USD/CAD. Bank of Canada helped the Canadian dollar: price outpost of 1.3000 ahead

Traders of the USD/CAD pair negatively perceived the outcome of the July meeting of the Bank of Canada: as an initial reaction, the price rose by more than 50 points, updating the high of the day.

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But the upward impulse did not receive its continuation. Firstly, due to the weakening US dollar, and secondly, due to the actual de-correlation of the intentions of the Canadian regulator and the US Federal Reserve. After all, by and large, the Bank of Canada's rhetoric was not "dovish", traders for the most part just expected what was nearly impossible from Stephen Poloz(in current conditions) - hints at a rate increase before the end of this year. The head of the Canadian central bank, naturally, did not live up to such "hawkish" expectations, so the loonie shot to the middle of the 31st figure. But on the whole, yesterday's "correspondence confrontation" between the Fed and the Bank of Canada ended in favor of the latter. After all, if members of the Canadian regulator decided to take a wait-and-see attitude, then their counterparts from the United States seem to have taken the opposite decision, taking the path of easing monetary policy.

However, the head of the Canadian central bank also voiced quite alarming signals, which indicate that at the end of this year, Stephen Poloz may follow the Fed. First of all, the head of the regulator was concerned about the external fundamental background. According to him, the consequences of the global trade war are becoming more tangible - in particular, the forecast for GDP growth in the global economy for the current year was reduced to three percent (from the previous value of 3.2%), for the next year - to 3.2% (from previous 3.3%). As the head of the central bank noted, the further escalation of trade conflicts will be the greatest risk for both the global and Canadian economy. In general, the theme of the tariff war was the main leitmotif of his speech, he repeatedly focused on this issue. Stephen Poloz was also concerned about the appreciation of the national currency. The Canadian currency has only increased against the US dollar as the loonie has grown by more than 500 points since the beginning of June. According to Poloz, such a significant strengthening of the loonie undermines competitiveness in world markets, adversely affecting the export sector.

Highlighting the negative aspects, the head of the Bank of Canada also noted the positive aspects. In particular, the regulator significantly increased the forecast of GDP growth in the second quarter to 2.3% (while the previous value was at the level of 1.3%). Such dynamics, according to Poloz, is explained by weather conditions and growth of the oil market. The third quarter promises to be less successful – the Canadian economy should grow by only 1.5% in this period . A significant increase in inflation in Canada was also due to temporary factors – at least, the members of the Canadian regulator are certain of this. In their opinion, inflation will decrease to 1.6% in the third quarter, but at the end of the year – in the 4th quarter – it should rise again to two percent.

In general, the rhetoric of Stephen Poloz were "optimistic-discreet" in nature. He noted the economic risks from trade conflicts, but did not dramatize the situation, announcing a possible reduction in the interest rate, even as a preventive measure. The head of the Bank of Canada stressed that at the moment the regulator's forecast is balanced and does not require any action. The appropriate decision will only be taken if the central bank faces "unrecorded risks."

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All this suggests that the Bank of Canada will maintain a wait-and-see position for the foreseeable future (at least until October). This can not be said about the Fed, the head of which yesterday actually announced the rate cut at the July meeting. Jerome Powell similarly attended to the negative effects of the trade war between the United States and China, while noting the slowdown in inflationary growth, the decline in business investment and overall economic growth. Strong Nonfarm did not save the situation, because the dynamics of wage growth leaves much to be desired. Summarizing what was said, Powell made it clear that the Fed will reduce the interest rate by 25 basis points at the end of this month. But the next steps of the regulator will depend on the incoming data, above all - inflation.

The minutes of the last Fed meeting, published yesterday, only confirmed the dovish intentions of the regulator. Most members of the Federal Reserve forecast a decline in GDP growth and a decline in inflation, as well as an increase in unemployment. Thus, taking into account the fact that Jerome Powell actually repeated the theses of the June meeting, the question of a reduction in the interest rate of the Fed can be considered resolved.

The uncorrelated monetary policy will exert background pressure on the USD/CAD pair, which may increase if US inflation disappoints investors today. In this case, the loonie can approach the first downward target, that is, the strongest support level of 1.3000 (the bottom line of the Bollinger Bands indicator).

