Author Archive for InvestMacro – Page 311

With Weaker Climate Consensus, Expect Elevated Climate Change

By Dan Steinbock       

As the UN climate conference concluded with the expected dissension, efforts to contain global climate change are weakening at the worst historical moment. Emerging and developing countries will pay much of the bill.

As representatives from more than 100 countries debated climate change in the COP24 – the 24th UN climate change conference – held in Katowice, Poland, the outcome could only be divisive.

In the past, collective consensus by major economic powers – U.S., the EU, Japan and China – fueled success. Now the planned withdrawal of the U.S. from the Paris Accord resulted in a hollow consensus, supported by big-oil opposition.

Like the recent G20 Summit, which welcomed trade but did not reject protectionism that undermines trade, Katowice agreed on a “compromise,” which welcomed the alarming climate UN (IPCC) report, but not its actual findings. The price could be the virtual extinction of small island states as seas rise, followed by soaring costs of climate change in emerging and developing economies.

Katowice’s “administrative” compromise virtually ensures that the extreme urgency required by the “rule book,” which would allow countries to implement the Paris Agreement, will be ignored.

The planned Trump exit from Paris Accord

Risks have escalated since June 1 2017, when President Trump announced his decision to withdraw the U.S. from the Paris Climate Agreement – an international pact intended to reduce the effects of climate change by maintaining global temperatures “well below 2°C above pre-industrial levels.”

The Accord was negotiated by almost 200 parties and adopted by consensus in December 2015. Based on the UN convention on climate change, it focuses on greenhouse gas emissions mitigation, adaptation and finance starting in 2020.

However, Trump calls the pact a “bad deal” for the U.S. and sees the withdrawal as a key piece of the “America First” stance. The White House began to pave the exit path in March 2017, when Trump signed an executive order to start the formal process of repealing President Obama’s climate agenda.

The withdrawal split the White House, the Congress, and the nation. A few powerful lobbying groups, energy giants and billionaires effectively hijacked the fight against climate-change, which most Americans and U.S. cities support.

More recently, the White House ignored a new government report, which concluded that, in the absence of significant steps to subdue global warming, U.S. economy will take severe hits and cause the death of thousands of Americans by 2100.

It is within the U.S. president’s constitutional authority to withdraw from the Paris deal without first receiving congressional or senatorial approval. But legal questions linger as to how the Trump White House can execute the withdrawal and what role the U.S. can play in future international climate meetings.

The role of China, emerging and developing economies

Since the early 2010s, it has often been said that China is the “world’s greatest polluter.” That’s true but only in aggregate terms. By default, big nations pollute more than small ones.

Moreover, emerging economies that are still industrializing generate relatively more pollution than advanced nations, which industrialized over a century ago.

The simple fact remains that, on per capita basis, the U.S. and major European economies remain the greatest polluters by far, however.

According to research, China contributes barely 10-12% of human influence on climate change. That figure has remained fairly steady over the industrial period. It is lower than might be expected for the world’s largest aggregate emitter.

As the major advanced economies, including the U.S. and Europe, have been emitting far longer, their net contribution on climate change remains relatively far higher. Climate change is not just cumulative but accumulative.

If the U.S. exit will materialize, global climate risks will intensify dramatically, particularly in emerging and developing economies.

The 10 countries most affected by climate risk

Between 1998 and 2017, Puerto Rico, Honduras and Myanmar ranked highest among the countries that have been most affected by climate change. Less developed countries are generally more affected than industrialized countries. Yet, even, high income countries feel climate impacts more clearly than ever before.

Regarding future climate change, the new Global Climate Risk Index can serve as a red flag for already existing vulnerability that may further increase in regions where extreme events will become more frequent or more severe due to climate change. The 10 countries most affected in the past two decades feature mainly poorer economies in Asia (Myanmar, Philippines, Bangladesh, Pakistan, Vietnam and Thailand) and Americas (Honduras, Haiti, Nicaragua and Guatemala) (Figure).

