Archive for Economics & Fundamentals

Trump attacks King Dollar, Gold edges up

Article by ForexTime

One would have expected U.S President Donald Trump’s criticism of the Federal Reserve’s policy to heavily punish the Dollar and draw opportunistic bears into the vicinity.

However, the Greenback remains somewhat supported despite easing from yearly peaks with prices trading above 95.00 as of writing.  While Trump’s comments on how he was “not thrilled” by the Federal Reserve’s interest rate rises could create a sense of uncertainty over Washington’s Dollar policy, it is unlikely to derail the Fed from gradually raising interest rates. Trump’s verbal intervention is likely to hit a brick wall, as heightened rate hike expectations ensure that the Dollar reigns supreme across currency markets.

Focusing on the technical picture, the Dollar Index is bullish on the daily and weekly charts. A solid weekly close above the 95.00 resistance level could seal the deal for further upside, with 96.00 and 96.40 acting as points of interest. Alternatively, a move back below 95.00 may invite a decline towards 94.30 higher low.

Currency spotlight – GBPUSD

Sterling weakness was a dominant market theme this week thanks to an appreciating Dollar, disappointing U.K economic data, fading expectations of a BoE rate hike and continuing Brexit uncertainty.

Matters could be exponentially worsened for the battered Pound today, if the European Union rejects Theresa May’s Brexit white paper. Such a scenario is likely to heavily damage buying sentiment towards the currency as fears of a hard Brexit intensify.

The GBPUSD continues to fulfil the prerequisites of a bearish trend on the daily charts as there have been consistently lower lows and lower highs. A weekly close below the 1.3000 level could invite a decline towards 1.2950 and 1.2870. Alternatively, a technical rebound towards 1.3115 may offer an opportunity for bears to jump back into the game.

Commodity spotlight – Gold

A broadly stronger Dollar has offered nothing but pain to Gold which is set to conclude the trading week negatively.

The aggressive depreciation witnessed in recent days continues to highlight how the precious metal remains heavily influenced by the Dollar’s performance and U.S rate hike speculation. With Jerome Powell reinforcing market expectations over the Fed gradually raising rates, Gold is likely to remain vulnerable despite trade tensions weighing on sentiment. With regards to the technical picture, the precious metal is heavily bearish on the daily timeframe. Sustained weakness below $1236 could encourage a decline toward $1209 and $1200, respectively.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.


Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

EM Currencies slide as Dollar appreciates

Article by ForexTime

Emerging market currencies have been treated without mercy by a broadly stronger Dollar, yet again.

The Dollar Index appreciated to its highest level this year above 95.50 due to heightened expectations over higher US interest rates this year. The Chinese Yuan, Malaysian Ringgit, Indonesian Rupiah, Singapore Dollar and most other major EM currencies have all felt the heat. With Dollar strength likely to remain a dominant market theme and global trade tensions negatively impacting risk sentiment, EM currencies appear destined for further punishment.

In regards to the Chinese Yuan, price action continues to suggest that the local currency remains heavily influenced by external forces. With the Yuan already weakening to a fresh yearly low, further losses could be expected amid an appreciating Dollar. Taking a look at the USDCNY, a decisive daily close above 6.750 could inspire an incline to levels not seen since June 2017 around 6.810

Dollar bulls are back in town

It has certainly been an incredibly positive trading week for the Dollar.

Federal Reserve Chairman Jerome Powell’s bullish testimony could be one of the primary drivers behind the Dollar’s appreciation, especially when considering how he reinforced expectations of higher US rates this year.

Taking a look at the technical picture, the Dollar Index has scope to venture towards 96.00 and 96.40 if bulls are able to secure a daily close above 95.00.

Commodity spotlight – Gold

Gold is poised to conclude this week in heavy losses thanks to an appreciating US Dollar.

The yellow metal remains under intense pressure on the daily charts with prices trading marginally below $1220 as of writing. With the combination of Dollar strength and prospects of higher US interest rates eroding appetite for the zero-yielding metal, Gold is firmly bearish. Sustained weakness below $1200 could inspire a decline towards $1209 and $1200, respectably.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.


Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

South Africa holds rate as inflation outlook deteriorates

By CentralBankNews.info
      South Africa’s central bank left its benchmark repurchase rate at 6.50 percent but noted the deteriorating outlook for inflation and raised its implied path of policy rates to five rate hikes by the end of 2020 from four hikes.
      The South African Reserve Bank (SARB), which cut its rate by 25 basis points in late March, lowered its forecast for headline inflation this year to 4.8 percent from a previous 4.9 percent but raised the 2019 forecast to 5.6 percent from 5.2 percent and the 2020 forecast to 5.4 percent from 5.2 percent.
      SARB said it still considers its policy stance to be accommodative but had noted the deteriorating inflation outlook and said it would not hesitate to act if inflation moves significantly away from the midpoint of its target range of 3 – 6 percent.
      The repurchase rate is now seen ending this year at 6.9 percent, up from 6.7 percent previously forecast, and then ending at 7.3 percent in 2019, up from 7.1 percent, and ending at 7.7 percent by the end of 2020, up from 7.6 percent.

      “While headline inflation is comfortably within the inflation target band, indications are that we have passed the low point of the current cycle,” SARB Governor Lesetja Kganyago said.

      Although the impact of an increase in Value-Added-Tax on April 1 on inflation appears to be less than anticipated, Kganyago said a weaker rand and higher oil prices have pushed up the inflation trajectory.
      South Africa’s headline inflation rate rose to 4.6 percent in June from 4.4 percent in May and is up  sharply from 3.8 percent in March.
       Since the previous meeting of SARB’s monetary policy committee in May, the rand has fallen 7.2 percent against the U.S. dollar and SARB considers it to be undervalued.
       But the exchange rate of the rand is expected to remain volatile and SARB forecast the nominal exchange rate would drop by an average of 0.8 percent this year and then a further 4.6 percent in 2019 and another 2.1 percent in 2020.
       The rand eased in response to SARB’s decision and was trading at 13.5 to the U.S. dollar and is down 8.3 percent this year.
       The outlook for South Africa’s economy is slightly weaker than SARB had forecast in May, with the economy in 2018 now seen only expanding by 1.2 percent, down from 1.7 percent previously forecast and down from 1.3 percent in 2017.
       In the first quarter, the economy shrank by 2.2 percent from the previous quarter.
       The forecast for 2019 of 1.9 percent is slightly up from 1.7 percent previously forecast while the 2020 forecast is unchanged at 2.0 percent, helping close the negative output gap.

          The South African Reserve Bank issued the following statement by its governor, Lesetja Kganyago:


“Since the previous meeting of the Monetary Policy Committee (MPC), several risks to the inflation outlook have begun to materialise. While headline inflation is comfortably within the inflation target band, indications are that we have passed the low point of the current cycle. Developments in the international environment have placed upward pressure on the inflation trajectory, while the domestic growth outlook remains challenging.

The year-on-year inflation rate, as measured by the consumer price index (CPI) for all urban areas, was 4.4% in May 2018 and accelerated to 4.6% in June. Goods price inflation increased to 4.2% (up from 3.5% in May), while services price inflation moderated to 4.9% (down from 5.3%). The South African Reserve Bank’s (SARB) measure of core inflation – which excludes food, fuel and electricity – declined to 4.2% in June. Producer price inflation for final manufactured goods increased marginally to 4.6% in May.

Despite remaining within the target band throughout the forecast period, the SARB’s model projects an increase in headline inflation, peaking at levels closer to the upper end of the target range. Thus far, the impact of the value-added tax (VAT) increase appears to have been less than anticipated. However, the weaker rand exchange rate and the higher oil price assumptions result in a more elevated inflation trajectory. Headline inflation is now expected to average 4.8% in 2018 (down from 4.9%) before increasing to 5.6% in 2019 and decreasing again to 5.4% in 2020 (up from 5.2% in both years). Headline CPI inflation is expected to peak at around 5.7% in the first and second quarters of 2019 before declining to 5.3% at the end of 2020. The forecast for core inflation is 4.6% in 2018 (up from 4.5%), 5.5% in 2019 and 5.3% in 2020 (up from 5.1% in both years).

