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Bitcoin (BTC) Price May Rally, Market in Heavily Oversold Territory

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Bitcoin (BTC) Price Outlook, Chart and Analysis:

  • CCI indicator highlights oversold nature of the market.
  • Retail remain heavily long of Bitcoin – are they right?

IG Client Sentiment Datashows how retail are positioned in a variety of cryptocurrencies. See how daily and weekly positioning can affect our trading bias. Bitcoin (BTC) trade data shows 78.7% of traders are net-long, a strong contrarian bearish signal. However, recent daily and weekly changes in sentiment give us a stronger bearish contrarian trading bias.

A Guide to Day Trading Bitcoin and Other Cryptocurrencies.

Bitcoin’s recent heavy sell-off has left the cryptocurrency in heavily oversold territory, according to the CCI indicator (bottom of the chart), leaving the market open to a short-term upside rebound. The July 2 spike-low at $9,640 remains in place for now, and if this remains the case a move back to $10,800 before $11,470 and the recent double-top around $11,900 cannot be discounted. The 50-day moving average, just under $10,000, also remains supportive if it survives a re-test. A decisive break lower could see a re-test of a cluster of trades between $8,600 and $9,600.

Bitcoin (BTC) Daily Price Chart (February 2018 – July 15, 2019)

Bitcoin’s Market Dominance Increases as Alt-Coins Fall Sharply

Bitcoin’s market dominance continues to increase and currently stands around 66% after the latest, sharp sell-off in the rest of the cryptocurrency market. No other alt-coins has a market cap in double-figures with Ethereum (ETH) having a market dominance of 9.24% ahead of third-placed Ripple (XRP) with 4.56%, according to data from CoinMarketCap.

Bitcoin Market Dominance – One Year Chart

Bitcoin (BTC) Price May Rally, Market in Heavily Oversold Territory

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on Bitcoin (BTC) – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.comor via Twitter @nickcawley1.

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Asian Markets Rise On China Relief Despite 27-Year Low GDP Gains

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Asian Stocks Talking Points:

  • Chinese stock market gains as players looked past wholly expected weaker growth
  • There were brighter spots in June’s economic release
  • The US Dollar was broadly lower with something of a relief rally seen for its Australian cousin

Join our analysts for live, interactive coverage of all major economic data at the DailyFX Webinars. We’d love to have you along.

Asian stock markets managed gains despite the deceleration of Chinese growth to its slowest for 27 years.

Official second quarter Gross Domestic Product expanded by 6.2% compared to the same period. This was exactly as forecast, limiting any ‘shock value.’ There was also some relief in data released at the same time showing stronger than expected gains for retail sales, industrial production and fixed asset investment for the month of June.

There remain dark clouds over the Chinese economy. Trade problems with the US are unresolved, manufacturing is contracting while inflation is rising, and the authorities will not want to further stoke already vast corporate debts with lower borrowing costs. Still, markets took Monday’s numbers overall as an upside surprise, with equities up 0.8% in the middle of the Shanghai afternoon. Hong Kong’s Hang Seng had added 0.2% while the ASX 200 was down 0.4%. Wealth manager AMP’s shares fell more than 15% after the company reportedly called a sale of its life insurance business ‘highly unlikely.’ Japanese markets were closed for a holiday break.

The US Dollar held near ten-day lows against a basket of its most widely traded rivals. The foreign exchange market seems pretty sure that US interest rates will be heading lower soon. The Australian Dollar meanwhile made gains in the wake of that Chinese growth news and managed to build on them through the session.

AUDUSD bulls have managed to keep the bounce from 2019 lows seen in mid-June very much alive.

The pair is now threatening to top its previous significant peak, despite just having endured the first back-to-back monthly interest rate cuts since 2012. For the moment the US Dollar seems to be driving most of the action here, and focus will probably return to the Aussie’s own lack of interest rate support soon enough. All the same, there may be less scope for still-lower Australian borrowing costs in the coming months than the market thinks.

The rest of the global session won’t offer markets much of huge interest, with Tuesday’s US retail sales figures probably the next major hurdle for investors.

APAC Stocks Resources for Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

— Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!

