Daily Market Analysis from Hotforex Broker

[HFM]

Date : 10th December 2020.

FX Update – December 10 – Sterling in the cross-hairs

GBPUSD & GBPAUD, H1
Sterling is under pressure after three hours of “lively and interesting” talks between UK PM Johnson and the European Commission President von der Leyen and their chief negotiators last night failed to find a way round “significant obstacles.” Talks will continue, and a new deadline has been set for Sunday, with the leaders promising that a “firm decision” will be made then, though UK foreign secretary Raab said that talks could still be extended. Either Johnson will have to decide whether the disruption of a no-deal is worth the risk, and/or von der Leyen will have to persuade EU leaders to budge during the group leaders’ summit today and tomorrow. The BBC’s Europe editor Katya Alder reported that EU diplomats are ready to go the extra mile, but contrary to the UK government view, the EU thinks the ultimate decision for deal or no deal lies primarily with the UK.

Our hunch is that a deal will still be reached, though Johnson will need some concessions from the EU as he will have to sell any deal to the influential faction of Brexit ideologues in his party. Sunday is the first anniversary of his 80-seat General Election win. The EU’s demands on fishing access to UK waters and governance, and in particular retaliatory measures if the UK diverged from EU rules, are on terms that Johnson singled out yesterday, just ahead of his trip to Brussels, that “no prime minister could accept.” He has some wiggle room, as he could argue that leaving the EU in some alignment of its rules is the pragmatic option in the Covid era, and that the UK could diverge from EU rules over time. A no-deal scenario would not come without potentially significant political risks to Johnson, and would see Scotland’s SNP step up demands for an independence referendum. The European Commission said it will publish “very narrow” no-deal contingency plans to maintain aviation and functioning borders.

The Pound has dropped over 0.5% against the Dollar in falling to the lower 1.3300s, and has seen a similar magnitude of decline against the Euro and other currencies. The USDIndex edged out a three-day high at 91.09, aided by the pound’s weakness, while EURUSD has lifted moderately after posting an eight-day low at 1.2059 yesterday. Elsewhere, the Australian Dollar has remained perky, posting a new three-month high against the Yen, and nearing the 29-month high seen against the US Dollar yesterday. Unsurprisingly GBPAUD is the biggest mover so far today (-1.30%). The pair rejected 1.8050 & closed under 1.8000 yesterday. The sell-off continued today from open, and has breached 1.7900 and trades below S3 to test 1.770. The fast EMAs aligned and are trending lower, RSI 29 and approaching OB, MACD histogram & signal line aligned lower, broke 0-line yesterday morning, Stochs OB from earlier. H1 ATR 0.0035, Daily ATR 0.0152.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date : 11th December 2020.

FX Update – December 11 – USD & GBP Remain Heavy

EURUSD, H1

The Dollar softened against most currencies, with most stock markets and oil prices rising in Asia, although overall risk appetite in global markets is relatively more subdued compared to recent times. As the European session got under way some demand for the USD has been evident. The GER30 has tanked over 1% in European trading as a no-trade deal Brexit, potentially looms. Base metal prices are below trend highs, and US equity index futures are also flat or modestly lower. The risk of a no-deal outcome between the EU and UK in the Brexit endgame has risen, while in the US Democrat House Speaker Pelosi said that wrangling over a fiscal aid package could drag on through Christmas, just as Covid-19 containing measures are becoming more restrictive and extensive across the country. Add in the usual year-end wind down, along with depleted levels of cash on hand at global investors, and the scene looks set for a consolidation in global asset markets, if not a correction.

Among currencies, the USDIndex fell to a four-day low at 90.62, swinging the 32-month low that was seen a week ago at 90.48 back into scope, before a tick higher 90.80. EURUSD concurrently lifted to a four-day high, at 1.2163 and then declined to 1.2130. The pair’s 32-month low, seen last Friday, is at 1.2178. USDJPY fell back to levels around 104.00, correcting after yesterday posting a nine-day high at 104.59. AUDUSD posted a fresh 30-month high at 0.7571, and AUDJPY scaled to a new 20-month high. NZDUSD saw a 30-month peak, too over 0.7100. USDCAD remained heavy, but remained above the 32-month low seen yesterday at 1.2704. As for the Pound, the currency has been holding up well so far, but looks vulnerable. UK PM Johnson said that “in all candour that the treaty is not there yet,” while stating that he is willing to return to Brussels, or visit Berlin and/or Paris, to get a deal over the line. The leaders have set a deadline of Sunday, though discussions could extend through next week if a deal has been agreed by the end of the weekend. Markets still expect a deal, but acknowledge the risk for a no-deal. Bookmakers Willian Hill are currently given odds with an implied probability of 61.9% for a no-deal outcome, with a 45.5% chance given for a deal being struck, which is down from the 62% that was given ahead of Johnson’s meeting with EU’s von der Leyen on Wednesday. We would anticipate a sharp decline in the Pound in the event of a no-deal scenario.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date : 14th December 2020.

Events to Look Out for This Week.

Europe and the US are in the middle of a second wave of Covid-19 infections. The prospect of another hit to the economy in Q4 and emerging lockdown disruptions still leave central banks and fiscal authorities in crisis mode, but positive news on the vaccine front has been confronted with slowing economic data. Next week’s focus will remain on the virus, the PMI data flow, the FED, BOE, BOJ and SNB and the Brexit trade deal or no trade deal.

Monday – 14 December 2020

• The Tankan Large Manufacturing Index (JPY, GMT 00:50) – The overall business conditions of the large manufacturing companies in Japan is expected to decline to -27 from -21 last time, with the Outlook holding up at -17 and remaining unchanged.
• The FDI (Foreign Direct Investment) (CNY, GMT 02:00) – The Chinese Economy has been recovering with significant FDI again, last time the data ratcheted to 6.4%.
• Industrial Production (Oct) (EUR, GMT 10:00) – The volume of production of Industries for factories and manufacturing has been slowly recovering but showing signs of stalling. September’s negative -0.4% is expected to show a rebound to +1.8% for the October reading.

Tuesday – 15 December 2020

• RBA Rate Meeting Minutes (AUD, GMT 12:30) – RBA kept policy settings unchanged – as widely expected, which left the three-year yield target at 0.10% and the cash rate target also at 0.10%. Governor Lowe said in his statement that the RBA doesn’t expect to lift the cash rate for at least three years. There was no dissention from the official line and little new is likely from the minutes.
• Retail Sales & Ind. Production (CNY, GMT 02:00) – Chinese Retail Sales are expected to rise to 5.2% from 4.3% last time and Industrial production is expected to rise to 7.1% from 6.9% as data continues to improve.
• Claims, Unemployment Rate and Earnings (GBP, GMT 07:00) – UK data flow recently has been remarkably resilient in the face of the pandemic the ongoing Brexit uncertainty. Today data is expected to show unemployment stable at 4.8%, claims increasing significantly to 50,000 and earnings slipping to under 1.0%.