Inflation expectations, as reflected in the survey conducted by the Bureau for Economic Research (BER) during the second quarter of 2018, are largely unchanged in the near term, averaging 5.2% in 2018, 5.4% in 2019 and 5.5% in 2020. Five-year-ahead inflation expectations are at a historical low of 5.4%. Expectations implicit in the break-even inflation rates (i.e. the yield differential between conventional and inflation-linked government bonds) declined marginally across all maturities.

While the global economic outlook has remained broadly favourable, expectations are that world growth will begin to slow in the third quarter of 2018. In addition, escalating trade tensions are contributing to uncertainty around global trade. World trade volumes contracted sharply in April 2018 – the worst performance since May 2015. The global inflation outlook remains benign but is on a moderate upward path, largely due to the rising oil prices. The prices of most other commodities have been retreating. Since the previous meeting of the MPC, the rand has depreciated by 7.2% against the US dollar, by 6.2% against the euro, and by 4.9% on a trade-weighted basis. At current levels, the SARB’s model assesses the rand to be undervalued. It is likely that the local currency, along with other emerging market currencies, will remain volatile. The implied starting point for the rand is R13.40 against the US dollar compared with R12.37 at the time of the previous MPC meeting.

A key external risk to the rand remains the possibility of tighter global financial conditions. However, the pace of monetary policy normalisation in the advanced economies continues to be gradual. At this stage, further policy tightening by the United States (US) Federal Reserve (Fed) is expected to follow a measured path in the absence of significant inflation or growth surprises. Higher-than-expected US fiscal deficits could result in a stronger monetary policy response.

The domestic economic growth outlook for this year is weaker than we had expected in May. Following the broad-based contraction of 2.2% in the first quarter and early indications of modest growth in the second quarter, the SARB’s forecast now indicates a growth rate of 1.2% for 2018 compared with 1.7% previously. The forecast for 2019 is 1.9%, marginally higher than the previous forecast of 1.7%, while the forecast for 2020 is unchanged at 2.0%. At these growth rates, the negative output gap is wider in the near term but is still expected to close in 2020. The composite leading business cycle indicator declined for the second consecutive month in April, consistent with a deteriorating outlook. Business confidence, as reflected in the Rand Merchant Bank (RMB)/BER business confidence index, decreased to 39 index points in the second quarter. In this context, gross fixed capital formation contracted by 3.2% in the first quarter and is expected to remain weak in 2018.

Consumption expenditure by households, although slightly weaker than last year, is expected to be positively impacted by the improved consumer confidence and the increase in households’ disposable income. In the near term, however, consumption expenditure is likely to be constrained by the VAT increase and other tax changes, weak employment growth as well as subdued growth in credit extension to households. Although credit extension to households increased earlier in 2018, year-on-year growth remains low.

Average wage growth is expected to remain elevated at around 7% over the forecast period. This is particularly a concern if labour productivity growth continues to decline. Much of the upward pressure on wage inflation arises from the public sector wage settlement, which is at levels above headline inflation.

Higher international oil prices will contribute to petrol price inflation in 2018. The impact on headline inflation is somewhat moderated by lower food price inflation. Annual food price inflation is expected to remain within the target range over the forecast period, and is not seen as a major risk to the inflation outlook. This is largely driven by an adequate supply of grains over the near term, alongside moderating meat price increases.

The MPC noted the rising inflation trajectory which, while remaining within the target range, is moving closer to the upper end of the range.

Key uncertainties in the global environment remain. The continued strength of the US dollar (which has appreciated against most currencies), any sustained elevation of oil prices, escalating trade tensions as well as geopolitical developments continue to pose risks to the inflation outlook. The rand will remain sensitive to changes in global monetary policy settings and investor sentiment towards the emerging markets. The MPC assesses the risks to the inflation forecast to be on the upside. A number of key risks and uncertainties highlighted in recent meetings persist. Electricity prices continue to pose a further upside risk.

The growth forecast has deteriorated, and the outlook remains constrained. Demand pressures in the economy are not assessed to pose a risk to the inflation outlook. The MPC assesses the risks to the growth forecast to be more or less balanced. A firm commitment to credible structural policy initiatives and implementation is required to make a marked impact on employment and potential output.

