The DollarDollar Forecast; The Bulls Are Back In Charge

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Forex Analysis: 10 Apr 2020, 07:21 UTC+00

Indicator analysis. Daily review for GBP / USD pair on April 10, 2020

Trend analysis (Fig. 1).

On Friday, the market from the level of 1.2460 (yesterday’s closing of candlestick) will try to break up the upper fractal of 1.2484 (blue dashed line) and, if successful, it will continue to move up, with the target of 1.2518 – a pullback level of 61.8% (red dashed line). If this level is broken upward, the upward trend will continue with the target of 1.2779 – a pullback level of 76.4% (red dashed line).

Fig. 1 (daily chart).

– indicator analysis – up;

– Fibonacci levels – up;

– candlestick analysis – down;

– trend analysis – up;

– Bollinger Lines – up;

– weekly schedule – up.

Today, the price will try to continue its upward movement with the target of 1.2518 – a pullback level of 61.8% (red dashed line).

An unlikely scenario: working down from the level of 1.2484 (blue dashed line), with the target of 1.2238 – a pullback level of 23.6% (blue dashed line).

Performed by
analytical expert: Stefan Doll InstaForex Group © 2007-2020

Published: 10 Apr 2020, 07:21 UTC+00

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Thursday, 09 April 2020

Time Country Indices Period Previous Reading Forecast Actual Reading Importance
23:50 Bank Lending Mar 2.1% y/y; 2.2% y/y 2.1% y/y 2.0% y/y; 2.2% y/y

The value of all outstanding loans with Japanese banks. Bank lending is important because lending increases with increased business confidence and investment. It is particularly insightful for the Japanese economy because of the weakness that has plagued the Japanese banking sector. The headline number is for total loans and discounts and is a percentage change from the previous year.

Domestic Corporate Goods Price Index Mar -0.4% m/m; 0.8% y/y -0.6% m/m; -0.1% y/y -0.9% m/m; -0.4% y/y

A Japanese index that measures the prices of goods created by firms at the producer and wholesaler level in Japan. The Domestic Corporate Goods Price Index (CGPI) tracks changes in supply side prices within the Japanese economy. Changes in the CGPI often precede changes in the overall Consumer Price Index, as input values determine the overall retail values of the consumer goods. Thus, a large increase in the domestic CGPI will lead to a large increase in the overall CPI.

Friday, 10 April 2020

Time Country Indices Period Previous Reading Forecast Actual Reading Importance
01:30 CPI Mar 5.2% 4.9% 4.3%

Assesses changes in the cost of living by measuring changes in the prices of consumer items. The CPI is the headline inflation figure that indicates the strength of domestic inflationary pressures.

PPI Mar -0.4% -1.1% -1.5%

Measures changes in the selling prices producers charge for goods and services, and well as tracks how prices feed through the production process. Because producers tend to pass on higher costs to consumers as higher retail prices, the PPI is valuable as an early indicator of inflation. Simply put, inflation reflects a decline in the purchasing power of the Dollar, where each dollar buys fewer goods and services. The report also gives insight into how higher prices from raw materials flow toward the final product.

A rise in PPI signals an increase in inflationary pressures. Given the economic instability associated with rising price levels, the Fed often will raise interest rates to check inflation. A low or falling PPI is indicative of declining prices, and may suggest an economic slowdown.

The headline figure is expressed in percentage change of producer price.

Notes: The PPI records prices at various stages of production: raw goods, intermediate goods and finished goods. Though intermediate and crude goods prices do provide insight for future inflationary pressure, it is the price of finished goods that generates most interest for market participants. The finished goods data is able to gauge price pressure before the goods reach the retail market.

Industrial Production Feb 1.1% 0.0% 0.9%

Measures the level of production of French industries. French Industrial Production tracks relative changes in the production of goods, excluding energy and food, whether they are sold domestically or abroad. The headline figure is the percentage change in the index from the previous quarter or year.

Industrial Production is highly sensitive to the business cycle, and so can forecast changes in employment, earnings, and personal income. Consequently, Industrial Production is considered a reliable leading indicator of the overall health of the French economy.

Consumer Price Index Mar 0.1% m/m; 2.3% y/y -0.3% m/m; 1.6% y/y

CPI assesses changes in the cost of living by measuring changes consumer pay for a set of items. CPI serves as the headline figure for inflation. Simply put, inflation reflects a decline in the purchasing power of the dollar, where each dollar buys fewer goods and services. In terms of measuring inflation, CPI is the most obvious way to quantify changes in purchasing power. The report tracks changes in the price of a basket of goods and services that a typical American household might purchase. An increase in the Consumer Price Index indicates that it takes more dollars to purchase the same set basket of basic consumer items.

Inflation is generally bad news for the economy, causing instability, uncertainty and hardship. To address inflation, the Fed may raise interest rates. However, the Fed relies on the PCE Deflator as its primary gauge of inflation because the CPI does not account for the ability of consumer to substitute out of CPI’s set. Price changes tend to cause consumers to switch from buying one good to a less expensive-other, a tendency that the fixed-basket CPI figure does not yet account for. Given that the PCE Deflator is a more comprehensive calculation, based on changes in consumption; it is the figure the Fed prefers.