Figure  Long-Term Climate Risk *

* Annual averages, 1998-2017: Climate Risk Index 2019, GermanWatch; Difference Group

 

The Index measures long-term global risk as a function of death toll, deaths per 100,000 inhabitants, absolute losses in US$ millions, losses per unit GDP in percentage and total number of climate events from 1998 to 2017. In this regard, there are differences among the most affected countries.

In the case of Puerto Rico, the top rank was driven by a very high death toll and costly economic losses, but the number of events was low relative to other countries. In Myanmar, the high death toll explains the score. In Dominica, Puerto Rico and Haiti, the losses per unit GDP drove high rankings.

In international comparison, the Philippines death toll has been relatively high in the past two decades, while its economic losses were among the highest. But it is the number of total events in the Philippines (over 300) that was the highest among the top-10 countries.

Only Vietnam and Bangladesh come close, but even they had just two-thirds of the climate events in the Philippines. And in the top-ranking Puerto Rico and Honduras, total events were less than a 10th and 5th of those in the Philippines.

Toward accelerated climate change

Since the 1980s typhoons that strike East and Southeast Asia have intensified by 12–15%, with the proportion of storms of categories 4 and 5 having doubled, even tripled. Under increasing greenhouse gas forcing, the projected ocean surface warming pattern suggests that typhoons striking Asia will intensify further.

Ironically, global climate change will penalize particularly those economies where living standards remain low and that are most vulnerable to collateral damage. The more poor economies will lose lives, the more that will bespeak about the effective indifference of advanced nations toward real human rights.

Timing matters. Under the agreement, the earliest date of the U.S. withdrawal is November 2020 – the last month of the Trump presidency, in the absence of a prior impeachment. That’s when Americans have to decide whether they really prefer energy profits, at the expense of future generations in the U.S. and elsewhere.

Furthermore, time is running out. According to estimates, current climate policies virtually ensure that the increase in global temperatures is on pace for somewhere around 3.3 degrees Celsius.

That does not bode well for the future.

About the Author:

Dr Dan Steinbock is the founder of Difference Group and has served at the India, China and America Institute (USA), Shanghai Institutes for International Studies (China) and EU Center (Singapore). For more, see http://www.differencegroup.net/ 

 

 

CADJPY: one support left

By Tomasz Wisniewski, Alpari

This analysis is for traders who do not care much about the instrument they’re trading on. Many market participants believe that technical setups work on any instrument and they go beyond the major pairs, gold, and oil. This analysis is about CADJPY, where we see a classic sell signal.

The pair has been in a healthy uptrend since March and the price movements created an upward channel formation. The beginning of December brought us a breakout of the lower line of this pattern (blue). In addition to this dynamic support, the price also broke the horizontal one (green), which was made from the monthly lows from October and November. The price has been advancing slightly higher since the 6th of December, which can be considered as typical price action movement aiming to test the broken supports as the closest resistances. On Friday, the test ended with a nice bounce, which may be perceived as a bearish factor. I would be more cautious here and I would wait for the breakout of the black line first. That is a dynamic support of the mid-term correction and the breakout of that line should bring us a proper sell signal.

As for the target, the first one is on the orange line, which represents the lows from August and September. We should get there relatively easy if we do see a drop. If the price breaks the orange line it could spell real trouble for buyers, but currently, this is still up in the air.

Source: CADJPY: one support left

AUDNZD: testing the new resistance

By Tomasz Wisniewski, Alpari

The new week starts for us with an interesting trading opportunity on AUDNZD. This pair has recently been following the technical protocol with great accuracy, so it provides us with a very interesting occasion.

