threatened to abandon a UK-EU trade deal if the Prime Minister moved ahead with the legislation.

The latest internal market bill published on Wednesday could create standard rules that apply across the U.K., including England, North Ireland, Scotland, and Wales. The new bill is expected to clash with key terms of the Brexit agreement that requires Northern Ireland to follow E.U. rules in the post-Brexit period to avoid a hard border with the Republic of Ireland.

The emergency talks held this week also failed to break the deadlock between E.U. & U.K. negotiators, and the differences in essential areas remain. PM Boris Johnson has warned that if no progress in trade talks will not be made until mid-October, the U.K. will leave the E.U. without a deal and follow WTO rules. The GBP/USD pair remained under pressure. Both sides were ready and prepared for a no-deal or hard Brexit as Michel Barnier, the top E.U. negotiator, said that the E.U. had intensified its preparedness work to be ready for all scenarios on January 1, 2021.

Apart from Brexit, the macroeconomic data released on Friday from Great Britain also affected GBP/USD prices. At 110:00 GMT, the Construction Output from the United Kingdom in July rose to 17.6% against the forecasted 10.3% and supported GBP. The GDP from the U.K. in July remained flat with expectations of 6.6%. The Goods Trade Balance from Britain declined more than forecast and weighed on local currency. The balance was dropped to -8.6B from the projected -7.4B and weighed on GBP.

The Index of Services for the quarter also dropped to -8.1% from the expected -7.8% and weighed on the local currency that added pressure on GBP/USD pair. The Industrial Production in July rose to 5.2% in the U.K. against the forecasted 4.2% and supported GBP. The Manufacturing Production in the United Kingdom in July rose to 8.3% from the forecasted 8.4% and supported GBP. Consumer Inflation Expectations in August dropped to 2.8% from the previous 2.9%.

The negative data from the United Kingdom weighed on local currency and added losses in the GBP/USD pair on Friday. From the USD front, the CPI and Core CPI in July rose to 0.4% against the expectations of 0.3% and 0.2%, respectively, and supported the U.S. dollar. The strong U.S. dollar added further losses in GBP/USD pair.

Daily Technical Levels

Support	Pivot	Resistance
1.2786	1.2799	1.2823
1.2762		1.2836
1.2748		1.2860

GBP/USD– Trading Tip

USD/JPY – Daily Analysis

The USD/JPY currency pair stopped its early-day bearish rally and drew some modest bids around above 106.20 level, mainly due to the risk-on market. However, the positive tone around the equity market was supported by the news of receding tension between India and China, and Tokyo’s optimism over easing lockdown restriction also favor the market trading sentiment, which eventually undermined the Japanese yen currency and contributed to the currency pair gains.

In the wake of low safe-haven demand, the broad-based U.S. dollar weakness becomes the major factor that kept the pressure on any further gains in the currency pair. Meanwhile, the ongoing US-China tussle over several issues, the risk of a no-deal Brexit, and delay in the U.S. stimulus keep challenging the market trading sentiment, which might cap further gains in the currency pair. The USD/JPY is trading at 106.19 and consolidating in the range between 106.08 – 106.20.

Across the ocean, the market trading sentiment rather unaffected by the intensified US-China tussle and Brexit issue. The Trump administration continues to hold TikTok on the sellers’ radar. In the meantime, the cancellation of over 1,000 visas of Chinese residents also irritates China.

Also capping the gains could be the headlines suggesting that the Tokyo metropolitan government lowered its coronavirus alert by one level to 3 on Friday. This might underpin the local currency and dragged the currency pair down.

The Japanese yen currency might also take clues from the Producer Price Index (PPI) data for August that recovered to -0.5% from -0.9% YoY. The traders will keep their eyes on the U.S. Consumer Price Index (CPI) for August, which is expected 1.2% against 1.0% YoY. Moreover, the updates surrounding the Sino-US tussle, as well as Brexit related headline, could not lose their importance.

Despite this, the crude oil prices’ gains were capped by the continuing oversupply fears and a slow recovery in global fuel demand. This was witnessed after the builds in crude oil supply reported during the previous week by both the American Petroleum Institute (API) and the U.S. Energy Information Administration (EIA). Meanwhile, the ongoing COVID-19 pandemic continuing to hamper fuel demand recovery. As per the latest report, the World Health Organization (WHO) recorded a record single-day hike in COVID-19 cases by 307,930 in 24 hours during this weekend.

Daily Technical Levels

Support	Pivot	Resistance
106.0900	106.1500	106.2100
106.0300		106.2800
105.9600		106.3400

USD/JPY – Trading Tips

The USD/JPY is consolidating at 106.050, with a resistance mark of 106.480 level. An upward crossover of 106.480 level may extend further buying trend until the 106.840level, and the violation of this level can extend buying until the next resistance level of 107.150. On the downside, the safe-haven USD/JPY currency may gain support at 105.620 and 105.280. Let’s consider taking a sell trade below 106.024 level as the MACD and RSI also suggest selling bias. Good luck!

Tags EURUSD, Forex, forex review, Fundamental Analysis, GBPUSD, Technical Analysis, trading, USDJPY

Crypto Market Analysis

Daily Crypto Review, Sept 14 – The EU Regulating Stablecoins; Crypto Market Preparing For a Move

Post author By Ilija Rankovic
Post date 14 September, 2020
1 Comment on Daily Crypto Review, Sept 14 – The EU Regulating Stablecoins; Crypto Market Preparing For a Move

The cryptocurrency market managed to stay relatively healthy over the weekend as most cryptos tried to consolidate rather than move. Bitcoin is currently trading for $10,343, which represents a decrease of 0.85% on the day. Meanwhile, Ethereum lost 5.22% on the day, while XRP lost 2.06%.

Daily Crypto Sector Heat Map

If we take a look at the top100 cryptocurrencies, Flexacoin gained 13.18% on the day, making it the most prominent daily gainer. OKB (13.14%) and Waves (12.08%) also did great. On the other hand, the NXM lost 18.45%, making it the most prominent daily loser. It is followed by DFI. Money’s loss of 17.46% and yearn .finance’s loss of 16.42%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level experienced an increase since our last report, with its value currently being at 59.37%. This value represents a 4.93% difference to the upside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization has gone slightly down in the past 24 hours. Its current value is $335.90 billion, which represents a decrease of $2.27 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin has spent the weekend steadily and slowly increasing and trying to reach past $10,500. While it has gotten past the $10,360 level once, it fell under it once the move couldn’t carry enough momentum to pass $10,500 as well. Bitcoin is currently fighting for the $360 level, with its price being right below it.

Our prediction regarding the price movement stays the same as Bitcoin did not move much over the course of the weekend. If Bitcoin doesn’t pass the $10,360 line soon, we should look for support at $9,600, and ultimately at the 200-day SMA ($9,080).

It is also important to note that, as the price movement has been muted for such a long time, it is extremely likely that, once the price moves past $10,360 or below $10,000 (with confidence), we might see a massive surge in volume extending that move. This will be a great opportunity for traders to trade on the way down, as well as the pullbacks.

BTC/USD 4-hour Chart

Technical factors:

Price is below the 50-period EMA and right at the 21-period EMA
Price is right at middle Bollinger band
RSI is neutral (50.27)
Volume is stable (slightly below average)

Key levels to the upside Key levels to the downside

1: $10,360 1: $10,015

2: $10,500 2: $9,870

3: $10,630 3: $9,600

Ethereum

Ethereum’s price movement in the past couple of days looks exactly like Bitcoins in direction, but with much higher volatility. The second-largest crypto by market cap took the weekend to push towards $400, which ended unsuccessfully. As the move could not carry the momentum forward, bears took over and brought the price to its current position, where it is bound in a narrow range by $360 to the downside and $371 to the upside.

Ethereum’s volatility certainly comes from people investing in DeFi as Ethereum was never as volatile as it is now. However, its moves are still following Bitcoin. This volatility might be a good opportunity for traders to push for some trades.

ETH/USD 4-hour Chart

Technical Factors:

The price is right above its 21-period and its 50-period EMA
The price is at its middle Bollinger band
RSI is neutral (49.14)
Volume is low and stable

Key levels to the upside Key levels to the downside

1: $371 1: $360

2: $400 2: $340

3: $415 3: $300

Ripple

XRP has not been much different from the aforementioned two cryptocurrencies. The third-largest cryptocurrency by market cap is still trading within a range bound by $0.235 to the downside and (more importantly) $0.2454 to the upside. XRP did have one a short period where it spiked above the resistance level, but the price quickly dwindled back down to its original level.

XRP is now fighting for the $0.2454 level, trying to surpass it. However, the extremely low volume shows us that this is will most likely not happen. Traders might have the opportunity to trade the pullback.

XRP/USD 4-hour Chart

Technical factors:

The price is just above its 21-period EMA and just below its 50-period EMA
Price is right above its middle Bollinger band
RSI is neutral (51.35)
Volume is extremely low, but stable

Key levels to the upside Key levels to the downside

1: $0.2454 1: $0.235

2: $0.266 2: $0.227

3: $0.285 3: $0.221

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Fundamental Analysis

Everything You Should Know About ‘Retail Sales YoY’ Macro Economic Indicator

Post author By Reddy Shyam Shankar
Post date 11 September, 2020
No Comments on Everything You Should Know About ‘Retail Sales YoY’ Macro Economic Indicator

Introduction

The computation of gross domestic product takes into account the consumption by households. In the households’ consumption, the retail sales data is considered to be the best leading indicator. Retail sales account for the majority of consumption by households. Retail sales are estimated to account for up to 70% of the US economy. It is, therefore, important for forex traders to understand how it affects the economy and the currency.

Understanding Retail Sales YoY

Retail Sales: the definition of retail sales is the purchase of finished goods and services by the end consumers. As an economic indicator, retail sales are used to measure the changes in the value of the goods and services bought at the retail level. This change can be monthly (retail sales MoM) or over the previous twelve months (retail sales YoY).

Retail Sales YoY: covers the retail sales made to consumers for the preceding 12 calendar months. It measures the rate of change in the value of purchases made by households.

How Retail Sales YoY is Measured

The data collected for the YoY retail sales cover all retail outlets from physical stores to e-commerce. It also includes data from the services sector, such as hotels and restaurants. According to the US Census Bureau, retail sales are divided into 13 categories, which include: e-commerce retailers, department stores, food and beverage stores, health and beauty stores; furniture stores; hospitality, apparel, building stores, auto dealers, and gas stations.

In the US, the measurement of the annual retail sales is done using the Annual Retail Trade Survey (ARTS). The ARTS is aimed at giving the estimates of the national total annual sales, sales taxes, e-commerce sales, end-of-year inventories, purchases, total operating expenses, gross margins, and end-of-year accounts receivable for retail businesses. This survey is conducted annually.

The retail sales YoY tends to be influenced by the seasonality of the economic activities since it covers more extended periods. These seasons including the holiday shopping seasons account for about 20% of the retail sales YoY. As a result, retail sales YoY cannot be expected to provide the most current and up-to-date retail data.

How Retail Sales YoY can be used in Analysis

As aforementioned, the retail sales account for about 70% of the GDP, making it a vital leading indicator.

Consumer spending drives the economy. An increase in retail sales implies that more money is circulating in the economy. This increase could be a result of increased wages, which increases the disposable income, increase in the rate of employment; and accessibility to loans and credit. All these factors increase the aggregate demand within an economy. The increase in demand leads to an increase in aggregate supply. This increase leads to the creation of more employment opportunities due to the expansion of businesses. Therefore, a steady increase in the retail sales YoY signifies that the economy has been steadily expanding over the long term.

Source: St. Louis FRED

Declining retail sales YoY is an indicator that the economy might be contracting. The decrease in retail sales implies that there is less disposable income within the economy, either as a result of low wages or job cuts. Subsequently, there will be reduced demand for the finished goods and services in the economy, which will, in turn, compel producers to cut the output to avoid price distortion. The reduction in the production will force them to scale down their operations, leading to more unemployment. Thus, a continually decreasing retail sales YoY could be an indicator of a looming economic recession.

Since the retail sales YoY are spread out over 12 calendar months, it provides a comprehensive outlook for the central banks to monitor the effectiveness of their monetary policies. In the US, the Federal Reserve Board uses the accounts receivable data in monitoring retail credit lending.

Monitoring the retail sale YoY enables the Federal Reserve to keep an eye on the rate of inflation. A continually increasing retail sales YoY, if left unchecked, could lead to an increased rate of inflation beyond the target rate. Thus, to ensure this does not happen, the central banks consider this data when making the interest rate decision.

Conversely, since a continually decreasing retail sales YoY forebode a possibility of a recession, this data encourages governments and central banks to implement expansionary fiscal and monetary policies. These policies, such as cutting the interest rates, are meant to reduce the cost of borrowing and increase access to credit hence spurring demand within the economy.

Impact on Currency

As established, an increase in the retail sales YoY is synonymous with an increase in economic activities and an expanding economy. A country’s economic growth leads to an increase in the value of its currency. Thus, increasing retail sales YoY results in currency appreciation.

Conversely, the declining retail sales YoY forebodes a looming recession and a possible interest rate cut in the future. More so, this decline signifies an increase in the unemployment levels and a contracting economy. All these factors contribute to the depreciating of a country’s currency.

In the forex market, the retail sales YoY is a low-level economic indicator. It is overshadowed by the MoM retail sales data, which represents the more recent changes observed within the economy.

Sources of Retail Sales YoY Data

In the US, the retail sales YoY data is released monthly by the United States Census Bureau, along with the monthly updates. A comprehensive breakdown of the US retail sales YoY can be accessed at St. Louis FRED website. Statistics on the global retail sales YoY can be accessed at Trading Economics.

How Retail Sales YoY Data Release Affects The Forex Price Charts

The most recent retail sales YoY data was released on August 14, 2020, at 8.30 AM ET. A more in-depth review of the data release can be accessed at the US Census Bureau website.

The screengrab below is of the retail sales YoY from Investing.com. On the right is a legend that indicates the level of impact the fundamental indicator has on the USD.

As can be seen, the retail sales YoY data release is expected to cause low volatility on the USD.

In the 12 months to July 2020, the retail sales YoY in the US increased by 2.74%. This increase is higher compared to the previous increase of 2.12%. In theory, this increase should appreciate the USD relative to other currencies.

The screengrab above shows the simultaneous release of the monthly retail sales data and the retail sales YoY data. It is to be expected that the monthly retail sales data will dampen any impact that the retail sales YoY would have had on the price action.

EUR/USD: Before the Retail Sales, YoY Data Release on 
August 14, 2020, Just Before 8.30 AM ET

As we can see from the above 15-minute EUR/USD chart, the pair was trading in a weak uptrend. This trend is proved by the 15-minute candles crossing above the slightly rising 20-period Moving Average.

EUR/USD: After the  Retail Sales, YoY Data Release on 
August 14, 2020, at 8.30 AM ET

After the news announcement, the pair formed a 15-minute bullish candle. This candle indicates that the USD weakened against the EUR. Subsequently, the pair continued trading in a renewed uptrend as the 20-period MA rose steeply.

GBP/USD: Before the Retail Sales YoY Data Release on 
August 14, 2020, Just Before 8.30 AM ET

Before the data release, the GBP/USD pair was trading in a steady uptrend. This trend is evidenced by a steeply rising 20-period MA, with bullish candles forming further above it.

GBP/USD: After the  Retail Sales, YoY Data Release on 
August 14, 2020, at 8.30 AM ET

Similar to the EUR/USD, the GBP/USD pair formed a long 15-minute bullish candle after the news release. The pair continued to trade in the previously observed uptrend before peaking and slowly flattening.

NZD/USD: Before the Retail Sales, YoY Data Release on 
August 14, 2020, Just Before 8.30 AM ET

NZD/USD: After the  Retail Sales, YoY Data Release on 
August 14, 2020, at 8.30 AM ET

Before the retail sales YoY data release, the NZD/USD pair was trading in a similar trend as the EUR/USD pair. The 15-minute candles were crossing above a flattening 20-period Moving Average. After the news announcement, the pair formed a long 15-minute bullish candle as did the EUR/USD and GBP/USD pairs. Subsequently, the pair traded in a renewed uptrend as the 20-period MA rose steeply with candles forming further above it.

Bottom Line

The retail sales YoY provides vital long-term data about the economic outlook of the households and their consumption patterns. In the forex markets, however, the retail sales YoY data is overshadowed by the retail sales MoM data, which is release concurrently. From this analysis, the increase of the retail sales YoY data for July 2020 had no impact on the price action since the markets reacted to the negative monthly retail sales data.

Tags Economy, Education, Forex, Forex Drivers, Forex Trading, Fundamental Analysis, Fundamental Forex Trading, fundamental indicators, Macro Economics, Retail Sales YoY, Sales, trading, Year on year

Crypto Market Analysis

Daily Crypto Review, Sept 11 – DeFi Sector Experiences Volatility; The Rest Of The Market Stable

Post author By Ilija Rankovic
Post date 11 September, 2020
1 Comment on Daily Crypto Review, Sept 11 – DeFi Sector Experiences Volatility; The Rest Of The Market Stable

The cryptocurrency market has experienced large volatility in the DeFi sector, while the rest of the market was relatively stable. Bitcoin is currently trading for $10,301, which represents a decrease of 0.68% on the day. Meanwhile, Ethereum lost 0.11% on the day, while XRP lost 0.73%.

Daily Crypto Sector Heat Map

If we take a look at the top100 cryptocurrencies, aelf gained 152.47% on the day, making it the most prominent daily gainer. Flexacoin (45.07%) and Ampleforth (35.77%) also did great. On the other hand, the SushiSwap lost 14.95%, making it the most prominent daily loser. It is followed by Elrond’s loss of 7.82% and Serum’s loss of 6.08%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level experienced a massive drop since our last report, with its value currently being at 54.44 9.29%. This value represents a 4.85% difference to the downside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization has gone up in the past 24 hours. Its current value is $337.66 billion, which represents an increase of $5.84 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin has spent another day trying to push past the $10,360 resistance. However, every attempt in the past few days ended up in BTC passing the level, but then coming back under it due to being unable to confirm its position above. While the resistance level weakens each time Bitcoin attempts to pass it, it brings more bears to the game as most people intuitively trade in the direction opposite to the most recent failed attempt.

If Bitcoin doesn’t pass $10,360 soon, we should look for support at $9,600, and ultimately at the 200-day SMA ($9,080).

BTC/USD 4-hour Chart

Technical factors:

Price is below the 50-period EMA and right above the 21-period EMA
Price is slightly closer to the middle than the top Bollinger band
RSI is neutral (49.57)
Volume is stable

Key levels to the upside Key levels to the downside

1: $10,360 1: $10,015

2: $10,500 2: $9,870

3: $10,630 3: $9,600

Ethereum

Ethereum has, unlike Bitcoin, managed to gain some value as it reached past its $360 level. However, the move has ended and Ethereum is now stuck in a narrow range between $360 to the downside and $371 to the upside. The second-largest cryptocurrency by market cap has repeatedly tried to get past it, but with no success.

Ethereum’s break above $371 should establish a short-term bullishness, while a break below $360 is not as relevant, and we may look for $340 as the next support.

ETH/USD 4-hour Chart

Technical Factors:

The price is above its 21-period while it is currently crossing the 50-period EMA
The price is near its top Bollinger band
RSI is neutral (52.77)
Volume is low and stable

Key levels to the upside Key levels to the downside

1: $371 1: $360

2: $400 2: $340

3: $415 3: $300

Ripple

XRP failed to break its immediate resistance of $0.2454, which triggered a small pullback. The third-largest cryptocurrency by market cap doesn’t seem like it will be able to break this level any time soon unless it gets a massive influx of bulls. Unlike the aforementioned two cryptocurrencies, XRP is a bit more stable, and failing to push above a resistance level doesn’t necessarily mean that it will attempt a move towards the downside.

XRP/USD 4-hour Chart

Technical factors:

The price is just below its 21-period EMA and well below its 50-period EMA
Price is sitting at the middle Bollinger band
RSI is neutral and descending (47.20)
Volume is low and stable

Key levels to the upside Key levels to the downside

1: $0.2454 1: $0.235

2: $0.266 2: $0.227

3: $0.285 3: $0.221

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Crypto Market Analysis

Daily Crypto Review, Sept 10 – Ethereum Double-Digit Gains; Crypto – S&P500 Correlation nears All-Time-Highs

Post author By Ilija Rankovic
Post date 10 September, 2020
1 Comment on Daily Crypto Review, Sept 10 – Ethereum Double-Digit Gains; Crypto – S&P500 Correlation nears All-Time-Highs

The cryptocurrency market recovered today as Bitcoin bulls pushed past $10,360. On top of that, Ethereum skyrocketed, netting double-digit gains on the day. Bitcoin is currently trading for $10,391, which represents an increase of 3.90% on the day. Meanwhile, Ethereum gained 11.36% on the day, while XRP gained 5.48%.

Daily Crypto Sector Heat Map

If we take a look at the top100 cryptocurrencies, Solana gained 42.61% on the day, making it the most prominent daily gainer. Yearn.finance (24.55%) and Aave (24.03%) also did great. On the other hand, the Hyperion lost 24.27%, making it the most prominent daily loser. It is followed by Blockstack’s loss of 5.21% and Tron’s loss of 2.60%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level decreased slightly since our last report, with its value currently being at 59.29%. This value represents a 0.60% difference to the downside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization has gone up slightly in the past 24 hours. Its current value is $331.80 billion, which represents an increase of $4.90 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin has spent the past 24 hours trying to push past the $10,360 resistance level, which is key if the largest cryptocurrency by market cap wants to continue its bullish presence. Even though the level has fallen, BTC needs to reliably pass it and confirm its position above it in order to encourage more bulls to enter the market. If Bitcoin positions itself above $10,360 well, the influx of bullish pressure will most likely send its price further up towards $10,500 or even $10,630

If, however, Bitcoin manages to fall below $10,000 and confirms its position below it, we can expect to see a bear push towards $9,600 and ultimately to the 200-day SMA ($9,080).

BTC/USD 4-hour Chart

Technical factors:

Price is below 50-period EMA while being above its 21-period EMA
Price is hitting the top Bollinger band
RSI is neutral and pushing towards the upside (54.00)
Volume is stable

Key levels to the upside Key levels to the downside

1: $10,360 1: $10,015

2: $10,500 2: $9,870

3: $10,630 3: $9,600

Ethereum

Ethereum skyrocketed in the past 24 hours, with its price reaching double-digit gains. The second-largest cryptocurrency by market cap overcame the initial rejection of the $360 level and ultimately pushed past it, reaching the $371 level and getting stopped out there. The next move Ethereum makes will be crucial and will determine its short-term future.

If Ethereum manages to pull off a confirmation move above $360, we can expect a push towards $371. However, if that does not happen, we can expect ETH to return to its previous levels.

ETH/USD 4-hour Chart

Technical Factors:

The price is well above its 21-period while being slightly above its 50-period EMA
The price is above its top Bollinger band
RSI is neutral and pushing towards the upside (57.49)
Volume is low and stable

Key levels to the upside Key levels to the downside

1: $360 1: $340

2: $371 2: $300

3: $400 3: $289

Ripple

XRP made a move towards the upside like Ethereum and Bitcoin, but its move was more alike to Bitcoin’s than Ethereum’s. The third-largest cryptocurrency by market cap managed to gather some bullish pressure and push towards the $0.2454, which barely touched at the time of writing). However, just like with Bitcoin, XRP did not conquer this resistance level yet, and it will have to confirm its position above it in order to bring the attention of more bulls.

XRP might face another resistance level in the form of its 50-period moving average, which sits very close to its current price.

XRP/USD 4-hour Chart

Technical factors:

The price is just above its 21-period EMA and right above its 50-period EMA
Price is above its top Bollinger band
RSI is neutral and moving towards the upside (54.76)
Volume is low and stable

Key levels to the upside Key levels to the downside

1: $0.2454 1: $0.235

2: $0.266 2: $0.227

3: $0.285 3: $0.221

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Fundamental Analysis

What Should You Know About ‘Loans to Private Sector’ Fundamental Forex Driver

Post author By Reddy Shyam Shankar
Post date 9 September, 2020
No Comments on What Should You Know About ‘Loans to Private Sector’ Fundamental Forex Driver

Introduction

Private Sector has a significant and crucial role to play in the economic growth of capitalist economies. The development of private sectors can single-handedly drive the GDP and development of the country forward. Credits and loan availability to the private sector can significantly impact the pace of expansion of the country. Hence, an analysis of the loans disbursed to the private sector can offer us much insight into the country’s growth.

What are Loans to Private Sector?

Loan

It is a credit incurred by an individual or entity. The creditor is generally a financial institution or the Government. The lenders give borrowers money on certain conditions that can include terms relating to the repayment date, interest charges, or other transactional fees. A loan can be secured or unsecured. In secured loans, the loan is given out against collateral like property, mortgages, or securities.

Private Sector

It refers to the part of the economy, which is not under state or central government’s control. The private sector industries are mostly privately owned and for-profit businesses. Private sectors can produce productive jobs, higher income, productivity growth. When private sectors are complemented with the Government sector’s support, the growth rate is multiplied many folds.

Loans to Private Sector

It refers to credits provided to the private sector by financial corporations. Credit can be as loans, nonequity securities purchases, and trade credits, etc. Financial corporations here can be monetary authorities (ex: Central Banks), finance and leasing companies, lenders, pension funds, insurance companies, and foreign exchange companies.