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China GDP, Eurozone ZEW, US Consumer Sentiment, New Zealand CPI, Australia Jobs

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TOP 5 FOREX TRADING EVENTS NEXT WEEK – SUMMARY POINTS

  • The Forex Economic Calendar is chalk full of high-impact event risk next week and puts USD, EUR, AUD, NZD and CNH currency pairs in the spotlight
  • Forex traders will likely watch upcoming China GDP, Eurozone ZEW, US consumer sentiment, New Zealand CPI and Australian employment data closely
  • Check out these free Forecasts and Trading Guides

CHINA GDP (Q2) | MONDAY JULY 15 | 2:00 GMT

China Q2 GDP will kick off next week’s economic data dump and looks to set the tone for risk appetite. Traders will get a glance at the impact that an ongoing trade war with the United States has had on the Chinese economy after a flareup in tension between the world’s two largest economies in early May.

While escalating US-China trade conflict has reportedly simmered since the most recent G20 Summit Trump-Xi meeting, the adverse effects from trade policy uncertaintyhas already shown signs of taking its toll judging by leading indicators like the Caixin Manufacturing and Services PMIs. According to Bloomberg’s median consensus, markets are expecting the year-over-year headline China GDP figure to cross the wires at 6.2%, down from a reading of 6.4% in the first quarter.

NEW ZEALAND CPI (Q2) | MONDAY JULY 15 | 22:45 GMT

New Zealand Q2 CPI data, which came in at a cool 1.5% annualized rate last quarter, has potential to sway the RBNZ’s looming decision on cutting interest rates for the second time this year at its next monetary policy meeting. The market estimate for Q2 inflation is for the metric ticking up a bit higher to 1.7%.

If realized or topped, the rebound in inflation may alleviate some pressure on the RBNZ to lower its overnight cash rate. This could reduce rate cut bets from the current level of 86.3%, whereas a miss on the CPI number might make another RBNZ rate cut even more probable.

EUROZONE ZEW SENTIMENT (JUL) | TUESDAY JULY 16 | 9:00 GMT

On Tuesday, the latest ZEW survey of expectations and economic sentiment out of the Eurozone could provide a jolt to EUR crosses. If Euro area sentiment continues to point to persistently bleak or further deterioration in outlook among survey respondents, it could provide the ECB with extra ammunition to justify additional monetary stimulus. The May ZEW drastically disappointed with a reading of -20.2 compared to the previously reported -1.6.

AUSTRALIA UNEMPLOYMENT RATE & EMPLOYMENT CHANGE (JUN) | THURSDAY JULY 18 | 1:30 GMT

Jumping to Thursday, the Australian Dollar and RBA will be put in the hot seat as traders await and digest updated Aussie jobs data. Bloomberg forecast respondents are predicting the unemployment rate to hold steady at 5.2% while adding a net 9.0k jobs.

Overnight swaps are pricing an 83.7% probability that the RBA stands pat seeing that the central bank shifted to a neutral stance after cutting rates at its last two policy meetings. If lower interest rates fail to “assist with faster progress in reducing unemployment,” the RBA and Governor Lowe may have to juice the economy a bit more with another reduction in its overnight cash rate which threatens the Aussie.

US CONSUMER SENTIMENT(JUL) | FRIDAY JULY 19 | 14:00 GMT

As for Friday, the UofMich consumer sentiment survey could also provide insight into America’s perception on trade wars and how it might impact business decisions, consumption and the US economy as a whole. Interestingly, the last reported survey of consumers detailed that 45% of respondents in the top third income distribution mentioned the negative impact of tariffs which was up from 30% in the prior period.

The Fed could be nudged closer toward an aggressive 50bps rate cut later this month if the consumer sentiment report comes in below the Bloomberg consensus estimate of 98.6. Rate traders are currently pricing in an 18.5% probability that the FOMC cuts rates by half a percent. Moreover, it may not bode well for consumer spending prospects if sentiment and expectations continue to drift lower.

