Hotforex - Market Analysis and News.

[HFM]

Date : 24th September 2020.

US Claims Disappoint, again & Equities under pressure.

USA500, H1 & Daily

A 4,000 initial claims rise to 870,000 in the third week of September followed a -27,000 drop to 866,000 in the BLS survey week, leaving a disappointing rise as we now log the fourth week with the new additive seasonal factors. We saw a -167,000 continuing claims drop to a modestly higher than expected 12.58 million in the BLS survey week, after a downward bump that left a -797,000 decline to 12.747 million in the first week of September. The insured jobless rate fell to 8.6% from 8.7%, versus a 17.1% peak in the second week of May and a 1.2% cycle-low for nearly two years ending in mid-March.

Initial claims are averaging 875,000 thus far in September, versus higher prior averages of 992,000 in August and 1.34 million in July. The 866,000 BLS survey week reading undershot prior BLS survey week readings of 1.104 million in August and 1.422 million in July. We saw a 4.442 million peak in April and a 203,000 prior cycle-low in April of 2019. We now have a continuing claims drop of -1.912 million between the August and September BLS survey weeks, though this measure is clouded by the seasonal adjustment switch that left one procedure for the August figure and another for September. We saw prior declines of -2.459 million in August, -2.28 million in July, and -1.61 million in June. September nonfarm payroll consensus remains around 900,000, though today’s data adds some risk to the forecasts and could be amended into next week.

The US Equity markets, which have seen Futures under pressure all day following yesterday’s significant declines (Nasdaq closed down by over 3% and the S&P 500 lost over 2.3%) are weaker again, with the USA500 trading at 3230 in early trades, 30 points above the key 3200 support level, but still 130 points above the vital 200-day moving average at 3,100.

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

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

Click HERE to access the full HotForex Economic calendar.

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

Click HERE to READ more Market news.

Stuart Cowell
Head Market Analyst
HotForex

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

 

[HFM]

Date : 2nd October 2020.

FX Update October 2 – Ahead of NFP.

USDJPY, H1
The Yen has rallied versus other currencies amid a pronounced risk-off positioning theme in global markets on news that President Trump, along with the First Lady and White House public relations counsellor, have tested positive for Covid.

S&P 500 E-minis are 1.4% lower, and Asian & European stock markets have also taken a hit. USDJPY dove by over 0.5% in pegging a low at 104.94. EURJPY fell to a four-day low and the high beta AUDJPY cross plummeted by over 1% to two-day lows under 75.00.



Following the positive Covid test news, Trump’s age and health is an added item on a growing worry list. Trump is now self-isolating, and at the least his pre-election campaigning will be greatly curtailed. The next Presidential debate is scheduled for October 15. CDC data shows a 94.6% survival rate for people over 70, though presumably this is better for people in their early-to-mid 70s, like Trump, as the data will be skewed by people over 80, who are at greater risk.



Among other currencies, EURUSD dipped to a two-day low at 1.1694 before rebounding quite sharply to a 1.1738 peak. Cable saw a similar price action, bouncing out of a low at 1.2838 and rallying 100+ pips to 1.2952 following news of a meeting between UK PM Johnson and European Commission President Von der Leyen scheduled for tomorrow. AUDUSD posted a two-day low at 0.7132. USDCAD lifted back above 1.3300 and matched yesterday’s peak at 1.3329.



In Japan, August unemployment came in at 3.0%, matching expectations and having no impact. Chinese and South Korean markets remained closed. Ahead, the flash September estimate of Eurozone CPI is up, where we expect a -0.4% y/y outcome after -0.2% y/y in the prior month. In the US, the September payrolls report is up. We expect it to show a continued rebound as workers have returned to work, but there will still be a net drop in employment for 2020 overall. Political negotiations on a new fiscal relief package in the US remain ongoing. The mood music has improved somewhat, with some Republicans eager to strike a deal with the Democrats before the November 3 elections. The Covid situation in Europe remains a concern, with the new case rate high and new restrictions in one form or another being introduced seemingly daily in many countries.

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

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

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

Stuart Cowell
Head Market Analyst
HotForex

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

 

[HFM]

Date : 5th October 2020.

Events to Look Out for This Week.

The announcement on Friday that US President Trump, the First Lady and White House counsel Hope Hicks had all tested Covid positive rattled market sentiment. This comes on top of many European countries renewing travel restrictions and quarantine measures and introducing new virus measures and regional lockdowns. Globally, concerns that the still fragile recovery will be disrupted have left markets looking for additional monetary and fiscal support, with the latter once again lagging while central banks are keeping their options open. Hence, the week’s focus will remain on the health of the President and wider virus issues, and concerns the recovery is losing momentum. The US Presidential Elections, surprisingly, may take a back seat, while from a data perspective, the FOMC minutes and RBA rate statements are the week’s top releases.

Monday – 05 October 2020

• Retail Sales (EUR, GMT 09:00) – Retail sales across Europe are expected to show a bounce back during August as many markets opened and in limited numbers, Europeans went on holiday. MoM growth is expected to turn positive (0.9%) from -1.3% in July whilst the YoY figure is expected to rise to 0.6% from 0.4% in July.
  
• ISM Services PMI (USD, GMT 14:00) – Services data, the bedrock of high income countries’ economic data, for the US is expected to slip slightly this month to 56.0 from the August reading of 56.9 and the July reading of 58.1.

Tuesday – 06 October 2020

• Trade Balance (AUD, GMT 00:30) – Tuesday’s import/export and trade balance data will likely show a continued decline, with Australia’s second city Melbourne (and the wider state of Victoria) starting to emerge from a second strict lockdown.
• Event of the Week – RBA Interest Rate Decision & Statement (AUD, GMT 03:30) No change in interest rates from the RBA is expected and as with other central banks the mantra of lower for longer will persist. What will be of interest is the Bank’s perspective on moving lower still and the possibility of negative interest rates before year end.

Wednesday – 07 October 2020

• Event of the Week II – FOMC Minutes – (USD, GMT 18:00) – The minutes from the Sept 15-16 meeting are likely to show no major surprises and confirm the shift to average inflation targeting. The reference to the measures taken to contain the virus continued to have substantial impacts on economic activity. The view on inflation is that the negative effects from COVID-19 on aggregate demand have more than offset upward price pressures.

Thursday – 08 October 2020

• Initial Jobless Claims (USD, GMT 12:30) – Last week there was better than expected numbers for the first time in 3 weeks with claims coming in at 837K, some 13k under 850k expectations. Today a further fall to 825k could be expected.
• BOC’s Governor Macklem (CAD, GMT 12:30) – The Governor is expected to re-iterate the Banks view of aggressive stimulus posture, reiterating forward guidance and the continuation of its QE program until “the recovery is well underway.”

