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SuperForex Analytics and Economic News

Discussion in 'Market Predictions and Reports' started by Superfx_official, Jul 25, 2018.

  1. Superfx_official

    Superfx_official SuperForex Representative

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    Brexit Update



    This week was quite packed in fundamental events. The Federal Reserve held a policy meeting and chose not to hike interest rates, which in turn prompted the USD to relax a little. The European Central Bank continues to be committed to dovishness, as the economic climate in the eurozone is not very favorable towards a policy tightening right now. Meanwhile, in the United States President Trump is balancing his time between trade negotiations with China and internal politics, as he continues to threaten with another government shutdown if he does not get his desired wall funding. However, our pick for the most important event of the week goes to Brexit once again: this past Tuesday the United Kingdom Parliament voted to support Theresa May’s deal. What does that mean?

    After the initial deal that Prime Minister Theresa May spent over a year negotiating with the European Union failed to gather enough supporting votes in Parliament, May was given the almost impossible task of drafting a different proposal in less than a week. Knowing that time is not enough to even roughly outline a new bill, May focused all of her attention on reigning back people from within her own Party by rallying around the one major issue in the deal that made most MPs vote it down: the Irish backstop.

    The backstop is a provision part of the Brexit deal that the European Union insisted on. Since Ireland is an EU member, but Northern Ireland will be leaving as part of the United Kingdom, legislators from both the UK and the EU tried to come up with a way to avoid a hard border between the two Irish countries. The backstop essentially means that Northern Ireland will remain in a customs union with the EU and goods shipped there from the rest of the UK will have to go through a customs check. This isolates Northern Ireland from the rest of the United Kingdom, which is why it is so heavily opposed in Parliament. However, the backstop will not be implemented if the UK and the EU reach an agreement regarding trade and customs before the end of 2020. The backstop is only a last resort, a guarantee to protect the EU’s borders in case other agreements are not reached.

    May tried to convince Parliament that it won’t actually come to that, as they would surely be able to negotiate more in the coming months, but this wasn’t convincing. In this week’s debate and vote, MPs showed that they do not support the backstop and want it out of the deal. Right now the Prime Minister has to focus on talks with Brussels in an attempt to convince them to change the withdrawal agreement signed between the United Kingdom and the European Union last year.

    Is that likely? Not at all. The EU has been adamant about the agreement being binding. Everything the two parties signed on in November is non-negotiable. Moreover, the UK really doesn’t have much else left to offer in order to convince the EU to change their stance. At this point, regardless of how the British parliament feels, the deal cannot be changed.

    It seems that now the United Kingdom is still stuck with a deal they do not support – and if it is confirmed that the backstop cannot be removed, then MPs will have to vote the deal down once more. This leaves the United Kingdom with no deal at all. Yet Parliament also voted on ruling out a no-deal Brexit. That vote is not legally binding, so will the government respect it? Right now the UK’s Parliament doesn’t want to leave with no deal, is not happy with the current deal, and cannot get a new one. This makes them pretty short on options. So what’s next?

    The EU’s lawyers have previously stated that the United Kingdom has the right to cancel Brexit. If they choose to remain in the European Union, no one will contest it. Opposition leader Jeremy Corbyn is also receiving a lot of attention. While he wants a customs union with the EU and is against a hard Brexit, he hasn’t declared himself outright in support of a second referendum. But with less than two months left until the United Kingdom and the EU have to part ways, it is time for the UK to come forward with a concrete position and be prepared to defend it.
     
  2. Superfx_official

    Superfx_official SuperForex Representative

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    EUR/USD Technical analysis



    Today we would take a look at the EUR/USD currency pair. After the price spent last week recovering, it is now once more decreasing.

