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Johnson's insidious plan, US GDP and dollar’s reactionBoris Johnson asks Queen to suspend parliament. The decision will cut dramatically the time MPs will have to take action to prevent no-deal Brexit. he is going to ask the Queen to suspend parliament for five weeks from mid-September. It seems like the Queen is ready to be in. And this means that the opposition will have time until September 12 to prevent the "no-deal" Brexit. The value of the pound has fallen by 1% following news that Prime Minister Boris Johnson is planning to suspend parliament The signal is more than alarming. Chances of the "no-deal" Brexit have increased dramatically. And this means that you need to be careful. Now we consider such pound descents of 150 points as an opportunity for cheaper purchases. But with stops. Once again, we note that events are developing against the pound, for now. Data on US GDP for the second quarter will be the main event. Experts expect a slight downward revision. The GDP growth rate is expected to remain at 2 %. Our expectations are more pessimistic. The fact is that the global economy as a whole and individual countries are increasingly showing signs of a slowdown. Very indicative is the data on German GDP, which, recall, showed a decrease in the second quarter. And most importantly, the decrease was due to the slow negative dynamics of exports. That is the direct evidence of the destructiveness of a trade war. There are reasons to expect further deterioration of the situation. Thus, we will not be surprised if the data is reviewed for the worse, but not by 0.1%, but more for example 1.5%. That will shock markets and the dollar will inevitably suffer. Moreover, the dollar will be under double pressure: the reaction to weak economic data will be multiplied by the growth of confidence in the Fed rate cut in September. So today we will sell the dollar across almost the entire spectrum of the foreign exchange market.
Long
by Trade24Fx
2
Arrangements, collapse in Germany and data from the USAThe China-United States Trade War is an ongoing economic conflict between the world's two largest economies. Two countries cannot even agree if they are talking. According to Trump, he got a call from Chinese officials, however, China did not confirm that yet. Well, quite possible that there was no call. this means that we are in a situation where the parties are in the active phase of the confrontation. In the light, we will continue to look for points to buy for safe-haven assets (the Japanese yen in the foreign exchange market and gold in the commodity market). Yesterday extremely weak data on the business climate in the largest economy of the Eurozone came out, today German GDP in the second quarter fell by 0.1%. Another quarter with a minus mark and the recession will be announced officially. Recall recession is a period of general economic decline, defined usually as a contraction in the GDP for six months (two consecutive quarters) or longer. An extremely alarming signal was the decline in German GDP mainly due to a sharp drop in the country's exports (it took 0.5% of GDP growth, actually leading it into the negative zone). This is an example of how the trade war could hurt. This news confirmed our recommendation to avoid buying euros. Instead, we suggest selling the euro against the Japanese yen and the British pound. This trading idea this week works just great. As for the dollar, not everything is that simple. Yesterday's data on orders for durable goods, consumer confidence and business activity in the US came out better than expected, which suggests that the US economy is getting better. But, our position on the dollar is unchanged - we are looking for points for its sales. First of all, against the pound and the Japanese yen. Also, on Thursday, revised data on US GDP for the second quarter will be published. Weak data may trigger a short dollar.
Short
by Trade24Fx
Printing Money, Interest Rates, and Equity MarketsI'm neither economist nor investment advisor, but the rise of cryptocurrency got me thinking about physical currency in America. Most of us know the U.S. Treasury prints money. Here's a chart, roughly, of how much they've been printing: There are several measures of money supply, but FRED:M2 is a fair picture of how much cash is out there. As you can see, it's a fairly consistent uptrend. Most of the charts in this article will have three moving average lines, inspired by Dave Landry. As Dave writes, they aren't magic; they just give us some help visualizing trend. But if we add regression channels over the last 20 years... ...we see that the trend is almost straight-line. The channels are a best-fit straight line with lines drawn 2 standard deviations on either side, which, for normally distributed events should contain 95% of population. Look how narrow the channels are when compared to something a little less predictable, S&P 500 : Just for kicks, let's tighten the channels to 1 standard deviation on each side, which should contain 68% of the bars: The only time the money supply growth dips below the channels is May 2006 through Nov 2008 and Sep 2009 through July 2011. Just to jog our memories, I'll overlay the SP500 and the Russel 2000 . Notice how, even though the money supply is always rising, when the pace of that supply drops a little bit, it precedes significant market drops, which "recover" when the pace of printing money returns to "normal." Of course, this isn't they only way to look at market events in those periods. There were real fiscal crises that happened. There may be other causes. I'm only asking a question of myself, "Is it possible that the extended bull markets we've seen are funded by the treasury's printing presses?" And remember, we're not just talking about how fast those printing presses run; we're talking about how fast the Treasury adds printing presses, especially when we see the velocity of money production increase along with the recent bull market: In 2014 the markets started to flatten out a bit. Feb 2014 saw a spike in money printing speed (notice the gapped bar.) A long bar show another spike in production Jan 2016, and a continued increase in speed through Sep 2018 when the stocks started sliding. This month, October 2018, we see the first decrease in money supply since Jan 2013 (if you compare end-of-month to end-of-month). Notice also the green, and drawn line marking the 2016 bull run. I believe people can predict the markets. Anybody who tells you for sure the market will do a certain thing by a certain date is, IMHO, viewing you as a market. I sure can't time the markets; I just like thinking about charts and asking questions. These charts leave me asking: To what extent is market recovery and growth funded by the manufacture of currency? Can that manufacture continue indefinitely? Who decides to slow down that production, and why? What does a drop in money supply mean? I assume it's the Federal Reserve "paying off" the Treasury Bonds it used to create the money, simultaneously lowering its debt and increasing the value of money. Should this affect my market bias? Should that affect my investing?