Wednesday – 16 December 2020

• PPI, CPI & Retail Sales (GBP, GMT 07:00) – More UK data, Inflation from producer and consumer spending and Retail Sales all expected to show declines for the month and on an annualized basis. Retails Sales may hold up over 1.3%.
• Markit PMI Composite (EUR, GMT 09:00) – The Composite figure is expected to show some resilience but remaining very weak rising to just 45.5 from 43.3. The shocks could be around the Services figures for Germany and France earlier in the day. Manufacturing data was showing some lead before the latest round of lockdowns.
• US Retail Sales (USD, GMT 13:30) – Expectations are for a -0.2% November retail sales headline with a flat ex-autos measure, following respective October gains of 0.3% and 0.2%.
• FED – Statement, Interest Rate Decision and Projections (USD, GMT 19:00) – Beige Book for the December 15-16 FOMC was on the dour side amid the surge in virus, renewed restrictions, and worries over looming expiration of unemployment benefits and moratoriums on foreclosures.

Thursday – 17 December 2020

• Employment and Unemployment Rate (AUD, GMT 00:30) – The Australian jobs market is expected to show a dramatic fall in employment to -30,000 as unemployment ticks up from 7%.
• SNB Interest Rate Decision and MPA (CHF, GMT 08:30) – As with other Central banks, no change is expected from the SNB with regards to interest rates, however, given the CHF’s rapid appreciation to near six year highs versus the weakening USD there maybe some reference to the currency.
• BOE Interest Rate & APF Decision, MPC Mins & Vote (GBP, GMT 12:00) – Last time the BOE had to act after turning more pessimistic on the outlook in the light of the renewed lockdown and the increase in the asset purchase target was more generous than markets had expected. This is unlikely to have improved in the short term.

Friday – 18 December 2020

• BOJ Interest Rate, MP Statement and Press Conference (JPY, GMT 03:00)– It’s widely expected, the BOJ will leave rates and asset purchases unchanged. BOJ head Kuroda is likely to again stress the downside risks, as economic outlook remains uncertain, but recent data has provided surprises to the upside, but a volatile recovery path is likely.
• UK Retail Sales (GBP, GMT 07:00) – Expectations are for the headline number to be 4.2% on a YoY basis down from 5.8%, last time, the MoM data for November to show an unchanged 1.2% and the key Core figure to fall to 5.9% from 7.8% last time.
• IFO Business Climate, Assessment & Expectations (EUR, GMT 09:00) – All three indicators are expected to show declines this month, coming in at 90.2, from 90.7, 89.3 from 90.0 and 91.5 from 92.9, respectively.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date : 15th December 2020.

FX Update – December 15 – Rangebound for now.

GBPUSD, H1

Narrow ranges have been prevailing among the main Dollar pairings and associated cross rates. This has been seen against a backdrop of sputtering global stock markets. Data showing Chinese industrial production rising 7.0% y/y in November, a 20-month high, along with a rise in retail sales, didn’t have much impact. Commodities have also been lacking direction after recent gains.

The surge in new positive test results for Covid in northern hemisphere countries, ranging from Japan and South Korea, to Europe and the US and Canada, along with more restrictive measures (tighter measures are due to be implemented in London from tomorrow, for instance), is being cited in market narratives as driving the risk-cautious sentiment in markets. While the bigger-picture outlook remains bullish, the view across the valley is being fogged out by the seasonality driven rise in coronavirus cases. The usual year-end wind down in investor commitment is also afoot. The roll-out of Covid vaccination programs in the months ahead won’t be sufficient to make much impact over the upcoming winter months.

The Brexit endgame, meanwhile, remains in focus, though the negotiation teams are being tight lipped and it is difficult to be sure exactly what the state of play is. The Pound has steadied after rallying yesterday. We do know that both sides have offered concessions, and have entered a post-brinkmanship, pragmatic phase, focused on a ‘managed divergence’ solution. The best market guess is that an agreement will be announced by the end of the week, however a no-deal outcome can’t be ruled out and remains a real possibility.

On Friday I wrote that “UK data flow recently has been remarkably resilient in the face of the pandemic and the ongoing Brexit uncertainty. Today data is expected to show unemployment stable at 4.8%, claims increasing significantly to 50,000 and earnings slipping to under 1.0%.” The results earlier were much darker than expected, as official unemployment ticked higher to 4.9% but this hides the significant number of people (3.7 million) who remain furloughed. The claims did indeed increase, and significantly more than the 50,000 that were expected, coming in at 64,300. Although Earnings did beat expectations at 2.7%, due to one off bonus payments, the outlook remains subdued due to the new lockdown tier 3 regimes, set to cover an additional 10.8 million people, 61% of England’s population – or 34 million people – under the toughest restrictions from Wednesday.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date : 16th December 2020.

FX Update – December 16 – Perky PMIs & a weaker USD.

EURUSD, H1

Eurozone & UK Dec. PMIs were generally stronger than expected, with the exception of UK Services. EU Services sentiment in particular rebounded, even in Germany, which is going into a stricter form of lockdown today, which will see shops closing. The Eurozone Services PMI still suggests contraction at 47.3, but that is a marked improvement compared to the reading of 41.7 in November. Manufacturing sentiment rose to 56.6 from 55.3, which left the composite at a 2-month high of 49.8, which effectively suggests stagnation rather than contraction. Markit commented that due to the improvement in December, the fourth quarter downturn is looking less steep than initially feared. Still, as Markit also highlighted – while the prospect of vaccinations is underpinning future expectations, in the near term the environment remains challenging for many consumer-facing companies.

In the UK Markit noted that “The UK economy returned to growth in December after the lockdown-driven downturn seen in November, adding to signs that the hit to the economy from the second wave of virus infections has so far been far less harsh than the first wave in the spring.” The recovery lacked vigour, however, as the service sector remained under particular strain, contracting marginally again as ongoing social distancing measures due to tiered lockdowns continued to hit many parts of the economy. Manufacturing numbers were 57.3 vs 55.9 with last month’s number being increased to 55.6, while the more important Services slipped below the key 50.0 level to 49.9 and missed expectations of 50.5, with last month’s data also being upgraded to 47.6, but remaining historically very low.

The USDIndex has remained heavy, testing a new 32-month low at 90.05. EURUSD has concurrently been holding firm, breaching its 32-month highs at 1.2178, to push to 1.2210. USDJPY, now amid its fourth down day out of the last five, has ebbed to a five-week low at 103.25. As we have noted before, real interest rate differentials are imparting a bias for the Yen to gain on the Dollar, albeit modestly. The nine-month lows, seen last month at 103.17-19, are back in scope. There looks to have been a degree of position trimming in CADJPY, which has been a popular long lately, being a strong correlate of the reflation theme in global markets. The cross is showing a decline of nearly 0.5% on the day so far. USDCAD, meanwhile, has lifted back above 1.2700 to 1.2745 after yesterday printing a 32-month low at 1.2686. While oil prices have been remaining perky, with Brent benchmark prices sustaining gains above $50, upside momentum has been abating. OPEC supply is set to increase, in addition to recovering supply out of Libya, while Norwegian and US supply are also increasing. There are also expectations for Iran to strike a deal on its nuclear program with the Biden administration, which could lower sanctions that have been stifling oil exports out of the country. These supply fundamentals, along with the demand-sapping virus containing measures in many of the major northern hemisphere economies, look to be setting up oil prices for a year-end correction after six consecutive up weeks. Elsewhere, the Pound has remained buoyant, with markets factoring in prospects for the EU and UK to reach a future relationship deal as soon as this week. There hasn’t been much news from the negotiating teams, though this in itself is being taken as a sure sign that progress is being made after the EU’s von der Leyen said that a “narrow” path to agreement has come into view. Cable has printed a 12-day high at 1.3519.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date : 17th December 2020.

