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The markets illogicality the and trading anomaliesTuesday was another recovery day in the financial markets. In general, all this is rather strange and illogical. Markets first fall on the news of coronavirus and the epidemic. Logically and explainable, we will not go into details, and once again build logical chains of consequences. We did this in previous reviews. But upon the receipt of news that the epidemic is developing and becoming the largest in the last 20 years (the number of deaths exceeded 400, and the cases of 20,000), markets begin to calm down instead of continuing to work out a fundamental negative. This can be seen from the dynamics of the stock markets (Nasdaq updated new historical highs, and Tesla shares seem to have forgotten what gravity and common sense are), gold is declining, risky assets are recovering, VIX Fear Index is falling by more than 10% in day, and the Chinese stock market is adding 1-2% per day. The main problem in this chaos is not to lose one’s head and not to succumb to general madness. Ultimately, you need to work not with current prices and their dynamics, but with facts. And the facts are that the epidemic has already caused enormous damage and will continue to cause it. Yes, the extent of the damage is unclear and perhaps it will be partially leveled in one way or another. But it is applied and this is a fact. So, starting from the facts, we consider current prices in the financial markets to be abnormal. Based on the concept of “regression to the average,” prices will sooner or later have to return to their moderately adequate state. Accordingly, today we will buy gold with redoubled energy and volumes (for less aggressive traders, we can recommend selling a pair of USDJPY - the points for sales are simply excellent). Stock market sales remain our No.1 trading idea. Oil sales (WTI benchmark) from 51.20 also seem to be a balanced transaction (stops above 51.20 with profits in the region of 45 or even lower make the transaction extremely attractive). At the same time, we are acting with an eye on OPEC activity. If the cartel decides to intervene, and oil goes above 51.20, then a stop coup is quite possible. Speaking of other news and macroeconomic statistics, we note that today will be published US employment data from ADP. Although the focus of the markets is traditionally focused on the official figures, which will be published on Friday, strong deviations in the fact from ADP from forecasts can provoke significant movements in dollar pairs.
FOREXCOM:XAUUSDLong
by Trade24Fx
2
Markets relax again amid concerns over global economyMonday was a very busy day in the financial markets in terms of price dynamics. The tone was set by China, which opened its stock markets after a long vacation. Expectedly, the market collapsed despite unprecedented restrictive measures by the Government and an infusion of nearly two hundred billion dollars from the Bank of China. The Shanghai Composite Base Index lost $420 billion in value over the day. Experts, meanwhile, note that China is well suited to act as a catalyst for a new global crisis (until recently, the States have done it well). The fact is that in recent years, the role of China in the global economy has grown dramatically. Today, it accounts for about a third of world growth, which is more than the share of the United States, Europe and Japan combined. So if Goldman Sachs analysts are right (they forecast a decline in China in 2020 at 0.4%), then the global economy will face serious problems. Despite the sales in China and the next anti-record coronavirus epidemic, investors again relaxed and calmed down. This already happened last week and turned out to be nothing more than a pause in the main movement. So, such gold descents as yesterday, we recommend using the asset for purchases. Moreover, by itself, the gold market could face a shortage. The fact is that the volume of gold mining in the world in 2020 decreased for the first time in 10 years. All easily recoverable metal has already been mined, which only strengthens the current negative trends for the offer of an asset. The pound dipped well yesterday. Although not the fact that this is its absolute minimum. The fact is that Great Britain and the EU, after the official withdrawal of the first from the Union, switched to the most important thing - the trade agreement. And then, predictably, the parties faced a problem. However, we have already gone through all this over the past 3 years. The parties will exchange threats, raise rates, put pressure on each other in an attempt to win the most favorable conditions for themselves. Given that the period until the end of the year, the pound is waiting for a difficult 8-9 months. We continue to believe that the parties will agree on how this ultimately happened with Brexit. And so we will use the pound's descents as an excuse for his purchases. At least the point 1.2980-1.3000 looks too attractive not to risk buying from it. But with mandatory stops, because it is likely that the pound can be bought even cheaper. Oil (WTI benchmark) yesterday fixed below the support of 51.20. In general, the situation looks rather threatening for buyers, especially since the background is generally favorable for further sales (oil demand in China collapsed by 3 million b/d, which is about 20% of its total consumption).
Long
by Trade24Fx
Week results - between Brexit the NFPThe main event of the previous week was not a meeting of the Bank of England or even a decision of the Fed (both the Central Banks left monetary policy parameters unchanged). This is not data on US GDP (annual growth rates have been the weakest since 2016: 2.3% in 2019 compared to 2.9% in 2018), but the coronavirus epidemic in China. Yes, so far the epidemic has been localized in China. But this is not easier. The magnitude of the coronavirus epidemic has already exceeded the 2003 SARS. And the World Health Organization declared the outbreak of coronavirus a global emergency. So last week, the markets were busy on the one hand counting the victims of the epidemic (more than 300 deaths and more than 15,000 cases), and on the other hand, counting the economic damage. China extended the New Year weekend for another week. That is, another week 2/3 of the Chinese economy will be closed. The magnitude of the losses is not yet clear, as the epidemic continues, but it is already clear that we are talking about tens of billions of dollars. The chances of China's GDP growth rate dropping below 6% now seem almost 100%. So the fears and concerns of the global recession have intensified. The Chinese stock market today is trading in a deep minus (about -8%) despite all the efforts of the Government and the Central Bank. Despite such a regrettable situation, trading is an opportunity that can and should be taken advantage of. For the long-term, it is worth selling in super bought stock markets, but in the medium-term and locally, the purchase of safe-haven assets (gold and the Japanese yen) and the sale of risky assets such as the Russian ruble look great. Actually, we voiced this plan last week, but as the epidemic grows, the relevance of our positions only grows. Another significant event of the past week was Brexit. On January 31, Great Britain officially left the EU. We already wrote that buying pounds remains one of the best trading opportunities at FOREX in terms of potential in 2020. Whether it is implemented or not will show the progress of trade negotiations between the UK and the EU. But if successful, a pound above 1.40 could very well become a reality. The upcoming week will be saturated with various kinds of macroeconomic statistics. But the main attention will still be focused on Friday statistics on the US labor market and NFP figures. Our thoughts and forecasts on this subject will be described closer to Friday. In the meantime, we continue to monitor the development of the epidemic and investor sentiment.