Friday – 09 October 2020

• GDP (GBP, GMT 06:00) – Following the unexpectedly higher than forecast rise in July to 6.6%, monthly UK GDP is expected to fall under 6% to 5.7% for August.
• Employment Change & Unemployment Rate (CAD, GMT 12:30) – Little change is expected in this month’s employment data, which is expected to show a 15.6K decline from 245.8k last time to 230.2k today. The Canadian unemployment rate is expected to remain steady at 10.2%.

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

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

Click HERE to access the full HotForex Economic calendar.

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

Click HERE to READ more Market news.

Stuart Cowell
Market Analyst
HotForex

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

 

[HFM]

Date : 6th October 2020.

US Trade Deficit at 14-year high.

The US trade deficit widened almost exactly as expected to a 14-year high $67.1 bln that slightly beat the $67.0 bln gap in July of 2008, leaving the largest gap since the $68.3 bln figure in August of 2006. We saw prior gaps of $63.4 (was $63.6) bln in July, $53.5 bln in June, and $57.9 bln in May. Though the deficit rise tracked estimates, it incorporated small but offsetting downside surprises for both exports and imports. Exports rose 2.2% to $171.9 bln and imports were up 3.2% to $239.0 bln, following respective July gains of 8.3% to $168.3 bln (was $168.1 bln) and 10.9% to $231.7 bln.

Excluding petroleum, the deficit expanded to -$68.6 bln from -$65.4 bln (was -$65.7 bln). The “real” August goods balance widened to -$92.3 bln versus July’s -$91.1 bln (was -$90.5 bln). We saw a slight August narrowing in the bilateral trade deficit between the US and China to -$30 bln from -$32 bln, though both figures reflect elevated import levels as suppliers respond to the intense inventory liquidation through the three quarters through to Q2. The data track robust bilateral export data from China through August.

Foreign trade was impacted harder by shutdowns than the other GDP components, and activity hit a bottom in May, versus lows for most other measures in April. We had a much bigger hit for exports than imports, and the rebound for service exports has been disappointingly small. Expectations for GDP growth now fall in the 31.5-33.0% range for Q3 and 5.5-6.0% in Q4, following the record -31.4% in Q2.

The Dollar was steady after the trade report, which showed the deficit widening more than consensus forecasts. EURUSD remains near two-week plus highs, topping at 1.1807, just above its 50-day moving average, while USDJPY sits near mid-range around 105.60.

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

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

Click HERE to access the full HotForex Economic calendar.

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

Click HERE to READ more Market news.

Stuart Cowell
Head Market Analyst
HotForex

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

 

[HFM]

Date : 7th October 2020.

Tonight October 7 – Pence & Harris – Does it matter?

In short yes. Tonight (October 7) is the vice-presidential, one and only, head to head debate and after last week’s bad tempered, chaotic first presidential debate expectations were limited. Indeed little attention or significance is traditionally given the V-P debate, however, the debate has taken on a new significance following the news flow in the last few days. “Expect the unexpected” is a bit of a cliché and one often used to describe the first four years of the Trump presidency but the last few days have been just that.

Tonight, it is the turn of Vice-president Mike Pence and the lady who would like his job, Democratic vice-presidential nominee Kamala Harris to debate the issues that matter most to Americans and to their respective chances of success on November 3rd. The ages of their immediate bosses (Trump is 74 and Biden 77, making them 78 and 81 respectively in 2024) is always on the radar, a risk factor that has heightened interest following the President’s Covid-19 hospitalization. The reins of power pass to the vice-president if the President becomes incapacitated, for any reason, for any period of time. Pence, 61, and Ms. Harris, 55 are renowned for their debating and oratory skills and tonight’s debate should be much more mannered and coherent, even with its added significance.

Five key areas of interest tonight could be:

COVID-19 – The president’s handling of the crisis and his very own infection is likely to be a point of sparky debate and hold attention of the live audience in the University of Utah as well as the millions tuning-in on TV. Pence will clearly defend the administration’s handling of the crisis (after all he chairs the White House task force) and the Presidents infection and apparent rapid recovery. Ms. Harris, chosen by Biden, particularly for her “attack-dog” style will be promoting the inverse story of needless deaths and incompetency by the administration.

The Economy – Old, safe ground and simple messages from Pence reiterating the “best ever” economy “making America great again” pre-pandemic. The economy is safe in the president’s hands and taxes will be reduced. How Pence deals with the sudden ending of additional fiscal support talks by the President earlier today is a curved-ball he will have to deal with. Ms. Harris on the other hand will point to the millions of jobless Americans, the preference the administration has shown to big business and the imbalances and stuttering recovery of the US economy.

Other hot topics which are polarizing the electorate include the state and future direction of Healthcare, Law & Order (including Policing, the Gun lobbies and the summer of disorder) and the Supreme Court and the likely nomination of Amy Coney Barrett to the supreme court to replace Ruth Bader Ginsberg.

Foreign policy, Trade and the Environment are likely to receive less airtime.

If the Polls are to be believed the Democrats could not only win the Presidency, but the Senate too, but with over three weeks to polling day, the outcome is still far from certain. The key swing states and potentially, just a few voters within those swing states, could determine the result on November 3.

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

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

Click HERE to access the full HotForex Economic calendar.

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

Click HERE to READ more Market news.

Stuart Cowell
Head Market Analyst
HotForex

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

 

[HFM]

Date : 8th October 2020.

FX Update – October 8 – Post Schnabel, Bailey, Jordan & Pre-Claims & Macklem.

EURUSD, H1

EURUSD has settled to near net unchanged levels near 1.1750 after ebbing back from a 1.1781 high, which was set in early London trading. Dollar weakness had been a driver earlier, and the currency has seen recouped lost ground. Uncertainties prevail about next month’s US election and the risk that it will be contested, about the Brexit endgame, and, increasingly, about new Covid restrictions and lockdowns in North America and, more especially, Europe. More dovish remarks have come from ECB policymakers, who have recently made known their concern about the recent rise in the euro’s effective exchange rate, given its tightening impact on real interest rates at a time when new Covid restrictions are crimping economic activity. ECB’s Schnabel also warned about credit cycle risks further down the track, especially when support measures are withdrawn, which could equally be applied to the UK, the US and many other economies given the large debt levels that have been built up over the last decade.