Sterling & the BoE Preview.

GBPUSD, Weekly

The BoE’s Monetary Policy Committee (MPC) convened for its two-day December policy meeting yesterday, with the announcement out today (12:00 GMT). No changes to policy settings is the universal expectation, which would leave the repo rate at 0.10% and the QE total unchanged at GBP 875 bln. The central bank is clearly keeping a close eye on Brexit talks, and with a deal looking much more likely than at the same time last week, the central bank is likely to hold its horses, especially as vaccinations offer a bright spot for next year. Things can still go wrong though and the BoE will want to keep its options open for now. A no-deal situation would put the BoE into crisis-response mode, and would increase the chance of the central bank implementing a negative interest rate policy. Still, the BoE’s Financial Policy Committee (FPC) affirmed on Friday that UK banks are able to withstand the shock of no-deal on top of the impact of the Covid pandemic. For many a negative interest rate policy in the UK is not the antidote and should be kept firmly in the toolbox, however, as with the protracted Brexit Withdrawal agreement and the down-to-the-wire trade deal (or no-deal), anything is possible and never rule anything out.

Sterling has the bid currently and expectations are that something will be agreed and the final “fishing” issue can be put to bed. Last week, EU sources talked of a deal by December 18 (tomorrow), which still provides enough time for draft legislation to be approved by year end. Then earlier this week stories started to circulate of “partial” ratification. The fudge continues.

Sterling remains bid versus the weaker USD and JPY, on the back foot versus the Antipodeans, moving higher versus the CAD & CHF and back to test 90.00 versus the Euro. The new 2020 high for Cable and the break and breach of 1.3500 could see an extension to initial 1.3680 and 1.4000 in the weeks ahead, should the Greenback continue to unwind. Key support is the 20-week moving average at 1.3100 and the 200-week moving average at the key psychological 1.3000.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date : 18th December 2020.

FX Update – December 18 – USD stops falling, Brexit flounders on fish?

EURUSD, H1

The Dollar has finally found its feet, concomitantly with global equity markets coming off the boil. Some market narratives have pinned this on news that Pfizer will under-deliver vaccine doses to the US next week, though the Moderna vaccine will reportedly win FDA approval today/Saturday. News that the US is blacklisting more Chinese companies has been in the mix, too. The wind down into the Christmas and new year holiday period may be a further factor, which can inspire investors to put on hedges, if not trim positions.

The USDIndex has lifted back towards 90.0, which follows a four consecutive days run lower that culminated yesterday with a 32-month low at 89.62. EURUSD has ebbed, although only modestly, to the the mid 1.2250s. The commodity-correlating dollar bloc currencies have softened, while USDJPY has lifted back to the mid 103.00s after posting a nine-month low yesterday at 102.88. The BoJ extended its Covid measures, including increased asset purchases and a corporate lending facility, out to next September from March, while leaving the major monetary policy settings unchanged. This met market expectations, while Governor Kuroda reaffirmed the central bank’s pledge to ease monetary policy further if necessary.

Elsewhere, the Pound has been in correction mode after a four-day ascent. Cable has tumbled back toward 1.3500 after peaking at a 31-month high yesterday at 1.3622, though continues to show a net gain of well over 2% from week-ago levels. UK PM Johnson spoke with the EU’s von der Leyen late yesterday, and reportedly warned that negotiations would collapse unless the EU moves “substantially.” Fishing rights remain a sticking point, while the state aid issue has also resurfaced as a difficulty, though it’s difficult to know exactly where negotiations are, and it might be that the UK government is tactically maintaining the maximum threat to leave without a deal, sensing that Brussels is genuinely worried about what an untethered UK might do. Reuters cited EU sources, meanwhile, saying that a deal is possible in the coming days, though difficult, while Ireland’s deputy PM Varadkar said both sides were edging towards a deal, and EU chief negotiator Barnier said that a deal by as soon as today is “difficult but possible.” The European Parliament yesterday demanded that a text of an EU-UK agreement must be made available by this Sunday for there to be sufficient time for them to scrutinize it before a ratification vote ahead the December-31 deadline.

Later there is Canadian Retail sales and the US current account and leading index indicator ahead of the December Quadruple witching where stock index futures, stock index options, stock options, and single stock futures all expire simultaneously. The last big trading day for many.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date : 21st December 2020.

Events to Look Out for This Week.

Holiday-thinned staffing in Europe, Asia and the US in the end of the week ahead will severely curtail trade, though what this means for volatility is anyone’s guess. The most of the central banks maintained their accommodative policy settings so far. However the near term outlook still remains challenging but the prospect of vaccination programs in Europe, UK and US and for the UK the chances of a Brexit deal mean there are both upside and downside risks for next year, with the outlook unusually uncertain. News that the US is blacklisting more Chinese companies remains in the mix as well.

Monday – 21 December 2020

• PBoC Interest Rate Decision (CNY, GMT 01:30) – The People’s Bank of China in this meeting should provide guidances on the next move in Loan Prime Rates. It is expected to continue to maintain flexibility in the exchange rate, stabilize market expectations, and keep the yuan basically stable at reasonable and balanced levels.

Tuesday – 22 December 2020

• Retail Sales (AUD, GMT 00:30) – The preliminary Retail sales are seen diving at -0.6% m/m in November from 1.4% last month.
• Gross Domestic Product (GBP, GMT 07:00) – Gross Domestic Product is seen stable at 15.5% q/q growth in Q3 and -9.6% y/y. Like in the Eurozone, production numbers expected to remain pretty good, even though the rebound started to slow down due to the November lockdowns.
• Gross Domestic Product (USD, GMT 13:30) – A slight boost is seen in Q3 GDP growth to 33.2% from 33.1%. The revised Q3 GDP figures should still show a quarter with dramatic rebounds for residential investment and equipment spending to notably robust levels, and out-sized Q2-Q3 gyration in both exports and imports that left big Q3 gains, and hefty recoveries in consumer spending. Government spending received an initial lift in Q2 from spending with the CARES Act, though most of this spending was transfer payments that don’t enter government purchases, and we saw a Q3 pull-back in government spending that should extend through Q4 and into 2021.