Price action principles have been dominant here over the past few months. It all started with the Head & Shoulders pattern during the summer. A proper decline started in October after the breakout of the neckline (red), which was then successfully tested as the closest resistance. November brought us a descending triangle pattern (green lines) in a place where this kind of pattern can be deadly. This place was the lower line of the giant symmetrical triangle (lower blue). The reason that this can be deadly is that this kind of formation shows an accumulation of bearish power and suggests that there could be a breakout to the downside. If we combine this with the symmetrical triangle, it tends to be huge. The price indeed went lower, but has recovered slightly over the last few days.

That reversal is a normal bit of price action and can be used as a great opportunity to open short positions at better, i.e. higher prices. As long as we stay below the green area, sentiment is negative. Our view is additionally strengthened by the fact that the last two daily candlesticks on the chart have long wicks, which indicate a rejection of the higher prices. At the end of the day, sellers would be more than happy to see a shooting star formation.

Source: “AUDNZD: testing the new resistance

 

 

Forex Technical Analysis & Forecast 17.12.2018 (EURUSD, GBPUSD, USDCHF, USDJPY, AUDUSD, USDRUB, GOLD, BRENT)

Article By RoboForex.com

EURUSD, “Euro vs US Dollar”

EURUSD has completed another consolidation range around 1.1288; right now, it is trading upwards. According to the main scenario, the pair is expected to start a new correction towards 1.1322 and then resume falling to reach 1.1251. After that, the instrument may form one more ascending structure towards 1.1289 and then resume trading inside the downtrend with the target at 1.1150.

EURUSD
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

GBPUSD, “Great Britain Pound vs US Dollar”

GBPUSD is consolidating. Possibly, today the pair may fall towards 1.2511 and then grow to reach 1.2611. Later, the market may resume trading inside the downtrend with the short-term target at 1.2430.

GBPUSD
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

USDCHF, “US Dollar vs Swiss Franc”

USDCHF is trading upwards. Possibly, the pair may reach 1.0003 and then start a new correction towards 0.9957. After that, the instrument may resume trading inside the uptrend with the first target at 1.0053.

USDCHF
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

USDJPY, “US Dollar vs Japanese Yen”

USDJPY is trading upwards to reach 113.52. Later, the market may form a new descending structure to break 113.13 and then continue trading inside the downtrend with the short-term target at 112.75.

USDJPY
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

AUDUSD, “Australian Dollar vs US Dollar”

AUDUSD is trading downwards. Possibly, the pair may reach 0.7190 and then resume falling with the short-term target at 0.7135. After that, the instrument may form one more ascending structure towards 0.7190 and then continue trading inside the downtrend with the target at 0.7077.

AUDUSD
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

USDRUB, “US Dollar vs Russian Ruble”

USDRUB is still consolidating above 66.50. If later the instrument breaks this range to the upside, the price may grow to reach 67.47 (an alternative scenario); if to the downside – resume trading inside the downtrend to break 65.56 and then continue this decline with the short-term target at 64.00.

USDRUB
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

XAUUSD, “Gold vs US Dollar”

Gold has completed the ascending impulse along with the correction. Today, the pair may form one more ascending structure towards 1245.70 and then start a new decline to reach 1240.25. If later the instrument breaks this range to the upside, the price may grow with the target at 1252.30; if to the downside – continue the correction continue the correction towards 1212.50.

GOLD
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

BRENT

Brent is still consolidating around 60.10. Possibly, the pair may form a new descending structure to reach 58.00. If later the instrument breaks this range to the upside, the price may resume trading inside the uptrend with the short-term target at 66.00. The key target is at 73.00.

BRENT
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

Bitcoin: on track to our target

By Tomasz Wisniewski, Alpari

We’re keeping an eye on bitcoin once again this week. We analysed the top cryptocurrency a week ago, and unsurprisingly, we were right! At the time of writing my previous piece, bitcoin was above 3,400 USD and we had a bearish outlook, saying that we should go much lower than this, having one particular target in mind. See for yourself:

“The new week started with a test of the broken support as the closest resistance, so a very clean price action movement. So far, the test is positive for sellers, which increases the chances of a further slide towards 2,900 USD (blue).”

