Industrial activity in China returns to pre-crisis levels

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Latest data shows that deflation in China eased in July, fueled by rising global energy prices and industrial activity returning to pre-coronavirus levels. In addition, exports, which have always been developed in China, have not declined even amid the pandemic.

Market participants say that this bodes well for a global economic recovery.

"China is so far ahead of the exit from lockdown that any good signs on the Chinese economy are important for the global economy," said Florian Ielpo, Head of Macroeconomic Research at Unigestion.

The MSCI World Equity Index, which tracks stocks in 49 countries, has not changed, and the Wall Street futures indicators also indicated modest gains.

Unfortunately, China's success continues to erode tensions between the US and China ahead of scheduled trade talks to renegotiate their agreement signed in January.

US President Donald Trump signed orders to ban Chinese social media WeChat, owned by Chinese tech giant Tencent, and TikTok, starting next month, and imposed sanctions on 11 officials in Hong Kong and China.

US regulators have also recommended that overseas companies listed on US exchanges be subject to US government audits from 2022.

These tensions between the two countries continue to raise concerns regarding the negative impact on trade negotiations. According to investors, any friction could make it difficult for the global economy to recover from the coronavirus pandemic.

In addition, uncertainty is escalating, mainly due to the current negotiations in Washington with regards to new stimulus package for the US economy. House Speaker Nancy Pelosi and Secretary of Treasury Steven Mnuchin said on Sunday that they are ready to resume talks on the aid package.

Just recently, Trump has sought to take matters into his own hands, signing decrees and memoranda on unemployment benefits, student loans, and payroll taxes.

With investors worried that the US economic recovery could lag behind the recovery of other major economies, the dollar's two-year dominance has weakened.

Against other world currencies, the dollar rose 0.3% to 93.620 per US dollar, but still slightly above a two-year low.

"The solutions provided by President Trump in the form of decrees are better than none at all," commented analysts at the MUFG.

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Weakening impact of COVID-19 in the US and positive data on the economy will cause a decline in the dollar's rate again

The situation in the currency market fully reflects the overall picture in the financial markets. The recent economic data from the US, Asia and Europe inspires optimism in investors that economic recovery will be more strong in the second half of the year.

On Monday, data on consumer inflation in China was released, which showed its acceleration amid economic growth after the impact of the coronavirus pandemic. In addition, news that the pressure of the COVID-19 pandemic is easing in America supports demand for shares of companies that have previously experienced significant pressure. The local strengthening of the dollar stopped on this wave. At the end of Monday trading, it rose against the yen and the Swiss franc, tried to rise to the euro, and was also helped by a strong technical overbought of the European currency. However, it declined against commodity and raw material currencies, as well as the pound.

Meanwhile, Increasing demand for risky assets, primarily for US companies ' shares, as well as the high probability of reaching a compromise between the Democratic majority in Congress and Government D. Trump on new measures to support Americans and business will definitely put downward pressure on the dollar. We expect that in the wake of the rally in the stock market, as well as the resumption of the decline in Treasury yields, the US currency rate will start to weaken again. And pairs where the dollar is present will end the consolidation period and resume growth against it.

Another negative moment for the dollar exchange rate on Monday was the publication of data on the number of open vacancies in the labor market (JOLTS). The number of which rose sharply to 5.889 million against 5.371 million. In fact, the indicator demonstrates a positive trend for the second month in a row, the persistence of which will become an important factor in supporting the demand for risky assets with a simultaneous increase in pressure on the US currency rate.

Assessing the overall picture, we believe that we should expect a resumption of the dollar's fall in the currency market this week.

Today, the focus of the markets will be the publication of the economic sentiment index from the ZEW for the euro zone and Germany, as well as the current conditions for Germany. If the values of the indicators do not rise and turn out to be, even if not much, but higher than expected, the euro/dollar pair should be expected to turn upwards with the prospect of exiting the period of consolidation.

In addition, the numbers of manufacturing inflation in America will be presented today. An increase in performance is expected. How can this news affect the dollar rate?