FOREXCOM:XAUUSDLong
by Trade24Fx
2
The epidemic continues, Carney's last word, Brexit dayAs we warned in our two previous reviews, investors relaxed clearly prematurely. Actually, the dynamics of underlying assets on Wednesday confirmed this. And the front pages of publications clearly indicate what investors should think and worry about now - the coronavirus epidemic. Yesterday we wrote that its scale has already exceeded SARS, and the epidemic is still in full swing. The number of deaths has already approached two hundred, and the number of cases is clearly aimed at overcoming the 10,000 mark. Meanwhile, analysts are accelerating the theme of global recession and coronavirus as a trigger. We already wrote earlier that there are prerequisites for this and current events are really great for the role of a catalyst. In general, our recommendations on buying safe-haven assets are still working and their decline on Tuesday was only a great opportunity for cheaper purchases. But back to the events of yesterday. The Bank of England left the bet unchanged. Since the price of the pound at the start of the day partially took into account a possible decrease in the rate, its increase upon the announcement of the decision by the Central Bank was an attempt to exclude this component from the price equation. Actually, our recommendation to buy the pound worked at 100%. For the current head of the Bank of England, Mark Carney, this was the last meeting. Already in March, he will be replaced by Andrew Bailey, who previously served as Executive Director of the British Financial Supervisory Authority. Well, do not forget that today is Brexit day. On January 31, 2020, Great Britain leaves the European Union. Note that Brexit was and remains the main driver of pound movements. Moreover, it is precisely the “soft” scenario that is being implemented. Recall that when the markets were just thinking about the possibility of a “soft” Brexit, the pound was worth 1.41-1.43. From this position, its current prices look like great opportunities for medium-term purchases with very ambitious goals. The US GDP for the fourth quarter was 2.1%. Overall expected as it was the final reading.
Long
by Trade24Fx
12
Price of the epidemic, the Fed and BoE decisionsYesterday, investors felt less relaxed and confident than it was on Tuesday. The VIX index stopped pouring, gold even rose by the end of the day, the Russian ruble returned to decline, as did oil. That is, everything is back. Investors can understand: the number of deaths continues to grow rapidly, as does the number of cases. As a result, the current epidemic has already exceeded the 2003 SARS epidemic in scale. But events are still developing. Yes, China is doing everything possible and impossible to stop the epidemic: closing transport links, prolonging holidays, isolating entire cities - all this has a well-defined economic price. ING experts believe that this could cost China a loss of 0.3% of GDP growth in the 1st quarter of 2020. So for now, we are only strengthening our desire to buy safe-haven assets, stock market assets and other risky assets such as the Russian ruble. In addition to reports on the situation with coronavirus, the main event of the day yesterday was the announcement of the decision of the Federal Open Market Operations Committee. As expected, they did not change the bid. Of interesting and important. The Fed has extended repos at least until the end of April this year. That is, the markets will continue to fill in with money, which in itself is an occasion for dollar sales in the foreign exchange market. Today, the Fed will intercept the baton of the Bank of England. Despite the fears of some investors that the Central Bank will reduce the rate at the meeting, we believe that the monetary policy parameters will remain unchanged. Given that the pound has dipped quite well recently, today we will buy it against the dollar. But with mandatory small stops because surprises, although unlikely, are possible. In addition, the US GDP data will be published today. This is the final reading, so no surprises should be expected, but the indicator is important in itself, so you need to follow it up.
Long
by Trade24Fx
Markets calm too soon. Preparing for Fed's decisionDespite the fact that the coronavirus epidemic is in full swing (the number of deaths has already exceeded one hundred, and the number of infected has approached 5000), investors sighed with relief. The Fear Index (VIX) crashed 15%, safe-haven assets were down, and stock markets and oil were up. Since we still do not see reasons for optimism, our recommendations remain valid: we are looking for points for buying gold and the Japanese yen within a day, and we are selling the Russian ruble and stock markets in the medium term. As an argument, we will cite information from the head of the Medical School of the University of Hong Kong, Professor Gabriel Lung, who announced the data from which it follows that 10 times more people are infected with the coronavirus than is officially considered. According to him, in Wuhan alone, 25,000 people are infected with the coronavirus, and the total number is 44,000. He predicts that the number of coronaviruses infected in China will double in 6 days. If the markets decide to respond to this information, then we may well become witnesses of what happened on Monday. The only recommendation is that we recommend buying oil as a kind of hedge for other positions that are somewhat unidirectional regarding investor sentiment, as well as an independent, not hopeless position. Now everyone is fixated on one component of the oil market situation - demand. But there is still a suggestion. And in this regard, Libya sends a rather strong bullish signal to the market. We are talking about the possibility of an almost complete stoppage of oil production in the country. According to the head of National Oil Corp. Mustafa Sanalla in the near future production may be reduced to 72 thousand b/d. from the current 262 thousand barrels per day. Meanwhile, the main central bank of the world today will announce its decision on the parameters of monetary policy. With a probability of 87%, the bet will be left unchanged. At the same time, 13% of traders believe that the rate will be increased. Quite symptomatic is the fact that markets do not even consider the possibility of reducing the Fed rate. But unlike the ECB or the Bank of Japan, the Fed still has enough space for this to maneuver. So, they will almost certainly not touch the bid. So, all attention will be focused on the comments of the Fed. What are the plans of the Central Bank for 2020? How long will the money market continue to pump liquidity through repos? Answers to these and other questions can determine the configuration in the financial markets. Today we will not make plans and predict the reaction of the dollar to the outcome of the FOMC meeting. Our plan for working with this currency for today is to stay out of the market, study the position of the Fed and tomorrow will formulate a plan of work with the US dollar.