FOREX TRADING RESOURCES

— Written by Rich Dvorak, Junior Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

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BCE Propone Extender los Estímulos Monetarios, Fed Asienta las Bases Para Bajar Intereses

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Puntos Clave:

  • EL BCE parece a punto de reactivar el Quantitative Easing(QE) a medida que la situación económica no mejora
  • El presidente de la reserva federal Jerome Powell admite que la inflación supone un problema mas grande de lo esperado, asentando las bases para una bajada del tipo de interés
  • Se espera que el dólar sufra más presión bajista si los datos económicos que se esperan antes de final de mes siguen apuntando a un enfriamiento del crecimiento económico

Banco Central Europeo

Próxima reunión sobre su política monetaria: 25 Julio

Una política monetaria expansiva crea dependencia en los mercados, y el riesgo incrementa sobre todo cuando se imponen intereses bajos que se adentran en el territorio negativo. Ha tenido lugar en el pasado con Japón, Dinamarca y Suiza, y parece ser que ahora el BCE se plantean mantener los intereses negativos durante más tiempo. Es fundamental saber identificar y diferenciar si los intereses negativos llevan a cabo su función de incrementar el nivel de inflación y generar crecimiento económico, y parece ser que por el momento no suponen un beneficio más allá de los que conllevan los intereses bajos, pero positivos.

El interés actual sobre los depósitos se encuentra en -0.4%, lo que significa que a los bancos se les cobra por depositar fondos con el BCE, con la esperanza de que el dinero fluya a los mercados creando liquidez, pero la transmisión de estos fondos entre los bancos y los consumidores parece no dar los resultados esperados. A pesar de que los intereses negativos permitan que los bancos puedan prestar fondos de forma mas barata, la realidad es que no consiguen pasar el efecto de los intereses negativos a sus clientes, por miedo a cobrarle a sus clientes por depositar fondos, lo cual reduce el margen de rentabilidad de los bancos. Además, no hay evidencias que demuestren que los intereses negativos han estimulado el consumo, principalmente por las situaciones económicas a las cuales se vinculan – desempleo y bajo crecimiento económico – lo cual reduce la eficacia de la política monetaria en su función de controlar la inflación y la estabilidad de los precios.

Pero el BCE se esta planteando mantener los tipos bajos e incluso bajarlos aún más, probablemente 10 puntos básicos, lo que llevarían los intereses a -0.5%. La realidad es que se plantean esta bajada porque la situación económica ha cambiado mucho en los últimos 12 meses, y el cambio en las políticas monetarias de la mayoría de los bancos centrales lo demuestra. Y es que hace apenas un año el BCE se planteaba subir los intereses y el debate se centraba alrededor del tamaño de los incrementos. También cabe destacar que la nueva presidenta del BCE Christine Lagarde es partidaria del uso de intereses negativos y los estímulos monetarios con tal de reencaminar el rumbo de la economía, una estrategia que heredará de Mario Draghi cuando tome su cargo en noviembre.

En las próximas semanas los responsables de la política monetaria de la Eurozona se centrarán en los datos de inflación de la zona Euro que se publicarán el 17 de Julio, con la expectativa de que la inflación se mantenga en el 1.2% anual, con un crecimiento mensual del 0.1%. Si los datos resultan ser por debajo de dichas expectativas, se incrementa el riesgo de que la Eurozona entre en un periodo de deflación, lo cual daría mas apoyo a la necesidad de rebajar aún más los intereses. También se prestará atención a los datos de inflación en Alemania, que se publicarán el 19 de Julio, para ver como evoluciona la economía mas grande de la zona Euro, la cual ha experimentado recientemente un periodo de desaceleración.

Reserva Federal

Próxima reunión sobre su política monetaria: 30-31 Julio

El presidente de la Reserva Federal de Estados Unidos Jerome Powell hizo que el dólar sufriera fuertes pérdidas y los mercados “equity” xx a nivel mundial el miércoles por la tarde al anunciar que el Fed había cambiado su opinión sobre la inflación, señalando que la baja inflación podría ser un problema mas grave de lo inicialmente pensado. Reiteró que el Fed actuaría como fuera apropiado según las situaciones en las que se encuentre el mercado americano en cuanto al crecimiento y la inflación, lo cual reafirmó las expectativas de los inversores de que los tipos se reducirán al menos 25 puntos básicos en la reunión de finales de julio, con la posibilidad de que la reducción llegue a ser de 50 puntos básicos.

