Noticias del mercado & perspectivas

The European Central Bank (ECB) engaged into a €2 trillion bond buying program to promote economic growth and drive inflation up in the Eurozone. It involves buying assets from commercial banks to inject more funds in the banking system. It is a non-standard monetary policy commonly referred as quantitative easing (QE).

The market expected the QE to be phased out by the end of this year. Key ECB policymakers are expressing concerns over a strong Euro which is putting months of challenging work into jeopardy. A strong Euro will directly hurt Germany, one of the largest economy in the Eurozone, as higher export costs will translate into lower demand.

On the other hand, the Pound will eventually benefit from it as euro buyers could switch to pound. The exchange rate has therefore become an issue as ECB is unable to maintain the desired inflation rate. Given the concerns over the strong euro, the market foresees that ECB is less likely to exit from the QE phase.

After more than 2-year high, the EURUSD dropped. The selloff was also due to strong economic US data during the week and the comeback of the tax reforms talks in the White House. [caption id="attachment_58394" align="aligncenter" width="600"] Source: GO Trader MT4[/caption] Mark your calendar!!!! The ECB Monetary policy statement and press conference is scheduled on the 7 th of September 2017.

It will be a key event for the Euro. By: Deepta Bolaky GO Markets

Yesterday, the US Federal Reserve announced the raising of interest rates from to 2.00%~2.25%. Most Fed officials agreed (12 people out of 16) in principle to raise the rate, in line with market expectations, and according to the Dot Plot, the expected interest rate in 2019 & 2020 is 3.2% and 3.6% respectively, which is still 4-5 hikes from today’s level. Although the Dot plot provides the information for the year 2021 as a “long-term” projection, from personal experience, this data is much less important to pay attention to as it is so far away from now.

We all know that the further out the predictions, the more uncertainty it has surrounding it, similar to that of weather forecasts. In summary, if we focus on the pattern of 2018-2020, it still maintains the hawkish trend. Powell's Statement The statement of the Fed maintains optimism about the economy and removes the wording of the easing policy.

For the first time, they deleted the sentence of "The stance of monetary policy remains accommodative, occasion supporting strong labor market conditions and a sustained return to 2 percent inflation" from the original text. That’s also a sign of hawkish movement. Economic Data Forecasts: Most of the numbers remain unchanged compared with June 2018’s prediction, but notably, they adjusted the GDP forecast from 2.8% to 3.1%, which is more optimistic.

We all know that the “balance sheet normalization plan” initiated by the Fed in October last year 2017. The purpose of this plan is to reduce the huge amount of debt back to its “normal” size (i.e., not too far away for the country’s GDP level) Let’s see how it goes up till today: after one year of the reduction process, the total assets (including liabilities) of the US has dropped from nearly $4.5 trillion to $4.2 trillion. Powell Highlights During The Conference About The Stock Market: Powell believes that Equity prices are at the upper band of the historical range.

Although he does not comment on market corrections, he emphasized that high leverage may bring harm. End of Tightening: He said it depends on economic data, including inflation, unemployment rate, and salary growth rate (literally like say nothing). Trade tariffs: Powell is worried about the impact of inflation in the long-run.

While still being observed, it has not affected the US economy in the short term. (It feels like he must say so to avoid confrontation with Trump ) Emerging Markets: Recognizing the importance of emerging markets when the Fed to consider raising interest rates, but he believes that it is only because of the fundamental problems of individual countries that the country's currency is under pressure. Fiscal policy: Worried about the sustainability of fiscal stimulus and believe that budgetary debt will be an inevitable problem in the future. (True, but it seems nobody had any solution for that) Inflation: He emphasized that if inflation unexpectedly rises, the Fed will raise interest rates even faster, but there is no such indication currently. The impact of the trade war on inflation has not yet emerged, and overall inflation is still mainly supported by oil prices. (that’s why Trump is giving pressure to OPEC on twitter recently) By Lanson Chen – Analyst @LansonChen This article is written by a GO Markets Analyst and is based on their independent analysis.

They remain fully responsible for the views expressed as well as any remaining error or omissions. Trading Forex and Derivatives carries a high level of risk. Sources: www.federalreserve.gov,

Upcoming News » 9:00pm BOE Inflation Report - GBP » 9:00pm MPC Official Bank Rate Votes - GBP » 9:00pm Monetary Policy Summary - GBP » 9:00pm Official Bank Rate - GBP » 9:30pm BOE Gov Carney Speaks - GBP » 10:30pm Unemployment Claims - USD » 11:30am RBA Monetary Policy Statement - AUD Eye’s are on the BOE tonight for the rate decision. As with the previous meeting the market is expecting a cut from 0.50% to 0.25%. Expectations were not met in the last meeting with the BOE holding rates.