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Trading plan for EUR/USD for July 11, 2019

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Technical outlook:

The EUR/USD pair has finally approached 1.1190 levels yesterday. The price held near of initial support at 1.1180 levels. We have presented the 4H chart view to have a short and medium term outlook for the single currency. Please note that the rally from 1.1193 to 1.1275/80 levels might have unfolded into 5 waves. It could indicate that the correction might not be over yet and EUR/USD could still push ahead towards 1.1330 levels. Having said that, we can expect a corrective drop towards 1.1220 levels in the short term before the rally could resume and push higher through 1.1330 levels. Those who initiated long positions in the last 2 days from 1.1190/1.1200 levels can take profits of around 80 pips and remain flat for now. We shall allow a slight correction lower and look to consider opening long positions again. Also note that there is resistance faced around current levels, from the support turned resistance trend line as well.

Trading plan:

Take profits of long positions are taken earlier from 1.1190/1.1200 levels. Remain flat for now.

Good luck!

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GBP/USD: plan for the European session on July 11. The pound's growth is limited by a political scenario

To open long positions on GBP/USD you need:

Despite the pound's growth, the further upward potential is limited by political issues related to the election of Great Britain's prime minister, which could turn out to be hard Brexit supporter Boris Johnson. At the moment, buyers need a breakdown and consolidation above the resistance of 1.2537, which will lead to the renewal of highs around 1.2585 and 1.2639, where I recommend taking profits. With a downward correction scenario in the first half of the day, long positions can be returned to a false breakdown from a support of 1.2503, as well as to rebound from a larger low in the area of 1.2469.

To open short positions on GBP/USD you need:

Pound sellers will expect good inflation in the US and a false breakdown in the resistance area of 1.2537, which will lead to a downward correction in the support area of 1.2503. However, only a breakdown of this area will return faith to the market for a further drop in GBP/USD with the renewal of lows around 1.2469 and 1.2439, where I recommend taking profits. With further growth in the new trend, short positions are best considered at the test of highs of 1.2585 and 1.2639.

Indicator signals:

Moving averages

Trading is conducted above 30 and 50 moving averages, which indicates a trend change.

Bollinger bands

If the pound goes down, support will be provided by the lower limit of the indicator around 1.2485.

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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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EUR/USD: plan for the European session on July 11. Powell shattered dreams of strengthening the US dollar

To open long positions on EURUSD you need:

The Fed's statements from yesterday led to a weakening of the US dollar. At the moment, euro buyers need a breakout and consolidation above the resistance of 1.1280, which will continue the upward impulse and lead to the renewal of highs around 1.1311 and 1.1364, where I recommend taking profits. In case the euro declines in the first half of the day, long positions can be seen from a support of 1.1243 or rebound from a large low of 1.1212. The main movement will depend on US inflation data.

To open short positions on EURUSD you need:

Euro sellers can count on a false breakdown of resistance at 1.1280, which will lead to a downward correction in the pair and the intermediate support test of 1.1243, from which growth has continued this morning. However, only a breakthrough of 1.1243 with good inflation data in the US could provide the necessary pressure on EUR/USD and a return to lows of 1.1212 and 1.1182, where I recommend taking profits. With the growth scenario for the trend, you can sell the euro on a rebound from highs of 1.1311 and 1.1338.

Indicator signals:

Moving averages

Trading is conducted above 30 and 50 moving averages, which indicates a trend change.

Bollinger bands

If the euro falls, support will be provided by the lower limit of the indicator in the region of 1.1230.

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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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EURJPY: EURO to lose grounds ahead of ECB Meeting today? July 11, 2019

The EUR/JPY pair recently rose. It was residing at the 122.50 area. The yen exhibited strength while the euro weakened.

The euro lost momentum after the European Commission has cut its euro-area growth and inflation forecast for next year as trade tensions and policy uncertainty are weighing on the region. In its quarterly forecasts, the EU's executive arm trimmed its 2020 euro-area GDP projection to 1.4% from 1.5% amid what it said were increased downside risks. On inflation, both this year and next were lowered modestly to 1.3%. The ECB aims for inflation of just below 2% over the medium term. Recently, ECB officials indicated that they're willing to cut interest rates further and possibly even restart asset purchases if needed. Germany and Italy are projected to have the lowest growth rates in the euro area this year, dragging down the outlook for the rest of the bloc.

The Final CPI data for Germany remained unchanged as expected at 0.3%. The French Final CPI report will be published soon. The reading is also expected to be unchanged at 0.2%.

