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Thread: Wave Analysis by InstaForex

  1. #301
    IM Master InstaForex Gertrude's Avatar
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    European Commission report helped the euro

    The euro rose against the US dollar after the release of a report from the European Commission, in which the forecasts for GDP growth and lower unemployment were revised in a positive way.

    In the first half of the day, recent data indicated growth in Germany's foreign trade balance, even despite the decline in exports, as imports decreased even more compared to the previous month.

    According to the report of the National Bureau of Statistics, Germany's exports in September 2017 declined by 0.4% compared to August, while imports fell 1.0%.

    Germany's foreign trade surplus with revision amounted to 21.8 billion euros against 21.3 billion dollars in the previous month.



    On Thursday, the Bank of France released a report, which indicated that the eurozone's second largest economy might grow by 0.5% at the end of this year. Good support by the end of the year can be provided by France's manufacturing sector and the services sector.

    As I mentioned above, the report of the European Commission was published on Thursday, according to which the eurozone GDP is projected to grow by 2.2% in 2017 against the previous forecast of 1.7%. In 2018, the economy could grow by 2.1% against the previous forecast of 1.8%, and in 2019 predicts the growth of the eurozone's GDP at 1.9%.

    There are also good moments that can be found in the labor market. Economists expect unemployment in the eurozone in 2017 to drop to the level of 9.1% against the previous forecast of 9.4%. In 2018, the same indicator should decrease to 8.5% against the previous forecast of 8.9%, and in 2019 will drop to the level of 7.9%.

    According to the European Commission, at present, the eurozone is on track for its fastest economic growth in a decade, while in the labor market there is still a weak wage growth and a significant amount of unused resources.

    However, everything is not so positive when it comes to inflation. The report was revised for the worse. The European Commission forecasts inflation in the euro area at 1.5% in 2017 against the previous forecast of 1.6%. In 2018, inflation is expected at 1.4% against the previous forecast of 1.3%, and in 2019 the level is set at 1.6%.

    The sharp growth in the euro in the first half of this year forced economists to revise their forecasts, and the curtailment of the mitigation program and incentive measures could further hurt the inflationary picture, which the European Central Bank pays close attention to.

    *The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

    Analysis are provided byInstaForex.
    Best regards, PR Manager
    Learn more about InstaForex Company at http://instaforex.com

  2. #302
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    Gold emerges from sleep mode

    The problems surrounding the tax reform and the related weakness of the US dollar allowed "bulls" for the XAU/USD to go into a counter-attack. Gold enjoys an increased demand for safe-haven during conditions when the risks of correction of the S&P 500 significantly grows. Indeed, the desire of Senate Republicans to connect its plan of repairing the fiscal system with the dismantling of Obamacare, appears to be ideal. To a certain degree, the chances of a compromise plan through Congress before the end of 2017 are extremely low, even though Secretary of the Treasury Steven Mnuchin and economic adviser to the President Gary Cohn claim otherwise. Along with the approaching date when the problem of the ceiling of the national debt should be solved, this factor forces investors to get rid of the shares.

    The tightening of monetary policy and the reduction in the balance sheet of the Fed are "bearish" drivers for the S&P 500, which grew due to hopes of an implementation in the tax reform. Now this prize at the stock index is ready for the taking. As a result, investors flee from risk, which is clearly visible as currencies of developing countries are being sold. I do not think that the panic will last long. The Fed remains committed to an extremely slow normalization, the health of the US economy does not cause concern, and the devaluation of the dollar contributes to improved corporate earnings reports. This is not the best news for the recovery of the precious metal from the "bullish" trend in the US stock market.

    For more than a month, gold traded in the range of 3.3%, the narrowest since February 2013, while its volatility is at its lowest level in the last 7 years. The yellow metal went into a sleep mode, bulls expect to support short-term drivers of growth, while the medium and long-term outlook for XAU/USD appears "bearish." When central banks move from unconventional to traditional monetary policy, and the global yield of debt markets begins to move away from the area of long-term lows, it is possible to forget about the recovery of the long-term upward trend.

    Dynamics of the yield of US and gold bonds



    Source: Bloomberg.
    At the same time, record shows that from June 2004 to June 2006, when the federal funds rate increased to 5.25%, gold prices rose 50%. From June 1999 to May 2000, the growth rate to 6.5% allowed the precious metal to add 6% to its value. What's the problem? In my opinion, parallels are unlikely to hold parallels, because the asset reacts sensitively to real rates of the debt market, and in conditions of sluggish inflation, the increase in nominal yield will put pressure on prices. Simply put, reasons must be sought in different CPI growth rates in the 2000s and now. It is highly unlikely that the XAU/USD pair will rise above $1,500 an ounce before the US economy plunges into a new recession.

    Technically, the release of precious metals beyond the downstream channel increases the risk of an activation of the "Dragon" pattern and the continuation of a downward trend in the direction of $1320 per ounce and above. In order for this scenario to turn into reality, a strike on $1302 is required.

