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ECB meeting: risk balance in focus It is widely expected that the upcoming ECB meeting will be a non-event, it may affect the euro’s dynamics anyway, with the central bank’s rhetoric being in focus. It is possible that the regulator’s tone will start changing in the context of a policy review. It will be interesting if the bank acknowledges the improving economic data in the Eurozone, and how it will assess risks from Brexit trade policy, especially amid the recent escalation in tensions between the European Union and United States. The upside risk for the euro is the potential shift in balance risk to neutral on the back of rising core inflation and the assessment of the so-called side effects from negative interest rates. In other words, the central bank may strike a slightly more hawkish tone, which in turn could lift the euro as it struggles to firmly regain the 1.11 handle. So should the ECB surprise to the upside, EURUSD may get back above the mentioned level and overcome the 200-daily moving average around 1.1130. on the downside, the immediate support comes at the 100-daily moving average at 1.1070. As long as the common currency remains above this line, downside risks are limited. Also, the Eurozone consumer confidence index may help to lift the euro of the indicator improves from -8.1 in December.
by HelenRush
EURUSD faces another bearish rejection In the first half of the day on Tuesday, EURUSD climbed above the 1.11 handle, mainly due to unexpectedly upbeat ZEW survey out of Germany. However, stronger dollar coupled with the prevailing risk aversion prevented the pair from turning bullish. The euro was rejected from local highs around 1.1120 and settled around 1.1080. Rising concern over a new strain of coronavirus in China fueled risk off sentiment across the markets yesterday, and despite the panic has abated since then, investors remain cautious, which in turn keeps the common currency under pressure. In the short term, the pair will continue to follow risk trends as well as dollar dynamics. Also, traders start to shift focus to the upcoming ECB meeting. It is widely expected that the meeting will be a non-event this time, but the central bank’s tone may affect the short-term direction in the pair anyway. From the technical point of view, EURUSD is again stuck between the 200- and 100-DMAs, and the risk of a break below the latter is rising after the prices dipped back under the 1.11 handle which acts as the immediate resistance again. Should the selling pressure persist in the near term, the single currency may really threaten the 100-daily moving average which now comes at 1.1067.
by HelenRush
Oil prices drift lower amid risk aversion Oil prices made some upside attempts on Monday, driven higher by fears about supply disruptions amid unrest in Libya. Brent climbed to $65.70 but failed to stay elevated and slipped back to $65. On Tuesday, the futures extended losses and have encountered a local support around $64, marginally above the 200-DMA. The recent decline was due to a massive risk aversion fueled by a rising concerns over the outbreak of coronavirus, a new disease which causes pneumonia-like symptoms. Also, investor sentiment has deteriorated substantially after Moody’s downgraded Hong Kong’s credit rating, citing the government’s failure to deal with a long-standing social unrest. As a result, Brent has lost its modest upside impetus and turned negative, both in the daily and weekly charts. In the short term, the prices will likely remain under pressure, with downside risks prevailing as long as the futures remain below the $66 handle. In the short term, Brent needs to get above at least the $65 figure which serves as the immediate resistance again. On the data front, the API and EIA data due to be released on Wednesday and Thursday, respectively, due to yesterday’s public holiday in the United States.
TVC:UKOIL
by HelenRush
Gold bulls don’t give up Despite a rise in global stocks, gold prices appreciated to one-week highs just below $1,563 on Monday and remain close to the upper edge of the current trading range. Risk appetite remains elevated, with many global equities have been trading at record highs these days. Still, the precious metal remains afloat as some investors continue to express a cautious tone, citing the remaining trade issues between the United States and China after the signing of the phase one deal last week. The yellow metal continues its recovery after an aggressive rejection from long-tern highs above the $1,600 handle which remains the key target for bulls these days. On the downside, the $1,535 area continues to serve as an important support now, with the key level comes around the $1,500 psychological level. In the short term, the bullion needs to hold above the $1,560 in order to retarget the $1,577 region. In a wider picture, once investors digest the phase one deal, market optimism could wane gradually, which in turn will play into the hands of gold bulls. Besides, the major central banks continue to show their commitment to expansionary monetary policy amid the remaining economic weakness. In this context, the yellow metal will likely preserve its appeal as a safe haven in the medium and long term.
