InvestMacro

By Orbex

It is possible to trade on just technical analysis. And quite a few Forex traders operate just on that!

However, it’s good to know that what moves the forex market at the very bottom – hence the name – is fundamental changes in value.

So, even if you are a budding technical forex trader, or one with some experience, having at least a basic knowledge of fundamentals will help your trading considerably.

Fundamental analysis is a really broad field that will give you plenty to study if you are interested in it. But there are some key elements that pop up regularly and distort the markets.

A purely technical FX trader might see a good set up, and suddenly the market moves in the wrong direction. Why? Well, it could be one of the events we discuss below.

Interest Rate Decisions

Central banks are mandated to maintain price stability, and they have a diverse range of tools to do this. Without getting too far into the weeds, basically, central banks will raise interest rates when they think the economy is overheating and will cut interest rates when they think the economy needs a little help.

Higher interest rates increase demand for the currency. This will make it stronger compared to other currencies. Lower rates will have the opposite effect. Many times, there is a consensus among analysts ahead of the rate decision.

If the central bank does something unexpected, the market can be significantly affected, with moves in the hundreds of pips range!

Consumer Price Index (or inflation)

Connected with central banks is the inflation rate. If prices change significantly, it means there isn’t price stability, and central banks are going to want to return the inflation rate to their target range.

When inflation is reported to be outside of the target range, currency pairs move on the expectation that the central bank will step in.

Gross Domestic Product (GDP)

The total value of the production within a country is called the GDP. The amount of money in circulation needs to match this, and it’s a delicate job for central bankers. If the GDP grows, it means the economy is growing.

Generally, that means more people want to invest in the country, increasing the value of the currency. If the GDP disappoints, then it can weaken the currency.

GDP figures are often published on a quarterly basis, and can move currency pairs well over a hundred pips if they catch the market by surprise.

Trade Balance

The reason to exchange currencies is to pay for goods and services from other countries.

Demand for a currency often depends on its level of imports and exports. This means that the trade balance can also have a strong effect on currency pairs. A larger trade surplus means there is more demand for the currency, and it should get stronger.

A larger trade deficit means there is less demand for the currency, so it should get weaker.

There are many other events that could affect the currency, but these are usually the key ones that could catch a technical forex trader by surprise.

You can follow the Economic Calendar on the Orbex website to get advance warning when one of these are coming up, and check out the blog for a preview of what might happen.

By Orbex

By IFCMarkets

US-China deal may cause the correction of precious metals

US and China agreed to sign a phase one trade deal. Will the XAGEUR rise?

An upward movement means an increase in silver prices against the euro. In fact, the signing of a phase one trade deal reduces global risks. US Trade Representative Robert Lighthizer said the deal would double US exports to China over the next 2 years. However, now, the two countries have a 90-day transitional period for the implementation of the mutual agreement. Robert Lighthizer also announced the need for some improvements in the deal. The phase one trade deal between the US and China is expected to be signed in the first week of January 2020. Theoretically, the saying “Buy the Rumor, Sell the Fact” might work, only the opposite way (sell the rumor, buy the fact), as precious metals prices fell in anticipation of the deal. In other words, prior to the signing of the trade agreement, precious metals prices may correct upward in case of any delays and unexpected statements. In anticipation of the US-China deal, the XAGEUR fell about 16% from the high of the current year in September.

On the daily timeframe, the XAGEUR: D1 trying to move upward from the downtrend. At the same time, its decline slowed down and a number of technical analysis indicators formed buy signals. The further price increase is possible in case of reassessment of global risks upwards.

• The Parabolic indicator gives a bearish signal. It can be used as an additional resistance line, which should be overcome before opening a buy position.
• The Bollinger bands have narrowed, which indicates low volatility.
• The RSI indicator is below 50. It has formed a positive divergence.
• MACD indicator gives a bullish signal.

The bullish momentum may develop in case XAGEUR exceeds the 4 last fractal highs, the Parabolic signal and the upper Bollinger band at 15.65. This level may serve as an entry point. The initial stop loss may be placed below the last fractal low, the 200-day moving average line and the lower Bollinger band at 14.75. After opening the pending order, we shall move the stop to the next fractal low following the Bollinger and Parabolic signals. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place there a stop loss moving it in the direction of the trade. If the price meets the stop level (14.75) without reaching the order (15.65), we recommend closing the position: the market sustains internal changes that were not taken into account.