FX:USOILLong
by Trade24Fx
Effects of the coronavirus grow as panic in marketsThe coronavirus epidemic is gaining momentum. At least, according to statistics. The number of deaths is already close to 100, and the number of cases is close to 3,000. China is forced to react harder. The magnitude of the effects on the economy is growing exponentially. Lunar New Year celebrations are extended for at least 3 more days. Actually, more than one review can be devoted to the chronicles of the coronavirus and attempts to assess their consequences. But we are still more interested in the reaction of financial markets and how to capitalize on this force majeure. Panic in the financial markets after the weekend intensified. The Fear Index (VIX) literally skyrocketed, increasing by more than 40% in a couple of days! So far, everything is developing exactly with our recommendations: safe-haven assets are growing in price, stock markets have rained down, risky assets like the Russian ruble are losing, oil and other commodity assets are continuing to decline. So further deterioration of the epidemic situation will obviously be accompanied by the development of these trends. Therefore, the basic trading plan is still unchanged: we buy gold and the Japanese yen, sell the Russian ruble, sell shares. As for oil (WTI brand), the support we outlined 51.20 +/- is clearly the goal of the current movement. If events will develop as they develop, and the asset will be able to break through this support, then oil sales may well become uncontrolled. But until this happens, 51.20 seems to be a good point for shopping (for aggressive traders, conservative in place, we would wait until the markets calm down). Today, quite important statistics for the United States will be published (orders for durable goods and the level of consumer confidence), but let's be realistic - everyone is not up to it now.
Short
by Trade24Fx
Central Banks weekly results, Coronavirus, Fed & BoELast week was marked by meetings of the Bank of Japan, Bank of Canada and the ECB. The first wave of decisions showed that the central banks are not yet ready for any changes in monetary policy. You can understand them: at the current rate of economic growth, raising the rate is impractical, and there is nowhere to lower it (at least in the case of the Bank of Japan and the ECB). ECB expected to detail the new monetary strategy but did not get it. According to the head of the Central Bank Lagarde, before November December 2020, it will not be. This week will be the second wave of meetings of the Central Banks. The Fed will announce its decisions on Wednesday and the Bank of England on Thursday. With the Fed, the intrigue is minimal, but there are doubts about the Bank of England - a number of analysts predict a rate cut. But we will talk about this closer to Thursday. The main global event of the past week was the coronavirus epidemic in China. The situation looks quite menacing. About 40 million people are limited in mobility. The tourist season is disrupted (all this happens at the height of the celebration of the Lunar New Year). Economists are only just beginning to calculate possible losses, but it is already clear that the damage will be very significant. But events are still only at the progress stage. It is very likely that this week will also be marked by growing fears in the investor environment in connection with the epidemic. We cannot but note that risky assets (primarily stock markets) are potentially under attack. But safe-haven assets, on the contrary, have good chances for growth. So this week we are again buying gold and the Japanese yen. In addition, we will continue to sell the Russian ruble: the formation of a new government, a hasty and generally dubious constitutional reform, the outcome of risky assets - all these are good reasons for the correction of the ruble. On Friday, January 31, Great Britain officially leaves the European Union. This is an occasion to recall the pound and its purchases. Recall, when the markets were just beginning to believe in the “soft” Brexit, the pound grew to the area of 1.41-1.43. Now it is becoming a reality, but the pound is quoted at about 1.31. Which in itself is a reason to think about buying it.
FOREXCOM:XAUUSDLong
by Trade24Fx
ECB strategy, record pessimism amid record greedYesterday, the ECB expectedly left the parameters of monetary policy in the Eurozone. This was predictable, so most were interested in the new strategy of the Central Bank. But Lagarde greatly disappointed the markets, saying that before November-December, one could not count on any clarity in this matter. Thus, the euro will not have to rely on support from the ECB in the foreseeable future. So the decline in the single European currency was quite natural yesterday. Not even Lagarde’s remarks on the fact that moderate growth was observed in the European economy did not help. In general, the euro continues to look attractive enough for sale. Increase pressure on the euro and sales in the EURJPY pair, which we recommended selling the pair when it was quoted above 122. PricewaterhouseCoopers recently announced the results of a survey of heads of major world companies. We have already analyzed the results of a similar survey from Deloitte and note that PWC confirmed the previous results: the business is experiencing record pessimism since 2009. Only 27% of company heads expect improvement in the economy. Most expect a slowdown in the global economy. Characteristically, the most pessimistic leaders in the United States. Which once again convinces us of the correct course on sales in the US stock market. Meanwhile, the fall of the Chinese Shanghai Composite Index by 2.8% on the last trading day before the lunar New Year, was the largest drop in eight months. Naturally, with such a level of pessimism, purchases of safe-haven assets look great. So today we will continue to look for points for buying gold and the Japanese yen. Again, the epidemic in China is in the process of development: the second large city, Huanggang (population about 11 million people), has been closed for entry and exit. Railroad interrupted with the city of Ezhou. Friday promises to be a rather volatile day. Data on business activity indexes for the Eurozone and selected European countries, as well as the UK and the USA, coupled with statistics on retail sales in Canada, practically guarantee that it will not be boring.