Furthermore, the Bank of Japan's focus on keeping the yen weak and bolstering stock prices has made executives complacent and hurt corporate competitiveness. According to Akira Kondoh, Years of aggressive monetary easing under the BOJ's Kuroda has helped weaken the yen to the benefit of exporters. But that has allowed companies with low productivity to stay alive. The US-China trade war and slowing global demand have heightened market expectations for a Fed rate cut this month which has put the BOJ under pressure to ease at its July 29-30 rate review, to avoid narrowing US-Japan rate differentials from pushing up the yen versus the dollar.

Japan's Tertiary Industry Activity report showed a decrease to -0.2% from the previous positive value of 0.8% which was expected to be at -0.1%. The Industrial Production report will be published tomorrow. The figure is expected to be unchanged.

Now let us look at the technical view. The price is currently correcting below 122.50 area. If it breaks below the trend line support i.e. at 121.50 area with an intraday close, the price is expected to push lower towards 119.00 and 120.00 support area. The dynamic level of 20 EMA restrains the price from its rise.

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Technical analysis of ETH/USD for 11/07/2019:

Crypto Industry News:

The US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) have presented regulatory compliance issues for cryptocurrencies in an official statement.

According to the joint statement, organizations still need to discover a set of circumstances in which a cryptographic depository can comply with the principle of customer protection according to the SEC. The report further claims that the cryptographic service may not be able to sufficiently demonstrate that it actually controls the assets it allegedly owns.

SEC and FINRA discuss how simply having a private key are not enough to demonstrate crypto ownership. They say that another party can have a copy of the private key and thus execute transactions that the trustee has not approved. In addition, if such a transaction was carried out, the trustee would not be able to reverse it. This also applies more generally to any transactions that the trustee may want to cancel or withdraw as stated in the statement.

The report also addresses issues related to the registration of other services, such as OTC OTC platforms and broker-dealer transactions in a wider scope. Other areas of compliance problems include the principles of bookkeeping and liquidation through the Act on investor securities protection.

Technical Market Overview:

The ETH/USD pair has made a new local low at the level of $259.81 as the wave X had been completed at the level of $317.30 as anticipated. The move down had been made in five waves, so it might indicate the whole corrective structure labeled as WXY in the wave 2 might have been completed already. To confirm this, the price must break back through the technical resistance located at the level of $272.02.

Weekly Pivot Points:

WR3 - $360.95

WR2 - $335.54

WR1 - $324.79

Weekly Pivot - $298.87

WS1 - $285.22

WS2 - $258.89

WS3 - $247.45

Trading Recommendations:

The best strategy in the current market conditions is to trade with the larger timeframe trend, which is still up. All the shorter timeframe moves are being treated as a correction inside of the uptrend. The current cycle is wave 2 of the higher degree and it might have been completed, so the uptrend should resume soon.

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Technical analysis of BTC/USD for 11/07/2019:

Crypto Industry News:

Fortress Investment Group buys the claims of creditors of the Mt. Gox regarding Bitcoins, according to a report published in the financial media.

Japanese cryptocurrency market Mt. Gox filed for bankruptcy in 2014 after losing Bitcoins with a total value of $ 473 million due to a hacker attack. Bitcoin reportedly experienced a subsequent decline in value, dropping by 36% during the month in which the attack took place.

According to the report, the executive director of Fortress Michael Hourigan sent a letter to the creditors, in which he specified the buyout offer. According to a public copy of this letter, Fortress offered to buy back Bitcoin claims of around twice the value of bankruptcy.

The value of claims at the time when the stock exchange Mt. Gox was declared insolvent, supposedly amounted to 451 dollars for Bitcoin, while Hourigan says that Fortress can offer $ 900 for Bitcoin. The letter also noted that redemption can be made in Bitcoins or Fiduciary currencies, and the offer lasts until July 31.

Technical Market Overview:

The BTCU/USD pair never made it to the recent swing highs located at the level of $13,698 as at the level of $13,121 the market reversed and broke through the technical support levels located at $12,362, $12,008 and $11,664. All of those levels will act as a resistance for the price now. The local low was made at the level of $11,103, but there is no sign of bounce yet. The next technical support is seen at the level of $10,721.

