LiteFinance
- Forex Broker en LiteFinance Global LLC
- San Vicente y las Granadinas
- 933
Desde el año 2005, LiteFinance (ex. LiteForex) es un bróker de ECN online, que ofrece a los clientes la posibilidad de acceder a la más profunda liquidez en divisas, materias primas y mercados de valores. Para operar a través de LiteFinance (ex. LiteForex) están disponibles todos los principales pares de divisas, tasas cruzadas, petróleo, metales preciosos, índices bursátiles, acciones corporativas y el conjunto más grande de pares de criptomonedas entre los brókeres.
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Dollar steps in the old path. Forecast as of 25.11.2020
In previous years, US presidents didn’t interfere in the foreign exchange market as often as Donald Trump did. Joe Biden is coming to power, and the Forex trends are to return to the former patterns. How will this affect EURUSD? Let us discuss the Forex outlook and make up a trading plan.
Monthly EURUSD fundamental forecast
Slogans and real actions are often two completely opposite things. US presidents from Bill Clinton to Barack Obama expressed their commitment to a strong dollar policy. However, because of this policy's transparency, the greenback often fell during their terms of office. Donald Trump, on the contrary, talked about the advantages of a weak currency. Trump accused other countries of currency manipulations, called on the Fed to cut interest rates and resume the QE. Nonetheless, the USD was growing because of the certainty created by Trump’s administration. That is why I believe there are important bearish drivers for the greenback's weakening in the future. Joe Biden comes back to the old slogan ‘String dollar reflects the strength of the US economy.’ Biden nominates Janet Yellen for Treasury Secretary.
The market should forget the shocks resulting from the President's unexpected commentaries, which the US administration would try to smooth over the next day. During Trump’s term of office, forex analysts used to say that what was good for Trump was good for the dollar. As a safe-haven, greenback often benefited from the uncertainty, fueled by Trump’s unpredictable and eccentric tweets. Forex is coming back to old patterns. Besides, the hopes for the global economic recovery press down the safe-haven assets.
Investors discuss the controversial rally of the US stock indexes by 60% up from March’s low amid the US economy’s weakness. However, no matter how terrible they are, recessions rarely happen and end rather quickly, so everyone is rushing to buy stocks. For decades, investors have been guided by three principles: spare no money, buy and hold, and finally buy on the price fall. Such simple investment strategies have been and continue to be profitable! The Dow Jones has hit level 30000 for the first time. The S&P 500, according to the median gauge of 40 experts polled by Reuters, should be 9% up from the current levels by the end of 2021.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/dollar-steps-in-the-old-path-forecast-as-of-25112020/?uid=285861726&cid=79634
Dynamics of Dow Jones and US GDP
In previous years, US presidents didn’t interfere in the foreign exchange market as often as Donald Trump did. Joe Biden is coming to power, and the Forex trends are to return to the former patterns. How will this affect EURUSD? Let us discuss the Forex outlook and make up a trading plan.
Monthly EURUSD fundamental forecast
Slogans and real actions are often two completely opposite things. US presidents from Bill Clinton to Barack Obama expressed their commitment to a strong dollar policy. However, because of this policy's transparency, the greenback often fell during their terms of office. Donald Trump, on the contrary, talked about the advantages of a weak currency. Trump accused other countries of currency manipulations, called on the Fed to cut interest rates and resume the QE. Nonetheless, the USD was growing because of the certainty created by Trump’s administration. That is why I believe there are important bearish drivers for the greenback's weakening in the future. Joe Biden comes back to the old slogan ‘String dollar reflects the strength of the US economy.’ Biden nominates Janet Yellen for Treasury Secretary.
The market should forget the shocks resulting from the President's unexpected commentaries, which the US administration would try to smooth over the next day. During Trump’s term of office, forex analysts used to say that what was good for Trump was good for the dollar. As a safe-haven, greenback often benefited from the uncertainty, fueled by Trump’s unpredictable and eccentric tweets. Forex is coming back to old patterns. Besides, the hopes for the global economic recovery press down the safe-haven assets.
Investors discuss the controversial rally of the US stock indexes by 60% up from March’s low amid the US economy’s weakness. However, no matter how terrible they are, recessions rarely happen and end rather quickly, so everyone is rushing to buy stocks. For decades, investors have been guided by three principles: spare no money, buy and hold, and finally buy on the price fall. Such simple investment strategies have been and continue to be profitable! The Dow Jones has hit level 30000 for the first time. The S&P 500, according to the median gauge of 40 experts polled by Reuters, should be 9% up from the current levels by the end of 2021.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/dollar-steps-in-the-old-path-forecast-as-of-25112020/?uid=285861726&cid=79634
Dynamics of Dow Jones and US GDP
LiteFinance
Yen loses the firm ground. Forecast as of 24.11.2020
Fundamental yen forecast for six months
Donald Trump is leaving the White House, and the age of safe havens is also about to end. The eccentric and unpredictable 45th US president created an environment of uncertainty in the financial markets, which supported the safe-haven assets. Amid the trade wars and the pandemic over the last three years, the Japanese yen has grown 6.4% versus the US dollar, the Swiss franc – by 6.9%. On the opposite side in the list of 30 most traded Forex currencies are the Turkish lira (-99%), the Brazilian real (-68%), and the Russian ruble (-30%). Everything can radically change in 2021.
One of the key drivers for the USDJPY is the capital flows from Japan into the USA and vice versa. Over the six months up to September, overseas stocks' net sales by Japanese investors totaled ¥3.91 trillion; net purchases of local government debt are of ¥11.8 trillion. Both values are the highest since 2013. During the same period, the dollar was down by 4.5% versus the yen. Furthermore, when the Japanese investors were actively selling the foreign stocks (- ¥ 4.85 trillion on a net basis), the USDJPY was almost 4% down.
Although the US stock indexes were rising, Japan's epidemiological situation was better than in the USA, and there was uncertainty around the US presidential election. As a result, insurance companies, pension funds, and other investors preferred to sell the US stocks and repatriate capitals to Japan, pressing the USDJPY down. In 2021, the Japanese investors should display a higher risk appetite amid Biden’s victory (he will be more predictable than Trump), vaccines, and global GDP recovery. The capital flows should again outflow from Japan, making the yen a Forex outsider.
I do not think there is much use in selling the yen versus the US dollar. First, the greenback is also a safe haven, and the USD outlook is also bearish for 2021. Second, the US economy can well recover sooner than Japan’s growth. The US PMI has shown the best growth since March 2015, while Japan’s PMI remains weak.
