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Helenrush

Oil: time for demand-side concerns? The crude oil markets are further supported by the looming US sanctions on Iran that are set to start on November 4. From its lows registered in August, Brent has risen by 20%, mostly on concerns that some additional shortfalls could tighten the already balanced market further. Apart from Iran, traders fear that Venezuelan production will continue to decline, which could bring a deficit of global supply at some point. Against this backdrop, despite the dollar bullishness, Brent climbed above the $85 threshold for the first time since early-November 2014 yesterday. On Tuesday, we see some profit-taking and a retreat of prices below the key handle. In a wider picture, as the barrel is getting closer to $100, supply-side fears could be replaced by demand-side concerns as the elevated prices may derail the global demand and erode the economic growth, especially amid the ongoing US-China trade war and the decline in many emerging market currencies. And this is a risk for a $100 scenario.
TVC:UKOIL
by HelenRush
GBPUSD: “sell on rallies” still favoured The pound has stopped its aggressive decline on Monday, with the pair is trying to recover its ground and find a bottom in the 1.30 area. The latest relief came from surprisingly strong UK PMI data. The manufacturing index rose 53.8, above the expected 52.5, after three months of slowing. The prior result was revised higher to 53 from 52.8. Moreover, the output expanded at the fastest pace in four months. However, it’s just a local bullish driver which will likely be only a short-term boost for GBPUSD as Brexit issues remain in market focus this week. The annual Tory party conference could bring back bearishness to the sterling. Traders will closely follow the PM May’s speech on Wednesday, so the downside risks for the pound persist from this front as the two sides haven’t still resolved some of the key issues in the “divorce” negotiations. As such, the pound looks interesting for a “sell on rallies” play as long as there is no significant progress in the Brexit deal. Another source of uncertainty for the British currency is the widespread solar strength after the FOMC meeting last week. So after some attempts to get back above the 1.31 threshold, the pound could challenge the 1.30 threshold and refresh mid-September lows in the 1.2970 region. 
by HelenRush
EURUSD and the wind of change The EURUSD extends its slide on Friday after sharp losses yesterday, as traders are digesting the developments in Italy. The government approved a controversial budget, which aims for a deficit of 2.4% of GDP in 2019.The markets expected that the deficit would be below 2%, in line with EU rules. Moreover, the number may get even higher as the budget is debated in parliament. In addition to this, we see a widespread rally in the greenback after a “hawkish” Fed’s rhetoric during the meeting this week. Meanwhile, fresh economic numbers added to the gloomy picture around the single currency. After Germany's positive CPI readings yesterday, traders were disappointed as the Euro zone core inflation fell back below 1.0%, down to 0.9% -1.1% expected. On Monday, the pair climbed above 1.18 for the first time since mid-June, while at the end of the week the price has slipped below 1.16 and registered a two-week low at 1.1570. In the absence of corrective technical signals and positive fundamental drivers, EURUSD could target the 1.15 handle, especially as the EU officials express concerns over Italy’s budget plans.
by HelenRush
Brent: market doubt is driving prices higher Brent crude extends its gains on Thursday, with price has refreshed four-year highs marginally below the $82 handle which is the immediate target for bulls now. The barrel has trimmed gains later but remains in the positive territory staying afloat above $81. The key drivers for the market are expectations of the US sanctions on Iran as well as OPEC’s decision not to increase production further. However, there are reports today that Saudi Arabia and other oil producers have discussed possible output increase last week in Algeria, and that the countries decided to revisit the issue of possible increase in December meeting. Saudi is said to plan to boost oil supply by 200-3-00K bpd in next two month. However, the market reaction to the reports is limited as this is not enough to compensate for lower Iran output as the total shortfall is expected to come around 1 million bpd. As long as market participants doubt that the key producers will be able to compensate for the shortfall in Iran and Venezuela, the bullish trend will remain intact. Brent could shift to a corrective mode in the near term, but the potential profit-taking should be limited at this stage.