Weekly Pivot Points:

WR3 - $14,886

WR2 - $13,428

WR1 - $12,616

Weekly Pivot - $11,119

WS1 - $10,237

WS2 - $8,716

WS3 - $7,123

Trading Recommendations:

The best strategy in the current market conditions is to trade with the larger timeframe trend, which is still up. All the shorter timeframe moves are being treated as a correction inside of the uptrend. The larger ABC correction might have been completed and the market might be ready for another impulsive wave up.

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Technical analysis of GBP/USD for 11/07/2019:

Technical Market Overview:

The GBP/USD pair has bounced from extremely oversold market conditions and broke through the local technical resistance at the levels of 1.2476, 1.2505 and 1.2529. So far the bounce is shallow and the main technical resistance at the level of 1.12559 has not been tested, but the momentum is positive, so there is a chance for another rally towards the trendline around the level of 1.2600.

Weekly Pivot Points:

WR3 - 1.2853

WR2 - 1.2772

WR1 - 1.2630

Weekly Pivot - 1.2551

WS1 - 1.2402

WS2 - 1.2319

WS3 - 1.2180

Trading Recommendations:

The best strategy for the current market conditions is to follow the larger timeframe trend. The larger time frame trend is still down and there are no signs of any trend reversal. The key long-term technical support is seen at the level of 1.2420 and the key long-term technical resistance is seen at the level of 1.2775 and only if this level is violated, there is a chance for the trend reversal.

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Technical analysis of EUR/USD for 11/07/2019:

Technical Market Overview:

The EUR/USD pair has bounced from the technical support located at the level of 1.1193, so the key technical support at 1.1181 had been saved so far. The bulls have managed to push the price above the technical resistance at the level of 1.1269, but they have been capped by the lower channel boundary around the level of 1.1280. The momentum is positive, but the main trend is still to the downside despite the possible Ending Diagonal formation visible on the higher time-frames. It is worth to keep an eye on the EUR/UDS pair at the current price level and wait for the outcome.

Weekly Pivot Points:

WR3 - 1.1467

WR2 - 1.1414

WR1 - 1.1302

Weekly Pivot - 1.1251

WS1 - 1.1141

WS2 - 1.1087

WS3 - 1.0908

Trading Recommendations:

The best strategy for the current market conditions is to buy the corrections in anticipation of the uptrend to resume. This strategy is valid as long as the level of 1.1181 is clearly violated. The larget time frame trend is still down, but there are signs of the trend reversal and the Ending Diagonal breakout to the upside.

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GBP/USD testing resistance, potential reversal!

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GBPUSD is testing our first resistance where we might be seeing a drop below this level.

Entry: 1.2520

Why it's good : horizontal pullback resistance, 23.6% Fibonacci retracement, 100% Fibonacci extension

Stop Loss : 1.2576

Why it's good : 38.2% Fibonacci retracement

Take Profit : 1.2460

Why it's good: 61.8% Fibonacci extension

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NZD/USD approaching support, potential bounce!

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Price is approaching its resistance at 0.6661 where it could potentially reverse to its support at 0.6616.

Entry: 0.6661

Why it's good :61.8% Fibonacci retracement, 100% Fibonacci extension, horizontal overlap resistance

Stop Loss : 0.6689

Why it's good : 78.6% Fibonacci retracement

Take Profit : 0.6616

Why it's good: 50% Fibonacci retracement, horizontal overlap support

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USD/JPY approaching support, possible bounce!

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Price is reaching support at 107.742, a d bounce could occur!

Entry :107.742

Why it's good : Horizontal pullback support

61.8% Fibonacci retracement

61.8% Fibonacci extension

Take Profit : 109.002

Why it's good : horizontal pullback resistance

61.8% Fibonacci extension

38.2% Fibonacci retracement

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Elliott wave analysis of EUR/JPY for July 11 - 2019

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EUR/JPY has turned lower as expected. The minor rally from 121.44 did not display an impulsive structure which calls for more downside pressure closer to strong support near 121.00 before a more solid bottom is expected. After that, the next impulsive rally begins.

Only a direct break above resistance at 122.09 will indicate a bottom and thar the next impulsive rally to above 123.38 is developing.

R3: 122.54

R2: 122.39

R1: 122.09

Pivot: 121.93

S1: 121.59

S2: 121.29

S3: 121.00

Trading recommendation:

The final 50% of our position from 121.50 was sold at 121.79. We will buy EUR again at 121.15 or upon a break above 122.09

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Elliott wave analysis of GBP/JPY for July 11 - 2019

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GBP/JPY has made a new low at 135.05 and we continue to look for a little more downside pressure towards 134.50 to complete wave 2 and set the stage for a new impulsive rally in wave 3.

