The global debt market is reeling

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At the moment, experts assess the state of the global debt market as unstable, calling this phenomenon Japanization, "flight to quality" and an attempt to adapt to the new standards proposed by the Fed. Analysts believe that in the near future, the world economy will face a fall in growth rates and slide into deflation.

The Japanization of the global economy is growing, and the debt market demonstrates this. This term implies the development of the economy according to the Japanese scenario. Note that in the Land of the Rising Sun, there has been no growth over the past twenty years. The state is constantly struggling with deflation, although the Bank of Japan uses all possible tools to stimulate price growth. The reason for this is partly the policy of the Japanese regulator. A few years ago, the Central Bank of Japan first started printing money, which in the short term proved very effective. However, this later led to negative consequences. Nevertheless, the launch of QE was decided by major players in the world market – the Fed and the ECB, and now they have to find a way out of the impasse.

Currently, the yield of indicative US Treasury securities is at a minimum, and the rates on Germany's public debt were in the red. At the same time, according to Bloomberg, century-old bonds, associated with the risk of changes in interest rates, suddenly became one of the market leaders. Surprisingly, investors ignore the inevitable uncertainty associated with attempts to bet a hundred years ahead.

Over the past three weeks, the capitalization of bonds with an investment grade rating and high-yield bonds of the world soared almost $ 1.6 trillion, reaching $ 55 trillion, Bloomberg noted. Investors have a new appetite for risk, and they expect that central banks will fuel their profits before the end of the credit cycle. Thirty-year Bundes, whose yield is only 0.54%, went up by 7.7%, ahead of the "junk" bonds and bonds of emerging markets.

Currently, corporate debt markets are also involved in the pursuit of profitability. However, in the event of a slowdown in economic growth, the balance sheets of companies will suffer, because they will not be able to service a high debt burden.

In the debt market of Europe, the situation also leaves much to be desired. The yields of ten-year German bonds fell below the yields of similar bonds in Japan. Experts consider this a wake-up call for the global economy. They believe that Europe may face a recession at a time when rates will still be negative. At the same time, the ECB can do little to help, since it does not have the tools to stimulate economic growth.

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Bitcoin analysis for March 29, 2019

We found the upside breakout of the well-defined trading range in the background, which is sign that buyers are in control. The short-term trend is bullish and the Keltner channel is going upwards, which are all signs of the strength. Resistance levels are found at $4.158 and $4.270. Support level is found at the price of $4.020.

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Trading recommendation: We are long BTC from $4.070 with target at 4.158. Protective stop is placed at $3.983.

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BITCOIN Analysis for March 29, 2019

Bitcoin managed to sustain the bullish momentum above $4,000. The level has been recently retested. The price is going on with a rally. The price is currently trading above $4,100. BTC is likely to extend its climb towards $4,250 and later towards $4,500 area in the coming days.

The price is currently being supported by the dynamic level of 20 EMA, Tenkan, Kijun, and Kumo Cloud. Such support is expected to carry the price further upward. The price formation currently is breaking above the corrective volatile range. On the other hand, breaking above $4,250 will help the price to get impulsive momentum, so the price could extend a rally towards $4,500 and later towards $5,000 in the short term as there is no obstacle which could put pressure on bullish momentum. As the price remains above $4,000, the price will acculumate the impulsive bullish pressure.

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Analysis of Gold for March 29, 2019

Gold has been trading sideways in past 24-hours but the supply is still present. We still expect more downside on the Gold.

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According to the H4 time – frame, we found rejection from the strong resistance cluster at the price of 1.300.00, which is sign that buying looks very risky and that more downside is expected. The 4h candle closed in the middle, suggesting that underlying weakness. Our advice is to watch for selling opportunities. Support is seen at the price of $1.281.00. As long as the resistance cluster (purple rectangle) at $1.300.00 is holding, we remain bearish.

Trading recommendation: We are short with small position from $1.293.00 and target at 41.281.20.

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EUR and GBP: Euro buyers are trying to take the lead. Pound falls further while waiting for the results of the vote

The good data on the German labor market was not enough for buyers of risky assets to return to the market in the first half of the day. Weak reports on the French economy led to the resumption of the downtrend.

According to the report, the unemployment rate in Germanyin March reached a new minimum this year, which happened because of the high demand in the labor market.

As noted in the Federal Employment Agency, the unemployment rate in Germany was 4.9% in March against 5% in February. The number of applications for unemployment benefits fell by 7,000 compared with February, while economists had forecast a decline of 10,000. The total number of unemployed in Germany was 2.301 million in March, whereas the previous figure was at around 2.373 million in February.

As I noted above, a weak report on the French economy affected the euro quotes. First of all, traders were worried about the report on the consumer price index, which showed a weaker growth than expected for the month of March this year in France.

According to the report, consumer prices rose by 0.8% in March compared to 1.1% per annum in February. Economists had forecast a consumer price index in France at 1.0% and 1.3%, respectively. As for the index harmonized according to EU standards, it added 1.3% in March against 1.6% per annum in February.

