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Bitcoin in second leg of corrective pattern, could top between 55-57.5k

    By
    ActionForex.com
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    Bitcoin’s rebound from 44027 resumed today by breaking through 52566 resistance and hits as high as 54490 so far. At this point, the structure of the rebound doesn’t warrant that it’s resuming larger up trend. Instead, it could mere be the second leg of a three-wave pattern that started back in 57529.

    Hence, we’d start to look for reversal signal between 100% projection of 44027 to 52566 from 46417 at 54956 and 57529 high. Break of 49369 support should start the third leg of the corrective pattern back to 44027 support and possibly below.

    Nevertheless, of course, firm break of 57529 will invalidate our view and bring up trend resumption sooner than expected.

    German GDP grew 0.4% in Q1 on domestic resilience, first ray of hope but uncertainty remains

      By
      ActionForex.com
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      Germany GDP grew 0.4% qoq in Q1, matched market expectation. That was also a significant improve over Q4’s 0.0% growth. The quarter-on-quarter comparison (price-, seasonally and calendar-adjusted) shows that positive contributions mainly came from domestic demand.

      Fixed capital formation in construction and in machinery and equipment increased considerably. Household final consumption expenditure, too, increased substantially. However, government final consumption expenditure recorded a decline. And there were mixed signals regarding foreign trade; as both exports and imports increased.

      Economy Minister Peter Altmaier said the growth figures were a “first ray of hope” following two quarters without expansion. However, he warned that ” international trade disputes are still unresolved”. He urged , “we must do everything possible to find acceptable solutions that enable free trade”.

      Trump said he won’t drop auto tariffs to zero even if EU proposes so

        By
        ActionForex.com
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        In a Fox Business interview, Trump repeated that EU is treating the US as bad as China in terms of trade. And, asked if he would agree to zero tariffs on autos if the EU proposed so, Trump said “no”. He added, “I would do it for certain products, but I wouldn’t do it for cars.” Trump is again inconsistent with what he said before. Apparently, he’s not that much of a free trade advocate as he proclaimed.

        In the G7 summit last June, Trump surprised other leaders and called for dropping all tariffs, trade barriers and subsidies. He said that “Ultimately that’s what you want, you want tariff free, no barriers, and you want no subsides because you have some countries subsidizing industries and that’s not fair”. And, “so you go tariff free, you go barrier free, you go subsidy free, that’s the way you learned at the Wharton School of Finance.”

        Economic advisor Larry Kudlow also aid “I don’t know if they were surprised with President Trump’s free trade proclamation, but they certainly listened to it and we had lengthy discussions about that… “As the president said, reduce these barriers, in fact go to zero, zero tariffs, zero non-tariff barriers, zero subsidies, and along the way we’re going to have to clean up the international trading system.”

        Bitcoin in ugly weekend selloff, downside risks remain

          By
          ActionForex.com
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          Cryptocurrencies suffered an ugly selloff over the weekend, as Bitcoin dived to as low as 41908, and then recovered and settled in range around 48k/49k. The move was exaggerated by low liquidity and cascading selling and liquidations. But it’s also part of the overall risk-off moves late last week.

          Technically, downside risks will remain in Bitcoin as long as 53299 support turned resistance holds. But we’re not expecting a break of 40k handle for now, which is close to 39559. However, firm break of 39559 could trigger even steeper selling to 30k handle, which is close to 29261.

          China’s Q3 GDP growth beats expectations; IMF cautions on future prospects

            By
            ActionForex.com
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            China’s economy exhibited resilience in Q3, with GDP growing at 4.9% yoy, outpacing anticipated 4.5% yoy increase. However, this growth rate reflects deceleration from 6.3% yoy expansion observed in Q2. On quarterly basis, the economy grew 1.3% qoq, marking an improvement from revised 0.5% qoq in the preceding quarter and outpacing anticipated 1.0% qoq expansion.

            Industrial output in September echoed the positive trend, registering a 4.5% yoy uptick, marginally above 4.3% yoy forecast. Retail sales also followed suit, with 5.5% yoy increase, surpassing expected 4.9% yoy rise. However, fixed asset investments underperformed expectations, with year-to-date growth of 3.1% yoy, slightly below anticipated 3.2%.

            Despite these seemingly positive indicators, China’s National Bureau of Statistics sounded a note of caution. The NBS underscored the challenges posed by a complicated external environment and lackluster domestic demand, calling for enhanced efforts to fortify the economic recovery’s foundation.