Trading plan for EURJPY, GBPJPY, and AUDJPY for six months
It makes sense to sell the yen versus the euro, the pound, and the Australian dollar. A Brexit deal will support the euro and the sterling. If the pandemic is stopped, the EUR and the GBP could repeat the rallies that occurred in the May-August period. China and commodities will support the Aussie. Under such conditions, it seems promising to buy the EURJPY, GBPJPY, and AUDJPY with the targets of 126.4 and 128.5, 142.5 and 144.7, 79.5 and 82.4 in three and six months, respectively.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/yen-loses-the-firm-ground-forecast-as-of-24112020/?uid=285861726&cid=79634
Dynamics of Japanese PMI
Fundamental yen forecast for six months
Donald Trump is leaving the White House, and the age of safe havens is also about to end. The eccentric and unpredictable 45th US president created an environment of uncertainty in the financial markets, which supported the safe-haven assets. Amid the trade wars and the pandemic over the last three years, the Japanese yen has grown 6.4% versus the US dollar, the Swiss franc – by 6.9%. On the opposite side in the list of 30 most traded Forex currencies are the Turkish lira (-99%), the Brazilian real (-68%), and the Russian ruble (-30%). Everything can radically change in 2021.
One of the key drivers for the USDJPY is the capital flows from Japan into the USA and vice versa. Over the six months up to September, overseas stocks' net sales by Japanese investors totaled ¥3.91 trillion; net purchases of local government debt are of ¥11.8 trillion. Both values are the highest since 2013. During the same period, the dollar was down by 4.5% versus the yen. Furthermore, when the Japanese investors were actively selling the foreign stocks (- ¥ 4.85 trillion on a net basis), the USDJPY was almost 4% down.
Although the US stock indexes were rising, Japan's epidemiological situation was better than in the USA, and there was uncertainty around the US presidential election. As a result, insurance companies, pension funds, and other investors preferred to sell the US stocks and repatriate capitals to Japan, pressing the USDJPY down. In 2021, the Japanese investors should display a higher risk appetite amid Biden’s victory (he will be more predictable than Trump), vaccines, and global GDP recovery. The capital flows should again outflow from Japan, making the yen a Forex outsider.
I do not think there is much use in selling the yen versus the US dollar. First, the greenback is also a safe haven, and the USD outlook is also bearish for 2021. Second, the US economy can well recover sooner than Japan’s growth. The US PMI has shown the best growth since March 2015, while Japan’s PMI remains weak.
Trading plan for EURJPY, GBPJPY, and AUDJPY for six months
It makes sense to sell the yen versus the euro, the pound, and the Australian dollar. A Brexit deal will support the euro and the sterling. If the pandemic is stopped, the EUR and the GBP could repeat the rallies that occurred in the May-August period. China and commodities will support the Aussie. Under such conditions, it seems promising to buy the EURJPY, GBPJPY, and AUDJPY with the targets of 126.4 and 128.5, 142.5 and 144.7, 79.5 and 82.4 in three and six months, respectively.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/yen-loses-the-firm-ground-forecast-as-of-24112020/?uid=285861726&cid=79634
Dynamics of Japanese PMI
LiteFinance
Euro ignores negative. Forecast as of 23.11.2020
Monthly euro fundamental forecast
The correction of the US stock indexes and the concerns about a double-dip recession in the euro area do not stop the EURUSD bulls. The idea of the price growth to 1.2 already in 2020 looks more real than it did in early November. Furthermore, the USA is willing to introduce COVID-19 vaccines in less than three weeks. The vaccination is a key to the victory over the pandemic, global economic recovery, and the improvement of the global risk appetite.
New lockdowns amid the second pandemic wave in the euro area should have sent the EURUSD down. Bloomberg experts expect the euro-area PMI to go down below the critical level of 50 for the first time since June. If so, the pressure on the ECB will increase, making the central bank expand the monetary stimulus at the December meeting. However, this fact has already been priced in the major currency pair rates. Also, there are talks about the Fed’s monetary policy easing.
The news that the Treasury asks the Fed to return the $ 415 billion in unused funds that Congress gave the central bank for emergency lending programs is clearly political. Donald Trump, leaving the White House, hinders the reforms of the new US president. Trump tries to push Biden against the Senate and the House of Representatives after the change of leadership of the Treasury Department and the resumption of the idea of supporting the economy with cheap and affordable loans. Simultaneously, the absence of a ‘blue wave’ reduces the chance of a fresh massive fiscal stimulus. Under such conditions, most of the responsibility is on the Fed. Further deterioration of the US economy can force the Fed to resort to the ‘operation twist’ and the QE expansion.
Fed’s monetary easing is a bearish factor for the US dollar. Also, speculators have recently reduced dollar shorts, which could trigger a new wave of sell-offs. Some sellers are stepping back, but new dollar bears should come, so the euro will continue rising.
The number of new coronavirus cases decreases in the euro-area, investors expect the UK-EU trade deal shortly, which supports the EURUSD bulls. Twenty-four hours is plenty of time, and the negotiators can well strike a deal at the last moment. The Brexit deal is likely to send the GBPUSD up to 1.34-1.35, allowing the euro to get closer to $1.2.
Monthly EURUSD trading plan
I have many times noted that the euro-dollar tends to consolidate in the range of 1.16-1.2. However, the upper border of the range could move higher. This is because the US dollar bearish factors are now included in the exchange rates. The euro can well move into the trading channel of $1.18-$1.22 in December. Therefore, it is still relevant to buy the euro on the breakout of the resistance zone of $1.188-$1.189.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/euro-ignores-negative-forecast-as-of-23112020/?uid=285861726&cid=79634
Dynamics of USD and speculative positions on US dollar
Monthly euro fundamental forecast
The correction of the US stock indexes and the concerns about a double-dip recession in the euro area do not stop the EURUSD bulls. The idea of the price growth to 1.2 already in 2020 looks more real than it did in early November. Furthermore, the USA is willing to introduce COVID-19 vaccines in less than three weeks. The vaccination is a key to the victory over the pandemic, global economic recovery, and the improvement of the global risk appetite.
New lockdowns amid the second pandemic wave in the euro area should have sent the EURUSD down. Bloomberg experts expect the euro-area PMI to go down below the critical level of 50 for the first time since June. If so, the pressure on the ECB will increase, making the central bank expand the monetary stimulus at the December meeting. However, this fact has already been priced in the major currency pair rates. Also, there are talks about the Fed’s monetary policy easing.