    There is not much that is new in Europe. The most recent reports on economic growth and inflation rates were disappointing, but overall in line with what the European Central Bank has warned against. The ECB was alarmed by the global economic slowdown in 2018, especially exacerbated by Trump’s tariff plan. The eurozone is also affected by this and as a result, the EU economy is no longer growing at the rates previously expected. We believe the ECB will maintain a dovish stance and the euro will not have any reason to strengthen in the foreseeable future.

    The American dollar is in a bit of a confusing place. Ever since the Federal Reserve voiced their concerns about the economic slowdown and indicated they might not increase interest rates anymore, unless it is absolutely necessary, the factors influencing the dollar have shifted. Normally, any sign of dovishness by the Fed would weaken the dollar, but instead it strengthened due to the overall unease on the global financial markets. Right now the USD is benefitting from market uncertainty.



    [​IMG]



    In terms of the daily chart, today we have a pivot point for the pair located at 1.1456, with the price currently very near, slightly below it. The daily support levels lie at 1.1446 and 1.1437. The daily resistances are located at 1.1466 and 1.1475. The indicators of technical analysis are giving us a strong buy recommendation.
     
  3. Superfx_official

    Superfx_official SuperForex Representative

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    GBP/USD Technical analysis



    The pair is turning



    During yesterday's trading session the dollar index gained over 35 points and is clearly not going to stop. Our pair began to turn, changing the medium-term trend.

    The recently released index of business activity in the services sector in the UK showed worse results than expected, reaching 50.1 points.

    [​IMG]

    The pair fell below the MA (21) and headed down. Now the moving average has become the level of support for the downward trend. The price is heading for the marks of 1.2960, 1.2930 and 1.2880.

    We advise you to take short positions on the pair and consider the above levels as your goals.
     
  4. Superfx_official

    Superfx_official SuperForex Representative

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    CAD/CHF Review and Forecast



    Starting from January, an upward trend was formed in favor of the CAD, which became possible due to the recovery of oil prices. After reaching many-years lows, oil recovered and solidly entrenched in the range of 50-55 dollars per barrel of CL/WTI. This became possible after the emergence of the political crisis in Venezuela, which was on the verge of a coup. In addition, the Swiss franc began to lose ground amid the economic downturn in the EU, since the Swiss economy is dependent on the situation in the region. The latest economic indicators of Switzerland are quite similar to those in the eurozone. Thus, the manufacturing PMI index of business activity in Switzerland was at the lowest in the last 2 years, as in the eurozone. Also, the Swiss investor sentiment remains negative for the sixth month in a row and fell to the lowest in the last 7 years, the value of -44 pips in January.

    The Canadian dollar stabilized after the recovery of oil prices and remains at a high level. At the same time, the forecasts for the cost of oil are favorable for the CAD. Despite fears of a slowdown in the global economy and the illusory prospects for a solution to the trade conflict between the US and China, oil could rise in price with reducing oil supplies from Iran and Venezuela. At the same time, OPEC countries adhere to the approved plan to reduce oil extraction.



    [​IMG]



    Volatility will remain at an average level. In the near future, the market will receive data on the unemployment rate in Switzerland, as well as the trade balance in Canada and the business activity index for January. The oscillators are controversial these days, but the Stochastic oscillator indicates the efficiency of the deals to BUY, taking into account the rates in the oversold zone. In this situation, such deals can be considered the most effective in the short and medium term.
     
  5. HotForexsignal

    HotForexsignal Recruit

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    GBP/JPY rebounds from the appendix-BoE alternating low finds some preserve ahead of 141.00 handle

    BoE cuts to its economic accretion forecasts for 2019/20 and prompts some uncompromising selling.
    Global risk-sensitivity trade underpins JPY's safe-wharf demand and aggravates the downfall.
    Investors now seemed to wait for open Brexit press on from May/Juncker meeting.


    The GBP/JPY fuming speedily recovered approximately 40-pips from the post-BoE every second low to on severity of two-week lows, albeit lacked any sound follow-through.