Overall, there is no strong directional bias at play in EURUSD at the current juncture. New positive Covid test outcomes continue to shoot up in Europe, but the rate of serious illness (as measured by ICU admissions) and mortality rates remain at low levels, although bumping up in many countries, as indeed are the same metrics for other respiratory disease in the usual seasonal pattern. Tentatively, there is little sign as yet that another big wave impact on public health, as witnessed in March and April in Europe, is happening. But most governments are nervous and firmly set on pursuing virus-suppression-until-vaccine strategies. Northern states in the US, as in Canada, are also seeing spikes in positive Covid tests, which is also leading to the implementation of new restrictions. Weekly jobless claims data and Fed speakers will feature later in the US along with a keynote speech from the BOC’s Macklem.

USDCAD posted a 17-day low at 1.3228, weighed on by a combo of US Dollar weakness and a 1% rise in oil prices. On Canada’s domestic front, rising positive Covid tests are becoming a problem as they are leading to economically disruptive restrictions. Canada’s September employment report is up on Friday, where expectations are for a 100,000 headline gain after the 245,800 rise in August, with unemployment seen ebbing to 10.0% from 10.2%.

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

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

Click HERE to access the full HotForex Economic calendar.

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

Click HERE to READ more Market news.

Stuart Cowell
Head Market Analyst
HotForex

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

 

[HFM]

Date : 9th October 2020.

The last leg of EU-UK trade talks OR Not?

The outlook isn’t good for either the UK or Europe given the surge in new Covid cases. New restrictions, from travel limitations to pub closures to local lockdowns, are being introduced almost daily in the UK, and this will have a negative impact on economic activity. The government’s furlough scheme is being withdrawn this month, and being replaced by a narrower, more targeted wage protection scheme, though the Chancellor has announced there will be a new scheme to support those affected by local lockdowns. Dovish signalling has come from the BoE governor this week, similar to policymakers at other central banks.

Attention remains fixated however……
Attention remains fixated on the final phase of talks between the EU and UK, with less than one week to go until the EU’s summit. Despite the public brinkmanship, there have been reports from behind the scenes of motion toward finding a compromise on key issues from both UK and EU sources. Any news of a deal would likely boost Sterling over the near term.

But even with a deal, and even with UK progress in signing continuity agreements with non-EU trading partners, the UK will see its terms of trade position deteriorate. It has also become increasingly clear that London’s European dominance in financial services will erode, deal or not. The technical picture of Cable is overall neutral after Tuesday’s bearish engulfing candlestick pattern at the 1.3000 area. However the asset reversed again to the upside retesting that area once again. Interestingly an inverse head and shoulders looks ready to be formed, however how the market will respond and whether or not it will confirm the formation depends on next week’s summit. A decisive move above 1.3000 and the 50-DMA could indicate a boost to August highs, while a pullback to 1.2700 lows would increase the negative momentum.

 

[HFM]

Date : 12th October 2020.

Events to Look Out for This Week.



The risk that virus developments will disrupt the recovery is back in play and very real globally. The lack of another round of stimulus in the US, ongoing US-China frictions and US elections weigh further on a potential economic recovery, as, after all, there is still a long way to go. The EU summit and Q3 earnings season kick off in the next week, with most of the large financials reporting. Data-wise, in focus will be inflation data from the biggest economies in the world, including the US, China and Europe.

Tuesday – 13 October 2020

• Trade Balance (CNY, GMT N/A) – Chinese trade is expected to see a decline in September, at $50.5B from the $58.9B last month.
• Harmonized Index of Consumer Prices (EUR, GMT 06:00) – The German final HICP inflation for September is anticipated to be at -0.1% y/y.
• Average Earnings (GBP, GMT 06:00) – Average Earnings excluding bonus are expected to have grown by 0.6% (3Mo/Yr) in August. The ILO unemployment rate is expected to have steadied to 4.1% in the three months to August.
• Consumer Price Index (USD, GMT 12:30) – Consumer Price Index is seen at 0.2% September gains for both the CPI headline and core, following 0.4% gains for both in August. The headline will be restrained by an estimated -0.3% September drop for CPI gasoline prices.

Wednesday – 14 October 2020

• Producer Price Index (USD, GMT 12:30) – For September both the headline and the core PPI are forecasted at 0.1%. As expected readings would result in a y/y headline PPI metric of 0.2%, up from -0.2% in August. A modest decline in energy prices will weigh on the headline. The y/y core reading is assumed to remain in the 0.9%-1.2% area over the near future, with a downward hit from reduced aggregate demand but a boost for prices from supply disruptions.

Thursday – 15 October 2020

• European Council Meeting -Event of the week – With political heavyweights now getting directly involved, we will find out over the next week (into the EU’s October 15th-16th summit) what degree of compromise both sides are willing to make to reach their shared goal of tariff free, quota free trade. Johnson reportedly wants to persuade the EU to enter in “the tunnel” (known as “submarine” in EU parlance), which refers to a media blackout period, to allow the final phase of negotiation to be uninterrupted by media or other criticism. Von de Leyen rejected that this is happening, however. The EU position has been that this would only happen when compromise positions have been established, which has not happened yet, with fishing rights and EU level playing field rules, the latter of which includes the state aid issue, remaining sticking points.
• Employment Data (AUD, GMT 00:30) – The unemployment rate is an important national priority for RBA, hence the employment change is key for the RBA this week. However, another sign of economic contraction it is expected as the s.a. reading is seen at -50K in September.
• Consumer Price Index (CNY, GMT 01:30) – Consumer Price Index is seen unchanged for September at 2.4% y/y and 0.4% m/m.

Friday – 16 October 2020

• IMF Meeting
• European Council Meeting -2nd day
• US Presidential Debate – Cancelled and postponed until 22nd of October.
• Consumer Price Index (EUR, GMT 09:00) – Inflation remains too low and against that background the ECB clearly is on course to strengthen the low for longer message by switching to a fixed inflation target. Eurozone CPI is anticipated steady at -0.4% m/m and core at 0.2% m/m for September.

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

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

Andria Pichidi
Market Analyst
HotForex

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

 

[HFM]

Date : 13th October 2020.

Equity markets rally loses some momentum in EU session.

Risk aversion picked up again, underpinned by negative vaccine news amid reports that Johnson & Johnson halted its Covid-19 trial due to “unexplained illness”.

The December 10-year Bund future is up 1 tick, while in cash markets Treasury yields have dropped back -1.2 bp to 0.76% after yesterday’s holiday. In FX markets EUR and GBP both declined against a largely stronger US Dollar. Negative vaccine headlines weighed on sentiment overnight, but tech stocks remained supported and the prospect of additional monetary and fiscal stimulus should help to underpin sentiment.

European stock markets are narrowly mixed in opening trade, with the UK100 up 0.04%, GER30 down -0.14% and the Euro Stoxx 50 down -0.03%, while US futures are narrowly mixed, with only the USA100 future managing fractional gains.