The news that the Treasury asks the Fed to return the $ 415 billion in unused funds that Congress gave the central bank for emergency lending programs is clearly political. Donald Trump, leaving the White House, hinders the reforms of the new US president. Trump tries to push Biden against the Senate and the House of Representatives after the change of leadership of the Treasury Department and the resumption of the idea of supporting the economy with cheap and affordable loans. Simultaneously, the absence of a ‘blue wave’ reduces the chance of a fresh massive fiscal stimulus. Under such conditions, most of the responsibility is on the Fed. Further deterioration of the US economy can force the Fed to resort to the ‘operation twist’ and the QE expansion.
Fed’s monetary easing is a bearish factor for the US dollar. Also, speculators have recently reduced dollar shorts, which could trigger a new wave of sell-offs. Some sellers are stepping back, but new dollar bears should come, so the euro will continue rising.
The number of new coronavirus cases decreases in the euro-area, investors expect the UK-EU trade deal shortly, which supports the EURUSD bulls. Twenty-four hours is plenty of time, and the negotiators can well strike a deal at the last moment. The Brexit deal is likely to send the GBPUSD up to 1.34-1.35, allowing the euro to get closer to $1.2.
Monthly EURUSD trading plan
I have many times noted that the euro-dollar tends to consolidate in the range of 1.16-1.2. However, the upper border of the range could move higher. This is because the US dollar bearish factors are now included in the exchange rates. The euro can well move into the trading channel of $1.18-$1.22 in December. Therefore, it is still relevant to buy the euro on the breakout of the resistance zone of $1.188-$1.189.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/euro-ignores-negative-forecast-as-of-23112020/?uid=285861726&cid=79634
Dynamics of USD and speculative positions on US dollar
LiteFinance
Central banks went too far. Review as of 20.11.2020
Fed Chair: a scapegoat for Trump, a man of his dreams for Biden
Can money solve any problems? The central banks can answer the question the best. When you've got a hammer, any trouble becomes a nail. Regulators' control over money is a crude tool, and it can be useless in some cases. Never before have disproportions been as evident as now, when stock markets are growing rapidly amid ultra-soft monetary policies even if the pandemic has killed millions of people.
The IMF admits that financial markets are far from reality, and a further rally will result in future perturbation and destabilization when the bubble has burst out. Saying monetary policy is just all right, the Fed officials admit that they went too far, though. If the economy may face a double recession, it's better to do something to avoid it. At the same time, if everything is "all right" and the federal funds rate and QE are optimal, the previous steps have been too aggressive. Finally, it's Donald Trump, who wins. The man always learns from the mistakes of those who have followed his advice. He asked the Fed to cut borrowing costs and revive QE a while ago. Now, face the music.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/chatty-forex/central-banks-went-too-far-review-as-of-20112020/?uid=285861726&cid=79634
Fed Chair: a scapegoat for Trump, a man of his dreams for Biden
Can money solve any problems? The central banks can answer the question the best. When you've got a hammer, any trouble becomes a nail. Regulators' control over money is a crude tool, and it can be useless in some cases. Never before have disproportions been as evident as now, when stock markets are growing rapidly amid ultra-soft monetary policies even if the pandemic has killed millions of people.
The IMF admits that financial markets are far from reality, and a further rally will result in future perturbation and destabilization when the bubble has burst out. Saying monetary policy is just all right, the Fed officials admit that they went too far, though. If the economy may face a double recession, it's better to do something to avoid it. At the same time, if everything is "all right" and the federal funds rate and QE are optimal, the previous steps have been too aggressive. Finally, it's Donald Trump, who wins. The man always learns from the mistakes of those who have followed his advice. He asked the Fed to cut borrowing costs and revive QE a while ago. Now, face the music.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/chatty-forex/central-banks-went-too-far-review-as-of-20112020/?uid=285861726&cid=79634
LiteFinance
Euro chose the path. Forecast as of 19.11.2020
The correction of the US stock indexes is dangerous for the EURUSD bulls. However, the recovery of the global economy promises euro buyers good profits. Let us discuss the Forex outlook and make up a EURUSD trading plan.
Monthly euro fundamental forecast
What is your trading style? Will you sell an asset in the short-term, being ready to take the profit at any time if you see a correction in the uptrend? Or will you buy and hold the longs expecting the drawdown to end? If you answer this question, you will know how to trade the EURUSD. Effective vaccines will support global economic growth in 2021. However, the markets should remain unstable in the short-term. There is a strong demand for safe-haven assets, including the US dollar. But investors should sell them sooner or later.
Although vaccinations will take time, and the logistical challenges are enormous, the global economy will be stronger in a year or two than it is now. The US stock market could be overvalued now, reacting to the positive news about vaccines developed by Pfizer and Moderna. Nevertheless, the long-term outlook for the US stock indices is optimistic. The EURUSD long-term prospects are also positive. Coronavirus vaccines are not the only growth driver for the euro.
Donald Trump’s protectionism, political uncertainty in the USA, and an 11% drop of the USD from the March high resulted in the fact that the single European currency for the first time over many years has outperformed the greenback in the international settlements. Yes, the US dollar is the primary funding currency, it is the major currency in the conversion transactions and FX reserves of the world’s central banks, but this won’t hinder the EURUSD rally. It is enough that the central banks diversify the FX reserves in favor of the euro.
The victory over the coronavirus pandemic is not the only factor that can accelerate economic expansion. According to the WTO research, in 2020, the G20 countries have introduced 133 trade measures related to COVID-19. 84 of them were aimed at facilitating trade, 49 - to restrict it. The entire world expects the USA and China to lower the import tariffs. Based on Xi Jinping's statement, Beijing is willing to do it.
Therefore, the euro's long-term outlook is clearly bullish. However, the EURUSD bears can well develop a short-term correction down. The main reason for this is the S&P 500 drawdown. BofA Merrill Lynch notes that the share of cash in global investors' portfolios has approached the critical 4% mark, which usually serves as a signal for selling US stocks.
Monthly EURUSD trading plan
Therefore, position traders should enter the EURUSD long-term longs on the corrections down to 1.18, 1.176, 1.172, and 1.167. Speculators could sell the euro in the short-term with narrow targets.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/euro-chose-the-path-forecast-as-of-19112020/?uid=285861726&cid=79634
Dynamics of the US dollar’s and the euro’s shares in the global payments
The correction of the US stock indexes is dangerous for the EURUSD bulls. However, the recovery of the global economy promises euro buyers good profits. Let us discuss the Forex outlook and make up a EURUSD trading plan.