Quiso remarcar que los datos de empleo de junio que se publicaron la semana pasada no habían cambiado la perspectiva del Fed sobre la salud de la economía americana, ya que usan una visión más generalizada para definir su política monetaria, y datos publicados recientemente siguen mostrando debilidad en el mercado. Las incertidumbres siguen siendo cuantiosas lo cual afecta el rendimiento económico y mantiene a la inflación por debajo se su objetivo, lo cual presiona a la baja al USD.

GRÁFICO DIARIO: EURUSD REACCIONA AL FED

A pesar de que el crecimiento económico anual en el primer trimestre de 2019 fue del 3.1%, un incremento importante sobre el dato del ultimo trimestre de 2018 que fue de 2.2%, la subida fue principalmente a causa de la industria exportadora y el gasto público, ya que el consumo domestico cayo a 1.3%, su nivel más bajo desde 2013. Se espera que el crecimiento económico en el segundo trimestre de 2019 se haya ralentizado a causa de las incertidumbres que afectan el consumo a nivel mundial.

Cuando a Jerome Powell le preguntaron sobre qué datos utilizaría para tomar su decisión sobre los tipos de interés, este contestó que el Fed no se centra tan solo en un número concreto, sino que observa como se comportan las diferentes variables económicas que afectan el país. Si que recalcó que datos importantes que se van a anunciar antes de final de mes, y que tendrán un impacto importante sobre su decisión, serán datos del crecimiento del segundo trimestre del año, datos de empleo, inflación y de ventas. También comentó que el Fed estaba analizando si su actual objetivo de inflación era suficientemente efectivo, ya que la inflación se ha mantenido por debajo del 2% durante varios meses, lo cual no respeta su política de simetría alrededor del 2%.

Escrito por Daniela Sabin Hathorn, Analista de Mercados

Para contactar con Daniela escríbanle en Daniela.Sabin@ig.com

Sigan aDanielaen Twitter @HathornSabin

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USDCAD Eyes 2019 Lows, GBPUSD Rises on Short Squeeze

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MARKET DEVELOPMENT –USDCAD Eyes 2019 Lows, GBPUSD Rises on Short Squeeze

DailyFX 2019 FX Trading Forecasts

USD: Fed’s Powell signal that interest rates will be cut at the upcoming meeting (July 31st) has continued to put the greenback on the back-foot against its major counterparts, while US indices extend on its record highs. While Powell is due to speak for a second day at Capital Hill, it is likely to be a reiteration from yesterday’s commentary. That said, with a July rate cut cemented, the focus now is whether the central bank expects further rate reductions going forward. Although with the latest CPI showing an upward surprise in the core figures, questions may be raised as the whether the Fed signals further easing is needed, thus the USD has seen a marginal bounce since the CPI report.

GBP: In recent sessions, the sentiment in the Pound has deteriorated and rightly so, given that recent data has softened, while BoE officials have grown more cautious. However, with the market increasingly bearish on GBPUSD (reminder, CFTC data shows speculators are the most bearish on GBP in the G10), yesterday’s drop in the USD looks to have sparked a short squeeze in the pair, which trades above 1.2550. Topside resistance situated at 1.26.

CAD: Firmer oil prices and a central bank that is willing to sit on the side-lines relative to its dovish counterparts, has seen the Loonie continue to outperform with USDCAD once again edging towards its 2019 lows of 1.3037.

EUR: The latest ECB minutes provided little in the way of fresh news given Draghi’s Sintra speech. Consequently, the Euro was relatively unchanged following the release with focus now on the upcoming data ahead of the July 25th monetary policy meeting.

Source: DailyFX, Thomson Reuters

IG Client Sentiment

USDCAD Eyes 2019 Lows, GBPUSD Rises on Short Squeeze - US Market Open

How to use IG Client Sentiment to Improve Your Trading

WHAT’S DRIVING MARKETS TODAY

  1. GBPUSD Outlook: From a Contrarian Perspective, a Sterling Rally is Due” by Martin Essex, MSTA , Analyst and Editor
  2. Crude Oil Price Analysis: Oil Prices Jump on Hurricane and Supply Risks” by Justin McQueen, Market Analyst
  3. USD/CHF, EUR/CHF Price Forecast: Potential Comeback for the Sellers” byMahmoud Alkudsi , Market Analyst
  4. Using FX To Effectively Trade Global Market Themes at IG” by Tyler Yell, CMT , Forex Trading Instructor

— Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

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ECB to Continue QE as Fed Cements its Case for an Interest Rate Cut

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Talking Points:

  • ECB looks set to restart Quantitative Easing as market conditions remain weak, inflation remains well below 2% target
  • Fed Chairman Jerome Powell admitted that low inflation is a greater concern than originally expected as he lays down the facts for an interest rate curt
  • UK inflation remains stable but stagnant growth and Brexit uncertainty increase the likelihood of a rate cut

European Central Bank

Next rate decision meeting: July 25

Continued monetary and fiscal stimulus creates dependency, with further problems arising when interest rates hit zero and ventured into negative territory. It has happened before in Japan, Denmark and Switzerland, and now the European Central Bank seems fixed on keeping deposit rates negative for the foreseeable future. The key focus is whether negative rates starve off inflation and spur economic growth, as they are intended to do, but evidence suggests that they provide little to no benefits compared to low, but positive, rates.

Current deposit rates stand at -0.4%, meaning that banks are charged to deposit funds with the ECB, in hopes that money would flow into the economy, but the effectiveness of the transmission channel from banks to the general population seems to be disappointing. Even though negative rates allow banks to receive cheaper funding, the reality of being able to pass those rates on to clients when depositing funds means that banks suffer a squeeze on their profitability margins. There has been no significant evidence that lower rates increase the amount of loans, because of negative underlying factors like unemployment and stagnant growth, which reduces the effectiveness of monetary policy in dealing with low inflation.

But now the ECB is considering cutting rates lower because the landscape has changed dramatically in the last few months, as the debate not that long ago was whether to increase rates and by how much. But now most central banks are trying to grasp by how much to cut rates, as the fact they need to cut seem to be fully acknowledged by now. And new ECB President Christine Lagarde supports the use of negative rates and bond purchases to steer the economy towards growth, a legacy she will inherit from Mario Draghi when she takes place in November.

Policy makers will be keeping a close eye on Eurozone inflation figures to be released on July 17, with expectations for the figure to remain stable from May’s reading of 1.2% YoY, and a monthly growth of 0.1%. If the figure comes in below expectations, there is an increased risk of the Eurozone facing a period of deflation, strengthening the case for the need to have rate cuts further. German inflation figures will be released on July 19 and will also play a part in the ECB monetary policy decision as the Eurozone’s largest economy has been facing a period of contraction and slowing demand.

Federal Reserve

Next rate decision meeting: July 30 – 31

Federal Reserve Chairman Jerome Powell sent the USD tumbling and worldwide equities higher on Wednesday as he changed his view on lagging inflation, pointing out that weak inflation could be more persistent than initially thought. He reiterated that the Fed would act appropriately given data on economic growth and inflation, reaffirming investors’ belief that interest rates will be cut in the July meeting by at least a quarter point, with an increase in the possibility of a 50-basis point cut.

He remarked that the upbeat June jobs report did not change the Fed’s outlook on the health of the economy, as a broader outlook is taken to define monetary policy, and recent data has continued to disappoint. Uncertainties continue to weigh on the outlook and inflation continues to be muted, which sent the USD lower across the board.

PRICE CHART: GBPUSD SURGE ON POWELL COMMENTARY (5-MINUTE CHART)

Despite Q1 GDP growth was 3.1% on an annualized basis, up from 2.2% in the last quarter of 2018 the increase was mainly led by exports and government spending, as domestic demand slowed to 1.3%, its lowest level since 2013. Growth in the second quarter is expected to have slowed as uncertainties about the outlook of the economy have increased in recent months.

When asked about what the Fed will be basing their future rate decisions, Mr. Powell pointed out that many figures will be looked at, with labour, Q2 GDP, CPI and retail sales data all coming out before the end of the month, when the next meeting takes place. He also pointed out that the Fed is looking at the effectiveness of their inflation target as inflation has remained below the 2% target for the last few months, inconsistent with their goal of creating a symmetry around 2%.