The ECB is clearly readying a strengthening of the PEPP program, the BoE is stepping up the preparations for a move towards negative rates and ECB President Lagarde also stressed again the need for fiscal stimulus to support the wave of monetary stimulus as the renewed surge in virus cases is threatening the still fragile recovery. An ongoing salvo of dovish signalling from ECB policymakers has resulted in outright Euro and GER30 declines, though has likely been contributory in offsetting dollar weakness recently. Aside from the Fed itself, and partly in response to, many other central banks have been conducting similar messaging campaigns.

Further pressure has been added to both EUR and GER30 despite after the release of German HICP inflation earlier. German HICP inflation confirmed at -0.4% y/y in the final reading for September. The national CPI rate was confirmed at -0.2% y/y, with the temporary cut to the VAT rate as well as the decline in energy prices the main reasons for the negative headline rate. Excluding household energy and petrol, CPI would have been 0.6% y/y. Still, while is not real deflation, the officials are clearly concerned that a prolonged period of negative headline rates against the background of new virus restrictions and rising unemployment will lead to a more permanent shift in inflation expectations that could lead to a deflationary spiral down the line. For the dovish camp at the ECB, the numbers will provide further ammunition in the push for additional stimulus measures and a further extension and strengthening of the PEPP program.

GER30, despite a decline on opening, retains the support at the 50-period SMA in the 1-hour chart. Although the asset has reversed nearly all the year’s losses and is trading clear above 12,500, the outlook is still not decisively positive, but neutral. It has been in a new uptrend since the beginning of October but momentum looks neutral with bulls struggling for a second day to move above 13,200 (76.4% FIb level) after a weak close yesterday. The improvement in momentum indicators will clear the strength level of the trend, as MACD is being tested around neutral as RSI slips lower towards 50. Immediate Resistance is in place at yesterday’s high, and the 13,200 at 76.4% Fib. The bulls need to show a breakout of this area. A pullback below 61.8% Fib. level at 13,027 but more precisely below the round 13,000 would seriously challenge whether bears are slowly taking the control again.

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

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

Click HERE to access the full HotForex Economic calendar.

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

Click HERE to READ more Market news.

Andria Pichidi
Market Analyst
HotForex

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

 

[HFM]

Date : 14th October 2020.

Big Bank Earnings & PPI lift sentiment.

USA500, Daily

Bank of America (BoA) and Goldman Sachs (GS) both reported third-quarter earnings earlier that beat estimates.

BoA reported net income of $4.9bn, or 0.51 cents per share (EPS) compared to the consensus estimate of 0.49 cents EPS. Revenue in the same quarter last year was $5.8bn and only $3.5bn for the second quarter of 2020. Like JPMorgan and Citibank yesterday, the recovery in Q3 was the reduction in provisions for bad loans down to “only” $1.4 bn from the colossal $5.1bn in Q2. Total revenues were lower at $20.3bn. Shares closed down 2.84% yesterday at 24.95 and are down a further 2.9% in out-of-hours trading today at 24.21.



Goldman Sachs (GS) figures were significantly better than consensus, with EPS at an impressive $9.68 versus expectations of just $5.57 – a beat in excess of 73% and a record for a quarter. Net revenues for the quarter were $10.78 bn versus $9.45 bn, a beat of some 14% and 30% better than the same quarter in 2019. Shares closed down 1.55% yesterday at 210.81 and are up 2.0% in out-of-hours trading today at 215.10.

US headline PPI rose 0.4% in September, with the core rate up 0.4% as well, both hotter than forecast, following respective August gains of 0.3% and 0.4%. The core price ties with August for the firmest since April 2019. Prices have recovered from big and record drops in April of -1.3% for the headline and -0.4% on the core. The 12-month pace climbed to a 0.4% y/y rate from -0.2% y/y previously, and the core rate surged to a 1.2% y/y clip versus 0.6% y/y. Goods prices increased 0.4% on the month from August’s 0.1% gain, with food prices jumping 1.2% from the prior -0.4% decline, while energy prices fell -0.3% after slipping -0.1% previously. Services prices were up 0.4% from 0.5% in August.

The Dollar edged lower following the September PPI print. USDJPY hit near two-week lows of 105.21, down from near 105.30, as EURUSD headed to intraday highs of 1.1764 from near 1.1755. The Dollar has been on the decline generally since before the open. Equity futures remains mixed with USA500 trading at 3519, up from earlier lows at 3502 but down from European session highs at 3532.

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

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

Stuart Cowell
Head Market Analyst
HotForex

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

 

[HFM]

Date : 15th October 2020.

European Equities Heavy on Covid-19 Resurgence.

Trading Leveraged Products is risky
GER30, UK100, H1

European stock markets are selling off, with the GER30 now down 3%, the UK100 2.3%, as investors price out stimulus hopes in the US and prepare for fresh economic setbacks as the second round of Covid-19 hit Europe and leads to increasingly strict restrictions. France has announced a curfew for Paris, that confines citizens to their homes between 9 pm and 6 am for four weeks, in the U.K. regional lockdowns are widened with London moving to tier 2 (No household mixing indoors anywhere from midnight on Friday. People are discouraged from using public transport. Schools, universities and places of worship remain open. All businesses and venues can continue to operate) and in Germany Chancellor Merkel has urged citizens to stick to the rules while signalling that official measures will be tightened if cases continue to rise at the current rate. Officials are eager to avoid full lockdowns, but despite the respite over the summer, they failed to prepare appropriate alternative measures to deal with the spike in cases that is now starting to show up in hospital admissions. Central bank officials continue to signal the willingness to do more if needed, but that hasn’t prevented Eurozone spreads from widening this morning, as peripheral bond markets feel the pressure from the pick-up in risk aversion. The Italian 10-year yield is up 3.4 bp, although still below the 0.7% mark, while German 10-year yields have dropped back -3.8 bp and -3.2 bp so far today.

The GER30 spiked below 12,600 from a close yesterday at 12,970, the UK100 pushed below 5,800 from highs yesterday over 6,000.

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

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

Click HERE to access the full HotForex Economic calendar.

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Stuart Cowell
Head Market Analyst
HotForex

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

 

[HFM]

Date : 16th October 2020.

Election2020 – Only Three Weekends Remain.

A little over 2 weeks – 12 trading days – until the US Election, and the Town Hall meetings co-hosted on the two main US national TV networks provided nothing really new with regards to policy or outlook. However, it did provide the opportunity to have both meetings running consecutively side-by-side. President Trump was in Miami, in the must-win state of Florida (29 Electoral College votes) with NBC, while former Vice President Biden was in Philadelphia, Pennsylvania, another key swing state with 20 Electoral college votes available to the victor, with ABC.