Wednesday – 23 December 2020

• Trade Balance (AUD, GMT 00:30) – The preliminary trade deficit of Australia is currently at $7,456M.
• Personal Spending and Consumption (USD, GMT 13:30) – Personal consumption is expected to show a -0.2% headline decline in November after a -0.7% drop in October. The projected November income decline reflects a 0.6% rise in compensation, but an ongoing unwind of jobless benefits and weakness in rental and proprietor’s income, as the April income boost from the CARES Act continues to unwind.
• Michigan Index (USD, GMT 15:00) – US consumer sentiment climbed 4.5 points to 81.4 in the preliminary December reading. That’s much better than expected but the move back up to the 89.1 level from March has been restrained by various headwinds, with the spike in the virus and renewed lockdowns the current difficulty.

Thursday – 24 December 2020

• Christmas Eve – Early close for Major Markets
• Durable Goods and Defence orders (USD, GMT 13:30) – Durable goods orders are expected to rise 1.4% in November with a 2.9% climb in transportation orders, after a 1.4% headline orders rise in October that included a 1.4% transportation orders gain. The durable orders rise ex-transportation is pegged at 0.7%, after a 1.3% September rise. A defense orders gain is pegged at 4.2%, following a 24.0% October bounce. Boeing orders rose to 27 planes in November after two months at zero. The vehicle assembly rate is seen ticking up to 10.7 mln in November from 10.6 mln in October, versus a 0.1 mln trough in April. Durable shipments should be flat, and inventories should be 0.3%.
• Tokyo CPI and unemployment rate (JPY, GMT 23:50) – The country’s main leading indicator of inflation is expected stable presenting a decline at -0.7% y/y in December ex Fresh Food. The unemployment rate is also stable at 3.1% for November.

Friday – 25 December 2020

• Christmas Day – Nearly all major Markets closed

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date : 22nd December 2020.

EU vaccinations & Brexit talks.

Τhe Dollar has traded moderately firmer, and the Pound has drifted lower, though the US currency has remained comfortably above its Monday highs while the UK currency has remained well off the lows it saw yesterday.

News that the EU has rejected the UK’s latest offer on fishing (which was a 35% reduction in the EU’s fishing quota from UK waters following a five-year transition period) weighed on the Pound. Brussels is reportedly demanding only a 25% quota reduction. Politico-Europe reported that UK PM Johnson and EU Commission President von der Leyen had a phone conversation yesterday to discuss a compromise on fish, and while the UK’s latest offer appears to have been rejected by the EU, it is positive that both sides are still talking. At the same time France and the UK are negotiating a way out of the current border disruption, with truckers to be tested at the borders. There doesn’t seem to be an agreement on the details – i.e. who pays where for what – but again, there are at least discussions on how to move forward, which helped sentiment to stabilise somewhat.

It is still expected that a deal will materialise before the looming year-end deadline, given the win-win versus lose-lose stakes, and given that intense discussions are continuing, along with reports from sources close to the negotiating teams that a landing zone for an accord is visible. Another consideration that has come to light is that EU law does not stipulate that ratification by Parliament is imperative and that an agreed deal could be applied provisionally (as highlighted by the BBC’s Katya Alder). This is important to know after the European Parliament’s deadline for the text of deal to be presented by Sunday just gone was missed. As for ratification in UK parliament, members are on standby to be recalled from their Christmas recess, and a deal could be ratified in just a single day given the government’s strong majority.

European stock markets rebounded after a mostly negative session in Asia. US equity index futures recouped earlier declines, and were near net unchanged as of the early London afternoon. News that the US Congress has passed the $900 bln Covid-19 relief package boosted sentiment, along with news that the EU will commence its Covid-19 vaccination program just after Christmas.

EU vaccinations to start after Christmas. Regulators cleared the Pfizer/BioNTech vaccine yesterday and the EU has already pre-ordered EUR 200 bln of the vaccine earlier in the year and this month also acted on the option to purchase additional EUR 100 bln that was part of the original deal. Not all of these doses are immediately available as production is slower than demand. The 300 million also won’t be sufficient for the 450 million EU inhabitants and officials will regret that the EU didn’t act on the offer in July to pre-order 500 million. Still, at that point it was not clear that Pfizer would win the race and as pre-orders were a large incentive to speed up developments, the EU decided on a wider spread, with provisional orders for more than 2 bln doses of candidate vaccines from a range of companies. Next in line is Moderna, with the European Medicines Agency set to meet on January 6 to discuss the vaccine, for which the EU has placed orders for 160 million. Still, it will take a while until vaccinations are rolled out properly – not just in the EU and if the virus mutates and becomes more infectious that also means a higher uptake is necessary to reach herd immunity.

In currency market, GBPUSD stabilised after rolling the roller coaster on Monday. Although GBPUSD managed to rise again to near 1.3500 overnight, the rise is seen to be quite limited for now. Cable found support the past few hours above 1.3400 after it tested daily pivot at 1.3390. The 50-period SMA and 200-period SMA clashed at 1.3400. If daily pivot is rejected then S1 1.3266 will be a key support. Monday’s highest price of 1.3498 remains a significant resistance followed by a pivot of R1 at 1.3577. The Bulls need strong momentum above 1.3500 to maintain their dominance.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date : 23rd December 2020.

Coca-Cola cuts staff.

The decline in sales due to the coronavirus outbreak and the operations that some governments have applied to many local restaurants and entertainment venues that operate at a significantly reduced capacity, have led Coca-Cola to consider the idea of eliminating 2,200 positions of work in all the headquarters that the company has around the world. At the end of last year, there were around 10,400 employees in the United States, of which another 1,200 were cut, representing approximately 12% of the workforce cuts, while in Atlanta where the company is based, 500 jobs will be eliminated. The company had announced this plan during the summer, when it also announced that it would offer acquisitions to 4,000 workers in the United States, Canada and Puerto Rico.

For the third quarter, the company’s revenues decreased 9% to $ 8.7 billion, while in the session on Tuesday, December 15, Coca-Cola shares rose 1.77% with a value of $54, $22, at the last close the company was $ 57.27 , 20.90% below its 52-week high of $ 60.13. Sales reflected an increase of -4.5%, where the company’s growth estimates for the current quarter and the next are -6.8% and -2%respectively, and the year-on-year growth of quarterly revenues decreased by 9% to 33.47B.

The company could continue to experience consequences in the long term because the coronavirus pandemic may leave some side effects, such as people increasingly turning away from sugary drinks. However, when the pandemic ceases and people can feel freer to leave their homes, the consumption of beverages in restaurants may increase; in any case, Coca-Cola continues to be the leader in the non-alcoholic beverages market, therefore it can be expected that during the next few years its annual growth rate could be 6.8%.

Pending its next earnings report, Coca-Cola is projected to report earnings of $ 0.41 per share, representing a 6.82% year-on-year decrease, which could lead to its consensus estimate calling for quarterly revenue of $ 8.69 billion, less than in the prior year period, while full-year earnings estimates could be $ 1.88 per share, with revenue of approximately $ 33.06 billion.