Short
by Trade24Fx
China’s epidemic, Brexit, the ECB, ruble, and oilWednesday was remembered by the next highs in the US stock market. The madness continues, but characteristic is the reluctance of gold to decline against this background. It turns out that buying gold is currently practically risk-free: with an increase in demand for risky assets, it does not fall, but at the same time, any concerns of investors instantly provoke an increase in asset prices. Speaking of investor concerns. The coronavirus epidemic in China seems to be gaining momentum and is at risk of spreading around the world. And although China’s official authorities claim that the situation is under control, there are risks of causing significant economic damage to the Chinese economy. Events take place at the time of the New Year holidays in China, which traditionally attract millions of tourists. In general, the chances of a trend continuing in a slowdown in China's economy are very high. Against such a background, gold purchases continue to be one of our favorite deals to date. Another top deal for us is the purchase of the British pound. The reasons are the same - Brexit is slowly but surely moving towards the implementation of the “soft” scenario, and this is an occasion for the growth of the pound in the region of 1.40. Yesterday, the GBPUSD pair jerked up due to the fact that the House of Lords of the British Parliament approved the Brexit bill. So on January 31, Great Britain will leave the European Union. From February, a transitional period will begin, which will last until the end of 2020. Bank Canals expectedly left the rate unchanged yesterday. However, the Canadian dollar was still under pressure, and the trading tactics proposed by us in yesterday's review worked out 100%. It is a pity that it can hardly be applied today in the case of the euro. The ECB will announce its decision on the parameters of monetary policy in the afternoon. Almost certainly everything will be unchanged. But comments can be quite unexpected. It is about the announcement of the details of the new monetary policy strategy of the Central Bank. As expected, it will include a phasing out of quantitative easing and the era of zero rates. If nothing changes, we do not expect a significant increase in the euro today. Even when changing the strategy of the Central Bank, it’s not about the months, but about the years that will be needed for its practical implementation. Downward pressure has clearly prevailed lately, and aggression on the part of the ECB has not come for years. The Russian ruble continues to decline in the foreign exchange market, but the potential for its reduction has not yet been fully exhausted. It still seems rather vulnerable to us, so we will use any attempts to strengthen the ruble for its sales. Oil yesterday declined quite aggressively and overcame an important level of support, which opens the way to a further decline. Considering that the markets again turned their attention to an oversupply of oil in 2020, we will refrain from aggressive asset purchases for now.
Long
by Trade24Fx
UK labor market gives the BoE's room for maneuverThe main event of yesterday in terms of macroeconomic statistics was the publication of statistics on the UK labor market. The data pleasantly surprised. Recall that we expected rather weak statistics - the British economy has been painfully unconvincing in recent times. Nevertheless, the UK economy for three months until November created 208K new jobs, which is almost 2 times higher than analysts' expectations. The average weekly wage also came out better than expected (+ 3.2%). Against the background of such data, supporters of the fact that the Bank of England will lower the rate at the next meeting sharply fell silent. Indeed, data on the labor market show that the Central Bank has no reason to rush. This sharply increased the chances that the bet will be left unchanged. The pound, of course, reacted positively to statistics and a shift in market expectations. Recall in this regard to our recommendation to buy a pound on the slopes. In general, for Europe yesterday was a good day. Indices from the ZEW Institute came out very good (relative to past data) both in the Eurozone as a whole (the expectations index came out almost 2 times higher than in December) and in Germany (the expectations index was +26.7 with a +15 forecast). So the growth of the euro looked quite natural. But for its continuation, this impulse will be clearly not enough. In this regard, Thursday looks more promising: on this day, the ECB will announce its decision on the monetary policy parameters in the Eurozone. But we'll talk about this in tomorrow's review. And today, the main event will be the announcement of the Bank of Canada’s decision on monetary policy parameters. Experts do not expect any changes. We are also inclined to believe that the bid will be left unchanged. But given the general trends in the development of the global economy in general and in Canada, in particular, there are risks of a rate reduction. Moreover, the reduction potential is far from exhausted, unlike the ECB or the Bank of Japan. Considering that the USDCAD pair has been treading water for two weeks now, fluctuating in the range of 50 points, there is a possibility of a strong movement in pairs with the Canadian dollar today. Moreover, the direction of movement is not obvious. Our recommendation in this regard is to work along the way. That is, if the pair goes above 1.3090 - we buy, if below 1.3020 - we sell.
Long
by Trade24Fx
Central Banks week and the IMF head expects a crisisMonday turned out to be a fairly calm day for financial markets. The reason on the surface is a day off in the USA. So today it will almost certainly be more volatile and interesting. The Bank of Japan set the pace to the news background early in the morning. Monetary policy parameters were left unchanged. The press conference will be somewhat later than the publication of this review, so if any interesting details come up, they will talk about them tomorrow. Today will be interesting statistics on the UK labor market. Considering how disastrous the data on the British economy last week was, one should not expect any positive. Nevertheless, we continue to believe that Brexit is the main driver of the pound, and statistics in the current reality can lead only to local movements. Accordingly, weak data, of course, will provoke sales but are unlikely to lead to the formation of a trend. This means that purchases in intraday oversold areas remain relevant to us. Let's get back to the events of yesterday. Perhaps the most significant was the opening of the oil market with a gap up. The reason is concerns about the supply on the market. The fact is that Iraq and Libya drastically reduced oil production. In Iraq, because of protests, in Libya, because of armed groups that blocked the pipeline. And although it is very likely that these force majeure are temporary, we recall our recommendation to buy oil, which continues to be relevant in the current conditions. We also continue to be supporters of the impending crisis, or at least the strongest correction in the US stock market. So it was nice to note the replenishment in our ranks. The head of the IMF, Kristalina Georgieva, in her last interview, compared the current situation to what was happening in the world on the eve of the Great Depression. A key common feature of the 1920s and the present situation is excessive financial squandering. According to the head of the IMF, depression cannot be avoided. The whole question is only in time. In this regard, we recall our recommendations on buying safe haven assets (gold in the first place and Japanese yen in the second), as well as the “trading idea of the decade” - in the sale of shares of high-tech companies in the US stock market.