The MPC unanimously decided to keep the repurchase rate unchanged at 6.5% per annum. At these levels, the MPC still assesses the stance of monetary policy to be accommodative and appropriate given the current state of the economy. However, the MPC has noted the deteriorating inflation outlook, driven mainly by supply-side factors. The approach of the MPC continues to be one of looking through the firstround effects and focusing on the second-round effects. With risks and uncertainties at higher levels, the MPC will continue to be vigilant and will not hesitate to act should there be second-round effects that take us significantly away from the midpoint of the inflation target range.

The implied path of policy rates generated by the Quarterly Projection Model has changed since the previous MPC meeting. Whereas previously four increases of 25 basis points each by the end of 2020 were indicated, five increases of 25 basis points are now implied. As emphasised previously, the implied path remains a broad policy guide which can and does change in either direction between meetings in response to new developments and changing risks. The MPC does not mechanically respond to changes in the path, and the assessment of the balance of risks to the forecast cannot be done by the model.”

     www.CentralBankNews.info

Indonesia holds rate to keep rupiah and markets stable

By CentralBankNews.info
      Indonesia’s central bank left its benchmark BI 7-day reverse repo rate steady at 5.25 percent, saying this was consistent with its efforts to maintain the attractiveness of domestic financial markets “against a backdrop of pervasive uncertainty blighting the global financial markets in order to maintain stability in general and Rupiah exchange rate stability in particular.”
      The decision to maintain steady rates comes after Bank Indonesia (BI) raised its rate three times this year by a total of 100 basis points, most recently on June 29, to strengthen the rupiah’s exchange rate while also intervening in the currency and government securities markets to maintain market liquidity.
      Moving forward, BI said it would remain vigilant of uncertainty in global financial markets and maintain the rupiah’s exchange rate in line with fundamental values.
      The rupiah fell around 0.8 percent in response to BI’s decision to maintain rates today to 14,538 per U.S. dollar and is now down 6.7 percent since the start of this year despite rising in the wake of the first two rate hikes in May.
      The central bank said U.S. economic growth is high with rising inflation while growth in Europe is weaker than expected and China’s economic growth is not yet improving. This is prompting appreciation of the U.S. dollar against nearly all currencies, including the rupiah and high uncertainty in global financial markets has also resulted in a reversal of capital from emerging markets.
      Momentum of growth in Indonesia continued to build in the second quarter of this year on strong domestic demand, backed by fiscal stimulus, higher incomes, controlled inflation and growing consumer confidence, BI said, adding that solid investment is expected to continue.
       But export growth is lower than forecast due to sliding international commodity prices, BI said, forecasting that growth this year would approach the lower end of the forecast range of 5.1 – 5.5 percent.
      Indonesia’s economy decelerated to annual growth of 5.06 percent in the first quarter of this year from 5.19 percent in the previous quarter.
      Indonesia’s inflation rate eased to 3.12 percent in June from 3.23 percent in May and is forecast by BI to remain around the midpoint of its target range of 3.5 percent, plus/minus 1 percentage point, in 2018.

         Bank Indonesia issued the following statement:

