Daily market outlook

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Forecast of the GBP/USD currency pair


Today we will take a look at the GBP / USD currency pair.We are witnessing a general strengthening of USD across most of the market, including the GBP. Despite the fall of the GBP / USD pair, there is still a risk of further decline. Therefore, in case of a break of support at 1.2610–1.2630, the likelihood of a bearish scenario will increase significantly.




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Trading outlook:

The main scenario takes into account a further weakening of the currency pair and, as a result, a breakthrough of the narrow support area of 1.2610–1.2630. The intermediate target is located at 1.2580, but the local target for sellers is at the next low of 1.2500.

An alternative scenario takes into account further growth of the pair, considering the current decline as a correction. As a result, it remains possible until the breakthrough of the psychological support level at 1.2600.

I will draw attention to the absence of important macroeconomic publications from Britain and the USA, while Asia is unlikely to have an impact on the markets. Therefore, trading activity may remain moderate.

The above review is not a direct guide to action, but carries an exclusively recommendatory nature.

#fibogroup #forex #forexnews #economy #fiance #gbpusd
 

fibogroup.com

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Dollar may enter a bear market


The US dollar has entered into a period of uncertainty after Friday after the release of job figures from the US gave hope that the economy might be recovering from the effects of the coronavirus quicker than first thought.

In one of the biggest miscalculations made in history by analysts, the US unemployment rate hit the market at 13.3 percent which was well below the figure expected of more than 19 percent which was attributed to the 2.5m jobs added in May and the rehiring of workers who were furloughed or layed off played a big part in this figure

“It appears that businesses began rehiring workers earlier and in greater numbers than expected, a trend that is likely to continue as lockdowns ease around the country,” said Eric Winograd, AB’s senior economist.

“To be clear: things are very far from normal in the labour market. But the pace of improvement, if sustained, suggests more reason for hope in the second half of the year than we have seen from any previous data release.” He added.

The news sent the US dollar spiralling further downwards against the major currencies as the market saw little reason to hold the greenback as a safehaven currency on light of the stellar job numbers which may be the start of bigger things to come.The release of unemployment figures next month will now be closely monitored by investors to see if this recovery in the economy is for real.

If we have in fact, seen the worst of the coronavirus and the devastating times are behind us, we may see traders abandon the US dollar and diversify their investments into other currencies. A recovery in the world’s most popular currency may take years according to some analysts

“If the global economy really is bottoming out and rebounding again, and US interest rates are at zero and potential growth is lower than emerging markets, we could see the dollar enter into a bear market that could last for five to 10 years,” Calvin Tse, a strategist at Citigroup, said the dollar could now be facing a very long stretch of weakness.

Some analysts however are 13.3 percent unemployment rate doesn’t tell the whole unemployment story. That is true even in ordinary times, and more so in view of the pandemic’s effect on the labor market, which has made this figure particularly incomplete as a measure of economic hardship.

The headline unemployment rate is calculated by taking the number of unemployed adults divided by the total number of people in the labor force, employed and unemployed.

But there are millions of people who are not working and want a job that this rate leaves out, things including part time workers.

This and other groups results means the real unemployment rate is around in 27 percent, which could more closely reflect the share of the labor force whose employment has been negatively affected by the pandemic.

“What this is telling us is that at least part of the pain in April was due to people being laid off or furloughed who still had very strong connections to their employers,” Ernie Tedeschi, an economist at Evercore ISI in Washington, said. “As good and surprising as this report was, this may just be the low-hanging fruit. These may have been the easiest workers to bring back.”said Calvin Tse, a strategist at Citigroup.

“If the global economy really is bottoming out and rebounding again, and US interest rates are at zero and potential growth is lower than emerging markets, we could see the dollar enter into a bear market that could last for five to 10 years,” Mr Tse said.

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Aussie dollar's remarkable recovery

The Australian dollar continues to stun the market with its swift recovery from around US75c at the height of the coronavirus pandemic to the best part of US70c as of today a more than 25 percent gain, which many attribute to the Australia’s successful containment of the deadly virus, which now amounts to virtually no new cases, and the fact that the population were forced to stay at home and spend their money on the local market.

“This time last year, Australians were flooding the airports heading overseas selling their Aussie dollars in order to buy foreign currencies. Right now, all that money that would have been spent abroad is staying in Australia. It removes one source of selling the Aussie dollar.” said Westpac senior currency strategist Sean Callow.

Whether the Australian dollar’s strength can be sustained will probably be dictated by further prevention of the virus, as businesses begin to open up and crowds begin to gather which may run the risk of the virus reappearing if people don’t adhere to social distancing measures. It’s strength will also be decided by investors willingness to diversify into riskier assets.

The Australian economy was expected to face the biggest recession in decades later in the year, and there was even a speculation that the Reserve Bank of Australia would have to cut rates into negative territory to boost the failing economy.