TVC:UKOIL
by HelenRush
Gold still capped by $1,214 Gold price continues its one-month consolidation with few signs of a more robust breakthrough in either direction in the daily charts. However, the upcoming FOMC decision could bring a more aggressive price action in the precious metal market, depending on the dollar direction. There is some pick up in dollar demand in the short-term charts, which keeps the metal on the defensive. Obviously “hawkish” hints by the Fed will drive the yellow metal lower, with the target at $1,185. Currently, the bullion is changing hands below the $1,200 level again, unable to sustain its shallow gains as the downside pressure on the greenback is limited. Should however investors rush to “sell the fact” after a rate hike, gold could attract a decent buying interest. On the upside, the metal is still capped by the $1,214 figure that prevented prices from a more steady corrective recovery on several occasions since early August. As long as the yellow metal remains below this threshold, downside risks persist.
TVC:GOLD
by HelenRush
FOMC: "buy the rumour, sell the fact"? The greenback is under pressure against the European counterparts on Tuesday, with EURUSD is back on the way to 1.18, though the impetus looks rather limited for the time being. Traders have already digested slightly more “hawkish” Draghi’s statement, and now the markets are preparing for the FOMC meeting that concludes tomorrow.  The probability that the US central bank will increase rates tomorrow is nearly 94%, so this step has been priced in already. So it is possible that we’ll see the traditional "buy the rumour, sell the fact" trade against the dollar should the Federal Reserve fail to hint at a rate hike in December. Another risk factor for the greenback from the meeting is the Fed’s potentially cautious tone when speaking about the trade war consequences for the economy and the monetary policy as well.  As such, should we see a negative scenario and a play against the dollar, EURUSD could challenge the 1.18 threshold once again and refresh the nod-June highs, depending on the FOMD rhetoric. The chances of another rate rise in December, according to the market positioning, are currently marginally above 76%.
by HelenRush
EURUSD: focus on FOMC and Italy The EURUSD pair is back on the offensive after a brief dip late last week. The price is trading around 1.1770 on Monday, but the recovery impetus looks limited due to some risk events due later this week. Besides, the euro’s upside potential is capped by a slight risk-off tone in the global markets. On Wednesday, the FOMC will announce its two-day meeting results. As a rate hike is already priced in, investors will focus on the tone of the central bank’s statement and its dot plot. Should the Fed express confidence in further robust growth of the US economy and dismiss the risks from the escalating US-China trade war, the greenback will rise across the board. The next day, the Italy’s government will present its budget proposals, and there is a risk that the plan will disappoint the markets. As such, in a negative scenario, EURUSD could get quickly below the 1.17 threshold and challenge the 1.1650 area. And the potential risk aversion may increase the potential downside pressure on the single currency.
by HelenRush
EURUSD targets 1.20 due to dollar weakness The greenback is mixed on Friday and remains unsettled in general despite a rise in the US Treasury yields. The EURUSD pair has briefly probed the 1.18 figure a break of which could open the way to 1.20. The price remains close to June highs but refrains from another bullish wave after yesterday’s aggressive rally. Apart from dollar weakness, the single currency is supported by stabilization of Italian bond yields as well as by general risk-on sentiment globally. In this context, the euro has a potential for further rise, especially as the speculations about the prospects for a slower tightening by the Fed next year. On the other hand, the economic outlook remains uncertain in the euro one, and today’s fresh PMI data which came on a mixed note confirm this. As such, this factor could cap the pair’s bullish potential in some way. As for the dollar itself, the prepositioning ahead of the Fed meeting due next week shows that investors don’t hope for some aggressive signals, while the third rate hike this year has been fully priced in already. So the bullish outlook for EURUSD remains intact and could be derailed if the risk-off tone reemerges.