“The BI Board of Governors agreed on 18th and 19th July 2018 to hold the BI 7-day Reverse Repo Rate at 5.25%, while maintaining the Deposit Facility (DF) and Lending Facility (LF) rates at 4.50% and 6.00% respectively. The policy is consistent with efforts by Bank Indonesia to maintain domestic financial market attractiveness against a backdrop of pervasive uncertainty blighting the global financial markets in order to maintain stability in general and Rupiah exchange rate stability in particular. Bank Indonesia believes that the macroprudential policy easing measures are able to increase liquidity management flexibility as well as banking intermediation for economic growth. Bank Indonesia also strengthens coordination with the government and other related authorities to maintain stability and implementation of structural reform to reduce current account deficit, including foreign exchange from tourism and private sector infrastructure financing. Moving forward, Bank Indonesia will continue to monitor the global and domestic economic developments and outlook in order to strengthen policy mix response in maintaining domestic financial market attractiveness. 
Global financial market uncertainty remain high, amid uneven world economic growth dynamics. Bank Indonesia forecast high US economic growth with increasing inflation, while economic growth in Europe is indicated weaker than previously predicted and China’s economic growth is not yet improving. Dynamics of the global economy prompted slowdown in the growth of world trade volume and commodity prices. With inflation increasing, the Fed is forecast to continue the Fed Fund Rate (FFR) hike. The US-China trade tensions elevate risks in the global financial market and sustainability of global economic recovery. Developments in the global economy prompted USD appreciation against nearly all global currencies, including the Rupiah. High uncertainty in the global financial market has also resulted in capital reversal from emerging markets. 
At home, national economic growth momentum continued to build in the second quarter of 2018 on strong domestic demand. Household consumption was backed by fiscal stimuli, higher incomes, controlled inflation and growing consumer confidence amongst the middle and upper classes. Solid investment is expected to endure, not only supported by infrastructure projects but also non-infrastructure projects through building and non-building investment. Strong domestic demand has edged up import growth, particularly imports of capital goods such as transportation equipment, machinery, equipment and spare parts. Meanwhile, export growth is lower than previously predicted due to sliding international commodity prices. The weaker position of net exports has affected the domestic economic growth outlook for 2018, which is approaching the lower end of the 5.1-5.5% range. 
Indonesia’s trade balance recorded a surplus in June 2018, reinforced by a non-oil and gas trade surplus coupled with a narrower oil and gas trade deficit. The non-oil and gas trade surplus stemmed from fewer imports of machinery and mechanical appliances, electrical machinery and equipment, iron and steel, plastics and plastic products as well as organic chemicals. On the other hand, the oil and gas trade deficit narrowed as non-oil and gas exports surged and non-oil and gas imports declined. Consequently, the trade balance overcame a USD1.5 billion deficit in May 2018 to record a USD1.7 billion surplus in June 2018. In general, trade surplus in June 2018 has alleviated pressures on the current account deficit, which is predicted to expand in the second quarter of 2018. Current account deficit in 2018 is estimated to remain within an acceptable threshold of 3% of GDP. Therefore, the position of reserve assets stood at USD119.8 billion in June 2018, equivalent to 7.2 months of imports or 6.9 months of imports and servicing government external debt, which is well above the international standard of three months. 
The Rupiah experienced depreciatory pressures against broad USD appreciation. The Rupiah strengthened at the beginning of July 2018 in response to Bank Indonesia’s pre-emptive, front-loading and ahead-of-the-curve monetary policy instituted at the Board of Governors’ meeting (RDG) held in June 2018 through a 50bps hike in the BI 7-Day (Reverse) Repo Rate. The favourable market response drew non-resident capital inflows to domestic financial markets, especially tradeable government securities (SBN), thus prompting Rupiah appreciation. Pressures on the Rupiah re-emerged as uncertainty enveloped the global financial markets, which triggered broad USD appreciation. On 18th July 2018, the Rupiah stood at Rp14,405/USD, down 0.52% (ptp) on the level recorded at the end of June 2018. Consequently, the Rupiah has depreciated by 5.81% (ytd) on the level posted at the end of 2017, not as severe as reported in other developing economies, including the Philippines, India, South Africa, Brazil and Turkey. Moving forward, Bank Indonesia will remain vigilant of global financial market uncertainty risks, while maintaining the Rupiah exchange rate in line with the currency’s fundamental value, backed by financial market deepening efforts. The policies remain backed by double intervention strategies and monetary operation strategies to maintain adequate liquidity, especially in the Rupiah and interbank swap markets. 
Inflation remains under control with stable supply maintained. CPI inflation was recorded at 0.59% (mtm) in June 2018, up from 0.21% (mtm) the month earlier. The increase stemmed from the seasonal spike in demand during Eid-ul-Fitr. Despite accelerating, the rate in June 2018 was below the historical average during Eid-ul-Fitr for the past four years at 0.81% (mtm). Annually, therefore, headline inflation decreased from 3.23% (yoy) to 3.12% (yoy) in the reporting period. Controlled inflation was backed by stable core inflation in line with Bank Indonesia’s policy consistency to anchor rational inflation expectations, including efforts to maintain the Rupiah exchange rate in line with the currency’s fundamental value. Moreover, inflationary pressures on volatile foods (VF) were lower than the corresponding historical average during Eid-ul-Fitr as a result of adequate supply. Conversely, inflation of administered prices (AP) increased, induced by rising airfares and intercity rates as demand increased during Eid-ul-Fitr. Looking forward, inflation in 2018 is predicted around the midpoint of the 3.5±1% (yoy) target corridor. Furthermore, policy coordination between Bank Indonesia and the Central Government and Regional Administrations will be strengthened in terms of controlling inflation. 
The financial system remains stable and the bank intermediation function is improving, while nonbank financing continues to expand. Maintained financial system stability is reflected in the high Capital Adequacy Ratio (CAR) reported by the banking industry at 22.1% and the liquidity ratio of 20.3% in May 2018. In addition, the banking industry maintained a low level of non-performing loans (NPL) at 2.79% (gross) or 1.28% (net). Financial system stability is also contributing to improvements in the bank intermediation function. Deposit growth declined from 8.1% (yoy) to 6.5% (yoy). Bank Indonesia believes that the decline will not hamper credit growth, considering the ample bank liquidity to support development financing. Credit growth accelerated from 8.9% (yoy) to 10.3% (yoy) in May 2018. On the other hand, nonbank economic financing through the financial markets, such as initial public offerings (IPO) and rights issues, corporate bonds, medium-term notes (MTN) and Negotiable Certificates of Deposit (NCD), soared 60.2% (yoy) in May 2018. Based on the recent domestic economic gains and progress in terms of banking industry and corporate consolidation, Bank Indonesia projects stronger credit and deposit growth in 2018 at 10-12% (yoy) and 9-11% (yoy) respectively. The higher banking intermediation is also supported by a number of relaxations in Bank Indonesia’s macroprudential policy, through the easing of Loan to Value (LTV) policy and the implementation of Macroprudential Intermediation Ratio, Macroprudential Liquidity Buffer, and Average Reserve Requirement policies.”