How can Loans to Private Sector numbers be used for analysis?

Most modern economies are capitalist economies, i.e., most of the GDP is derived from the private sector that operates on profitability. Economic indicators like employment, wage growth, the standard of living, GDP, etc. are all heavily dependent on the private sector. In the United States, the private sector contributes more than 85% of the total GDP. Hence, private sector growth is almost equivalent to the country’s growth.

In capitalist economies, the private sectors are competitive, provide high employment, better income, and lie at the forefront of technological innovation in general. Due to competition amongst fellow business organizations, the benefits of working in the private sector far exceed that of the public sector.

Credit plays a vital role in the economic growth of capitalist economies. Credit serves as a crucial channel for money transmission from central authorities to the private sector. Loans can fund production, consumption, and capital formation for businesses that, in turn, generate revenue for the country.

Loans can help private businesses to expand beyond just the cash in hand and speed up their growth rate. The ease with which credit facilities are made available to the private sector will largely control the pace of economic growth. The Government and the Central Bank authorities’ support in providing credit to private industries have historically proven to be very beneficial for the state and country’s urbanization and rapid growth.

On the flip side, a decrease or lack of credit availability can significantly impact small and medium businesses, resulting in halting expansion plans, laying off employees, or in the worst close filing bankruptcy.

The public sectors can only take care of the essential services and set rules and regulations in different areas. The required development has to come from the private sector. But it is the private sector that can boost economic growth through investment, employment, competition, innovation, and better wages.

In the underdeveloped economies, the Government’s support in credit and business support to the private sector has mostly helped uplift people from poverty. In the developing economies, private sector investments have dramatically improved the standard of living for many countries like China, Japan, and India. Private sectors of developed countries already enjoy the support from the public and banking sector, which explains their high GDP and consistent growth rate.

Impact on Currency

An increase in loans to the private sector is a positive sign for the economy. It indicates more businesses are now creditworthy and are working on expansionary plans. A healthy increase in the number of loans to the private sector is good for the future economy. An increase in loans to the private sector also indicates the market is more liquid, and the currency will lose value for the same set of goods and services. Conversely, a decrease in loans to the private sector means the market is less liquid, and money is costly. Currency appreciates, but economic growth is difficult to achieve.

Loans to private sector statistics are useful for the Governments and international investors and companies to check the health of the private sectors in a particular economy. International companies open businesses where ease of doing business is high. For them, it is a useful indicator. Private Sector Loan is not a significant economic indicator for the FOREX markets. Hence it is a low impact indicator.

Economic Reports

The World Bank collects domestic credit data to the Private Sector as a GDP percentage on their official website. The dataset is annual and covers most countries. The datasets are updated once they receive the latest data from the respective countries.

Sources of Loans to Private Sector

The World Bank’s Domestic Credit to private sector reports is available here.

We can also find a consolidated list of Loans to the private sector on the Trading Economics website.

How Loans to Private SectorAffects The Price Charts?

Loans to the private sector is not a statistic most forex traders keep an eye when making their trades. The lack of interest is because it is considered a their-tier leading indicator. It is, however, essential to know how the release of this fundamental economic indicator affects the forex price charts.

The Eurozone private sector loans data is released monthly by the European Central Bank about 28 days after the month ends. It measures the change in the total value of new loans issued to consumers and businesses in the private sector. The most recent release was on July 27, 2020, 8.00 AM GMT can be accessed here. A more in-depth review of the economic news release can be accessed at the ECB website.

Below is a screenshot of the Forex Factory official website. On the right side, we can see a legend that indicates the level of impact the Fundamental Indicator has on the EUR.

As can be seen, low impact is expected on the EUR.

The screengrab below is of the most recent change in private loans in the EU. In June 2020, private loans grew by 3% as compared to the same period in 2019. This change represented a flat growth from the previous release. Based on our fundamental analysis, this should be positive for the EUR.

Now, let’s see how this positive news release made an impact on the Forex price charts.

EUR/USD: Before Eurozone Private Sector Loans release on July 
27, 2020, Just Before 8.00 AM GMT

From the above chart, the EUR/USD pair is trading on a neutral trend before the data release. The candles are forming around the flattening 20-period Moving Average. This trend is an indication of relative market inactivity.

EUR/USD: After Eurozone Private Sector Loans release on July 
27, 2020, 8.00 AM GMT

After the news release, the pair forms a 15-minute bullish candle as EUR becomes stronger as expected. However, the news release was not strong enough to cause a shift in the pair’s trend since the pair continued to trade in the previously observed neutral trend.

Now let’s see how this news release impacted other major currency pairs.

EUR/JPY: Before Eurozone Private Sector Loans release on July 
27, 2020, Just Before 8.00 AM GMT

Before the news release, EUR/JPY traded in a similar neutral trend as observed with the EUR/USD with the candles forming around a flattening 20-period Moving Average.

EUR/JPY: After Eurozone Private Sector Loans release on July 
27, 2020, 8.00 AM GMT

As observed with the EUR/USD pair, EUR/JPY formed a 15-minute bullish candle after the news release as expected. The subsequent trend does now significantly shift.

EUR/CAD: Before Eurozone Private Sector Loans release on July 
27, 2020, Just Before 8.00 AM GMT

EUR/CAD: After Eurozone Private Sector Loans release on July 
27, 2020, 8.00 AM GMT

The EUR/CAD pair shows a similar neutral trading pattern as the EUR/USD and EUR/JPY pair before the news release. After the news release, the pair forms a 15-minute bullish candle but later continued trading in the earlier observed neutral trend as the 20-period Moving Average flattens.

Bottom Line

Loans to the private sector play a vital role in stimulating a country’s economic growth. From the above analyses, the release of the loan growth data has an instant short-term effect on the EUR. The data is, however, not significant enough to cause any relevant shift in the prevailing market trend.

Tags Education, Forex, Forex Fundamentals, Fundamental Analysis, GDP, Loan, Loans to Private Sector, Macro Economic Indicators, Mortgages, Private Sector, private sector growth, trading

Forex Market Analysis

Daily F.X. Analysis, September 09 – Top Trade Setups In Forex – U.S. China Conflict in Play!

Post author By Ali B.
Post date 9 September, 2020
1 Comment on Daily F.X. Analysis, September 09 – Top Trade Setups In Forex – U.S. China Conflict in Play!

On the news front, the Bank of Canada Overnight Rate rate and Rate Statement will be in focus, and it may drive some price action in Canadian pairs. Elsewhere, we don’t have any major events that can drive sharp movements in the U.S. dollar related pairs. Let’s focus on technical levels.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The UR/USD pair was closed at 1.17734 after placing a high of 1.18273 and a low of 1.17654. The EUR/USD pair dropped on Tuesday and extended its bearish move for the 3rd consecutive day on the back of a strong U.S. dollar and ahead of ECB monetary policy meeting.

Recently ll eyes have turned towards the upcoming meeting of European Central Bank on Thursday to observe if they will do anything to push inflation pressure higher. Chief Economist Philip Lane has raised concerns over the high prices of local currency the last week. Though the currency has already come under pressure due to currency devaluation expectations or inflation, investors are still awaiting the words from ECB. The currency Euro is facing heavy pressure ahead of ECB’s monetary policy meeting and is weighing on EUR/USD for the past three days. The pair continued following the same pressure and dropped on Tuesday as well.

On the data front, 10:30 GMT, the French Final Private Payrolls for the quarter dropped to -0.8% from the projected -0.6%and weighed on Euro. At 11:00 GMT, the German Trade Balance showed a surplus of 18.0B against the expected 14.9B and supported Euro. At 11:45 GMT, the French Trade Balance was released that remained flat with the expectations of -7.0B. At 13:00 GMT, the Italian Retail Sales for July dropped to -2.2% from the projected 1.1% and weighed on Euro. At 14:00 GMT, the Final Employment Change for the quarter dropped to -2.9% from the forecasted -2.8% and weighed on Euro. The Revised GDP for the quarter from Eurozone dropped by -11.8% against the expected -12.1% and supported Euro. As most data came in against the single currency Euro, the EUR/USD pair came under fresh pressure and dropped on Tuesday to 8th day lowest level.

From the U.S. side, the NFIB Small Business Index was released at 15:00 GMT that advanced to 100.2 against the expected 99.0 and supported the U.S. dollar. The strong U.S. dollar added further pressure on EUR/USD pair and dragged the pair down.

Meanwhile, as the global coronavirus cases have surged to 27.3M, including 893,000 deaths, Spain has become the first nation in Western Europe to exceed half-million COVID-19 total infections. This also weighed on the local currency Euro and added in the currency pair losses.

The U.S. dollar was already strong because of its safe-haven status amid the rising US-China tensions after the tech fight escalated.

The U.S. has announced tariffs of any American company forcing overseas production. The U.S. has also warned its companies not to work with any Chinese company or face sanctions. Whereas, the greenback was also strong because of the weakness of its rival currency like the Euro and GBP.

Daily Technical Levels

Support	Pivot	Resistance
1.1753	1.1791	1.1817
1.1727		1.1855
1.1690		1.1881

EUR/USD– Trading Tip

The EUR/USD is trading with a bearish bias around 1.1780 level, having immediate support at 1.1756 level that’s extended by a double bottom pattern. On the 4 hour timeframe, the violation of the 1.1756 level may extend the selling trend until the 1.1715 level. The EUR/USD may find resistance at 1.1862 and 1.1958 level. Bullish bias seems dominant today.

GBP/USD – Daily Analysis

The GBP/USD closed at 1.29806 after placing a high of 1.31697 and a low of 1.29798. Overall the movement of the GBP/USD pair remained bearish throughout the day. THE GBP/USD pair fell below 1.30 level on Tuesday at the lowest level since 30-July 2020. The pair extended its previous day bearish movement due to a fresh threat by Prime Minister Boris Johnson to leave the E.U. without any deal if progress in talks will not be made till October 15.

Johnson has said that there would need to be an agreement in place by the mid-October deadline when European Council convenes or warned that the U.K. would leave the negotiating table and follow the WTO rules.

However, the talks have become tough after the U.K. has already angered the E.U. members by unveiling plans to introduce a new law that would undermine the withdrawal agreement. Both parties signed the agreement into law and included all terms and conditions of the U.K.’s departure from the bloc.

The new bill aims to create common rules that would apply across the whole of the U.K. are expected to clash with the terms of the withdrawal agreement that requires the Northern Ireland to keep following E.U. rules in the post-Brexit period to avoid a hard border with the Republic of Ireland.

The talks have started on Tuesday between the E.U. chief negotiator Michel Barnier and U.K. chief negotiator David Frost. The U.K.’s controversial move about new law has made the E.U. angry, and the E.U. has said that it will be ready for a no-deal Brexit when the transition period ends on December 31. The British Pound suffered massively as the concerns raised ahead of Brexit talks and dropped below 1.30 level on Tuesday.

On the data front, at 04:01 GMT, the BRC Retail Sales Monitor for the year in August rose to 4.7% from the expected 3.5% and supported British Pound, but the traders ignored it as the focus was shifted towards Brexit talks. The U.S. dollar was also strong in the market due to positive data and safe-haven appeal and also weighed on GBP/USD currency pair. At 15:00 GMT, the NFIB Small Business Index advanced to 100.2 from the expected 99.0 and supported the U.S. dollar that added pressure on GBP/USD pair.

Daily Technical Levels

Support	Pivot	Resistance
1.2918	1.3049	1.3118
1.2849		1.3249
1.2719		1.3318

GBP/USD– Trading Tip

The GBP/USD is trading with a selling bias at 1.2948 level, set to test the support level of 1.2923 level. The Cable is trading within a downward channel, extending support at 1.2923 level and resistance at 1.3013. On the downside, the GBP/USD pair may find support at 1.2857 level upon the violation of the 1.2923 level. The recent bearish engulfing candle is also in support of the selling trend. The MACD is also supporting selling bias; therefore, we will be looking for selling trades below the 1.3000 level.

USD/JPY – Daily Analysis

Today in the European trading session, the USD/JPY currency pair failed to break its thin trading range and still hovering below the 106.50 marks. However, the choppy trading around the currency pair could be associated with the risk-off market sentiment, driven by the US-China tussle and Brexit concern, which eventually underpinned the safe-haven Japanese yen and kept the currency pair under pressure. On the other hand, the broad-based U.S. dollar strength, supportive by the safe-haven demand, becomes the key factor that keeps trying to break the pair’s thin trading range. At this moment, the USD/JPY currency pair is currently trading at 106.30 and consolidating in the range between 106.20 – 106.39.

Despite the optimism over a potential treatment/vaccine for the highly infectious virus, the market risk sentiment remains depressive. Be it the worrisome headlines concerning the Brexit or the tension between the US-China, not to forget the coronavirus issues in the U.S., the market trading sentiment has been flashing red since the European session started, which ultimately keeps the safe-haven assets supportive on the day.

At the US-China front, the rising tensions between the United States and China continued to pick up the pace as President Trump earlier imposed punitive measures over the Asian major. As a result, China announced new visa restrictions to counter the Trump administration’s action against China. Also fueled the tension could be the fresh headlines suggested that the U.S. is considering banning some or all products made with cotton from China’s Xinjiang region. Apart from this, the Brexit’s gloomy headlines also weighed on the market trading sentiment, which eventually supported the safe-haven appeal in the market and dragged the currency pair down.

Also weighed on the market trading sentiment were the fears of rising COVID-19 cases in the U.S., Europe, and some of the notable Asian nations like India, which fueling fears that the economic recovery could be halt.

On the contrary, the broad-based U.S. dollar succeeded in maintaining its positive traction and remaining bullish on the day amid risk-off sentiment. The U.S. dollar gains were further bolstered by the ongoing upsurge in the U.S. Treasury bond yields. However, the U.S. dollar’s modest gains turned out to be the major factor that capped the pair’s further downside momentum. Whereas, the U.S. Dollar Index, which tracks the greenback against a basket of other currencies, rose by 0.13% to 93.168 by 9:53 PM ET (2:53 AM GMT).

Daily Technical Levels

Support	Pivot	Resistance
105.7900	106.0900	106.3200
105.5600		106.6200
105.2500		106.8500

USD/JPY – Trading Tips

The USD/JPY is consolidating at 105.928 area, having a resistance mark of 106.025 level. An upward crossover of 106.024 level may extend further buying trend until the 106.480 level, and the violation of this level can extend buying until the next resistance level of 106.840. On the downside, the safe-haven USD/JPY currency may gain support at 105.620 and 105.280. Let’s consider taking a sell trade below 106.024 level as the MACD and RSI also suggest selling bias. Good luck!

Tags Daily Brief, EURUSD, Forex, Forex Trading, Fundamental Analysis, GBPUSD, Support and Resistance, Technical Analysis, Technical Outlook, trading, USDJPY

Crypto Market Analysis

Daily Crypto Review, Sept 9 – Will DeFi Bubble Burst, Send Ethereum to Freefall?

Post author By Ilija Rankovic
Post date 9 September, 2020
1 Comment on Daily Crypto Review, Sept 9 – Will DeFi Bubble Burst, Send Ethereum to Freefall?

The cryptocurrency market had another pullback today, with Bitcoin coming dangerously close to $10,000. Bitcoin is currently trading for $10,087, which represents a decrease of 2.29% on the day. Meanwhile, Ethereum lost 3.26% on the day, while XRP lost 2.52%.

Daily Crypto Sector Heat Map

If we take a look at the top100 cryptocurrencies, IOST gained 11.86% on the day, making it the most prominent daily gainer. TRON (11.78%) and Ontology (7.92%) also did great. On the other hand, the SushiSwap lost 15.01%, making it the most prominent daily loser. It is followed by Hyperion’s loss of 14.32% and Ocean Protocol’s loss of 11.46%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level stayed at the same spot since our last report, with its value is currently at 59.89%. This value represents a 0.05% difference to the upside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization has gone down slightly in the past 24 hours. Its current value is $326.90 billion, which represents a decrease of $6.34 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin has been clinging to the $10,000 psychological resistance for the past 24 hours as bears took over the market yet again. The largest cryptocurrency by market cap fell well below $10,000, but quickly recovered and stayed just a bit up for the duration of the day. The reason for the sudden drop is most likely the inability to break the $10,360 resistance level. Lower time-frames show that Bitcoin might have formed a triple bottom formation, which would indicate some form of bullishness.

When it comes to predictions, we are one step closer to the bearish scenario than yesterday. A drop sustained drop below $10,000 could lead us to $9,600 and ultimately to the 200-day SMA ($9,080). On the other hand, if BTC manages to bounce off the current levels and surpass $10,500, a move to $11,000 is likely.

BTC/USD 4-hour Chart

Technical factors:

Price is well below its 50-period, while it’s slightly below its 21-period EMA
Price is slightly below middle Bollinger band
RSI is neutral (43.31)
Volume is stable

Key levels to the upside Key levels to the downside

1: $10,360 1: $10,015

2: $10,500 2: $9,870

3: $10,850 3: $9,600

Ethereum

Ethereum had quite a bad day, with its price falling below the $340 mark. The second-largest cryptocurrency by market cap is already down over 30% from the $490 peak, with many indicators showing bearish scenarios. If the DeFi bubble pops, we can see Ethereum in freefall, though that is unlikely simply due to high yields current investors are collecting from staking.

On the other hand, while some DeFi enthusiasts cashed out and left the market due to the volatility, Ethereum’s gas prices have normalized from its Sept 2nd highs, which may be just enough to push the price slightly up or at least keep it stable.

Traders should pay attention to how Ether handles the $340 level.

ETH/USD 4-hour Chart

Technical Factors:

The price is slightly below its 21-period and well below its 50-period EMA
The price is right below its middle Bollinger band
RSI is neutral (41.08)
Volume is descending (low)

Key levels to the upside Key levels to the downside

1: $340 1: $300

2: $360 2: $289

3: $371

Ripple

XRP has lost a couple of percent of its value, though nothing to be scared of. The third-largest cryptocurrency by market cap tested its support level of $0.235 for a couple of times in the past 24 hours, and all attempts towards the downside failed. Many analysts are calling for XRP’s future rise, but we need to see a drastic change in volume for that to happen.

XRP traders should watch out for volume spikes, as even sideways trading is hard now due to the extremely low volume.

XRP/USD 4-hour Chart

Technical factors:

The price is just under its 21-period, while it is well below its 50-period EMA
Price is at its middle Bollinger band
RSI is neutral (45.18)
Volume is low

Key levels to the upside Key levels to the downside

1: $0.2454 1: $0.235

2: $0.266 2: $0.227

3: $0.285 3: $0.221

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Fundamental Analysis

The Importance of ‘Loan Growth’ as a Forex Macro Economic Indicator

Post author By Reddy Shyam Shankar
Post date 8 September, 2020
No Comments on The Importance of ‘Loan Growth’ as a Forex Macro Economic Indicator

Introduction Loan Growth is a suitable parameter for us to check whether the monetary strategies implemented by the Central Authorities are coming into play yet or not. Loan Growth also helps us to gauge the health of the economy in terms of liquidity. Loan Growth percentage serves as a litmus test, especially in a capitalist […]

Introduction

Loan Growth is a suitable parameter for us to check whether the monetary strategies implemented by the Central Authorities are coming into play yet or not. Loan Growth also helps us to gauge the health of the economy in terms of liquidity. Loan Growth percentage serves as a litmus test, especially in a capitalist economy, where credit and inflation primarily drive the economy forward.

What is Loan Growth?

Loan: It is a debt incurred by an individual or entity. The lender is generally a bank, financial institution, or the Government. The lender credits the borrower a sum of money. The borrower agrees to specific terms and conditions that can include finance charges, interest payments, due dates, and other conditions.

Loans can be secured or unsecured. In secured loans, the loan is given out against collateral with a financial value like a property, mortgages, or securities, etc.

Loan Growth: Loan Growth refers to the percentage increase in the number of loans issued overall by banks in a particular region over a particular time frame. The time frame can be monthly, semi-annual, or annual.

Most modern economies today we see are capitalist economies, i.e., they grow through capitalism. A capitalist economy requires money to expand and grow. Hence, credit is an inevitable fuel required for economic growth.

How can the Loan Growth numbers be used for analysis?

A healthy increase in the percentage of Loans is suitable for a stable and healthy economy. But as with any case, there is no perfect economy, and there are two sides of analysis to Loan Growth.

First Scenario

A healthy economy means it is growing at a stable rate year over year with mild inflation each year. Credit fuels economic growth in this type of economy. In this type of economy, an increase in the number of loans taken can be considered a positive sign for the economy.

Businesses can grow beyond just cash in hand. Householders can purchase homes without saving the entire cost before purchase. Governments can meet their spending needs without relying solely on tax revenues. Be it a business, householder, or a Government can smoothen out their economic activities in terms of money. They will take credit when in deficit and payback when in surplus.

An increase in Loan Growth can imply that more people are creditworthy, and more businesses are taking credit to expand and grow. Both of these scenarios are good for the GDP and is a good sign for the economy.

Second Scenario

The first scenario takes into the assumption that the economy is strong and stable. In reality, currently, most of the developed nations are struggling to maintain their economic growth. For example, the United States debt to GDP ratio is above 100%, which indicates that even if the entire GDP were given out to repay the debt, it would still be in some debt. Most of the developed nations have taken substantial credits to keep the economy from ticking over.

Keeping economic growth and global competency in mind, most countries have invested heavily in overgrowing in the short-term. By taking on more and more debts, countries may have achieved the necessary growth and needs now but have pushed their problems to the future.

Economists argue that eventually, there would be a time when countries cannot afford any more debt and would be backed into a corner. The only way out then would be at a considerable cost of losing out more than what they had made. Studies also show that rapid loan growth than the long term average also has seen an increase in underperforming or bad loans.

It is also essential to know that increase in Loan Growth should be accompanied by the fact that no bad loans are given out. Giving loans to people and businesses who do not have the eligibility but just because money is lying around is also a problem.

In the United States itself, the Government has been injecting money into the economy since the financial crisis in the form of Money Supply and Quantitative Easing programs to inflate their way out of depression or recession. Until now, the Government has not been able to reduce debt and is only taking on more debt to sustain the current growth.

An increase in loans is good or bad for the economy remains debatable for many. Without credit, sector growth is almost unimaginable in present times. For our analysis, we can use the Loan Growth rate as a litmus test to see whether the injected money from the Central Authorities has started reaching the public and businesses.

When the Central Authorities want to inflate the economy, they reduce interest rates by injecting money into the interbank market. The injected money takes time to get into the economy, and loans are one form in which this money gets circulated.

Overall, for our analysis, once Loan Growth shows increasing numbers, we can assume that the injected money is reaching the intended sectors, and consequent effects could be predicted on businesses and consumers. Loan Growth is indicative of a growing economy in general and is more prominent in developing countries.

Impact on Currency

Loan Growth is a by-product of a reduction in interest rates from the Central Banks of the country and an increase in employment and business growth. An increase in Loans indicates that money is “cheaper” to borrow. It is inflationary for the economy and is given out to induce growth (which may or may not happen).

An increase in Loan Growth depreciates currency as more money is competing against the same set of goods and services. A decrease in Loan growth appreciates the currency as the reduced liquidity forces goods and services to come at reduced prices.

Overall, Loan Growth is a low-impact indicator, as the Central Bank’s interest rates are the leading indicators, and the desired effect from increased loans can be traced from other leading indicators like Consumer and Business surveys.

Economic Reports

Since Loan Growth is not a significant economic indicator, official publications for significant countries are not explicitly published but can be obtained through reports analysis. For our reference, the Trading Economics website consolidates the Credit Growth in different sectors for data available countries on its official website. Since it is a consolidation, frequency and time of publication vary from country to country.

Sources of Loan Growth

Loan Growth consolidated available data for different countries are available here.

“The impact of bank lending on Palestine economic growth: an econometric analysis of time series data” has been referenced for this article.

How Loan Growth Affects The Price Charts

Loan growth is not a statistic. Most forex traders keep an eye when making their trades. The lack of interest is because it is considered a their-tier leading indicator. It is, however, essential to know how the release of this fundamental economic indicator affects the forex price charts.

In the EU, loan growth data is released monthly by the European Central Bank about 28 days after the month ends. It represents the change in the total value of new loans issued to consumers and businesses in the private sector. The most recent release was on July 27, 2020, 8.00 AM GMT can be accessed here. A more in-depth review of the economic news release can be accessed at the ECB website.

Below is a screengrab of the Forex Factory website. On the right, we can see a legend that indicates the level of impact the Fundamental Indicator has on the EUR.

As can be seen, low impact is expected on the EUR.

The screengrab below is of the most recent change in the loan growth in the EU. In June 2020, private loans grew by 3% as compared to the same period in 2019. This change represented a flat growth from the previous release. Based on our fundamental analysis, this should be positive for the EUR.

Now, let’s see how this positive news release made an impact on the Forex price charts.

EUR/USD: Before Loan Growth release on July 27, 2020, 
Just Before 8.00 AM GMT

EUR/USD: After Loan Growth release on July 27, 
2020, 8.00 AM GMT

Now let’s see how this news release impacted other major currency pairs.

EUR/JPY: Before Loan Growth release on July 27, 2020, 
Just Before 8.00 AM GMT

Before the news release, EUR/JPY traded in a similar neutral trend as observed with the EUR/USD with the candles forming around a flattening 20-period Moving Average.

