SuperForex Analytics and Economic News

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USD/CAD Technical Analysis


The uptrend persists.

Before yesterday’s speech by Fed Chairman Jerome Powell, the dollar index weakened, dropping below 97.00, and is still there. Therefore, on our chart we observe that the price has begun a correction and has moved away from semi-annual highs.

The data on crude oil reserves in the USA released yesterday showed a significant increase, which pushed oil quotes to update their annual highs. Given that the Canadian dollar has a correlation with oil prices, the Canadian currency has also begun to weaken.

At the moment we are seeing an uptrend. The current trend line is at the MA (86), but this time the MA (21) also played its role, and the price began to rise again. Therefore, we believe that the upward movement will continue and we advise you to take long positions regarding this pair. We recommend considering the levels of 1.3340 and 1.34 for your goals.

 

[Superfx_official]

G20 Summit Expectations

Global leaders are meeting in Buenos Aires today to resolve some of the key issues in the world today.

Today one of the most anticipated events of the year is taking place: the G20 are meeting for an annual summit in Buenos Aires, Argentina. While in the past the G20 summits may have gone unnoticed, this time around the gathering is highly anticipating, as it will likely bring us news on all of the global developments - the trade war between China and the United States, Brexit, the Saudi Arabia murder scandal, and more. Let’s dive in to see what we can expect from this meeting.

To start with, during the summit Donald Trump’s schedule will be quite busy. Perhaps the most interesting interaction would be his scheduled meeting with Chinese President Xi Jinping. China and the United States spent most of 2018 engaged in a hectic trade conflict, exchanging reciprocal tariffs, which affected their trading partners and increased the speed of the global economic slowdown. To say that everyone is looking forward to a resolution of their trade conflict would be an understatement. While Trump was initially optimistic about reaching an agreement with his Chinese counterpart during the summit, just this week he expressed a readiness to continue with tariffs. China is also not exactly known for compromise, so at this point an agreement seems unlikely.

Trump was also scheduled to have a meeting with Russian President Vladimir Putin. For decades Russia and the United States have had their political disagreements, but Trump is known for showing his admiration for the Russian President, for which he gathered a lot of criticism after the two met earlier this year. With Mueller’s Russia investigation in full heat, all eyes will be on Trump to see how he interacts with Putin. Things with Russia will be particularly interesting because of the recent escalation in the conflict between Russia and Ukraine, whereby Russia attacked Ukrainian ships. Russian action in Ukraine has been harshly criticized in the past so analysts are waiting to see if Trump, too, will be able to stand against Putin.

Update: Trump has decided not to meet with President Putin. The two will still cross paths during the general G20 events, but will not have a private meeting.

Moreover, the agreement between the United States, Mexico, and Canada to revise NAFTA still hasn’t been formally signed by all three countries. It is expected that they will do that during the G20 summit.

The Crown Prince of Saudi Arabia, Mohammed bin Salman, is also attending the G20 summit. After the brutal murder of regime-critical journalist Jamal Khashoggi, eyes are on how world leaders will treat bin Salman. Saudi Arabia is a powerful trade partner, but a close relationship with it right now could be bad for world leaders, as it would make them seem as if they approve bin Salman’s ruthless approach to politics.

Aside from that, British PM Theresa May is expected to attend, and so are the German Chancellor Angela Merkel, French President Emmanuel Macron, European Council President Donald Tusk, and President of the European Commission Jean-Claude Juncker. Because of this gathering of the European political elite, journalists are eager to see if we would learn anything new about Brexit. The EU has shown that they are not likely to offer anything different from the deal May currently has; the British PM’s job for the time being is to try to gather support for it in the British government, but her efforts have failed to produce results so far.

Overall, it will be a hectic two days, so we recommend you keep a close eye on the news, since there are so many important people gathered there, almost all financial instruments could be affected by the news.

 

[Superfx_official]

EUR/USD Technical Analysis & Daily Chart


Today is a good time to sell the pair.

Today we would take a look at the EUR/USD currency pair. The pair remains volatile and near some of its lowest levels for 2018.

The circumstances of the euro remain relatively unchanged. Last week’s CPI reports which are among the most important indicators of economic growth, both failed to meet the forecasts, indicating that the European economy is not performing as well as expected. Moreover, the budget issues between the EU and Italy still persist. The European Commission is preparing the speak about possible punishments if Italy continues to resist complying with EU budgetary rules. The ECB is schedules to stop with its QE efforts at the end of this month, but they might postpone any interest rate increases even further that the middle of 2019, as initially expected.