At this point only a break above minor resistance at 135.74 and more importantly a break above resistance at 136.06 will confirm that wave 2 has completed and wave 3 is developing for a rally to and above 137.79.

R3: 136.26

R2: 136.06

R1: 135.74

Pivot: 135.44

S1: 135.05

S2: 134.75

S3: 134.50

Trading recommendation:

We will buy GBP at 134.65 or upon a break above 135.74

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Technical analysis: Important Intraday Levels For EUR/USD, July 11, 2019

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When the European market opens, some economic data will be released such as French Final CPI m/m and German Final CPI m/m. The US will also publish the economic data such as Federal Budget Balance, 30-y Bond Auction, Natural Gas Storage, Unemployment Claims, Core CPI m/m, and CPI m/m, so amid the reports, the EUR/USD pair will move with low to medium volatility during this day. TODAY'S TECHNICAL LEVELS: Breakout BUY Level: 1.1313. Strong Resistance: 1.1307. Original Resistance: 1.1296. Inner Sell Area: 1.1285. Target Inner Area: 1.1259. Inner Buy Area: 1.1233. Original Support: 1.1222. Strong Support: 1.1211. Breakout SELL Level: 1.1205. (Disclaimer)

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Technical analysis: Important Intraday Levels for USD/JPY, July 11, 2019

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In Asia, Japan will release the Tertiary Industry Activity m/m and the US will release some economic data such as Federal Budget Balance, 30-y Bond Auction, Natural Gas Storage, Unemployment Claims, Core CPI m/m, and CPI m/m. So there is a probability the USD/JPY pair will move with low to medium volatility during this day. TODAY'S TECHNICAL LEVELS: Resistance. 3: 108.68. Resistance. 2: 108.47. Resistance. 1: 108.25. Support. 1: 107.99. Support. 2: 107.78. Support. 3: 107.56. (Disclaimer)The material has been provided by InstaForex Company - www.instaforex.com

Forecast for EUR/USD on July 11, 2019

EUR/USD

On Wednesday, before speaking in the House of Representatives of the US Congress, Jerome Powell paid much attention to negative trends in the global economy and politics, listing in detail all the possible reasons for the deterioration of the situation. Expectations for lower rates have increased, in particular, in the September meeting, the probability of another cut has increased from 55.4% to 60.0%. As a result, the dollar index lost 0.39% while the euro grew by 42 points.

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On the daily chart, the price went above both indicator lines, but the signal line of the Marlin oscillator remains in the zone of negative numbers, which indicates the likelihood of continuation of the corrective growth of the euro while maintaining the overall decreasing trend.

On the four-hour chart, the price crosses the MACD line and enters the accumulation zone from July 2-4, 1.1274-1.1313. From here, in the main scenario, we expect a turn down.

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Forecast for GBP/USD on July 11, 2019

GBP/USD

As a result of yesterday, the pound sterling grew by 42 points - the pessimistic speech of the Fed Chairman Jerome Powell in Congress was superimposed on the moderately positive economic data for the UK. UK GDP in May reached an expected 0.3% against -0.4% in April, the trade balance in May improved from -12.8 billion pounds to -11.5 billion, industrial production for the same period increased by 1.4 %, but this indicator is still weak, taking into account the previous drop of 2.9%. In front of Congress, Jerome Powell accentuated the risks to the economy, which increased the expectations of investors of a double rate cut by the end of the year.

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On the daily chart, the Marlin oscillator showed a weak convergence, which makes it possible for correctional growth to continue for another 1-2 days, approximately to the May 23 high (1.2604). Overcoming the level will allow the price to rise higher, towards the price channel line (1.2668).

On the four-hour chart, the downward price from the 1.2480-1.2556 range turned out to be false, which makes it possible to expect a high probability over the upper limit, as a result of which the price will automatically be above the MACD line.

from decline, and on the four-hour chart this line will already be in the overbought zone. We expect a reversal from the level of 1.2604 down. The situation may be delayed, then another rise to 1.2668 is likely, where the MACD daily scale line is aimed.

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Consolidation above the resistance will push the price to a target level of 1.2604. Here, the Marlin oscillator signal line on the daily will meet with the boundary that separates growth.

