SuperForex Analytics and Economic News

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EUR/USD Technical Analysis & Daily Chart

The pair will remain bearish today, so we should sell it.

Today we would take a look at the EUR/USD currency pair. Although the pair grew at the end of last month, its journey has become shakier recently.

The European single currency is likely to still retain its uncertain status and pairs containing it will likely continue to be influenced by the other currency in each pair. There has been no indication that the European Central Bank will change its approach that investors have already become accustomed to, not even with the current economic problems in Turkey which might affect the liquidity of some European banks. Even though there is an ECB policy meeting this Thursday, we do not expect much, except maybe a statement regarding Turkey and possible contagion.

Meanwhile, the American dollar is still going strong and we expect it to continue so. Economic reports from the United States remain positive and inflation is rising at a healthy rate, which offers a good justification for the interest rate hike scheduled by the Federal Reserve for this month. This alone would strengthen the dollar. Add to that the fact that a higher rate in the US makes things worse for emerging markets, this would lead to more appetite for safety assets, among which the dollar is unrivaled at the time. So this too would bolster the USD’s value.

In terms of the daily chart, today we have a pivot point for the pair located at 1.1557. The daily support levels lie at 1.1553 and 1.1545. The daily resistances are located at 1.1565 and 1.1569. Though there are some mixed signals, overall the indicators of technical analysis and the moving averages agree on a strong sell recommendation.

 

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GBP/USD Technical Analysis



The pair is headed up.

After the macroeconomic indicators published in the United Kingdom, the pound appreciated and rose above 1.3150. Furthermore, some aspects of the recent negotiations on Brexit had an impact on the rate of the British currency.

As for the dollar index, it showed a decline from yesterday's trading session and approached the 95.05 mark, so we watched the pair rise on the last candles.

At the moment on the chart we see rising peaks and it is possible that a long-term uptrend might form. However, we believe that at the moment the formation of a reversal model is underway. Volatility in the pair is quite high judging by the last candle and at this point a reversal is possible, as the pair could not overcome the 1.3050 mark.

Therefore, we advise you to look for points to enter the market, depending on the formation of the next candle, and also to receive a signal from technical indicators. The RSI is pinned to the upper boundary and we expect either an intersection or a reversal from the current level.

 

[Superfx_official]

Economic Events Today

We are awaiting quite a few reports from the United States today.

There are a number of events and reports expected today, which would likely have an impact on the financial markets.

First of all, we are set to receive the latest data on inflation in the United States. This is the most important factor for determining when the next rate increase by the Federal Reserve will take place. The data is expected at 12:30 GMT. Analysts’ forecast is that the PPI grew by 0.2% in August and 3.2% YoY, with a 2.7% YoY for the CPI. If the numbers turn out higher than the forecasts, an interest rate increase may happen sooner than expected.

At 18:00 GMT we expect the Federal Reserve’s Beige Book - a report that contains a detailed assessment of the economic situation from all branches of the Fed. There will also be speeches by two different leading members of the Federal Reserve. Overall, today we are set to learn quite a lot about the US economy and where things are headed for the American dollar.

 

[Superfx_official]

The Week at a Glance


Many separate events affected the markets this week.

This week there was no single major event that the financial markets were influenced by. Instead, we can say that multiple smaller things happening all over the world had their impact on the main trading instruments that you are interested in. This is why we thought it would be a good idea to catalogue them all, to make sure you’re all up to date with everything.

First off, we need to turn to our topic from last week – emerging markets. We discussed how the strengthening of the dollar is exacerbating whatever internal financial issues exist in countries like Argentina and Turkey, and we also mentioned that the further increases of interest rates in the US will continue to make things worse for those countries. This week we actually saw the Turkish central bank finally try to tackle the crisis directly. Though President Erdogan has spoken time and time again against interest rates, decrying them as evil, the central bank of Turkey managed to hike them this week from 17.75% to 24%. This instantly improved the lira’s outlooks and allowed it to win back some of its lost ground. Yet the positive effects didn’t last, which means that investors have lost confidence in Turkey’s ability to solve the problem on its own. Right now analysts are arguing that what can help stop the decline in emerging markets is an end to the trade war started by Donald Trump, since that is shaking the global economy.

Regarding that same trade war, it does not seem like it’s about to end anytime soon. There are already tariffs worth $50 billion on Chinese exports, and Trump is considering adding another $200 bn worth of tariffs to that. Moreover, duties were recently added to Turkish imports (which worsened the lira’s problems) and some have suggested that Trump might be aiming at Japan next. Earlier this week the United States invited China to the negotiations table once again, likely hoping that the newest threat of more tariffs would scare them, but the Chinese state media spoke out against America’s bullying tactics. There is no indication that these talks would fare any better than all of the previous meetings between Chinese and American officials. So for now, the trade war remains a factor.

Back in Europe, another major topic of conversation is Brexit. Though the European Union representatives recently stated that they are prepared to extend an unprecedented deal to the United Kingdom, there is still surprisingly little known about what the British government is trying to achieve in that regard. The main issues of immigration and border control remain and Theresa May would be hard-pressed to get the government’s support for a deal that’s full of compromises. Yet the Bank of England is working hard to defend the country’s economy. Just today BoE Governor Mark Carney spoke about the importance of reaching a deal, stating that the opposite could be as bad for the United Kingdom as the global financial crisis of 2008.