Monthly euro fundamental forecast
What is your trading style? Will you sell an asset in the short-term, being ready to take the profit at any time if you see a correction in the uptrend? Or will you buy and hold the longs expecting the drawdown to end? If you answer this question, you will know how to trade the EURUSD. Effective vaccines will support global economic growth in 2021. However, the markets should remain unstable in the short-term. There is a strong demand for safe-haven assets, including the US dollar. But investors should sell them sooner or later.
Although vaccinations will take time, and the logistical challenges are enormous, the global economy will be stronger in a year or two than it is now. The US stock market could be overvalued now, reacting to the positive news about vaccines developed by Pfizer and Moderna. Nevertheless, the long-term outlook for the US stock indices is optimistic. The EURUSD long-term prospects are also positive. Coronavirus vaccines are not the only growth driver for the euro.
Donald Trump’s protectionism, political uncertainty in the USA, and an 11% drop of the USD from the March high resulted in the fact that the single European currency for the first time over many years has outperformed the greenback in the international settlements. Yes, the US dollar is the primary funding currency, it is the major currency in the conversion transactions and FX reserves of the world’s central banks, but this won’t hinder the EURUSD rally. It is enough that the central banks diversify the FX reserves in favor of the euro.
The victory over the coronavirus pandemic is not the only factor that can accelerate economic expansion. According to the WTO research, in 2020, the G20 countries have introduced 133 trade measures related to COVID-19. 84 of them were aimed at facilitating trade, 49 - to restrict it. The entire world expects the USA and China to lower the import tariffs. Based on Xi Jinping's statement, Beijing is willing to do it.
Therefore, the euro's long-term outlook is clearly bullish. However, the EURUSD bears can well develop a short-term correction down. The main reason for this is the S&P 500 drawdown. BofA Merrill Lynch notes that the share of cash in global investors' portfolios has approached the critical 4% mark, which usually serves as a signal for selling US stocks.
Monthly EURUSD trading plan
Therefore, position traders should enter the EURUSD long-term longs on the corrections down to 1.18, 1.176, 1.172, and 1.167. Speculators could sell the euro in the short-term with narrow targets.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/euro-chose-the-path-forecast-as-of-19112020/?uid=285861726&cid=79634
Dynamics of the US dollar’s and the euro’s shares in the global payments
LiteFinance
Dollar doesn’t like Tesla. Forecast as of 17.11.2020
Weekly US dollar fundamental forecast
We should never forget 2020. However, financial markets seem to have forgotten it. Despite Wall Street experts' forecasts, suggesting the market turmoil following the US presidential election, the S&P 500 hits fresh highs. The US stocks are again rising amid the news about the COVID-19 vaccine. This time, Moderna offers a vaccine that demonstrated 95% efficiency. This vaccine performs better than the products developed by Pfizer and BioNTech. However, the stock index featured a weaker growth, which suggests the momentum exhaust and the EURUSD rally is limited.
The higher rises the S&P 500, the more experts talk about a correction. The epidemiological situation in the USA is deteriorating. The number of hospitalizations has reached a record high of 73,000. Over the last week, 1129 people died on average, which is the highest rate since August. Besides, 53 Reuters experts out of 57 believe that the coronavirus is the US economy's major problem, rather than the uncertainty about the ultimate voting results.
I suppose these two matters are related. Joe Biden says even more people will die from COVID-19 unless he and the new US administration soon take up their duties. Donald Trump continues a series of controversial tweets. Trump tweets Biden ‘won because the election was rigged’ and then he writes ‘We will win.’
So, the USA's epidemiological situation is tough; Trump refuses to concede and rejects the voting result. These are the arguments for a soon S&P 500 correction down. Another bearish factor is the uncertainty around the new fiscal stimulus package. Old financial aid programs expire on January 1. According to Deutsche Bank, the end of the programs will reduce consumer incomes by $150 billion in the first quarter of 2021, pressing the GDP down by 1%.
On the other hand, the US stock buyers have some arguments for the rally continuation. The Fed provides huge volumes of cheap liquidity, investors hope for a soon recovery of the US economy amid the introduction of COVID-19 vaccines. Furthermore, Tesla stock is to join the S&P 500 index in December. Since the beginning of 2020, the S&P 500 has been 12% up, which is quite an impressive performance considering the pandemic. However, the Nasdaq 100 has been 38% up due to the Tesla company. The S&P 500 should catch up.
Weekly EURUSD trading plan
I deliberately focus on the US stock market in my euro-dollar analytics. The US stock indexes determine the global risk appetite, which is the key driver for all dollar pairs, including the EURUSD. If the euro breaks out the resistance at $1.1865-$1.188, it should continue the rally towards $1.1955-$1.1965. If the EURUSD bounces down from the resistance, the correction should continue down to 1.18 and 1.1765.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/dollar-doesnt-like-tesla-forecast-as-of-17112020/?uid=285861726&cid=79634
S&P 500 reaction to the news about vaccines
Weekly US dollar fundamental forecast
We should never forget 2020. However, financial markets seem to have forgotten it. Despite Wall Street experts' forecasts, suggesting the market turmoil following the US presidential election, the S&P 500 hits fresh highs. The US stocks are again rising amid the news about the COVID-19 vaccine. This time, Moderna offers a vaccine that demonstrated 95% efficiency. This vaccine performs better than the products developed by Pfizer and BioNTech. However, the stock index featured a weaker growth, which suggests the momentum exhaust and the EURUSD rally is limited.
The higher rises the S&P 500, the more experts talk about a correction. The epidemiological situation in the USA is deteriorating. The number of hospitalizations has reached a record high of 73,000. Over the last week, 1129 people died on average, which is the highest rate since August. Besides, 53 Reuters experts out of 57 believe that the coronavirus is the US economy's major problem, rather than the uncertainty about the ultimate voting results.
I suppose these two matters are related. Joe Biden says even more people will die from COVID-19 unless he and the new US administration soon take up their duties. Donald Trump continues a series of controversial tweets. Trump tweets Biden ‘won because the election was rigged’ and then he writes ‘We will win.’
So, the USA's epidemiological situation is tough; Trump refuses to concede and rejects the voting result. These are the arguments for a soon S&P 500 correction down. Another bearish factor is the uncertainty around the new fiscal stimulus package. Old financial aid programs expire on January 1. According to Deutsche Bank, the end of the programs will reduce consumer incomes by $150 billion in the first quarter of 2021, pressing the GDP down by 1%.