by HelenRush
Brent struggles to push for better levels Crude oil prices continue to grind higher on Thursday, with Brent has settled around the $79 figure after a brief jump to $79.30 earlier in the day. The price remains in the positive territory and looks set for further rise with the key target at $80. Talks of $80 Brent help the prices to stay elevated as following the comments by Saudi Arabia, similar statement came from Iran. The country’s oil minister highlighted that oil at $80 a barrel is a “suitable” price. Meanwhile, the expected major decline in global supply as a result of sanctions on Iran further keep the market afloat. The fact that the US crude oil inventories decline for a fifth consecutive week adds to the positive sentiment as well. On the other hand, it seems that the barrel lacks the upside impetus to challenge the key barrier again, and that the existing bullish drivers are not enough to push Brent to better levels in a more sustained manner. Moreover, the risk of some profit-taking is growing as the proximity to the $80 level deters investors. But as long as the greenback under a substantial pressure, Brent will likely remain on the offensive.
TVC:UKOIL
by HelenRush
GBPUSD: downside risks are still there The pound briefly jumped to fresh two-month high of 1.3175 in a knee-jerk reaction to strong UK inflation data. The headline consumer price index rose to its highest levels in six months and was a surprise for markets. However, GBPUSD failed to sustain gains and partially retreated, in part due to the fact that there was much summer-related boost to the CPI for August. But let’s not forget that sterling receives a decent support from positive Brexit comments recently, from both sides. As such, further signs of moving closer to the deal and any substantial progress in negotiations between the EU and UK will help to underpin the pound down the road. And now, as the inflation has accelerated, the Bank of England rate hike expectations could increase, which is also supportive for the pound. But the bullish scenario could be derailed as the greenback may rise across the board in pre-positioning for Fed rate decision due in a week. And this factor could serve as a driver for profit-taking in the GBPUSD pair should the negotiators fail to reach a meaningful progress in the coming days. Technically, the pair continues to target the 1.32 level, but could reverse gains and get back below 1.31 as dollar demand is expected to pick up.
by HelenRush
Brent spike is unjustified Crude oil price action looks unstable these days, with Brent tends to grind lower since reaching a peak above $80 last week. The barrel has rebounded after a brief dip towards $77 support earlier on Tuesday and jumped aggressively to $78.80 recently on the reports that Saudi Arabia said to prefer Brent above $80. However, the asset remains vulnerable to losses down the road, and the spike is hardly justified. Generally, the key source of distress for crude oil prices comes from the ongoing US-China trade war. Trump has slapped tariffs on $200 billion of Chinese goods overnight. Beijing vowed to retaliate and accused the US President of poisoning trade talks. As such, this factor remains the bearish driver for Brent as the escalation of the conflict causes concerns over the global demand. Besides, Iraq can increase oil production immediately to support the market ahead of the implementation of US sanctions on Iran, while Russia’s Novak said yesterday that OPEC and its allies could discuss the possibility of increasing oil production by more than 1 million barrels per day during the upcoming meeting scheduled on September 23. As such, the market will continue to follow the developments from these two fronts in coming days, while recovery attempts will likely be limited and short term due to the lingering downside risks for demand and the prospects of increasing OPEC supply.
TVC:UKOIL
by HelenRush
Dollar remains attractive for buyers The greenback started the week on the defensive as part of a marginal profit taking after a rally on Friday fuelled by strong US economic data. Despite the upside impetus has abated, the buck stays afloat as investors anticipate another escalation of the US-China trade war which could trigger another sell0off in the riskier assets. US is reported to impose tariffs on $200 billion of Chinese imports in the first half of the week, but at a rate of 10% instead of 25% signaled earlier, which partly explains the limited buying pressure on the USD and a relatively timid risk aversion at the start of a new trading week. Nevertheless, as the talks between the two countries are at a risk, and fresh mutual tariffs are looming, the dollar may yet receive a decent support from this front down the road as the conflict is far from being resolved. Additionally, the Fed is expected to raise rates later this month, which is another bullish factor for the greenback. As such, EURUSD could resume the decline after a potential rebound above 1.17. In the coming days, the pair could easily lose the 1.16 figure should the trade tensions escalate further.