    The already weaker British Pound was late buildup knocked plus to after the latest dovish declaration by the Bank of England's (BoE) quarterly inflation excuse, wherein the central bank lowered it's toting going on forecasts for this year and moreover-door-door in the wake of intensifying Brexit uncertainties.

    This coupled once a roomy sensitivity of global risk-allergic reaction trade, as depicted by a sea of red across equity markets, boosted the Japanese Yens relative fasten-dock status and auxiliary collaborated to the pairs hurting intraday slide to a session low level of 141.13.

    The downside, however, remained limited as investors still seemed reluctant to place any argumentative bets and preferred to wait for fresh Brexit developments, especially upon the backstop issue, from the UK PM Theresa May's meeting behind the European Commission President Jean-Claude Juncker.
     
  6. Superfx_official

    Superfx_official SuperForex Representative

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    Trump's State of the Union



    This week we caught a glimpse as to what is in store for American politics when President Trump gave his annual State of the Union address. Postponed by about a week due to the government shutdown, the State of the Union is seen as a golden opportunity for the President of the United States to set the political agenda for the whole year ahead. We decided to present you with a few highlights from the event and see what we can expect from a President who has repeatedly proven difficult to predict the actions of.

    Trump opened his speech by inviting all American politicians to set aside their partisan differences and work together for a better, stronger United States. However, the message rang hollow, as over the course of the speech Trump kept making remarks that were aimed at the Democrats. It is clear that in his eyes, the Democrats are responsible for the Russia investigation; Trump believes they are doing this as a grudge against Republicans, not in the interest of the American people. Here we would like to remind you that Robert Mueller’s investigation has already successfully produced tens upon tens of indictments against different people who are going to jail for undisputed criminal activities, and all of them are from Trump’s inner circle (a notable example being Michael Cohen, Trump’s lawyer). So while Trump and the Republican Party continue to claim the investigation is a “witch hunt,” it is undeniable that many important people in Trump’s surroundings have been found guilty of various sketchy things, proving that the investigation is at least doing some good against corruption.

    In a memorable moment from the speech, Trump said that “peace and legislation” cannot come when there is “war and investigation.” The line has a nice ring to it and shines among things he has said as a President. Nevertheless, analysts pointed out that it sounds a little bit like a threat - unless you stop investigating the President, he will not allow you to do your jobs and pass legislation. This made it seem that Trump is using the State of the Union as a personal podium, approaching the speech not from the standpoint of he Potus, but as Donald Trump, the man who takes everything personally.

    As expected, Trump also dedicated a significant amount of time to the issue of the wall along the border with Mexico. He adamantly insists on funding of $5.7 billion (which will come out of taxpayers’ pockets and could otherwise be used on healthcare or education) to build a 200-mile wall, which will only cover about 10% of the border with Mexico. As he continues to praise his wall plan, he still has not explained what he has in mind for the remaining 90% of the border that, according to his logic, can be easily crossed without a wall. Trump had previously threatened to declare a state of national emergency, which would allow him to take funds from the military’s infrastructure budget, but did not mention the issue during the speech. It is possible that he has been dissuaded from resorting to that, since the Democrats are likely ready to challenge it in court and prevent him from succeeding that way. Still, even as he ostensibly urged for peace, love, and understanding, he said he will force another shutdown after the current funding plan expires on February 15 if he doesn’t get his wall funding.

    The SOTU speech essentially showed once again how Trump views his presidency. He is likely to continue to be a source of uncertainty on the markets. We now have to look forward to February 15 and see if another shutdown will happen, and then we have the summit with North Korea’s leader Kim Jong-un at the end of February.
     
  7. Superfx_official

    Superfx_official SuperForex Representative

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    EUR/USD Technical anaslysis



    Today we would take a look at the EUR/USD currency pair. The pair has been in a steep decline all through February so far.

    The economic situation in Europe continues to be suboptimal. Recent fundamentals provided proof for the ongoing economic slowdown in Europe, showing that the poor global situation is also affected the eurozone. Further weakness in the single currency is expected as in the current state the European Central Bank is likely to remain involved in supporting the economy with stimulus packages, even though their program ended in December. The EUR would most likely continue decreasing in value.