President Trump said “I know nothing about QAnon”, that he WILL accept a peaceful transfer of power, ”Yes, I will. But I want it to be an honest election, and so does everybody else.” and commented on whether he took a coronavirus test on the day of his last debate with Mr Biden, saying: “Possibly I did, possibly I didn’t.”

Candidate Biden continued to avoid answering if he would move to increase the size of the supreme court (the third arm of US government) with judges if, as seems likely, the Senate confirm judge Amy Coney Barrett to the court before election day. “I have not been a fan of court packing. I’m not a fan.” He admitted that the 1994 crime bill, which he helped draft, which the Black Lives Matter Movement has claimed is one of the reasons for mass jailings of African Americans, was a “mistake” but continued to defend his record “It [the bill] had a lot of other things in it that turned out to be both bad and good.”

So attention is turned to a weekend of high intensity campaigning, the final two-week onslaught of media messages and no-holds-barred advertising. The pair are still expected to meet face to face for the final time before polling day on Thursday in Belmont University, Nashville, Tennessee (a strongly Republican state with 11 electoral college votes, almost guaranteed for the President).

The Pandemic, Economics, Foreign Policy, and even the environment are likely to be key topics in what is expected to be a much less raucous and chaotic affair than their first encounter. The most powerful job in the world is up for grabs, and it impacts us all, regardless of where we live.

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

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

Click HERE to access the full HotForex Economic calendar.

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

Click HERE to READ more Market news.

Stuart Cowell
Head Market Analyst
HotForex

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

 

[HFM]

Date : 21st October 2020.

USD Down, GBP & Crypto’s Higher, CAD data.

The Dollar underperformed while the Pound outperformed and the Yen, diverging from its usual close correlation with the Dollar, was measuring as the second strongest of the main currencies. Global stock markets have been skittish, with European indices dropping and US equity index futures giving back gains in returning to near net unchanged levels.

Sterling has rallied quite strongly, showing a 1.0%+ gain on the Dollar at prevailing levels, as it rallied to test 1.3100. EURGBP is back under 0.9100 and down over 0.5% and testing 0.9050. The market reacted to remarks from EU trade negotiator, Barnier, that talks with the UK could continue “day and night.” There was also news that US Trade Representative Robert Lighthizer said that a trade agreement with the UK would come “reasonably soon.” The currency market evidently remains bullish on the EU and UK reaching an agreement, although the game of chicken between the two sides is continuing. Boris Johnson’s position is that the EU must fundamentally change its stance, while France’s European affairs minister Clément Beaune asserted yesterday that there would be “no new approach.” USDJPY tumbled under 105.00 en-route to printing a one-month low at 104.55. EURUSD lifted to a one-month high at 1.1868.

USDCAD posted a new low for a fourth consecutive day in pegging a six-week low at 1.3080 before recouping back above 1.3100 amid a near 2% drop in oil prices. USOil fell from the $41.88 highs seen on Tuesday to a low of $40.86 in London morning trade. The API reported a 600k bbl weekly inventory build after the close yesterday, versus expectations for a 2.0 mln bbl draw, which weighed on prices some. Inventories at the Cushing, OK storage hub were up by 1.2 mln bbls. Concerns over Covid related demand destruction, along with increased crude production from Libya, should keep a cap on prices for now. The EIA weekly inventory report is due at 14:30 GMT.

Canada’s CPI accelerated and retail sales grew, but both measures were on the tame side. CPI rose 0.5% y/y in September after the 0.1% gain in August. But CPI dipped -0.1% on an m/m basis (nsa) after the -0.1% slip in August and flat (0.0%) reading in July. CPI last rose on an m/m basis in June, rising 0.8%. The average of the three core CPI measures was 1.7% y/y, matching the 1.7% average seen in August. The CPI report remains consistent with ample slack in the economy, with a long way to go before activity returns to pre-pandemic levels across all industries. Meanwhile, retail sales rose 0.4% in August (m/m, sa) after a 1.0% gain in July (revised from 0.6%). Statistics Canada’s preliminary estimate is for little change in September retail sales. Sales have returned to more typical growth rates following the initial pop that followed the reopening of the economy — sales surged 21.2% in May after plunging -24.8% in April and falling -10.0% in March. Retail sales jumped 22.5% in June, an all time high growth rate. The ex-autos sales aggregate gained 0.5% in August. Both measures undershot expectations for stronger gains. Tame annual CPI growth along with the deceleration in retail sales is consistent with steady, accommodative policy from the BoC for an extended period.

Elsewhere, BTCUSD moved to 2020 highs after Paypal confirmed it will allow cryptocurrency buying, selling and shopping on its network.¹ The press release stated it “signaled its plans to significantly increase cryptocurrency’s utility by making it available as a funding source for purchases at its 26 million merchants worldwide. The company is introducing the ability to buy, hold and sell select cryptocurrencies, initially featuring Bitcoin, Ethereum, Bitcoin Cash and Litecoin, directly within the PayPal digital wallet. The service will be available to PayPal account holders in the U.S. in the coming weeks.”

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

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

Click HERE to access the full HotForex Economic calendar.

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

Click HERE to READ more Market news.

Stuart Cowell
Head Market Analyst
HotForex

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

 

[HFM]

Date : 22nd October 2020.

Volatility and US elections.

US Elections had been and always expected to be an event historically extremely volatile globally. Elections similar to other political or banking sector events are notably treated by market participants with anticipation and speculation. As discussed in our HF Markets Q4 Outlook, markets look to have already pricing in the possibility of Biden’s victory even though they overall maintain an increasing cautious optimism, holding US Dollar basket to 2018 low territory.

Election-year fund flows, 1993-2020
Historically, it has been noticed that during election years, market participants due to the heightened uncertainty, shift their investments into Money market funds instead from the safety of stock and bond funds, AS THEY waiting out. The 2020 is not any different but it’s been a unique one as we have seen an extreme money flow into currency assets in comparison with past election years, due the sluggish US and worldwide economic activity as the Covid-19 crisis resumes, the truce with China again which is under scrutiny, the lockdowns in several areas, the lack of additional fiscal stimulus from central bankers, Brexit frictions and the fear of double dip recession in Europe.

Year-to-date fund flows, through June 30

Source: BlackRock, with data from Morningstar as of June 30, 2020. Money market funds, stock funds and bond funds are represented by their respective US fund categories as defined by Morningstar.
That said, cash balance into money funds spike to $980 in 2020 as of June 30, given the large risk premia. However as soon as uncertainty recedes we might see equity market’s volatility and volume to spike again since they consider to be attractive and more stable assets in period which there are historically low interest rates. If we emphasize on the medium term thought it is expected that if current conditions sustained, market volatility will extend beyond Election days with any potential outcome, i.e. a Biden win and Democrat majority in Congress, a Biden win but split Congress, or a Trump victory with split Congress.