Short
by Trade24Fx
The week results: many events but few changesThe previous week was rich in important events, some of which can be formally classified as “game changers”, but judging by the dynamics of prices in the financial markets, the game did not undergo any special changes. Let's start with the most global. The United States and China signed documents on the first part of the trade deal. But there was no euphoria - almost immediately it became clear that this was really only the first step towards solving the problem. Hundreds of billions of dollars in tariffs remain in force, and harm to the global economy will continue to be done. China's GDP growth rate in the fourth quarter of 2019 was minimal over the past 30 years, which is the best illustration of the previous phrase. Other macroeconomic statistics released last week clearly confirmed this. The UK was the most disastrous data: GDP, industrial production, retail sales - all in the red and much worse than forecasts. Statistics from the US and the Eurozone also did not shine: industrial production in the States and the Eurozone came out in the negative zone. In general, against the backdrop of such statistics, we were once again surprised at new historical highs in the US stock market and became even stronger in our belief in its imminent decline. Madness cannot last forever. We already wrote about Putin’s initiatives and Medvedev’s resignation in Russia. We only note that the sale of the Russian ruble after the sale of shares in the US stock market and gold purchases, in our opinion, is one of the most promising positions in the financial markets as a whole. Speaking of gold. After the gold sellers could not get anything out of the signing of the agreement between the USA and China, we became even more fond of buying this asset both within the day and in the medium term, especially after gold returned above 1550. The Japanese yen, although it looks weakened, also It is a good alternative to gold, but in the foreign exchange market. Speaking about the upcoming week, we note that it promises to be even more interesting. It can be called the "Central Banks Week". The Bank of Japan, Bank of Canada and the ECB will announce their decisions on monetary policy parameters in their countries. And although experts do not expect global changes, given the weak form of the global economy, one can count on fairly “pigeon” sentiments in the ranks of the Central Banks.
Short
by Trade24Fx
The US & China, Russian reforms and an oil situationAfter the United States and China completed the first phase of negotiations, the result of which was not as rosy as many expected, the markets decided to take a break and continued to develop existing trends. Note that the current optimism has exhausted itself. But the negative on the horizon more than enough. Only the first step has been taken. Now the parties need to move on and begin the negotiation process on phase number 2. Given that the first phase was an extremely painful process, we are waiting for a problem on the way to the second. Do not forget also that the first phase still needs to be performed. For example, China must buy hundreds of billions of dollars of agricultural products from the United States. Not the fact that he will do it. Therefore, you should not expect a happy ending in the foreseeable future. Accordingly, we continue to look for points for the purchase of safe-haven assets both within the day and in the medium-term - gold and the Japanese yen. The growing pressure on the oil market is largely due to market concerns. Trade wars have shown themselves to be extremely destructive. Their continuation is further damage to the global economy, which in turn will lead to a decrease in oil demand. Nevertheless, we consider current oil prices favorable for intraday purchases (with small stops). The situation in Iran is very unstable; in Iraq, too, not everything is calm. That is, problems with the supply of oil on the market can arise at any time. In the news plan, the most interesting continued to happen around Russia and the Russian ruble. A more detailed analysis of the situation and our recommendation to sell the Russian ruble we will do in a separate review. In the meantime, we note that many experts perceive the dissolution of the Government and Putin's initiative to amend the Constitution as the next qualitatively new level of the usurpation of power. Which in itself is bad, because it deprives at least some hope of a change in the course and manner of behavior of the Russian Federation in the international arena with all the ensuing in the form of sanctions and the role of the rogue state. As for macroeconomic statistics on Thursday, the main event of the day was the publication of data on retail sales in the United States. The data came out exactly as part of the forecasts. Today, in the news plan, it is interesting with data on China's GDP (released as part of forecasts), as well as retail sales in the UK, inflation in the Eurozone and industrial production in the United States. In general, the day promises to be eventful, which means movements in the foreign exchange market and, accordingly, the possibility of earning.