The sharp decline in consumer spending in France will have a negative impact on the future on already slowing economic growth rates. According to the data, expenses fell by 0.4% in February of this year and by 1.8% compared to February 2018. Expenditures were projected to increase by 0.2% compared in February and a decline by 1.3% against last year.

On the contrary, the state budget deficit of France rose to 36.9 billion euros at the end of February against 28.5 billion euros at the end of February 2018 due to more than a sharp decline in income and an increase in expenditure.

As for the technical picture of the EUR/USD pair, it remained unchanged. The further downward trend will continue with the minima in the region of 1.1200 and 1.1170. However, the main goal of sellers of risky assets is to test the support level of 1.1150. Under the scenario of the upward correction of the euro, sellers will not take long to wait in the area of major resistance at 1.1270 and 1.1295.

Great Britain

The British pound fell against the US dollar and continued its downtrend pending a vote in the British Parliament on the Brexit issue.

There was pressure on the pound in the first half of the day amid a weak report on the investments of British companies, which decreased again in the 4th quarter of 2018 for the fourth time in a row.

According to the data of the National Bureau of Statistics of the United Kingdom, capital investments of companies decreased by 0.9% compared with the previous quarter in the 4th quarter of 2018.

The weak growth of the UK economy at the end of last year also did not make traders happy.

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According to the GDP data in the 4th quarter, it grew by only 0.2% compared with the previous quarter. In comparison to the growth in the same period of the previous year, it was revised upward to 1.4% from 1.3%.

The current account deficit of the balance of payments amounted to 23.7 billion pounds in the 4th quarter against 23 billion pounds in the 3rd quarter.

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The dollar made a comeback

The US dollar in late March made the seemingly impossible possible. It grew despite an increase in the probability of weakening the Fed's monetary policy easing in 2019 to 75%, despite disappointing data on US GDP for the fourth quarter (+ 2.2%), despite progress in the negotiations between Washington and Beijing, about which Finance Minister Steven Mnuchin spoke. Neither the economic slowdown nor the "pigeon" rhetoric of FOMC representatives could stop the "bears" on EUR/USD, which managed to storm the lower limit of the medium-term consolidation range of 1.125-1.15. In early March, in a similar situation, the case ended with a false breakdown. Will the be a double "two" now?

After the Central Bank lowered its forecast for US GDP in March from 2.3% to 2.1% in March and stopped expecting a rate hike in the current year, the dollar theoretically had to come under pressure. Indeed, if the normalization cycle is complete, and the inversion of the yield curve signals a recession with a time lag of 12-18 months, it would be nice to get rid of the toxic currency. Moreover, the derivatives market, which is counting on tightening monetary policy in December, openly spoke about monetary expansion in March.

Dynamics of Fed rate forecasts

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A prolonged pause in the process of normalization or its completion with growing risks of a rate reduction led to a fall in the yield on 10-year Treasury bonds to a 16-month bottom. The attractiveness of US-issued securities is declining, which theoretically should lead to capital outflows and a weaker US dollar. In practice, before you get rid of the currency, it needs to be replaced by something in the investment portfolio.

A couple of weeks ago, the euro featured as the best option. Indeed, the end of trade wars is a positive signal for the export-oriented economy of the eurozone. Its V-shaped recovery was supposed to help the "bulls" on EUR/USD to find the bottom and go to the counterattack. Alas, disappointing statistics on the economic confidence of the eurozone, German inflation, and business activity suggest that Germany is still far from rising from its knees.

Mario Draghi and his colleagues are concerned about the reluctance of GDP to gr

ow by more than 0.2% q / q and core inflation - to go far from the level of 1%. They are scared to look at the negative effects of using negative interest rates for the banking system and are ready to use LTRO and other tools to throw a lifeline to financial institutions of the currency bloc. Rumors about the introduction of differentiated interest rates into practice, which allow commercial banks not to pay for the resources placed on the accounts of the regulator, have dealt another blow to the bulls positions on EUR / USD.

Technically for the euro buyers, nothing is lost. If they manage to cling to support at $ 1.125 and at $ 1.1185 (61.8% from the last long-term uptrend) and continue consolidation, the risks of restoring the bull trend and realizing the "Wolfe Wave" pattern will remain. And only a confident breakthrough of $ 1.118-1.1185 will allow the bears to count on the continuation of the southern campaign.

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EUR/USD: plan for the US session on March 29. Euro buyers return to the market

To open long positions on EURUSD you need:

If in the first half of the day, the buyers of the European currency failed to get above the resistance of 1.1240 against the background of diverse fundamental statistics for the eurozone countries, then the bulls were able to hold the support level of 1.1208. At the moment, it is best to look at long positions in the euro after breaking through and consolidation above the resistance of 1.1240, where you can expect growth to the maximum area of 1.1269 and 1.1294, where I recommend taking profits. In the case of a repeated wave of EUR/USD decline in the afternoon, new purchases can be considered from the same support level of 1.1208 and a rebound from the new minimum of 1.1176.