Currently, the price of Coca-Cola follows an ascending channel although it presents a double top with failure of highs at its level of 54.00 very close to Fibo 78.6% at 54.79, the price could approach the Fibo level 38.2% at 51.80 to break this support, maybe pull back to it and continue to the lower supports in the 80-period SMA that is only slightly above the 61.8% Fibo level at 50.82, coinciding with the bullish guideline of the channel. Breaking these supports would end up closing the gap at the 61.8% Fibo level coinciding with the psychological level at 50.08.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Aldo Weidner Zapien,
Market Analyst
HF Office of Education – Mexico

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date : 24th December 2020.

FX News Today | 24 December 2020.

Wall Street rallied overnight, despite some disappointing US data. Stimulus hopes and the rollout of Covid-19 vaccines supported the market. Energy, financials and healthcare sectors outperformed, while tech issues lagged. Core European bourses were higher, with the GER30 up 1.26%, and the UK100 underperforming, adding 0.66%, though held back by a firmer Pound. Treasury yields climbed amid bearish momentum from European bonds. Thinning holiday conditions exacerbated the moves and the break of key levels added to the selloff.

Gilts led a sell off in EGBs amid rumors that the UK and the EU are getting close to a post-Brexit trade deal. With Europe still firmly in the grip of Covid-19, the chance to avoid a disruptive no-deal scenario clearly would be extremely helpful, although even with an agreement no-tariff trade barriers will go up at the start of next year, which will add to an already difficult situation.

UK, EU press conferences likely expected today. The timing on press conferences may slip by a couple of hours.

• EUR – stabilized at 1.22
• GBP– spiked top 1.3570 a breath below R1
• JPY – in a triangle at 103.55. PP at 103.50 and R1 103.70
• CAD – gains ground again amid risk appetite and Us inventories – currently at 1.2847
• AUD –Currently at 0.7590
• GOLD – gains some ground to to $1879 high level
• USOil – climbs to 48.60 as US inventory draw, Brexit deal hopes boost risk appetite

Today – Nearly all stock markets have an early closed for the extended Christmas weekend and there are no key data releases until January 4, with Brexit and virus developments the only topics to interest investors until then. Only Tokyo inflation tonight.

Biggest (FX) Mover – GBPCHF (0.61% as of 09:50 GMT) – It rallied to R1 to 1.2058. Fast MAs and BB still point upwards while the asset manage to break yesterday’s peak. Technical indicators hold positive, however they are also flat suggesting a potential consolidation H1 ATR 0.00174, Daily ATR 0.01315

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date : 29th December 2020.

Market Update – December 29 – The final few days.

EURUSD, H1
US stock futures are in the green with gains of 0.45% to 0.65% after President Trump signed the $2.3 tln spending bill that will fund the government through to September 2021 and which also includes the $900 bln pandemic relief package. Further supporting investor sentiment has been the Brexit deal — while not ideal for either side, it eliminates the hard Brexit result that was most feared. These factors, and the positive developments on vaccines, should smooth out trading over the rest of 2020, though thin holiday trading could make for some choppy price swings. All three major US markets closed at new all-time highs yesterday.

Earlier, the JPY225 closed up an impressive 2.7% and closed over 27,000 for the first time since 1991. End of year portfolio rebalancing, profit taking and accounting all conspire to boost equities in the final trading days of the year. The 161.8 Fibonacci extension of the March sell-off sits at 28,800. The MACD has a rising signal line and histogram, the weekly ATR remains over the 500 point and although the RSI has been technically in the overbought range for over 6 weeks, it is still moving higher and currently trades around 78.00. The JPY225 is one of the best performing assets for 2020 of all the ones we monitor; for more details of what the long term Weekly & Monthly charts might be suggesting for the next few months, join me tomorrow in our “2021 – The Year Ahead in Charts” webinar. You can register here:

In the FX markets, Dollar, Yen & Sterling dropped against most currencies, with USDJPY falling back to 103.71. EURUSD is back to 1.2250 territory and the commodity currencies also remain bid, with AUDUSD touching 0.7600 earlier, the Kiwi at the daily R1 (0.7130) and USDCAD spiking below S1 to touch 1.2807. Crude prices are up from overnight lows, amid the prospect of new supply from OPEC+ members. The front end USOIL future is currently trading north of $48.00 per barrel. Gold rotates through the daily pivot point at $1881.00.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date : 30th December 2020.

FX Update – December 30 – USD slips again.

AUDUSD, H1

The USDIndex posted down to 89.65 earlier, close to the 32-month low from December 17 at 89.62, before recovering to 89.80 in low volume trading. EURUSD concurrently printed a 32-month high at 1.2295 before turning back to 1.2255, and USDJPY saw a nine-day low, at 103.26, and remains below 103.30. The pair’s near-10-month low, seen on December 17th, is at 102.88. The Australian and New Zealand Dollars posted respective 30- and 32-month highs against their US peer. AUDJPY and NZDJPY also saw new trend highs. The Canadian Dollar also traded firmer, but remains comfortably below recent trend highs. Oil prices remain in a consolidation, below recent near-nine-month highs. Base metal prices also remain off recent trend highs. The Pound recouped some of the declines seen over the last couple of days, with Cable lifting to a two-day high at 1.3357. The pair’s 31-month high, which was seen before Christmas, is at 1.3626. EURGBP concurrently ebbed to a two-day low at 0.9055.

Intra-day the AUD is the strongest and the USD and CHF are the weakest. AUDUSD holds at 0.7650 around R2, up some 0.56%, and AUDCHF trades up over 0.69% at 0.6768 from last night’s close at 0.6718.

Later today there are US pending Home Sales which are projected unchanged in November at 128.9, after falling -1.1% in October from 130.3 in September. The only other key data point is the Chicago PMI index which is expected to slip further to 57.0 in December after dropping -2.9 points to 58.2 in November. This would be a third straight monthly drop. Most of the regional PMIs have declined on the month amid the surge in virus cases and increasingly stringent lockdowns. The index was at 48.2 a year ago.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date : 31st December 2020.

Market Update – 2020 Day 366 – More grief for the Greenback.

USDIndex, Weekly
My diary tells me it’s day 366 of 2020. I started my WFH campaign on March 11, when the USDIndex was trading at 96.40 and on its way to 103.80 by March 23. Today, as we close an unprecedented year, the USDIndex has posted another major-trend low, at 89.51, a level last traded in April 2018.

The Dollar has continued to correlate inversely with global stock market direction, with weakness today being concomitant with the MSCI Asia Pacific rising to a new record high in holiday-thinned conditions. The USA30 yesterday closed at a fresh record high on Wall Street. Oil and other commodities have, in contrast, remained directionally subdued. EURUSD remained buoyant on dollar weakness, although has so far remained just off from yesterday’s near-33-month peak. USDJPY remained heavy, though above yesterday’s two-week low at 102.96. Cable trades healthily above 1.3600 at 1.3660 in low, low volume trading. Both the Australian and New Zealand Dollars, which are living up to expectations for being outperformers in post-Covid recovery trade, rallied to fresh 32-month highs against the US Dollar. USDCAD edged out a 13-day low at 1.2734. The lack of direction in oil prices over that last 10 days or so has rendered the Canadian Dollar the underperformer of the dollar bloc pack.