Long
by Trade24Fx
The end of the positive, pressure on the pound & BoEThe US and China have signed documents for the first phase of the trade deal. It would seem that this has been expected for a very long time and this is an excellent occasion for a mass exodus from safe-haven assets and another injection of capital into risky assets. But it was not there. Gold yesterday was more than comfortable, and the Japanese yen in the foreign exchange market stopped pouring. The reason for this market behavior is that most US tariffs on Chinese goods will continue until the second phase of the agreement is signed. So, we can again recall the slowdown in the global economy as a result of trade wars, and the ghost of a global recession has become more tangible. In general, we continue to recommend the purchase of safe-haven assets. The inability of gold and Japanese yen sellers to use their main reason to intensify the decline in prices for safe-haven assets very clearly signals their weakness. Another pretty important event yesterday was the publication of inflation data from the UK. Unexpectedly, for most experts, inflation slowed to a three-year low (annual consumer price inflation in the UK fell to 1.3% in December from 1.5% in November). Considering that the issue of lowering interest rates by the Bank of England has recently been actively accelerated among analysts, now there are many more reasons for this. Actually, many are waiting for a rate reduction this month. Formally, the pound is a strong bearish signal. But we will not rush to sell it anyway. Recent events show that Brexit has been and remains the main driver of the pound's dynamics. It is news from these fronts that can provoke the formation of directional movement in pound pairs. And since Brexit is going according to plan so far, we see no reason to revise our recommendation for pound purchases intraday and medium-term. Recall that with favorable developments, the growth potential of the pound paired with the dollar is about 1000 points. From yesterday's data, it is worth noting also the weak data on industrial production in the Eurozone: -1.5% with a forecast of -1.0%. In this light, recall that the EUR/JPY pair is still at excellent points of sale. Today, all financial markets are focusing on US retail sales data. We will prepare for weak data, and accordingly, we will look for points for its sales in the foreign exchange market. The best candidate for this role is the USD/JPY pair. We consider the dissolution of the Government in Russia and the plan to redistribute the system of power in the country as an excellent opportunity to sell expensive Russian rubles. The usurpation of power from the point of view of modern history has rarely led to something good for the country's economy.
by Trade24Fx
Trade conversations, US inflation and a tough day aheadTuesday in the news plan was noted by the information that the United States excluded China from the list of currency manipulators countries. This led to yet another sigh of relief among investors that already are in a rather relaxed on the eve of the signing of the documents on the first phase of the trade agreement between the US and China. But at the same time, we did not see any significant development of the downward movement in the safe havens. This suggests that interest in the sale is beginning to decline. Plus, there was information about another attack on a military base in Iraq. So today we will continue to look for points for purchases of gold and the Japanese yen. We only note that in the first place we will not buy the yen against the dollar but against the euro. And do not forget to put your feet. The signing of a trade agreement between the US and China will take place today, which may well provoke another round of sales of safe-haven assets. So those who adhere to more conservative trading today should stay away from gold and the Japanese yen. Not that we were very worried about the growth of the dollar, but yesterday's data on consumer inflation turned out to be slightly lower than forecasts, which means we should not expect an increase in the Fed rate in current realities. And all the same, the percentage differential of the dollar-yen is several times higher than the differential of the euro-yen, so the sale of the EUR/JPY pair looks truer. Interesting fact. By excluding China from the list of manipulating countries, the United States threatened to add Switzerland there. However, the franc did not bother him and he showed the strongest growth against the euro over the past few years. Returning to yesterday's inflation statistics from the United States, we note that the probability of a rate hike in 2020 at the moment is 5%. But the chances of a decrease are about 55%. At the same time, some experts expect 3 more rate cuts in 2020. Against the backdrop of the Fed's aggression in the repo market, this does not seem to be something completely unbelievable. Which in turn makes the dollar vulnerable in the foreign exchange market. The British pound is still a great candidate for purchases against the dollar. But today you should be careful. Since it will be published a large block of statistics on the UK, which includes consumer and industrial inflation. Recall that while the pound is above 1.2960 there is no threat to purchases. The departure of the pair below this mark is a signal for a temporary exit from positions and a rebound at the low of 1.28.
Short
by Trade24Fx
Weak UK data, EUR/JPY sales and market sentimentAs we announced, this week is extremely full of various kinds of macroeconomic statistics. As yesterday's UK data showed, one should prepare for surprises and most likely with a “-” sign. Data on GDP (-0.3% with a forecast of 0%) and industrial production in the UK (-1.2% with a forecast of 0%) justified the worst fears of experts. The only positive point of yesterday's statistics on Britain was the data on the trade balance (and even then rather conditionally). The deficit was expected at -11.800 billion pounds, but in fact, it was at around 5.256 billion pounds. In connection with such data, the support test of 1.2970 was more than logical. Nevertheless, the inability of the bears against such a fundamental background to take the level is symptomatic in itself. We refer to our recommendation to buy the pound, which so far has not lost its relevance. And the barrier between bulls and bears loomed even more clearly. So while the pound is paired with the dollar above 1.2960-1.29970, its purchases, even against the backdrop of weak macroeconomic data, remain relevant. But if the pair goes lower, and against the backdrop of another portion of weak data (inflation statistics for the UK will be published on Wednesday and retail sales data on Friday), this will clearly indicate that the initiative is in the hands of bears. Otherwise, the markets continue to monitor what is happening in Iran, await the signing of the first phase of agreements between the US and China and try to think exclusively positively, which can be seen in the dynamics of gold, the Japanese yen, and the US stock market. We already habitually maintain a moderate negative, as we try to look a little further than the time horizon of 2-3 days. And therefore, the purchase of safe-haven assets remains relevant to us. In particular, the pair EUR/JPY entered very interesting places for sales. Also, intraday oil purchases from current prices look very attractive. Of course, with small stops, since the markets are now set to sell, but at the same time, potential profits definitely outweigh the number of risks expended. What could trigger a rally in safe haven assets? At least reporting season in the USA. Weak financial results (especially the dynamics of profits) of companies in the overshot market can lead to a massive exodus from risky investments in gold and the Japanese yen.