We believe that their growth will not affect the overall dynamics of the dollar exchange rate. On the contrary, they will be perceived by investors as confirmation of the improvement in the situation in the country's economy, which will only strengthen the trend in demand for risky assets with a simultaneous weakening of the dollar.

In the meantime, it is also supported by the factor of growing tensions between Washington and Beijing. We believe that as soon as it weakens, the dollar will decline.

Forecast of the day:

The EUR/USD pair is consolidating in anticipation of the publication of data on the economy of Germany and the eurozone, which will be released today. If they turn out to be above expectations, the pair will rush to 1.1900.

The USD/CAD pair remains in a short-term downward trend. A consolidation below 1.3335 on the wave of continued growth in oil prices will be the basis for a fall in prices first to 1.3235, and then to 1.3200.

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Brief trading recommendations for EUR/USD and GBP/USD on 08/11/20

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The EUR/USD currency pair followed the trail of the pound sterling changing the direction of trend lines 1, 2 and 3 with upward inclination to the horizontal, 4,5 and 6. This change calls into question the long-running channel up where it is possible to dramatically change direction from upward to downward in case of breaking of the horizontal line No. 6.

Until line number 6 (area 1.1700) is broken, price fluctuations should be considered within the price range 1.1700 // 1.1810 // 1.1910 (6 + 5 + 4, lines).

Based on the above, it is worth considering several possible market development scenarios:

First, a rebound from line #6.

In this case, we consider a price rebound from line 6 (area 1.1700) towards line 5 (area 1.1810). The entry point for a buy position is considered higher than 1.1780.

Second, hold the upward move.

In this case, the scenario proceeds from the first option, where a rebound from line 6 leads to an increase in the volume of buyers, which leads to a breakdown of line 5 and directs the quote towards line 4 (area 1.1910). The entry point to a buy position is considered if the price is consolidated above 1.1825.

Third, a breakdown of line #6.

In this case, the downward move set two days earlier is held on the market, as a result of which line No. 6 (area 1.1700) is broken through, and the quote is directed towards the values of 1.1650 - 1.1600 - 1.1550, thereby changing the direction of the market. The entry point for a sell position is considered below the level of 1.1690.

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The GBP/USD currency pair continues to follow within the sideways channel, lines 4, 5 and 6 (1.2985 // 1.3080 // 1.3185), where the last day was expressed in price fluctuations along line 5, with an amplitude of 40-50 points.

The situation for the pound sterling is the same as for the European currency. The long-term ascending channel (1 + 2 + 3 - lines) has changed to a sideways channel (lines 4 + 5 + 6), work is primarily done within the range 1.2985 // 1.3080 // 1.3185, but already in case of approaching lines 4 and 6, a breakout tactic is considered.

Based on the foregoing, it can be assumed that the 1.3060 / 1.3100 amplitude along line No. 6 will not last long, the tactics of working within the range (4 + 5 + 6) is relevant.

Buy positions are considered above 1.3105, towards 1.3145-1.3180.

Sell positions are considered below 1.3060, towards 1.3025-1.2985.

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Technical Analysis of ETH/USD for August 11, 2020:

Crypto Industry News:

KEB Hana Bank, one of South Korea's largest commercial banks, has entered into an agreement with the state-backed highway operator, Korea Expressway Corporation, to introduce a blockchain-based toll system on national highways.

According to D Daily, the project is to start before the end of the year. The system will connect the KEB Hana smartphone banking app, Hana One Q, allowing drivers to make payments, postpone them and even receive toll refunds.

The report found that both parties involved in the agreement reached to implement the blockchain solution are seeking to remove cash or credit card payments, in part because of the COVID-19 pandemic, which encourages them to offer contactless solutions.

Korea Expressway Corporation and KEB Hana Bank want to use blockchain to share data to strengthen synergies with the payment system design. Kwang-Ho Lee, head of sales at Korea Expressway Corporation, commented on the report:

"We will continue to expand personalized non-face-to-face (contactless) services to society using blockchain technology, which is part of the Korean version of the new digital contracts policy to lead the global economy after the coronavirus."