To open short positions on EURUSD you need:

Weak inflation reports in France and Germany put pressure on the euro in the first half of the day, which led to a decline in the support area of 1.1208, which I paid attention to in the morning review. At the moment, while trading is below the 1.1240 range, the pressure on the euro will continue, and the bearish target will again be at least around 1.1208, a breakthrough of which will lead to a larger EUR/USD sale to the support area of 1.1176, where I recommend taking profits. When scenarios return EUR/USD to the resistance level of 1.1240 in the second half of the day, it is best to consider short positions on a rebound from the maximum of 1.1269 and 1.1294.

Indicator signals:

Moving Averages

Trade is conducted below the 30-day and 50-medium moving, which indicates the preservation of the bearish nature of the market. However, a breakout of the slide could lead to a sharp rise in the euro.

Bollinger bands

An upward correction on the euro will be formed in case of a break of the upper border of the Bollinger Bands indicator in the 1.1240 area.

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Description of indicators

  • MA (moving average) 50 days - yellow
  • MA (moving average) 30 days - green
  • MACD: fast EMA 12, slow EMA 26, SMA 9
  • Bollinger Bands 20
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GBP/USD analysis for March 29, 2019

GBP/USD has been trading downwards. The price tested the level of 1.2977. Anyway, potential oversold condition is found.

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According to the M15 time – frame, we found rejection from the support 1 at the price of 1.2986, which is sign that selling looks very risky. Also, stochastic oscillator is in oversold condition, which adds more potential strength on the GBP. Resistance levels are seen at the price of 1.3090 (pivot) and at 1.3149 (RR1).

Trading recommendation: We are long GBP from 1.3022 and targets at 1.3090 and 1.3150.

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March 29, 2019 : GBP/USD Intraday technical analysis and trade recommendations.

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On January 2nd, the market initiated the depicted uptrend line around 1.2380.

This uptrend line managed to push price towards 1.3200 before the GBP/USD pair came to meet the uptrend again around 1.2775 on February 14.

Another bullish wave was demonstrated towards 1.3350 before the bearish pullback brought the pair towards the uptrend again on March 11.

A weekly bearish gap pushed the pair slightly below the trend line (almost reaching 1.2960) before the bullish breakout above short-term bearish channel was achieved on March 11.

Bullish persistence above 1.3060 allowed the GBPUSD pair to pursue the bullish momentum towards 1.3130, 1.3200 then 1.3360 where the recent bearish pullback was initiated.

Bullish persistence above 1.3250 was needed for confirmation of a bullish Flag pattern. However, significant bearish pressure was demonstrated below 1.3250 demonstrating a false bullish breakout above 1.3200 (the upper limit of the depicted bearish channel).

Hence, the short term outlook turned to become bearish towards 1.3150 - 1.3120 where the depicted uptrend line failed to provide any immediate bullish support.

Currently, the price levels of 1.3020-1.3000 (the lower limit of the depicted movement channel) is being challenged where bullish rejection is expected to be found.

Next bullish target is located around 1.3140 where the upper limit of the depicted movement channel is located.

Trade Recommendations:

Intraday traders can have a valid BUY entry around the lower limit of the movement channel (1.3000-1.3020).

SL to be located below 1.2970. TP levels to be located around 1.3100 and 1.3140

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Expert opinions diverged: What determines the EUR / USD rate now?

According to some experts, the difference in interest rates of the ECB and the Fed is no longer the decisive factor in the change in the value of the euro against the dollar.

"In order to predict the dynamics of the euro against the dollar, traders must now monitor the flow and outflow of capital in the stock market," said Mark McCormick, currency strategist at TD Securities.

McCormick said that the euro may strengthen if the outflow of funds from European stocks slows down.

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According to Bloomberg, European funds traded on US exchanges (ETFs) experienced an outflow of capital from the eurozone in the amount of $ 859 million in 2019.

The euro also suffered losses this year as it plunged by almost 2.1% against the dollar.

"The slowdown in the global economy is putting pressure on stock prices. Here, we should also add the weakness of the Chinese economy, as well as trade disputes between Washington and Beijing", said McCormick.

In early March, the Asian empire promised to adopt a wide package of incentives aimed at overcoming economic weakness. At the same time, the euro area will receive the biggest fiscal stimulus in a decade.

In addition, if the United States and the PRC ultimately conclude a trade agreement, firstly, this will weaken investors' concerns about a slowdown in global growth, and secondly, it will contribute to the restoration of such major sectors of the European economy as banking and automobiles.

"The eurozone is now in the process of stabilization. It may take two to three months of positive statistical data to change the psychology of the market. Most likely, this will happen in the third quarter", said McCormick.

Meanwhile, an analyst at Jefferies Group, Brad Bechtel, believes that the difference in interest rates between the ECB and the Fed is still not to be written off. Although at the moment, a combination of threats related to Brexit serves as a factor in determining the direction of the EUR/USD pair and common European political fears.

He expects that in the summer, the weakening of the dollar will begin to gain momentum and the euro will rise to $ 1.16 in value.

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