Summary of technical analysis

Market Analysis provided by IFCMarkets

Article By RoboForex.com

AUDUSD, “Australian Dollar vs US Dollar”

AUDUSD is trading at 0.6884; the instrument is moving above Ichimoku Cloud, thus indicating an ascending tendency. The markets could indicate that the price may test Tenkan-Sen and Kijun-Sen at 0.6855 and then resume moving upwards to reach 0.6980. Another signal to confirm further ascending movement is the price’s rebounding from the support level. However, the scenario that implies further growth may be canceled if the price breaks the cloud’s downside border and fixes below 0.6795. In this case, the pair may continue falling towards 0.6695.

NZDUSD, “New Zealand Dollar vs US Dollar”

NZDUSD is trading at 0.6596; the instrument is moving above Ichimoku Cloud, thus indicating an ascending tendency. The markets could indicate that the price may test the cloud’s upside border at 0.6585 and then resume moving upwards to reach 0.6735. Another signal to confirm further ascending movement is the price’s rebounding from the support level. However, the scenario that implies further growth may be canceled if the price breaks the cloud’s downside border and fixes below 0.6490. In this case, the pair may continue falling towards 0.6395.

USDCAD, “US Dollar vs Canadian Dollar”

USDCAD is trading at 1.3163; the instrument is moving below Ichimoku Cloud, thus indicating a descending tendency. The markets could indicate that the price may test the cloud’s downside border at 1.3190 and then resume moving downwards to reach 1.3045. Another signal to confirm further descending movement is the price’s rebounding from the descending channel’s upside border. However, the scenario that implies further decline may be canceled if the price breaks the cloud’s upside border and fixes above 1.3255. In this case, the pair may continue growing towards 1.3345.

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.

By IFCMarkets

Rising euro-zone trade surplus bullish for EURUSD

Euro-zone trade surplus increased to 24.5 billion euros in October compared with 18.7 billion in previous month. Will the EURUSD rise?

The price chart on 1-hour timeframe shows EURUSD: H1 is trading sideways. The price is rising above the 200-period moving average MA(200) which is rising. And the RSI oscillator is rising above 50 level but has not reached the overbought zone. There is no trend yet formed, traders have to decide when it would be a best time to enter the market.

Technical Analysis Summary: Sideways price movement

Market Analysis provided by IFCMarkets

Article By RoboForex.com

AUDUSD, “Australian Dollar vs US Dollar”

In the H4 chart, AUDUSD is moving at 5/8. In this case, the pair is expected to break this level and continue falling towards the support at 3/8. However, this scenario may no longer be valid if the price rebounds from 5/8 to the upside. After that, the instrument may continue growing to reach the resistance at 6/8.

As we can see in the M15 chart, the pair has broken the downside line of the VoltyChannel indicator and, as a result, may continue trading downwards.

NZDUSD, “New Zealand Dollar vs US Dollar”

As we can see in the H4 chart, NZDUSD is moving inside the “overbought area”. According to the main scenario, the pair is expected to break 8/8 and then continue falling to reach the support at 5/8. However, this scenario may no longer be valid if the price rebounds from 8/8. After that, the instrument may start a new growth towards the resistance at +2/8.

In the M15 chart, the pair may break the downside line of the VoltyChannel indicator and, as a result, continue moving downwards.

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.

By George Prior

Boris Johnson could spook financial markets in 2020 and investors must avoid complacency, warns the CEO of one of the world’s largest independent financial advisory organizations.

The warning from Nigel Green, chief executive and founder of deVere Group, follows the landslide victory for Mr Johnson’s Conservative party in the UK’s general election last week in which he secured an 80-seat majority, and as stocks rose across Europe on Monday.

The Queen will officially open Parliament on Thursday, outlining her new government’s legislative programme.

It is expected that the Withdrawal Agreement Bill on leaving the EU could be put before lawmakers as early as Friday.

Nigel Green affirms: “The decisive win for the Conservatives triggered one of the pound’s biggest ever rallies, the FTSE 250 index of UK shares climbed by 3.6 per cent and the FTSE 100 rose 1.3 per cent.

“On Monday, European stock markets reached all-time highs.

“This has been driven in part by investors’ relief that a hung parliament had not been delivered, meaning years of uncertainty and indecisions over the UK’s way out of the EU is coming to an end. Also, perhaps, because the Conservatives promised a more pro-business agenda.”