       www.CentralBankNews.info

    Pound Heading Down Again – Market Review, July 19, 2018

    Article By RoboForex.com

    On Thursday, the British pound falls down quickly against the dollar. The pair is currently trading at $1.3027, near its Sep 2017 lows.

    The most negative factor for the pound was the inflation information. Once this report was released, the investors determined the likelihood of the BoE rate hike as 70% or 80%, which is quite high, but has not supported the British currency so far, or even quite the reverse. The macroeconomic stats are brought to nothing by the Boris Johnson’s speech where he is expected to severely criticize May’s policy regarding Brexit. This puts the pound well under pressure.

    As for other fundamentals, the UK CPI in July remained unchanged at 2.4% YoY, despite the expectations at 2.5%. Meanwhile, the base inflation is edging down, reaching just 1.9% YoY in June compared to 2.1% in May.

    The investors get somewhat worried about other inflation stats, too. Thus, the PPI input rose by just 0.2% MoM in June after skyrocketing by 3.3% in May, while the PPI output added just 0.1%, after increasing by 0.5% in May.

    Brexit is still the most important point for the pound, and the more politicians are against ‘smooth’ Brexit, the more uncertain and nervous the market is.

    Article By RoboForex.com

    Attention!
    Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

    Aussie Happy with Stats – Market Review, July 19, 2018

    Article By RoboForex.com

    The Aussie is still slightly rising Thursday against the greenback, currently trading at $0.7395. During the Asian session it was going up very actively, but then failed to keep its advantage.

    The stats released earlier today showed the unemployment in Australia remained at 5.4% in June, just as expected. Meanwhile, the number of jobs increased by as much as 50,900, with just 13,400 in May and 16,700 expected. Curiously, most jobs created are full time, +41,200, with less than 10k part time. The number of hours worked in June also went up, which is positive for both manufacturing and the Australian economy in general.