Oil prices re-entered pre-Covid crisis ranges in recent weeks, while a combination of increasing OPEC and non-OPEC supply swelled global inventories, and demand-sapping Covid lockdowns and restrictions across many major economic areas in the northern hemisphere have taken the legs out of the bull trend.

Elsewhere, Bitcoin rallied to yet another record peak north of $29,000. Cryptocurrencies look likely see much more upside amid signs that long-term institutional investment managers have been buying and holding bitcoin and other leading cryptocurrencies as an inflationary hedge. Assets held by Grayscale Investments, the world’s biggest crypto asset manager, is widely cited as a bellwether indicator of this, as it allows professional investors exposure to crypto currencies without having to store the assets. Grayscale reported yesterday that it had $19 bln in crypto assets under management, up from $16.4 bln last week.

European stock markets are lower – those that are open – with the UK100 down -1.3%, and the IBEX -0.5%. The 10-year Gilt yield is down -0.8 bp at 0.202%. A very quiet day with many European markets already closed for the extended New Year weekend. Many will be happy to leave a difficult year behind, but as vaccination programs continue it is becoming clear that it will take a while before they really have an impact. For now case numbers in many European countries still look pretty bad and it is likely to stay that way for another week, as caution was relaxed over the holiday period. European stocks are pretty near record highs as the year ends as there are also companies benefiting from stay-home orders and investors look ahead to the expected recovery in 2021.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date : 4th January 2021.

Focus on the Data, but Politics Still in Play.

After last week’s focus on US stimulus, Brexit, vaccine roll outs, virus worries, and lockdowns, attention will turn back to fundamentals with heavy data slates around the world. However, politics will still be an issue near term. On the immediate radar are the runoff elections in Georgia which will determine control of the Senate, which in turn will set the legislative agenda for Congress. In the UK, it will be adjustment time after leaving the EU single market, with many Brexit details still to be worked out. Asia’s economic data should continue to reflect the strength of the recovery even at a slightly more moderate pace.

It’s back to work for US markets, kicking off 2021 after the USA30 and USA500 closed out 2020 at record highs. Combined, the major indexes posted 102 fresh peaks through the year. Compared to March lows, the USA30 was 64% higher, the USA500 up 67% and the USA100 a remarkable 88% firmer. Moreover, the rally saw a further broadening of gains as shares of firms that would benefit from a return to normal saw continued buying interest. Concurrently, yields richened in the few weeks leading up to year end after the 10-year and 30-year rates failed to eclipse 1% and 1.75% levels, respectively.

Wall Street and global stock markets added to already impressive gains in December, fueled by the rollout of vaccines that are widely seen as driving a robust recovery in 2021 after the volatile path seen in 2020. Adding to the optimism was the passage of a fresh stimulus bill in the US and a Christmas Eve Brexit agreement. The accumulation of upbeat developments continued to overshadow the challenges facing the economy in the very near term, as surging infections triggered increasingly stringent lockdowns in the US, Europe and parts of Asia, suggesting a rocky start to the year for global growth. Meanwhile, bond markets continued to take a more measured view of the growth outlook, as the uptick in yields since March has sharply undershot the magnitude of the upward trajectory in equities. The tension between dismal near term and sunny medium term outlooks will continue to drive volatility in equity, bond and currency trading as the New Year begins.

Vaccines rolled out in the UK, US and Europe during December, providing the market with a light at the end of the tunnel as infections, hospitalizations and restrictions soared. Front line health care workers and the elderly have priority, but expectations have grown that wider availability will be the case by the middle of the year, if not a bit earlier. Japan will begin to vaccinate in late February, according to a Bloomberg report that cited local media sources.

Meanwhile, President Trump signed a $2.3 tln omnibus spending bill as the month of December came to a close, averting a partial government shutdown and funding the government through September. More importantly for the market, the bill includes $900 bln pandemic relief measures that will add PPP funds, boost extended unemployment benefits and the eviction moratorium, support the airlines, and increase money for vaccine distribution. The bill provides $600 checks to individuals. Congress indicated it would review Section 230 which advantages big tech, and will look into voter fraud issues.

There are a number of key economic reports on tap this week, including ISMs and vehicle sales, though culminating with the December employment data. The Fed is back in focus too with the FOMC minutes and Fedspeak due.

The December jobs report should garner extra attention given the non-trivial risk of a drop in payrolls as restrictions ratcheted up on the spikes in virus infections since November and the delayed stimulus. Of course, the service sector again suffered the brunt of the restrictions, but that sector has already been hollowed by the spring shutdowns, so weakness may be tempered. Hence, a 100k December nonfarm payroll increase is expected, after gains of 245k in November, 610k in October, and 711k in September. We also note that initial claims are not flashing warnings signs about employment in December — claims fell -19k to 787k in the Christmas week, extending the -86k plunge to 806k in the prior week. The jobless rate should tick up to 6.8% from 6.7% in November, versus a 14.7% peak in April. Average hourly earnings should increase 0.2%.

Fed policy will be on view again after the holiday hiatus. The FOMC released the minutes to its December 15-16 meeting the results of which were uneventful as the 0% to 0.25% rate band was maintained, and there were no changes to QE. However, the minutes will be scrutinized for insights into the general thinking of policymakers. Note there is a new voting rotation this year, and the new crew of Evans, Bostic, and Daly will tilt to the dovish side, with just Barkin more of a centrist. And Fedspeak this week will include the aforementioned doves. Also on tap are Williams, Mester, Harker, Bullard, and VC Clarida.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date : 5th January 2021.

Market Update – January 5 – Georgia on everybody’s mind.

USDCAD, Oil & Gold

The Dollar has been trading steadily so far today after yesterday rebounding quite sharply from 33-month lows. This has come amid a backdrop of sputtering stock markets, with narratives ascribing today’s two runoff elections in Georgia, which have existential implications for the incoming Biden administration (as the result will decide whether Democrats or Republicans will control the Senate), alongside the constant rise in positive Covid tests and associated restrictions, as providing excuses for markets to correct.

The USDIndex has settled above the trend low seen yesterday at 89.42. EURUSD has concurrently settled lower, in the mid-to-upper 1.2200s, after yesterday foraying above 1.2300. USDJPY has settled around 103.0, and the Pound ebbed modestly lower as market participants continue to digest the UK-EU deal. The Aussie and Kiwi Dollars are showing gains over 0.5%, but remain below their respective highs from yesterday.

