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  #1  
Old 11-09-2020, 08:32
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Default Daily Fundamental ForexTime ( FXTM )

Daily Fundamental ForexTime ( FXTM )

US stocks: More bumps ahead?










Asians stocks are putting in a mixed shift after Wall Street was unable to sustain its mid-week rebound. Investors are also mulling the prospects of another round of US fiscal stimulus arriving before the November elections, which have now grown slim, after Senate Democrats shot down the Republican’s downsized proposal. The MSCI All Country World Index (ACWI), which measures the performance of global equities, is set for two straight weeks of losses, with such an instance only last seen in March.

The heightened volatility in the markets of late is evidenced by the Volatility Index (VIX) rising above its 100- and 200-day moving averages, though the index has now moderated from its peak a week ago and now reads slightly below the psychologically-important 30 level.

Investors apparently remain trepidatious about preserving the same break-neck speeds in adding to stocks’ advances, considering the still-lofty valuations. Yet the desire to push US stocks even higher is still attempting to gain critical mass, with benchmark futures edging higher at the time of writing, while FXTM trader's overall sentiment is long on the US SPX 500 (Mini).





Watch out for witching day

Looking ahead, there could be even more volatility in store, with quadruple witching day for US markets set to happen in a week from now. On September 18, Futures and Options on Indices and Stocks are set to meet their quarterly expiration, which can trigger heightened volatility and a surge in trade volumes.

In the week before the June quadruple witching day, the S&P 500 tumbled by as much as 7.7 percent and the VIX breached above the 40 mark. Since the June 19th quadruple witching event, the VIX then moderated through end-August, even flirting with its long-term average of 20, while the S&P 500 added another 12 percent through the end of August.

Perhaps the volatility so far this month is just another bump in the road for US stocks, as investors pursue new record highs, emboldened by the tremendous support from global central banks.

Beleaguered Pound helps Dollar index stay afloat

The Dollar index (DXY) has managed to clamber back on top of the 93.0 psychological level and keep its head above the 30-day simple moving average, as EURUSD’s break above 1.19 proved fleeting. Still, the Euro’s resilience remains a drag on the DXY, having set aside the notion of immediate central bank intervention in the bloc’s currency for the time being.

The DXY’s fortunes are also aided by the weaker Pound, which accounts for 11.9 percent of the DXY. With bigger cracks showing up in UK-EU talks, it raises the threat of a no-deal Brexit on December 31. Having concluded eight rounds of negotiations, with another round set to take place in Brussels next week, the Brexit drama could return with a vengeance and haunt the British Pound. The uncertainty is expected to keep GBPUSD in the sub-1.30 region over the coming weeks, barring a miraculous breakthrough in negotiations or a sudden bout of weakness in the US Dollar.

The US inflation outlook remains a key driver of the US Dollar, with the August CPI data in focus today. Although the spectre of faster US inflation, as tolerated by the Fed, threatens to erode the Dollar’s allure, markets remain sceptical over the source of such upward price pressures, especially considering the uneven recovery in the US jobs market as seen in Thursday’s disappointing weekly US jobless claims data. Without the promise of incoming fiscal support over the near-term, coupled with the rising political uncertainty surrounding the November elections, such concerns may in turn bolster support for the Greenback.








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  #2  
Old 14-09-2020, 04:49
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Daily Fundamental ForexTime ( FXTM )

A not-so-happy birthday for OPEC











On 14th September 1960, OPEC was born in Baghdad, aiming to “co-ordinate and unify petroleum policies among Member Countries”. 60 years later, the alliance is being strained by a global pandemic.

OPEC’s birthday week holds key events that could influence the near-term performance of Oil prices. Later today, OPEC is set to release its Monthly Oil Market Report, complete with its outlook on global demand and output. Then on Thursday, the OPEC+ Joint Ministerial Monitoring Committee is scheduled to meet and discuss the efficacy of its supply cuts, while assessing the level of compliance among members.

Recall that back in April, OPEC+ agreed to an unprecedented supply cuts deal, shaving off 9.7 million barrels per day (bdp) from its collective output, only to then ease off by about two million bpd starting last month in hopes that global demand will stage a sustained recovery.

However, things haven’t quite panned out as they hoped.







Both Crude and Brent are coming off back-to-back weekly drops for the first time since April. On a month-to-date basis, Brent and WTI futures have fallen by over 12 percent respectively, leaving both to be ‘scooped up’ by their 100-day simple moving averages. Both these instruments are also trying to claw themselves out of the ‘oversold’ domain, judging by their respective 14-day relative strength indices having dipped into sub-30 levels recently. At the time of writing, Brent and WTI futures are about 35 percent lower so far in 2020.