by HelenRush
Retail sales report is the last hope for the dollar  The greenback dropped dramatically following the dismal inflation numbers on Thursday. The EURUSD, which also gained on a more “hawkish” Draghi rhetoric, jumped to two-week high of 1.17. However the pair didn’t dare to challenge the psychological level as the knee-jerk market reaction ebbed, but still looks set for another leg higher as the dollar remains on the defensive. In his new tweet, Trump denied pressure for a trade deal with China and confirmed that his country “will soon be taking in billions in tariffs”. This statement sent the China’s yuan lower and thus has partially eased the downside pressure on the greenback. It looks like the trade conflict between the two countries is far from being resolved, which means the buck still has a bullish potential despite the recent waves of weakness. In the short term however, the EURUSD pair could get a chance to challenge the 1.17 barrier with the immediate target at 1.1720, should the US retail sales report disappoint. The weak CPI figures pushed back investor expectations for further Fed rate hikes, and now some market participants are starting to doubt that the central bank will dare to hike two more times this year. This is a significant downside risk for the greenback, so retail sales data should come in better than expected to reassure the dollar bulls.
by HelenRush
Gold supported by trade talk hopes Gold prices show indecisive price action on Thursday as the greenback has been consolidating either. Yesterday, the precious metal gained decently following a strong rejection from lows around $1,192. The prices now stay above the 20-DMA and the $1,200 handle which is however not enough to confirm a shift to a recovery mode. Everything depends on the dollar behavior as the negative correlation between the buck and the bullion now exceeds 90% in monthly terms, which is more than normal. The greenback in turn is at crossroads as the risk sentiment has improved, while on the other hand the prospects for further Fed tightening help the currency to stay afloat. In this context, today’s US CPI report will be the key short-term driver for the dollar and for the yellow metal as well. Strong numbers could derail the latest recovery attempts and send gold back below $1,200. In a broader picture, the downside risks for the metal still persist. However, should the US-China trade tensions abate as the two sides have agreed to resume trade talks, the safe-haven support for the currency will weaken substantially. Such a scenario will open the way to a more robust correction in gold prices
TVC:GOLD
by HelenRush
EURUSD could be hit by ECB The euro reversed its gains from the start of the week and turned lower on Wednesday, despite there is no evident risk aversion in the markets and the dollar demand is rather subdued. EURUSD has got back below the 1.16 threshold and the 20-DMA, down to 1.1570.  The local bearish catalyst for the single currency is another dismal economic report from the euro area. The industrial production contracted further in July, while analysts expected some rebound in the output.  So the euro looks nervous ahead of tomorrow’s ECB meeting which could hurt the pair further should the central bank points to downside risks to growth and lowers its growth outlook, citing weaker external demand amid trading wars. However, even a cautious Draghi’s tone won’t be enough to challenge the ECB’s intensions to normalize policy, at least, not at this stage. More alarming signals could emerge in case the global economy feels the real effect from the trade conflicts.  Anyway, a slightly more dovish tone by Draghi than expected could fuel the current bearish correction in the EURUSD pair. The key support ahead of the 1.15 threshold lies at 1.1525. 
by HelenRush
Gold: bearish risks persist  Gold prices have been consolidating in a narrowing range lately, with the recent rise in expectations of higher interest rates in the US caps the dismal recovery attempts. Despite the greenback is on the defensive against major counterparts since the start of this week, the yellow metal fails to attract a more robust buying interest and remains close to the 20-DMA at $1,195.  On the one hand, the precious metal shows some signs of stabilization, with the latest significant decline was limited by lows just below the $1,190 figure. On the other hand, the solid US economic fundamentals coupled with the ongoing US-China trade war keep the greenback in the bullish trend, despite some negative pressure recently.  The US retail sales data are due on Friday, with another spectacular release could cement Fed rate hike expectations further and dent the emerging recovery in gold prices. For now, federal-funds futures point to a 80% probability of the Fed rate hike two more times this year, while just a month ago, the probability was around 60%. As such, downside risks for the yellow metal persist, and the prices could yet challenge the $1,190 in the coming days. 