The Canadian Dollar, meanwhile, recouped some of the ground it lost yesterday during a sharp drop in oil prices. Oil prices steadied today after yesterday seeing a sharp correction after posting 11-month highs, which in our view shouldn’t have been too surprising, what with the demand destruction being caused by the increasing Covid lockdown measures being taken in Europe and other major northern hemisphere nations, alongside increasing supply from both OPEC and non-OPEC producers, and with crude prices having already returned to pre-pandemic levels. USOil lifted back above $48.00 to $48.50 after tumbling by just over 5% from yesterday’s high at $49.80, just shy of the key $50.00. USDCAD rebounded by over a big figure from the 33-month low the pair saw yesterday, at 1.2664, though has since dropped back around the 1.2750 area. Bitcoin has settled after whippy price action yesterday, and remains over 8% down on its record high, as GOLD tests $1950.00, an area last visited November 9th, the day the yellow metal lost over 7%.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date : 6th January 2021.

Europe and UK risks after the deal.



The last two weeks were thin on data and full of trading holidays, but the last minute agreement on a Brexit deal and virus developments were key events and will be decisive for growth and central bank policy over the next months at least. The Brexit deal secured frictionless goods trade, but didn’t cover financial services, which has already led to some shifts. The sharp rise in Covid-19 case numbers over the holiday period and the resulting tightening and/or extension of restrictions meanwhile will put fresh pressure on economic growth and thus keep economies reliant on fiscal and central bank support.

A Brexit deal materialized on Christmas Eve, and has since been ratified by the UK parliament and unanimously approved by all 27 EU ambassadors. The deal took effect on January 1, and in the Eurozone is operating on a provisional basis until the EU parliament formerly ratifies it. The new “Trade and Cooperation Agreement” provides tariff and quota free trading of goods between the EU and UK. For fishing there are transitional arrangements, but in general EU law will cease to apply in the UK, and the jurisdiction of the European Court of Justice will end. The biggest hurdles to a deal being reached were the level playing field rules and state aid issues, which were overcome with the principal of “managed divergence”, which gives both sides the right to a review and retaliation mechanism if they believe the other side has gained an unfair competitive advantage.

Financial services are still in limbo though, despite the trade deal. The agreement struck between the EU and the UK, last week ensured tariff and quota free trade in goods, but the UK’s important financial services industry still doesn’t have clarification on what exactly will change in the future, as the deal doesn’t cover financial services. Some area are covered by “equivalence” assessments, but not all. Both sides hope to get a memorandum of understanding in place by the end of March, but that won’t be as high profile and extensive as the trade deal. Britain’s Financial Conduct Authority was forced to announce last week that it would temporarily alter its rules to ease fears of market turbulence in interest rate swap trades at the start of this year. The EU has so far not granted equivalence to the UK market to help smooth cross-border transactions and the FCA will temporarily allow London-based branches of European investment banks to trade on EU venues, as long as they are trading for EU clients. The relief will not apply to the firms’ trades on behalf of non-EU clients or their own proprietary trades and the measure will be reviewed on March 31.

Share trading is also shifting and with companies not really expecting equivalence rulings to materialise may were prepared with big shifts reported for yesterday’s trade. An FT article (paywall) highlighted that on the first trading day of 2021 “nearly €6bn of EU share dealing shifted away from the City to facilities in European capitals”. This may not be the city’s biggest area of revenue, but it may give a flavor of what is to come. The FT also highlighted that EU regulators yesterday “withdrew registration of six UK-based credit rating agencies and four trade repositories — data warehouses that provide authorities with information on derivatives and securities financing trades. EU companies and investors will now have to use EU-based entities.”

Meanwhile, the UK is back in the strictest lockdown since March last year and despite the rollout of vaccines, it may don’t expect restrictions to be lifted before the end of February. Germany is also extending its lockdown, with the hospitality sector and non-essential shops already closed for a while and now set to remain shut until the end of the month at least. Under discussion are also further restrictions of movement in areas were incident rates are particularly high. It may be the result of the new and more infectious virus mutation, or just the natural result of a more relaxed attitude over the holiday period, but it is clear that vaccination programs will take a while to have sufficient impact to get economies back to normal.

Against that background data releases looked already out of date.

The final December UK manufacturing PMI may have been revised slightly higher, to a 57.5 headline in the final reading yesterday, but like the German numbers the data already look outdated considering subsequent developments.

German jobless numbers came in better than expected in December readings released today, with the sa unemployment total unexpectedly falling -37K over the month, despite the tightening of lockdown restrictions last month that saw restaurants, hotels and non-essential shops close once again. Expectations had been for a rise in the jobless total as well as the jobless rate, but in the event the sa rate remained steady at 6.1%. However, the fact that official numbers haven’t exploded is largely due to government wage support and job retention schemes, which have helped companies to hang on to staff. That is a costly exercise and not all companies will survive once government support ends and the ECB also starts to tightening policy. That means the real impact on the labour market from the pandemic will only become apparent over time and much later in the year.

ECB waiting for fiscal stimulus after extending PEPP & Brexit deal takes pressure of BoE

The EU has finally cleared the next medium term budget and with it the pandemic recovery program that will be jointly financed and should go some way to get the economy back on track. In the best case scenario, the ECB is pretty much on hold for now, although clearly if there is Brexit chaos or the virus situation doesn’t improve, ECB officials will be ready to step in with additional measures.

Meanwhile in UK, developments could also lead to renewed speculation that the BoE will have to step in again, although the Brexit deal removed any immediate pressure on the central bank to consider negative rates. The BoE’s Monetary Policy Committee left official rates unchanged at the meeting in December, but extended the Term Funding Scheme by six months, while focusing on flexibility in the asset purchase program. Should market functioning worsen materially again, the Bank of England could increase purchases, but at the same time, there is flexibility to slow the pace of purchases later if the economy recovers as planned next year. Fiscal policy is already stepping in again to get companies and employees through this latest crisis and clearly with the budget deficit rising sharply BoE support will be needed to keep financing conditions favourable, even in the best case scenario.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Andria Pichidi
Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date : 7th January 2021.

Big Surprise from Germany & US data Preview.

EURUSD, H4​

German manufacturing orders jumped 2.3% m/m in November, which unexpectedly continued the pretty impressive rebound that the sector has seen since the last lockdown. Expectations had been for a slight correction from the 3.3% rise in October, but in the event the inflow continued at a robust pace, with domestic orders rising 1.6% m/m and foreign orders 2.9% m/m. The annual rate is now at 6.4% y/y – based on the seasonally adjusted series, and thus clearly above pre-virus levels. This is of course data that preceded the latest lockdown, although it is expected that the renewed tightening of virus restrictions won’t hit production too much, even if it means further hardship for the services sector. The latter also means that there still is the risk of a technical recession despite the impressive orders number. Indeed, part of the surge in orders may be due to precautionary stock building in the UK ahead of the official Brexit date and that could mean a drop back in orders at the start of this year as companies reduce stockpiles.