            Separately, International Monetary Fund adjusted its growth outlook for China downward, citing a “losing steam” recovery impacted significantly by the property sector’s frailty. IMF now projects China’s economy to grow by 5% in 2023 and 4.2% in 2024, a downward revision from its earlier forecast of 5.2% and 4.5% respectively.

            The IMF’s report highlighted contraction in manufacturing purchasing managers’ indexes from April to August, coupled with additional weaknesses in real estate sector, as pivotal factors behind the revised forecast.

            US ISM services jumped to 55.2, corresponds to 1.8% annualized GDP growth

              By
              ActionForex.com
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              US ISM Services PMI rose from 49.6 to 55.2 in January, well above expectation of 50.4. Looking at some details, business activity/production rose from 53.5 to 60.4. New orders rose sharply from 45.2 to 60.4. Employment ticked up from 49.4 to 50.0. Prices dropped slightly from 68.1 to 67.8.

              ISM said: “Ten industries reported growth in January, according to the Services PMI®, which was in expansion territory after a single month of contraction and the prior 30-month period of growth. The composite index has indicated expansion for all but three of the previous 155 months.”

              Nieves continues, “Business Survey Committee respondents indicated that capacity and logistics performance continue to improve. Although responses varied by industry and company, the majority of panelists indicated that business is trending in a positive direction. Employment was unchanged for the month. Some companies still find it difficult to fill open positions, while others are facilitating staff reductions.”

              “The past relationship between the Services PMI® and the overall economy indicates that the Services PMI® for January (55.2 percent) corresponds to a 1.8-percent increase in real gross domestic product (GDP) on an annualized basis.”

              Full release here.

              Minneapolis Fed Kashkari: Fed might be one hike away from achieving neutral

                By
                ActionForex.com
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                Minneapolis Fed President Neel Kashkari is seen clearly as a dove as he voted against al three of Fed’s rate hikes last year.

                He said in a WSJ interview published today that fiscal stimulus of the federal government, including tax cuts would make Fed meeting its 2% inflation target more likely. The tax cuts and spending increases are “macroeconomically significant, and they are big enough to have an effect on the trajectory of the economy… that could change things in a meaningful way.” And with that development, Fed can move ahead with the planned tightening.

                But he also argued that “it isn’t going to be obvious to me once we achieve our inflation target that we need to now put the brakes on the economy.” He reiterated his stance that ” once we achieve our inflation target, we should try to get to neutral in a reasonable period of time,”

                And he added that “we might be one hike away from achieving neutral.”

                US NFP grew 1763k, unemployment rate dropped to 10.2%

                  By
                  ActionForex.com
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                  US non-farm payroll employment grew 1763k in July, above expectation of 1510k. Notable job gains occurred in leisure and hospitality, government, retail trade, professional and business services, other services, and health care.

                  Unemployment rate dropped to 10.2%, down from 11.1%, better than expectation of 10.7%. Labor force participation was little changed at 61.4%. Average hourly earning rose 0.2% mom, better than expectation of -0.5% mom decline.

                  Full release here.

                  China retail sales unexpectedly contracted in July, USD/CNH channeling lower

                    By
                    ActionForex.com
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                    The batch of economic data released from China is mixed. In particular, retail sales contracted -1.1% yoy in July, versus expectation of 0.3% yoy. That showed vulnerability in domestic demand. Nevertheless, industrial production rose 4.8% yoy in July, slightly above expectation of 4.7% yoy. Fixed asset investment dropped -1.6% ytd yoy in July, above expectation of -3.3% ytd yoy.

                    USD/CNH is still channeling well as fall from 7.1961 extends. This decline is seen as the third leg of the consolidation pattern from 7.1953. Hence, while fall could be seen, we’d expect strong support from 6.8452 to contain downside and bring rebound. Meanwhile, break of 6.9804 resistance will now suggests short term bottoming and turn bias back to the upside.

                    Eurozone Sentix Investor Confidence rose to 12.1 in technical counter-movement

                      By
                      ActionForex.com
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                      Eurozone Sentix Investor Confidence rose to 12.1 in July, up from 9.3 and beat expectation of 9.0. Sentix noted in the release that Eurozone expectations may “stabilize slightly” after the sharp fall in June. But that seems more of a “technical counter-movement”. It noted that the Economic Index for Germany had dropped for the sixth time in a row to just 16.2.