EUR/JPY: After Loan Growth release on July 27, 
2020, 8.00 AM GMT

As observed with the EUR/USD pair, EUR/JPY formed a 15-minute bullish candle after the news release as expected. The subsequent trend does now significantly shift.

EUR/CAD: Before Loan Growth release on July 27, 2020, 
Just Before 8.00 AM GMT

EUR/CAD: After Loan Growth release on July 27, 2020, 
8.00 AM GMT

The release of the loan growth data has an instant short-term effect on the EUR. The data is, however, not significant enough to cause any relevant shift in the prevailing market trend.

Tags Banks, Central Banks, Education, Forex, Forex Advanced Trading, Forex Fundamental Analysis, Fundamental Analysis, Fundamental Trading, Loan, Loan Growth, Mortgages, Securities, trading

Forex Market Analysis

Daily F.X. Analysis, September 08 – Top Trade Setups In Forex – European Data in Focus!

Post author By Ali B.
Post date 8 September, 2020
1 Comment on Daily F.X. Analysis, September 08 – Top Trade Setups In Forex – European Data in Focus!

On Tuesday, the economic calendar offers low impact economic events that may not drive any solid movement in the market. However, the eyes will remain on the German Trade Balance, French Trade Balance, and Revised GDP figures from the Eurozone. EUR currency pairs can show some price action during the day today.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.18120 after placing a high of 1.18485 and a low of 1.18114. The EUR/USD pair dropped on Monday and extended its previous day’s losses due to decreased risk appetite and negative industrial production data from Germany. However, the change in prices was little as the U.S. financial markets were closed for the Labor Day Holiday.

The U.S. Dollar was steady on Monday with a little change in U.S. Dollar Index at 92.895 level. However, the greenback sentiment remained weak after the dovish comments from Jerome Powell on Friday that interest rates will remain lower for longer. The dollar was also steady because of the slow growth in the job sector was reported in August.

On Friday, the U.S. Department of Labor showed slow growth and increased permanent job losses as the government funding was running out. It has raised doubts about the sustainability of the economic recovery. On the Euro front, traders’ focus has shifted to the European Central Bank’s meeting on Thursday this week. As it is expected, ECB will not change policy stance, but the focus will solely remain on the message the ECB will deliver on its inflation forecasts.

The local currency Euro marked a 2-year high at the beginning of the month, and after that, the European Central Bank meeting will hold more importance. Because officials were concerned about the higher Euro prices, it would impact the exports and prices.

On the data front, at 11:00 GMT, the German Industrial Production in July decreased to 1.2% from the expected 4.5% and weighed on the local currency Euro. At 13:30 GMT, the Sentix Investor Confidence for September came in as -8.0 against the expected -11.4 and supported single currency Euro. The decreased German Industrial Production raised concerns over the economic growth and weighed on the Euro that dragged the currency pair EUR/USD on the downside.

The EUR/USD pair was down on Monday because of the European Union’s rising coronavirus cases. On Monday, Spain became the first European country to surpass 500,000 coronavirus cases after the second surge in infections caused after schools were reopened. On Tuesday, the Trade Balance from Germany and France and the Retail Sales data from Italy will be under traders’ focus for finding fresh impetus.

Daily Technical Levels

Support	Pivot	Resistance
1.1803	1.1826	1.1841
1.1788		1.1864
1.1764		1.1879

EUR/USD– Trading Tip

The EUR/USD is trading with a selling bias around 1.1801 level, heading lower towards the next support area of 1.1780 level. On the 4 hour timeframe, the EUR/USD may find support at 1.1780, the triple bottom level, which is extended by an upward trendline. Below this, the next support is likely to be found around the 1.1725 level.

GBP/USD – Daily Analysis

The GBP/USD failed to stop its previous session losing streak and took further offer below the 1.3150 level while represented 0.96% losses on the day mainly due broad-based U.S. dollar on-going strength, supported by the combination of factors. On the other hand, the reason behind the currency pair declines could also be associated with the rising fears of a no-deal Brexit, which joined the on-going pessimism around the Cable and contributed to the currency pair losses. At this time, the GBP/USD currency pair is trading at 1.3155 and consolidating in the range between 1.3145 – 1.3267.

The GBP currency took a hit on the 1st-day of the week manly after the British Prime Minister Boris Johnson set October 15 as the deadline for a Brexit trade agreement with the European Union, which eventually bolstered the risk of a messy end to the Brexit transition period on December 31. As per the keywords, “U.K. will be ready to trade with the E.U. on Australia type terms if no deal agreed.” He further added, “If no deal reached by October 15 with the E.U., both sides should accept this and move on. Also, fuel the fears could be the reports that the U.K.

However, the Brexit fears played a major role in weakening the market trading sentiment as the U.S. is on the labor day holiday. Across the pond, the intensifying tensions between the U.S. and China also added a burden around the market trading sentiment. After the U.S. punished Chinese technologies and diplomats by imposing several sanctions, China’s Foreign Ministry urged the U.S. to stop abusing private companies. As per the keywords of China’s Foreign Ministry, “Without evidence, the U.S. has abused national power to take measures on Chinese companies.” This ultimately exerted downside pressure on the trading sentiment and contribute to the currency pair losses.

As in result, the broad-based U.S. dollar flashed green and took the safe-haven bids on the day amid market risk-off sentiment. However, the U.S. dollar gains could also be associated with the upbeat U.S. labor market report, which showed a decline in the unemployment rate and a rise in U.S. Treasury yields. Thus, the gains in the U.S. dollar kept the currency pair under pressure. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies rose by 0.18% to 92.882 by 12:05 AM ET (5:05 AM GMT).

Daily Technical Levels

Support	Pivot	Resistance
1.3109	1.3197	1.3254
1.3052		1.3342
1.2964		1.3398

GBP/USD– Trading Tip

The GBP/USD is trading with a selling bias at 1.3125 level, set to test the support level of 1.3120 level. The Cable is trading within a downward channel, which may extend support at 1.3120 level along with resistance at 1.3186. On the downside, the GBP/USD pair may find support at 1.3051 level upon the violation of the 1.3125 level. The MACD is also supporting selling bias; therefore, we will be looking for selling trades below the 1.3165 level.

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 106.227 after forming a high of 106.503 and 106.055. Overall the movement of the USD/JPY pair remained bullish throughout the day. The pair USD/JPY moved in the upward direction and posted gains on Monday. The currency pair extended its bullish streak for the 5th consecutive day despite the sow job growth in the U.S. and increasing US-China tensions.

The tensions between U.S. & China further escalated on Monday after the U.S. administration of President Donald Trump announced a ban on the usage of products made from cotton from China’s Xinjiang region. The ban was imposed against the human rights violation in Xinjiang over the forced labor on Muslim minorities.

China’s response to such a ban is yet to come, but it is expected that the latest ban would only increase the lingering tensions between both nations. These conditions helped fade the market risk sentiment and capped on additional gains in the USD/JPY pair on Monday. The greenback gathered strength against its rivals on the back of upbeat macroeconomic data released in the previous week. But the pair’s upside momentum was limited after a sharp decline in the major equity indexes in the U.S. that helped the JPY to find demand as safe-haven.

On the data front, at 10:00 GMT, the leading indicators in July rose to 86.9% compared to June’s 83.8%; it failed to impact USD/JPY’s pair prices as it came in line with the forecast. However, traders’ focus has now shifted towards the second quarter Gross Domestic Product (GDP) and Trade Balance data from Japan that will be released on Tuesday. Markets expect the Japanese economy to contract by 8.1% every quarter. Any better than expected reading would give strength to the Asian stock markets and hurt the Japanese Yen that will add further gains in USD/JPY pair.

According to Johns Hopkins University data on the coronavirus front, the total number of coronavirus cases reached 27 million on Monday. These fears kept the risk sentiment under pressure and weighed on the USD/JPY pair’s gains.

However, the risk sentiment was favored by the latest comments from Steven Mnuchin on Sunday. He said that the new stimulus measures’ details would be delivered by the end of this week. He reiterated that the new bill would provide funds to the federal government through the start of December.

The White House and Congress agreed on the same terms to extend the funding, as confirmed by Nancy Pelosi and Steven Mnuchin. The announcement came to avoid the economic shutdown as the current funding was near to expire at the end of this month. These positive comments from Mnuchin raised the risk sentiment and weighed on the Japanese Yen and pushed the USD/JPY pair higher.

Daily Technical Levels

Support	Pivot	Resistance
106.1100	106.2500	106.3800
105.9900		106.5100
105.8500		106.6400

USD/JPY – Trading Tips

The USD/JPY is consolidating at 106.250 area, having a resistance mark of 106.485 level. An upward crossover of 106.505 level may extend further, buying into the next resistance mark of 106.850. On the downside, the safe-haven USD/JPY currency may gain support at 106.028 and 105.628. Let’s consider taking a bullish trade over 106.028 level as the MACD and RSI also suggest neutral bias. Good luck!

Tags Daily Brief, Daily Support and Resistance, EURUSD, Forex, Forex Technical Trading, Fundamental Analysis, GBPUSD, Support and Resistance, Technical Analysis, Technical Outlook, trading, USDJPY

Crypto Market Analysis

Daily Crypto Review, Sept 8 – Peter Schiff Buying More Bitcoin; Investors Keep Buying BTC Despite Downside Potential

Post author By Ilija Rankovic
Post date 8 September, 2020
1 Comment on Daily Crypto Review, Sept 8 – Peter Schiff Buying More Bitcoin; Investors Keep Buying BTC Despite Downside Potential

The cryptocurrency market was quite slow today, with most cryptocurrencies establishing their positions rather than pushing towards upside or downside. Bitcoin is currently trading for $10,329, which represents an increase of 0.64% on the day. Meanwhile, Ethereum lost 2.23% on the day, while XRP lost 0.36%.

Daily Crypto Sector Heat Map

If we take a look at the top100 cryptocurrencies, BitShares gained 9.64% on the day, making it the most prominent daily gainer. Dash (8.35%) and Zcash (5.51%) also did great. On the other hand, the Reserve Rights lost 12.27%, making it the most prominent daily loser. It is followed by Kusama’s loss of 9.38% and Arweave’s loss of 9.26%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level has gone up slightly, with its value is currently at 59.84%, which represents a 0.23% difference to the upside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization has gone up slightly in the past 24 hours. Its current value is $333.24 billion, which represents an increase of $1.71 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin’s price has been holding to the psychological $10,000 support all weekend, trying to stay above it. While the largest cryptocurrency by market cap managed to stay above it, this has been the second day that it couldn’t pass the $10,360 resistance. On top of that, the past 24 hours showed us a much greater spike in volume during a support retest than a resistance test. Lower time frames show that Bitcoin has possibly made a double bottom, which calls for a slightly more bullish scenario.

When it comes to predictions, nothing has changed from yesterday. If the bulls fail to break the $10,360 level soon (and sustain it), the bears will most likely make another attempt to bring the price down. A drop to the 200-day SMA ($9,080) is highly likely. On the other hand, if BTC manages to bounce off the current level and surpass the next one ($10,500), a move to $11,000 is likely. While traders should wait for a bigger move to happen before trading, small profits can be made on sideways-movement trades.

BTC/USD 4-hour Chart

Technical factors:

Price is well below its 50-period, while it is at its 21-period EMA
Price is slightly above middle Bollinger band
RSI has recovered and is neutral (46.38)
Volume is stable

Key levels to the upside Key levels to the downside

1: $10,360 1: $10,015

2: $10,500 2: $9,870

3: $10,850 3: $9,600

Ethereum

Ethereum has broken free from its descending trend as well, with its price consolidating between the $340 and $360 levels. Ethereum tested the $340 level with a strong push towards the downside, but the level held up quite nicely. This may give Ethereum the opportunity to gather its strength and push past the $360 level.

Ethereum’s gas prices have dropped slightly from the highs it reached on Sept 2nd, which may be just enough to push the price slightly up.

Traders should pay attention to how Ether handles the $360 level.

ETH/USD 4-hour Chart

Technical Factors:

The price is slightly below its 21-period and well below its 50-period EMA
The price is right at its middle Bollinger band
RSI is neutral (42.37)
Volume is descending (low)

Key levels to the upside Key levels to the downside

1: $360 1: $340

2: $371 2: $300

3: $400 3: $289

Ripple

XRP has also taken the day to consolidate and establish its presence at the levels it reached after its price plummeted. The third-largest cryptocurrency by market cap is currently trading within the range bound by the $0.235 and $0.2454. The most recent retest of the support level showed that $0.235 will be hard to get through for bears, while the $0.2454, as well as the 21-period moving average, will require a lot more bullish presence to get conquered as well.

XRP traders should either trade within the range or wait for a breakout.

XRP/USD 4-hour Chart

Technical factors:

The price is just under its 21-period, while it’s well below its 50-period EMA
Price is slightly above its middle Bollinger band
RSI is neutral (44.06)
Volume is average

Key levels to the upside Key levels to the downside

1: $0.2454 1: $0.235

2: $0.266 2: $0.227

3: $0.285 3: $0.221

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Market Analysis

Daily F.X. Analysis, September 07 – Top Trade Setups In Forex – Labor Day Holiday!

Post author By Ali B.
Post date 7 September, 2020
1 Comment on Daily F.X. Analysis, September 07 – Top Trade Setups In Forex – Labor Day Holiday!

On the news front, eyes will remain on the U.K. Halifax HPI m/m and European Sentix Investor Confidence figures, but these are hardly expected to drive any market movement today. We may experience a lack of volatility in the market amid the Labor Day holiday in the U.S.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.18370 after placing a high of 1.18652 and a low of 1.17806. Overall the movement of the EUR/USD pair remained bearish throughout the day. The EUR/USD pair dropped on Friday amid the broad-based U.S. dollar strength against Euro as the tensions rose in the market that ECB was uncomfortable with the Euro rise. Another reason included in the fall of the currency pair was the strong US Jobs data and weak German Factory Orders. The decreasing risk sentiment due to increased US-China tensions and the rising number of coronavirus also added in the losses of the EUR/USD pair on Friday.

On Thursday, the U.S. dollar extended its gains as investors started to sell Euro against it because the European Central Bank was worried about the rising prices of local currency. This pushed the U.S. dollar 1.3% upside down the 28-month low level that it hit on Tuesday.

Earlier this week, the Euro touched 1.20 level, and the worries increased in the market that the rise in prices had come too fast and strong for the ECB to like it. These concerns were even confirmed by the ECB policymakers that reportedly warned that if the Euro kept increasing, it would weigh on the exports and drag down the prices and eventually increase the need for more monetary stimulus. These concerns also followed the remarks from ECB Chief Economist Philip Lane, who said that the exchange rate does matter for the monetary policy. It weighed on Euro and ultimately dragged the EUR/USD pair on the downside.

On the data side, the German Factory Orders in July were released at 11:00 GMT that decreased to 2.8% from the projected 5.1% and weighed on Euro that added pressure on EUR/USD pair. At 11:45 GMT, the French Government Budget Balance in July reported a deficit of -151.0B compared to June’s 124.9B.

From the U.S. side, the Average Hourly Earnings in August was increased to 0.4% from the forecasted 0.0% and supported the U.S. dollar. The Non-Farm Employment Change remained flat with the expectations of 1371K. In August, the Unemployment Rate also dropped to 8.4% against the forecasted 9.8% and supported the U.S. dollar that added further pressure on EUR/USD pair.

Furthermore, the fading risk sentiment also added in the EUR/USD pair’s losses as the escalating US-China tensions weighed on market sentiment. The Chinese government stopped renewing press credentials for foreign journalists working for American press organizations in China. China has also said that it will proceed with removals if the Trump administration takes any further action against Chinese media employees in the U.S.

Meanwhile, the coronavirus cases in Europe rose again and jumped back to the figures recorded in mid-March, the time of disease peak across the continent. Spain saw the highest daily cases since April and recorded 8959 cases in just 24 hours. Spain is one of the hardest-hit European countries by the coronavirus pandemic, with 488,513 cases. These pandemic related tensions also kept the risk sentiment under pressure that weighed on local currency and added the EUR/USD pair’s losses.

Daily Technical Levels

Support	Pivot	Resistance
1.1828	1.1838	1.1844
1.1821		1.1855
1.1811		1.1861

EUR/USD– Trading Tip

The EUR/USD bounced off over the support level of 1.1795, and now it’s heading further higher until the next target of 1.1890. The pair may find an immediate resistance at 1.1860 level. Conversely, the EUR/USD may find support at 1.1808 and 1.1780 levels. We can expect choppy trading today amid U.S. bank holidays in the wake of labor day. Neutral bias prevails in the market today.

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.32820 after placing a high of 1.33189 and a low of 1.31754. Overall the movement of the GBP/USD pair remained flat throughout the day. The GBP/USD pair dropped to 6-days lowest level on Friday after the release of dismal PMI data from Britain and more stimulus hopes from the U.K. Another factor involved in the GBP/USD pair’s downward momentum was the increased risks of no-deal Brexit.

On Friday, the British Pound fell and posted weekly losses for the first time in the month as experts warned that any potential recovery could get limited by the threats of no-deal Brexit. The recent success of the British Pound was partly due to the U.K. government’s success in preventing a second wave of coronavirus. However, the fears that the virus could return and could persist for a very long period as long as it is not contained in Europe weighed on GBP. The number of cases in European countries increased day by day, and it has also kept the GBP/USD pair.

Furthermore, the end of the Brexit transition period is near, and it has also brought the risk of a no-deal Brexit more into focus. No-deal has been reached so far, and in case of no-deal, the U.K. would trade with the E.U. on World Trade Organization rules from next year onward. It could affect both sides in real economic terms but above all for the British economy. It is because the European Union is the largest trading partner of the United Kingdom. These Brexit tensions also weighed on local currency and kept the GBP/USD pair under pressure on Friday.

Meanwhile, the monetary policy also offered reasons for caution on the British Pound after the Bank of England monetary policy committee members, including Governor Andrew Bailey, suggested negative interest rates could have a role play in the recovery of the economy. These dovish comments from BoE’s governor weighed on the local currency that dragged the pair GBP/USD towards the six days lowest level at the ending day of the week.

On the data front, at 13:30 GMT, the Construction PMI from Great Britain in August reported a decline to 54.6 from the anticipated 58.5 and weighed on the Sterling that ultimately weighed on GBP/USD pair. Whereas from the U.S. side, the Unemployment rate decreased to 8.4% from the projected 9.8%, and the Average Hourly Earnings rose to 0.4% against the estimated 0.0% and supported the U.S. dollar.

The weak Sterling and the strong Greenback played an important role in pushing the GBP/USD pair downward. Furthermore, On Friday, the interest-rate-setter of Bank of England, Micheal Saunders, said that it was possible that more stimulus would be needed for the U.K.’s economy that has been hit by the pandemic. This need for more stimulus confirmed by an official BoE’s member raised the concerns of recovery and weighed on the local currency and added pressure on GBP/USD pair.

Daily Technical Levels

Support	Pivot	Resistance
1.3231	1.3257	1.3274
1.3214		1.3300
1.3188		1.3317

GBP/USD– Trading Tip

The GBP/USD is trading with a selling bias at 1.3205 level, set to test the support level of 1.3168 level. The Cable is trading within a downward channel, which may extend support at 1.3175 level along with resistance at 1.3265. On the downside, the GBP/USD pair may find support at 1.3086 level upon the violation of the 1.3172 level. The MACD is also supporting selling bias; therefore, we will be looking for selling trades below the 1.3250 level.

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 106.184 after placing a high of 106.551 and a low of 106.000. Overall the movement of the USD/JPY remained flat yet bullish throughout the day. The USD/JPY pair extended its bullish streak for the 4th consecutive day and rose to a high of 106.5 level on Thursday on positive U.S. jobless claims and services PMI data. However, the pair failed to remain higher and lost most of its daily gains in the late session as the Japanese Yen found demand as a safe-haven.

The U.S. stock market slipped sharply during last week, with S&P 500 and the Nasdaq Composite indexes down by 3.5% and 5.05%. The fall in equities was caused by the lack of progress in the next coronavirus stimulus package by the U.S. government and overdue correction.

Moreover, the US-Treasury yields for the 10-year note lost almost 5%, and the U.S. Dollar Index stayed in the positive territory near 92.8 level as the greenback continued to perform higher against its risk-sensitive rival currencies and helped the USD/JPY to limit its fall in the second session.

On the data front, at 17:30 GMT, the Unemployment Claims from last week were dropped to 881K from the projected 955K and supported the U.S. dollar that added further gains in the USD/JPY pair.

The Revised Non-farm Productivity for the quarter raised to 10.1% from the forecasted 7.3% and weighed on the U.S. dollar. The Revised Unit Labor Costs for the quarter declined to 9.0% from the anticipated 12.0% and pressured on the U.S. dollar. The Trade Balance in July showed a deficit of 63.6B against the expectations of 58,2B deficit and weighed on the U.S. dollar. At 18:45 GMT, the Final Services PMI for August rose to 55.0 from the expected 54.8 and supported the U.S. dollar that added strength in the USD/JPY pair. At 19:00 GMT, the ISM Non-Manufacturing PMI remained flat with the expectations of 47.0 and had almost no effect on the U.S. dollar.

The decrease in Unemployment claim benefits and rise in Final Services PMI gave a push to U.S. dollar and USD/JPY pair gains on Thursday.

On the coronavirus front, 25.8 million people have been reported to be diagnosed from coronavirus globally. Almost 17 million people have been reported to be recovered, while more than 850,000 have reported as dead. On Wednesday, after easing the pandemic restrictions, India reported more than 78000 cases in a single day and surpassed the U.S. for a daily case record of coronavirus.

Australia saw the biggest drop in GDP for the quarter and was pushed into recession for the first time since 1991 amid a pandemic crisis and its effect on the economy. These lingering concerns over the coronavirus kept the safe-haven demand for Japanese yen on board and limited the USD/JPY pair’s gains.

Daily Technical Levels

Support	Pivot	Resistance
106.2400	106.2800	106.3500
106.1700		106.3900
106.1300		106.4600

USD/JPY – Trading Tips

Tags Daily Brief, Daily Support and Resistance, EUR-USD, EURUSD, Forex, Fundamental Analysis, GBP-USD, GBPUSD, Technical Analysis, Technical Outlook, USDJPY

Forex Fundamental Analysis

What Is GDP Annual Growth Rate & What Impact It Has On The Forex Price Charts?

Post author By Reddy Shyam Shankar
Post date 7 September, 2020
No Comments on What Is GDP Annual Growth Rate & What Impact It Has On The Forex Price Charts?

Introduction

Apart from inflation, gross domestic product growth is one of the most closely monitored macroeconomic statistics. This interest in the GDP growth rate is because GDP is one of the leading indicators of economic health in any country. Therefore, apart from understanding how the GDP growth rate impacts a nation’s economy, forex traders must comprehend how it affects the exchange rate.

Understanding the GDP Annual Growth Rate

GDP: A country’s gross domestic product is the monetary measure of the entirety of goods and services that have been produced within an economy over a specific period. The formula for calculating the GDP for a country is summing up the households’ consumption expenditure, expenditure by the national government, spending by businesses, and the net value of exports. The fact that the GDP covers the entire expenditure within an economy makes it a robust leading indicator of economic health.

GDP Growth Rate: The measure of how the various components in an economy are changing over a given period is the GDP growth rate. The GDP growth rate shows how much a country’s economy has expanded or shrunk relative to the previous period. Thus, the GDP growth rate is the primary measure of how well or poorly an economy is performing.

GDP Annual Growth Rate: The GDP growth rate is calculated every quarter. However, the annual growth rate measures the change in the real GDP between a given quarter and a similar quarter in the previous calendar year. While the QoQ GDP growth rate gives a more recent picture of how the economy is fairing, the annual growth rate is necessary to indicate the longer-term trajectory of the economy.

How the GDP Annual Growth Rate is Measured

It is worth noting that the GDP annual growth rate is calculated using the “real” GDP, meaning that the GDP has been adjusted for inflation. This adjustment is made to ensure the effects of inflation do not result in a false sense of economic progression. There are two ways of determining the GDP annual growth rate.

The first one is by annualising the QoQ GDP growth rate. Annualising means converting the short term QoQ GDP growth rate into an annual rate.

Annualised GDP growth rate = (1 + QoQ GDP)⁴– 1

The second method for calculating the annual GDP growth rate is by comparing the rate of change from a given quarter with that of the same quarter in the previous year.

YoY GDP growth = (Current quarter GDP/ Similar Quarter's GDP – previous year) – 1

How the GDP Annual Growth Rate can be used for analysis

Economists track the GDP growth rate not just because it shows the current state of the economy but because it the primary objective of fiscal and monetary policy formulation. The annual GDP growth rate shows a long-term trajectory of the economy. It provides an effective measure to compare the sizes of economies of different countries.

Governments and central banks formulate their policies around the GDP growth numbers. When the YoY GDP is falling, expansionary monetary and fiscal policies that will be implemented. A falling GDP is an indicator that the economy is heading to higher levels of unemployment; reduced wages; and a general reduction in aggregate demand and supply. Therefore, to avoid recession, expansionary policies like a reduction in interest rates are introduced. These measures are reducing the cost of borrowing, which in turn leads to increased expenditure by households, businesses, and the government.

Conversely, a rapidly increasing growth rate of the annual GDP signifies that the economy is performing well. This economic prosperity translates to a higher rate of employment, higher wages; increased levels of investment and re-investments; and higher aggregate demand and supply within the economy. However, although an increasing GDP is good, a rapidly increasing annual growth rate could forebode an overheating economy.