Meanwhile, a very chart from Wells Fargo Investment Institute, shows the USA500 implied Volatility index along with USA500 index performance prior and post the Election Day based on the election since 1988 with 2008 recession year excluded. This chart interestingly suggest that typically the USA500 tends to eased/consolidate a bit a month prior elections despite a extremely high volatility, while USA500 price continue their upwards move after the election day even though volatility declines significantly.

WELLS FARGO INVESTMENT INSTITUTE

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

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

Click HERE to access the full HotForex Economic calendar.

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

Click HERE to READ more Market news.

Andria Pichidi
Market Analyst
HotForex

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

 

[HFM]

Date : 23rd October 2020.

Dollar Dips as Equities escalate.


EURUSD, H1

The Dollar fell back concomitantly with rallying European stock markets and US index futures, which was likely a repositioning dynamic after declining over the last two weeks.

EURUSD rebounded quite strongly, rising back above 1.1850 from a three-day low at 1.1787. Preliminary October PMI data in the services and composite readings out of the Eurozone and UK undershot the median forecast of economists, but didn’t impact the Euro or Sterling. Technically, the H1 chart has moved over the 50-hour moving average (1.1835) to test R1 at 1.1852; above here is Wednesday’s high and R2 at 1.1885. Today’s pivot point is next support at 1.1830, below the 50-hour moving average. The MACD histogram has broken the zero line and the signal is starting to rise, although still south of the zero line, RSI is positive and trades at 64.50, Stochastics are moving into the OB zone.

able settled at near net unchanged levels around 1.3090-95 after dropping back from a high at 1.3124. The UK currency remains comfortably up on week-ago and month-ago levels against the Dollar and Euro, and others, with market participants anticipating a limited trade deal between the EU and UK. The two sides are amid intensive face-to-face discussions. The UK and Japan today signed the trade deal that was agreed in principle a month ago.


USDJPY is modestly softer after upside forays over the last day stalled at 104.93-95. At levels around 104.70, the pair remains down by 1% on the high seen on Wednesday. AUDUSD rallied to an eight-day high at 0.7158, floated by higher stock markets in Europe and an above-forecast composite PMI reading out of Australia. Global asset markets are likely to remain skittish, notwithstanding the rally today, with investors pondering the uncertainties presented by the surge in Covid cases in Europe and elsewhere, including now in many US states and in Canada, and which are leading to ever more restrictive countermeasures. The ongoing delay in new US fiscal stimulus and the event risk posed by the upcoming US elections are also in the mix. Regarding the elections, polls point to a Biden presidency, but it is less clear if his Democratic party can take control of the Senate. If not, then Congress will remain split at least until the mid-term elections in two years, which will limit the scope for policy changes and crimp Democrat ambitions for expansive fiscal policy.

US data later is topped by flash PMI data, Manufacturing numbers are expected to show a slight rise to 53.5 from 53.2 last time, whilst the more important and significant Services numbers are expected to increase by a single tick from 54.6 to 54.7. The data is due at 13:45 GMT.

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

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

Click HERE to access the full HotForex Economic calendar.

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

Click HERE to READ more Market news.

Stuart Cowell
Head Market Analyst
HotForex

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

 

[HFM]

Date : 26th October 2020.

Events to Look Out for This Week.

A gigantic week is coming with FAANGs reporting their Q3 earnings, along with the rate decisions and monetary policy statements from three key Central Banks (ECB, BoJ, and BoC) as the second wave of Covid-19 is hitting the world with full force. Across the Atlantic, all eyes will be also on what emerges from the Brexit talks and how markets will reform in the final week prior to the US Elections. Focus will be on inflation data from the biggest economies in the world, including the US, China and Europe.

Monday – 26 October 2020

• German IFO (EUR, GMT 09:00) – German IFO business confidence is expected to slip slightly to 92.9 in October after the jump seen in September to 93.4.
• New Home Sales (USD, GMT 14:00) – New home sales are seen at -1.1% in September after a drop-back to a 1,000k pace from a 14-year high of 1,011k in August, versus a prior high of 965k in July. With the economy’s reopening, the recovery for new home construction and sales is proving much faster than for the rest of the economy, partly due to solid fundamentals going into the crisis, and even lower mortgage rates now.

Tuesday – 27 October 2020

• ECB Bank Lending Survey (EUR, GMT 09:00)
• Durable Goods (USD, GMT 12:30) – Durable goods orders are expected to drop -0.7% in September with a 3.0% decline in transportation orders. The durable orders rise ex-transportation is pegged at 0.4%. A defense orders gain is pegged at 4.0%, following a -3.6% August correction. Boeing orders fell back to zero planes in September from 8 in August and zero in July.

Wednesday – 28 October 2020

• Consumer Price Index (AUD, GMT 00:30) – Australian inflation data in Q2 was moderate but in line with projections and remained within the average rate of increase between 2% and 3% that the RBA targets over the medium term. The RBA trimmed mean CPI for Q3 is seen at 0.1% q/q.
• Interest Rate Decision and Conference (CAD, GMT 14:00) – In September, the Bank of Canada maintained an aggressive stimulus posture, reiterating forward guidance and the continuation of its QE program until “the recovery is well underway.” However, the BoC removed its promise to “provide further monetary stimulus as needed,” keeping its commitment to hold rates at current levels and maintain the asset purchase program at the current pace. The policy rate was held steady at 0.25%, and it is expected to be maintained in this meeting as well.

Thursday – 29 October 2020

• Interest Rate Decision and Conference (JPY, GMT 03:00) – The Bank of Japan remains pledged to do whatever it takes to support the recovery. The BoJ minutes last time highlighted that some council members are becoming concerned that virus developments will negatively impact the recovery. On the political front, PM Suga is expected to maintain policy continuity.
• Gross Domestic Product (USD, GMT 12:30) – Gross Domestic Product should advance in Q3 and reveal headline growth of 33.5%, with a reversal in the inventory trajectory from a record-liquidation rate of -$287 bln in Q2 to a $12 bln accumulation rate in Q3, as the inventory figures begin a long rebuild into early-2021.
• Interest Rate Decision and Conference (EUR, GMT 12:45 & 13:30) – More than data releases, it is developments on the virus front that will have strengthened the dovish camp at the ECB. The number of new infections, but also hospital admissions and deaths, continues to rise across Europe, with Ireland just announcing a full lockdown until early December. Developments are adding to pressure on the central bank to act sooner rather than later, and the debate at next week’s ECB meeting will likely be lively, although on balance Lagarde is expected to hold fire for now and focus on a dovish presser that will lay the ground for a PEPP extension in early December.