TVC:GOLD
by HelenRush
USDJPY rally helped by China data The USDJPY pair extended gains to fresh May 2019 highs around 110.30 early on Friday. The rally was helped by upbeat economic data out of China. China GDP growth in 2019 was 6.1%, in line with expectations. Despite the growth rate was the slowest in 29 years, the report was perceived as positive because many investors feared the numbers could come even lower, citing the trade dispute with the United States. Against this backdrop, risk sentiment continued to improve, with Asian stock markets rose following fresh record highs on Wall Street. As such, USDJPY continued yesterday’s rally and registered new seven-month highs above the 110.00 handle. Earlier, the pair received a boost amid broad-based dollar strength following better-than-expected US retail sales data. Now, USDJPY needs to confirm a break above the mentioned level on a weekly basis. Otherwise, the prices could correct lower to 109.80. in the near term, dynamics in the pair will depend on the upcoming economic reports out of the US, including housing starts, building permits, and industrial production. Should the numbers surprise to the upside as well, the pair may climb to fresh highs. Once above 110.30, the greenback may target the 110.70 area.
by HelenRush
Markets unfazed by trade deal, focus shifts to data As investors have already priced in a phase-one deal between the US and China before the event, the ceremony itself caused only a short-lived positive reaction across the markets. So, following a brief rally, risky assets mostly retreated while Asian stocks saw a muted and mixed reaction early on Thursday. Currencies were even more apathetic to the event. Now, market participants will likely shift focus to the upcoming economic data. The US retail sales will be the key release of the day, with signs of a weak consumer demand could add to the negative pressure surrounding the greenback after mixed inflation data revealed earlier in the week. Should retail sales growth comes lower than 0.3%, the report would be dollar-negative. Also, investors will assess imports and exports data out of the United States as well as business inventories. As for the EURUSD pair, disappointing US data may send the prices above the 1.1160 area. In this case, the breakout will serve as a confirmation of a break above the 200-DMA, which now acts as the immediate support area. On the upside, the key nearest target comes at 1.12. Otherwise, the recent recovery, which still looks fragile, may fizzle easily.
by HelenRush
EURUSD struggles around the 200-DMA EURUSD remains under pressure after failed attempts to break above the immediate resistance in the form of the 200-DMA around 1.1140. As such, the pair remains stuck within a bearish channel, with risks pointing to the downside in the near term despite dollar demand is fairly muted at this stage. Ahead of signing the first phase trade deal between the US and China, investors express a cautious approach due to lack of details of the agreement. Also, market participants realize that even after today’s ceremony, the two sides will still have to go through a long way to resolve the long-standing and deep conflict. Besides, the White House hinted that the existing tariffs on Chinese imports will remain in force until the US Presidential elections. Against this backdrop, demand for riskier assets looks weak, which in turn caps euro demand. From the technical point of view, unless the pair breaks above the mentioned moving average, the risk of a decline below 1.11 persists. The key support is still represented by the 100-daily moving average at 1.1060. even after the recent recovery from local lows around 1.1085, the euro looks weak due to a lack of positive drivers at this stage.
by HelenRush
Gold market bullish as long as prices above $1,500 Gold prices continue to decline on Tuesday and registered two-week lows around $1,535. The precious metal has trimmed intraday losses since then but remains under the selling pressure as market sentiment improves ahead of the ceremony of a phase one deal signing due tomorrow. But as this event has been priced in already, the downside risks for the safe-haven gold are limited at this stage. In the near term, the bullion will follow dollar dynamics in the context of the upcoming US economic data. In particular, the consumer price index due later today will be important, as signs of a still subdued inflation will confirm that the Federal Reserve won’t shift to hiking rates in the foreseeable future, which is a dollar-negative scenario. From the technical point of view, the yellow metal needs to hold above the $1,530 area in order to regain the lost ground with the initial target of $1,560. In a wider picture, the gold market remains bullish as long as the prices remain above the 100-DMA which comes just below the $1,500 handle. In the longer run, the precious metal could derive support from the potential geopolitical tensions as well as concerns over the economy if the upcoming data disappoint.