He continues: “But Boris Johnson now has the daunting task of turning his powerful election campaign slogan of ‘Get Brexit Done’ into reality.

“When Britain leaves on January 31, there will be only 11 months to thrash out the basics of the future relationship with the European Union.

“The self-imposed end of December 2020 deadline is a mammoth challenge or Britain will fall through the ‘trap door’ of no-deal Brexit on January 1 2021.”

The Prime Minister could request another extension for the transition period.  The government has until 1 July 2020 to agree with the EU a one-off extension, until the end of 2021 or 2022.

But, says Mr Green, this is unlikely. He notes: “I don’t believe that Johnson will use his significant majority to slow down or soften – the Brexit process.

“Instead, his assumption from the election outcome will be that people want quick, easy answers.

“Indeed, in an interview on Sunday, Michael Gove guaranteed that the Brexit transition period will not be extended.”

He goes on to add: “The task ahead is monumental. The time frame in which to complete it is narrow. Failure to agree a free trade deal by the end of next year will mean the UK crashing out of the EU and all the far-reaching negative economic implications, including the likelihood of a recession.

“With such uncertainty, following the election bounce, in 2020 investor confidence in the UK is likely to remain subdued and Boris Johnson’s Brexit stance could be a major source of volatility in financial markets.”

The deVere CEO concludes: “Despite the markets currently surging, investors must avoid complacency.

“2020 promises to be a year in which political factors – including Boris Johnson’s Brexit plan and the U.S. presidential election, amongst others – could potentially spook markets.

“Investors should assess and, where necessary, rebalance their portfolios to take advantage of the potential opportunities and to mitigate the risks.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement

by JustForex

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev Open: 1.11258
• Open: 1.11541
• % chg. over the last day: +0.10
• Day’s range: 1.11342 – 1.11541
• 52 wk range: 1.0879 – 1.1572

An ambiguous technical pattern has developed on the EUR/USD currency pair. Quotes are currently being consolidated. The local support and resistance levels are 1.11250 and 1.11550, respectively. Yesterday, Germany and EU published a series of weak economic releases on business activity. A correction of the trading instrument after a significant growth from the beginning of the current month is not ruled out in the near future. Today, investors will evaluate important statistics from the United States. We recommend opening positions from key levels.

The Economic News Feed for 17.12.2019:

• – Real Estate Market Report (US) – 15:30 (GMT+2:00);
• – JOLTS (US) – 17:00 (GMT+2:00);

Indicators do not give accurate signals: the price has crossed 50 MA and 100 MA.

The MACD histogram is close to the 0.

The Stochastic Oscillator is near the overbought zone, the %K line has crossed the %D line. There are no signals at the moment.

Trading recommendations

• Support levels: 1.11250, 1.11100, 1.10900
• Resistance levels: 1.11550, 1.11850, 1.12000

If the price consolidates above 1.11550, expect the quotes to grow toward 1.11800-1.12000.

Alternatively, the quotes could drop toward 1.10900-1.10700.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev Open: 1.33390
• Open: 1.33205
• % chg. over the last day: -0.11
• Day’s range: 1.32352 – 1.33350
• 52 wk range: 1.1959 – 1.3516

The GBP/USD currency pair went down. The trading tool has updated local lows. British MPs are planning to add a new paragraph to the Brexit bill to exclude at the legislative level the possibility of extending the transitional period after the country leaves the bloc. Currently, GBP/USD quotes are consolidating in the range of 1.32250-1.33100. A trading instrument has the potential for further correction. Market participants expect important economic reports from the UK. Open positions from key levels.

At 11:30 (GMT+2:00) the UK will published statistics on the labor market.

Indicators do not give accurate signals: the price has crossed 100 MA.

The MACD histogram is in the negative zone and continues to decline, which sends a strong signal to sell GBP/USD.

The Stochastic Oscillator is in the neutral zone, the %K line is below the %D line, which also indicates a bearish sentiment.