Furthermore, it appears that this would be a weekend of quite a few meteorological disasters. The Philippines are about to be hit by the super typhoon Mangkhut, with at least 10 million people estimated to live along the storm’s predicted path. The typhoon is also headed for Hong Kong and the south of China. Meanwhile, on the other side of the world, Hurricane Florence is wreaking havoc on the American East coast. North and South Carolina are the states to be hit the hardest by Florence, and the storm is not over yet.

Please bear in mind that while natural disasters are not necessarily financial events, they can cause a lot of destruction, leading to upsets in the regular daily activities of affected countries, and that has a very tangible impact on the financial markets, especially if oil rigs are affected.

 

[Superfx_official]

EUR/USD Technical Analysis


The pair is in a corridor.

At the moment we are seeing that the currencies are balanced and the existence of clear and working levels of resistance.

The dollar index sank during the previous day and now stands at the mark of 94.14, having dropped more than .50 points since yesterday.

The consumer price index released yesterday in the EU was expected to be at the level of 2% and supported the single currency.

On the chart we observe that the pair is in a corridor and is clamped between the levels of 1.1715 and 1.1550. Therefore, we advise you to trade within this range and take positions in accordance with these levels.

 

[Superfx_official]

Oil (CL/WTI): Short Review & Forecast

The upward trend is losing its intensity but continues. The deals to BUY seem the most effective in the short term.

The trade conflict between the US and China is gaining momentum, which negatively affects the cost of oil. Nevertheless, the rates are kept at a high level and continue within the upward trend. Moreover, the price of oil continues testing the level of $70 and can successfully overcome it in the near future.

This week oil prices received support amid statements by officials from Saudi Arabia. They stated that current price of oil is optimal and the market is stable. At the same time, they will not contribute to the growth of prices above $80, but will not prevent. Also, oil is becoming more expensive due to the implementation of sanctions against Iran, which will lead to a significant reduction in oil supplies by the third oil exporter from OPEC. At the same time, the US requires importers to completely refuse Iranian oil, according to their sanctions.

In the long term a number of negative factors remain in the market which negatively affect the cost of oil: the trade conflict between the US and China, the growth of shale oil production in the US, and plans to increase oil production in other countries to replace Iran on the market. In addition, the lack of interest of market participants in further price growth should also be noted. Therefore, we can see a tendency of losing intensity in the uptrend in the future. However, oil has not yet lost its growth stimulus at all and could rise by 10% in the short term. Thus, at the moment the most effective will be the deals to BUY, which is also confirmed by the Stochastic oscillator.

 

[Superfx_official]

GBP/USD Technical Analysis



The pair is directed upwards.

On our chart we see that the price has updated the maximum values since July this year and is directed upwards. The trend indicator RSI shows an upward movement; the pair has been fixed and has found a support at the level of 1.3150.

The latest economic news contributes to the weakening of the reserve currency, therefore we believe that the pair has good growth potential. Furthermore, the current macroeconomic data from the UK is higher than expected, so the base index and retail sales volumes were 0.3% and 0.3% instead of -0.2% and -0.1%, respectively.

Therefore, we advise you to look for points to enter the market for long positions and consider your targets at the following resistance levels of 1.3250 and 1.3320.

 

[Superfx_official]

No Hope for Brexit


The latest round of negotiations brought no results.

This week brought difficult news for the United Kingdom. British Prime Minister Theresa May spent the past few weeks in a heavy battle with her government, trying to forge a plan for a Brexit deal, and after some positive remarks from the chief EU negotiator Michel Barnier several weeks ago, the British had hope that they would be close to securing a deal. However, at this week’s summit of EU leaders, this dream came crashing down and a no-deal Brexit seems more likely than ever.

Theresa May came to the summit with the so-called Chequers proposal, designed with her ministers earlier this summer. The draft proved hard to stomach even back in the United Kingdom and we saw several resignations from the Cabinet as a result from the proposal. The most important people in the European Union – Donald Tusk (President of the European Council), German Chancellor Angela Merkel, and French President Emmanuel Macron all criticized the Chequers proposal and the British demands in general. One of the most complicated aspects of the negotiations so far has been the fact that Britain wants to retain access to Europe’s single market, which is the largest one in the world, while Merkel and the rest see this is a key privilege reserves for members of the EU, and so refuse to let the United Kingdom benefit from it after leaving the bloc.

Another key problem that still remains unresolved has to do with Ireland. The Republic of Ireland is a member of the European Union, but Northern Ireland is part of the United Kingdom, so it will leave the bloc together with Great Britain. Yet the “two Irelands” have incredibly close ties and introducing a hard border between them, a division between EU and not-EU land, will be extremely problematic. Northern Ireland’s being part of the United Kingdom has always been a hot topic in the UK, much like Scotland’s status, though with a more militant history. Scotland had a referendum on whether to leave the UK just a couple of years ago, and even then the only saving grace that swayed voters in favor of staying put, was that the UK is a member of the European Union, thereby providing access to the EU for Scotland. But with leaving the bloc, Britain risks more political problems internal to the kingdom.