TVC:GOLD
by HelenRush
Oil market remains under pressure Crude oil prices remain on the defensive on Monday, nursing losses for a sixth day in a row, as traders continue to react to de-escalation in geopolitical tensions between the United States and Iran. Amid profit taking, Brent was rejected from highs around $71, down to the $64.50 area. At the start of a new trading week, the futures are desperately trying to cling to the $65 handle. The US and China are expected to sign a phase one trade deal this Wednesday and this event could serve as a bullish catalyst for the oil market, as the first step towards resolving the long-standing trade dispute will be taken by investors as a precondition to improvement in the global economic climate down the road. Also, traders will pay attention to the industry news out of the US. As a reminder, the EIA report last week showed that crude oil and gasoline stockpiles increased unexpectedly, which disappointed investors. Should the agency reveal another bearish report, Brent may come under a more severe pressure despite progress in the US-China trade relationship. As for the dollar factor, mixed dynamics in the greenback doesn’t affect oil prices much at this stage. Technically, Brent needs to firmly get back above the $65 handle in order to initiate a local reversal after a steep sell-off witnessed last week.
TVC:UKOIL
by HelenRush
Dollar: what to expect from the US jobs data The greenback saw mixed dynamics on Thursday as safe-haven demand has waned somehow amid easing geopolitical tensions in the Middle East amid the US-Iran conflict. As Trump has calmed down global markets, the threat of a full blown war receded, along with risk aversion. Now, market focus gradually shifts to the upcoming US jobs report due later today. As a reminder, the API data pointed to a rise in private sector employment by over 200,000, while the November figure was revised substantially higher. Judging by this report, one can expect strong numbers today, which in turn may push the greenback higher across the board. But it should be noted also that the ADP and NFP data are not often correlated, so there is a risk that the release may disappoint. By the way, apart from jobs data, wages will also matter for market participants as this component serves as an inflation indicator. Anyway, as the USD index remains relatively elevated, further signs of easing geopolitical concerns could prompt some profit taking in the dollar against high-yielding currencies. As for EURUSD, the pair briefly dipped below the 1.11 handle on Thursday and failed to stage a decent recovery. As long as the euro remains below the 200-DMA at 1.1140, bearish risks prevail.
by HelenRush
Oil market: bullish trend remains firmly intact Crude oil prices extended gains on Friday and registered fresh September highs just above the $67 handle. The futures finished marginally below this level and was the fourth weekly gain in a row. Brent has been following the upbeat sentiment in the stock markets, where a Santa Claus rally continues, backed by a widespread investor optimism over the US-China trade deal. The market is still supported by trade hopes that in turn help to ease market concerns over the state of the global economy. Additionally, oil prices derived a local support from the EIA data. The official report showed that crude oil stockpiles contracted 5.5 million barrels in the week to December 20, more than the expected 1.7-million-barrels decline. Meanwhile, Baker Hughes reported that the number of active U.S. rigs drilling for oil fell by 8 to 677 last week. At this stage, the bullish trend in the oil market remains firmly intact, with futures continue to target fresh highs despite the overbought conditions. On the other hand, unless fresh positive signals emerge, traders may shift into a profit-taking mode during the last trading days of the year. On the downside, the initial support comes around the $66 handle. Once the futures confirm a break above $67, the next resistance is expected at $67.40.
TVC:UKOIL
by HelenRush
USDJPY: downside risks limited due to trade optimism USDJPY gained on Thursday but has once again encountered a local resistance around 109.70. Today, the pair struggles to keep its upside momentum, trying to cling to the 109.50 area in order to avoid a deeper bearish correction. In general, the sentiment looks upbeat, mainly due to a better risk sentiment. At the same time, the 200-SMA in the weekly charts which comes around the above mentioned resistance caps the upside attempts. Also, the yen derived support from the Bank of Japan summary of opinions of the December meeting which showed that monetary authorities are not eager to increase stimulus further and instead prefer to assess the side-effects of their policy while maintaining the current monetary easing. Also, in his latest comments, the Japanese Prime Minister Abe noted that moderate economic recovery continues. Against this backdrop, USDJPY had to retreat from the important local highs but as long as the prices hold above 109.00, the upside risks prevail. The fact that investors in the stock markets remain bullish amid the renewed trade-related optimism, suggests that the safe-haven yen demand will likely remain subdued, at least until the US and China sign a partial deal. The ceremony is scheduled for January. In the near term, the dollar needs to firmly get back above the 109.50 area in order to challenge 109.70.