The slide in Oil prices comes amid signs that the global demand recovery appears to have stalled. Diesel stockpiles in Singapore are at their highest since 2011, while Saudi Arabia, Iraq, and other Gulf producers have slashed the pricing on their respective crude grades to the US and Asia. Oil supermajor, BP, recently cited the risk that global demand may never recover to pre-pandemic levels, while traders are buying up tankers in case they need to hold crude supplies for months. According to CFTC data, short-selling on Oil has risen to its highest levels since the historic crash in April this year, when WTI futures were sent into negative territory.

This week, investors will be monitoring how much sway the alliance could still have over global markets, even as these major Oil-producing nations aim to shore up prices. While its 60th birthday celebrations had to be put on hold due to Covid-19 restrictions, OPEC may not be able to hold off further intervention for much longer if Oil prices keep unwinding more of its recovery from the past five months.




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  #3  
Old 15-09-2020, 04:44
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China’s better-than-expected data push stocks higher











Chinese stocks are advancing on Tuesday morning, with the Shanghai Composite Index and the CSI 300 erasing losses from today’s open, after the world’s second largest economy posted a slate of better-than-expected data for August’s industrial production, as well as investments in fixed assets and property. Retail sales officially returned to positive territory with a 0.5 percent growth compared to August 2019; its first on-year expansion so far this year. The Chinese Renminbi is now at its strongest versus the US Dollar in over a year, trading on the stronger side of 6.8 psychological level for the first time since May 2019.

Such data underscores the notion that China is making further inroads into the post-pandemic era, adding another dimension to the recovery in the world’s second largest economy. Industrial production has been recording on-year gains since April, and a resurgence in domestic consumption could further buffer China’s role in leading the world towards relegating the pandemic’s ill effects to the past. This also shows that a firm grip on the outbreak is paramount before any economy can boost its recovery prospects.



Hong Kong’s Hang Seng index also counts itself among the few gainers in Asia. If this holds at the close, the benchmark would post its first 3-day run of advances since early July. The HSI50 is now testing its 100-day simple moving average, which is now acting as the immediate resistance line, even as the index is squeezed into a triangle pattern.

Asian stocks are broadly mixed, as it struggles to maintain the strong start to the week. At the time of writing, Japan’s Nikkei 225 has erased Monday’s advances, as the benchmark’s quest to return to year-to-date growth appears to have stalled. The Nikkei 225 remains some 1.3 percent lower so far in 2020.



Despite Japanese stocks having the biggest weightage by country on the MSCI AC Asia Pacific index, 34.09 percent to be more precise, the benchmark for regional equities has still managed to post a year-to-date gain of over one percent, powered on by Chinese stocks which account for 26.42 percent of the overall index. Despite the selloff earlier this month, Asian stocks were able to bounce off the MSCI index’s 50-day moving average and to remain in the green so far in 2020.





Still, there are several key events that could sway global sentiment over the coming days. The Fed’s policy decision and Fed chair Jerome Powell’s press conference, slated early Thursday morning before Asian markets open, could have a major say over how markets perform. Should investors get further assurances that the US monetary policy will maintain its ultra-accommodative stance, that could allow investors to continue nibbling at riskier assets. US equity futures are pushing slightly into the green at the time of writing, suggesting further gains at the New York open.




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Old 16-09-2020, 08:53
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Mid-week technical outlook: Gold waits for Fed decision











The Federal Reserve monetary policy announcement later today will be the most important economic event of September.

Although the central bank is widely expected to leave interest rates unchanged, much of the focus will be directed towards the economic projections, Powell’s press conference and updated ‘dot plot’ forecast of interest rate moves. Given how this will be the first meeting after the Fed announced its new average inflation targeting (AIT) framework, there could be some volatility in the Dollar as investors sift for clarity during the meeting.

Back in June, policy members projected GDP to decline 6.5% in 2020 while unemployment was seen rising 9.3%. However, the current unemployment rate of 8.4% is already below the medium forecast - something that could allow the Fed to express some confidence over the US economy.



Let’s be honest, the US economy is certainly not out of the woods yet despite the improving unemployment rate.

Rising coronavirus cases in major states coupled with the congressional stalemate over a new fiscal package remain major threats to the country’s economic outlook. Markets expect the Fed to signal that interest rates will remain unchanged and close to zero through the end of 2023! But It will still be interesting to hear Jerome Powell’s thoughts on the latest developments, in addition to how high or how long the Fed will allow inflation to overshoot the 2% target.

What does this all mean for Gold?

Gold seems to be drawing strength from a softer Dollar this morning as anticipation mounts ahead of the Federal Reserve meeting.