Key focus will be on inflation figures released on Thursday at 1230 GMT with expectations that price growth will have slowed, with the yearly figure expected to drop from 1.8% to 1.6% in the month of May. Considering the commentary made on Wednesday by the Fed we could expect inflation to be lower, even below estimates, but the reaction in USD pairs may be subdued on the basis that the pre-warning issued on Wednesday could have taken most of the hit on the dollar.

Bank of England

Next rate decision meeting: August 1

Sterling has continued to be held on short positions throughout the last few months as Brexit uncertainty continues to weigh on the outlook of the economy. Net short contracts equate to $5bn, its highest level since 2018 as investors are betting that the BoE will follow other central banks in cutting rates before the end of the year.

But some still believe that the BoE is due to increase rates in the near term as inflation is behaving relatively well. But the battle for next prime minister is going to continue to weigh down on the outlook of the British economy with potentially lower figures for growth and inflation, which would feed into the need to cut rates. And on Wednesday afternoon BoE policymaker Silvana Tenreyro squashed hopes of those expecting a rate hike as she said that there is no inflationary pressure to warrant the need for rate hikes, even if a successful Brexit deal is reached in the next few months. A successful Brexit outcome would increase the value of the pound, which would in turn reduce inflationary pressure and the need to apply restrictive measures.

An issue will arise if we continue to see stable and high inflation with no spill over into the jobs market, and growth continues to lag. Such factors would give into a period of stagflation, where unemployment picks up as prices continue to rise.

Recommended Reading

Eurozone Debt Crisis: How to Trade Future Disasters – Martin Essex, MSTA, Analyst and Editor

KEY TRADING RESOURCES:

— Written by Daniela Sabin Hathorn, Junior Analyst

To contact Daniela, email her at Daniela.Sabin@ig.com

Follow Daniela on Twitter @HathornSabin

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From a Contrarian Perspective, a Sterling Rally is Due

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GBP price, news and analysis:

  • Sir Richard Branson has warned that a no-deal Brexit could cause the British Pound to plummet to parity with the US Dollar.
  • When confidence in Sterling is so low, contrarians might argue that a GBP rally is now on the cards.

GBPUSD outlook: ripe for a recovery

The British Pound has fallen so far against the US Dollar since GBPUSD hit a 2019 high of 1.3382 on March 13 that a rally cannot be ruled out. As the chart below shows, the pair is clearly trending lower. However, it now looks to be forming a base around the 1.25 level and, if that holds, a short-term recovery could be due.

GBPUSD Price Chart, Daily Timeframe (January 1 – July 11, 2019)

Chart by IG (You can click on it for a larger image)

The tumble in GBPUSD has been due principally to growing fears of a no-deal Brexit if, as seems likely, former UK Foreign Secretary Boris Johnson becomes the next leader of the ruling Conservative Party and therefore the next British Prime Minister. However, it is possible that such an outcome is now fully priced in to exchange rates.

Trading GBP When a New Tory Leader Takes on Labour

Moreover, Wednesday’s UK economic data were less bad than feared. GDP growth in May, on a three months/three months basis, beat expectations at 0.3% and the construction sector performed well that month – offsetting poor industrial production and manufacturing output numbers. That makes a further easing of UK monetary policy marginally less likely.

GBP to fall to parity with US Dollar?

In addition, Sir Richard Branson, the founder of the Virgin group, was reported Wednesday as saying that a no-deal Brexit would cause the Pound to plummet and be worth the same as the Dollar. Contrarians argue that when sentiment is so negative a recovery is overdue.

Sterling index steady

On the other side of the GBPUSD pair, the markets are now pricing in a 26.5% chance that the Federal Open Market Committee will cut US interest rates by half a percentage point on July 31 – up sharply since the first leg Wednesday of Fed Chair Jerome Powell’s semi-annual report to Congress. If that is delivered, the US Dollar could well weaken.

That said, a couple of cautionary notes need to be mentioned. First, negative sentiment towards GBP has been much less pronounced recently when looking at a chart of Sterling since the Brexit referendum against a basket of other currencies.

Sterling effective exchange rate index, January 2005 = 100, (January 4, 2016 – July 11, 2019)

Latest sterling price chart.