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Forecast for AUD/USD on July 11, 2019

Unfortunately, the output of the Australian dollar under the accumulation of support on the daily chart was false. Even the signal line of the Marlin oscillator, noting the transition to the zone of negative numbers, returned to the territory of growth. Now, before the price opens the prospect of growth, the upper limit of the price channel is in the area of 0.7028.

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But to continue the growth of the price, it is still necessary to exit the MACD line on a smaller, four-hour chart, above the mark of 0.6992, and while this has not happened, the growth appears to be limited to this MACD line. Empirically, price fluctuations in the areas of strong technical lines, both graphical and indicator, indicates that the price is in the zone of free wandering.

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Perhaps the pound would like to touch the heavens, but it's hardly worth waiting for miracles

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If in the spring, currency market participants argued about how long the pound would take to recover from last year's highs, now, according to some analysts, the British currency is directed at 2017 lows.

The inability of bears on GBP/USD to update the multi-month lows that were recorded yesterday was the reason for taking profits on short positions in the pound. The publication of positive statistics for the UK has given a fresh impetus to this process, providing a breakthrough to levels above 1.25.

According to the National Statistical Service (ONS), the country's GDP expanded by 0.3% in May compared to April, when a decrease of 0.4% was noted. In annual terms, the figure increased by 1.5%.

ONS analysts noted that the recovery of economic growth was mainly provided by the car manufacturing sector. According to them, the state's GDP may continue to decline in quarterly terms.

"The growth rate in May was a pleasant event, but it is unlikely to be sustainable. We believe that by the end of the second quarter the indicator will be close to zero. At the same time, an improvement in the situation in the third quarter is not expected. Reducing political tensions in the UK should be expected no earlier than July 23, when the name of the country's new prime minister is finally known. However, after clarifying this issue, the focus will shift to the negotiations on Brexit, which may put additional pressure on the pound," ING representatives said.

They adhere to the forecast for GBP/USD at the end of the third quarter at 1.22.

Strategists at TD Securities, in turn, believe that the latest statistical data on the UK may give reason for some reduction in the "shorts" for the pound, but no more.

"It is obvious that a lot of negative was taken into account in the pound, but we still see no reason for investors to reassess risks, and we believe that the GBP/USD decline to new lows remains the least resistance when the currency market participants warm against the dollar. At the same time, we expect the GBP/USD pair to recover by 1.29 by the end of the third quarter," said TD Securities.

"Over the past few months, the pound has dropped significantly, but the potential for its decline has not been exhausted. The uncertainty factor in the question of the UK's withdrawal from the EU remains. The fundamental picture also looks less and less favorable. In particular, we see the risks of reducing the country's GDP in the second quarter, which will push the Bank of England to further soften the rhetoric at a meeting in August," said MUFG experts.

"We do not believe that the GBP/USD pair will be able to stabilize at the lows of December 2018 - January 2019, and we believe that attempts at its growth should be considered as an opportunity for selling. A break below 1.2500 will be a blow to the bulls and will pave the way for movement to the 1.20 mark," they added.

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Powell, the Fed Minutes, the central bank of Canada ... Who shakes the markets?

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Jerome Powell will begin his two-day speech in Congress today. In the coming days, the dynamics of the dollar will largely depend on the Fed chairman's tone and his economic comments. In anticipation of an important event, the dollar index froze near highs reached as a result of the publication of strong statistics on employment in the United States.

The questions that are most interesting to the market are: has that anxious time come when easing of monetary policy is necessary to save the country from a recession? Is there enough uncertainty in US trade policy to justify a rate cut while the economy is fine?

The futures market has now significantly reduced the likelihood of a rate cut by 50 bp at the meeting in late July from 40% to less than 2%, and in 2019 - from 65% to 41%. Mitigation is seen as a safety net, aimed at changing the slope of the yield curve - an indicator that accurately predicts recessions over the past 50 years.

It is clear that the market overreacted to the testimony about the US central bank's readiness to reduce the rate. The growing risks of the ECB's earlier reaction to the problems of the eurozone economy are supporting sellers of EUR/USD. A need for ultrasoft monetary policy in Europe, said Benoit Coeure. Following him, a dovish rhetoric noted from Philip Lane. According to the leading economist of the ECB, the region is in dire need of a monetary stimulus due to weak inflation and the threat of weakening GDP growth.