Trading recommendations

• Support levels: 1.32250, 1.31650
• Resistance levels: 1.33100, 1.34200, 1.35000

If the price consolidates below 1.32250, expect further correction toward 1.31700-1.31500

Alternatively, the quotes could grow toward 1.31700-1.31800.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev Open: 1.31719
• Open: 1.31562
• % chg. over the last day: -0.16
• Day’s range: 1.31542 – 1.31737
• 52 wk range: 1.3014 – 1.3664

The technical picture on the USD/CAD currency pair is still ambiguous. Looney continues to bargain in flat. There is no defined trend. At the moment, the local support and resistance levels are: 1.31400 and 1.31750, respectively. A trading instrument has a downside potential. We recommend paying attention to the dynamics of oil quotes. Open positions from key levels.

At 15:30 (GMT+2:00), a report on sales in the manufacturing sector of Canada will be published.

Indicators do not give accurate signals: the price has crossed 50 MA and 100 MA.

The MACD histogram is close to the 0 mark. There are no signals at the moment.

The Stochastic Oscillator is near the oversold zone, the% K line crossed the% D line. There are no signals at the moment.

Trading recommendations

• Support levels: 1.31400, 1.31150
• Resistance levels: 1.31750, 1.32000, 1.32250

If the price consolidates below 1.31400, expect a drop in quotes toward 1.31000.

Alternatively, the quotes could grow toward 1.32000-1.32200.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev Open: 109.292
• Open: 109.536
• % chg. over the last day: +0.18
• Day’s range: 109.491 – 109.628
• 52 wk range: 104.45 – 113.53

USD/JPY quotes continue to consolidate after a significant rally last week. At the moment, the local support and resistance levels are 109.450 and 109.700, respectively. Demand for the safe haven currencies remains at a rather low level against the backdrop of the prospects for resolving the trade conflict between Washington and Beijing. A trading instrument has the potential for further growth. We recommend that you pay attention to the dynamics of yield on US government bonds. Open positions from key levels.

The Economic News Feed for 17.12.2019 is calm.

The price has fixed above 50 MA and 100 MA, which signals the strength of buyers.

The MACD histogram is in the positive zone, but below the signal line, which gives a weak signal to buy USD/JPY.

The Stochastic Oscillator is in the neutral zone, the %K line is above the %D line, which indicates bullish sentiment.

Trading recommendations

• Support levels: 109.450, 109.250, 109.050.
• Resistance levels: 109.700, 110.000

If the price consolidates above 109.700, expect further growth of the USD/JPY quotes.

Alternatively, the quotes could descend toward 109.300-109.100.

by JustForex

by JustForex

The US dollar is being traded without changes against a basket of major currencies. The dollar index (#DX) closed yesterday in the red zone (-0.21%). The United States published mixed economic data. Thus, the index of economic activity in the manufacturing sector fell to 52.5 in December, while experts forecasted a value of 52.6. Markit composite PMI rose from 52.0 to 52.2 in December.

Yesterday, the British pound fell against the US dollar after the news that British Prime Minister Boris Johnson considered a new bill on the transitional period after Britain’s exit from the EU and planned a new Brexit term. Johnson’s revised bill will require Britain to take steps to exit the European Union by December 31 of next year. At the same time, the Prime Minister’s administration said that US President Donald Trump and Boris Johnson had discussed an “ambitious free trade agreement” during a telephone conversation.

The “black gold” prices are changing slightly. Currently, futures for the WTI crude oil are testing $60.10 mark per barrel.

Market Indicators

Yesterday, there was the bullish sentiment in the US stock market: #SPY (+0.69%), #DIA (+0.34%), #QQQ (+1.00%).

The 10-year US government bond yield has increased slightly. At the moment, the indicator is at the level of 1.86-1.87%.

• – UK labor market data at 11:30 (GMT+2:00);
• – Statistics on the real estate market in the US at 15:30 (GMT+2:00);
• – JOLTS job openings in the US at 17:00 (GMT+2:00).

We also recommend paying attention to the speech by the Bank of England Governor Carney.

by JustForex

By Orbex

The UK Conservative Party’s win at the general elections last week achieved 365 seats in parliament vs Labour’s 203. With that behind us, focus has now quickly shifted back to Brexit.

The Prime Minister has announced that he will be holding the vote on his Brexit deal in parliament this Friday.

Johnson has outlined his plan to gain parliamentary backing for his deal and proceed with Brexit by the January 31^st, 2020 deadline agreed upon with the EU in October.

New MPs to Enter Parliament

Before the vote on Friday, Johnson has a busy week ahead of him. MPs are returning to parliament for the first time today as part of the new government.