An overheating economy is one that is experiencing an unsustainable period of prolonged economic growth. This prolonged growth risks high levels of runaway inflation in the economy due to the continually rising wages. More so, an overheating economy results in inefficient allocation of the factors of production since producers oversupply the economy to take advantage of the higher prices. These inefficiencies are likely to result in a nationwide economic recession.

To prevent the effects of an overheating economy, the government and central banks will implement contractionary monetary and fiscal policies. They include a reduction in government expenditure and increasing the interest rate. These policies will help slow down the rate of inflation and increase the cost of borrowing, effectively reducing the aggregate demand.

Therefore, the YoY GDP growth rate provides an important metric for the relevant authorities to ensure that the economy is progressing at a sustainable pace. Furthermore, it is a way for the governments and central banks to gauge the effectiveness of the policies put in place.

Impact on Currency

Forex traders keenly follow the changes in fundamental economic indicators to establish whether there will be a future hike or cut in the interest rate. A falling annual GDP growth rate is accompanied by expansionary monetary policies such as a reduction of the interest rate. This cut tends to depreciate a country’s currency. Therefore, a falling annual GDP growth rate is negative for the currency.

Conversely, an increasing annual GDP growth rate forestalls an increase in the interest rate to prevent runaway inflation. Therefore, it is expected that a rising annual GDP growth rate leads to the appreciating of the currency.

Sources of the GDP Annual Growth Rate

The statistics on global GDP annual growth rate can be accessed at Trading Economics and The World Bank.

How GDP Annual Growth Rate Data Release Affects The Forex?

This analysis will focus on the annual GDP growth rate in Australia. The most recent data release was on September 2, 2020, at 1.30 AM GMT and can be accessed at Forex Factory here. A more in-depth review of the data release can be accessed from the Australia Bureau of Statistics.

The screengrab below is of the annualised QoQ GDP growth rate from Forex Factory. On the right of the image is a legend that indicates the level of impact it has on the AUD.

As can be seen, both the annualised QoQ GDP growth rate data is expected o result in a high impact on the AUD.

In the 2nd quarter of 2020, the Australian economy contracted by an annualised rate of 7% compared to a 0.3% contraction in the first quarter. This contraction was worse than analysts’ expectation of 6%. This contraction is expected to depreciate the AUD relative to other currencies.

Let’s now analyse the impact made by this release on the Forex price charts of a few selected pairs.

AUD/USD: Before Annualised QoQ GDP Growth Rate Release on 
September 2, 2020, Just Before 1.30 AM GMT

From the above 15-minute chart, the AUD/USD pair was trading in a neutral trend before the data release. This trend is evidenced by candles forming just around an already flat 20-period Moving Average. However, 30 minutes to the news release, the pair adopted a steep downtrend forming two long bearish candles with the 20-period MA falling.

AUD/USD: After the Annualised QoQ GDP Growth Rate Release on 
September 2, 2020, at 1.30 AM GMT

After the data release, extreme volatility is observed. As expected, the pair forming a long 15-minute bearish candle due to the weakening AUD. The 20-period MA continued to fall steeply even though the pair started recovering from the worse than expected data release. Subsequently, the steepness of the 20-period MA subsided.

GBP/AUD: Before Annualised QoQ GDP Growth Rate Release on 
September 2, 2020, Just Before 1.30 AM GMT

The GBP/AUD pair traded in a similar pattern as observed with the AUD/USD pair before the annualised GDP data release.

GBP/AUD: After the Annualised QoQ GDP Growth Rate Release on 
September 2, 2020, at 1.30 AM GMT

As expected, after the news release, the pair formed a long 15-minute bullish candle due to the weakening AUD. As with the AUD/USD pair, the GBP/AUD pair underwent a period of correction with the 20-period MA flattening and the subsequent candles forming lower than the news candle.

EUR/AUD: Before Annualised QoQ GDP Growth Rate Release on 
September 2, 2020, Just Before 1.30 AM GMT

EUR/AUD: After the Annualised QoQ GDP Growth Rate Release on 
September 2, 2020, at 1.30 AM GMT

Like the other pairs, the EUR/AUD pair traded within a neutral trend with a significant shift in the trend immediately before the GDP data release. Like the GBP/AUD pair, the EUR/AUD pair formed a long 15-minute bullish candle after the news release due to the worse than expected data.

Bottom Line

The above analyses have shown that the GDP annual growth has a significant effect on price action. The period of relative market inactivity before the data release indicates that most forex traders avoid opening any new, significant positions until the data is released.

Tags Annual Growth, Education, Forex, Forex Fundamentals, Fundamental Analysis, GDP Annual, GDP Annual Growth Rate, Gross Domestic Product, Growth Rate, trading

Crypto Market Analysis

Daily Crypto Review, Sept 7 – Peter Schiff: “I Was Wrong About Bitcoin”; Bitcoin Facing $9,000 or Recovering?

Post author By Ilija Rankovic
Post date 7 September, 2020
1 Comment on Daily Crypto Review, Sept 7 – Peter Schiff: “I Was Wrong About Bitcoin”; Bitcoin Facing $9,000 or Recovering?

The cryptocurrency market has been trying to establish its position after the pullback that happened on Wednesday and Thursday. Bitcoin is currently trading for $10,260, which represents a decrease of 1.34% on the day. Meanwhile, Ethereum recovered from its big drop and gained 7.3% on the day, while XRP gained 2.67%.

Daily Crypto Sector Heat Map

When taking a look at the top100 cryptocurrencies, SushiSwap gained 79.68% on the day, making it the most prominent daily gainer. UMA (31.22%) and Flexacoin (26.59%) also did great. On the other hand, the HedgeTrade lost 20.50%, making it the most prominent daily loser. It is followed by Hyperion’s loss of 15.70%. The rest of the market was either in the green or lost sub-1% of its value.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level has gone up slightly, with its value is currently at 59.61%, which represents a 0.32% difference to the upside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization has gone down slightly in the past 24 hours. Its current value is $331.58 billion, which represents a decrease of $3.07 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

After failing to break the $12,000 mark, BTC bears have taken over the market, causing the price to plummet, reaching as low as $10,000. The largest cryptocurrency by market cap took the weekend to consolidate and establish its presence above $10,000. However, the $10,360 resistance level proves its strength once again, making Bitcoin’s rebound towards the upside that much harder.

If the bulls fail to break the $10,360 level and sustain it, the bears will most likely make one more attempt to bring the price down. In this case, a drop to the 200-day SMA ($9,080) is likely. However, if BTC manages to bounce off the current level and rise above $10,500, a move to $11,000 is likely.

Traders should pay close attention to Bitcoin’s price movement around the $10,360 level, as the next move will determine its short-term future.

BTC/USD 4-hour Chart

Technical factors:

Price is well below its 50-period and 21-period EMA
Price is at its middle Bollinger band
RSI is recovering from being in the oversold territory (38.77)
Volume is descending (from extremely high)

Key levels to the upside Key levels to the downside

1: $10,360 1: $10,015

2: $10,500 2: $9,870

3: $10,850 3: $9,600

Ethereum

Ethereum had a similar weekend as Bitcoin, as its price consolidated and tried to establish itself above the most recent low of $310. While its price did get stuck at the $360 resistance level, it increased in value much more than Bitcoin, most likely due to the growing popularity of DeFi.

With all being said, Ethereum’s short-term future will be decided by the popularity of DeFi and the problems it will encounter with extremely high Gas fees.

Traders should pay attention to how ETH handles the $360 level.

ETH/USD 4-hour Chart

Technical Factors:

The price is well below its 21-period and 50-period EMA
The price is near its middle Bollinger band
RSI is neutral and recovering from being oversold (40.82)
Volume is descending (from high)

Key levels to the upside Key levels to the downside

1: $371 1: $360

2: $400 2: $340

3: $415 3: $300

Ripple

While XRP suffered the same fate as Bitcoin and Ethereum in terms of price movement, the third-largest cryptocurrency by market cap did have slight differences in the move towards the downside. XRP had several bull comebacks that tried to push the price back up, but failed due to the overall bearishness of the market.

XRP is now consolidating between the $0.235 and $0.2454, with low volume and no signs of future movement (unless the technicals change drastically).

XRP traders should watch out for any form of break of the immediate support/resistance levels.

XRP/USD 4-hour Chart

Technical factors:

The price is well below its 21-period and 50-period EMA
Price is near its middle Bollinger band
RSI is recovering from being oversold (40.84)
Volume is low (back from elevated)

Key levels to the upside Key levels to the downside

1: $0.2454 1: $0.235

2: $0.266 2: $0.227

3: $0.285 3: $0.221

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Fundamental Analysis

What is Producer Prices Change and what should you know about it?

Post author By Reddy Shyam Shankar
Post date 4 September, 2020
No Comments on What is Producer Prices Change and what should you know about it?

Introduction

For forex traders, the producer prices change come as an afterthought. The changes in the prices of the output by domestic producers is a vital macroeconomic indicator since it is considered a leading indicator of inflation. Therefore, understanding how these changes impact the economy, the rate of inflation, and the currency can be useful to forex traders.

Understanding Producer Prices Change

Producer prices change in the United States is measured using the producer price index (PPI). The PPI is a weighted index that measures the change in the price of finished goods and services sold by producers.

The consumer price index is the most cited metric for measuring inflation. However, PPI can be used as a measure of inflation; because it tracks the changes in prices from the perspective of producers. CPI tracks price changes from the consumers’ perspective. Therefore, PPI can be used as the foremost tracker of inflation since it measures the changes in the prices of output before it is distributed to the consumers. PPI can be considered to the purest change in the prices of output since it does not include the changes caused by sales taxes and mark-ups by retailers. Hence, PPI is predictive of the CPI, as shown by the correlation in the chart below.

Source: St. Louis FRED

Since the PPI does not represent the general and final changes in the prices of goods and services in an economy, it is regarded as a weak economic indicator in the forex market.

How PPI is measured

Although the PPI is quoted as the change in the price of the producers’ output, it is measured in three distinct stages based on the level of production. They include the PPI Commodity Index, which measures the changes in the price of input materials, PPI Processing Index, which measures the changes in the price of intermediate goods, and Core PPI, which measures the finished output.

It is worth noting that the prices of food and energy are considered to be highly volatile and are therefore not included in the computation of the core PPI. This omission is justified by the fact that their prices are reliant on the short term supply and demand, which makes it difficult to compare these prices in the long-run.

As mentioned earlier, PPI is a weighted index. Weighting means the size and importance of the items sampled are used. The changes in prices compared to those of 1982 as the base year.

How can the PPI be used for analysis?

The inflation data is among the most-watched economic indicators because the rate of inflation informs the monetary and fiscal policies in a country. Being a leading indicator for the CPI, the PPI serves an important role. This role is precipitated by the fact that inflation is one of the primary drivers of monetary and fiscal policies.

Rising inflation signifies the availability of cheap money, which encourages spending and investments. The Federal Reserve then raises interest rates to reduce the amount of money in circulation. At higher interest rates, borrowing money becomes expensive hence reducing consumption. Similarly, it becomes lucrative for households to save money since they earn more. Postponing consumption tends to reduce the amount of money I circulation hence lower rates of inflation.

Inarguably, low rates of inflation result in a stagnant economy. Although inflation is good for the economy, when it gets out of hand, it results in a rapid depreciation of a country’s currency. It is for this reason that the central banks use interest rate policies to set the desired maximum and minimum inflation rate. In the US, for example, the Federal Reserve has set the country’s inflation target at an average of 2%.

An increase in the PPI signifies that the overall rate of the CPI will also increase. This increase will reduce the purchasing power of the country’s currency since the same amount of money will afford a lesser quantity of goods and services. Therefore, an increasing rate of inflation encourages consumption within an economy because savers will be afraid that their money will lose value.

This increased consumption leads to growth within an economy. Conversely, a decreasing PPI signifies that the overall inflation is likely to reduce. This reduction, in turn, encourages people to save their money hence reducing the rate of consumption in an economy.

Inflation can result in a feedback loop. Hence, rising inflation will encourage more expenditure and investment in an economy leading to further inflation. This feedback loop occurs when savers opt for consumption to avoid the depreciation of their money; this, in turn, increases the amount of money in circulation, which causes the purchasing power of money even to reduce further.

Impact on Currency

The end goal for any forex trader is to establish whether a change in any fundamental indicator will lead to an interest rate hike or cuts. This anticipation is what primarily impacts the price action in the forex market.

A rising PPI signifies rising inflation, which would be accompanied by an increase in the interest rates. Since the increasing interest rate is good for the currency, an increase in PPI results in appreciation of the currency relative to others.

Conversely, dropping levels of PPI signifies that the overall rate of inflation will fall. Therefore, a steadily dropping PPI forestall a drop in the interest rate. Therefore, decreasing levels of PPI leads to a depreciating currency.

Sources of Producer Price Changes

The producer price changes data can be accessed from the US Bureau of Labor Statistics, along with the monthly updates. A comprehensive look into the US PPI data can also be accessed from St. Louis FRED website. Statistics on global producer price changes can be accessed at Trading Economics.

How PPI Data Release Affects The Forex Price Charts

The most recent PPI data was released on August 11, 2020, and can be seen at Forex factory here. A more in-depth review of the PPI report from the Bureau of Labor Statistics can be accessed at the BLS website.

As can be seen, both the monthly PPI and core PPI data are expected to have a high impact on the USD upon release.

The screengrab below shows the most recent changes in the MoM PPI and core PPI in the US. In July 2020, the monthly PPI increased by 0.5% compared to a 0.3% decrease in June. The core PPI increased by 0.6% in July compared to a 0.2% decrease in June. Both changes in the MoM PPI and core PPI were better than analysts’ expectations of 0.1% and 0.3% increase, respectively.

Now, let’s see how this release made an impact on the Forex price charts of a few selected pairs.

EUR/USD: Before Monthly PPI Release on August 11, 2020, 
Just Before 8.30 AM ET

As can be seen from the above 15-minute chart of EUR/USD, the pair was on a steady uptrend before the release of PPI data. This trend is evidenced by candles forming above the steeply rising 20-period MA. However, 30 minutes before the release, the steady uptrend tapered with the 20-period MA peaking.

EUR/USD: After Monthly PPI Release on August 11, 2020, 
at 8.30 AM ET

After the PPI data release, the pair formed a 15-minute bullish candle followed by a period of volatility. The pair later adopted a bearish trading pattern with the 20-period MA steadily sloping downwards, showing that the USD became stronger as expected.

Now let’s see how this news release impacted other major currency pairs.

GBP/USD: Before Monthly PPI Release on August 11, 2020, 
Just Before 8.30 AM ET

Before the news release, the GBP/USD pair showed a similar steady uptrend as observed with the EUR/USD pair. As seen above, the 20-period MA is steeply rising with candles forming above it.

GBP/USD: After Monthly PPI Release on August 11, 2020, 
at 8.30 AM ET

After the PPI release, the pair formed a 15-minute bullish “hammer” candle. As with the EUR/USD, the pair subsequently reversed the uptrend and traded in a steady downtrend, the 20-period MA sloping downwards.

AUD/USD: Before Monthly PPI Release on August 11, 2020, 
Just Before 8.30 AM ET

AUD/USD: After Monthly PPI Release on August 11, 2020, 
at 8.30 AM ET

Unlike the strong uptrend observed with the EUR/USD and GBP/USD pairs, the AUD/USD pair traded in a weak uptrend before the PPI data release. This trend is evidenced by candles forming just around the slightly rising 20-period MA. After the news release, the pair formed a 15-minute “bearish Doji” candle signifying a period of volatility. The pair subsequently reversed the trend adopting a steady bearish stance with the 20-period MA sloping downwards.

Bottom Line

Although the PPI is a relatively low impact fundamental indicator compared to the CPI, this analysis has proved that its release has a significant impact on the price action. Forex traders should avoid having any significant positions open before the release of the PPI.

Tags Education, Forex, FRED, Fundamental Analysis, Macro Economic Indicators, Macro Economics, PPI, Producer Price Index, Producer Prices Change, trading

Crypto Market Analysis

Daily Crypto Review, Sept 4 – Bitcoin at $10,000: What Happened? Detailed Price Level Analysis

Post author By Ilija Rankovic
Post date 4 September, 2020
1 Comment on Daily Crypto Review, Sept 4 – Bitcoin at $10,000: What Happened? Detailed Price Level Analysis

The cryptocurrency market has been decimated after Bitcoin plummeted below $11,000. Bitcoin is currently trading for $10,260, which represents a decrease of 10.02% on the day. Meanwhile, Ethereum lost 12.07% on the day, while XRP lost 9.21%.

Daily Crypto Sector Heat Map

When taking a look at the top100 cryptocurrencies, TRON gained 15.35% on the day, making it the most prominent daily gainer. Celo (13.98%) and ZB Token (8.75%) also did great. On the other hand, the Ampleforth lost 33.29%, making it the most prominent daily loser. It is followed by Sushi Swap’s loss of 32.41% and DFI. Money’s drop of 32.28%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level has gone up slightly, with its value is currently at 59.29%, represents a 0.67% difference to the upside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization has plummeted in the past 24 hours. Its current value is $334.65 billion, which represents a decrease of $39.74 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

After failing to break the $12,000 mark, Bitcoin bears have taken over the market and the price plummeted, reaching as low as $10,000. While it was true that many people were bullish and called for a bull market, Bitcoin’s continuous failed attempts to break $12,000 took its toll and started a short-term bear trend that could reach $9,600 at some point.

There are many reasons that caused Bitcoin (and the rest of the crypto market) to plummet, mainly the US traditional market, DeFi, miners as well as traders.

The US S&P 500 index pulled back on Thursday after reaching record highs just earlier this week. This happened because of a US report showing jobless claims of over 881,000 in August. While this number was, in fact, better than expected, it is still much larger than the one that the US saw during the 2009 recession high-point (665,000). Bitcoin is not completely uncorrelated from the traditional markets and has most likely reacted slightly to this news.
While the DeFi craze is continuing, many believe that the fact that people are locking billions of dollars worth of Bitcoin may cause any form of market manipulation or influx of buyers/sellers much more significant due to reduced supply in circulation. It is also not implausible that DeFi is in a bubble (even some DeFi project leaders/creators such as Yearn Finance’s Andre Cronje say it), and that this is a form of a bubble “pop”.
Miners and traders gathered up to sell Bitcoin at the $12,000 mark, which triggered this crash. Miners tried to secure their profits and play it safe, and traders most likely did the same, as they saw strong resistance sitting at the $12,000 level. All of the big mining pools saw large BTC outflows from the wallets, incidacting a market play with the intention to take profits and secure gains.

Traders should pay attention to Bitcoin’s price movement around $10,090 and $10,400.

BTC/USD 4-hour Chart

Technical factors:

Price is well below its 50-period and 21-period EMA
Price is just above its lower band
RSI is deep in the oversold territory (21.56)
Volume is elevated

Key levels to the upside Key levels to the downside

1: $10,360 1: $10,015

2: $10,500 2: $9,870

3: $10,850 3: $9,600

Ethereum

Ethereum had a similar day to Bitcoin, with its price plummeting and reaching as low as $371. The second-largest cryptocurrency by market cap tried to break the downward pressure after dropping below $445. It quickly bounced off of $415 and pushed towards the upside. However, the $445 level was now resistance, and after a failed attempt to break it, ETH moved further down.

Ethereum is now in its consolidation/recovery stage near $380.

Traders should pay attention to any influx in volume as well as how ETH handles $415.

ETH/USD 4-hour Chart

Technical Factors:

The price is well below its 21-period and 50-period EMA
The price is just above the lower band
RSI is in the oversold territory (28.35)
Volume is descending (from extremely high)

Key levels to the upside Key levels to the downside

1: $400 1: $371

2: $415 2: $360

3: $445

Ripple

XRP was no exception when it comes to today’s price movement. The third-largest cryptocurrency by market cap plummeted and reached as low as $0.238 before starting to recover. The price is now recovering at the $0.2454 support level, which is (at the moment) contested. It is still unsure of whether XRP will end up above or below it, so traders should watch out to a breakout to any side.

XRP/USD 4-hour Chart

Technical factors:

The price is far below its 21-period and 50-period EMA
Price is at its lower band
RSI is in the oversold area (29.09)
Volume is above average

Key levels to the upside Key levels to the downside

1: $0.266 1: $0.2454

2: $0.285 2: $0.235

3: $0.31 3: $0.227

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Market Analysis

Daily F.X. Analysis, September 04 – Top Trade Setups In Forex – Brace for U.S. NFP Figures!

Post author By Ali B.
Post date 4 September, 2020
1 Comment on Daily F.X. Analysis, September 04 – Top Trade Setups In Forex – Brace for U.S. NFP Figures!

On the news front, the eyes will be on the U.S. ADP Non-farm payroll figures, which may drive price action during the New York session today. Besides, the U.S. Crude Oil Inventories will remain in highlights as economists expect a slight draw in U.S. oil stocks that may drive buying in WTI crude oil.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.18513 after placing a high of 1.18644 and a low of 1.17888. Overall the movement of the EUR/USD pair remained flat yet bullish throughout the day. After dropping for two consecutive days, the EUR/USD pair extended its losses in the first half of the day but reversed its direction and started posting gains in the late trading hours.

After reaching a 2-years peak level, the EUR/USD pair saw subsequent profit-taking that weighed on its prices and dragged it down. However, on Thursday, the pair’s extra downside pressure was due to the strong U.S. dollar amid better than expected economic data.

The Unemployment Claims from the United States last week dropped to 881K from its previous forecast of 955K and supported the U.S. dollar. The less unemployment claim benefits mean more people rejoined their jobs during the last week in the U.S. and raised hopes for a quick economic recovery.

Moreover, from the European side, at 12:15 GMT, the Spanish Services PMI in August dropped to 47.7 from the forecasted 48.0 and weighed on the shared currency Euro. At 12:45 GMT, the Italian Services PMI for August also dropped to 47.1 from the expected 49.4 and weighed on Euro. AT 12:50 GMT, the French Final Services PMI dropped to 51.5 from the projected 51.9 and weighed on Euro.

However, at 12:55 GMT, the German Final Services PMI rose to 52.5 from the expected 50.8and supported Euro. At 13:00 GMT, the Final Services PMI for the whole bloc in August also rose to 50.5 and showed an expansion against the expectations of 50.1 and supported the Euro that added further in the EUR/USD pair’s gains. At 14:0 GMT, the Retail Sales data from Eurozone dropped to -1.3% in July against the anticipated 1.3% and weighed heavily on Euro.

Most data from Europe on Thursday came in against the local currency and took the pair EUR/USD to its five days lowest level on Thursday. However, in the late trading session, the pair managed to reverse its track and started posting gains. On the other hand, on Thursday, a survey showed that the Eurozone’s rebound from its deepest economic downturn was weakened in August as some countries in the E.U. suffered more than others from the restrictions imposed to curb the spread of the virus.

On Thursday, France’s government detailed its 100 billion euro stimulus plan to erase the coronavirus crises’ economic impact over two years. The billions of euros were lined up in public investments, subsidies, and tax cuts. This added pressure on the single currency Euro and the pair dropped in the first session.

Meanwhile, the countries that rely heavily on tourism like Italy, Spain, and Greece saw a large contraction in the services PMI on Thursday as travel restrictions were put in place to stop the coronavirus spread.

Apart from that, the EUR/USD pair was also under pressure on Thursday because of the latest comments from the Chief ECB Economist, Philip Lane, who said that authorities have started to become uncomfortable with the single currency’s recent appreciation. This not only triggered the profit-taking but also hopes for a new stimulus measure from the European Union to ease the rally of EUR currency. However, the pair EUR/USD managed to find support at the ending hours of Thursday’s trading session as the selling pressure was eased ahead of the NFP data from the U.S.

Daily Technical Levels

Support	Pivot	Resistance
1.1802	1.1834	1.1879
1.1757		1.1911
1.1726		1.1956

EUR/USD– Trading Tip

As expected, the EUR/USD bounced off over the support level of 1.1795, and now it’s heading further higher until the next target of 1.1890. The pair may find an immediate resistance at 1.1860 level. Conversely, the EUR/USD may find support at 1.1808 and 1.1780 levels. NFP will determine further price action in the pair.

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.32804 after placing a high of 1.33584 and a low of 1.32424. Overall the movement of the GBP/USD pair remained bearish throughout the day. The British Pound fell for a second straight day on Thursday and threatened to reverse the 3-week winning streak on the Bank of England’s rising expectations of negative interest rates.

Recently, the Governor of Bank of England, Andrew Bailey, has said that the central bank could adopt the worst-case scenario’s negative interest rate policy. The scenario pointed towards the second wave of coronavirus and failure to reach a post-Brexit trade deal with the E.U.

According to Andrew Bailey, the use of negative interest rates would be strong in the worst-case scenario instead of using bond buying or quantitative easing, which are considered the central bank’s preferred tools.

He added that the fears of the second wave of coronavirus affected the recovery pace as the key parts of economy operations were under their normal level. He said that he was worried about the weak economic activity in London.

Bailey also highlighted that there was still a huge amount of uncertainty around the effects that the crisis would have on the economy long term. These concerning comments from bailey weighed on a single currency Pound and kept the GBP/USD pair under pressure on Thursday.

Moreover, the U.S. dollar also played an important role in keeping the currency pair GBP/USD on the downside on Thursday after the release of U.S. Unemployment Claims data.