According to Bloomberg respondents and the derivatives market, the European regulator will declare its desire to lower rates at the next meeting and possibly revive QE. It will most likely begin to take action in September. What if the prediction is wrong and the central bank starts taking action as soon as possible? In this scenario, the euro cannot escape from a powerful blow.

This is a bit later, but for now traders are significantly focused on Jerome Powell, who may well overshadow the minutes of the June meetings of the Fed and the ECB. He can both confirm the readiness to reduce the rate in July and put an end to it. In the second case, Powell risks provoking a collapse of US stock indices, which is already difficult to keep at record highs. It is worth noting that over the past two decades, the belief in easing the Fed's policy was not a long-playing driver for the S&P 500. The stock index fell after the expected earnings of issuers of shares for the next 12 months went down to zero. Now the indicator has dropped to 3% from more than 20% in December.

The S&P 500 correction is an argument for buying safe-haven assets, including the yen, franc and gold. Powell can delay it, but not stop it. His neutral position will allow euro bulls to grab the $1.12 mark, while the hawks drop the top pair.

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As for the yen, it can resume growth in tandem with the dollar in the region of 107.50. This will happen if the Fed recognizes the need for monetary easing.

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Bank of Canada

This is perhaps the only central bank in the world that has not begun to talk about policy easing, and everyone is looking forward to when this happens. At the May meeting, financial regulator officials remained optimistic, calling the slowdown in the economy a temporary phenomenon. Since then, the first signs of weakness have appeared. Retail sales in April almost did not increase, the number of employees in June decreased. However, in May, the labor market set a new record, and wage growth accelerated. The picture is unclear, and the Bank of Canada is likely to prefer to wait for new data before initiating talk about lower rates. If officials find that recent weak performance means nothing, USD/CAD will continue to fall to the lowest level in 1.5 years. A long-term low could begin to form for the USD/CAD pair only when the central bank becomes cautious.

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The market is waiting for gold at $1500

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Gold is now trading near a six-year peak of $1,439 a week ago. A return to $1,400 is unlikely to be a problem, investors are most interested in whether quotes will manage to get to their favorite level of $1,500 and move on. This, in particular, will depend on what the Fed's main figures will say this week. It all starts with Jerome Powell's two-day speech.

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Market participants have reduced their appetite for the pace of rate hikes in the United States after the release of strong data on employment, but still believe in a symbolic easing policy. In Powell's words, they will scrupulously look for hints of the prospects for lower rates this month.

The publication of the minutes of the June Fed meeting is significant for gold traders. This document will help them better understand why the officials then decided to postpone the rate cut.

In June, officials removed the word "patience" from their statement, and Powell recently used the phrase "prevention is better than treatment". This suggests that the US central bank is leaning toward preventive policy easing in order to avoid a possible slowdown in the economy.

Judging by the past meetings, the US regulator is known for its discretion. Therefore, it may not postpone the rate cut by 25 bp, which the market relies on so much to follow the situation in the country's economy. It is worth noting that there are traders expecting a decline of 50 bp, but such units.

This week, there will be a whole group of Fed officials and the most interesting one for investors will be the President of the Federal Reserve Bank of St. Louis, James Bullard. At the June meeting, he was the only one who did not agree with the decision to leave interest rates unchanged. Bullard compared with other members of the Fed committee holds the most dovish stance.

Analyst opinions on gold

Gold will reach $1,500 and move higher, according to Bank of America Merrill Lynch. However, strategists are worried about short-term risks. "The market overestimated the likelihood that the US central bank will lower rates," and if policy easing is postponed, for example, "due to the constructive results of the G20 summit," this will cause a drop in precious metal prices.

The same opinion is shared by UBS. However, they are waiting, gold will end the current year below $1,400, the next one will be close to $1,450, and only then will investors see the coveted mark of $ 1,500.

The National Australia Bank raised its forecast for the price of the yellow metal in 2019 to $1,400 per ounce. Earlier it was about $ 1,380 per ounce.

"We are still expecting two reductions in the US Federal Reserve rates - in July and September. This will support the precious metal," analysts wrote.

Gold is expected to become more attractive in the event of a further decrease in the yield of G7 countries. The demand for precious metals will grow from both long-term investors and short-term speculators. The world's central banks will also show an increased interest in gold.