Friday – 30 October 2020

• Retail Sales and GDP (EUR, GMT 07:00) – The German Retail sales are seen at 4.2% y/y in September from 3.7% y/y last month. The final Gross Domestic Product in Germany for Q3 is seen at -8.9% q/q from 9.7%.
• Gross Domestic Product and Consumer Price Index (EUR, GMT 10:00) – Fears of a double dip recession are on the rise, with preliminary Q3 GDP s.a. numbers likely to show the index down to 16.9% y/y from -14.7%. The Euro Area preliminary CPI is anticipated at -0.4% y/y in October with core reading at 0.5% y/y from 0.2% y/y last month.
• Personal Income/Consumption (USD, GMT 12:30) – A 0.3% increase in personal income in September is anticipated after a -2.7% decrease in August, alongside a 1.1% climb in consumption after a 1.0% bounce in August.

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

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

Click HERE to access the full HotForex Economic calendar.

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

Click HERE to READ more Market news.

Andria Pichidi
Market Analyst
HotForex

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

 

[HFM]

Date : 27th October 2020.

USD improves, GBP Mixed, CB decisions & TRY.

The Dollar firmed up into the London open and beyond, paring declines seen earlier in pre-Europe trading in Asia. The move drove gold and oil prices lower, too, indicating there has been some depth in dollar buying, although the magnitude of movement hasn’t been great.

US equity index futures have managed modest gains after the S&P 500 closed with a 1.9% loss yesterday, though investor sentiment in global markets remains decidedly restive. Most Asian stock markets declined, and Australia’s ASX 200 equity index closed with a 1.7% loss in its worst single day performance in a month. Soaring positive Covid tests and the associated trend toward increasingly restrictive countermeasures, along with the risk of next week’s US election results being contested, and the delay in US stimulus relief, are keeping markets on edge. Overall strong Q3 economic data are being overlooked as markets look to what is appearing to be a grim winter ahead in the northern hemisphere, with risks of a double dip recession being factored in, especially in Europe. Amid this, the Dollar has been holding up, despite a narrowing in nominal US yields relative to peers in recent days, including Bunds and JGBs, revealing that the US currency is functioning as a safe haven currency again.

The USDIndex index lifted back above 93.00, though remains down on yesterday’s and Friday’s highs at 93.11-13. EURUSD tipped back to levels around 1.1800 after posting a high at 1.1836. USDJPY remained settled in the upper 104.00s in what could be termed a consolidation of the steep decline seen last Wednesday but has tested below S1 below to 104.60. The pair remains about 0.7% down from week-ago levels. Sterling continued to trade without direction, overall, holding over 1.3000 around 1.3020. EU and UK trade talks continue in London through to tomorrow before relocating to Brussels. They are reportedly working to a mid-November deadline.

Taking a step back, the currencies that are showing the biggest gains on the year-to-date are the ones that most would expect to have risen against the backdrop of the global pandemic crisis, being currencies of current account surplus economies, specifically ones that don’t have a high commodity export component. Thereby the Euro, Swiss Franc and Yen are the biggest gainers, while the dollar bloc and the likes of the South African Rand and Russian Ruble, among others, are showing the biggest year-to-date declines, save the politically savaged Turkish Lira. Turkey seems to be in dispute with all its neighbours and some further afield. The Central Bank holding rates last week has not helped its predicament – USDTRY printed a new all time high earlier at 8.1580.

USDCAD lifted out of a correction low at 1.3169, with oil prices, although up yesterday’s lows, coming under moderate pressure during the early London session. WTI benchmark crude prices are down 6.5% from week-ago levels, and prospects for a sustained rebound look to be limited given the supply glut and weakening demand as Covid-containing measures intensify across Europe and some parts of North America. This backdrop should keep USDCAD underpinned. The pair has been trending lower since March, though we have been noting trend derailing risks. A run to levels around 1.3500 and above seems possible, as the BOC decision tomorrow and the US Election next week remain the key immediate fundamentals .

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

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

Click HERE to access the full HotForex Economic calendar.

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

Click HERE to READ more Market news.

Stuart Cowell
Head Market Analyst
HotForex

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

 

[HFM]

Date : 28th October 2020.

Alphabet Q3 earnings: Focus on advertising revenue.

Once again the FAANGs excluding Netflix plan to report their earnings the same day within 30 minutes of each other. FAANGs illustrate 20% of the S&P500’s total value. Even though most of them face increasing antitrust scrutiny, all posted an impressive rally this year as their shares have surged and sustained close to record highs as the pandemic reckoned with online services such as shopping, streaming, clouds.

Hence in addition to our earnings articles, today we will focus also on Alphabet’s third quarter earnings for 2020 which will be reported along with the rest of the giants. Just a quick reminder, Alphabet Inc. is a holding company and Google’s parent company. The company’s businesses include Google Inc. (which is the largest one) and its Internet products, such as Access, Calico, CapitalG, GV, Nest, Verily, Waymo and X. The company’s segments include Google and Other Bets.

Alphabet’s report will be key after its first year-over-year revenue decline in company history in Q2 as a result of the lack of advertisement demand from the majority of businesses amid the economic slowdown globally. However the forecasts for Q3 have the company well positioned with the consensus recommendation “strong buy”, corresponding to the majority of the consensus recommendation from Reuters Eikon, as 30 out of 36 analyst firms recommend “buy” and “strong buy”, while only 6 recommend ‘hold’. Hence, no analyst firm is making a “sell” or “underperform” recommendation for the company.

GROWTH FOR ALPHABET INC

According to Zacks Investment Research and Reuters Refinitiv, the information service is expected to have $11.33 in earnings per share during the third quarter of 2020, which represents a yearly rise of 12% since the reported EPS for the fiscal quarter ending September 2019. Focus should also turn onto the revenues number which is projected to hit a 6% yoy spike, to around $42.8 billion, from the $40.49 billion reported last year. Net sales meanwhile are seen at $35.26 billion.

Revenue by business segment:

• Google Search & Other (ad revenue, dominated by Google Search) – consensus of $24.96 billion*
• YouTube ads – consensus of $4.38 billion*
• Google Network (ad sales on third-party websites/apps) – consensus of $5.07 billion (down 4%)
• Google Cloud – consensus of $3.32 billion*
• Google Other (Play Store, hardware, YouTube subscriptions) – consensus of $5.11 billion*
• Other Bets (Google Fiber, Verily, Waymo, etc.) – consensus of $153 million (down 1%)

Despite the huge diversification of its portfolio, Alphabet Inc earns nearly 71% of its revenue from advertising. Hence even though, the travel sector is still weak the majority of the analysts remain bullish on the advertisement services of Alphabet into Q3 given the slightly ‘temporary as it seems’ recovery that we have seen as the pandemic eased over the summer and business began reopening. Morgan Stanley stated also that they came into earnings season positive about the online ad market recovery but grew more optimistic following Snap’s blowout ad revenue beat and better-than-expected ad results from Verizon subsidiary AOL, Sirius-owned Pandora, and Interpublic Group.