Our view was spot on and the price declined sharply, literally straight away! Almost every single day last week ended with lower lows and highs. The new week hasn’t started off any better. We are around 3,200 USD and getting closer to our ultimate long-term target slightly below the psychological barrier of 3,000 USD (blue). Quick reminder: this area was important in May, June, July, and September 2017, so we assume that it will be tested once again pretty soon. Our outlook on BTC remains negative.

Source: Bitcoin: on track to our target

 

Fibonacci Retracements Analysis 17.12.2018 (GOLD, USDCHF)

Article By RoboForex.com

XAUUSD, “Gold vs US Dollar”

As we can see in the H4 chart, after reaching the retracement of 38.2%, XAUUSD started a new pullback, which may be followed by another rising impulse towards the long-term retracement of 50.0% at 1262.60. The local support level is at 1208.60.

GOLD1
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

In the H1 chart, the divergence made the pair reverse and start a new correction, which has already reached the retracement of 38.2%. The next possible targets may be the retracements of 50.0% and 61.8^ at 1231.05 and 1226.30 respectively. If the price breaks the high at 1250.84, the mid-term uptrend will continue.

GOLD2
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

USDCHF, “US Dollar vs Swiss Franc”

As we can see in the H4 chart, the convergence made USDCHF stop trading downwards and start a new rising impulse inside the mid-term uptrend, which is getting closer to the retracement of 50.0% at 0.9996. The next upside targets may be the retracements of 61.8% and 76.0% at 1.0027 and 1.0064 respectively. The key resistance is the high at 1.0128.

USDCHF1
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

The H1 chart shows more detailed structure. The pair is getting close towards the retracement of 50.0% at 0.9996.

USDCHF2
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

The Analytical Overview of the Main Currency Pairs on 2018.12.17

Analytics by JustForex

The EUR/USD currency pair

Technical indicators of the currency pair:
  • Prev Open: 1.13595
  • Open: 1.13004
  • % chg. over the last day: -0.48
  • Day’s range: 1.12965 – 1.13183
  • 52 wk range: 1.1214 – 1.2557

Last week USD once again strengthened against the major currencies. The USD index (#DX) updated the annual maximums. On Friday, December 14, EUR/USD saw an aggressive sell-off. The quotes fell by more than 80 points. The USD was supported by the positive retail sales report in the US. The key event this week will be the Federal Reserve meeting. The financial market participants expect the regulator to increase the key interest range by 25 basis points to 2.25%-2.50%. You should open positions from the key levels.

At 12:00 (GMT+2:00) the EU will publish the Customer Price Index.

EUR/USD

The price fixed below 50 MA and 200 MA which shows the power of the sellers.

MACD histogram is in the negative zone but above the signal line, which gives a weak signal to sell EUR/USD.

The Stochastic Oscillator is in the neutral zone, the %K line crosses the %D line. There are no signals at the moment.

Trading recommendations
  • Support levels: 1.13000, 1.12700
  • Resistance levels: 1.13200, 1.13450, 1.13650

If the price fixes below 1.13000, the quotes are expected to fall further. The movement will tend toward 1.12700-1.12500.

Alternatively, the currency pair can recover toward 1.13450-1.13600.

The GBP/USD currency pair

Technical indicators of the currency pair:
  • Prev Open: 1.26325
  • Open: 1.25996
  • % chg. over the last day: -0.58
  • Day’s range: 1.25166 – 1.25996
  • 52 wk range: 1.2477 – 1.4378

GBP/USD is showing a variety of trends. The technical picture is ambiguous. The GBP/USD quotes are consolidating. The key support and resistance levels are 1.25700 and 1.26150. Investors wait for the relevant data regarding the Brexit process. Last week Theresa May failed to negotiate better conditions regarding the UK leaving the EU. You should look for market entry points at the key levels.