by HelenRush
Gold needs to confirm a bullish breakthrough Gold prices made an important breakout on Tuesday, accelerating the rally since the start of the week. The sudden spike was due to a combination of thin liquidity due to a Christmas holiday and the retreat in the dollar index back into the red territory. As a result, the yellow metal rallied above the 100-DMA and registered six-week highs around the $1,500 psychological level. After yesterday’s holiday, gold continued the ascent on Thursday and refreshed highs around $1,505. The question now is if the precious metal manages to confirm the breakout and preserve the latest gains amid low trading volumes due to the upcoming New Year holidays. In general, risk sentiment in the global financial markets looks quite positive now, which may cap further upside in the bullion. On the other hand, market year-end positioning could push spot gold higher in the days to come should the prices confirm a break above $1,500 in the near term. In a wider picture, the yellow metal shows a mixed-to-negative bias in the monthly timeframes, as the prices struggle to firmly retarget long-term highs above $1,550, registered in early-September. In many ways, the inability to stage a robust and straightforward rally is due to the fact that the United States and China are moving towards striking a trade deal. By the way, the two sides confirmed on Wednesday their readiness to sign the partial deal, which could curb further upside potential in the gold market these days.
TVC:GOLD
by HelenRush
EURUSD struggles to regain 1.11 During a strong sell-off late last week, EURUSD derived support around the 100-DMA which capped the downside pressure on Monday as well. The decline was mostly due to a pickup in dollar demand on the back of decent US GDP and PCE data – the figures mostly came in line with expectations and helped to further ease market concerns over a possible recession in the United States. Today, the pair once again encountered a local resistance around 1.11 and turned negative in the daily charts, after a limited recovery overnight. The common currency lacks the directional impetus amid thin pre-holiday trading. As a reminder, after today’s shortened session, many Western stock markets will be closed on Wednesday for Christmas. Amid low liquidity, EURUSD could settle in a tight range between the 1.11 handle and the 100-DMA around 1.1060. So far, it looks like the potential for a break below the moving average is limited. At the same time, chances of a break above 1.11 are low, as risk sentiment looks subdued now, with most equity markets show mixed dynamics amid the lack of drivers and significant news. In a wider picture, the common currency remains in a downtrend since early-2018, when the pair was rejected from highs above 1.25. as monthly timeframes suggest, to break this trend, the euro needs to retrace its losses to at least 1.16.
by HelenRush
Oil market: profit taking looks appropriate Crude oil prices continue to drift lower on Monday, extending the decline after a rejection from highs on Friday. Brent crude dipped below the $65 figure and is now trying to cling to this level on order to trim losses. The bearish correction looks appropriate after a period of strong gains. Ahead of Christmas holidays in the Western countries, many traders decided to take profit at attractive levels. In a wider picture, the market remains supported by trade-related optimism. By the way, Trump reiterated on Sunday that the two countries are ready to sign a phase one deal. This driver should cap the downside pressure in the market now. Apart from technical factors, the selling pressure came from Baker Hughes report which showed that the drilling activity in the Unites States increased by 18 oil rigs last week. In the near term, Brent could continue to consolidate around the $65 handle, a break below which will shift market focus to the 100-DMA which serves as a support zone marginally above the $64 figure. Should bearish pressure persist, this level will likely cap the decline. On the upside, the immediate meaningful resistance now comes around $65.80.
TVC:UKOIL
by HelenRush
Gold directionless amid the lack of news Gold prices continue to show sideways dynamics, trading in a tightening range since the start of the week. Price action is muted amid the lack of trade-related news, which makes markets directionless in the second half of December. The yellow metal registered one-month highs around $1,486 last week and has been consolidating in the $1,475 area since then. On Friday, the bullion shows a bearish bias, struggling to get back above $1,480. Interestingly, investors in the global financial markets ignored the statement by US Treasury Secretary Steven Mnuchin who said that the phase one trade deal is ready and will be signed in January. It looks like market participants are preparing for Christmas and New Year holidays, showing their fatigue. This apathy in turn suggests that the precious metal will likely continue to consolidate in the days to come. From the technical point of view, gold prices have been rising since the start of last week and have a potential for bullish extension. Meanwhile, in the weekly charts, the bullion remains in a consolidation mode. In the short term, gold prices need to challenge the $1,481 level in order to see a more sustainable upside bias. On the downside, the key support comes around $1,470. At this stage, risks for the metal are skewed to the upside as global stocks could see a deeper correction ahead of holidays.