At 17:30 GMT, the Jobless Claims from last week dropped to 881K from the forecasted 955K and supported the U.S. dollar. At 19:00 GMT, the highly awaited ISM non-Manufacturing PMI remained flat with the expectations of 47.0. The strong U.S. dollar then weighed on GBP/USD pair and extended its previous day losses.

Whereas, from the Great Britain side, at 13:30 GMT, the Final Services PMI for August dropped to 58.8 against the anticipated 60.1 and weighed on single currency Sterling. The already weak Sterling weighed on GBP/USD pair, and the pair posted losses on the day.

On the Brexit front, the E.U. chief negotiator Michel Barnier launched another attack on U.K.’s post-Brexit stance and said that the British government sought to have its cake and eat it. He accused the U.K. of failing to engage constructively in talks on the future relationship. He stressed the need to approve an agreement by the end of October to have time for ratification. Barnier claimed that despite the U.K.’s desire for independence from the E.U., in practice, the U.K. was seeking the status quo but without obligations. Barnier’s comments raised concerns over the Brexit deal and weighed on GBP that dragged the currency pair GBP/USD on the downside.

Daily Technical Levels

Support	Pivot	Resistance
1.3228	1.3293	1.3344
1.3177		1.3409
1.3112		1.3460

GBP/USD– Trading Tip

On Friday, the GBP/USD pair is trading bearish at 1.3308 level, set to test the support level of 1.3168 level. The Cable has already violated an upward trendline at 1.3375 level, which is already violated. On the lower side, the GBP/USD may drop further below 1.3358 until the 1.3263 level. The MACD is also supporting selling bias; therefore, we will be looking for selling trades below the 1.3355 level.

USD/JPY – Daily Analysis

The U.S. stock market dropped sharply on Thursday, with S&P 500 and the Nasdaq Composite indexes down by 3.5% and 5.05%. The fall in equities was caused by the lack of progress in the next coronavirus stimulus package by the U.S. government and overdue correction.

On the data front, at 17:30 GMT, the Unemployment Claims from last week were dropped to 881K from the projected 955K and supported the U.S. dollar that added further gains in the USD/JPY pair.

The decrease in Unemployment claim benefits and rise in Final Services PMI gave a push to U.S. dollar and USD/JPY pair gains on Thursday.

Daily Technical Levels

Support	Pivot	Resistance
105.9300	106.2500	106.5000
105.6800		106.8200
105.3700		107.0700

USD/JPY – Trading Tips

On Friday, the USD/JPY currency pair is trading at 106.077with an immediate resistance level of 106.085 level. Bullish crossover of 106.085 level may drive further buying until the next resistance level of 106.570. On the lower side, the USD/JPY pair may find support at 105.800 and 105.500 levels. Let’s consider buying over 106.100 level as the MACD and RSI also suggest the same. Later today, the eyes will remain on the U.S. NFP figures. Good luck!

Tags EUR-USD, Forex, Forex Trading, Fundamental Analysis, GBP-USD, GBPUSD, Support and Resistance, Technical Analysis, Technical Outlook, Trade Setup, USD-JPY

Forex Signals

AUD/USD Bullish Correction Completed – Brace for Selling!

Post author By Ali B.
Post date 3 September, 2020
No Comments on AUD/USD Bullish Correction Completed – Brace for Selling!

The AUD/USD failed to stop its previous session losing streak and dropped below 0.7300 level due to the broad-based U.S. dollar strength, buoyed by the Tuesday’s better-than-expected U.S. manufacturing data. Also weighing on the currency pair was the downbeat data from Australia and China. On the contrary, the market risk-on sentiment, supported by the vaccine hopes and hopes of further U.S. stimulus, becomes the key factor that helped the currency pair limit its deeper losses.

At the press time, the AUD/USD is currently trading at 0.7302 and consolidating between 0.7297 and 0.7340. Moving on, the currency pair may find some support as the ongoing rally in the U.S. dollar seems to be short-lived as the doubts remain about the U.S. economic recovery amid the weaker than expected ADP report. Australia’s July month Trade Balance registered another fundamental disappointment for the Australian policymakers. Australia’s July month Trade Balance dropped below 5400M flash forecasts and 8202M prior to the data front. Details suggest that the Imports increased past-1.0% to 7.0% while Exports fell to -4.0% from +3.0% prior.

Across the ocean, China’s Caixin Services PMI rose to 54.00 versus 50.4 expected and 54.1 before August. The same push the composite PMI data to 55.1 versus 54.5 prior. As a result of mixed data from the Aussie and China, the AUD/USD currency pair extends its bearish trajectory for the 3rd-day in a row.

However, the reason for the risk-on market sentiment could be associated with the probabilities of further stimulus and hopes of the coronavirus (COVID-19) vaccine, which tends to underpin the perceived risk currency Australian dollar and helps the pair to limit its deeper losses. It is worth reporting that the AstraZeneca continues its final tests for the coronavirus vaccine. Meanwhile, around 76 rich countries, the global policymakers join to help for the vaccine developments and distribution.

On the contrary, the two biggest economies are at loggerheads after the latest headlines concerning additional sanctions on China diplomats by the U.S. Also fueling the tussle could be the reports suggests Beijing’s embassy in America criticized harshly by the U.S. However, these gloomy headlines could also be considered as the key factor that has been weighed on the Aussi pair.

Despite the risk-on market sentiment and downbeat U.S. data, the broad-based U.S. dollar flashing green on the day supported by Tuesday better-than-expected PMI data, which fueled the hopes of the U.S. economy. However, the U.S. dollar’s bullish bias could be short-lived as doubts remain about the U.S. economic recovery amid Wednesday weaker than expected ADP report. However, the gains in the U.S. dollar became the key factor that kept the currency pair lower. Whereas, the U.S. Dollar Index that measures the greenback against a bucket of 6-major currencies rose by 0.03% to 92.977.

Looking ahead, the market traders will keep their eyes on final German and Eurozone PMI readings, which is scheduled for release on the day. As well as, the Friday’s Nonfarm Payrolls (NFP) will also be key to watch. In the meantime, the updates surrounding the fresh Sino-US tussle, this time over the South China Sea, and the coronavirus (COVID-19) updates, could not lose their importance.

The AUD/USD is trading at 0.7317, having violated the double bottom support level of 0.7337 level. Closing of candles below this level may drive sharp selling until 0.7289 and even below this until 0.7275. Conversely, a bullish crossover of 0.7369 may drive intense buying until the 0.7385 level. Bearish bias may dominate today.

Entry Price – Sell 0.7296

Stop Loss – 0.7336

Take Profit – 0.7256

Risk to Reward – 1:1

Profit & Loss Per Standard Lot = -$400/ +$400

Profit & Loss Per Micro Lot = -$40/ +$40

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Tags AUD/USD, Forex Trading Signal, Fundamental Analysis, Support and Resistance, Technical Analysis, Technical Outlook

Forex Videos

The Dollar Index & The COVID 19 Effect!

Post author By Keiran
Post date 3 September, 2020
No Comments on The Dollar Index & The COVID 19 Effect!

https://youtu.be/JJzgfbI9en8

The Dollar Index and the COVID-19 Effect

Thank you for viewing this Forex academy educational video. In this session, we will be looking at the U.S. dollar index and how it has been affected by the global pandemic.

The Dollar Index is also known by the following acronyms, the DXY, or DX, and USDX. The United States dollar is the single largest currency traded in the forex market. The U.S. dollar index is a weighted measurement of the value of the United States dollar against six other currencies, including the euro, the Japanese yen, Australian dollar, the British pound, the Canadian dollar, the Swedish krona, and the Swiss franc. The values of the dollar index or updated every few seconds during normal market trading activity.
If you like to trade any of these pairs, it is advisable that you keep an eye on the U.S. dollar index at all times.

This is a historical 6-month view of the dollar index, and although the pandemic was already starting to escalate in February, the disease was mostly effecting Europe and Asia, and after a move lower, the index climbed to a high of 103.00 just one month later due to its safe-haven status. However, this healthy level for the United States dollar has fallen off since that high to a low of 92.54 at the beginning of August.
This dollar fall has largely been due to the fact that Europe is seen to be recovering from the coronavirus and where governments such as the European Union and the British have been seen to be implementing monetary policies that will be good for the recovery for their respective economies. Also, Australia has handled the pandemic very well and where the infection rates have been quite low in that country.
On the flip side, we have the United States, which is systemically failing in coming to grips with the Corona outbreak, which has been escalated in many of the U.S. states.

While the federal reserve has been wildly applauded for their implementation of quantitative easing and handling of interest rates in reaction to the escalating economic fallout, President Donald Trump has been criticized for not taking the disease seriously enough, and many would say he has had his head in the buried in the sand hoping that it will go away and that much of his rhetoric surrounding that disease is tilted towards the upcoming presidential elections. This had caused the markets to wonder if America will actually get a grip on this horrendous disease, and this had caused market sentiment to shift away from the United States dollar in favor of the other major currencies, which have all pulled back from their lows when Europe was very badly hit back in March.

However, on Friday the 7th of August, the non-farm payroll reports took a little bit of heat of the DXY when it posted jobs growth of 1.76M in the United States for July, which went on to erase some of the concerns about the state of the United States labor market and this gave the dollar index a lift. In fact, it was up 0.6% at 93.40, a 3-day high. But this was still only bouncing off the loads of 7 weeks and straight declines.
While the boot has been firmly put into the U.S. Dollar in the last few months, it is important to remember that one month’s good U.S. jobs figures may not be enough to raise the U.S. dollar index back to its highs in March. The next biggest test will be whether or not the U.S. government can agree on a new pandemic relief package. So far, the democrats and republicans have been at each other’s throats and not being able to come to a successful conclusion on this matter with regard to how much relief is necessary. Watch this space. The outcome will affect the Dollar index.

Tags Education, Forex, Fundamental Analysis, The dollar index, trading

Forex Fundamental Analysis

Understanding The ‘Inflation Rate MoM’ Macro Economic Indicator

Post author By Reddy Shyam Shankar
Post date 3 September, 2020
No Comments on Understanding The ‘Inflation Rate MoM’ Macro Economic Indicator

Introduction

The GDP and Inflation rate are two of the most closely watched macroeconomic statistics by economists, business analysts, investors, traders, government officials, and the general population. The inflation rate has an impact on everyone, and no one is exempt from it. Understanding its effect on the currency, economy, living conditions, and how to use it for our analysis is paramount.

What is Inflation Rate, MoM?

Inflation: The increase in the prices of commodities over time is called inflation. It is the rise in the cost of living over time where the purchasing power of the currency depreciates. Inflation erodes the value of the currency, meaning a unit of currency can procure lesser goods and services than before. Inflation occurs when more currency is issued than the wealth of the country.

Inflation Rate: The percentage increase in price for a basket of goods and services for a particular period is called the inflation rate. It is used to measure the general increase in the cost of goods and services. It is contrasted by deflation, which refers to the appreciation of the currency and leads to decreased prices of commodities. When more currency chases, fewer assets inflation occurs.

Inflation Rate MoM: The general measure of the inflation rate is YoY, i.e., Year-over-Year. It serves as a means to measure how currency has faired over the year against inflation. The rate tells how fastly prices increased. The inflation rates are often low and incremental over time and hence make more sense for a YoY comparison for general use. However, for traders and investors, MoM is more useful for close monitoring to trade currencies.

How can the Inflation Rate MoM numbers be used for analysis?

As inflation continues, the standard of living deteriorates. Inflation is an essential economic indicator as it concerns the standard of living. Hence, it requires much attention to understand and analyze. Inflation can occur due to the following reasons: cost-push inflation, demand-pull inflation, and in-built inflation.

Demand-pull inflation: When too few goods are chased by too much money, we get demand-pull inflation. It is the most common form of inflation. The demand for commodities is so high that people are willing to pay higher prices.

Cost-push inflation: It occurs when there is a limit or constraint on the supply side of the demand-supply equation. A limited supply of a particular commodity makes it valuable, pushing its price higher. It can also occur when the cost of manufacturing or procuring raw materials increase that forces businesses to sell at higher prices.

Built-in inflation: It occurs out of people’s adaptive expectations of future inflation. As prices surge, workers demand higher pay due to which manufacturing costs increase and form a feedback loop. It forms a wage-price spiral as one feeds of another to reach a new higher equilibrium.

Inflation mainly affects middle-class and minimum wage workers as they immediately experience the effects of inflation. Generally, the monthly inflation rates would be less than 1% or 0.00 to 0.20% in general. Such increments can be useful for currency traders to short or long currency pairs by comparing relative inflation rates.

Central authorities are committed to ensuring a low and steady inflation rate throughout. The policies are also drafted to counter inflation or deflation. The central authorities would likely intervene with a loose-monetary policy to inject money into the system and induce inflation when the economy is undergoing a slowdown or deflation. A tight monetary policy (withdrawing money from the economy) would be used to induce deflation to counter hyperinflation.

Impact on Currency

The monthly inflation rates are essential economic indicators for both equity and currency traders. It is an inversely proportional high-impact coincident indicator. An increase in the inflation rate deteriorates currency value and vice-versa. As it has a direct impact on the currency, the volatility induced as a result of significant changes in the inflation rate is also high.

Economic Reports

There are multiple indices to measure the inflation rate. The CPI, Producer Price Index (PPI), Personal Consumption Expenditures (PCE), GDP Deflators are all popular statistics used for measuring inflation in a variety of ways.

The Bureau of Labor Statistics (BLS) of the United States releases the CPI and PPI reports on its official website every month. The GDP Deflator is published by the Bureau of Economic Analysis (BEA) every quarter. The PCE is also published by BEA every month.

Sources of Inflation Rate MoM

BLS publishes the Consumer Price Index (CPI) and Producer Price Index (PPI) on its official website. The data is available in seasonally adjusted and non-adjusted versions, as inflation is also affected by business cycles. A comprehensive and visual representation of these statistics is available on the St. Louis FRED website. The BEA releases its quarterly GDP deflator statistics and monthly Personal Consumption Expenditure (PCE) on its official website for the public. Consolidated statistics of monthly inflation reports of most countries are available on Trading Economics.

How the Monthly Inflation Rate Data Release Affects The Price Charts

For this analysis, we will use the monthly consumer price index (CPI) to measure the rate of inflation. The Bureau of Labor Statistics releases the MoM CPI data in the US. It measures the change in the price of goods and services from the perspective of the consumer. The most recent data was released on August 12, 2020, at 8.30 AM ET and can be accessed at Forex factory here. An in-depth review of the latest CPI data release can be accessed at the BLS website.

The image below shows the most recent changes in the MoM CPI in the US. In July 2020, the US CPI changed by 0.6%, the same increase as that of June.

Now, let’s see how this release made an impact on the Forex price charts.

EUR/USD: Before Monthly CPI Release on August 12, 2020, 
Just Before 8.30 AM ET

From the above 15-minute chart of the EUR/USD, the pair can be seen to be on a steady uptrend before the CPI data release. The 20-period MA in steeply rising with candles forming above it.

EUR/USD: After Monthly CPI Release on August 12, 2020, 
8.30 AM ET

After the data release, the pair formed a long 15-minute bullish candle indicating that the news release negatively impacted the USD. The pair subsequently continued trading in the previously observed uptrend.

Now let’s see how this news release impacted other major currency pairs.

AUD/USD: Before Monthly CPI Release on August 12, 2020, 
Just Before 8.30 AM ET

The AUD/USD pair traded in a subdued uptrend before the data release. The 15-minute candles are forming just around an almost flattening 20-period MA.

AUD/USD: After Monthly CPI Release on August 12, 2020, 
8.30 AM ET

Like the EUR/USD pair, the AUD/USD formed a long bullish 15-minute candle after the news release. Afterwards, the 20-period MA steeply rises as the pair adopted a steady uptrend.

NZD/USD: Before Monthly CPI Release on August 12, 2020, 
Just Before 8.30 AM ET

NZD/USD: After Monthly CPI Release on August 12, 2020, 
8.30 AM ET

Before the data release, the NZD/USD pair traded within a neutral pattern with the 15-minute candles crisscrossing an almost flattening 20-period MA. As observed with the other pairs, the NZD/USD formed a long 15-minute bullish candle after the news release. It subsequently traded in a steady uptrend with the 20-period MA steeply rising.

Bottom Line

In theory, an increasing rate of CPI should be a strong USD, but as observed in the above analyses, a high CPI resulted in a weakening USD. The CPI is often considered a leading indicator for interest rate; hence, a rising CPI is accompanied by a rising interest rate. However, since the US Fed had already indicated that it has no intention of increasing the interest rate, a high CPI implies a depreciating USD. It is, therefore, imperative that forex traders have the Fed’s decision in mind while trading with CPI data.

Tags Education, Forex, Forex Market, Fundamental Analysis, fundamental indicator, fundamentals, Inflation, Inflation rate, Inflation Rate MoM, Macro Economic Indicator, Macro Economics, trading

Forex Market Analysis

Daily F.X. Analysis, September 03 – Top Trade Setups In Forex – A Day Before NFP!

Post author By Ali B.
Post date 3 September, 2020
1 Comment on Daily F.X. Analysis, September 03 – Top Trade Setups In Forex – A Day Before NFP!

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD closed at 1.18542 after placing a high of 1.19286 and a low of 1.18219. On Wednesday, Euro fell sharply against the U.S. dollar as the European Central Bank’s growing expectations will roll out additional stimulus after dismal Eurozone PMI data on Tuesday.

The Eurozone data on the previous day suggested that it had slipped into deflation as the prices of main goods were dropping for the first time in four years. As a result, markets were expecting another round of stimulus package from Europe’s central bank, which raised the European stocks higher.

The central bank’s expectations would unleash a new monetary stimulus, raised the global equities, and added pressure on EUR/USD pair. Expansion in more financial asset purchases is expected from ECB to stimulate the pandemic-stricken economy.

As the European Central Bank meeting is coming next week, some members have raised concerns that the Euro currency was rising sharply, and there was a need for more stimulus package in the economy. According to the ECB’s Chief Economist, Philip Lane, the euro currency levels do matter for monetary policy as a stronger currency generally weighs on export growth and curbs import prices that will lead to a slowdown in inflation.

These growing hopes for a fresh round of stimulus measures from ECB came in just after days the Federal Reserve announced its policy shift to tolerate a rise in inflation from its initial target of 2%. Investors interpreted the Fed’s latest decision as the interest rates will remain lower for longer.

These interpretations were also backed by the New York Federal Reserve President John Williams, who said that even talk of raising interest rates was so far off in the future. The hopes for another round of Europe’s stimulus weighed on the Euro currency and hence paired EUR/USD dropped.

On the data front, at 11:00 GMT, the German Retail Sales in July was dropped to -0.9% from the forecasted 0.5% and weighed on single currency Euro. At 12:00 GMT, the Spanish Unemployment Change in August rose to 29.8K from the expected 10.1K and weighed on the shared currency Euro and dragged EUR/USD pair further on the downside.

At 14:00 GMT, the Producer Price Index from Eurozone for July rose to 0.6% from the forecasted 0.5% and supported the Euro currency. Most of the data came in against shared currency, and hence EUR/USD pair suffered losses on Wednesday.

Meanwhile, from the U.S. side, the ADP Non-Farm Employment Change came in as 428K against the expected 1250K and weighed on the U.S. dollar but failed to reverse the EUR/USD pair’s bearish movement. However, the Factory Orders from the U.S. rose to 6.4% from the projected 6.0% and supported the U.S. dollar that added further in the EUR/USD pair’s losses on Wednesday.

Daily Technical Levels

Support	Pivot	Resistance
1.1805	1.1868	1.1914
1.1759		1.1977
1.1696		1.2024

EUR/USD– Trading Tip

As expected, the EUR/USD continues to extend it’s selling bias to 1.1812 level after violating the support level of 1.1890 level. On the lower side, the EUR/USD may find support at 1.1780 level. Above this, we can expect the EUR/USD to take a bullish correction. But for now, we can see the selling trend in the EUR/USD pair. Today, EUR/USD may find resistance 1.1825. Bearish bias dominates.

GBP/USD – Daily Analysis

GBP/USD pair was closed at 1.33504 after placing a high of 1.34022 and a low of 1.32831. Overall the movement of the GBP/USD pair remained bearish throughout the day. After posting gains for three consecutive days and reaching its highest since December 2019, GBP/USD pair dropped on Wednesday and posted losses on the day. The fall in GBP/USD pair was triggered by the dovish commentary by the Bank of England on Wednesday.

Another reason behind the decreased GBP/USD pair prices was the increased safe-haven demand for the greenback that made the U.S. dollar strong and weighed on the currency pair. On Wednesday, the Governor of Bank of England, Andrew Bailey, said that the E.U.’s strategy to force Britain to follow E.U. rules in the future could be seen by European Union’s refusal to grant cross-border access to investment banking services from London.

European Union has said that as the Britain access to the bloc will end on December 31, the services of investment banks from London to E.U. member states will be blocked. E.U. said that it wanted to review the rules first, and then it will decide how much direct access it will grant all types of U.K. financial activity under its system.

British rules will be compared to the 27-nation bloc’s rules, and then the decision of whether to grant access will take place accordingly.

He also warned that the U.K. economy was facing a record level of uncertainty about its future and a significant risk that growth will be far weaker than recently forecasted. He added that the forecasts made in August were done in the face of huge uncertainty due to the continuous fight against COVID-19, structural economic changes, and stalled Brexit trade talks.

These comments weighed on a single currency British Pound and added in the losses of GBP/USD pair on the day. Meanwhile, the U.S. Dollar rose on Wednesday as the concerns around the U.S. elections and the ongoing US-China tensions have restored the appetite for the safe-haven greenback.

Despite a sharp decline in the ADP Non-Farm Employment Change in August, the U.S. dollar continued to post gains and weighed on GBP/USD pair. In July from the U.S., the Factory orders were increased to 6.4% from the forecasted 6.0% and supported the U.S. dollar that added further pressure on GBP/USD pair.

From the Great Britain side, at 04:01 GMT, the BRC Shop Price Index for the year dropped to -1.6% in September from the previous -1.3%. At 10:57 GMT, the Nationwide Housing Price Index in August rose to 2.0% from the expected 0.5% and supported the Sterling. At 13:30 GMT, the House Price Index from the U.K. for the year increased to 2.9% from the projected 2.8%.

Furthermore, the BoE Deputy Governor, Ben Broadbent, said on Wednesday that fears that BoE was bailing out the U.K. government by financing its coronavirus surge in public spending were misplaced and the central bank has not lost its credibility.

Just like Broadbent, several BoE officials have sought to explain that the central bank’s decision to ramp up its government bond-buying since the COVID-19 crisis was not to restore monetary financing of the government’s spending push. Moreover, the British Pound also fell on Wednesday as the uncertainty over a post-Brexit trade deal between the U.K. & E.U. continued to weigh on the Sterling. With a lack of progress in trade deal talks, investors were concerned about the British economy’s future, and hence the pair GBP/USD dropped.

Daily Technical Levels

Support	Pivot	Resistance
105.9000	106.1100	106.3700
105.6400		106.5800
105.4300		106.8400

GBP/USD– Trading Tip

The GBP/USD pair is trading bearish at 1.3308 level, set to test the support level of 1.3168 level. The Cable has already violated an upward trendline at 1.3375 level, which is already violated. On the lower side, the GBP/USD pair may drop further below 1.3358 until the 1.3263 level. The MACD is also supporting selling bias; therefore, we will be looking for selling trades below the 1.3355 level.

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 105.955 after placing a high of 106.150 and a low of 105.589. The USD/JPY pair moved sideways on Tuesday but ended its day with posting gains as the selling pressure against the U.S. dollar was faded away after the release of ISM Manufacturing data and some fresh comments from Fed Governor.

However, the fading risk sentiment kept the gains in the USD/JPY pair checked after the coronavirus cases started to rise globally. The worldwide toll of cases reached 25 million with the United States on top with 6 million cases on Wednesday. India reported its biggest single-day surge in coronavirus cases of 78,761 on the weekend, while Spain reported a daily toll of more than 8000. After the U.S., Brazil, and India, now Russia has also entered the country with more than 1 million coronavirus cases. Besides, the Scottish government announced restrictions on people traveling from Greece to Scotland due to developing coronavirus cases.

The move came in against the order of Donald Trump in which he gave 90 days to the TikTok app for sale or transfer of its rights to the U.S. The tensions also supported the Japanese Yen and capped further upside in the USD/JPY pair on Tuesday.

Daily Technical Levels

Support	Pivot	Resistance
1.3288	1.3346	1.3409
1.3225		1.3467
1.3167		1.3530

USD/JPY – Trading Tips

The USD/JPY currency pair is trading at 106.077with an immediate resistance level of 106.085 level. Bullish crossover of 106.085 level may drive further buying until the next resistance level of 106.570. On the lower side, the USD/JPY pair may find support at 105.800 and 105.500 levels. Let’s consider buying over 106.100 level as the MACD and RSI also suggest the same. Good luck!

Tags Daily Brief, EUR-USD, Forex, Fundamental Analysis, GBP-USD, Support and Resistance, Technical Analysis, Technical Outlook, trading, USD-JPY, USDJPY

Crypto Market Analysis

Daily Crypto Review, Sept 3 – DeFi Flippening: Unifi’s Volume Topples Coinbase

Post author By Ilija Rankovic
Post date 3 September, 2020
1 Comment on Daily Crypto Review, Sept 3 – DeFi Flippening: Unifi’s Volume Topples Coinbase

The crypto sector had quite a bad day as almost every single cryptocurrency ended up in the red. Bitcoin is currently trading for $11,376, which represents a decrease of 4.26% on the day. Meanwhile, Ethereum lost 6.82% on the day, while XRP lost 9.33%.