The Economic News Feed for 17.12.2018 is calm.

GBP/USD

The price fixed below 50 MA and 200 MA which indicates the power of the buyers.

MACD histogram is in the negative zone but above the signal line which provides a weak signal towards selling the GBP/USD.

The Stochastic Oscillator is in the neutral zone, the %K line crosses the %D line. There are no signals at the moment.

Trading recommendations
  • Support levels: 1.25700, 1.25300, 1.24850
  • Resistance levels: 1.26150, 1.26800

If the price fixes below the local support 1.25700, expect further fall of the GBP/USD quotes. The movement will tend toward 1.25300-1.25000.

Alternatively the quotes can grow toward 1.26500.

The USD/CAD currency pair

Technical indicators of the currency pair:
  • Prev Open: 1.33452
  • Open: 1.33811
  • % chg. over the last day: +0.24
  • Day’s range: 1.33733 – 1.33882
  • 52 wk range: 1.2248 – 1.3445

USD/CAD keeps being traded in a long flat. There is no singular trend. The key support and resistance levels are 1.33600 and 1.34000. Investors are waiting for additional drivers. Keep an eye on the oil quotes dynamics. Positions should be opened from the key levels.

The Economic News Feed for 17.12.2018 is calm.

USD/CAD

There are no precise signals: 50 MA has crossed 200 MA.

MACD histogram is close to 0.

The Stochastic Oscillator is in the neutral zone, the %K line crosses the %D line. There are no precise signals.

Trading recommendations
  • Support levels: 1.33600, 1.33250, 1.32900
  • Resistance levels: 1.34000, 1.34450

If the price closes above 1.34000, expect the USD/CAD quotes to grow toward 1.34300-1.34500.

Alternatively, the price fixed below 1.33600 and you should look for the market entry points to open short positions. The movement will tend toward 1.33250-1.33000.

The USD/JPY currency pair

Technical indicators of the currency pair:
  • Prev Open: 113.535
  • Open: 113.336
  • % chg. over the last day: -0.22
  • Day’s range: 113.301 – 113.520
  • 52 wk range: 104.56 – 114.56

The safe haven currency stabilized. The USD/JPY quotes are consolidating. The local support and resistance levels are 113.350 and 113.500. A technical correction is highly probable soon. The financial market participants are waiting for the Bank of Japan meeting on December, 20. You should open positions from the key levels.

The Economic News Feed for 17.12.2018 is calm.

USD/JPY

Indicators do not provide precise signals, the price fixed between 50 MA and 200 MA.

The MACD histogram is around 0.

The Stochastic Oscillator is in the neutral zone, the %K line is below the %D line, which points towards a bearish mood.

Trading recommendations
  • Support levels: 113.350, 113.150, 112.900
  • Resistance levels: 113.500, 113.700

If the price fixes below the local support 113.500, expect further growth towards 113.700-114.000.

Alternatively the quotes can correcttoward 113.000-112.800.

Analytics by JustForex

EURUSD Remains Cautious

By Dmitriy Gurkovskiy, Chief Analyst at RoboForex

The major currency pair is rather unenthusiastic early in the week. The market managed to recover after the weak statistics published last week: investors’ interest in the USD as a “safe haven” asset went down, but they are still very cautious.

Macroeconomic reports from different European countries made the market move against the Euro.

First of all, the Manufacturing PMI in France decreased up to 49.7 points in December after being 50.8 points the month before. The French Services PMI went from 55.1 points in November to 49.6 points this month. The fact that the indicator broke the psychologically-crucial level of 50 points disturbed market players a lot.

The numbers from Germany didn’t make anybody happy as well. The Manufacturing PMI dropped to 51.5 points, the Services PMI – to 52.5 points.