The Ministry of Science and ICT and the Korean Internet and Security Agency approved the agreement. Last year, KEB Hana also received an award for its mobile electronic blockchain verification program from the same agencies.

The South Korean government recently revealed its intention to invest over $ 48.2 billion in blockchain and other Industry 4.0 technologies by 2025. The state's goal is to promote the digitization of all industries in the coming post-pandemic era.

Technical Market Outlook:

After the ETH/USD pair had bounced from the level of $362.30, the bulls has pushed the price up towards the yearly high located at the level of $414.11, but did not make it yet. The momentum has increased and is back in positive territory, so the bulls are still in charge of the market, but the price is still trading inside of the range seen between the levels of $355.34 - $407.03 as the volatility dries up. In a case of a breakout higher, the next target for bulls is seen at the level of $450. The key short-term support is still located at the level of $323.87- $323.85. The weekly time frame trend is still up.

Weekly Pivot Points:

WR3 - $458.63

WR2 - $430.13

WR1 - $411.58

Weekly Pivot - $386.08

WS1 - $366.85

WS2 - $340.34

WS3 - $321.13

Trading Recommendations:

Due to the violation of the level of $351, Ethereum is now in the up trend on the long-term time frame. The next target for bulls is seen at the level of $500. The key long-term technical support is located at the level of $86.10, but the zone around $300 - $308 is an important technical support as well.

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Technical Analysis of BTC/USD for August 11, 2020:

Crypto Industry News:

Facial recognition can help prevent Bitcoin scams such as those that took place on Twitter and YouTube, said Rod Hsu, president and co-founder of the Coincurve virtual currency platform.

Hsu said Bitcoin is an electronic form of currency that is irreversible and somewhat anonymous, "coupled with this vulnerability makes it attractive to fraudsters." Due to the negative publicity the cryptocurrency has gained from the scams, it may have deterred many from adopting it.

"Therefore, people may see fraud and Bitcoin as synonyms. In the case of traditional payment methods or Bitcoin, it is the individual who needs to understand the situation and determine its legitimacy. We hope that thanks to greater public awareness of these programs and education about Bitcoin, we'll be able to separate these negative associations. "

Hsu believes that facial recognition is one possible way to eliminate Bitcoin scams as it is much more difficult to implement. He adds that such a system is based on biometrics, which is "much more advanced than a simple photo":

"We have seen a simplified version of facial recognition where the consumer not only provides his identification but also performs a live inspection that covers different angles of the person's profile. This creates additional difficulties if someone tries to use someone else's payment instrument."

Hsu added that facial recognition is a good tool to re-authenticate a person after initial verification, "balancing the goal of better user experience while minimizing fraud."

However, Coincurve co-founder cautions systems like facial recognition should have ethics in mind when verifying:

"I think the ethics of facial recognition comes down to consent and security. Consent requires that the user must know and control how the data is stored, shared, used and accessed, and must be able to remove it at any time. In terms of security, this is about how data is stored and how security protocols are implemented. These requirements may also vary according to the age of the user. "

Services must take these considerations into account when using new technologies such as facial recognition, as implementation will affect many layers of the service, from "user experience to system architecture and security."

Technical Market Outlook:

The BTC/USD pair has bounced from the level of $11,400 after big Pin Bar candlestick pattern was made. The momentum has increased and is back in positive territory, so the bulls are still in charge of the market, but no new high was made yet. In a case of a breakout above the level of $12,035, the next target for bulls is seen at the level of $12,269. The key short-term support is still located at the level of $10,940 - $10,890. The weekly time frame trend is still up.

Weekly Pivot Points:

WR3 - $12,981

WR2 - $12,405

WR1 - $12,075

Weekly Pivot - $11,487

WS1 - $11,099

WS2 - $10,537

WS3 - $10,124

Trading Recommendations:

Due to the level of $12,000 violation, the Bitcoin is now in the up trend on the long-term time frame. The next key target for bulls is seen at the level of $13,712 and $15,000. The key long-term technical support is located at the level of $7,897, but the zone around $9,500 - $10,500 is an important technical support as well.

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