    The American dollar, on the contrary, remains strong. There has been a bit of a disappointment with data coming from the US, but the reserve currency is receiving a much greater confidence boost to not be shaken by such news. Moreover, due to the uncertainty on the financial markets elsewhere, the dollar is an appealing investment opportunity. Still, beware of another government shutdown as funding expires this week.



    [​IMG]



    In terms of the daily chart, today we have a pivot point for the pair located at 1.1324, with the price currently trading below it. The daily support levels lie at 1.1314 and 1.1304. The daily resistances are located at 1.1334 and 1.1344. The indicators of technical analysis and the moving averages agree on a strong sell recommendation in the daily term.
     
  8. Superfx_official

    Superfx_official SuperForex Representative

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    EUR/USD Technical analysis



    On the daily chart we observe that the pair has declined for six days in a row and the dollar index reached its maximum annual values, rising above the level of 96.80.

    A meeting of EU finance ministers will be held today, where future plans will be discussed. In part, the single currency rate is also affected by the Brexit negotiation status.

    [​IMG]

    As of now, the pair has already updated four-month lows and is directed to the level of 1.1210.

    Technical indicators point to a sale and we believe that the price will soon overcome the level of 1.1270 and go down. Therefore, we advise you to take short positions on the pair and consider as your goals the marks near the levels 1.1210 and 1.1180.
     
  9. Superfx_official

    Superfx_official SuperForex Representative

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    CAD/JPY: Fundamental Review & Forecast





    Starting from January we have observed the rates within the upward trend. The Canadian dollar received the necessary support by rising oil prices and reducing the risks associated with the trade conflict between the US and Canada. At the same time, the economy remains at the optimal level, although it is not in the stage of active growth.

    The upward movement continued this week. Demand for risky assets has increased significantly this week with positive signals from the United States on the prevention of a new shutdown in the government. The cost of oil increased not only thanks to rising interest in risky assets, but also due to the active reduction of oil extraction in OPEC countries, taking into account the sanctions against Venezuela and Iran. At the same time, the negative forecasts for a decrease in oil demand, as well as forecasts about a significant increase in oil extraction in non-OPEC countries, including the US and Canada, do not prevent the increase in oil prices for a while.

    The Japanese yen decreases against most currencies at a time when investors pay more attention to risky assets. Japan's economy continues to be in a recession. This is evidenced by the latest data: the PMI index in the services sector fell by 0.3%, that is significantly more than expected on the market. The Producer price index grew by only 0.6%, which is the lowest growth rate in more than 12 months. Thus, there are no signs of increasing inflation and economic activity in Japan. The main signal for investors will be the data about Japan's GDP for the 4th quarter of 2018, which will be published tomorrow. The GDP is expected to recover by 0.4% after a decline by 0.6% in the previous period.



    [​IMG]



    The Stochastic and RSI oscillators signal the rates in the overbought zone, which inclines us to make deals to SELL. As part of the price correction, we can expect a decline to the level of 83.1 JPY and 82.75 JPY in the long term.
     
  10. Superfx_official

    Superfx_official SuperForex Representative

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    EUR/USD Technical analysis



    During yesterday's rally, the dollar appreciation resumed and the pair started a downward movement again. The dollar index again approached 97.00 showing the strength of the reserve currency.

    The euro, on the contrary, is trying to reduce the ECB’s efforts and the pair continues to approach four-month lows.



    [​IMG]



    Technical indicators point to a sale and we believe that the pair will be able to overcome the level of 1.1270 and go lower.

    We believe that the next support levels for the pair will be 1.1210 and 1.1180.

    Therefore, we advise you to take short positions in the pair and consider the above positions as your goals, given that these are strong levels formed in 2017 and we can expect bearish resistance on them.
     

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