Macroeconomic reports published by the USA last Friday showed that the Retail Sales added only 0.2% m/m in November after expanding by 1.1% m/m the month before. However, investors barely responded to this reading. Another report, the Capacity Utilization Rate, was 78.5% after being 78.1% in the previous month. And then was another reading, which completely switched attention to the USD: the Industrial Production in the USA increased by 0.6% m/m in November after losing 0.2% m/m in October and against the expected reading of +0.1% m/m.

The H4 chart shows that EURUSD has broken the support line of the previous correctional channel and right now is returning to the line to test it from below. The target of this pullback is at 1.1334. If the price breaks this level, it may return into the previous channel and grow towards the resistance line at 1.1412. However, according to the main scenario, the instrument is expected to continue trading downwards steadily. The downside targets are at 1.1230 and 1.1215.

Disclaimer

Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

Central Banks Meetings Are in the Spotlight

by JustForex

Last week the USD strengthened against the basket of major currencies again. The USD index (#DX) closed in the green (+0.39%) and updated the annual maximums. On Friday an array of positive economic reports was published in the US. The amount of retail sales grew by 0.2% in November while the experts expected +0.1%. At the same time, the basis index of retail sales fulfilled the expectations exactly, increasing by 0.2%.

The EUR is under pressure due to weak business activity reports in Germany and the EU. This week Federal Reserve, Bank of England and Bank of Japan will have meetings. More than 75% of financial market participants expect the US Central Bank to increased the key interest range by 25 basis points to 2.25-2.50%. The investors will be keeping an eye on the comments and the rhetorics of the Federal Reserve representatives regarding the monetary policy. Experts forecast that the Bank of England and Bank of Japan will keep the basis parameters of monetary policy at the same level. Check out the EU news feed and act accordingly.

Prices of oil are consolidating. The WTI futures are testing the 51.50 USD/barrel mark.

Market Indicators

On Friday the US stock market saw aggressive sales: #SPY (-1,85%), #DIA (-1,97%), #QQQ (-2,43%).

The US Treasury 10-year bonds yield is at 2,88-2,89%.

The Economic News Feed for 17.12.2018:
  • – Customer Price Index (EU) – 12:00 (GMT+2:00).

by JustForex

EURUSD: dip expected following correction

By Matthew Anthony, Alpari

Previous:

On Friday the 14th of December, the euro fell to 1.1270 during the US session. The weakening of the euro was due to the publication of disappointing data concerning economic activity in the areas of manufacturing and services in the Eurozone and Germany, as well as the dollar rally against the background of favourable data in retail sales and industrial production in the US.

The industrial production index in the US for November was 0.6% (forecast: 0.3%; previous: -0.2%).

The volume of retail sales for November was 0.2% (forecast: 0.2%; previous: 1.1%).

According to Markit, the business activity index in the manufacturing sector in the US was 53.9, and in the services sector – 53.4. They were forecast to reach 55.1 and 534.7.

Day’s news (GMT+3):

  • 13:00 Eurozone: CPI (Nov), trade balance (Oct).
  • 14:00 Germany: Buba monthly report.
  • 16:30 Canada: Canadian portfolio investment in foreign securities (Oct).
  • 16:30 US: NY Empire State manufacturing index (Dec).
  • 18:00 US: NAHB housing market index (Dec).

Fig 1. MA channel on the EURUSD hourly chart.

Current situation:

Sellers have broken through two supports (1.1341 and 1.1318). The first support is a trend line passing through the lows at 1.1306 – 1.1331, the second through the lows at 1.1367 and 1.1306.

Upon reaching 1.1270, the price corrected to 1.1308. On Monday, during Asian trading buyers shifted to a high of 1.1313. The price may move up slowly to 1.1323. There is a resistance on top of this level which acted previously acted as a support at the 45th degrees. Given that there is no bullish divergence between the AO indicator and the price, according to the forecast, I expect downward movement from the pair to 1.1270. Ideally, it would be nice to update and test the low and 112th degree. Now the price is positioned under the 4-hour period (the stochastics are back in the sell zone).