TVC:GOLD
by HelenRush
GBPUSD may have a turbulent week Pound has staged a short-term spike following the better-than-expected Q2 DGP report, but failed to sustain gains as the manufacturing and industrial production disappointed. After a brief jump to 1.2954, the cable retreated back to opening levels, however keeps above the 1.29 threshold. Apart from the impressive GDP data, the general weaker tone around the greenback helps GBPUSD to refrain from losses, though the bearish risks from the Brexit developments are still there. In particular, it is reported that the UK PM May will hold a cabinet meeting this week to discuss no-deal Brexit as a part of preparations in case of a no-deal scenario. Chequers is the only Brexit plan on the table, which is a risk for the pound as EU negotiator Michel Barnier has said he is "strongly opposed" to aspects of the Chequers plan, and former Brexit minister Steve Baker said PM risks 'catastrophic split' in Tories. Apart from this factor, sterling will have another test in the form of a Bank of England meeting on Thursday. Despite the central bank is not expected to change the current stance of the monetary policy, Carney’s comments on the economy and the potential further policy course could bring the additional volatility to the pound that could get back below the 20-DMA and challenge the 1.28 threshold should the bearish risks realize.
by HelenRush
Dollar may yet regain strength The greenback declined dramatically against the yen overnight and remains unattractive for buyers on Friday. There is no obvious risk aversion so fat in the global financial markets, but investors are obviously cautious as the new Trump’s tariffs on China are looming as well as another trade war, this time with Japan. So the risk-off sentiment could reemerge at any moment, with the buck may benefit from market turmoil along with the yen as safe-haven currencies. And as long as Trump’s protectionism keeps global investors on their toes, dollar’s downside potential will be limited. As there are no signs of easing tensions between the US and its trading partners, this factor could serve as a safety cushion for the dollar at this stage. In the short term however the USD dynamics will depend on the economic signals. For the greenback to regain its previous strength, the NFP employment data, including wages, should surprise to the upside. Otherwise, the USDJPY will threaten the 110.00 figure, while EURUSD will break above the 1.1650-1.1660 area, to 1.17.
by HelenRush
GBPUSD: bulls should be cautious The pound staged an impressive recovery yesterday, though trimmed intraday gains consequently. GBPUSD continues to move north on Thursday, but remains below the key 1.30 handle so far. The sterling has regained the upside impetus due to a weaker dollar demand coupled with Brexit news. Positive Brexit headlines from Germany have inspired the bulls and partially eased concerns over a no-deal divorce, which spurred sterling buying after four days of decline. The technical picture has im-proved as a result, and the easing demand for the greenback also helps. Nevertheless, bearish risks are still there for the cable as Brexit issues are not resolved yet, while the buck may yet regain strength in the nearest future as Trump is about to announce fresh tariffs on Chi-na exports and thus make safe havens attractive again, after a short period of stabilization. As such, the pound bulls should be cautious in the current recovery which could reverse abruptly should the risk aversion reemerge as sterling remains very sensitive to risk sentiment, and the green-back receives a decent support from the trading wars in general. In a negative scenario, GBPUSD could get beck below 1.28 after a dip under the 20-DMA at 1.2850.