Since the official date when the United Kingdom has to leave the European Union is in March 2019, if there is going to be an agreement between the UK and the EU, it needs to happen now. The last month or two before the deadline will be necessary for dealing with the legislation pertinent to a Brexit deal, which means Theresa May needs to work quickly in order to get results from the negotiations right now.

There will be another meeting to deal with Brexit next month. Nevertheless, Donald Tusk stated that if there isn’t a concrete and feasible plan proposed by May’s government by then, it is likely that we would all witness a no-deal, hard Brexit. May has also stated that her cabinet is preparing for that eventuality as well.

 

[Superfx_official]

EUR/USD Technical Analysis & Daily Chart


We can buy the pair, as it shows a bullishness.

Today we would take a look at the EUR/USD currency pair. Though we have seen ups and downs in this instrument lately, the general price movement in September has been upwards and continues to be so.

The outlook for the European single currency has improved this month compared to the rest of the summer. Since right now the European Central Bank isn’t much of a factor, considering the steady course of their policy, the euro was able to strengthen for other reasons. One such factor is hope that Italy will manage to resolve its financial difficulties without causing too much trouble for the eurozone. Furthermore, the latest inflation reports from the eurozone showed a slight increase, which is good news for the ECB and the euro. Nevertheless, there is also a negative factor bringing the EUR down, and that is the inability to negotiate a Brexit deal. After the failure of last week’s talks with Theresa May, a hard Brexit seems more likely than ever. Although this would be bad mostly for the pound, the euro could suffer if trade is disrupted. Today there is also a speech by ECB President Mario Draghi in Brussels which is of high importance to the euro.

On the other hand, the American dollar has relaxed in the last two weeks. Although economic data from the United States continues to be strong, the reserve currency dropped in value due to a higher risk appetite from investors, who started turning away from safety assets like the dollar and the yen. This is the result of lessening worries over the trade war with China and the financial problems of developing markets like Turkey and Argentina. It is very likely that this Wednesday we would have an interest rate increase by the Federal Reserve which would strengthen the dollar.

In terms of the daily chart, today we have a pivot point for the pair located at 1.1747. The daily support levels lie at 1.1741 and 1.1734. The daily resistances are located at 1.1754 and 1.1760, with the pair currently trading slightly above them. We expect the price to continue rising. The indicators of technical analysis and the moving averages agree on a strong buy recommendation.

 

[Superfx_official]

US Economy: What’s Coming

The Fed hiked rates again, but what's in store for the future?

This week the Federal Reserve met investors’ expectations completely by implementing another increase in interest rates by .25 basis points, bringing the rate in the United States up to 2.25%. This hike was well-anticipated, with a likelihood at above 80%. It is yet another testament to the Federal Reserve’s commitment to a hawkish monetary policy. But would that continue in this way and what does this mean for the American economy? Let’s find out.

First off, we need to talk about inflation. After all, it is rising inflation rates that are the main grounds for the Fed to hike interest rates. With record-low unemployment and rising wages, more and more people in the United States have money at their disposal, which they spend. As people try to buy more goods and services, based on the principles of demand and supply, prices rise slightly (so that the goods go to the buyers who can afford them). This is a sign of a healthy economy.

However, there is a level when unchecked inflation can become quite dangerous. If it’s left to rise to no end, inflation causes the value of the national currency to drop, which makes it difficult to deal with international transactions and debt. Sounds familiar? This is what’s going on in Turkey right now, where record high inflation has made Turkey’s loans in USD really difficult to pay back.

Of course, the United States are very far from that. Inflation is still within healthy values (generally those are seen as the levels around 2-3%). But to keep it that way, the Federal Reserve has raised interest rates slightly, several times. In practice, this slows down inflation growth so that the economy can remain stable. Without a doubt this policy has had a very positive effect on the American economy. Bond yields are at a very attractive level just above 3% and the major US stock indices (S&P 500, Dow Jones) are soaring.

Nevertheless, there is some concern regarding what the Federal Reserve is doing. The low interest rates put into place after the 2008 economic crisis made borrowing money cheap, so many businesses took out massive loans which allowed them to continue in operation, leading to the current booming economy. When rates go up, however, that makes those same companies owe more money back than they initially took out and this could put a strain on them.

The Fed is expected to hike rates for the fourth time this year in December. If inflation remains on the rise, more interest rate increases are likely in store for 2019, but many analysts are beginning to expect a winding down of that hawkish approach, hoping that the economy will reach a balance that would not be too harsh on American businesses. In other words, while the Fed’s hawkishness made the central bank’s moves more or less predictable in the last few years, 2019 and 2020 are shrouded in mystery. Not to mention that the currently ongoing trade war with China will likely show more and more significant results in the economy, which may give the Fed pause.

In any event, for now the course of the dollar is certain: bullishness and strength. We hope you get to enjoy it and trade smart while it lasts.