Based off that I’m not leaning towards any sure thing for tonight’s meeting. Overnight Oil snapped out of this weeks down trend with a 3% counter rally. I’m looking for this to extend further.

Gold and Silver lost ground overnight with Silver continuing to lose further ground today. US Markets bounced back, the US30 put in a second failed low this could be a trend continuation forming. I ‘m looking for more upside tonight to confirm this current pattern.

The EURUSD had a strong move down over night losing 72 pips. It’s sitting on a previous high which could come in as short term support. Today’s Asian session has been mixed for the USD, the AUD has recovered retesting its.7630 high.

The JPY has mainly been weaker but has seen some buyers. It’s currently weaker at this point in the session with pairs making small increases consolidating yesterday's gains. The JPN225 has reversed a low put in earlier and is now posting a strong looking session.

I’m seeing 16020 as short term support. It's showing signs this could be a developing reversal point. The GBP has been in quiet trade as the market awaits tonight's raft of news.

Expect a sharp move up on the GBP if the BOE holds rates for the second time. Due to the upcoming multiple news events, I’m steering clear of the GBP tonight. EURUSD – Two levels shown are the points I’m watching currently.

We did have a strong move down overnight but 1.1134 is presenting as the first point of support. 1.10860 is the next level down. I still see the EURUSD in an uptrend at the moment. Until counter evidence develops I’m looking for support to confirm and a continuation to possibly follow.

US30 – Buy idea filled today. The first sign here for me was the failed low on the 2 nd of AUG. While last night’s recovery can be seen as an inside bar, it also shows a failed low off 18295.

This point now has three tests and three fails at going lower. Divergence has also set up around this support area. These are all good signs we could see a continuation higher to possibly test 18460 if buyer commitment stays strong.

A new move lower that breaks 18245 cancels this buy idea out. There’s one issue present that didn’t make this setup perfect for me. It’s the fact that price is still in a short-term downtrend.

Seeing a break is normally best for trend continuation setups, keep that in mind when looking at future trend continuation trades. XAGUSD – This is a follow up from yesterday’s silver section. Price tried to break 20.64 again overnight.

This attempt failed and sellers took control of the session. Today my sell idea was filled, price has broken its current trend in today’s Asian session. This is the hard part of being in a sell position in an established uptrend.

We don’t know if this is going to be a deep or short reaction. As shown I have sharpened my stop loss and closed part of the position to limit any losses in case we have a snap back to test the new breakout. 20.00 has shown support and has seen buyer interest today. I have a target of 19.96 down to 19.83.

Time will tell if that’s reached or not. Managing potential damage is important once your position is moving in the right direction. If prices get down to 19.37 I would be looking for buyers to reconfirm that support area.

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Written by Joseph Jeffriess, GO Markets Market Strategist

In 2018, we have seen a growing interest in the Emerging Markets (EM) as a lot of advisers or asset allocators have been upbeat about these markets. The emerging countries are improving on different factors such as stability of employment, growth in money or opportunity for innovation which make the overall outlook for EM promising. However, the enthusiasm might have faltered over a broad rally in the US dollar and the strength in the US economy.

Along with the resurgence of the US dollar which have caught investors off-guard, the EM are currently being underpinned by trade tensions and policy uncertainties. As the monetary tightening takes hold in the US, stocks in many emerging markets plunged and the dollar appreciated against major emerging currencies. The sudden shift in the second quarter in 2018 compared to 2017 Q4 shows that the US dollar has made an impressive comeback and appreciated against major EM and G0 currencies.

Quarter 4, 2017 Quarter 2, 2018 Even though the markets are navigating through various challenges: trade tensions, geopolitical upheaval and US sanctions, monetary policy remains the major factor for investors to monitor when looking for opportunities in the EM economies. The policy divergence between US and other central banks are the catalyst behind the strength of the US Dollar. A more aggressive Fed could have a magnifying effect on the EM economies and their respective currencies.

The Chinese Yuan and Turkish Lira continue to slide over the ongoing tensions with the US and a hawkish Fed. The Mexican Peso has also been under pressure but has recently found some relief over the renewed optimism around NAFTA. USDCNH, USDTRY, USDZAR and USDMXN (Daily chart) Source: GO Markets MT4 Similarly, in the equity markets, the slump in Chinese equities over trade concerns are weighing on the EM indices.

Trade tensions are indeed a matter of concern but it might not necessarily be bad for growth as global supply chains might eventually adjust. In the short-term, the Emerging Markets might remain volatile but the question is that investors need to ponder on whether the current situation is an opportunity. Does this situation represent a good entry point for long-term traders??

Despite the fact that many EM are trapped by political instability, they have potential to grow even faster than the developed countries and has wealth in the form of oil or other commodities. Moreover, some emerging countries are engaged in key structural reforms that will likely boost business confidence and encourage stronger investment and consumption.