Daily Crypto Sector Heat Map

When taking a look at the top100 cryptocurrencies, Kusama gained 24.25% on the day, making it the most prominent daily gainer. UMA (13.51%) and JUST (9.08%) also did great. On the other hand, the Ampleforth lost 26.14%, making it the most prominent daily loser. It is followed by OMG Network’s loss of 15.44% and Aragon’s drop of 15.44%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level has gone up slightly, with its value is currently at 58.62%, represents a 0.48% difference to the upside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization has decreased significantly over the course of the day. Its current value is $375.41 billion, which represents a decrease of $15.64 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin’s push towards the upside yesterday culminated by the cryptocurrency price reaching the $12,000 mark before triggering a bear push. The largest crypto by market cap couldn’t keep its price above the level, which triggered massive bearish volume that brought the price down as low as $11,150. Bitcoin is currently consolidating right below $11,460, which it is testing and trying to get past. However, this level has proven to be a strong resistance point at the moment.

Traders should pay attention to Bitcoin’s price movement around $11,460.

BTC/USD 4-hour Chart

Technical factors:

Price is below its 50-period and 21-period EMA
Price is just above its lower band
RSI is stable (38.13)
Volume is coming back to normal after a massive spike

Key levels to the upside Key levels to the downside

1: $11,630 1: $11,460

2: $12,015 2: $11,090

3: $12,330 3: $10,855

Ethereum

Ethereum had a similar day to Bitcoin, with its price plummeting and reaching as low as $418 after failing to break $496 to the upside. The second-largest crypto by market cap is currently near the $445 level, which is resisting any current pushes towards the upside that Ethereum makes at the moment.

With all this being said, Ethereum is still looking extremely bullish as DeFi’s volume and the number of users is reaching its all-time highs. Traders should look for a break from the $445 level.

ETH/USD 4-hour Chart

Technical Factors:

The price is at its 21-period and below 50-period EMA
The price is just below the middle band
RSI is neutral (52.47)
Volume is descending (from extremely high)

Key levels to the upside Key levels to the downside

1: $445 1: $415

2: $496 2: $400

3: $360

Ripple

XRP was no exception when it comes to today’s price movement. The third-largest crypto by market cap crashed, at one point reaching sub-$0.266 levels. However, the price recovered, and XRP is currently consolidating at the $0.272 level. However, unlike Bitcoin and Ethereum, which seem ready to test its resistance levels, XRP’s low volume as well as price position signal that there is almost no chance it will move towards the upside on its own.

Traders should look at XRP’s next move, which will be triggered by a volume spike.

XRP/USD 4-hour Chart

Technical factors:

The price is below its 21-period and 50-period EMA
Price is just above its lower band
RSI is stable and leaning towards the oversold area (39.55)
Volume is slightly below average

Key levels to the upside Key levels to the downside

1: $0.285 1: $0.266

2: $0.31 2: $0.2454

3: $0.32

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Fundamental Analysis

What Should You Know About Industrial Production MoM Forex Indicator?

Post author By Reddy Shyam Shankar
Post date 2 September, 2020
No Comments on What Should You Know About Industrial Production MoM Forex Indicator?

Introduction

Before the Service sector dominated the Industrial sector as a significant contributor to the GDP, it was the industrial production alone that was seen as a measure of economic growth. It still holds for many developing economies. Economies like China, Japan, India, etc. all had significant industrial revolutions that helped their countries to improve their economy. The industrial sector still contributes a considerable percentage to the economy and employs millions of people.

What is Industrial Production MoM?

Industrial Production: It refers to the total output produced by the industrial sector. Here the industrial sector consists of the mining, manufacturing, electric, and gas utility sectors. It is like a mini-GDP report for the industrial sector. By definition, it must be apparent that it primarily deals with tangible commodities or physical goods. On the other hand, The Service sector comprises of non-tangible entities largely.

The Industrial Production Index goes as back as 1919 if required, and is published by the Board of Governors of the Federal Reserve System in the United States. The extended time-frame availability of data makes it a more robust, reliable economic indicator as more data points are available relative to other sectors.

The data is aggregated by combining data in different units. Some of the data may be in dollar terms, some may be in tonnes (e.g., the weight of barrels of oils and steel), or inferred by the number of hours worked. The logged-in hours are obtained from the Bureau of Labor Statistics. It is expressed as a percentage of real output relative to a base period. The base year is currently 2012. The methodology incorporated to calculate the Industrial Production is the Fisher Ideal Index, where the contribution of each sector is weighted (the higher the contribution, the higher is the weightage in the index calculation).

Industrial Production Indices comes in YoY and MoM versions comparing production size with the previous year and month, respectively. The YoY figures deem more use to analysts and government officials to analyze the performance of the industrial sector for this financial year. The MoM (Month over Month) figures are useful for closely monitoring for the expected uptrends or downtrends during business cycles. The MoM figures are more useful for investors in this regard.

How can the Industrial Production MoM numbers be used for analysis?

We have to understand the significance of this statistic historically. Before the development of the service sector, i.e., before the era of computers and the internet, the most industrialized countries were the most advanced economies. Countries that had many factories manufacturing tons of commodities were seen as highly advanced economies back in the day. Hence, it is no surprise that at such times the Industrial Production figures were a direct measure for the economy’s economic activity and growth.

The general trend in economic growth has been that underdeveloped economies have the primary sector as a significant contributor to the GDP. The developing economies have the secondary sector (industrial sector) as the primary contributor to the GDP, while the developed economies have the tertiary (or service) sector.

For the United States, the Industrial Sector now contributes less than 20% to the overall GDP, while more than 80% comes from the Service sector itself. Although it may sound like only 20%, it is only in comparison, but individually the industrial sector is in itself huge and employs millions of people. 15-20% is still a significant contribution, and that is the reason why it is still being published as well as analyzed by investors, traders, analysts frequently to infer significant economic conclusions.

With machine automation, the advancement of technologies, and the introduction of artificial intelligence, many traditional jobs in the industrial sector are getting replaced. This trend is likely to continue further down the line. As of now, the Industrial Production figures bear some relevance, though it is only a matter of time that its contribution further falls and is overlooked by investors and analysts.

(Image Credit: St. Louis FRED)

The industrial sector is more sensitive to business cycles as well as economic shocks, as evident from the historical plot. The current COVID-19 pandemic has had a more significant impact on the industrial sector than the service sector due to the nature of business.

Impact on Currency

Since the Industrial Production figures only account for a few sectors of the economy, hence it is not a macroeconomic indicator encompassing all industries into its statistics. For this reason, the relative significance of this indicator in the currency markets is less. Whereas, investors looking to invest in stocks of companies belonging to the Industrial sector use Industrial Production MoM figures to make investment decisions. Overall, it is a low-impact coincident indicator that bears no significant volatility in the currency markets but has a significant influence on the equity markets.

Economic Reports

The Board of Governors of the Federal Reserve System publishes reports of the Industrial Production statistics as part of its monthly “G.17 Industrial Production and Capacity Utilization” report on its official website. It is released around the 15th of the month for the previous month. It is a preliminary estimate and is annotated with a superscript ‘p’ in the tables. It is subject to revision in the subsequent five months as more data becomes available. The report details both seasonally adjusted and unadjusted versions for our convenience.

Sources of Industrial Production MoM

The Federal Reserve publishes Industrial Production MoM reports on its official website. The same statistics are available with more tools for analysis on the St. Louis FRED website. Similar Industrial Production MoM statistics for most countries is available on the Trading Economics website.

How the Monthly Industrial Production Data Release Affects The Price Charts

In the US, the monthly industrial production data is released by the Federal Reserve about 16 days after the month ends. It measures the change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities. The most recent data was released on August 14, 2020, at 9.15 AM ET and can be accessed at Investing.com here. An in-depth review of the industrial production data release can be accessed at the Federal Reserve website.

The screengrab below is of the monthly industrial production from Investing.com.

As can be seen, the industrial production data is expected to have a low impact on the USD upon its release.

The screenshot below represents the most recent changes in the monthly industrial production in the US. In July 2020, the US industrial production increased by 3% down from a 5.7% increase in June. This change was in line with analysts’ expectations of a 3% change. Therefore, this is expected to be positive for the USD.

Now, let’s see how this release made an impact on the Forex price charts.

EUR/USD: Before the Monthly Industrial Production Data Release 
on August 14, 2020, Just Before 9.15 AM ET

Before the data release, the EUR/USD pair was trading in a renewed uptrend with the 15-minute candles forming above a steadily rising 20-period Moving Average. This pattern indicates that the USD was weakening against the EUR.

EUR/USD: After the Monthly Industrial Production Data Release 
on August 14, 2020, at 9.15 AM ET

As expected, the pair formed a 15-minute bearish candle after the data release indicating a momentary strength in the USD. The data was, however, was not significant enough to bring forth a change in the trading pattern. The pair continued trading in the earlier observed uptrend with the 20-period Moving Average steadily rising.

Now let’s see how this news release impacted other major currency pairs.

NZD/USD: Before the Monthly Industrial Production Data Release 
on August 14, 2020, Just Before 9.15 AM ET

Similar to the trend observed with the EUR/USD pair, the NZD/USD was trading in an uptrend before the data release. The 20-period Moving Average can be seen to be steadily rising in the above 15-minute chart.

NZD/USD: After the Monthly Industrial Production Data Release 
on August 14, 2020, at 9.15 AM ET

After the data release, the pair formed a 15-minute bearish candle. As observed with the EUR/USD pair, NZD/USD continued trading in the earlier observed uptrend with the 20-period Moving Average steeply rising.

AUD/USD: Before the Monthly Industrial Production Data Release 
on August 14, 2020, Just Before 9.15 AM ET

AUD/USD: After the Monthly Industrial Production Data Release 
on August 14, 2020, at 9.15 AM ET

Before the data release, the AUD/USD pair was trading in a similar uptrend pattern as the EUR/USD and NZD/USD pairs. After the data release, the pair formed a 15-minute bearish candle and subsequently continued trading in the earlier observed uptrend similar to the other pairs.

Bottom Line

The monthly US industrial production data an important leading indicator of the economy’s health. From this analysis, however, while the data release affects the USD, it is not significant enough to cause a shift in the prevailing market trend.

Tags Education, Forex, Forex Fundamental Analysis, Forex Fundamentals, Fundamental Analysis, Industrial production, Industrial Production MoM, Macro Economic Indicators, Macro Economics, trading

Crypto Market Analysis

Daily Crypto Review, Sept 2 – Ethereum Pushing Towards $500; Decentralized Exchanges Volume Surges

Post author By Ilija Rankovic
Post date 2 September, 2020
1 Comment on Daily Crypto Review, Sept 2 – Ethereum Pushing Towards $500; Decentralized Exchanges Volume Surges

While the top cryptocurrencies had quite a slow day, the DeFi market kept going up. Bitcoin is currently trading for $11,890, which represents an increase of 2.37% on the day. Meanwhile, Ethereum gained 7.57% on the day, while XRP gained 6.91%.

Daily Crypto Sector Heat Map

When taking a look at top100 cryptocurrencies, DFI.Money gained 111.02% on the day, making it the most prominent daily gainer. SushiSwap (35.54%) and Flexacoin (23.70%) also did great. On the other hand, the bZx Protocol lost 16.28%, making it the most prominent daily loser. It is followed by Aragon’s loss of 10.47% and Kusama’s drop of 9.44%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level has gone down slightly, with its value is currently at 58.14%, represents a 0.26% difference to the downside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization has increased significantly over the course of the day. Its current value is $391.05 billion, which represents an increase of $14.67 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

After managing to fend off the bears and establish its presence above $11,630 yesterday, Bitcoin started moving towards the upside. The largest cryptocurrency by market cap pushed towards the upside and quickly reached the $12,000 mark. However, the cryptocurrency did not stay above it for long and fell under it yet again. Bitcoin is now on a path towards the downside.

Traders should pay attention to how Bitcoin’s price reacts to its moving averages, as well as to $11,630.

BTC/USD 4-hour Chart

Technical factors:

Price is above its 50-period and 21-period EMA
Price is at its middle band
RSI is neutral (52.80)
Volume is slightly increased

Key levels to the upside Key levels to the downside

1: $11,630 1: $11,460

2: $12,015 2: $11,090

3: $12,330 3: $10,855

Ethereum

Ethereum had another extremely bullish day, where its parabolic rise continued. The second-largest cryptocurrency by market cap surged towards the upside and passed $445 with ease, only to be stopped a little under $490. Ethereum is now consolidating slightly below this level.

Ethereum’s parabolic price rise is attributed to a surge of interest in DeFi projects, and all they have to offer.

Ethereum traders should pay attention to DeFi announcements, as well as to how ETH will consolidate.

ETH/USD 4-hour Chart

Technical Factors:

The price is above its 21-period and 50-period EMA
The price is just below the upper band
RSI is in the overbought territory (73.71)
Volume is descending (from extremely high)

Key levels to the upside Key levels to the downside

1: $445 1: $415

2: $496 2: $400

3: $360

Ripple

XRP, boosted by the other cryptos increasing in price, pushed towards the upside itself. The third-largest cryptocurrency by market cap managed to get past the $0.285 resistance level, and then quickly (and successfully) retested it. The move towards the upside got stopped at $0.305, and XRP is now consolidating slightly under it.

While XRP’s move seems like it ran out of steam, its volume is still relatively high, which may indicate a possibility of further volatility.

Traders should look at XRP’s volume spikes and check for any signs of its next move’s direction.

XRP/USD 4-hour Chart

Technical factors:

The price is above its 21-period and 50-period EMA
Price is just under its upper band
RSI is stable and extremely close to being overbought (63.57)
Volume is slightly above average

Key levels to the upside Key levels to the downside

1: $0.31 1: $0.285

2: $0.32 2: $0.266

3: $0.3328 3:$0.2454

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Market Analysis

Daily F.X. Analysis, September 02 – Top Trade Setups In Forex – Eyes on ADP Non-Farm Employment!

Post author By Ali B.
Post date 2 September, 2020
1 Comment on Daily F.X. Analysis, September 02 – Top Trade Setups In Forex – Eyes on ADP Non-Farm Employment!

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.19117 after placing a high of 1.20113 and a low of 1.19010. On Tuesday, the EUR/USD pair rose above 1.2000 level in earlier trading session but failed to keep the level and dropped in the late session to post losses. The gains in the first half of the day were associated with the broad-based U.S. dollar weakness; however, in the late session, the losses were associated with the dollar strength triggered by better than expected ISM Manufacturing PMI.

The upward momentum that took the pair above 1.200 level on Tuesday was derived from the broad-based U.S. dollar weakness followed by the new policy shift from Federal Reserve. The improved risk sentiment due to vaccine hopes also helped the pair reach its highest since May 2018. However, the gains were limited as the pair started to fell in the second half of the day.

The losses in the EUR/USD pair were also encouraged by the fading market risk sentiment due to increased coronavirus cases worldwide. On Wednesday, the number of cases reached 6 million in the U.S., while India reported the biggest single-day jump of 78,761 in coronavirus cases over the weekend, whereas the daily case count reached 8000 in Spain. Meanwhile, after the U.S., Brazil, and India, now Russia also became the fourth country to exceed 1 million cases of COVID-19.

Furthermore, to prevent the second wave of coronavirus, the Scottish government announced new restrictions on travelers from Greece to Scotland; quarantine restrictions will be imposed on people traveling from Greece to Scotland due to emerging coronavirus cases. These tensions weighed on market risk sentiment and added in the further losses of EUR/USD on Tuesday.

Daily Technical Levels

Support	Pivot	Resistance
1.1870	1.1941	1.1981
1.1829		1.2053
1.1758		1.2093

EUR/USD– Trading Tip

The EUR/USD pair fell to trade at 1.1901 level, having immediate support at 1.1891 level, which is extended by double bottom level. Violation of 1.1891 level may extend selling until 1.1845 support. On the higher side, the resistance stays at 1.1935 and 1.1978 level for EUR/USD. Price action will highly depend upon the U.S. Advance NFP figures today.

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.33830 after placing a high of 1.34820 and a low of 1.33561. Overall the movement of GBP/USD remained flat yet bullish throughout the day. In the first half of the day, the pair rose and extended its gains to reach its highest since December 2019, near 1.3500 level on the back of selling bias surrounding the U.S. dollar. However, most of its early gains were lost in the second half of the day after the release of ISM Manufacturing PMI data on Tuesday.

In the early trading session, the equity markets moved in a higher direction after releasing China’s manufacturing PMI data from Caixin that showed an expansion in the industry by 53.1 against the estimated 52.6. It showed that the world’s second-largest economy was improving and raised the chances for quick economic recovery.

The improvement in China’s economy when the U.S. is suffering against the coronavirus pandemic increased the risk sentiment and weighed on the U.S. dollar that pushed the risk-sensitive currency pair GBP/USD higher on board. However, USD and risk appetite’s selling bias did not remain in the market for long and started to fade in the late session as the macroeconomic data from both the U.K. & U.S. came in against GBP/USD pair on Tuesday.

At 13:30 GMT, the Final Manufacturing PMI from the U.K. in August dropped to 55.2 from the forecasted 55.3 and weighed on GBP. The M4 Money Supply in July from Britain also dropped to 0.9% from the expected 1.2% and weighed on the Sterling. The Mortgage Approvals, however, rose to 66K against the estimated 55K and supported GBP. The Net Lending to Individuals remained flat with the expectations of 3.9B. Most data from Great Britain was against British Pound, and hence, the GBP/USD pair suffered and lost some of its gains on the day.

On the other hand, from the U.S. side, the highly awaited ISM Manufacturing PMI was released at 19:00 GMT, which exceeded the expectations of 54.6 and came in as 56.0 and supported the U.S. dollar. The strong U.S. dollar added weight on the GBP/USD pair that lost most of its daily gains but still ended its day with a slightly bullish trend.

Apart from macroeconomic data, the progress towards Brexit deal also drove the GBP/USD pair on Tuesday when PM Boris Johnson’s spokesman said that Britain wanted to agree simpler parts of the future relationship with the E.U. first to create momentum in the negotiations. While the E.U. has been insisting on reaching a consensus on difficult areas in talks such as E.U. state aid before any other negotiation area, even legal texts.

However, the next round of talks is scheduled for next week, but before that, another meeting was scheduled for Tuesday ahead of formal negotiation resumption next Monday. Michel Barnier went to London for informal talks with his U.K. counterpart, David Frost, as the transition period is near to end. It is yet to see how the informal talks went between both parties and discussed in the next round of formal meetings. Traders are cautiously waiting for some direction towards Brexit-deal.

Daily Technical Levels

Support	Pivot	Resistance
105.6400	105.9000	106.2100
105.3300		106.4700
105.0700		106.7800

GBP/USD– Trading Tip

The GBP/USD pair is trading bearish at 1.3358 level, set to test the support level of 1.3358 level. The Cable has already violated an upward trendline at 1.3375 level, which is already violated. On the lower side, the GBP/USD pair may drop further below 1.3358 until the 1.3263 level. The MACD is also supporting selling bias; therefore, we will be looking for selling trades below the 1.3355 level. Lets brace for ADP NFP figures for better price action.

USD/JPY – Daily Analysis

The increasing number of COVID-19 cases decreased the risk appetite and helped safe-haven Japanese Yen to gain traction that weighed on the USD/JPY pair and limit the additional gains in the USD/JPY pair on Tuesday. Moreover, the renewed US-China tensions after Beijing’s new law to impose restrictions on tech export. China forced a ban on the export of tech companies that will require government approval, which will take 30 days approx. The move came in against the order of Donald Trump in which he gave 90 days to the TikTok app for sale or transfer of its rights to the U.S. The tensions also supported the Japanese Yen and capped further upside in the USD/JPY pair on Tuesday.

Daily Technical Levels

Support	Pivot	Resistance
1.3330	1.3407	1.3459
1.3279		1.3535
1.3202		1.3587

USD/JPY – Trading Tips

Tags Daily Brief, EUR-USD, Forex, Forex Trading, Fundamental Analysis, GBP-USD, Support and Resistance, Technical Analysis, Technical Outlook, Trade Setup, trading, USD-JPY

Forex Market Analysis

Daily F.X. Analysis, September 01 – Top Trade Setups In Forex – Dollar Weakens Amid NFP Forecast!

Post author By Ali B.
Post date 1 September, 2020
No Comments on Daily F.X. Analysis, September 01 – Top Trade Setups In Forex – Dollar Weakens Amid NFP Forecast!

On the news front, the eyes will be on the series of economic events like Manufacturing PMI data from Europe, the U.K., and the U.S. Economy. Overall, almost all of the events are expected to report neutral results. Therefore, any surprisingly bad or good data may drive some price action in the market today.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD closed at 1.19359 after placing a high of 1.19659 and a low of 1.18841. The EUR/USD pair continued its bullish trend for the second day and rose to its highest since August 18 on Monday amid broad-based U.S. dollar weakness. Every month, the currency pair EUR/USD rose for the 4th consecutive month in August. The improved risk sentiment followed the positive momentum in the EUR/USD pair in the market amid a rise in the U.S. stock futures.

On Monday, the U.S. stock futures opened the day with modest gains as the market was on track to rack up their best August in more than 30 years. The upward momentum in stocks came after the S&P 500 and NASDAQ closed at an all-time high on Friday, with the former looking set to record its most robust August performance in 34 years.

The rally in the stock market was backed by the improved risk sentiment powered by massive monetary and fiscal stimulus in recent months that offset the concerns over the outlook of economic recovery from the coronavirus pandemic. Besides, the optimism around the vaccine development and treatments for COVID-19 and the robust demand for tech stocks also boosted the risk sentiment.

During the previous week, the Federal Reserve Chairman Jerome Powell shifted the policy to average inflation targeting that allowed inflation to surpass the 2% target. This shift raised concerns that interest rates were locked near-zero for as much as five years and weighed heavily on the U.S. dollar. The weak U.S. dollar helped EUR/USD to post gains on Monday.

Meanwhile, the German Prelim CPI in August dropped to -0.1% from the anticipated 0.0% and weighed on Euro on the data front. The Spanish Flash CPI fell in August to -0.5% from the July’s -0.6%. The Italian Prelim CPI in August came in line with the expectations of 0.3%. Most data from the European side came against Euro and limited the additional gains in EUR/USD pair on Monday.

While from the U.S. side, the Fed Vice Chair, Richard Clarida said on Monday that Federal Reserve would turn to discuss the next possible steps in the U.S. central bank’s fight against coronavirus induced economic fallout as a new policy framework has been set in place. The possible steps include linking interest rates directly with a return to full employment and possible expansion in monthly asset purchases to aid the economy through the COVID-19 crisis further.

Furthermore, the risk sentiment was also boosted by the news that the highly awaited Oxford vaccine will begin its phase-3 trials in the United States on Tuesday. This also helped EUR/USD pair to post gains on Monday.

Whereas, the World Health Organization pointed out encouraging signs that countries in Europe could deal with the coronavirus outbreak, despite the increase in cases since lockdown measures were lifted. According to a Senior Advisor to the Director-General at WHO, Bruce Aylward said that Europe has learned how to identify, isolate, and quarantine. It also helped raise the local currency Euro and added further in EUR/USD pair gains.

Daily Technical Levels

Support	Pivot	Resistance
1.1891	1.1929	1.1975
1.1846		1.2012
1.1808		1.2058

EUR/USD– Trading Tip

The EUR/USD is trading sharply bullish amid the weaker dollar, leading EUR/USD pair towards 1.1993 level. The EUR/USD pair has violated the resistance level of 1.1960 level, which is now working as a support for Eur. On the upper side, the pair may find resistance at 1.2025 and 1.2065 levels today. The bullish bias remains dominant.

GBP/USD – Daily Analysis

The GBP/USD closed at 1.33651 after placing a high of 1.33956 and a low of 1.3309. Overall the movement of the GBP/USD pair remained bullish throughout the day. The GBP/USD pair extended its previous day’s bullish streak on Monday and posted gains for the third consecutive month on August amid broad-based U.S. dollar weakness and improved risk-on market sentiment.

The risk-sensitive British Pound gained on Monday due to many factors, including the dovish policy shift from the U.S. Federal Reserve, development in vaccine & treatments of COVID-19. At the same time, some lingering tensions in US-China kept the pair’s gains limited.

On Friday, the U.S. Federal Reserve shifted to a dovish policy that allowed inflation to pass over the 2% target, which means continued low-interest rates for almost five years. This weighed on the U.S. dollar and helped GBP/USD to post gains on Monday.

Meanwhile, the market sentiment was also powered by the positive headlines from the vaccine front as a possible virus vaccine made by Oxford has announced to start its phase-3 trials from Tuesday. Moreover, the US-listed Chinese tech companies were heading to Hong Kong exchange from New York Exchange amid increased US-China dispute. This weighed on market sentiment and kept a check on additional gains in GBP/USD pair.

Whereas, on the Brexit front, the U.K. Government has said that the European Union was making Brexit talks unnecessarily difficult after France accused the U.K. of deliberately stalling in negotiations.