Johnson will be meeting 109 new Conservative MPs, many of whom won their seats in a traditional Labour stronghold. As part of the influx of new MPs this week, the PM will carry out a cabinet reshuffle to fill some of the posts left vacant as a result of the elections.

The first duty of MPs this week will be to elect Lindsay Hoyle as the new speaker after he replaced former Speaker John Bercow in November. There is unlikely to be a vote on this motion. However, constitutionally speaking, there could be one. The Speaker will then begin swearing in the MPs.

Queen to Outline Parliamentary Programme

The Queen will also formally commence parliament with a speech. The speech is written by government ministers setting out the government’s legislative plans for the sessions. Following this is a parliamentary debate on the content of the speech.

Withdrawal Agreement Bill

Finally, on Friday, Johnson will introduce the Withdrawal Agreement Bill to parliament.

Last time around, Johnson secured backing for his bill. However, he failed to achieve backing for the fast-track timeframe within which he needed to implement the bill to leave the EU on October 31^st.

However, with the January 31^st deadline having been agreed on well ahead of time, and with the Conservative party now holding a majority in parliament, Johnsons is likely to see the Bill passed. This will allow them to honor the January 31^st Brexit deadline.

When asked whether the bill presented on Friday would be the same as the one presented in October, the PMs spokesman said:

“The Bill will reflect the Agreement made with the EU on our Withdrawal.”

Looking ahead to the trade talks which will then commence over the transitional phase, the PM’s spokesman said Johnson Is “confident” he can get a “Canada style” agreement in place by the December 31^st, 2020 deadline.

However, the PM’s spokesman would not comment on the potential details of the trade deal or whether Johnsons would leave the talks without a deal. However, Johnson has said himself that he will not extend talks beyond the slated deadline.

Technical Perspective

GBPUSD continues to attempt to break out above the 1.3379 level, trading up as high as a test of the bearish long-term trend line from 2015 highs, before reversing. While above the 1.3241 level, however, focus is on an eventual break higher. If we reverse below this level however, attention will turn to deeper support at the 1.2981 level.

By Orbex

By Orbex

Markets were trading somewhat quietly on Monday as the holiday season nears.

A lack of fresh details on the US-China trade deal kept markets in check. Equities posted modest gains on the day.

The USD was also on the back foot as trade tensions eased. Data over the weekend saw China’s figures showing modest improvement.

Euro Unchanged After Weak Flash PMI Data

The euro was little changed after fresh PMI numbers for December. IHS Markit’s flash PMI figures showed that the data for the services and manufacturing sector were mixed.

The December flash manufacturing PMI fell to 45.9 from 46.9 in November. Services PMI was up from 51.9 in November to 52.4 in December. Based on the above figures, forecasts show that the eurozone economy will close at the worst level since 2013.

EURUSD Consolidating Near Support

The common currency attempted to break past the price level of 1.1131. However, the gains were quickly reversed. The euro is seen retesting this price level.

We can see that price is consolidating near this support. If support is firmly established, we expect the breakout to the upside. The upper resistance at 1.1193 – 1.1180 will be the next key level of interest.

Sterling Gives Back Election Gains

The pound sterling continued to retreat off the election highs. Focus shifts to this week’s BoE meeting. Although the election has cleared some uncertainty, investors are still doubtful.

PM Johnson promised to table the Brexit bill before Christmas. But concerns remain on whether the UK will be able to pull out of the EU by the January 31st deadline.

GBPUSD Forms a Lower High

The cable’s attempt to rebound was met with a lower high formation. Price action managed to rally to 1.3391 before reversing the gains. At the time of writing, GBPUSD is testing the minor support at 1.3320. If this level breaks, we expect to see a decline to the lower support at 1.32260.

Gold Holds Steady as USD Pulls Back

The precious metal is trading steady on Monday. There were no major news reports that could impact the markets much.

Data from the US remains conflicting. The Empire State manufacturing index came out a tad lower. But, on the other hand, IHS Markit’s flash PMI’s were a bit better than expected.

XAUUSD Maintains Sideways Range

The precious metal is busy trading within the range of 1483 and 1462. In the process, price has attempted to break past the 1483 level twice. Failure to breakout higher above this resistance could signal further gains in the near term. This comes with the ascending triangle pattern currently forming.

By Orbex