On the other hand, the US stock buyers have some arguments for the rally continuation. The Fed provides huge volumes of cheap liquidity, investors hope for a soon recovery of the US economy amid the introduction of COVID-19 vaccines. Furthermore, Tesla stock is to join the S&P 500 index in December. Since the beginning of 2020, the S&P 500 has been 12% up, which is quite an impressive performance considering the pandemic. However, the Nasdaq 100 has been 38% up due to the Tesla company. The S&P 500 should catch up.
Weekly EURUSD trading plan
I deliberately focus on the US stock market in my euro-dollar analytics. The US stock indexes determine the global risk appetite, which is the key driver for all dollar pairs, including the EURUSD. If the euro breaks out the resistance at $1.1865-$1.188, it should continue the rally towards $1.1955-$1.1965. If the EURUSD bounces down from the resistance, the correction should continue down to 1.18 and 1.1765.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/dollar-doesnt-like-tesla-forecast-as-of-17112020/?uid=285861726&cid=79634
S&P 500 reaction to the news about vaccines
LiteFinance
Euro believes in vaccine. Forecast as of 16.11.2020
Weekly euro fundamental forecast
People drive the markets. The unexpected moves of asset prices often result from people’s puzzling decisions. The entire world is inspired by the positive results of the COVID-19 vaccines, and the S&P 500 hits fresh highs. Why has Pfizer CEO Albert Burla sold shares of $ 5.6 million in the pharmaceutical company? Does he want to sell at good prices when everybody is buying? Or does he not believe in the vaccine? If so, the disappointment could soon replace the market euphoria.
The hopes for a soon economic rebound are pushing up the stock indexes and the EURUSD. The Bloomberg data suggest a sharper downturn of the euro-area PMI than that of the US in the first weeks of November. Furthermore, the number of new coronavirus cases in Europe is higher than in the USA. Despite all the negative factors, the euro is growing.
Investors believe in the economic recovery. The progress in the vaccine development and the hopes for a V-shaped recovery of the US GDP allow Morgan Stanley to recommend investors to continue buying stocks and corporate bonds and selling Treasuries and the US dollar. According to the company’s forecast, the USD index will drop by 4% by the end of 2021. JP Morgan and Goldman Sachs are also optimistic. They suggest that the US presidential election results and the gradual improvement of the epidemiological situation will support the growth of the stock.
The trust in the vaccines implies that the global PMI will continue increasing despite the second pandemic wave. The correlation between the PMI and the Treasury yields means a big growth potential of the US bond market. The lesson learned from the current recession suggests that it’s better to ignore the growing debt and continue selling money rather than saving it up. Extensions of the issue volumes will encourage investors to withdraw the money from the secondary market and spend it in the initial market. In addition to the hopes for the global GDP recovery, this fact will send the yields up.
Italy is willing to issue bonds in US dollars at a rate of 165 basis points higher than their euro-area peers. Why should a country pay more when it can borrow cheaper in its own currency, not to mention cheap loans from the European Stability Mechanism? Italy needs money. If there is demand, why not sell the securities at a higher price?
The higher risk appetite and growing bond yields are a positive factor for the EURUSD.
Weekly EURUSD trading plan
Therefore, if Pfizer’s vaccine really saves the world from the pandemic, the global economic recovery promises good profits for the euro buyers. However, one should be cautious when holding the EURUSD longs entered at level 1.18. If the S&P 500 goes down, the traders will start selling the euro.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/euro-believes-in-vaccine-forecast-as-of-16112020/?uid=285861726&cid=79634
Dynamics of EURUSD and the change in the COVID-19 cases
Weekly euro fundamental forecast
People drive the markets. The unexpected moves of asset prices often result from people’s puzzling decisions. The entire world is inspired by the positive results of the COVID-19 vaccines, and the S&P 500 hits fresh highs. Why has Pfizer CEO Albert Burla sold shares of $ 5.6 million in the pharmaceutical company? Does he want to sell at good prices when everybody is buying? Or does he not believe in the vaccine? If so, the disappointment could soon replace the market euphoria.
The hopes for a soon economic rebound are pushing up the stock indexes and the EURUSD. The Bloomberg data suggest a sharper downturn of the euro-area PMI than that of the US in the first weeks of November. Furthermore, the number of new coronavirus cases in Europe is higher than in the USA. Despite all the negative factors, the euro is growing.
Investors believe in the economic recovery. The progress in the vaccine development and the hopes for a V-shaped recovery of the US GDP allow Morgan Stanley to recommend investors to continue buying stocks and corporate bonds and selling Treasuries and the US dollar. According to the company’s forecast, the USD index will drop by 4% by the end of 2021. JP Morgan and Goldman Sachs are also optimistic. They suggest that the US presidential election results and the gradual improvement of the epidemiological situation will support the growth of the stock.
The trust in the vaccines implies that the global PMI will continue increasing despite the second pandemic wave. The correlation between the PMI and the Treasury yields means a big growth potential of the US bond market. The lesson learned from the current recession suggests that it’s better to ignore the growing debt and continue selling money rather than saving it up. Extensions of the issue volumes will encourage investors to withdraw the money from the secondary market and spend it in the initial market. In addition to the hopes for the global GDP recovery, this fact will send the yields up.
Italy is willing to issue bonds in US dollars at a rate of 165 basis points higher than their euro-area peers. Why should a country pay more when it can borrow cheaper in its own currency, not to mention cheap loans from the European Stability Mechanism? Italy needs money. If there is demand, why not sell the securities at a higher price?
The higher risk appetite and growing bond yields are a positive factor for the EURUSD.
Weekly EURUSD trading plan
Therefore, if Pfizer’s vaccine really saves the world from the pandemic, the global economic recovery promises good profits for the euro buyers. However, one should be cautious when holding the EURUSD longs entered at level 1.18. If the S&P 500 goes down, the traders will start selling the euro.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/euro-believes-in-vaccine-forecast-as-of-16112020/?uid=285861726&cid=79634
Dynamics of EURUSD and the change in the COVID-19 cases
LiteFinance
Dollar looks for benefits. Forecast as of 13.11.2020
Investors wonder if it is relevant to sell the greenback as a safe haven or to buy because the US economy performs better than the euro-area. Therefore, the EURUSD tends to consolidate. Let us discuss this and make up a trading plan.