Now those worries are starting to subside with the swift recovery and if the possibility of a no recession scenario gathers momentum with market participants we may see the currency break through US70c in the coming days.

“In the near term, the AUD will remain supported, possibly breaching 0.70 as the market keeps its focus on positive news,” says Eugenia Fabon Victorino, head of Asia strategy at SEB in Singapore.

“The RBA’s clear aversion to pursuing negative rates provides a firm back stop to any downward correction to the currency.” he added.
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History may dictate direction of Bitcoin

The price of Bitcoin made another run for the $10,000 dollar mark in yesterday’s trading session after the US Federal Reserve decided to keep rates on hold, which was followed up by a rather dovish monetary statement where the Fed noted that interest rates may remain near zero until 2022 to cover the uncertainty surrounding the US economy.

“There is great uncertainty about the future, At the Federal Reserve, we are strongly committed to use our tools to do whatever we can for as long as it takes to provide some relief and stability to ensure that the recovery will be as strong as possible.” Said Fed boss Jerome Powell

The news was initially good for Bitcoin as an extended period of lower rates in the US will lessen the appeal of the US dollar as an investment to generate returns, which in theory, is great news for the world’s most popular cryptocurrency.

But once again the price faced stiff resistance at $10,000 and was quickly rejected which has left analysts scratching their heads and wondering just what it is going to take to finally break and remain above this elusive target.

To find a reason why Bitcoin may finally break higher, traders are looking at past history on how Bitcoin behaved last time when the supply was halved and this they believe, was one of the main reasons that the price reached an all-time high which is documented in a recent report released from Bloomberg.

The report states that it won’t be long before we see Bitcoin once again head for the $20,000 dollar mark

“Bitcoin is mirroring the 2016 return to its previous peak. That was the last time supply was halved, and the third year after a significant peak. After 2014's 60% decline, by the end of 2016 the crypto about matched the 2013 peak,” the report noted.

“Fast forward four years and the second year after the almost 75% decline in 2018, Bitcoin will approach the record high of about $20,000 this year, in our view, if it follows 2016's trend,” the report predicts.
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Forecast of the currency pair AUD / USD

Today we will take a look at the AUD / USD currency pair. The situation for this currency pair remains confusing, as quotes are stuck in the tight range of 0.6915–0.7005 with occasional breakouts. I will point out that the upper limit of the range is the maximum price of the current year, and the lower range is the solid support level formed in 2019. As a result, a breakthrough of the 0.6915 support level will significantly increase the risk of a deeper correctional decline.

Trading Outlook:
The main scenario takes into account the breakthrough of support at 0.9615, and then the psychological support level of 0.6900, paving the way to 0.6750 and further on to 0.6675. Until the breakout of the support level of 0.6915, the pair is in a phase of uncertainty.
The alternative scenario takes into account the return of the currency pair above 0.7005, which indicates a lack of selling interest and possible further growth to 0.7190.
The AUD is under pressure from Australia's conflict with China. Let me remind you that Australia’s relations with China, its main trading partner has deteriorated due to cooperation with the United States, which itself, is in a trade and technological conflict with China. Against this background, there is a risk of further selling of the AUD and, as a result, the AUD / USD currency pair.

The above review is not a direct guide to action, but carries an exclusively recommendatory nature.
 

fibogroup.com

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Messages
683
Possible 2nd wave of virus pressures oil

The oil price has slumped as much as 5 percent in today’s trading session, extending losses from last week, as fears of a 2nd round of the coronavirus emerged after new infections were reported in China and the United States, raising concerns the news will put a damper on the recent recovery of the oil price.
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Alex Bainbridge

Private, 1st Class
Messages
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Forecast of the GBP/USD currency pair

Today we will take a look at the GBP / USD currency pair.We are witnessing a general strengthening of USD across most of the market, including the GBP. Despite the fall of the GBP / USD pair, there is still a risk of further decline. Therefore, in case of a break of support at 1.2610–1.2630, the likelihood of a bearish scenario will increase significantly.




950×500



Trading outlook:

The main scenario takes into account a further weakening of the currency pair and, as a result, a breakthrough of the narrow support area of 1.2610–1.2630. The intermediate target is located at 1.2580, but the local target for sellers is at the next low of 1.2500.

An alternative scenario takes into account further growth of the pair, considering the current decline as a correction. As a result, it remains possible until the breakthrough of the psychological support level at 1.2600.

I will draw attention to the absence of important macroeconomic publications from Britain and the USA, while Asia is unlikely to have an impact on the markets. Therefore, trading activity may remain moderate.

The above review is not a direct guide to action, but carries an exclusively recommendatory nature.

#fibogroup #forex #forexnews #economy #fiance #gbpusd
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