Regardless of the choppiness witnessed over the past few weeks, the precious metal remains underpinned by low-to-negative government bond yields, rising COVID-19 cases in the United States and a tired Dollar.

Price action suggests that the precious metal is in search of a fresh directional catalyst to breakout of the current range. This may come in the form of the Fed meeting today.

After the Federal Reserve’s policy shift to let inflation rip, the big question on the mind of many investors is how will the central bank put this policy to action? Clarity on this could provide Gold a tailwind as the metal is seen as a hedge against inflation. Additionally, a dovish sound Fed could weaken the Dollar, further supporting Gold prices.

Looking at the technical picture, strong support can be found around $1910 and resistance around $1985. The solid daily close above the $1952 intraday resistance level may open the doors towards $1985. If $1952 proves to be unreliable support, prices may decline back towards $1910.






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Old 17-09-2020, 03:52
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Stocks tumble after Powell’s warnings over US economic recovery









Fed chair Jerome Powell poured cold water over stock markets during his latest press conference on Wednesday, as he expressed doubts whether the US economic recovery can persist at the same pace without more fiscal stimulus.

Asian equities are in a sea of red, after US stock indices posted declines on Wednesday. The Dow Jones index was the sole exception, as it eked out a 0.13 percent advance, aided by the climbs in the industrials and financials segments. The US central bank left interest rates unchanged at the record low during their meeting this week, and suggested that rates could be kept near zero until the year 2023, or at least until the US can return to maximum employment and reach the average two percent inflation. Such an ultra-accommodative interest rate environment should keep global equities well bid over the coming years. In technical terms, the Dow may be able to call upon its 50-day moving (MA) average to guide the index higher eventually. However, at the time of writing, the FXTM trader's sentiment is short on the Wall Street 30 (Mini).







However, stocks bulls may not get the near-term boost that they desire, considering the stalemate in negotiations over the next round of US fiscal stimulus. Despite US President Donald Trump saying on Wednesday evening that he was more open to bridging the gap with Democrats, markets remain doubtful that the next support package can arrive before the elections on November 3. Global investors are also fearing a delayed outcome to the polls, with the political uncertainty further delaying the much-need financial support. Such a major event risk, if it happens, is then likely to trigger heightened volatility in global equities. At the time of writing, US stock futures are edging slightly lower.

The concerns over the delayed US fiscal stimulus are also set to colour the jobless claim data due out later Thursday, with both initial claims as well as continuing claims expected to show slight declines. Yet, with about 13 million Americans still having to rely on unemployment benefits along with the more than 800,000 still being added to that list per week, such figures only underscore the need for more financial support for the vulnerable segments of the US economy. Further signs that the recovery in the US jobs market is stalling, even as the world’s largest economy presses on with its reopening, could trigger more risk aversion which may push the Dollar index closer to its 50-day MA.









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Old Yesterday, 03:28
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Bank of England pour fuel onto the GBP fire








Although the BoE kept policy measures and rates unchanged at its meeting today, it said it had explored plans to take interest rates into negative territory if necessary. The bank’s main scenario is based on the UK signing a Brexit trade deal before the end of the year, so the market has reacted strongly in light of the negative recent headlines and increasing risk of a no-deal. At one point, the GBP was one of the weakest major currencies on the day, down nearly 0.7% while money markets have been given little choice but to price in negative rates in early 2021.

Although it would seem that more QE and bond buying will take place ahead of negative rates, sub-zero borrowing costs are not just in the toolbox now, but briefings are taking place on how to implement them effectively. And that is the sixty-four million pound question as negative rates have failed to boost the economies of Japan and Europe, hurting the banking sector in the process who park their funds with the central banks.

The damage to Sterling has been done and the recent softening in the UK government stance by giving a veto to Parliament over some measures of the Internal Market bill doesn’t appear to be enough to change the odds so far of any kind of success in the trade talks. The 50-day Moving Average at 1.2993 was too much of a hurdle for Cable but the pair has found near-term support at 1.2850.



Fed aftermath leaves risk off, for now

The Dollar is consolidating its gains from overnight with US stocks opening firmly lower as the disappointment from last night’s meeting grows. The Fed delivered the minimum dovish statement on QE as the bar to ‘outdove’ itself and shake the prevailing stance was high. Chair Powell emphasised the steady profile of rates in the coming years and the fact that data has surprised to the upside is clearly positive, with the upcoming elections and the pressure now on government to do more.

Further out, in an average inflation targeting regime, what matters is continuously easier financial conditions, and this ultimately means the Dollar trading weaker in the Fed’s fight for higher inflation. DXY’s pop higher earlier this morning bumped up near to resistance at this month’s peak around 93.66. If prices continue to struggle, then bears will attack 92.70/80 as the first support ahead of the big figure.





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