Weekly US dollar fundamental forecast
The market is like an ocean; the calm follows the storm. But calm sometimes is anxious; investors can’t define the further trend direction. Investors start exiting longs on the US stocks amid the record number of hospitalizations in the USA. Besides, the number of new COVID-19 cases is above 100,000 per day during nine consecutive days, and some US governors impose new restrictions. Another strict lockdown will hardly occur, but local isolation will result in job losses and an economic downturn. The EURUSD bulls will lose the major benefit if the S&P 500 fails to continue the rally.
The euro is supported by easing the market uncertainty and the hope for the global GDP recovery amid the vaccination. The US dollar could benefit from the divergence in economic expansion and monetary policies. According to 90% of 65 Wall Street Journal experts, the financial markets' uncertainty will ease as the US voting results are announced, and there is positive news about the vaccines. 80% of specialists expect the market to stabilize soon. According to Christine Lagarde, the ECB sees far less uncertainty than before amid Joe Biden's victory, progress on Brexit, and successful vaccine tests. The more clarity there is in the market, the less reason to buy safe-haven assets, including the US dollar.
On the other hand, the greenback should benefit from US economic performance. According to Wall Street Journal experts, the euro-area economy is likely to face a double recession while the US economy will show better results than earlier expected. The US GDP should contract by 2.7%, compared to the previously expected drop of 3.6%. The unemployment rate will drop to 6.7%, not to 7.8%. The risk of another downturn within twelve months has been significantly down.
The forecasts of experts look optimistic, but the pandemic does not end. Jerome Powell warns that the next few months will be tough for the United States and that it is too early to assess the impact of vaccine news on the economy's development. New restrictions can discourage those who think the glass is half full.
If the greenback loses the advantage of growth divergence, it may benefit from underestimating uncertainty. There are more than enough reasons for uncertainty growth. It is not known whether Washington's attitude towards Beijing will soften under Biden. It is unknown if Democrats and Republicans will find common ground over the fiscal stimulus. 58% of Wall Street Journal experts expect the stimulus of $1 trillion -$2 trillion, 29% expect less than $1 trillion, 13% predict a stimulus package of $2.1 trillion -$3 trillion.
WeeklyEURUSD trading plan
Therefore, some benefits of the US dollar have exhausted, some still work. That is why the EURUSD trend is not clear. If the pair breaks out the resistance at 1.1845, the bulls should go ahead. On the other hand, if the price goes below the support at 1.176, the bears can take control.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/dollar-looks-for-benefits-forecast-as-of-13112020/?uid=285861726&cid=79634
Dynamics of risk of US economic recession
Investors wonder if it is relevant to sell the greenback as a safe haven or to buy because the US economy performs better than the euro-area. Therefore, the EURUSD tends to consolidate. Let us discuss this and make up a trading plan.
Weekly US dollar fundamental forecast
The market is like an ocean; the calm follows the storm. But calm sometimes is anxious; investors can’t define the further trend direction. Investors start exiting longs on the US stocks amid the record number of hospitalizations in the USA. Besides, the number of new COVID-19 cases is above 100,000 per day during nine consecutive days, and some US governors impose new restrictions. Another strict lockdown will hardly occur, but local isolation will result in job losses and an economic downturn. The EURUSD bulls will lose the major benefit if the S&P 500 fails to continue the rally.
The euro is supported by easing the market uncertainty and the hope for the global GDP recovery amid the vaccination. The US dollar could benefit from the divergence in economic expansion and monetary policies. According to 90% of 65 Wall Street Journal experts, the financial markets' uncertainty will ease as the US voting results are announced, and there is positive news about the vaccines. 80% of specialists expect the market to stabilize soon. According to Christine Lagarde, the ECB sees far less uncertainty than before amid Joe Biden's victory, progress on Brexit, and successful vaccine tests. The more clarity there is in the market, the less reason to buy safe-haven assets, including the US dollar.
On the other hand, the greenback should benefit from US economic performance. According to Wall Street Journal experts, the euro-area economy is likely to face a double recession while the US economy will show better results than earlier expected. The US GDP should contract by 2.7%, compared to the previously expected drop of 3.6%. The unemployment rate will drop to 6.7%, not to 7.8%. The risk of another downturn within twelve months has been significantly down.
The forecasts of experts look optimistic, but the pandemic does not end. Jerome Powell warns that the next few months will be tough for the United States and that it is too early to assess the impact of vaccine news on the economy's development. New restrictions can discourage those who think the glass is half full.
If the greenback loses the advantage of growth divergence, it may benefit from underestimating uncertainty. There are more than enough reasons for uncertainty growth. It is not known whether Washington's attitude towards Beijing will soften under Biden. It is unknown if Democrats and Republicans will find common ground over the fiscal stimulus. 58% of Wall Street Journal experts expect the stimulus of $1 trillion -$2 trillion, 29% expect less than $1 trillion, 13% predict a stimulus package of $2.1 trillion -$3 trillion.
WeeklyEURUSD trading plan
Therefore, some benefits of the US dollar have exhausted, some still work. That is why the EURUSD trend is not clear. If the pair breaks out the resistance at 1.1845, the bulls should go ahead. On the other hand, if the price goes below the support at 1.176, the bears can take control.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/dollar-looks-for-benefits-forecast-as-of-13112020/?uid=285861726&cid=79634
Dynamics of risk of US economic recession
LiteFinance
Euro and ‘fun isolation’. Forecast as of 12.11.2020
Monthly euro fundamental forecast
I have often mentioned that the fourth quarter should be similar to the second, although the disaster should be less dramatic. This is evident from economic data, which suggests the current restrictions hit the euro-area economy. However, the damage is far less than it was during the previous lockdown. People continue going to work, manufacturing operates, and the government restricts entertainment and retail trading. The so-called ‘fun isolation’ suggests that vaccines' introduction will allow the euro-area economy to recover soon. This fact lets me hope that the EURUSD correction won’t be deep.
Of course, the ECB would like the euro to cost as little as possible, which will support exports and accelerate inflation. In her recent speech, Christine Lagarde highlighted the effectiveness of the Pandemic Emergence Purchase Program (PEPP) and anti-crisis long-term refinancing operation (LTRO). This was a clear signal that both of them will be expanded in December. On the other hand, the ECB president did not say anything about interest-rate changes. It is quite possible that by increasing the scale of QE, the ECB will cause the same reaction in EURUSD as the Bank of England did by its similar actions. Remember, the pound rose in response to the BoE monetary easing in November.