Source: Bank of England

Second, positioning data on retail traders using the IG platform are currently neutral. They show that 82.2% of traders are currently net-long, with the ratio of traders long to short at 4.63 to 1. In fact, traders have remained net-long since May 6, when GBPUSD traded near 1.2911; the price has moved 2.9% lower since then. The number of traders net-long is 6.2% lower than yesterday and 10.4% higher from last week, while the number of traders net-short is 1.0% lower than yesterday and 10.8% lower from last week.

At DailyFX we typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests the GBPUSD price may continue to fall. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us no clear GBPUSD trading bias.

Retail trader positioning (July 11, 2019)

GBPUSD positioning data.

Source: DailyFX/IG

Looking for longer-term forecasts for GBP and USD? Check out the DailyFX Trading Guides.

Resources to help you trade the forex markets:

Whether you are a new or an experienced trader, at DailyFX we have many resources to help you:

— Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex

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Oil Prices Jump on Hurricane and Supply Risks

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Oil Price Analysis and News

  • Crude Oil Prices Jump to Near 2-month highs
  • US Crude Stocks Drawdown Support Oil Complex
  • Hurricane Risks Increasing

Yesterday, Brent and WTI crude futures settled 4.5% higher, hitting its highest level in nearly two months, having made a break above $67 and $60/bbl respectively. The oil complex had been underpinned by several factors ranging from a weaker USD, stemming from the outlook on Fed policy, alongside the latest production update from the EIA.

EIA Production: The latest DoE oil inventory report showed a sizeable drawdown in crude stocks of 9.49mln barrels, larger than the 3mln barrel drawdown that markets had expected and more importantly, a bigger drawdown shown in the API crude oil inventory report of 8.13mln barrels. As such, this marked the 4th consecutive weekly drawdown in crude stockpiles, which has also coincided with US crude production stalling and thus buoyed the energy complex. This is also at a time where seasonal factors, such as peak oil demand due to the US driving season is at play.

Hurricane Risk: Elsewhere, risks of supply disruptions are on the rise with tropical cyclones heading towards the Gulf of Mexico. Consequently, US crude production is set to decline by 32% as oil producers begin evacuating, thus, going forward oil stockpile drawdowns look set to continue, which in turn may place a floor on oil prices.

Source: Thomson Reuters.

Iranian Tensions: Aside from domestic production, rising tensions in the middle east and particularly around the Strait of Hormuz continue to pose supply risks with the latest reports noting that Iranian ships have attempted to impede UK vessels.

Brent Crude Price: Daily Time Frame (Sep 2018 – Jul 2019)

Please add a description for the image.

Oil Impact on FX

Net Oil Importers: These countries tend to be worse off when the price of oil rises. This includes, KRW, ZAR, INR, TRY, EUR, CNY, IDR, JPY

Net Oil Exporters: These counties tend to benefit when the price of oil rises. This includes RUB, CAD, MXN, NOK.

Recommended Reading

What Traders Need to Know When Trading the Oil Market

Important Difference Between WTI and Brent

— Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

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Gold Price Volatility Climbs as XAUUSD Rallies on Dovish Fed

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GOLD PRICE VOLATILITY & XAUUSD RISE AS POWELL POINTS TO FED RATE CUT

  • XAUUSD eclipses $1,400 on the back of dovish comments from Federal Reserve Chair Jerome Powell’s testimony to US congress
  • Gold volatility rebounds higher and looks to keep spot gold prices bid
  • Spot gold traders remain net-long and continue to add to bullish bets according to IG Client Sentiment
  • Download the free Q3 Gold Price Forecast from DailyFX for comprehensive fundamental and technical insight on XAUUSD

Spot gold prices (XAUUSD) have reclaimed the $1,400 driven by a 1% jump in the precious metal as commodity traders react to the latest bit of dovish language from Fed Chair Powell revealed during Wednesday morning trading. Powell provided his opening remarks to US congress earlier today and kicks off his 2-day testimony regarding the Federal Reserve’s monetary policy decisions and economic outlook.

Most prominently, the Fed Chair stated that “it appears trade uncertainties and concerns about the global economy continue to weigh on economic outlook,” adding that the Fed “will act as appropriate to sustain US economic growth.” Powell’s dovish comments have sent Fed rate cut expectations surging once again as we approach the July FOMC meeting, which in turn is pushing yields lower and gold prices higher.