After statements by the Federal Reserve last week, analysts now expect just one interest rate increase this month, and are less optimistic about further hikes in 2019. It appears that the rate is more or less where the Federal Reserve wants it to be for a healthy economy. This led to a softening in the dollar. This week we expect November’s job reports, as well as several other fundamental releases that will likely boost the dollar.

In terms of the daily chart, today we have a pivot point for the pair located at 1.1341, with the price currently slightly below it. The daily support levels lie at 1.1330 and 1.1317. The daily resistances are located at 1.1354 and 1.1365. The indicators of technical analysis and the moving averages agree on a strong sell recommendation.

 

[Superfx_official]

USD/JPY Technical Analysis


The pair has fallen sharply.

After the news of the agreement between the head of the White House and the President of China to suspend the trade war, investors returned to demand for risky assets. The American dollar has become less popular, having lost some of its positions.

The US dollar index, which reflects the average weighted rate of the reserve currency to the basket of major currencies, dropped to a two-week minimum and is currently at the level of 96.40.

The Japanese data released today also helped the Japanese yen continue to strengthen.

We believe that the current situation with the weakening of the dollar may last until the end of the week, since in the middle of the month another increase in interest rates may be announced. Therefore, in the medium term, we believe that the pair is set to decline.

We advise you to look for points to enter short positions and consider targets at the marks near the levels of 112.35, 112.00 and 111.80.

 

[Superfx_official]

EUR/AUD: Fundamental Review & Forecast


Both currencies are weak and have a lack of incentitives for growth. In this situation the most optimal course are the deals on the trend.

At the end of October an intense downtrend in favor of the AUD was formed, but this wasn't thanks to an outstanding performance in the Australian economy. The increase was caused by the economic downturn in the EU, which is becoming more pronounced. At the same time, both currencies remain under pressure due to the economic situation in the EU, Australia, and the recession in the global economy as a whole.

The main event of the week can be considered the pause in the trade conflict between China and the United States. Commodity currencies certainly received support with this decision and in the future we can talk about the lack of pressure from the trade conflict on the market in the next two months. However, the latest data on the Australian economy continue to negatively impact the AUD value. Released today, Australia's GDP report showed weaker GDP growth in Q3 than expected. The GDP grew by only 0.3% against 0.9% in the previous period, which is the lowest result since the third quarter of 2016. The volume of construction of new houses is also decreasing and inflation is slowing amid slowing wage growth. In addition, the PMI index fell, which in October was the lowest since 2017 and amounted to 51.3 points. This situation in the economy forced the RBA once again to leave the rate unchanged, which also had a negative impact on the AUD. Perhaps the expected tomorrow data on the balance of trade will support the AUD rate, if they meet the expectations of investors. Recall that an increase in the surplus is expected, which is quite a bold forecast, given the problems in the Australian economy.

The situation in the EU is no better than in Australia. Economic recession is observed even in Germany, which has recently been the engine of the entire EU economy. The German business sector slowed to the lowest level for the last 4 years, which was seen with the release of the composite index of business activity, which fell to 52.3 points. The decline in the index is observed for the fourth month in a row. The situation is similar with the PMI manufacturing index, which in November fell to 51.5 points, the lowest indicator since August 2016.

In this situation, the most optimal seem to be the deals on the trend, given also that the rates continue in the overbought area, according to the Stochastic oscillator. This may also mean the end of the price correction. At the same time, the decline will be limited, given the lack of incentives for the AUD to strengthen.

 

[Superfx_official]

OPEC Meeting in Vienna

The cartel is meeting to discuss possible production cuts.

The world was facing an unprecedented oil glut in 2014. This was caused by technological advancement, which had led to countries within OPEC and outside of it, such as the United States, being capable of much higher volumes of production. The US’s method of shale oil extraction, in particular, allowed America to produce high amounts of oil at low costs. The United States kept pumping more and more, pushing beyond the levels of production by OPEC leader Saudi Arabia, taking the number one spot in terms of a global leader in oil production. OPEC and the United States faced off for a time, trying to see just how low they can push the prices (which decrease as supply increases) until one of them gave up. The oversupply was also helped by the slowdown in the global economy, which additionally meant lower demand for oil. In 2015 OPEC finally gave up and agreed to cut their production levels significantly, and Russia, though not a member of the organization, voluntarily joined them.

After the initial agreement to reduce production levels significantly, in 2016 and 2017, as well as the first half of 2018, we saw oil prices gradually stabilize and achieve target level after target level. This proved that with a united, patient approach to the oil market, OPEC was still able to regain control and direct prices upwards, where they wanted them.