But still, the primary growth driver for the EURUSD is not the liquidity trap suggesting lower efficiency of the stimulating measures as their volumes increase and inadequate response of the regional currency. That is the rally of the US stock indexes, which supports the euro. Yes, the S&P 500 growth on November 9 unexpectedly supported the dollar. But this situation resulted from the realization of the investment idea of Biden’s victory in the US presidential election. The correlation between the US stock market and the EURUSD should soon restore, which could encourage the euro bulls to go ahead.
The record stimuli as the response to the recession have poured a huge amount of money into the financial system. Ahead of the elections, investors preferred to hold cash because of uncertainty. Now, that money goes back into the market. Amid positive news about vaccines, the S&P 500 rallies thanks to traditional industries, including industry and banking. As soon as there are talks about a long vaccine introduction process, the stock market is still rising. This time thanks to the tech stocks.
Monthly EURUSD trading plan
The current situation looks like that of the second quarter when the US and the euro-area economies slid down into recession, and the S&P 500 was growing. Investors expected the recession to end soon, and the GDP recovery to be V-shaped. The same is now. It will take a long time to introduce the COVID-19 vaccine after it has been approved. However, the stock indexes are rallying up, suggesting purchases of the EURUSD if the price closes above 1.18 and 1.1845. Otherwise, the US stock market correction will send the euro down to $1.172 and $1.167.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/euro-and-fun-isolation-forecast-as-of-12112020/?uid=285861726&cid=79634
Dynamics and structure of ECB assets
Monthly euro fundamental forecast
I have often mentioned that the fourth quarter should be similar to the second, although the disaster should be less dramatic. This is evident from economic data, which suggests the current restrictions hit the euro-area economy. However, the damage is far less than it was during the previous lockdown. People continue going to work, manufacturing operates, and the government restricts entertainment and retail trading. The so-called ‘fun isolation’ suggests that vaccines' introduction will allow the euro-area economy to recover soon. This fact lets me hope that the EURUSD correction won’t be deep.
Of course, the ECB would like the euro to cost as little as possible, which will support exports and accelerate inflation. In her recent speech, Christine Lagarde highlighted the effectiveness of the Pandemic Emergence Purchase Program (PEPP) and anti-crisis long-term refinancing operation (LTRO). This was a clear signal that both of them will be expanded in December. On the other hand, the ECB president did not say anything about interest-rate changes. It is quite possible that by increasing the scale of QE, the ECB will cause the same reaction in EURUSD as the Bank of England did by its similar actions. Remember, the pound rose in response to the BoE monetary easing in November.
But still, the primary growth driver for the EURUSD is not the liquidity trap suggesting lower efficiency of the stimulating measures as their volumes increase and inadequate response of the regional currency. That is the rally of the US stock indexes, which supports the euro. Yes, the S&P 500 growth on November 9 unexpectedly supported the dollar. But this situation resulted from the realization of the investment idea of Biden’s victory in the US presidential election. The correlation between the US stock market and the EURUSD should soon restore, which could encourage the euro bulls to go ahead.
The record stimuli as the response to the recession have poured a huge amount of money into the financial system. Ahead of the elections, investors preferred to hold cash because of uncertainty. Now, that money goes back into the market. Amid positive news about vaccines, the S&P 500 rallies thanks to traditional industries, including industry and banking. As soon as there are talks about a long vaccine introduction process, the stock market is still rising. This time thanks to the tech stocks.
Monthly EURUSD trading plan
The current situation looks like that of the second quarter when the US and the euro-area economies slid down into recession, and the S&P 500 was growing. Investors expected the recession to end soon, and the GDP recovery to be V-shaped. The same is now. It will take a long time to introduce the COVID-19 vaccine after it has been approved. However, the stock indexes are rallying up, suggesting purchases of the EURUSD if the price closes above 1.18 and 1.1845. Otherwise, the US stock market correction will send the euro down to $1.172 and $1.167.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/euro-and-fun-isolation-forecast-as-of-12112020/?uid=285861726&cid=79634
Dynamics and structure of ECB assets
LiteFinance
Dollar smiles again. Forecast as of 11.11.2020
Monthly US dollar fundamental forecast
It is impossible to predict market trends. The market is unpredictable; it can always surprise us. The EURUSD bulls are surprised because the pair doesn’t grow. There should be several reasons for the euro growth. Joe Biden has won the US presidential election; there is positive news about the COVID-19 vaccines. Investors should have started selling the dollar. However, the greenback remains strong, encouraging traders to buy the USD.
Jefferies notes that the USD closed in the red zone six months out of the last seven, having been down by 11%. The dollar’s surge on November 9 proves that most of the negative had been priced in the quotes, and the greenback will hardly start falling now. The central bank in Europe and Asia, which compete with the Fed, are willing to provide an extra monetary stimulus, which is a bearish factor for their local currencies. Jefferies sees the EURUSD falling to 1.14 as the dollar smile theory is popular again. It suggests the USD should strengthen at the final, third stage of the economic cycle because the US GDP outperforms the global peers.
Even though the next two quarters, according to the President of the Federal Reserve Bank of Dallas Robert Kaplan, will be tough for the US, it should demonstrate robust growth in 2021. Unlike Europe, the USA does not impose a lockdown, and the restrictions introduced in the euro-area countries are costly. For example, each month of helping businesses and workers in Italy affected by COVID-19 will cost Rome €10 billion. If the restrictions last through March, it will cost €40 billion - €50 billion, or 3% of GDP. Furthermore, the PMIs and other indicators are falling, which is confirmed by a decrease in the ZEW Indicator of Economic Sentiment for Germany to the lowest level since April.
The epidemiological situation in the euro area deteriorates. The ECB estimates that one in seven workers in Spain is associated with a business at risk of collapse, which compares with 8% of employees in Germany and France, and 10% - in Italy. The divergence in economic growth is in favor of the USA, which presses down the EURUSD.
And what about Biden’s victory and coronavirus vaccines? I believe the first driver has already worked out, which is evident from the euro drop on November 9. There is still much uncertainty around vaccines. Nobody can say how quickly they will be introduced and how long the immunity will last. The market needs time. The US stock indexes could be overvalued and will be unstable in the next few weeks. Besides, the positive news about COVID-19 vaccines will give Republicans a reason to delay or adopt a smaller fiscal stimulus than previously anticipated.