                      Also, the next of of trade dispute between the US and the rest of the world “has been reached and countermeasures by the EU and China are under way. Sentix noted if Trump now targets the European car industry, the “trade dispute could lead to more than a slowdown in economic sentiment.” At the same time, central banks, at the path of stimulus remove, are “unlikely to play a support role”.

                      Sentix added that the global environment is also showing more and more signs of an economic slowdown. For Japan, for example, we are recording the sixth consecutive decline in the overall index and economic expectations for Asia ex Japan are slumping by more than 10 points. US economic expectations are also falling to their lowest level since August 2012.

                      Full Sentix Economic Index release here.

                      Eurozone economic sentiment rose to 101.5, significant rise in Italy and Spain

                        By
                        ActionForex.com
                        -

                        Eurozone Economic Sentiment Indicator (ESI) rose 0.3 to 101.5 in December, slightly above expectation of 101.4. The stabilization in the ESI resulted from markedly higher confidence in services (+2.2 to 11.4), construction (+2.2 to 5.0) and, to a lesser extent, retail trade (+1.0 to -0.8), while confidence worsened among consumers (-0.9 to -8.1) and remained virtually unchanged in industry (-0.2 to -9.3).

                        Amongst the largest euro-area economies, the ESI increased significantly in Italy (+1.7) and Spain (+1.3) and edged up in Germany (+0.4), while it remained broadly unchanged in France (-0.2). By contrast, the ESI declined somewhat in the Netherlands (-0.4).

                        Business Climate Indicator dropped -0.04 to -0.25. With the exception of production expectations, which improved markedly, all the components of the BCI worsened.

                        US ISM manufacturing dropped to 55.4, demand, consumption and inputs indicative of a normal expansion cycle

                          By
                          ActionForex.com
                          -

                          US ISM Manufacturing PMI dropped to 55.4 in September, down from 56.0, missed expectation of 56.0. Looking at some details, new orders dropped -7.4 to 60.2. Production dropped -2.3 to 61.0. But Employment rose 3.2 to 49.6, close to breakeven. Prices rose 3.3 to 62.8.

                          Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee: “Manufacturing performed well in the month with demand, consumption and inputs registering growth indicative of a normal expansion cycle. While certain industry sectors are experiencing difficulties that will continue in the near term, the manufacturing community as a whole has learned to conduct business effectively and deal with the variables imposed by the COVID-19 pandemic.”

                          Full release here.

                          EUR/USD lost downside momentum as new ECB forward guidance awaited

                            By
                            ActionForex.com
                            -

                            ECB policy decision and press conference are the main focuses for today, even though no policy change is expected. After the conclusion of the strategic review on July 8, officials are clear that they’re going to adjust the forward guidance to align with the new symmetric 2% inflation target, which allows a temporary overshoot. Overall reactions could, however, be rather muted.

                            Here are some previews:

                            Euro is currently rather mixed in general. EUR/USD is clearly losing downside momentum as seen in 4 hour MACD. But current fall from 1.2265, as the third leg of the pattern from 1.2348, could still extend towards 1.1703 support and even below. Nevertheless, break of 1.1880 resistance would be a sign of near term reversal and bring stronger rebound through 1.1974 resistance.

                            Dollar index’s medium term outlook depends on non-farm payrolls today

                              By
                              ActionForex.com
                              -

                              US Non-Farm Payrolls report will be the major focus today. Markets are expecting 183k job growth in November. Unemployment rate is expected to be unchanged at 3.6%. Average hourly earnings growth is expected to pick up to 0.3% mom. Dollar dropped sharply this week as poor ISMs pointed to weaker outlook ahead, and revived speculation of Fed cut next year. A strong set of NFP data today is needed to reverse the greenback’s fortune. Otherwise, selloff might accelerate further.

                              Other job related data released have been mixed to slightly negative. ISM manufacturing employment dropped from 47.7 to 46.6, suggesting deeper contraction in manufacturing jobs. ISM services employment rose to 55.5, up from 53.7. ADP private sector jobs grew just 67k. The details were also in-line with ISMs’, with goods-producing jobs contracted -18k. Service-providing jobs rose 85k. Four-week moving average of initial claims rose 3k to 217.75k.

                              Current development now raised the chance that Dollar index’s recovery from 97.10 was only a corrective rise, and has completed at 98.39. Next focus will be 97.10 support. Break there will also have 55 week EMA firmly taken out. In that case, a medium term should be confirmed at 99.66. And, a medium term correction should at least be started towards 38.2% retracement of 88.30 to 99.66 at 95.32.