    It looks like the job market in Australia is quite strong, with the number of jobs rising, which allows most people to find job quite easily. This will then influence the consumer confidence, inflation, and economic growth positively.

    The NAB business confidence index in Australia edged down to 7 points in Q2, after reaching 8 in Q1. This is most likely the reaction to the risks arising from trade wars enforced by the US to Australia’s strategic partner, China.

    Article By RoboForex.com

    Attention!
    Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

    Pound hammered as U.K retail sales disappoint

    Article by ForexTime

    The British Pound was immediately attacked by sellers on Thursday morning after retail sales tumbled -0.5% in June, well below the 0.2% market expectation.

    With wage growth disappointing and inflation cooling as well, is this really the right environment to raise interest rates? Market expectations over the Bank of England raising interest rates next month are now likely to be heavily diminished and this can already be reflected in the Pound’s bearish price action. With the Sterling highly sensitive to monetary policy speculation, further losses may be witnessed as investors scale back bets of a rate hike this quarter.

    The GBPUSD has plunged to a 10-month low below 1.2990 this morning and has scope to extend losses as long as bears can maintain control below 1.3000. If the Dollar continues to appreciate, the next key level of interest can be found around 1.2950.

    Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.


    Forex-Time-LogoArticle by ForexTime

    ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

    Earnings season push equities higher; Dollar remains the favorable currency

    Article by ForexTime

    Asian equities followed Wall Street higher on Thursday, as investors cheered strong quarterly results from corporate America that have taken away the focus from trade jitters, for now at least.

    Out of the 55 companies that announced results, 87% managed to beat earning estimates while only 7% missed the mark. With EPS growth exceeding 22% we are obviously heading towards the best earning season in 8 years. More interestingly, we started seeing rotation from non-cyclical to cyclical sectors over the past couple of days in a clear sign that investors are willing to take more risk. If this earnings momentum continues at its current pace the S&P 500 may take out the record high posted on 26 January; at the moment, the Index is just 57 points away from this record.

    Fed Chair Jerome Powell’s positive assessment of the U.S. economy and the fact that he downplayed the threat of a global trade war has also supported the risk-taking mood. He also believes that the expansionary fiscal policy will continue to fuel the economy for at least two years.  Mr. Powell does not share market fears concerning the flattening yield curve. He believes that that long-run rates tell us where long-run neutral rate is and are not necessarily a sign of a looming recession. While this topic will continue being a hot one in the coming weeks and months, economists are still uncertain whether a yield curve inversion will lead to a recession or just a technical inversion due to the significant change in monetary policy after many years of quantitative easing.

    The Dollar was the main beneficiary of Powell’s testimony, with the DXY climbing back above 95, a striking distance from the previous one-year high of 95.53 that was met on 28 June.

    Meanwhile, the Pound was hit by a combination of Brexit politics and weak inflation figures. GBPUSD fell to a key psychological level of 1.30 for the first time since September 2017 as markets started repricing expectations of an August rate hike.  Markets were almost certain that a rate hike was coming on 3 August, but not anymore; this will likely keep the Pound under pressure during the coming days. If the BoE doesn’t raise rates in two weeks, the central bank’s credibility will be at stake which will likely lead to further selloff in Sterling.

    Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.


    Forex-Time-LogoArticle by ForexTime

    ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

    War Horses: Chinese “Unicorns” Are Not Racing to the US

    By Amram Margalit – Leverate

    Start-up companies that are valued over one billion USD are awarded the title of “unicorn”. They then gallop ahead in factors of 10—a decacorn is worth over 10 billion USD, and a hectocorn is valued at over 100 billion USD. The US might be the natural target for these mythical creatures, but with a trade war brewing between the two giant nations, Chinese unicorns are staying put.

    As the trade war between the US and China keeps developing, Chinese unicorns have been requested by the Chinese government to stay at home rather than fly off to meet with wealthy US investors in Silicon Valley.

    Ever since US President Donald Trump raised the specter of a trade war between the two giant nations, the channel of Chinese IPOs looking to raise cash in the US has run dry. One new Chinese IPO for e-commerce site Pinduoduo has attracted some attention, but it’s currently in a class of one, with nobody waiting in line. This new company, which is currently facing off with Alibaba and JD.com, is a natural fit for a US listing where it could compete against other e-commerce colossi.