TVC:GOLD
by HelenRush
Oil prices stay elevated but hint toward correction Brent crude registered fresh mid-September highs around $66.20 on Tuesday but failed to confirm a bullish break and finished below $66. Today, the futures struggle to resume the ascent and hint toward a potential bearish correction, though in general, prices stay elevated within the upside trend. Rejection from fresh highs was due to overbought conditions coupled with stronger dollar. Also, the API report disappointed market participants as the data showed the US crude oil inventories rose 4.7 million barrels last week. Moreover, gasoline stockpiles jumped the most since January, by more than 5 million barrels. Now, traders hope that the official EIA report will show more bullish results. If so, Brent could receive a local lift but to get back above the $66 handle, the market may need positive investor sentiment in the global financial markets in general. After fresh record highs in Wall Street, Asian stocks traded lower on Wednesday, as the renewed no-deal Brexit concerns coupled with the lack of trade-related news curbed risk appetite. Against this backdrop, another bull run in the oil market will hardly take place any time soon. Besides, there are some overbought signals in the short-term timeframes. So traders will probably prefer to see lower levels to reenter the market with long positions. On the downside, the initial target comes around $65.
TVC:UKOIL
by HelenRush
Gold prices making ground despite risk-on sentiment Gold prices extend gains for a third day in a row after a rejection from more than one-month highs last week. The bullion has been making bullish attempts below $1,480, with upside bias persisting despite risk sentiment improved on Tuesday after fresh all-time highs in Wall Street overnight. Still lack of safe-haven demand prevents the precious metal from making more sustainable gains. Global investors continue to cheer the US-China consensus on the phase-one deal and now expect the two countries to sign the preliminary agreement. However, the current market optimism could wane if the official deal doesn’t come in the short term, which could play into the hands of gold market investors. Also, investors express a more cautious tone early in Europe amid the revived no-deal Brexit concerns after an optimism following the Conservative Party’s victory in the UK election. market fears reemerged on the comments from Prime Minister Boris Johnson who said he is looking to block any extension following the December 31 2020 deadline. In the short term, gold could stay elevated but the upside momentum will likely remain limited as long as risk-on sentiment prevails. Later in the day, economic updates out of the United States could affect the sentiment in gold market, and the disappointing figures may support the yellow metal at the expense of a weaker dollar. The immediate resistance comes around $1,480, while the next barrier comes in the form of the 100-DMA at $1,490.
TVC:GOLD
by HelenRush
EURUSD stuck between the moving averages After a brief spike to 1.12 on Friday and the subsequent partial correction, EURUSD started the new trading week on a positive note. However, the pair was rejected from local tops around 1.1150, where the 200-DMA lies and turned slightly negative on the day, with the immediate support now coming at 1.11. The trade-related euphoria turned out very short-lived, as investors shifted focus to the details of the phase one US-China deal and the potential for a comprehensive agreement between the two countries. So the bullish impetus for the high-yielding common currency from this front has abated fairly quickly. In the latest move, the euro failed to challenge the 1.1150 area as the economic updates out of the Eurozone came in mixed. In particular, German December flash manufacturing PMI declined from 44.1 to 43.3 versus 44.6 expected. Services PMI came in line with expectations while composite index reached 49.4 versus 49.9 expected. So, further sighs that German manufacturing recession hasn’t bottomed out yet pus the euro under some pressure. Moreover, Eurozone flash manufacturing PMI came in at 45.9 versus 47.3 expected, pointing to further stagnation in the regional economy. Later in the day, the US PMIs will set further tone for the pair, and stronger-than-anticipated results could push the dollar higher across the board. Anyway, EURUSD will likely stay within the range limited by the 100- and 200-DMAs as long as market participants continue to digest the US-China trade deal.
