SuperForex Analytics and Economic News

Superfx_official

SuperForex Representative
Messages
8
Hello dear friends! In this thread, we will post daily technical analysis, as well as economic news that affect forex.
We hope our analytics will help you make more profitable trades!
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Superfx_official

SuperForex Representative
Messages
8
NZD/JPY: Fundamental Review and Forecast


The JPY is still strong against the weak NZD. The sure downward trend continues, so the deals to SELL seem the most effective.

The JPY has recently lost its position amid a strong dollar and aggressive monetary policy in the US. Investors are disappointed by the weak economic growth in Japan, but even more, they are not satisfied with the extremely soft monetary policy of the Bank of Japan. Therefore, there is a growing tendency on the market: the Japanese yen as a safe but profitable asset is losing its attractiveness.

The negative sentiment on the market was noticed by the Bank of Japan, which became less categorical about the reduction of the financial incentive program. In any case, the Japanese yen still feels confident against an even weaker New Zealand dollar. So the downward trend which began a year ago continues without signs of completion. In early July the rates reached a two-year low, then retreated amid negative sentiment around the JPY. Weak data about inflation in June, as well as the fall of the manufacturing PMI index to 51.6 points had a negative impact on the JPY's value.

At the same time, the economic statistics of New Zealand have a greater negative impact on the NZD. Since last week the rates continued in favor of the JPY after the New Zealand services PMI index was published. The index has achieved a 66-months minimum, amounting to 52.8 points in June. Today statistics from New Zealand continued to show a slowdown in the country's economy: the trade balance again became negative, unexpectedly for the market by -113 million NZD, while investors expected a surplus by 200 million. At the same time, imports increased by 12.9%, while exports by only 4.6%, i.e. 3 times less than imports, which in the future makes an additional burden on the trade balance of New Zealand.


Next week volatility will remain high. At the end of the month a meeting of the Bank of Japan is expected. In addition, New Zealand's employment market data will be published. In the current situation, the most optimal in the medium term would be short deals on the trend, despite the fact that the Stochastic oscillator indicates the efficiency of opposite trades considering the rates in the oversold zone.
 

Superfx_official

SuperForex Representative
Messages
8
USD/CAD Technical Analysis


The pair overcame the level of support.

As of now, the dollar rally has been broken and the winning streak paused after reaching a one-year high. Data released yesterday in the US on the housing market was worse than expected and helped the pair overcome the level of 1.3115 and entrenched under it.

The dollar index shows that a further weakening of the reserve currency is possible, since the index approached the 94.00 mark and in case of overcoming this mark, the sale may begin and our pair will rush after the index.

Technical indicators point to a sell signal and we expect that the next mark to which the price will go will be the level of 1.2960, which is offered to set take profits. Therefore, we recommend looking for points to enter short positions on earlier charts.

 

Superfx_official

SuperForex Representative
Messages
8
Trump & Juncker Reach an Agreement

For now the biggest risk factor regarding Europe has been averted.

A couple of weeks ago we wrote about a somewhat neglected side of the trade war discussion: the relationship between the United States and Europe. In a recent interview US President Donald Trump went as far as to call the European Union “a foe” of the United States due to the trade deficit with the bloc. He also threatened to impose tariffs on car imports from the EU as a countermeasure to tariffs on American vehicles that have been in place for many years. However, it appears that this disaster has been averted – for now.

After sending a warning letter to the United States against further tariffs, the European Union continued their fight against the trade war this week with a visit of the President of the European Commission, Jean-Claude Juncker. After a couple of days of negotiations, Juncker and Trump managed to agree that there will be no tariffs on European car imports to the United States. This is a huge win for the EU, who are the home to some of the leading car manufacturers in the world, including Volkswagen, BMW, Fiat Chrysler, and more. European stocks rose by 5% on this news alone, and analysts appear to be overall calmer regarding the negative impact of the trade war on Europe.

Still, the EU remains bound by steel and aluminum duties that Trump introduced earlier this year. The bloc has implemented their own retaliatory measures to shield the European economy from the tariffs, so some “warring” is still in effect between the United States and the European Union.

Moreover, some analysts have greeted the news of this most recent deal between Juncker and Trump with skepticism, due to the American President’s inconstancy. After all, earlier this year the United States and China reached a trade agreement, only to see all of their negotiations collapse just days afterwards under Trump’s criticism. In other words, the President could still change his mind about Europe and no one would be surprised.

Reasons why Trump might back out of the deal with the EU lie in his expectations regarding what Europe can do for American trade. Trump announced that based on his recent talks with Juncker, the European Union will be more open to American imports, especially soybeans. Nevertheless, this might not be feasible in practice because food, in particular agricultural products, are more heavily regulated in Europe. GMO use is widely discouraged in foods on the European market, and many of the types of soybeans grown in the United States are far too modified to meet EU standards.