In last week, U.K. and E.U. ended their latest round of negotiation with very little progress due to warnings of no-deal Brexit if issues did not settle within a few weeks. Only four months have left until the transition period ends, and both sides have failed to resolve their issues and are still stuck on various points, including fisheries and state aid policy.

Recently French Foreign Minister Jean-Yves Le Drian has blamed the U.K. for the deadlock and said that the failure in progress in talks was because of the United Kingdom’s intransigent and unrealistic attitude. Whereas, the U.K. has said that it has been clear from the outset about the U.K. approach’s principles. A spokeswoman said that the U.K. seeks a relationship that respects their sovereignty and has a free trade agreement the E.U. has with like-minded countries.

E.U. still insists not only that the U.K. must accept continuity with E.U. state aid and fisheries policy but also that the U.K. must agree before any further work can be done un any other area of negotiation. This also includes the legal texts that make in unnecessarily difficult to make progress. Next week, another round of talks will occur, and investors are looking forward to it for fresh clues.

Daily Technical Levels

Support	Pivot	Resistance
1.3314	1.3355	1.3409
1.3260		1.3450
1.3219		1.3504

GBP/USD– Trading Tip

The GBP/USD is trading with a neutral bias below an immediate resistance level of 1.3425 level. Closing of candles below 1.3420 level is likely to drive selling until the 38.2% Fibonacci support level of 1.3350 and 61.8% Fibonacci support level of 1.3305 level. The MACD has also crossed below 0, supporting selling bias in the GBP/USD pair. On the higher side, a bullish breakout of 1.3420 level can lead the Cable towards 1.3511 level. Let’s consider taking buying trades over 1.3350 level today.

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 105.901 after placing a high of 106.094 and a low of 105.208. The USD/JPY pair moved in an upward direction on Monday despite the broad-based U.S. dollar weakness. The pair, which posted a loss of more than100 pips on Friday amid the resignation of Japanese Prime Minister Shinzo Abe, recovered about half of the previous losses on Monday.

The risk-on market sentiment made it difficult for the safe-haven Japanese Yen to find demand on Monday and helped pair USD/JPY moved higher on board. The heightened optimism for an effective coronavirus treatment and the U.S. Food & Drug Administration’s decision to fast-track vaccine approval added in the risk-sentiment. Besides, the news that the Oxford vaccine will also start its phase-3 trials on the next day also powered the risk sentiment and weighed on JPY that pushed the USD/JPY pair even higher at the start of the week.

However, with the lingering tensions between the U.S. & China, the US-listed Chinese tech companies were preferring the Hong Kong Exchange with Alibaba affiliate Ant Group, one of the most highly predicted initial public offerings ready for a dual listing in Shanghai and Hong Kong. This kept the additional gains in USD/JPY limited on Monday.

The U.S. dollar was under heavy selling pressure on Monday amid U.S. Dollar Index slumped to more than two years, the lowest level at 91.99.

The pressure surrounding the greenback was increased in the absence of any significant fundamentals on Monday, and the market kept following the strategy of a policy shift from the Federal Reserve on Friday.

Meanwhile, on Monday, Vice Chairman Richard Clarida explained that as Federal Reserve has shifted from its previous policy and has set a new policy framework, the central bank’s focus will now shift towards the next promises made by it to fight against the coronavirus induced economic slump.

Fed made promises to link interest rates to the direct return of full employment and increase the monthly assets purchases to boost the economy through the economic crisis followed by the coronavirus pandemic.

On the other hand, at 04:50 GMT, the Prelim Industrial Production in July increased to 8.0% from the expected 5.0% and supported the Japanese Yen. The Retail Sales for the year from Japan dropped to -2.8% from the forecasted -1.7% and weighed on the Japanese Yen that pushed the pair USD/JPY even higher on board.

At 10:00 GMT, the Consumer Confidence from Japan in August increased to 29.3 against the expected 28.7 and supported the Japanese Yen. At 10:02 GMT, the Housing Starts came in as -11.4% against the anticipated -12.0% and supported the Japanese Yen but failed to reverse the USD/JPY pair’s bullish movement.

Daily Technical Levels

Support	Pivot	Resistance
105.4200	105.7600	106.2300
104.9500		106.5700
104.6200		107.0300

USD/JPY – Trading Tips

The USD/JPY is trading within a sideways range of 105.866 to 105.200 range. The pair entered into the oversold zone previously, but now it has completed 23.6% Fibonacci retracement, and above this, the next target is likely to be found around 105.870. The MACD has crossed over 0 and has entered into the buying zone. Bullish bias seems dominant in the market today. Therefore, we may see USD/JPY prices soaring towards 38.2% Fibo levels of 105.870. Buying can be seen at over 105.200 level today. Good luck!

Tags Daily Brief, EUR-USD, Forex, Forex Trading, Fundamental Analysis, GBP-USD, Support, Support and Resistance, Technical Analysis, Technical Outlook, Trade Setup, USD-JPY

Crypto Market Analysis

Daily Crypto Review, Sept 1 – Binance Crypto Card Expanding To The US; YFI Token Up 1,000,000% Since July

Post author By Ilija Rankovic
Post date 1 September, 2020
1 Comment on Daily Crypto Review, Sept 1 – Binance Crypto Card Expanding To The US; YFI Token Up 1,000,000% Since July

While the top cryptocurrencies had quite a slow day, the DeFi market kept going up. Bitcoin is currently trading for $11,630, which represents a decrease of 0.38% on the day. Meanwhile, Ethereum gained 2.99% on the day, while XRP lost 0.59%.

Daily Crypto Sector Heat Map

When taking a look at top100 cryptocurrencies, Sushi gained 110.98% on the day, making it the most prominent daily gainer. BitShares (72.48%) and Kusama (35.57%) also did great. On the other hand, DFI.Money lost 18.67%, making it the most prominent daily loser. It is followed by bZx Protocol’s loss of 13.96% and NXM’s drop of 9.34%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level has gone down slightly, with its value is currently at 58.40%, represents a 0.84% difference to the downside when compared to our last report.

Daily Crypto Market Cap Chart

The crypto market cap has increased significantly over the course of the day. Its current value is $375.72 billion, which represents an increase of $3 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

After a weekend of steady gains, Bitcoin spent the day trying to establish its presence above the newly-conquered $11,630 level. While the fight is still in progress, it seems that the largest cryptocurrency by market cap will stay above the level, thus turning it into support.

Traders should take a look at how Bitcoin handles its next resistance, which is at around $11,820.

BTC/USD 4-hour Chart

Technical factors:

Price is above its 50-period EMA and 21-period EMA
Price is above its middle band
RSI is neutral but leaning towards overbought (57.26)
Volume is low

Key levels to the upside Key levels to the downside

1: $11,630 1: $11,460

2: $12,015 2: $11,090

3: $12,330 3: $10,855

Ethereum

Unlike Bitcoin, Ethereum has had a great day. The second-largest cryptocurrency by market cap continued its rush towards the upside, fueled by the expansion of DeFi. The move towards the upside rekindled after ETH confirming its position above $415 and stopped (for now) at its next resistance level, which is sitting at $445. While Ethereum has a chance of breaking this level as well, it is unlikely that it will stay above it as the volume seems to be fading, while its RSI is in the overbought territory.

Ethereum traders should look for ETH’s pullback after the bullish move ends.

ETH/USD 4-hour Chart

Technical Factors:

Price is currently above its 21-period and 50-period EMA
Price is just below the upper band
RSI is in the overbought territory (74.23)
Volume is descending

Key levels to the upside Key levels to the downside

1: $445 1: $415

2: $496 2: $400

3: $360

Ripple

XRP’s move towards the upside ended abruptly as the third-largest cryptocurrency by market cap failed to break the $0.285 resistance level. While it is still very close to it, XRP shows no signs of breaking the resistance any time soon, unless it gets external help in the form of BTC pushing the price of the whole crypto market.

On the other hand, XRP doesn’t show any signs of going down anytime soon, so we can expect some range-bound trading in the near future.

Traders should look for an opportunity within the range XRP is currently in.

XRP/USD 4-hour Chart

Technical factors:

The price is above its 21-period and 50-period EMA
Price is slightly above its middle band
RSI is stable and neutral (58.98)
Volume is low and relatively stable

Key levels to the upside Key levels to the downside

1: $0.285 1: $0.266

2: $0.31 2: $0.2454

3: $0.32 3:$0.235

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Fundamental Analysis

Importance of ‘Lending Rate’ News Announcement on the Forex market

Post author By Reddy Shyam Shankar
Post date 31 August, 2020

Introduction

The ease with which money can be obtained within a country primarily drives the business sector and consumer spending. Consumer Spending and Businesses mostly make up the GDP of a country. Hence, understanding Lending Rates and its impact on the economy can help us build our fundamental analysis better.

What is Lending Rate?

Lending Rate: The rate at which a bank or a financial institution charges its customers for lending money. It is the fee that is to be paid by the customer for the borrowed money. Bank Lending Rate, in general, is the Bank Prime Rate.

Bank Prime Rate: It is the rate of interest that banks charge their most creditworthy customers. It is the lowest interest rate at which banks generally gives out loans. On the receiving end usually are large corporations with a good track record with the concerned bank. Generally, the loans taken are also huge.

Other forms of loans like house mortgage, vehicle loans, or personal loans, are all either partly or wholly based on the prime rate. It is also important to note that the Central Bank’s interest rates set the bank lending rate. For the United States, the Federal Reserve’s, the Federal Open Market Committee (FOMC) determines the target fed funds rate. Fed funds rate will ultimately influence all the Bank lending rates on account of competition.

How can the Lending Rate numbers be used for analysis?

Banks and financial institutions are the primary source of money for businesses and consumers across the country. Hence, Bank Lending Rates can mainly drive business direction and influence consumer spending.

The Central Banks will influence the interest rates through their open-market operations in the inter-bank market by purchasing or selling bonds. When Central Banks buy bonds, they inject money into the economy, thereby effectively inducing inflation. It is popularly referred to as the “Dovish” approach. When the Central Bank sells bonds, it is effectively withdrawing money from the economy, making money scarce and costly to borrow. It is popularly referred to as the “Hawkish” approach.

When the Central Bank wants to deflate the economy, they will sell bonds, and when they decide to inflate, they will effectively buy bonds. In the private sector, Consumer Spending makes up about two-thirds of the United States’ GDP, and the rest is mostly by the business sector. The ease with which money is made available to people and business organisations affects the economy in a big way.

When lending rates are low, businesses can procure loans easily; they can run, maintain, and expand their current businesses. On the other hand, when the lending rates are high, only the high-end companies can procure loans. Meanwhile the rest of the business struggle to stay afloat in the deflationary environment. Businesses would be forced to keep their expansionary plans on halt when loan rates are high.

Consumers are also encouraged to take on loans when the rates are low. It promotes consumer spending, which, in turn, boosts local business. On the other hand, when interest rates are high, consumers would tend to save more spend less. When spending is less, businesses also slow down, especially sectors that do business with non-essentials like entertainment, luxury, or recreation.

On the international scale, the lending rates and deposit rates of banks from different countries also drive the flow of speculative money from international investors. When the lending rate in one country’s bank is lower than the deposit rate in another country’s bank, investors can generate revenue through a “carry.” Investors will borrow from the low-yielding currency bank and deposit in the high-yielding currency bank. The difference between these two rates is the margin they make.

The above plot shows the actual plot between the interest rates differential (AUS IR – USA IR) and the AUD USD exchange rate. As we can see, whenever the difference between the interest rates rises in favour of AUD, the exchange rate tends to follow. There is a strong correlation between both in the long run.

Since the Central Bank’s interest rates primarily determine all the lending rates (all types), investors generally calculate interest rate differentials by subtracting interest rates of two countries to see potential “carry” opportunities. Hence, when low-interest rates are prevalent, currencies lose value, on account of inflation and also outflow of money into other countries where deposit rates are higher.

Overall, the lending rates and deposit rates together move the currency markets in favour of the country’s currency, having higher deposit rates.

Impact on Currency

The underlying Central Bank interest rates influence lending rates. The market is more sensitive to Central Bank interest rate changes than the bank lending rates. The lending rates of banks are also not as immediate as the Central Bank’s interest rate changes. Hence, although lending rates impact the economy, its effects are only apparent after about 10-12 months.

Hence, Lending rates are a low-medium impact indicator in the currency markets, as the leading indicator Central Bank interest rates take precedence over bank lending and deposit rates.

Economic Reports

The lending rates of banks can be found from the respective banks from which we would want to borrow money. For the United States, the Federal Reserve publishes Monday to Friday the daily Interest Rates in its H.15 report at 4:15 PM on its official website. Weekly, Monthly, Semi-annual, and Annual rates of the same are also available. The average Bank Prime Rates are also available in the same report.

Sources of Lending Rate

The United States Fed Fund Rates are available here. The prim Bank Loan Rate is available in a more consolidated and illustrative way for our analysis in the St. Louis FRED website. Consolidated Bank Lending Interest Rates of different countries are available here.

How Lending Rates Affects Price Charts

The lending rates can either create expansionary or contractionary effects within an economy. Let’s now have a look at how it affects the price action in the forex market. In the US, lending rates entirely depend on the Federal Reserve’s Fund Rate. On March 4, 2020, the lending rates were cut from 4.75% to 4.25%. This cut coincided with the Federal Reserves’ interest rate cut from 1.75% to 1.25% on March 3.

On March 16, 2020, the lending rates were reduced from 4.25% to 3.25%. This cut coincided with the Federal Reserves’ interest rate cut from 1.25% to 0.25% on March 15.

For this reason, the lending rates rarely affect the price action in the forex markets.

In the US, the Bank Prime rate is published every weekday at 4.15 PM ET. Below is a screengrab from the US Federal Reserve showing the latest bank prime rates.

As can be seen, the rate has remained at 3.25% from March 16, 2020. For this analysis, we will consider if the change on March 16, 4.15 PM ET from 4.25% to 3.25% had any effect on the price action of selected currency pairs.

EUR/USD: Before Lending Rate Change on March 16, 2020, 
Just Before 4.15 PM ET

Between 10.00 AM and 4.00 PM ET, the EUR/USD pair was on a neutral trend. This neutral trend is shown on the 15-minute chart above with bullish and bearish candles forming slightly above the flattening 20-period Moving Average.

EUR/USD: After Lending Rate Change on March 16, 
2020, 4.15 PM ET

As shown by the chart above, the EUR/USD pair formed a slightly bullish 15-minute candle after the daily release of the lending rates. As earlier mentioned, the release of the lending rates is not expected to have any significant impact on the price action. This sentiment is further supported by the lack of change in the prevailing trend after the news release since the pair continued trading on a neutral stance.

GBP/USD: Before Lending Rate Change on March 16, 2020, 
Just Before 4.15 PM ET

The GBP/USD pair showed a similar neutral trading pattern as the EUR/USD pair between 1.00 PM and 4.00 PM ET. This pattern can be seen on the above 15-minute chart with candles forming on the flat 20-period Moving Average.

GBP/USD: After Lending Rate Change on March 16, 
2020, 4.15 PM ET

After the news release, the pair formed a slightly bearish 15-minute candle but continued trading in the earlier neutral trend.

NZD/USD: Before Lending Rate Change on March 16, 2020, 
Just Before 4.15 PM ET

NZD/USD: After Lending Rate Change on March 16, 
2020, 4.15 PM ET

Unlike the EUR/USD and the GBP/USD pairs, the NZD/USD pair had a steady downtrend between 12.15 PM and 4.00 PM ET. After the release of the daily lending rates, the pair formed a bullish 15-minute candle, but just like the other pairs, the news was not significant enough to change the prevailing market trend.

As we noticed earlier, the lending rates move in tandem with the Federal funds rate. Since the lending rates have always remained unchanged in the market and forex traders have anticipated this, hence the lack of volatility accompanying the news release.

Tags Bank Lending Rate, Banks, Economic Reports, Forex, Forex Drivers, Forex Fundamentals, Fundamental Analysis, lending, Lending Rate, Macro Economic Indicators, trading

Crypto Market Analysis

Daily Crypto Review, August 31 – Cryptos Making Steady Gains Over the Weekend; ETC Hit By Third 51% Attack

Post author By Ilija Rankovic
Post date 31 August, 2020
1 Comment on Daily Crypto Review, August 31 – Cryptos Making Steady Gains Over the Weekend; ETC Hit By Third 51% Attack

The crypto market had a good weekend, with almost every single top cryptocurrency ending up in a net gain. Bitcoin is currently trading for $11,664, which represents an increase of 0.66% on the day. Meanwhile, Ethereum gained 4.42% on the day, while XRP gained 2.19%.

Daily Crypto Sector Heat Map

When taking a look at top100 cryptocurrencies, UMA gained 48.99% on the day, making it the most prominent daily gainer. Flexacoin (27.54%) and bZx Protocol (26.08%) also did great. On the other hand, DFI.Money lost 17.06%, making it the most prominent daily loser. It is followed by Golem’s loss of 10.16% and NEM’s drop of 7.06%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level has gone down quite a bit over the weekend and dropped below the 60% mark. Its value is currently at 59.24%, represents a 1.82% difference to the downside when compared to our last report.

Daily Crypto Market Cap Chart

The crypto market cap has increased significantly over the course of the weekend. Its current value is $372.72 billion, which represents an increase of $19.24 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin spent the weekend slowly rising in price on low volume. The largest cryptocurrency by market cap rose above $11,460 and $11,630 resistance levels, turning them into support. The $11,630 level is currently being retested, but it looks like Bitcoin will stay above it unless a large spike of sellers suddenly comes to the market.

Traders should take a look at Bitcoin’s confirmation of the $11,630 level. If BTC stays above it, traders can consider Bitcoin to be moving in within a range, bound by $11,630 and $12,000.

BTC/USD 4-hour Chart

Technical factors:

Price is above its 50-period EMA and 21-period EMA
Price is slightly above its middle band
RSI is neutral but leaning towards overbought (57.95)
Volume is low

Key levels to the upside Key levels to the downside

1: $11,630 1: $11,460

2: $12,015 2: $11,090

3: $12,330 3: $10,855

Ethereum

After passing the descending trend and moving above it, Ethereum had a couple of days of steady gains. The second-largest cryptocurrency by market cap slowly gained ground and passed the $400 as well as $415 resistance levels along the way. The move stopped just above $430, before starting to retrace. There is a big possibility that the $415 level will be tested as a support level.

Ethereum traders should look for ETH’s reaction when the price reaches $415 again.

ETH/USD 4-hour Chart

Technical Factors:

Price is currently above its 21-period and 50-period EMA
Price is slightly below the upper band
RSI is severely overbought (67.64)
Volume is average

Key levels to the upside Key levels to the downside

1: $415 1: $400

2: $445 2: $360

3: $496 3: $340

Ripple

XRP also had a great weekend, with its price consistently moving towards the upside after briefly breaking the $0.266 support level to the downside, which is where the bullish move on Aug 27 started. While it made some progress towards the upside, XRP did not reach past any significant resistance levels. In fact, it got stopped by the $0.285 level, which it most likely won’t pass.

Due to its RSI being close to overbought, low volume, and price rejection around the $0.285 level, XRP will most likely start a move towards the downside now.

XRP traders should trade it on its way down towards $0.266 or possibly look for a bounce off of the support XRP will find on its way down.

XRP/USD 4-hour Chart

Technical factors:

The price is above its 21-period and 50-period EMA
Price is slightly below its upper band
RSI is nearly overbought but is moving towards neutral (58.17)
Volume is low and relatively stable

Key levels to the upside Key levels to the downside

1: $0.285 1: $0.266

2: $0.31 2: $0.2454

3: $0.32 3:$0.235

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Market Analysis

Daily F.X. Analysis, August 31 – Top Trade Setups In Forex – Trading Choppy Sessions!

Post author By Ali B.
Post date 31 August, 2020
1 Comment on Daily F.X. Analysis, August 31 – Top Trade Setups In Forex – Trading Choppy Sessions!

On the news side, the eyes will be on European Spanish and German CPI data, which are expected to report a mixed figure. Later the Italian Prelim CPI is expected to report slightly positive data that may support EUR. Let’s take a look at the trade setups.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.19054 after placing a high of 1.19196 and a low of 1.18108. Overall the movement of the EUR/USD pair remained bullish throughout the day. After moving sidelines and under pressure for two days, EUR/USD pair surged on Friday and posted gains on the back of broad-based U.S. dollar weakness from the dovish comments from the highly awaited Jerome Powell’s speech. However, the gains remain limited due to rising coronavirus cases and fears of the second wave in Europe.

The Government of Europe has re-imposed restrictions on citizens and renewed quarantine measures for some travelers. In response to these renewed restrictions, thousands of people took to the streets of Berlin against it. Police in Berlin arrested 300 demonstrators during the protests against Germany’s coronavirus restrictions.

On Friday, France made a larges jump since May 16 and reported 7462 new coronavirus cases. Germany reported around 1737 cases and three deaths. Italy reported 146 cases on Friday, the largest since April 1, and Spain announced 9779 cases on August 28. The resurgence of coronavirus in Europe came near when every European country was planning to start schooling from next week. Now, fears for a renewed spike in cases exacerbate as the schools’ time has come near. These lingering fears have kept the market sentiment under pressure and gains in EUR/USD limited on Friday.

Meanwhile, on the data front, at 11:00 GMT, the German GfK Consumer Climate in August declined to -1.8 from the projected 1.0 and weighed on single currency Euro. At 11:03 GMT, the German Import Prices for July rose to 0.3% from the expected 0.2% and supported Euro added in the currency pair’s gains.

At 11:45 GMT, the French Consumer Spending in July fell to 0.5% from the anticipated 1.2% and weighed on Euro. For August, the French Prelim CPI came in as -0.1% against the expected -0.2% and supported Euro and added in the gains of EUR/USD. The French Prelim GDP for the second quarter came in line with the expectations of -13.8%.

Daily Technical Levels

Support	Pivot	Resistance
1.1902	1.1904	1.1908
1.1898		1.1910
1.1895		1.1914

EUR/USD– Trading Tip

The EUR/USD is trading slightly bullish at 1.1900 level, having an immediate resistance at 1.1918 level and support at 1.1896 level. On the higher side, a bullish breakout of the 1.1920 level can trigger buying until 1.1955 level. Conversely, a bearish breakout of 1.1896 level can drive selling until 1.1835 support.

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.33505 after placing a high of 1.33564 and a low of 1.31861. Overall the movement of GBP/USD pair remained bullish throughout the day. After moving sideways on Thursday, GBP/USD pair posted strong gains on the back of supportive comments from Governor of Bank of England at Jackson Hole Symposium and broad-based U.S. dollar weakness.

On Friday, the GovernorBank of England Governor said that the central bank was not out of power to support the economy. This statement was followed by the dramatic shock caused by the coronavirus pandemic.

In a speech to Jackson Hole symposium, Andrew Bailey told that the bank has more ammunition left to support the economy. He also said that the major bond-buying drives had been proved more effective in the major economic crisis caused by the pandemic.

He informed that the central bank appreciated the need to keep enough headroom to deal with future shocks. He said that the bank still has a range of fiscal tools, including the negative interest rates, and there was no need to tighten monetary policy.

In March, the Governor took over the bank and almost immediately oversaw a 300 billion pounds bond-buying program and a cut in interest rate to a record low of 0.1%. After these comments from the Governor of Bank of England, the GBP/USD pair surged to the highest level since December 15, 2019.

The gains in GBP/USD pair were also supported by the weakness in the U.S. dollar that was derived from the dovish comments from the Chairman of Federal Reserve Jerome Powell on Thursday. According to Powell, the inflation will remain at 2% average for some time that increased hopes for a entended period of loose monetary policy by the central bank and weighed on local currency.

The U.S. dollar weakness helped GBP/USD pair to post extra gains, and hence, the pair reached the highest of more than eight months. There was no macroeconomic release from the U.K. side on the data front, but from the U.S. side, at 17:30 GMT, the Core PCE Price Index fell to 0.3% in July from the anticipated 0.5% and weighed on U.S. dollar. The Personal Spending rose to 1.9% in July from the projected 1.5% and supported the U.S. dollar. At 18:05 GMT, the Chicago PMI came in line with the anticipations of 51.0 in August. At 19:00 GMT, the Revised UoM Consumer Sentiment rose to 74.1 from the projected 72.8 and supported the U.S. dollar.

Daily Technical Levels

Support	Pivot	Resistance
105.3400	105.5700	105.7800
105.1300		106.0100
104.8900		106.2300

GBP/USD– Trading Tip

The AUD/USD pair is trading with a neutral bias below an immediate resistance level of 1.3365 level. Closing of candles below 1.3365 level is likely to drive selling until 38.2% Fibonacci support level of 1.3280 and 61.8% Fibonacci support level of 1.3250 level. The MACD has also crossed below 0, supporting selling bias in the GBP/USD pair. Let’s consider taking selling trades below 1.3365 level today.

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 105.351 after placing a high of 106.945 and a low of 105.200. Overall the movement of the USD/JPY pair remained bearish throughout the day. The USD/JPY pair rose to near ten days the highest level on Friday near 107.00 level but failed to cross the resistance level and dropped on the back of broad-based U.S. dollar weakness and posted strong losses day. The pair posted the biggest daily decline on Friday and dropped to 105.2 level at the week’s ending day.

In the early trading session, the USD/JPY pair faced rejection near the 107.00 level and witnessed a dramatic turnaround on the latest news that Japan’s Prime Minister Shinzo Abe was stepping down due to ill health.