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EUR/USD: Will Jerome Powell and the FOMC "Minutes" say something new to the dollar?

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The focus of traders is the speech of the head of the Federal Reserve System (FRS) of the US Jerome Powell in Congress and the publication of the minutes of the June meeting of the FOMC. It is assumed that they will shed light on the way in which the Federal Reserve's next meeting, scheduled for the end of July, will take place.

The EUR/USD pair is trading near the 1.1220 mark in anticipation of signals from the Fed.

Since the June data on the US labor market turned out to be stronger than previously expected, the need to mitigate the Fed's monetary rate has slightly dropped, and record high quotes on the American stock market, which received support from cheap money, are beginning to put pressure on investors, who have recently, surprisingly , rejoiced at weak US economic data and grieved because of signs of recovery of the country's economy.

"Are we really in a world turned upside down, where the good state of the US economy is the worst thing in the world for markets, since it raises doubts that the Fed will continue to generously distribute money?" Said John Hardy, chief currency strategist Saxo Bank.

Last month, the Fed hinted that it was prepared to lower the rate in order to support economic growth in the United States in the context of trade wars.

The derivatives market still assesses the probability of a rate cut at the July FOMC meeting at 100%.

Speech by the Fed Chairman in Congress

This week, Fed Chairman Jerome Powell should signal to the market what the regulator intends to do in the future. It is unclear whether the US central bank will act or is still not sure and will continue to monitor the incoming data.

Today, the Fed chairman will deliver a semi-annual report on monetary policy in the Financial Services Committee of the House of Representatives, and tomorrow in the Senate Banking Committee.

Most likely, during the speeches in Congress, J. Powell will leave the door wide open to lower the federal funds rate, although the latest release on the US labor market has weakened arguments in favor of haste with monetary easing.

It is possible that the head of the Fed may repeat the wording from the June statement and that the regulator will act accordingly to support economic growth in the country. This may strengthen the market in the opinion that the US central bank will lower the interest rate at the next meeting on July 30-31.

FOMC Minutes

The minutes from the last FOMC meeting will be released today. This publication is important in order to determine the course of the Fed's current policy and its future prospects. The minutes will contain clarifying details regarding the outcome of the June Fed meeting and can demonstrate how "soft" the regulator's position is now. The fears of the latter are primarily related to international trade. Although Washington and Beijing at the G20 summit agreed to restart trade negotiations, only time will tell whether the parties can make real progress.

It is expected that the "soft" tone of the minutes will have a negative impact on the US dollar, while the "hard" rhetoric of the Fed's leadership regarding monetary policy prospects will push the greenback to further growth, including in relation to the euro.

EUR/USD outlook

A regular meeting of the Federal Reserve is set to take place at the end of July, according to the results of which market participants are waiting for a reduction in the federal funds rate by 0.25%. At the same time, analysts seriously fear that if the Fed does not lower the rate, the head of the White House, Donald Trump, may proceed to active actions aimed at weakening the US currency.

"Can frustration with the Fed's policies encourage the US president to take matters into his own hands and weaken the dollar? If the ECB lowers rates at the end of July or starts a new round of quantitative easing in September, and this will increase the pressure on the EUR/USD pair, Washington could potentially react. Given the threat of currency intervention, we assume that the dollar will reach highs this summer. Therefore, we maintain our forecast for the EUR/USD pair at 1.15 for the end of the year," noted currency strategists at ING.

Bipan Rai, North America Head of FX Strategy at CIBC, noted that this scenario is not basic for the bank, but with such a development, the US Treasury may require the Fed to liquidate its balance in order to free up more dollars for market intervention.

"This may have a long downward pressure on the greenback, given the incredible size of the Fed's balance sheet," the analyst said.

Meanwhile, Barclays analysts believe that the decline in the dollar can be forgotten, while the euro, by contrast, looks even more vulnerable.

"Although, in general, the latest statistics on the United States were mixed, they showed that the positive momentum persists, particularly in the labor market. Under these conditions, the Fed may stick to "soft" rhetoric, however, the regulator definitely has no reason to rush to the actual reduction in rates. At the same time, signals from the eurozone turned out to be negative. A recession combined with low inflation in the region will force the ECB to go for additional easing, although it will not be easy. Therefore, we decided to lower the outlook for EUR/USD at the end of the third quarter from 1.14 to 1.12, and at the end of the year from 1.11 to 1.10," Barclays said.

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