Another thing the two leaders supposedly agreed on is that Europe will import more natural gas from the United States. Nevertheless, this is more expensive than importing gas from Russia, which is the current choice of many European countries. Not to mention that the leading economies in the EU such as Germany, France, and the Netherlands, have for a long time been trying to gradually switch to renewable energy sources, which would lead to a smaller demand for natural gas, regardless of the supplier.

Because there are no more specific details about the agreement between Juncker and Trump, we cannot be sure what all of the American demands are, nor whether the European Union is actually going to be able to meet them. Considering how quickly the US President can change his mind, it is highly unlikely that the markets will remain calm for long.
 

Superfx_official

SuperForex Representative
Messages
8
EUR/USD Technical Analysis & Daily Chart

The pair will be volatile today.

Today we would take a look at the EUR/USD currency pair. The pair continues to oscillate without certainty in a narrow corridor between 1.1726 and 1.1630.

Today the euro will likely be under the influence of economic reports from Germany, the EU’s strongest economy. The key reports to look forward to with high importance are the yearly and monthly CPI, as well as unemployment reports: these are the two most important factors to measure inflation in Germany, and thus have an impact on inflation throughout the eurozone as a whole. As previously established, we do not expect any changes in the monetary policy of the ECB who repeatedly stated that an interest rate change cannot happen before the summer of 2019. Until then the only incentives for a growth in the euro will be found around rising inflation and lowering unemployment reports.

On the other hand, the dollar continues to be supported by solid economic data. Just last week the Q2 GDP report came in at 4.1%, which is the highest economic growth in four years. This week we would hear from the Federal Reserve, but analysts don’t expect a rate hike so soon, since there was one last month. Instead, there is an 80% chance of a rate increase in September. In any event, we expect the dollar to remain strong.



In terms of the daily chart, today we have a pivot point for the pair located at 1.1658, with the pair currently trading below it. We expect the EUR/USD to be a bit volatile today, so pay attention to the nearby resistances at 1.1661 and 1.1664. In case the dollar starts growing again, be aware that the daily support levels are located at 1.1655 and 1.1652. The indicators of technical analysis show a buy signal; the moving averages are neutral.
 

Superfx_official

SuperForex Representative
Messages
8
AUD/USD Technical Analysis

The pair is still in a corridor.

Our pair has been in a corridor for several weeks already. Volatility in the pair is limited by the current boundaries of the corridor.

The morning data on building permits exceeded the forecasted figures and amounted to 6.4% instead of 1.1% in June. Today we expect the United States to release the consumer confidence index. The output of this index can increase volatility in the pair.

At the moment, quotes are in the range of 0.7475-0.7320, and the interim levels can be counted as 0.7450, 0.7365 and 0.7340.

Technical indicators demonstrate a divergence. The MACD and Stochastic indicators diverge. Therefore, we expect the intersection of the MA (21) and the MA (48) to confirm the sell signal. So far, we believe that the price will go to the upper border of the channel.

 

Superfx_official

SuperForex Representative
Messages
8
Oil (CL/WTI): Short Review & Forecast

Despite many negative factors, we can expect oil prices to be restored at least to the level of $70 in the near future. The deals to BUY seem the most effective now.

The rates continue within the upward trend, despite the presence of many factors that have a negative pressure on the value of oil. In addition to the usual increase in oil production in the United States, trade wars, slowing economic growth in China, and the increase in oil production in OPEC to compensate for the reduction in supplies from Iran and Venezuela also negatively impact the prices.

This week oil has been decreasing amid reports of increased oil production in one more country, Russia. In addition, the new data about oil stocks in the USA showed that contrary to predictions, inventories increased by 5.6 million barrels. Today, the market again expects a decline in oil reserves in the US by 2.79 million barrels for the past week. However, there is a high probability that these forecasts will not be matched by the actual data. There are also concerns on the market about the formation of an oversupply of oil within OPEC itself, given that all countries have started increasing oil production again. At the same time, Iran may remain on the market and supply oil in limited quantities, given the softening of Donald Trump's rhetoric. The growth of oil demand is also slowing. In particular, the decline in oil imports can be seen in China and Latin America.



However, at the moment we cannot see any signs for the end of the uptrend. Moreover, the latest decreasing in oil prices can be seen as another price correction, after which we would be awaiting the recovery of prices to at least 70 dollars in the near future. It is also possible to see a consolidation in the range of 67.2-71 dollars. Therefore, in the short term the most optimal would be the deals to buy, according to the trend.
 

Superfx_official

SuperForex Representative
Messages
8
EUR/USD Technical Analysis

The pair overcame the resistance level.

At the moment the US dollar continues to strengthen against the basket of major currencies. For the third day in a row the dollar index shows growth and at the time of writing the article is at the mark of 94.72.

To date there are almost no news from the EU, while in the US a number of indices will be released today. However, we do not expect significant changes in the market after this.

Our pair approached the lower border of the corridor in which it has already been trading for a month. It came very close to the level of 1.1625 and, if it manages to overcome it, we expect the price to move to the next support levels at the marks of 1.1585 and 1.1550.

Therefore, we recommend looking for points to enter short positions based on the fact that the price will be able to gain a foothold under our level, expanding the boundaries of the corridor. Otherwise, the pair will again go to the upper limits of 1.1715, 1.1745.