The 65-year-old Japan’s PM Shinzo Abe said that he did not want his illness to get in the decision-making way. He apologized to the Japanese people for failing to complete his term in office. He has had ulcerative colitis, inflammatory bowel disease, and he said that his condition had worsened recently.

Abe’s current period began in 2012, and last year he became Japan’s longest-serving prime minister. Until a successor is chosen, he will remain in his post and continue his duty. This political development gave strength to Japanese Yen that dragged the pair back closer to the 106 level on Friday.

Meanwhile, in later sessions, the pair was further dragged down due to the U.S. dollar’s broad-based weakness. The greenback was under pressure due to the dovish comments from the Fed Chair Jerome Powell at the Jackson Hole Symposium on the previous day.

On Thursday, Powell announced a significant policy shift and said that Fed was willing to run the inflation hotter than usual and support the labor market, also suggested keeping interest rates lower for longer. This also weighed on market sentiment and added further in the USD/JPY pair losses that dragged the pair towards 105.00 level.

On the data front, at 04:30 GMT, the Tokyo Core CPI for the year in August was declined to -0.3% from the anticipated 0.3% and weighed on Japanese Yen. From the U.S. side, at 17:30 GMT, the Core PCE Price Index was dropped to 0.3% from the anticipated 0.5% in July and weighed on the U.S. dollar and added in the losses of currency pair. The Personal Spending rose to 1.9% against the expected 1.5% in July and supported the U.S. dollar.

Daily Technical Levels

Support	Pivot	Resistance
1.3339	1.3349	1.3364
1.3325		1.3373
1.3315		1.3388

USD/JPY – Trading Tips

Tags EUR-USD, forex services, Forex Trading, Fundamental Analysis, GBP-USD, Support and Resistance, Technical Analysis, Technical Outlook, USD-JPY

Forex Fundamental Analysis

Everything About ‘Households Debt to Income’ as a Macro Economic Indicator

Post author By Reddy Shyam Shankar
Post date 29 August, 2020
No Comments on Everything About ‘Households Debt to Income’ as a Macro Economic Indicator

Introduction

Households Debt to Income is another metric that is used to assess the relative wealth and standard of living of people in the nation. It can give us hints on the spending patterns and circulation of currency and liquidity of the nation overall. Hence, Households Debt to Income ratio is beneficial for economists, investors, and also to deepen our foundation in fundamental analysis.

What is Households Debt to Income?

Debt-to-Income (DTI): The DTI is an individual financial measure that is defined as the ratio of total monthly debt payments to his monthly gross income.

Gross income refers to the income received from the employer or workplace and does not include any of the tax deductions.

The DTI is calculated using the below-given formula.

Disposable Personal Income (DPI): Disposable Personal Income, also called After-Tax Income, is the remainder of an individual’s income after all federal tax deductions. Hence, It is the amount people are able to spend, save, or invest.

Household Debt Service Ratio and Financial Obligations Ratio: The household Debt Service Ratio (DSR) is the ratio of total household debt payments to Disposable Personal Income (DPI).

Mortgage DSR: It is the total quarterly required mortgage payments divided by total quarterly Disposable Personal Income.

Consumer DSR: It is the ratio of aggregate quarterly scheduled consumer debt payments to total quarterly Disposable Personal Income (DPI). The Mortgage DSR and the Consumer DSR together form the DSR.

Financial Obligations Ratio: It is a broader measure than the Debt Service Ratio (DSR) as it takes into account rent payments, auto lease deductions, house owners’ insurance, and property tax.

How can the Households Debt to Income numbers be used for analysis?

DTI is a personal financial metric that is used by banks to determine the individual’s credit eligibility. A DTI ratio should be no more than 43% to be eligible for mortgage credit, but most banks prefer 36% as a healthy DTI ratio to lend money.

The household Debt Service Ratio & Financial Obligations Ratio is more useful, and large scale public data releases for fundamental analysis. The proportion of income that goes into servicing debt payments determines Discretionary Income, Personal Savings, and Personal Consumption Expenditures. Higher the Households Debt to Income ratio, the lesser the money available for other needs.

The Households Debt to Income measures the degree of indebtedness of Households, or in other words, it measures the burden of debt on Households people. The higher the numbers, the greater the load and lesser freedom to spend on other things. As debt burden increases, Discretionary Spending (i.e., for personal enjoyment) decreases, and the income is used entirely to meet the necessities only.

An increase in DPI or decrease in debt payment (by foreclosure or servicing all installments at once) is the two ways to reduce the Debt to Income percentage.

The Households Debt to Income is an essential metric for Government and Policymakers as dangerously high levels in these figures is what led to the financial crisis of 2008 in the United States.

Impact on Currency

High Households Debt to Income figure slows down the economy as debt durations are usually serviced for years. Higher numbers also indicate decreased spending as people spend more money to save and to maintain repayments. This cut back on expenditures results in slowing down businesses, especially those based on Discretionary items (ex: Fashion, entertainment, luxury, etc.) take a severe hit. The overall effect would be a lower print of GDP, and in extreme cases, it can result in a recession.

Households Debt to Income is an inverse indicator, meaning lower figures are good for economy and currency. The numbers are released quarterly due to which the statistics are available only four times a year, and the limitations of the data set make it a low impact indicator for traders. It is a long-term indicator and shows more of a long-term trend. It is not capable of reflecting an immediate shift in trends due to which the number’s impact is low on volatility and serves as a useful indicator for long-term investors, economists, and policymakers.

Economic Reports

The Board of Governors of the Federal Reserve System in the United States releases the quarterly DSR and FOR reports on its official website. The data set goes back to 1980.

DSR & FOR Limitations: The limitations of current sources of data make the calculation of the ratio especially tricky. The ideal data set for such an estimate requires payments on every loan held by each household, which is not available, and hence the series is only the best estimate of the debt service ratio faced by households. Nonetheless, this estimate is beneficial over time, as it generates a time series that captures the critical changes in the household debt service burden. The series are revised as better data, or improved methods of estimation become available.

Sources of Households Debt to Income

The DSR and FOR figures are available here:

DSR & FOR – Federal Reserve

Graphical and Comprehensive summary of all the Households Debt related are available here:

St. Louis FRED – DSR & FOR

Households Debt to Income for various countries is available here:

Households DTI – TradingEconomics

How Households Debt to Income Affects The Price Charts

Within an economy, the household debt to income is vital to indicate the consumption patterns. In the forex market, however, this indicator is not expected to cause any significant impact on the price action. The household debt to income data is released quarterly in the US.

The latest release was on July 17, 2020, at 7.00 AM ET. The screengrab below is from the Federal Reserve website. It shows the latest household debt service and financial obligations ratios in the US.

The debt service ratio for the first quarter of 2020 decreased from 9.7% in the fourth quarter of 2019 to 9.67%. Theoretically, this decline in the debt to income ratio is supposed to be positive for the USD.

Let’s see how this news release made an impact on the Forex price charts.

EUR/USD: Before Households Debt to Income Release on June 17,
2020, Just Before 7.00 AM ET

Before the news release of the household debt to income, the EUR/USD pair was trading on a steady downtrend. This trend is evidenced by the 15-minute candles forming below the 20-period Moving Average, as shown in the chart above.

EUR/USD: After Households Debt to Income Release on June 17,
2020, 7.00 AM ET

After the news release, the pair formed a bullish 15-minute candle indicating that the USD had weakened. The weakening of the USD is contrary to a bearish expectation since the households’ debt to income had reduced, the USD would be stronger. The pair later continued to trade in the previously observed downtrend.

Now let’s see how this news release impacted other major currency pairs.

GBP/USD: Before Households Debt to Income Release on June 17, 
2020, Just Before 7.00 AM ET

Before the news release, the GBP/USD pair had been attempting to recover from a short-lived downtrend. This recovery is evidenced by the candles crossing above a flattening 20-period Moving Average.

GBP/USD: After Households Debt to Income Release on June 17, 
2020, 7.00 AM ET

After the news release, the pair formed a 15-minute bullish “Doji star” candle. The pair traded within a neutral trend afterward with the 20-period Moving Average flattening. As observed with the EUR/USD pair, GBP/USD did not react accordingly, as theoretically expected, to the positive households’ debt to income data.

AUD/USD: Before Households Debt to Income Release on June 17, 
2020, Just Before 7.00 AM ET

AUD/USD: After Households Debt to Income Release on June 17, 
2020, 7.00 AM ET

Before the news release, the AUD/USD pair showed a similar trend as the GBP/USD pair attempting to recover from a short-lived downtrend. As can be seen, the 20-period Moving Average has already started flattening before the news release.

After the data release, the AUD/USD pair formed a 15-minute bullish candle. The pair continued trading in a neutral trend with candles forming on a flat 20-period Moving Average.

From the above analyses, the news release of the household to debt income data produced contrary effects on the USD. More so, the indicator’s impact on the currency pairs is negligible.

Tags Education, Forex, Forex Drivers, Forex Fundamentals, Fundamental Analysis, Fundamental Trading, Household Desbt, Households Debt to Income, Macro Economic Indicators, Macro Economics, trading

Forex Fundamental Analysis

Everything About Food Inflation & The Impact Of Its Release On The Forex Market

Post author By Reddy Shyam Shankar
Post date 28 August, 2020
No Comments on Everything About Food Inflation & The Impact Of Its Release On The Forex Market

Introduction

Capitalist economies achieve economic growth using inflation as the primary fuel. Low and steady inflation rates are essential for achieving target GDP each year. Not all commodities inflate steadily and proportionally. Disproportional inflation amongst different sectors leads to over and underpricing of commodities. Food and Energy are the most basic of necessities in today’s modern society. Understanding how food inflation affects the population and the overall economy will help us better understand the inflation trends and their consequences.

What is Food Inflation?

Inflation is the typical increase in prices of commodities and a decrease in the purchasing power of money over time. Inflation is required to motivate people to work better to be able to afford it. If prices were stagnant, the necessity to grow or earn more would cease, thus halting the growth of a nation on the macro level. When that happens, people will remain in their current financial state and would not progress. Hence, inflation is the “necessary evil” or the required fuel for capitalist countries to achieve economic growth.

Food Inflation refers to the general increase in prices of food commodities. As prices inflate, our current income’s purchasing power erodes. Food and Energy are the necessities for us in this modern society. Although to some extent, Energy can be cut back on to get on with life, we cannot cut back on food.

Food is the fundamental right to every human being. Accessibility and affordability to food and water is a must for every individual regardless of their country. Food inflation monitors the affordability aspect of food within the nation; the consequences associated with it are more intricate than we might anticipate.

How can the Food Inflation numbers be used for analysis?

As people can procure fewer goods for a unit of currency over time, people can either cut back on expenses or earn more to compensate for inflation. Food expenses are mandatory expenditure part of income. High food inflation will take up a more substantial chunk out of the disposable income of individuals leaving less room for discretionary spending.

As the affordability of food decreases due to high food inflation, consumer spending is negatively affected. Consumer Spending is the primary component of GDP accounting for more than two-thirds of the nation’s GDP. In the same case, more people who are working on minimum wages find it more difficult to afford food and would be below the poverty line even when their wages are not.

Political implications would also be severe. The backlash from the public over Government’s inadequacy to control inflation would be severe and, at times, have led to strikes and bans in many countries over the years. The Government at such times faces severe criticism both from the public and the opposition parties and would likely lose the next elections.

Food inflation could also occur due to adverse weather conditions destroying crops, or mismanagement of supply and demand by the authorities, or even politically manipulating supply and demand for profit by local dealers. There have been incidents where supplies of grains were withheld to boost up the prices for better profits artificially.

In developing countries, there are incidents where Government-issued rations are also sold illegally for profit by some corrupt groups. Lack of proper support to farmers in terms of resources like electricity, water, seeds, loans could also impair them to produce a good yield. All such factors add to food inflation, whose burden falls upon the ordinary people.

It is necessary to understand that all other commodities excluding Food and Energy generally have at least some alternatives (or different brands) to choose from in case price inflates. For instance, people looking to buy clothes from a brand may switch to another brand to avoid paying the new inflated price. Food inflation effect cannot be avoided as quickly as was the previous case.

Government officials closely monitor the inflation levels and are politically committed to keeping inflation in check through fiscal and monetary levers at their dispense. Food and Energy prices are given special attention, and almost all the time, the response is quick and practical from the Government during times of disruption in the food supply.

During the COVID-19 pandemic, many countries’ governments released relief packages to make sure there is no food shortage. Despite the fact many people slipped through the cracks of these protection measures, nonetheless, Governments did everything they could to avoid starvation.

Impact on Currency

Food inflation is part of overall consumer inflation. Consumer inflation is the primary macroeconomic indicator for currency traders to assess relative inflation amongst currency pairs. Hence, food inflation is overlooked by currency traders for the broader inflation measures like the Consumer Price Index (CPI) or Personal Consumption Expenditure (PCE).

Nonetheless, food inflation is beneficial for the government officials to keep it in check all the time and also for the economic analysts to report the same. Overall, food inflation is a low-impact coincident indicator in macroeconomic analysis for currency trading that is overlooked for broader inflation measuring statistics, as mentioned before.

Economic Reports

The Bureau of Labor Statistics publishes monthly inflation statistics as part of its Consumer Price Index report for the United States. This report has the food inflation statistics as the first criteria.

The St. Louis FRED also maintains the inflation statistics on its website and has many other tools to add to our analysis.

Sources of Food Inflation

Consumer Price Index from the US Bureau of Labor Statistics is available on its official website along with monthly updates.

We can find the same indexes along with many others with a comprehensive summary and statistics on the St. Louis FRED website.

We can find the global food inflation statistics of most countries on Trading Economics.

How Food Inflation Data Release Affects The Price Charts

In the US, the food inflation data is released simultaneously with the overall consumer price index (CPI) data. The data is released monthly about 16 days after the month ends. The most recent release was on August 12, 2020, at 8.30 AM ET and can be accessed at Investing.com here. A more in-depth review of the monthly report can be accessed at the US Bureau of Labor Statistics website.

It is worth noting that since the food inflation numbers are released together with the over CPI, it will be challenging to determine the effect it has on price action.

The screengrab below is of the monthly CPI from Investing.com. On the right, is a legend that indicates the level of impact the Fundamental Indicator has on the USD.

As can be seen, the CPI data is expected to have a medium impact on the USD upon its release.

The screengrab below shows the most recent changes in the monthly CPI data in the US. In July 2020, the monthly CPI increased by 0.6% better than analysts’ expectations of a 0.3% change. This positive change is therefore expected to make the USD stronger compared to other currencies.

Now, let’s see how this release made an impact on the Forex price charts.

EUR/USD: Before Monthly CPI Release on August 12, 2020, 
Just Before 8.30 AM ET

As can be seen from the above 15-minute chart, the EUR/USD pair was on a steady uptrend before the inflation news release. Bullish candles are forming above a steeply rising 20-period Moving Average, indicating the dollar was weakening before the release. Immediately before the news release, the uptrend can be seen to be weakening.

EUR/USD: After Monthly CPI Release on August 12, 
2020, 8.30 AM ET

After the news release, the pair formed a 15-minute bullish candle. Contrary to the expectations, the USD became weaker against the EUR since the pair continued to trade in the previously observed uptrend.

Now let’s see how this news release impacted other major currency pairs.

AUD/USD: Before Monthly CPI Release on August 12, 2020, Just Before 8.30 AM ET

The AUD/USD pair shows a similar trading pattern as the EUR/USD before the inflation news release. The pair is on an uptrend, which heads for a neutral trend immediately before the news release.

AUD/USD: After Monthly CPI Release on August 12, 2020, 
8.30 AM ET

As observed with the EUR/USD pair, the AUD/USD formed a bullish 15-minute candle after the news release. Afterward, the pair traded in a renewed uptrend with the 20-period Moving Average steeply rising.

NZD/USD: Before Monthly CPI Release on August 12, 2020, 
Just Before 8.30 AM ET

NZD/USD: After Monthly CPI Release on August 12, 2020, 
8.30 AM ET

Unlike the EUR/USD and the AUD/USD pairs, the NZD/USD traded within a subdued neutral trend with an observable downtrend immediately before the news release. However, after the news release, the pair formed a 15-minute bullish candle and traded in a steady uptrend, as seen with the other pairs.

Bottom Line

In theory, a positive CPI data should be followed by an appreciating USD. From the above analyses, however, the positive news release resulted in the weakening of the USD. This phenomenon can be choked to the effects of the coronavirus expectations, which have made fundamental indicators less reliable.

Tags Education, Food, Food Inflation, Forex, Forex Fundamental Analysis, Forex Trading, Fundamental Analysis, Inflation, Inflation rate, Macro Economic Indicators, Macro Economics, trading

Forex Market Analysis

Daily F.X. Analysis, August 28 – Top Trade Setups In Forex – U.S. Fed Chair Powell Speaks!

Post author By Ali B.
Post date 28 August, 2020
1 Comment on Daily F.X. Analysis, August 28 – Top Trade Setups In Forex – U.S. Fed Chair Powell Speaks!

On the news front, the economic calendar is due to a report series of CPI and GDP figures from the European economy. These events are expected to be overshadowed by the U.S. Personal Pending, Chicago PMI, and Revised UoM Consumer Sentiment, which are expected to slightly worse than beforehand. This may add further bearish bias for the U.S. dollar today.

Economic Events to Watch Today

EUR/USD – Daily Analysis

During the Thursday’s Asian trading hours, the EUR/USD currency pair managed to extend its previous session gaining streak and still flashing green while taking round near 1.1830/40 level mainly due to the broad-based U.S. dollar selling bias, in the wake of cautious sentiment around the market ahead of the U.S. Federal Reserve (Fed) Chair Jerome Powell’s speech. On the contrary, the buying interest around the shared currency is declining on the day amid the intensifying virus fugues in Europe, which eventually becomes the key factor that has been capped further upside in the currency pair.

At the moment, the EUR/USD currency pair is currently trading at 1.1835 and consolidating in the range between the 1.1817 – 1.1850. However, the traders are cautious about placing any strong position ahead of week’s Jackson Hole conferences where Federal Reserve’s (Fed) President Jerome Powell will speak about the central bank’s long-awaited monetary policy framework review, which will focus on inflation.

Despite the upbeat U.S. and China data, the equity market has been declining since the day started amid the renewed concerns over the US-China relation. At the US-China front, the Trump administration sanctioned those companies who are helping China to mark its existence in the South China Sea. In contrast, China fired missiles in a military drill near the South China Sea.

At the USD front, the broad-based U.S. dollar failed to gain any positive traction on the day. However, the losses could be associated with the doubts about the U.S. economic recovery ahead of Fed Chairman Jerome Powell’s speech at Thursday’s Jackson Hole symposium themed. However, the losses in the U.S. dollar became the key factor that kept the currency pair’s higher. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies dropped by 0.12% to 92.882 by 11:59 PM ET (4:59 AM GMT).

At the coronavirus front, the coronavirus cases grew to 236,429, with a total of 9,280 deaths toll, according to the German disease and epidemic control center, Robert Koch Institute (RKI) report. In the meantime, the cases rose by 1,576 in Germany yesterday against Monday’s +1278. Whereas the death toll also grew by 3. It is worth mentioning that Germany recorded its highest number of new COVID-19 cases during the weekend in almost 4-months. As a result, they undermined the bullish sentiment around shared currency and held the currency pair between the thin range.

Daily Technical Levels

Support	Pivot	Resistance
1.1754	1.1828	1.1894
1.1689		1.1967
1.1615		1.2033

EUR/USD– Trading Tip

The EUR/USD is trading slightly bullish at 1.1851, crossing over the resistance level of 1.1849 level. On the lower side, the EUR/USD may find support at 1.1830, while a bearish breakout of 1.1830 level can trigger selling until 1.1800 level. In case of a bullish breakout, the EUR/USD pair may begin further buying trends until 1.1880 and 1.1945 levels.

GBP/USD – Daily Analysis

The GBP/USD stimulates the daily high to 1.3242, up 0.29%, while directing into the European session open. Like major pairs, the Cable restored the yearly high on Thursday ere dipping to 1.3161, which caught the two-day winning streak. After remarks from Fed Chair, the broad U.S. dollar rally pulled the quote descending the prior day.

The greenback’s latest drops support the pair bulls before BOE Governor Andrew Bailey’s address at the Jackson Hole Symposium. While running the third bullish day in the previous four, the GBP/USD prices also spend tiny heed to the Brexit distress indicated by The Times.

The final scheduled round of post-Brexit trade negotiations between the E.U. and the U.K. have already been abandoned, but ministers are expected to appear next week. Additionally, Germany’s expulsion of Brexit discussions as agenda from next week’s critical talks amongst the E.U. representatives.

Subsequently, the uproar girdling insect repellent ingredient defending against the coronavirus (COVID-19) and 21-day immunity plan represented a mild enthusiasm at home. The sentiment overlooks the biggest daily COVID-19 problems while producing 1,522 numbers for Thursday.

On the other hand, U.S. President Donald Trump addressed to end dependence on China “once and for all.” Besides, the mystic concepts of Fed Chair Powell, involving Average Inflation Targeting (AIT), appear to decrease the allure as markets start reading between the words and spot economic worries.

Daily Technical Levels

Support	Pivot	Resistance
1.3145	1.3215	1.3268
1.3092		1.3338
1.3022		1.3391

GBP/USD– Trading Tip

The GBP/USD has distributed the trading range of 1.3240 – 1.3180, and a bullish breakout of Cable is anticipated to lead it higher unto 1.3275 mark. On the higher side, the GBP/USD faces the next resistance at 1.3275 mark and over this level, the pair may find 1.3323 resistance. Speaking about the technical side of the market, 50 periods of EMA, RSI, and MACD suggest bullish bias in the GBP/USD pair. Today, let’s look for buying trades above 1.3275 level.

USD/JPY – Daily Analysis

During Thursday’s early European trading session, the USD/JPY currency pair managed to stop its early-day losing streak and took modest bids near above 106.00 level mainly after the (BOJ) board member Hitoshi Suzuki expressing his take on the monetary policy outlook, which eventually undermined the Japanese yen and extended some support to the currency pair.

Meanwhile, the risk-off market sentiment, driven by the renewed US-China tussle and intensifying virus cases in Europe and Asia, tends to underpin the safe-haven Japanese yen and kept the currency pair sidelined. At this moment, the USD/JPY currency pair is currently trading at 106.02 and consolidating in the range between 105.81 – 106.08.

It is worth reporting that the Bank of Japan (BOJ) board member Hitoshi Suzuki expressed his part on the monetary policy outlook while saying that “Will ease monetary policy further without hesitation with an eye on the pandemic impact on the economy. “He also added that “If BOJ were to ease more, it could use a special program for combating pandemic, cut short-, long-term interest rates or ramp up risky asset buying.” However, these statements recently weakened the Japanese yen and provided little support to the currency pair.

Apart from this, the Takatoshi Ito, a famous economist who was once a preferred nominee to become Bank of Japan (BOJ) governor, stated that the Japanese economy could see a quicker recovery by 2022 if a vaccine becomes available. However, the currency pair failed to give any major attention to the above headlines, as it remains flat around 106.00 due to the cautious risk tone and weaker greenback ahead of the Fed Chair Powell’s Jackson Hole speech.

Across the pond, the failure of the American lawmakers to offer any hint on the big coronavirus (COVID-19) relief package or the highest COVID-19 new cases in Italy since May, not to forget the fresh US-China tussle over the South China Sea, all factors are weighing on the market trading sentiment, which could be considered as the main factors for the currency pair limited moves.

At the US-China front, the Trump administration plans sanctions on those companies who are helping China to mark its existence in the South China Sea. At the same time, China fired missiles in a military drill near the South China Sea. The U.S. Secretary of State Michael Pompeo criticized China for “coercive bullying tactics against our friends in the United Kingdom.” This also exerted a burden on the market trading sentiment. This, in turn, underpinned the safe-haven Japanese yen demand and capped upside momentum in the pair.

Despite the risk-off market sentiment, the broad-based U.S. dollar failed to gain any positive traction on the day, as well as the losses could be associated with the doubts about the U.S. economic recovery ahead of Fed Chairman Jerome Powell’s speech at Thursday’s Jackson Hole symposium themed. However, the losses in the U.S. dollar became the key factor that kept the currency pair’s gain limited. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies dropped by 0.12% to 92.882 by 11:59 PM ET (4:59 AM GMT).

Looking forward, the market traders await the Federal Reserve Chairman Jerome Powell’s speech in the Jackson Hole Symposium. As well as, America’s preliminary readings of the second quarter (Q2) GDP, which is expected -32.5% versus -32.9% will be key to watch. In the meantime, the updates surrounding the fresh Sino-US tussle, this time over the South China Sea, as well as the coronavirus (COVID-19) updates, could not lose their significance.

Daily Technical Levels

Support	Pivot	Resistance
105.8700	106.2900	106.9700
105.1800		107.4000
104.7600		108.0800

USD/JPY – Trading Tips

The USD/JPY is trading bearish at 106.082 level, holding above a support level of 106, which is extended by upward channel. On the higher side, the USD/JPY expected to gain an immediate resistance around 106.566 and 107.078. Looking at the 2-hour timeframe, the 50 periods EMA is extending resistance at 106.350. Likewise, the MACD and RSI are staying in a bearish zone, beneath 50 and 0, sequentially. The USD/JPY may trade bearish below 106.350 to target 106 and 105.800. Good luck!

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