FRED:WM2NSEducation
by bradobro
EURUSD at 20 day Exponential Moving Average support.The 20 day moving average is a strong point which plays big part in how the future trend is set and detected. Setting up for a trade, short term selling from under 1.23 to 1.2270 may play a good trade short term trade, below it is stronger support directly to the 1.2200/1.2190 trend line support where more buyers are emerging. Be careful and follow also everything connected with news and don't forget next week is NFP's week. -------------------------------------------------------------------------------------------------------- Trading carries a high level of risk to your capital and may result in losses that exceed your initial deposit. Supplied information is not advice.
by TheTrade_Academ
GBPAUD Forecast for the week Long Entry: break of 1.82865 SL: will be right under the breaking point Short: Entry: 1.82865 SL: just above the resistance at price: 1.82865 Also a Bearish divergence, have formed. the price will go up a little before confirming the divergence Look in the RSI and the orange line in the chart, divergence is marked with cirkels Description: An long entry can be taken, when a break of the rising wedge above the resistance/support line (1.82865) A Short entry can be taken when the price hits the resistance/support line. This is risky, and therefore I will wait for the confirmation, when the price breaks the support line in the rising wedge. Historically there is a 69% chance for a breakout of the support line in the rising wedge. This is because a rising wedge is formed after a longer decline in price, and therefor the rising wedge can be seen as a consolidation formation, before further downside. Breakouts above the resistance line, is occurring 31% of the time historically. In a consolidating rising wedge. Also there is coming more this week about brexit, and can perhaps give more information about the prices direction Also there is a great deal of economic numbers with high importance coming out this week for Britain. That needs to be taken in considering. www.fxpro.co.uk
Short
by Fx-AlphaStrats
The Big Short | Putting Economic Data to the TestHello Traders, I have been fiddling with the idea of applying the same model used to predict Financial Markets to Economic Data.This is my first attempt at applying the model to such data publicly. Consider this post an experiment. Taking into consideration some fundamentals (and a little bit of rationalizing); Since the auto industry bail outs of 2008-2009 interest rates have been at a record lows(0%). Car sales reacted accordingly making a full recovery into pre 2008 levels. Now that QE and 0% interest is over (interest rates are likely to rise in the next few years), there is a bit of stagnation in the car industry as a whole. Once attractive lease offers and 0% financing is off the table a decline in sales should occur. Overall, when interest rates are high people buy less as a whole. Questionable Lending Practices: The use of Sub Prime loans in the auto industry and selling those loans as bonds has an all too familiar ring to it. Granted, it is not as rampant as it was in the mortgage industry, but the same practices of junk loans being sold as junk bonds is occurring. One does not need to be a prophet to know what the end result of that is. Take a look at this satirical piece by John Oliver for more detail: www.youtube.com Self Driving Cars: It is imminent, self driving cars are the future and can reach the everyday consumer as soon as 2020. www.nissanusa.com Why is this important? The idea of self driving cars also brings up the idea of not having to own a car to get around in one. Cars being able to move around without a driver + (UBER + Car Manufacturer Collaboration) = Less consumers having to own cars to get around in one. www.wired.com The Model: The most important aspect here is the model. Time and time again it has proven to predict and forecast financial markets with pin point precision. Here, the model points to 5.26 as the highest probability target. So...what does this all mean? If the model is successful in predicting the outcome of auto sales, it means that there will be a massive decline in auto sales. It also means that there is a great recession looming over us like a dark cloud. The ideas discussed in this thread are purely conversation topics that help "aid" the rationale behind the targets defined by the model. I do not consider myself an economist, nor do I think I have the full range of ideas listed in this thread. If you feel like you have a different outlook or if I missed something please feel free to discuss it in the comment section(with sources to back up your view). Best, Chartistry
FRED:ALTSALESShort
by GWaves
2
EURUSD outlook for the next week, waiting for NFPThe next targets could be fibo50%, to 1,120, and the next test of the trendline at 1,129, close to the 0.618 fibo important to understand if this bullish sprint really hiding something more than just a swing upward in a movement facing down... RSI+ MA seems now near a new attempt for a bullish momentum and direction.. The market movers that await euro-dollar in the coming week could therefore play a crucial role, just as has happened with the US GDP previous week..
by MANOLIS
3