All three pairs had a volatile year. Trade and geopolitical tensions have put significant bearish pressures on those pairs. EURUSD, GBPUSD and AUDUSD have seen new lows in 2018, and if the negative environment persists, we might see fresh lows.

EURUSD Fundamental Analysis The EURUSD pair was able to find some support on Brexit news and some positive data last week. This week, eyes will move to the ECB interest rate decision. The ECB failed to provide a bullish picture for the EUR pairs over the months, and it will be interesting to see if there is any upgrade or downgrade to the level of dovishness.

Policy divergence between US and ECB will remain a significant driver for the pair. Technical Analysis We can see that the pair has formed a head and shoulders pattern. A substantial break below the neckline level could bring in sellers.

The take profit level will probably be set above the support level. Overall, a crisis in the emerging markets, a dovish ECB compared to a hawkish Fed, subdued data, trade uncertainties, Brexit jitters and political issues within the Eurozone area is painting a bearish outlook for the pair. GBPUSD Fundamental Analysis Sterling traders found renewed confidence over the positive Brexit news.

Now that the main downside risk appears to take a back seat at least in the short-term, investors might begin to concentrate on the fundamentals. Notable data releases – GDP, Manufacturing & Industrial Production, Jobs Report and Rate decision, might help the pair to test the 1.30 level. However, any gains might be short-lived due to the strength of the US dollar.

Technical Analysis The pair is currently trading in a descending trend line and has potential to slide further. Any upbeat data might face some resistance at the 1.30 level. There are still no concrete Brexit negotiations, and until there are important agreements, the pair will likely stay gripped by Brexit headlines.

Adding to this uncertainty is the trade worries that are clouding the pair as the greenback isbeing favoured. AUDUSD Fundamental Analysis This pair appeared to be the victim of the US-Sino trade war. The pair has been in a bearish channel since the beginning of the year and plummeted to more than a 2- year low.

Upbeat data managed to provide momentary support to the pair last week. Amid a few data releases this week, the employment reports will be the highlight of the week. Even if there is an uptick in the data, any upside lift will likely be temporary.

Technical Analysis Key support levels were broken, and the pair dropped to multiple months low. Since the beginning of the year, the pair encountered 1000 pips fall. Using the Ichimoku, we can see that the pair is trading below the cloud.

The thin cloud indicates indecision and potentially, a weakening downtrend. However, the RSI is also bearishly configured suggesting more downward pressure for the pair. It is unlikely that the trade situation will change by the US mid-term elections in November.

A dovish RBA coupled with other negative pressures will likely continue to weigh on the pair.

If you’re familiar with the US dollar Index, you might have noticed it has moved in a repetitive pattern for the past few years. You need to treat every six months as a cycle, at the end of this cycle (June, December), the Fed will generally raise interest rates. Here’s a look at how this pattern may look: The Cycle Jan-Feb and July-Aug is the adjustment period, and since there is still a half year to go before the end of the cycle, it is unlikely to hold this high position all the time, so investors tend to take the profit and close positions causing the DXY to drop.

The media suggesting that the dollar would fall to 85, I remember this vividly because at the time I spent three or four articles on debating with those who challenged my belief that the USD will go up, not down. In May and November, the price will often soar brutally, not even giving the herd a chance to catch up. June Dec, Fed announces the rate hike, causing the momentum to fizzle and all those previous excuses to maintain the price turn to dust.

This final process completes the end of the cycle. Eight weeks and falling? For the past eight weeks, the USD has held below 95 levels.

Similarly, the US 10-year bond returns cannot break the 3% ceiling. it is it likely that they will fall? At present, there are two reasons why this may occur: There is only one country in the world to raise interest rates which is the USA. All other major countries within the EU, China, and Japan have no plans to raise interest rates.

Although this strategy has the potential to harm the US's opponents in some ways (for example, the Chinese stock market recently dropped dramatically), it doesn't make themselves better off. If the US 10-Year yield does breach upwards of 3%, it may harm all US companies and its domestic economy. Therefore, keeping the return around 3%, but not breaking it, seems a better option.

The recent decline in CNY seems like a deliberate attempt by China to employ counteractive measures against the US's trade war. The devaluation of CNY has numerous benefits. For example, it can offset the domestic exceeded hot money, create inflation to dilute debts, make export goods cheaper, offset the tariffs brought by trade wars, and so on.

US vs. China Ultimately, the manipulation of monetary policies has both positive and negative effects and deciding who may win a trade war between the US and China is too hard to call. We will wait and see.

This article is written by a GO Markets Analyst and is based on their independent analysis. They remain fully responsible for the views expressed as well as any remaining error or omissions. Trading Forex and Derivatives carries a high level of risk.

Lanson Chen GO Markets Analyst