by Trade24Fx
Ambiguous NFP and a busy week aheadLast week ended for the dollar is not the best way. Statistics on the US labor market came out slightly worse than expected: +145K new jobs outside agriculture instead of the expected +160K. On the one hand, it’s okay, but on the other hand, after +200K of employment from ADP, it seems to be not enough. On the whole, our predictions for NFPs based on statistical laws can be justified: two excesses by the fact of the forecast must be followed by lag from expectations. Perhaps the most annoying thing for us happened in the USD/CAD pair. Recall, we recommended news trading. And the news came out almost ideal for reducing the pair: relatively weak data on the USA against the background of strong data on Canada (employment +35K with a forecast of +25K). But the decline in USD/CAD was very limited and earnings of 15-20 points cannot be considered as such. Total, the week is clearly an asset to the dollar, but so far we see the growth of the dollar exclusively as an opportunity for its sales to be more expensive. And the numbers on the NFP have more likely confirmed our position than disproved. So this week we will continue to look for opportunities for dollar sales. The main candidates for this are the pair with the Japanese yen and the British pound. The first is interesting to us as an asset-refuge and just the entry points themselves are magnificent. As for the British pound, Brexit is confidently moving in the right direction, but the pound has lingered. Accordingly, we expect that already this week he will rush to catch up. In our opinion, another interesting asset for trading this week is gold. The inability of sellers to sell 1550 is the best confirmation of the appropriateness of buying gold. In any case, the deal is worthwhile: with relatively small stops (placed below 1440), goals can be set very ambitiously. Recall, we believe that gold should test 1800 this year. The new week promises to be quite saturated with macroeconomic statistics, especially in the USA and Great Britain. Which, again, will almost certainly be accompanied by the appearance of points for entering positions.
Short
by Trade24Fx
4
About optimism, faith, and facts, as well as trading on the newsOptimism and belief in a bright future are generally quite positive things, but you should not abuse them, because this is fraught with a separation from reality. What we observed in the last couple of days in the financial markets, in our opinion, was that separation from reality. Asset prices are as if there were no killing of Suleimani, mutual threats from the United States and Iran, Iran’s missile attacks on US military bases. All at once forgot about the billionth injection of the Fed in the Fed market, the trade wars and the slowdown of the global economy. By the way, the World Bank just a few days ago lowered its forecast for world economic growth in 2020 from 2.7% to 2.5%. But this is part of reality, from which there is no escape. Failure to think about these things does not mean that they cease to exist. That’s why we will continue to sail today against this stream of optimism and will buy gold and the Japanese yen, as well as sell the dollar. In general, the dollar today can be a very defining day. The release of statistics on the US labor market is always an occasion for a sharp increase in volatility. Given the importance of the data, our position on the NFP and the reaction of the dollar will be presented in a separate review. In general, the best option for trading today, in our opinion, is trading on the news. That is, do not try to guess what data will be released and how the dollar will react to it, but act on the fact. And there is just a great candidate for the deal - we are talking about a pair of USD/CAD. The fact is that today not only statistics on the US labor market but also on the Canadian labor market will be released. That is, a couple can undergo either a double positive (as it was a month ago) or a double negative. In any of these cases, the movement will be quite strong and unidirectional. So we offer the next trading plan for today. 1-2 minutes before the release of data in the USD/CAD pair, we place orders like BUY STOP and SELL STOP at 20 points from the current price at that time. And then we just wait for the news. If the option “bad data for the USA/good for Canada” is triggered, pick up SELL STOP. If the game has the option “good US data/bad Canada data”, BUY STOP will work. In both of these cases, it is recommended to hold the position until the end of the day. If the data come out less clear and the situation is unclear - remove orders.
by Trade24Fx
Missiles attack, plane crash, earthquake and ADP dataYesterday was oversaturated and accordingly super volatile. Although it is worth noting that the strength of the counter-movements significantly exceeded our expectations. On days like yesterday, traders either make a fortune or (which happens much more often) lose their deposits. Often the reason for the loss of the deposit is excessive greed on the one hand and disbelief in their own positions on the other. For us, yesterday’s events mean that even better entry points have appeared on the market. And that means opportunities for even greater earnings. But first things first. Yesterday began with news of Iran’s missile attacks on US military bases in Iraq. Gold and oil on such news naturally rushed up. The markets were preparing for an immediate US response: Trump's 52 goals - that’s all. But no action followed. Trump tweeted “keep calm,” and then also made a public statement in which he made it clear that the United States was not going to further escalate the conflict, at least militarily. As a result, investors rushed to lock profits. True, they were obviously carried away, since the fixation clearly turned into the opening of counter-positions. As a result, gold after the 1610 test fell to the key support area of 1550. Although it looked strange, it was only a great opportunity to buy cheaper. Actually, we wrote about this in our review yesterday. That is, gold could theoretically reach 1550 and it reached. Yes, it looked almost unbelievable, but in terms of the logic of key levels, it was generally logical. So, we repeat, while gold is above 1550 - only purchases, only forward. In general, most of the news yesterday had Iranian roots. The crash with many casualties on take-off from Tehran immediately after attacks on US military bases unwittingly suggests that a passenger plane could become a victim of either an Iranian air defense or a terrorist attack. Too converge events in time and place. Add to this a rather strong earthquake in same Iran, and even near the nuclear power plant, and we get such a jackpot. In general, we strongly recommend that you refuse to buy the Iranian real or the Iranian stock market. But back to the economy. US employment data from ADP presented a gift to buyers of the US dollar and the US stock market: +202K with a forecast of +160K inspire serious optimism on the eve of the publication of official statistics on Friday. However, the correlation between ADP and official data is very weak, albeit positive, so for now we continue to see in the growth of the dollar is not a threat, but an opportunity. The opportunity for its sales is more expensive. So today we will continue to look for points to open short positions on the dollar. First of all, against the Japanese yen. Everything that is happening in the world plays into the hands of only safe havens. It is hard to imagine that such a positive and relaxing thing should happen in the world so that the level of anxiety and tension would drop sharply. This means that we will continue to buy gold today. In terms of macroeconomic statistics, today will be a day of respite before Friday and data on the US labor market, so no surprises should be expected in this regard.