    Gold, daily chart



    *The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

    Analysis are provided byInstaForex.
    Best regards, PR Manager
    Learn more about InstaForex Company at http://instaforex.com

  3. #303
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    Bulls on the euro need a breather

    The US dollar managed to partially restore its positions against the European currency after a major decline, which was observed for several days in a row.

    Inflation data in the US slightly affected the quotes of the EUR / USD, but the statements by the officials of the Fed, which were scheduled for the second half of the day, led to the closure of a portion of long positions in the euro.

    Fed spokesman Eric Rosengren said yesterday that the data favors higher interest rates in December, and low inflation gives the Fed space for a gradual increase in rates. In his opinion, a very low unemployment rate, which is likely to fall below 4%, will sooner or later push up inflation. Rosengren also believes that the banking system is now in a much better state than before the recession.

    Today there will be a number of important data on the US labor market, which can confirm the forecasts of officials of the Fed.

    As for the technical picture, the large resistance level 1.1855, which coincides with the upper limit of the medium-term side channel. Only its breakdown can form a new upward wave, capable of updating the annual highs.

    The Australian dollar is in the middle of the last five years.

    According to the Australian National Bureau of Statistics, unemployment in Australia fell to 5.4% in October, while economists expected it to remain unchanged at 5.5%. The number of employees in October increased by 3,700, while the expected growth of 19,000. The number of full-time jobs increased by 24,000.

    Despite this, many analysts say that the pressure on the Australian dollar is due to weak growth in the third quarter of this year, as well as to the Central Bank's lowering of the long-term inflation forecasts, which crosses out the likelihood of an upswing in interest rates in Australia.



    As for the technical picture of the AUD / USD, the trade is near important support levels located in the 0.7580 area and 0.7535, where large buyers can return to the market again. Counting on a more powerful upward momentum, 0.7675, 0.7775, which will lead to an immediate increase in the Australian dollar to the areas of 0.7675 and 0.7735.

    *The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

    Analysis are provided byInstaForex.
    Best regards, PR Manager
    Learn more about InstaForex Company at http://instaforex.com

  4. #304
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    The Euro used its chance

    Eurozone
    The euro took full advantage of the rise of political risks in the US when it passed the tax reform plan through Congress, restoring half of the losses from the reduction of the last one and a half months, but in order to question the reversal of the trend to the south, something more important is required.

    Inflation in the eurozone continues to be low. The price growth in October was only 0.1%, the while growth of the core indicator slowed to 0.9% year-on-year. The weak indicators call into question the ECB's willingness to continue the policy of exiting the soft monetary policy.

    The head of the ECB, Mario Draghi, speaking on Friday at a conference in Frankfurt, said that the low-interest policy does not harm the income of European banks that have remained stable over the past two years and, moreover, added that the asset repurchase program can be continued after September 2018, "if it is necessary".

    The euro, therefore, immediately lost the driver to growth and went into the lateral range. Most likely, it will continue to be cautious about the direction of the movement and at the beginning of the new week due to the lack of significant macroeconomic releases. On Thursday, the report PMI Markit on the eurozone countries, the forecasts are favorable, with the production index very close to the highs of the last nine years, the service sector index lags behind insignificantly.



    Given that the earlier reports released earlier by Ifo and ZEW indicated further growth of consumer confidence, the growth of Markit indices should be expected, which in turn can support the euro.

    Also on Thursday, the minutes of the ECB meeting of October 26 will be published. In the light of Draghi's latest comments, the market will be looking for an answer to the question whether the probability of announcing the exact date of completion of the asset buy-back program was announced at the meeting, as the answer to this question may change the long-term expectations for the euro.

    For a break above 1.1850 euros more weighty reasons are required. More likely is the consolidation at the achieved levels with the resumption of the activity of bears and the move towards support level of 1.16.

    United Kingdom
    The report on retail sales published on Thursday could not provide the pound any support, despite the fact that the dollar was exposed to considerable pressure. Retail sales increased by 0.3% in October; this was slightly higher than market expectations, but on an annual basis, it showed a decline of 0.3%, meaning consumer activity continues to be very low. Despite the fact that prices grew quite confidently, the physical volume of goods sold remained at the levels of a year ago, which indicates certain problems in the consumer sector.



    Oil
    Oil by the close of the week resumed growth, responding to the reduction of the threat of Venezuela's default and the weekly report of Baker Hughes, according to which the rise in the number of active drilling rigs stopped. The current level of quotes , apparently, by the shale industry is perceived as insufficient to significantly resume investments, and without new drilling wells it is difficult to keep production at current levels, given the high rate of their depletion.

    The threat of deep correction has decreased, but the chance to update the two-year high, on the contrary, has increased. The market will catch the insider about the upcoming meeting of OPEC +, one must assume that the general background remains favorable for oil.

    *The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

    Analysis are provided byInstaForex.
    Best regards, PR Manager
    Learn more about InstaForex Company at http://instaforex.com

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