US Initial jobless claims preview: Initial claims are expected to slip -7,000 to 780,000 in the week ended January 2 after a -19,000 drop to 787,000 from 806,000 at the end of December. Claims have been elevated in recent weeks amid the surge in virus cases and the more stringent lockdowns have seen renewed layoffs. Additionally, the holidays have been distorting. Remember, seasonal adjustments were switched in September, and the usual seasonal rise in NSA claims through the holidays may be lifting the reported SA data given the unusually high level of claims. Claims are expected to average 835,000 in December, following averages of 749,000 in November, 786,000 in October, and 855,000 in September. The 892,000 December BLS survey week reading exceeded recent survey week readings of 748,000 in November, 797,000 in October, and 866,000 in September. Expectations are still for a December payroll rise around 100,000 though risk is for a weaker print, and potentially a decline, (Barclays have a -50,000 figure) especially given the -123k decline in the ADP report yesterday.

US trade balance preview: the deficit is expected to widen to -$67.2 bln in November, a 14-year high, after edging out to -$63.1 bln in October, and was at a 12-year high of -$64.9 bln in August. We expect exports to increase 0.7% to $183.2 bln, while imports rise 2.2% to $250.4 bln. The November petroleum price rebound has likely boosted both exports and imports of petroleum. We saw November pull-backs in vehicle trade after huge increases in every month since June, but large declines in each prior month since February. We expect a sustained high November bilateral goods deficit between the US and China of about -$30 bln as businesses rebuild inventories. For the year, we expect a -$55.9 bln average deficit, versus a -$48.1 bln average in 2019.

US ISM services index preview: we expect the index to dip to 55.0 in December. This would be a third straight monthly decline as service sector activity slows, especially with the delayed stimulus, the surge in virus cases and renewed shutdowns. The index had surged to 58.1 in July, an 11-year high, amid reopenings of the economy. It was at 54.9 last December. Producer sentiment has remained firm despite the fall’s moderation as businesses scramble to rebuild inventories.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date : 23rd February 2021.

Market Update – February 23 – USD Remains Heavy.

Market News Today​

Equities heavy & USD down again (Nasdaq –2.46%, TSLA -8.55% but DIS+4.4%) as Yields (+1.8% 10yr) & Commodities (inc. Oil +2% & Gold) gained. Commodity currencies close to 3-year highs. Another volatile session for BTC – 57k-49K. Facebook restores some Aussie news sites, Marathon & Occidental both missed expectations, HSBC announced a 34% fall in profits. Huawei launched a $2,800 foldable phone. US passed 500,000 Covid deaths (20% of global total) & England announced a slow exit from lockdowns. UK labour data was weak but better than expected (claims down & earnings up).

The Dollar remained on a softening path in what is now a fourth consecutive trading day of weakening, which has spanned over phases of both risk-on and risk-wary sentiment in global markets, alongside a continued ascent in Treasury yields.

Overall, as witnessed by gains in commodity prices over this period, which have been attributed by some market narratives today as helping revive stock market sentiment in Asia, the reflation trade remains in play. Copper prices, for instance, hit fresh 10-year highs today, and are up by nearly 20% on the year to day and by 62% from year-ago levels. Other base metals have seen a similar magnitude of advance.

There remains a conviction in markets that the reflation trade — the escape from pandemic recession and slow growth to the anticipated eventual return to societal and economic normalcy, fuelled by massive stimulus and a presumed unleashing of a pent up consumer ‘lockdown savings’ spending spree in developed economies — is inherently dollar bearish. The Dollar is richly valued by the measure of historic trade weighted levels, and many value/relative value investment opportunities in the inflation trade lie outside of the US economy. SocGen research, for instance, last week highlighted that the consensus expectation is for earnings to rise 30% in 2021 for companies in the MSCI World Index, and by 40% in emerging markets. That said, the Dollar (as measured by the USDIndex) remains above its early January lows. When it became clear that the Democrats would control the Senate following the early-January Georgia run-off elections, this put the brakes on what had been an unfolding dollar weakening trend — especially in light of the consequential passing of the gargantuan $1.9 tln stimulus bill, which has the potential to bring forward Fed tightening sooner than it would otherwise have been. But for now the Fed is likely to stick to its dovish guns, which is what we expect Fed chair Powell will do to today during his Congressional testimony of the central bank’s semi-annual Monetary Policy Report.

Today – EZ CPI (final), US Consumer Confidence, Fed Chair Powell’s semi-annual testimony to the Senate, BoC’s Macklem.





Biggest (FX) Mover @ (07:30 GMT) NZDCAD (-0.34%) Rejected 0.9250 yesterday, moved under PP, 20Hr & 50Hr MA earlier to test toward 0.9200. Recovered 50MA now. Faster MAs aligned and trending lower, RSI 45 and neutral, MACD histogram & signal line aligned lower, with a weak break of 0 line. Stochs. approaching OS. H1 ATR 0.0011, Daily ATR 0.0055.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date : 10th March 2021.

Market Update – March 10 – USD holds ahead of key auction.


Market News Today – USD holds its bid, big bounce back from Nasdaq (+3.69%, AAPL +4.06%, TSLA +19.64%, NIO +17.45%), Yields consolidate around 1.55%. Stimulus bill will pass into law later today. Nikkei closed flat. Overnight – Chinese CPI & PPI better than expected, RBA Lowe – would not say AUD is overvalued, but “comfortable” lower than last week. Gold bounced from key level ($1685), USOil drifted lower towards $63.00, BTC hit 55K.

USDIndex – Fell from 92.50 yesterday – today PP at 92.15

EUR – Tested back to 1.1900 yesterday – but back down again now at PP 1.1880
JPY – Retreats from 9-mth high at 109.20. Now 108.80 (PP 108.70, R1 109.00
GBP – Test of 1.3800 held again yesterday and rallied to 1.3915. Now at PP 1.3870

AUD – under 0.7700 to 0.7685 (PP) – s1 0.7645, R1 0.7750
NZD – rose from test of 0.7100 yesterday to -0.7180. – Trades at 0.7145
CAD – rose from test of 1.2600 (S1) to 1.2660 now. PP 1.2630, r1 1.2690.
CHF – Holds back at 0.9300 after rally to 0.9375 yesterday – PP 0.9325.

BTC – held $50k yesterday, has rallied to R3 at $54,400. PP today at $50,600

GOLD – rallied from below important May & June lows at $1685 yesterday to 1720 earlier.
Trades at $1715 now.
USOil – down again to test $63.50 and the 200Hr MA – S1 $63.00. PP $64.45

USA500 – +54.09 (+1.42%) 3875. – USA500 FUTS now at 3860. – 20SMA (3878). 50SMA 3850

Today – US CPI (13:30 GMT), BoC Rate decision (15:00), Weekly Oil Inventories and – key today – Auction of $38 billion US 10-year Treasuries (18:00).



Biggest (FX) Mover @ (07:30 GMT) AUDUSD (-0.45%) Moved lower following LOWE comments. Under 0.7700 from 0.7820 highs yesterday, under PP (0.7865) earlier. Faster MAs aligned and lower but turning neutral, RSI 48 and neutral, MACD histogram & signal line aligned lower and attempting to break 0 line. Stochs rising from OS zone. H1 ATR 0.0012, Daily ATR 0.0098.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.


Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work.

Stuart Cowell
Head Market Analyst
HotForex

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.