The positive consensus for Q3 could also be driven by the shift of Alphabet to Google Play and YouTube to help its partners support their businesses. The majority of the analysts believe that we could see strength in YouTube ad pricing and the return of brand spending in its channel checks.

Alphabet CEO Sundar Pichai however highlighted in his latest statements GOOGL’s focus on non-advertising segments. Like tech giant and its cloudspace rival Microsoft Corporation (NASDAQ: MSFT), GOOGL has the capacity and resources to strategically pivot, from a large “legacy” company to an aggressive emergent; in this case, from search to various ‘other segments’ offering potential growth.

Meanwhile, the risks that Alphabet faces ahead of the report is the solid competition from Amazon in advertising business and cloud services but also the cold headwinds on the earnings front in addition to emerging regulatory challenges. Coming off a not-so-stellar Q1 reporting season, GOOGL fell short in Q2, reporting its first ever year-over-year quarterly decline.

Earlier this week, the Justice Department, along with 11 Republican state attorneys general, filed an antitrust lawsuit against Google, alleging an unlawful monopoly on search services and advertising. US Deputy Attorney General Jeffrey Rosen called GOOGL, “the gateway to the internet” and said the company “has maintained its monopoly power through exclusionary practices that are harmful to competition.”

At this stage, we have to point out that a consensus recommendation, similarly to economic data forecasts, has a significant effect on the near-term stock price, as it represents a company’s wealth picture. Hence on every earning report, stock price is highly influenced by the comparison between the outcome and the expectations. The market tends to react positively if the outcome comes in better or at least in line with the forecast, while the price moves lower if the reported earnings miss expectations.

Technically, the current Google price action has posted a sharp rally since the March panic with the stock rebounding from the $1,000 area to record highs at $1,732.41. Currently the asset is traded at the $1,524 area which is just a 23.6% loss from all-years highs. The overall bias remains strongly positive even though medium term momentum indicators signal a potential pullback lower.

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

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

Click HERE to access the full HotForex Economic calendar.

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Click HERE to READ more Market news.

Andria Pichidi
Market Analyst
HotForex

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

 

[HFM]

Date : 29th October 2020.

Apple – Earnings Tonight.

APPLE, Daily
The world’s largest company, APPLE (APPL), report their 4th quarter earnings ending September 30th after the close of the New York stock market later today The consensus among analysts is for revenues of $64 billion versus $64 billion in Q4 2019 and earnings per share (EPS) of $0.69 (with estimates ranging from 0.54 to 0.8) versus $0.76 in the same quarter last year.

Apple hardware has been clearly hit from the disruption in the supply chains, starting with factories and shops in China and rippling out across the wider distribution and production facilities in Asia, Europe and then North and Latin America. iPhone sales are likely to miss estimates, but likely to be compensated for by increases in services and possibly other hardware.

Style, design and being the best premium product has always been at the core of what Apple does and the big move in recent years has been away from this dominance of hardware (even though the iPhone still accounts for over 60% of revenues) to invest significantly in services. The initial move was a partnership in 2015 with IBM and Cisco to try to break into the corporate market; this has been followed by Apple Pay and more recently the long awaited upgrade for Apple TV.

Apple TV+ was launched in November 2019. Initially it was only to be in the USA but it was then made available to 100 countries at an extremely competitive $4.99 per month. Apple has entered a very crowded video-streaming marketplace, which remains dominated by Netflix, but includes Amazon and Disney. Apple Services is a growing revenue stream within the technology giant and TV+ marks its latest attempt to diversify its dependence from the ubiquitous iPhone. The aggressive pricing structuring, undercutting its competitors, is a break from traditional Apple pricing models. However, the poor reviews and weak content in the first few months of launch have been disappointing. Disney+ with a huge back-catalogue and equally as aggressive pricing has been the new winner in the streaming wars. Netflix missed expectations last week, but as subscriber numbers continue to grow, what will we see for AppleTV+?

However, this quarter saw the delayed launch of the much heralded iPhone 12 with (finally) 5G capabilities. The buzz word from Apple is the dawn of a new “super cycle” of upgrades, as many in the companies home country of the USA have delayed upgrading awaiting the 5G model. However, 5G coverage in the US is patchy and sporadic and with a highly diffused network of poor signal areas. A lot could depend on the iPhone 12, is the pent-up demand there to be taken advantage of ? Early market gossip and market news suggest their is indeed that demand.

As ever, guidance and outlook will be key with some analysts expecting a hit on revenues because of the iPhone 12 delay and figures could be as low as $60.00 billion. (JP Morgan).

Overall the services and wearables business, including sales of AirPods and Apple Watch consumables is expected to show a hefty 17-24% growth year on year.

In the midst of the Pandemic, Apple announced the launch of the iPhone SE retailing at $399.00, the issue of the cut price iPhone proved a significant success and offered simple churn of existing sales rather than any enhancement of new replacement units. can signs of the upgrade cycle be announced tonight ?

The major Wall Street banks have price targets for the stock ranging from $150 down to $49. The consensus among 41 analyst is a target price of $122 with 23 of the 41 recommending a Buy or Strong Buy rating and none of the 41 with a Sell rating. The stock currently trades at $114.00.

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

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

Click HERE to access the full HotForex Economic calendar.

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

Click HERE to READ more Market news.

Stuart Cowell
Head Market Analyst
HotForex

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

 

[HFM]

Date : 6th November 2020.


NFP Friday on a US Election week!

Treasury Action: losses on Treasuries have accelerated even as stocks sag. Some of the action is a function of unwinding of some of this week’s big moves. But there’s some renewed concerns creeping back into the markets as the expectation for a split Congress is coming into doubt as special elections are likely necessary in January.

The US Dollar headed a bit higher after the jobs report, which revealed a higher than consensus NFP print, and saw the unemployment rate fall to 6.9% from 7.9%. USDJPY rallied to 103.48 from 103.35, while EURUSD dipped toward 1.1865 from 1.1880. Equity futures remain in the red, though off earlier lows, while yields ticked slightly higher before pulling back.

https://www.facebook.com/video.php?v=390059935451192

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


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


Click HERE to access the full HotForex Economic calendar.


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


Click HERE to READ more Market news.


Andria Pichidi
Market Analyst
HotForex

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