GOLD PRICE CHART: DAILY TIME FRAME (JANUARY 15, 2019 TO JULY 10, 2019)

The most recent bounce in XAUUSD reiterates spot gold’s sharp ascent since the end of May and is reflected by the steep bullish trendline keeping prices bid. XAUUSD is also rallying off technical support around the $1,380 price level which aligns with the 78.6% Fibonacci retracement of its August 2018 to June 2019 trading range.

Similarly, Gold price volatility – measured by Cboe’s GVZ Index which reflects the market’s expectation of 30-day volatility of gold prices – is seen turning higher after receding a bit from last Friday as market participants reassessed lofty Fed rate cut bets following better-than-expected US nonfarm payroll data. With Fed Chair Powell’s latest commentary, however, expectations for the Fed to cut rates in response to deteriorating fundamentals and economic outlook appears to be dragging gold price volatility and XAUUSD higher.

GOLD VOLATILITY PRICE CHART: DAILY TIME FRAME (DECEMBER 12, 2018 TO JULY 10, 2019)

Gold Price Volatility Chart Reaction to Fed Chair Powell Testimony

While gold price volatility may be losing upward momentum, the metric still looks like it could continue trending higher. By extension, this has potential to keep spot gold bid as investors flock to XAUUSD during times of heightened uncertainty and economic downturns in consideration of gold’s safe-haven properties. This is also reflected by IG Client Sentiment data which indicates that spot gold retail trader positioning is growing increasingly bullish.

XAUUSD PRICE CHART AND CLIENT SENTIMENT OVERLAY: DAILY TIME FRAME (JANUARY 11, 2019 TO JULY 10, 2019)

Spot Gold Client Sentiment Price Chart

According to XAUUSD retail trader sentiment from IG, 67.2% of traders are net-long spot gold resulting in a long-to-short ratio of 2.05. Moreover, the number of traders net-long is 3.8% higher than yesterday and 19.0% higher relative to last week. For additional information, register to addend live webinar coverage of identifying trends with trader sentiment with DailyFX analysts for free.

— Written by Rich Dvorak, Junior Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

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CAD Drops as Bank of Canada Flags Concerns Over Trade Wars

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CAD Analysis and Talking Points

  • BoC maintains interest rates as expected at 1.75%
  • Cautious monetary policy statement given trade war risks.

See our latest Q3 FX forecast to learn what will drive the currency through the quarter.

CAD Drops as Bank of Canada Flags Concerns of Trade Wars

Growth: The Bank of Canada kept interest rates unchanged at 1.75% as expected. In light of recent encouraging data, the BoC had upgraded their Q2 GDP forecast to 1.3% from 1% citing an unwind of the temporary factors that had plagued GDP growth in the beginning of the year. Consequently, the central bank forecasts 2019 growth at 1.3%, up from April’s forecast of 1.2%, however, this remains below the 1.7% expected in January. The BoC continue to highlight that global trade conflicts remain the largest risks to the global and domestic outlook, thus this caution has pushed the Canadian Dollar lower.

Inflation: Despite both headline and core inflation hovering around the middle of the BoC’s target range of 1-3%. The BoC expect inflation to drop 0.1ppt in both 2019 and 2020 to 1.9% and 2% respectively with near term impacts being due to dynamics in gasoline prices.

Market Response: In reaction to the more cautious BoC statement, the CAD drop against the USD with USDCAD back above the 1.3100 handle to test the top of its recent range at 1.3140. Overall, the statement emphasises that the BoC will remain on the side-lines with the outlook largely determined by the outcome of the US-China trade wars. As such, the BoC are likely to stand pat throughout the remainder of the year, while the bar to raise interest rates has increased slightly.

USDCAD Price Chart: 1-minute time frame (Intra-day)

Chart by IG

— Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

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Can you get moneyed from fx trading? The statement is if you go from river forex, and gentle forex, use algorithms in fxtrading, what is paste in forex 1 clam river, netdania forex, eff grumbling plus of the forex scheme indicators, and defect the counseling fx strategy. We module win win all.
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