                              US CPI rose to 6.8% yoy, highest since 1982

                                By
                                ActionForex.com
                                -

                                US CPI rose 0.8% mom in November, above expectation of 0.7 % mom. For the 12-month period, CPI accelerated to 6.8% yoy, up from 6.2% yoy, matched expectations. That’s the highest rate since June 1982.

                                CPI core rose 0.5% mom, matched expectations. CPI core accelerated to 4.9% yoy, up from 4.6% yoy, matched expectations. Energy index rose 33.3% yoy. Both are highest level in at least 13 years.

                                Full release here.

                                Germany BDI expects Joe Biden and China to boost industrial sector export this year

                                  By
                                  ActionForex.com
                                  -

                                  Germany’s BDI industry association expects the country’s GDP to grow 4.4% this year. The export-oriental industrial sector would drive recovery with 6% growth.

                                  BDI President Siegfried Russwurm said, “the election of Joe Biden as U.S. President facilitates the path for multilateral solutions and joint initiatives for fair competition on the world markets.”

                                  “Our companies will benefit from both China, the driver of global growth, and the agreement on an investment pact, even if it is not perfect,” he added.

                                  Gold defending 1848/59 key support zone for now

                                    By
                                    ActionForex.com
                                    -

                                    Regarding the development of Gold, this question has been in our minds for some time. Is gold just correcting the rise from 1451.16 to 2075.18? Or it’s correcting the whole up trend from 1160.17? We’d probably find out very soon as the results of US election unfolds, which should set the direction of the financial markets for the next few months.

                                    1848.39 support is a key level, as it largely overlaps with 23.6% retracement of 1160.17 to 2075.18 at 1859.23. Sustained break of this support zone will favor the case that it’s in a larger scale correction. Deeper decline should be seen to 38.2% retracement at 1509.70, which is close to 55 week EMA (now at 1735.45.

                                    Nevertheless, even in case of a brief breach, failure to sustain below 1848.39, followed by break of 1933.17 resistance, will argue that the correction is a smaller scale one, and has probably completed. Retest of 2075.18 high should be seen rather soon, with prospect of a break out. We’ll see.

                                    Australia PMI manufacturing dropped to 49.4, but services rebounded notably

                                      By
                                      ActionForex.com
                                      -

                                      Australia CBA PMI Manufacturing dropped to 49.4 in September, down from 50.9 and missed expectations. That’s the first contraction reading since survey began in May 2016. On the other hand, PMI services improved from 49.1 to 52.5. PMI Composite rebounded from 49.3 to 51.9. CBA added that “overall, new order growth picked up and stronger confidence was recorded, but the rate of job creation softened to a fractional pace”.

                                      Commenting on the Commonwealth Bank Flash PMI data, CBA Senior Economist, Gareth Aird said:

                                      “An encouraging result thanks to a pickup in the services sector. There are early signs that the combination of rate cuts, tax rebates and rising dwelling prices is having a positive impact on the services sector.

                                      “The divergence in the readings on the manufacturing and services sector is somewhat unusual, though not unprecedented. The dip in the manufacturing reading was a touch disappointing, particularly given the ongoing weakness in the Australian dollar. It may be the case that the raft of so-called geopolitical tensions are having a dampening impact on the local manufacturing sector. Overall, a move in the right direction, but the level of the headline index continues to imply that the economy could do with more stimulus. The case for fiscal easing through personal income tax cuts remains.”

                                      Full release here.

                                      Fed Chair Jerome Powell press conference live stream

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                                        ActionForex.com
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                                        Eurozone industrial production down -1.1% mom in Dec, EU down -0.4% mom

                                          By
                                          ActionForex.com
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                                          Eurozone industrial production declined -1.1% mom in December, worse than expectation of -0.8% mom. Production of intermediate goods fell by -2.8%, durable consumer goods by -1.4%, non-durable consumer goods by -1.0% and capital goods by -0.4%, while production of energy grew by 1.3%.

                                          EU industrial production dropped -0.4% mom. Among Member States for which data are available, the largest monthly decreases were registered in Ireland (-8.5%), Luxembourg (-5.2%) and Lithuania (-4.0%). The highest increases were observed in Denmark (+13.5%), Portugal (+4.1%) and Hungary (+3.8%).

                                          Full release here.

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