FOREXCOM:XAUUSDLong
by Trade24Fx
13 Iranian scenarios, hedge fund performance and data from ADPThe conflict between the US and Iran as long as it continues to develop in the verbal plane. In response to Trump’s 52 goals, Iran has developed 13 scenarios for causing maximum damage to the United States in response to the assassination of General Soleimani, who killed about 50 people in a crush yesterday. According to Iran, even the weakest of these scenarios could be a historical nightmare for Americans. In addition, the Iranian Parliament recognized the Pentagon as a terrorist organization. Although there are no casualties according to preliminary reports, there is no immediate response from the United States, despite some reduction in the level of tension among investors in this regard, we do not recommend relaxing. On the contrary, we use these moments for the purpose of earning: we recommend buying gold and the Japanese yen in the area of daily lows. But let's digress from the conflict between Iran and the USA. According to the results of 2019, hedge funds generated an average of 8.6% yield curve. This is despite the fact that the S&P 500 index grew by 32%. How can one not recall the already legendary Buffet bet, which bet that hedge funds for 10 years will not be able to surpass the market as a whole? In general, we have one more confirmation of the futility of investing in hedge funds - it is cheaper and easier to invest in Index Funds or ETFs. In terms of macroeconomic statistics, yesterday was remembered by relatively good data from the Eurozone: retail sales are better than expected (1% with a forecast of 0.6%), and inflation is at its highest for the last 8 months. Which, however, it did not stop the euro from testing the support level of 1.1160. Good shopping opportunity, by the way. Statistics from the US came out better than expected. All indicators, including trade balance, production orders, as well as ISM index of business activity in the services sector exceeded experts' expectations. In this situation, yesterday's strengthening of the dollar can be considered quite justified and logical. But again, the data are not so good and not so important as to somehow change the balance of power in the foreign exchange market. Today is interesting primarily for US employment data from ADP. Of course, they are not as important as the Friday NFPs but nevertheless, the labor market is very important in terms of assessing the state of the country's economy. Our basic trading ideas today are unchanged: we sell the dollar primarily against the yen, the euro and the British pound, buy gold, the Japanese yen, and simply sell the Russian ruble.
Short
by Trade24Fx
2
Risk insurance, what to do with the dollar, oil and the rubleYesterday's opening brought gold to the highest mark since 2013. According to Goldman Sachs analysts, gold is by far the best hedge against geopolitical risks. We generally agree with this and continue to recommend buying the asset, since we believe that the mark of 1800 is an achievable goal for gold this year. But it is much more promising trading ideas in terms of earnings is the US high-tech sector shares sale of for us. But since we are conducting a separate branch of stock reviews, let's get back to the currency and commodity markets, as well as the news. Key events continue to develop around the conflict between the US and Iran. Key news for today: Soleimani killed (second most important person in Iran); Iran announced impending revenge; Iraq asked US troops to leave the country; Trump announced 52 targets in Iran in response to possible attacks; Iran has completely withdrawn from the nuclear deal. Total, the situation is developing, but so far more horizontally than vertically. The growth of gold and oil is rather an attempt to discount in advance under the escalation of the conflict. Although we prefer from time to time to go against the stream and open reverse positions, for now, we recommend going in the direction of travel. At least, we will definitely continue the purchase of gold. As for oil, its further growth will depend entirely on Iran’s actions. In general, we do not believe in the rapid transition of processes to the terminal stage, which means that we do not believe in further oil growth. But first of all, one should proceed from the facts. Therefore, for the time being, we maintain neutrality in oil. Which, however, it does not stop buying an asset within a day from interesting points, as well as selling it in the absence of tough fundamental contraindications. The Russian ruble is still extremely attractive for sales. So those of our readers who have not sold it yet can do it today. In terms of macroeconomic statistics, attention should be paid to consumer inflation and retail sales in the Eurozone, as well as data from the USA (ISM index of business activity in the services sector, production orders and trade balance).
TVC:NDQLong
by Trade24Fx
The year begins extremely unsuccessfully, so we will earnIn the news plan, the year began extremely unsuccessfully. The elimination of Iranian general Kassem Suleymani (he was the second most important in Iran after the main ayatollah) was headline news. We wrote about in our weekend reviews “Escape to safe-haven Assets Activated: $ 1800 Gold” and “Will the Suleyman Killing Become a Black Swan for the US Stock Market”. Will this event become a real "game-changer" we will see. But the primary reactions of the markets are showing how the events will develop in response to any the conflict escalation. Gold will hit 1800. Oil, if Iran decides to block the Strait of Hormuz, will continue to grow. Stock markets rush down. So it’s possible and even necessary to earn. Weak data on business activity indices were shown from all around the world. But the main event was the publication of the US Manufacturing Sector Index, which fell to a 10-year low. So our expectations of sales in the US stock market have the background. Our basic position - recommendations to sell the US dollar. In December, the dollar lost about 2%: this was the maximum monthly decline over the past 2 years. Weak data and the threat of collapse of price bubbles in different segments of the US financial market will push the Fed to further lower rates and continue to inject money through repo markets or new quantitative easing programs. Which will inevitably provoke a new round of dollar weakness? So we will buy the USDRUB in the future. Selling the Russian ruble from current points is a great opportunity, despite our expectations of dollar weakness. This week the statistics on the US labour market is expected to be published. And this is a guaranteed surge of volatility and a great opportunity for making money. But we will talk about this later.
FOREXCOM:XAUUSDLong
by Trade24Fx