by HelenRush
GBPUSD enjoys post-election euphoria The GBPUSD pair jumped to the best levels since May 2018 marginally above the 1.35 handle on Friday. The rally has accelerated on the outcome of parliamentary election in the UK, where the UK PM Boris Johnson won a majority. After a knee-jerk reaction, cable retreated partially and has settled around 1.34, staying elevated. So, the UK managed to avoid a so-called hung parliament and the political uncertainty in the country decreased substantially as a result. Moreover, a large majority in Parliament will make it easier for Johnson to push his Brexit plans through, which is also positive for sterling. Also, the pound derives support from a general risk-on tone in the global financial markets amid further signs of a progress towards a partial trade deal between the US and China. However, as the pair is around multi-month highs now, it doesn’t look attractive for opening long positions. As such, traders may have to push the prices lower before to buy sterling on a dip. Anyway, the short- and medium outlook for the pair has improves substantially now, with further gains may be ahead for the UK currency. In the immediate term, GBPUSD could switch into a consolidation mode before a possible bearish correction which should be reasonable and limited anyway.
by HelenRush
Oil market: upside still limited by trade uncertainty Brent crude briefly dipped to nearly one-week lows around $63 on Wednesday but managed to trim intraday losses substantially by the end of the day. Today, oil prices are back above the $64 key handle, however still struggle to challenge the 200-DMA which serves as the immediate resistance now. The EIA report showed that crude oil inventories increased by 822,000 barrels last week while market participants expected a drawdown of 2.76 million barrels. Meanwhile, gasoline inventories rose by 5.4 million barrels and distillate stockpiles climbed by 4.1 million barrels. The bearish report fueled a local sell-off in the market but the fact that the futures managed to recover afterwards showed that traders are not ready to push Brent lower at this stage. This in turn may signal that markets still hope for a partial trade deal between the US and China. In recent developments, there are reports that China won’t hesitate to retaliate if the United States impose the December tariffs that a due to take effect this Sunday. In the short-term, Brent is supported by a weaker dollar as the currency came under a decent pressure following the outcome of the Federal Reserve meeting after the central bank said it won’t resume hiking rates in 2020. Still, the upside potential in the oil market is limited now as trade-related uncertainty persists.
TVC:UKOIL
by HelenRush
Dollar could gain on FOMC meeting The greenback is on the offensive against major rivals on Wednesday despite the prevailing risk-on sentiment in the global financial markets amid some signs pointing to China tariff delay. Traders are fairly optimistic about the ongoing Federal Reserve policy meeting that concludes later today. The US central bank is widely expected to deliver a non-dovish message on the economy and the outlook for its monetary policy, which would be dollar-positive. The Fed may point to the economic conditions that don’t warrant additional stimulus at this stage. As a reminder, last week’s employment data impressed the markets as the US economy created 266,000 jobs, exceeding the 180,000 estimate. Moreover, wages growth was decent and services sector remained strong last month. Against this backdrop, Powell may confirm that the regulator won’t rush to adjust its interest rates unless economic conditions materially change. In this scenario, EURUSD could extend the retreat from local highs around 1.11 and get back below the 100-DMA which lies around 1.1060. At that, demand for gold could wane quickly, sending the bullion to the $1,458 area and lower. USDJPY will likely regain the 200-DMA around 108.80 and retarget the 1.11 handle. Also, the US CPI report could affect USD crosses in the near term. Weak numbers may temper local demand for the US currency.
by HelenRush
Gold bulls cautious ahead of a risk event After a dramatic plunge on Friday amid a broad-based dollar rally on upbeat US jobs data, gold prices have been making recovery attempts since the start of the week. The $1,480 area continues to serve as the key resistance area, standing on the way to the $1,500 figure. Safe-haven demand seems to be reemerging on Tuesday as investors still don’t see any concrete progress towards at least a partial trade deal between the United States and China. Moreover, the December 15 tariffs deadline looms and this makes investors nervous. Therefore, should investor sentiment deteriorate further in the short term, the yellow metal may receive a boost and recoup at least a part of the recent losses. On the other hand, there is a major risk event for gold this week. On Wednesday, the two-day Federal Reserve policy meeting concludes, with the outcome of the event will set the tone for the greenback and in turn for the precious metal. The selling pressure on gold could come from a possible pock up in USD demand should the US central bank express a less dovish tone on the outlook for the country’s economy and its monetary policy. Technically, gold prices need to hold above the $1,454 figure in order to avoid deeper losses in the short term. In a positive scenario, the bullion may regain the $1,466 area and retarget the above mentioned resistance around $1,480.
TVC:GOLD
by HelenRush