While last year OPEC projected an almost complete recovery in the oil market for 2018, no one could anticipate Trump’s aggressive stance on global trade. Thanks to Donald Trump’s massive tariff plan, economic growth around the world faltered and the slowdown’s rate exacerbated. Moreover, as OPEC relaxed and began upping production levels, the United States kept pushing even more aggressively, once again causing a slightly oversupplied market. Things aren’t nearly as bad as they were in 2014, but we are seeing oil prices close and even below $60 per barrel, which has essentially erased much of OPEC’s good work to stabilize prices over the last two years.

This bring us to the present. Yesterday OPEC members gathered in Vienna to discuss their future course of action, with analysts anticipating another agreement like the one in 2015, which would help bring prices back up towards the coveted levels above $80 per barrel. But this time around it seems that the cartel is held back by internal disagreements.

For instance, while OPEC members agree that a production cut would be helpful in resolving the current issue with oil prices, they have been unable to decide what levels they should settle on. Another issue is the status of Iranian oil: this year Trump reinstated sanctions against Iran. Yet Iran’s biggest trade partners got an extension of six months to stock up on oil before they have to be affected by sanctions. Now, Iran is thinking past these six months and is refusing to accept a production limit at present – naturally, they want to try to produce as much as possible before the six-month deadline. Saudi Arabia, on the other hand, refuses to exempt Iran from the agreement.

As of now, the expected production cut is in the amount between 1 and 1.4 million bpd. Russia has already agreed to a decrease of 250,000 bpd, which is more than what OPEC had initially hoped for.

The meeting is still going on, so pay attention to the news to learn whether oil is finally going to be able to stabilize or if more volatility lies ahead.

 

[Superfx_official]

AUD/CAD: Fundamental Review & Forecast



Decreasing oil prices was the only factor that negatively impacted the CAD but now the deals in favor of the CAD seem the most effective.

The uptrend formed in October continues, but is losing its intensity. The trend was formed under the influence of a number of factors, the main of which was the sharp decline in oil prices, which is why the Canadian dollar was under pressure because the Canadian economy depends on oil exports and oil value. The truce in the trade conflict between the US and China also affected the rates. In addition, investors noticed a certain interest of both sides to achieve some agreement, and this certainly supports commodity currencies, especially the currencies of countries that export a significant part of their products or raw materials to China. The AUD in this regard has long been an indicator of China's import potential and responds to any changes in the Chinese economy.

As for macroeconomic statistics, they are contradictory. Macroeconomic statistics on the Canadian economy showed a negative impact of low oil prices on the trade balance. The trade deficit widens for the fourth consecutive month and exceeds the forecasted level. Exports fell twice faster than imports, which in the long term increases the load on the trade balance. At the same time, unemployment in Canada fell to 5.6% in November, the lowest level since 1976. The Canadian economy created + 94.1 thousand jobs in November, which exceeds 9 times the forecasts of investors and is an all-time record. The situation in the real estate market is also optimal. The volume of construction of new houses in November increased by 215.9 thousand, exceeding the forecasted number of new homes by more than 16 thousand. Thus, we can say that the Canadian economy is far from recession and it is on the rise. The only factor that prevents the CAD from strengthening is low oil prices. Despite the agreements reached between the OPEC+ countries to reduce oil by 1.2 million barrels per day, oil is consolidating in the range of 49-53 dollars and has not yet found incentives for recovery.

The Australian economy has improved. If a few months ago we talked about a hopeless economic downturn, now we can see signs of improvement and even some economic growth. The trade balance remains positive, while exports and imports set new records. The Australian dollar also received support with a pause in the trade conflict between the US and China, but in the short term may experience a lack of incentives for growth, in the absence of macroeconomic statistics and amid of seasonal decline in market volatility. Therefore, in the near future the most optimal seem to be the deals to Sell against the trend, which is confirmed by the Stochastic oscillator. Most likely the rates will fall down right to the support line, with an attempt to shift it. In the future we can also see the probability of the trend change, if the price of oil goes to a recovery.

 

[Superfx_official]

GBP/USD Technical Analysis

The pair is in a correction.

At the current moment, after updating the annual minimums, we are seeing a correction for the pair.

During yesterday’s vote of confidence in the Prime Minister, the pair began to grow and after an attempt to remove Theresa May was unsuccessful, the pair continued its upward movement.

The dollar weakened somewhat during yesterday's trading session and the dollar index dropped to 97.00.

Against the background of a stabilized situation in the UK, we believe that the pound will still be able to win back its positions.