The figure is released monthly, as either a month over month annualized percentage change, or percentage change for the full year. The figure is seasonally adjusted to account seasonal consumption patterns.

On A Technical Note: The CPI includes over 200 categories of goods and services included, divided into 8 main groups, each with a different weight: Housing, Transportation, Food, Medical Care, Education and Communication, Recreation, Apparel, and Other Goods and Services.

Consumer Price Index Core Mar 0.2% m/m; 2.4% y/y 0.1% m/m; 2.3% y/y

CPI Excluding Food and Energy – United States

The CPI is also reported excluding food and energy; two of its most volatile components. These components are particularly sensitive to temporary economic factors like oil prices, natural disasters and seasonal affects. Consequently, CPI excluding Food and Energy provides a more stable figure, but at the cost of overlooking two significant sectors in the economy (together food and energy comprise nearly a quarter of the goods included in the CPI).

The figure is the monthly percent change in the index.

Leading Indicators Feb 91.4; 0.1%

Leading Indicators is a composite index designed to forecast trends in the overall economy.

Unjustified expectations: Fed chose the wrong year for rate hikes

The Forex market sent the dollar into free fall after the publication of the results of the Fed meeting, which did not meet the expectations of investors

The Bulls are in Charge as S&P 500 Tests Key Resistances

By Paul Ebeling on July 9, 2020 Comments Off on The Bulls are in Charge as S&P 500 Tests Key Resistances

The Bulls are in Charge as S&P 500 Tests Key Resistances

Monday, the S&P 500 marked the 6th gainer in 7 sessions for US stocks now sees the benchmark index equity above Key technical marks.

The latest rally comes as focus shifts to the coming quarterly earnings reports that are forecast to show 2X-digit profit growth.

The S&P 500 Index gave chartists reason for optimism Monday. The equity benchmark made a clean break above all 3 of its Moving Averages last week is trading within 20 points of the Psych resistance at 2,800. The Psych number has served as a cap on past attempts at recovery from February’s selloff.

Metals Stocks

Myra P. Saefong and

Mark DeCambre

Gold futures score weekly gain of about 7%

Gold on the move

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Gold futures rallied to settle at their highest level in seven-and-a-half years on Thursday, getting a boost as the U.S. dollar declined on the back of the Federal Reserve’s new lending plans which aim to support the hit to the economy from the coronavirus pandemic.

The Federal Reserve on Thursday set up new loan programs and bolstered existing ones in an effort to provide $2.3 trillion to boost the economy.

The “take away for gold is extreme bullish,” said Jeff Wright, executive vice president of GoldMining Inc. “This will lead over long term to a much weaker U.S. dollar.”

The “goal is to reopen economy quickly, but the price will be a long-term weak U.S. dollar, which is good for gold as well,” Wright told MarketWatch.

June gold on Comex GCM20, +3.34% rose $68.50, or 4.1%, to settle at $1,752.80 an ounce in Thursday dealings after trading as high as $1,754.50. It marked the highest most-active contract settlement since October 2020 according to FactSet data. For the holiday-shortened week, the precious commodity rose roughly 7%.

May silver SIK20, +4.67% gained 84.8 cents, or 5.6%, at $16.053 an ounce. For the week, the white metal gained about 9.6%.

Regular trading on Comex will effectively be closed on Friday due to Good Friday holiday.

The Fed is trying to “provide as much relief and stability as we can” during this period where Americans are staying at home to stop the spread of the pandemic, said Fed Chairman Jerome Powell in a statement Thursday.

Data on U.S. jobless claims revealed a climb, up 6.6 million in the first week of April—bringing total job losses in less than a month to 16.8 million.

Even before the pandemic panic, “an economic, financial and monetary crisis was inevitable anyway and the pandemic is accelerating and exacerbating this inevitable crisis,” said Mark O’Byrne, research director at GoldCore. “Gold is outperforming other assets and has delivered a 12% dollar return in 2020 year to date, and that outperformance will continue in the coming months and years.”

“$5,000 gold is quite possible in the next year or two,” O’Byrne told MarketWatch.

Against that backdrop, the ICE U.S. Dollar Index DXY, -0.14% a gauge of the dollar against a basket of six major rivals, was down 0.6% at 99.52. A weaker dollar can provide support for gold, which is traded in the currency.

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“The market is flooded with cash from central banks around the world which is inflating gold prices at this highly uncertain time,” wrote Craig Erlam, senior market analyst at Oanda, in a daily research report.

Gold prices gained on Wednesday after minutes from the Federal Reserve’s March 3 and March 15 meetings showed that Fed staff’s worst-case scenario was that an economic recovery wouldn’t take hold until next year.

Among other metals traded on Comex, May copper HGK20, +0.46% ended little changed, down 0.02% at $2.2595 a pound. July platinum PLN20, +2.48% rose 2% to $748.60 an ounce, but June palladium PAM20, -0.39% added 0.7% to $2,110 an ounce.

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