 

Superfx_official

SuperForex Representative
Messages
8
Bank of England in Control

The BoE is preparing for Brexit, but what about everyone else?

If the current economic climate in the United Kingdom has to be characterized in one word, that would likely be “uncertain.” The British government still hasn’t announced any specific measures they would like to take in the negotiations with the European Union, leaving everyone else guessing what would happen when the March deadline approaches. For now at least the Bank of England is paying attention.

Currently the state of the British economy is not bad: wages are growing and inflation is rising, which are both indicators of economic health. To curb inflation closer to the 2% ideal target, this week the Bank of England voted to increase interest rates to .75%, the highest they have been since 2009. This is a countermeasure to an earlier lower decrease of the interest rate adopted shortly after the Brexit vote to cushion the blow to the British pound in the months that followed. Now the slightly higher rate will help add more value to savings, which is quite important while we wait to see how Theresa May’s government will handle Brexit.

Despite negotiations between the United Kingdom and the European Union being underway for over a year and a half, no significant agreements have been reached. Businesses in the UK want May’s cabinet to yield to the EU wherever possible in order to secure a customs-free trade with Britain’s most important market partner, but the politicians who supported Brexit in the first place are resisting these plans. Eurosceptics who pushed for the Brexit vote are afraid that a trade deal with the EU would come at a high cost: allowing access to EU workers to the British labor market, for instance, which was one of the key reasons why the United Kingdom wanted to leave the bloc in the first place. Yet international tech, automobile, and financial companies operating in the United Kingdom have suggested that if no deal is reached, they would move their headquarters to another European location in order to avoid heavy fees. This would likely increase unemployment in Britain significantly.

Some concerns regarding the trade of important goods such as food and pharmaceuticals have been raised. If May’s government fails to reach a trading deal with the European Union, Britain could experience a shortage of food products and medicine typically imported from Europe while companies adjust to new regulations. This is why the French pharmaceutical company Sanofi (which produces the majority of vaccines) and the Swiss Novartis (which makes the most popular ADHD medication, Ritalin, among others) are currently increasing their British supplies, trying to sneak in as much product as possible before Brexit. The British GSK is also increasing the supply of its products in the EU, though an actual shortage is not expected there; the company is merely trying to minimize possible future losses.

Aside from medicine, food is the other worrying sector. According to CNN, 50% of all food sold in the United Kingdom is imported. If no deal is reached with the European Union, the UK won’t likely suffer anything resembling a famine, but there will be a food shortage among certain products which are getting delayed at border control, or as some suppliers refuse to deliver to the United Kingdom to avoid paying customs charges. Right now it is not clear what May’s cabinet is doing in order to ensure there are enough supplies of everything important before the deadline. Even if the government is hopeful that a trade agreement with the EU is possible, they should still try to prepare a back-up plan, which the major industries in the UK are not seeing right now.

The official deadline for a Brexit agreement is in March 2019, but businesses would likely need to know what to do months in advance in order to plan their strategies better. This is why the next couple of months will be crucial; we need to keep a close eye on Brexit talks.
 

Superfx_official

SuperForex Representative
Messages
8
NZD/USD: Fundamental Review & Forecast

The consolidation phase for the NZD/USD is likely to continue. However, in the near future we can still expect further decreases in the rates to the minimum 0.668 USD.

Commodity currencies continue to be under pressure due to rising tensions in international trade, which negatively affect the rates of the NZD/USD. The value of the New Zealand dollar since the beginning of the year decreased from 0.74 to 0.668 USD. The current value of the NZD is 0.672 USD, which is the lowest price since April 2016 . Over the past 30 days we have observed the consolidation of the rates in the range of 0.668 - 0.684 USD. However, perspectives for the NZD are questionable: the decline is likely to continue at least until the recently reached level of 0.668 USD.

The USD is strengthening against most currencies. This week the impetus for strengthening was the result of the FED meeting, where a positive assessment for the current economic situation in the United States was given, considering the strong macroeconomic statistics. Despite the fact that this time the rate was not revised, investors saw a positive attitude by the FED and a willingness to continue tightening monetary policy according to the established plan. At the same time, the growth of tension in trade relations with China due to the strengthening of protectionist measures to support the US economy also has had a positive effect on the USD exchange rate.

The situation in New Zealand is the opposite. The trade war between China and the United States has had a negative impact on the cost of raw materials, including the cost of milk powder, which is exported to China in large volumes. New Zealand's economic growth has been threatened and business sentiment in New Zealand has worsened. The rate of the NZD is negatively affected by the RBNZ's extremely soft monetary policy. In particular, the RBNZ meeting tomorrow will most likely not please investors: the rate will not be revised, and the soft monetary policy will remain unchanged.



In the current situation, the most optimal would be the short deals. At the same time, in the short term the decline in prices will be limited by the current flat trend. There is also a possibility of a downward trend recovery in case of a breakout of the 0.66 USD level.
 
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