by HelenRush
EURUSD decline presents a long-term buying opportunity The dollar bulls are starting to lose the grip on Wednesday as the risk sentiment shows some signs of improvement. However, the buck remains on the offensive generally as the currency refrains from a deeper retreat ahead of new tariff exchange between the US and China due tomorrow. The trade war escalation could send the riskier assets lower once again, while the greenback will benefit as a typical safe-haven currency along with the Japanese yen. As such, EURUSD could resume the decline and once again challenge the 20-DMAwhich is the last line of defense ahead of the 1.15 support area. The risk factors for the euro are also the developments around the Italy’s budget and the potentially strong US jobs data for August due this Friday. In the long term however the pair could regain strength as the prospects of further tightening in the US may weaken should the economy slow down amid trade wars, while the ECB may start to prepare markets for hiking rates after the QE ends this year. As such, a dip below 1.15 could be attractive for long-term buyers who believe in the positive outlook for the euro zone economy.
by HelenRush
Brent nears $80, profit-taking around the cornerCrude oil prices continue to rise on Tuesday, and in the latest move, Brent has pierced the $79 handle and stays elevated despite the signs of overbought conditions start to emerge in the daily charts. The market sentiment remains firmly positive, with Brent has accelerated its ascent even as the greenback demand has picked up today. Traders continue to push the barrel closer to the key $80 threshold as the fundamental picture remains bullish amid the upcoming US sanctions on Iranian oil exports. The fact that supplies from the third biggest OPEC producer have been already declining quite rapidly supports crude prices amid expectations of further market tightening. This factor continues to serve as a “safety cushion” for the market in the medium term. However, to get firmly back above $80, Brent needs some additional catalysts and drivers. By the way, traders should be more cautious at this stage as the market ignores the downside risks including the upcoming US-China trade war escalation, emerging market turmoil and more positive sentiment around the greenback. So as soon as investors shift focus to these risks, oil prices could rapidly change the course and retreat from nearly two-month highs around $79.30, down to $77 or even lower.
TVC:UKOIL
by HelenRush
Brexit dominates pound trading The buying pressure on the greenback has eased since Friday rally, but it doesn’t help the pound which remains on the defensive at the start of a new trading week. The GBPUSD pair opened with a bearish gap on Monday, with the price got back below 1.29 and is approaching the 20-DMA at 1.2850. The selling pressure could increase further in the coming days as the House of Commons returns from the Summer holiday, and Brexit will dominate the headlines down the road. Brexit uncertainty is still there and the unresolved issues continue to limit the pound’s upside potential even as the greenback trading is subdued. Over the weekend, Barnier said that he is “strongly opposed” to May’s Chequers’ proposals which as he pointed would signal “the end of the single market and the European project”. As such, the two sides are yet to reconcile the differences to find a solution that will suit both. Against this backdrop, traders will likely refrain from sterling buying, with rally attempts could attract bears and send the pair below 1.28 in the coming days. Another risk for the pound is the worsening risk sentiment amid the ongoing US-China trade war, uncertainty around NAFTA negotiations and the currency crisis in the emerging markets.
by HelenRush
EURUSD: time for a correction? After the recent rally, the euro may be set for a bearish correction even as the dollar demand is tentative. A number of risk factors for the single currency that could derail its current bullishness and fuel a retreat from the recent highs above 1.17. EURUSD has slipped from August high of 1.1733 earlier this week on some signs of risk-off sentiment reemergence. On Friday, Trump’s new tariff threats have fuelled risk aversion, which added to the bearish bias in the euro, though the selling pressure is still limited, despite the euro area CPI data came in lower than expected. But further on, the single currency could face some obstacles that may send the pair lower. First, the Turkish lira crisis deepens, which could reignite worries over the European banks. So far, there are no signs of this crisis abating, so this factor may yet fuel euro weakness down the road. Second, the US-EU trade jitters back in focus after Trump rejected the EU offer to eliminate auto tariffs and called this offer "not good enough." This means that the two sides are yet to come to agreement, and this could be problematic, considering the US President’s tough position. Third, Fitch report on Italy’s ratings could increase the pressure on the euro should the agency present a lower estimate citing the country’s budget issues. In a negative scenario, the pair may get back below the 20-DMA at 1.1540 as early as next week. In the short term, the price could challenge the 1.1650 immediate support.
by HelenRush