It also seems that the pair is forming an inverted head and shoulders on the chart, and we believe that the formation of the second shoulder is currently completed.

Our technical indicators give early buy signals. Therefore, we advise you to look for points for entry into long positions and to consider as your goals marks near the levels 1.2670 and 1.2780.

 

[Superfx_official]

Is There Hope for Brexit?


May's attempts to get a better deal from the EU have failed.

At the risk of repeating ourselves, we have to acknowledge that Brexit continues to be a topic that dominates both our news feeds, and the financial markets in general, as analysts try to anticipate what would happen after the March 29 deadline with Europe, the United Kingdom, and the British pound, among other things. This week was quite packed in events in that regard, so let’s go over what we’ve learned.

First of all, a quick recap: Theresa May and the EU negotiators managed to agree on a draft deal regarding Brexit several weeks ago. However, this deal is reviled back in the United Kingdom because it includes clauses such as imposing a backstop on the Irish border, keeping the UK still bound to the European Union for another two years or so in a transition period where the UK will not have much say in things, and more. Most of all, British politicians are faulting the deal for not giving them the Brexit leave-campaigners wanted. The fact that what they promised their voters was never achievable (they wanted to get out of the EU quickly, painlessly, while still keeping all of the benefits such as an access to the bloc’s single market for free) seems to go unnoticed.

While May has been championing the deal, speaking in Parliament and in front of media about it, she has met with a lot of rejection. The Prime Minister tried to explain that it is highly unlikely that at this stage the European Union will back off and magically produce the deal British politicians wanted, since the bloc has to make things difficult in order to dissuade any other members from ever wanting to leave. Yet all that got her was a vote of no confidence from her own party on Wednesday. May miraculously survived the vote and is safe in her post as PM for another whole year, but at the cost of vowing to step down on her own before the next elections.

On Thursday she headed for the European Union summit in Brussels in hopes of negotiating at least some of the problematic clauses in the agreement, more specifically the backstop in Ireland. Nevertheless, the bloc is firm in insisting that a border is necessary between a country that remains in the EU (Ireland) and one that does not (Northern Ireland, part of the United Kingdom). The bloc does not want to provide a legal back door for the United Kingdom by assigning a different status to Northern Ireland, which the UK might take advantage of to avoid customs. They voted on May’s proposed changes with an affirmative no. Moreover, the President of the European Commission, Jean-Claude Juncker once again expressed his view that the British government is not coming to the table with specific ideas and is instead waiting for the EU to do a lot of guesswork. He demanded more outspokenness from the PM and her team. Jucker also praised Theresa May’s efforts so far, but expressed his doubts regarding the British Parliament ever accepting it.

Now the Labour Party, who are in opposition to May’s Tories, is calling for the PM to finally schedule the vote on the Brexit deal in its current form, knowing full well that it is very likely to be rejected in Parliament. If that happens, the Labour Party could even call a general vote of no-confidence against the whole government, not just May (which is the vote we had on Wednesday, that was internal to the Tories), which would force the UK into another round of elections. The Labour Party is hoping to win such an election and even hold another Brexit referendum. If May wants to avoid losing the mandate, she might call for one such referendum herself. Compared to a no-deal hard Brexit, no Brexit at all might no longer seem like such a bad option.

 

[Superfx_official]

EUR/USD Technical Analysis & Daily Chart


We should sell the pair today, as it is headed even lower.

Today we would take a look at the EUR/USD currency pair. The pair continues to rapidly fluctuate but remains overall lower.

Things continue to look bad for the European single currency. Last week we got to hear from the European Central Bank, whose expectations about the economy are somewhat pessimistic. They lowered their forecasts for GDP and inflation growth, leading to a very poor performance for the euro last week. According to ECB President Mario Draghi the problems for the euro stem from global political factors - conflicts, uncertainty, slowing growth elsewhere, trade wars, and so on all affect the eurozone negatively. The issue of Italy’s budget, as well as protests in France, remains a burden on the EUR. Today the CPI YoY missed the forecast, coming in at 1.9% against the expected 2.0%.

On the other hand, the American dollar continues to be strong. Despite some pessimism expressed by the Federal Reserve regarding their policy in 2019, this week we expect interest rates to be increased on Wednesday by 0.25%. The hike will likely give the dollar further upwards momentum.

In terms of the daily chart, today we have a pivot point for the pair located at 1.1304, with the price currently well above it. The daily support levels lie at 1.1300 and 1.1296. The daily resistances are located at 1.1308 and 1.1312. The indicators of technical analysis and the moving averages agree on a strong sell recommendation.