    So, where are Chinese IPOs headed? Well, Hong Kong! A UK colony for 150 years before returning to China in 1997, HK is currently enhancing its status as a financial hub. Chinese Apple-lookalike Xiaomi just raised 3.1 billion USD through an IPO, and there are at least two dozen more Chinese companies with something to say, looking to raise cash. In Hong Kong alone, the total value of IPOs exceeds 10 billion USD. With a shortage of hi-tech activity, Hong Kong has welcomed Chinese unicorns with open arms. And with only 10% of the Hang Seng index devoted to hi-tech, compared to 40% of hi-tech stocks in the S&P 500, the US-China trade war has produced an unexpected dividend for the island province.

    US investors won’t be happy missing out on these Chinese IPOs. In recent years, Chinese stock releases have been extremely popular, and the Chinese government wasn’t too happy with this situation either. They could sense the Chinese middle class growing aggravation, as Chinese unicorns soaked up billions of US dollars, while US investors benefitted from the capital gains in their stocks.

    But even with activity heating up in Hong Kong, Chinese American Deposit Receipts, or ADRs, are outperforming the Hong Kong market. Renaissance Holdings Limited, a Chinese investment bank that provides investment advice to the best and brightest Chinese tech companies, provides a good indication of the way future Chinese IPOs will develop. The bank is planning a listing in Hong Kong, targeting a valuation of 4 to 5 billion USD.

    The drying up of Chinese unicorn business will do further damage to the relations between China and the US, and it’s not easy to see any good news ahead. Chinese start-ups will find investors for their ideas in other locations, and US investors will be left high and dry, wondering when this particular mess will sort itself out.

    About the Author:

    Amram Margalit is a professional writer who has worked in a wide range of settings, including technology companies, nonprofits, and the entertainment industry. Within these positions, Amram has provided quality content and advertising services and is currently the Content Manager at Leverate.

     

     

    AUD in focus ahead of jobs data

    Article by ForexTime

    The big mover ahead of us today is looking to be the Australian employment data which is due out shortly. Markets will be keenly focused on this as the labour market has been hit and miss for some time. More importantly the growth in the labour sector has primarily been led by part-time jobs as well, so analysts will be keenly watching this aspect. But the main factor will be the Reserve Bank of Australia and their take on the employment market, with markets hopeful that a strong showing may push the bank to start being a tad more hawkish, especially if inflation figures start to pick up. I do feel it’s a little early to be hawkish, and the Australasian region as a whole is struggling as the strong USD is leading to weaker commodity prices as of late – this has been partially offset though by the fall in the Australian dollar though.

    Looking at the AUDUSD on the charts and it’s clear to see that the AUD has been a little shy when it comes to moving lower as of late. The main level of support in the marketing being at 0.7337 which has seen some stiff bullish activity in recent weeks, and yesterdays moves towards that level were quickly fended off. With the upcoming job reports we could see large swings here, and I would expect some very strong pressure on the 0.7337 support level if it comes in weaker than expected. If the report shows signs of strength then expect the AUDUSD to look to jump to up resistance at 0.7467, and potentially go higher to 0.7527. Nevertheless, the 50 day moving average is also something to be acutely aware of as the AUDUSD does have a habit of playing of this from time to time as can be seen.

    The other big mover today was of course oil markets which saw a bounce in the market despite there being an oil surplus in the official US inventory data. A surplus was widely expected based on private data, however coming in at 5.84M was quite large compared to what analysts expected. The market though was more focused on gasoline data which showed still a heavy drawdown in that area with -3.16M (0.7M exp), which proves that there is still demand for the commodity in the US market.

    As a result of the move oil has surged higher on the charts, pushing through resistance at 67.45 and with the potential to move higher to 69.38 if we were to see some dollar weakness or positive oil news released. If the momentum can’t be sustained then I would anticipate support at 66.03 and 63.98 to be the likely next levels to find themselves under pressure. But I would be cautious of the bulls more so given the strong defence we saw at the 66.03 level today.

    Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.


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