MonthlyEURUSD trading plan
The euro should be strong in the long-term outlook, but it should weaken in the short term. Under such conditions, one could buy the EURUSD at the breakout of the resistance at 1.192. It will be relevant to sell the euro-dollar if the price breaks out the support at 1.179.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/dollar-smiles-again-forecast-as-of-11112020/?uid=285861726&cid=79634
Dynamics of German economic sentiment index
Monthly US dollar fundamental forecast
It is impossible to predict market trends. The market is unpredictable; it can always surprise us. The EURUSD bulls are surprised because the pair doesn’t grow. There should be several reasons for the euro growth. Joe Biden has won the US presidential election; there is positive news about the COVID-19 vaccines. Investors should have started selling the dollar. However, the greenback remains strong, encouraging traders to buy the USD.
Jefferies notes that the USD closed in the red zone six months out of the last seven, having been down by 11%. The dollar’s surge on November 9 proves that most of the negative had been priced in the quotes, and the greenback will hardly start falling now. The central bank in Europe and Asia, which compete with the Fed, are willing to provide an extra monetary stimulus, which is a bearish factor for their local currencies. Jefferies sees the EURUSD falling to 1.14 as the dollar smile theory is popular again. It suggests the USD should strengthen at the final, third stage of the economic cycle because the US GDP outperforms the global peers.
Even though the next two quarters, according to the President of the Federal Reserve Bank of Dallas Robert Kaplan, will be tough for the US, it should demonstrate robust growth in 2021. Unlike Europe, the USA does not impose a lockdown, and the restrictions introduced in the euro-area countries are costly. For example, each month of helping businesses and workers in Italy affected by COVID-19 will cost Rome €10 billion. If the restrictions last through March, it will cost €40 billion - €50 billion, or 3% of GDP. Furthermore, the PMIs and other indicators are falling, which is confirmed by a decrease in the ZEW Indicator of Economic Sentiment for Germany to the lowest level since April.
The epidemiological situation in the euro area deteriorates. The ECB estimates that one in seven workers in Spain is associated with a business at risk of collapse, which compares with 8% of employees in Germany and France, and 10% - in Italy. The divergence in economic growth is in favor of the USA, which presses down the EURUSD.
And what about Biden’s victory and coronavirus vaccines? I believe the first driver has already worked out, which is evident from the euro drop on November 9. There is still much uncertainty around vaccines. Nobody can say how quickly they will be introduced and how long the immunity will last. The market needs time. The US stock indexes could be overvalued and will be unstable in the next few weeks. Besides, the positive news about COVID-19 vaccines will give Republicans a reason to delay or adopt a smaller fiscal stimulus than previously anticipated.
MonthlyEURUSD trading plan
The euro should be strong in the long-term outlook, but it should weaken in the short term. Under such conditions, one could buy the EURUSD at the breakout of the resistance at 1.192. It will be relevant to sell the euro-dollar if the price breaks out the support at 1.179.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/dollar-smiles-again-forecast-as-of-11112020/?uid=285861726&cid=79634
Dynamics of German economic sentiment index
LiteFinance
Gold pays the debts back. 10.11.2020
Monthly gold fundamental forecast
Gold is rolling down, and my forecast comes true. Just a few days ago, I recommended selling gold on the rebound from the resistance at $1965. Gold has been more than 5% down, and one could have made quite a lot of money on this strategy. Most of the positive factors have already been priced in the XAUUSD. The good news about COVID-19 vaccines has crashed the gold prices.
Gold trades could face the same situation as it was in 2011. 9 years ago, the global economy was recovering after the recession; massive fiscal and monetary stimuli weakened the world’s major currencies and fueled up inflation expectations, which was a bullish factor for the XAUUSD. However, consumer prices grew very slowly, and the gold uptrend broke down. In 2020, the hopes for the expansion of financial aid to at least $2 trillion encouraged the gold bulls to go ahead. Nonetheless, the divided congress and the information about vaccines set the gold buyers back.
The gold uptrend seemed to base on a strong foundation. The monetary stimuli now are the biggest ever, which boosts the central banks’ balance sheets, weakening the global currencies and increasing the volume of negative-yielding bonds up to a record high of $17.05 trillion.
Nonetheless, the situation cannot be stable by its nature, and it is going to change.
First, grate money supplies provided by central banks turned out into a liquidity trap. Additional monetary stimuli won’t be as effective as they used to be. It is evident from the reaction of the Australian dollar and the British pound to the monetary easing performed by the RBA and the BoE. These currencies strengthened, though they should have weakened under normal conditions. Regulators are more likely to change the structure of the QE rather than the volumes. The balance sheets should not increase as fast as before.
Second, Joe Biden’s victory along with the divided Congress lowers the chances of a massive fiscal stimulus. The gold bulls’ hopes for the reflationary policy, which could have been performed along with the presence of the ‘blue wave’, haven’t met the reality. That is why the speculators are exiting the gold longs.
Finally, if the information about the effectiveness of the OCVID-19 vaccine is true, the global economic recovery will drive the global bond market rates up and encourage investors to sell off the XAUUSD. Gold uptrend might recover only if the dollar is weak, but that will hardly happen soon. The dollar should weaken against the euro only provided the EU cancels the restrictions.
Monthly gold trading plan
I recommend holding down the shorts entered at level $1965. It will be relevant to add up to the sell positions if the price fails to break out the resistance at $1900 and $1915 or tests the supports at $1875 and $1860.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/gold-pays-the-debts-back-10112020/?uid=285861726&cid=79634
Dynamics of central banks’ balance sheets
Monthly gold fundamental forecast
Gold is rolling down, and my forecast comes true. Just a few days ago, I recommended selling gold on the rebound from the resistance at $1965. Gold has been more than 5% down, and one could have made quite a lot of money on this strategy. Most of the positive factors have already been priced in the XAUUSD. The good news about COVID-19 vaccines has crashed the gold prices.
Gold trades could face the same situation as it was in 2011. 9 years ago, the global economy was recovering after the recession; massive fiscal and monetary stimuli weakened the world’s major currencies and fueled up inflation expectations, which was a bullish factor for the XAUUSD. However, consumer prices grew very slowly, and the gold uptrend broke down. In 2020, the hopes for the expansion of financial aid to at least $2 trillion encouraged the gold bulls to go ahead. Nonetheless, the divided congress and the information about vaccines set the gold buyers back.
The gold uptrend seemed to base on a strong foundation. The monetary stimuli now are the biggest ever, which boosts the central banks’ balance sheets, weakening the global currencies and increasing the volume of negative-yielding bonds up to a record high of $17.05 trillion.
Nonetheless, the situation cannot be stable by its nature, and it is going to change.
First, grate money supplies provided by central banks turned out into a liquidity trap. Additional monetary stimuli won’t be as effective as they used to be. It is evident from the reaction of the Australian dollar and the British pound to the monetary easing performed by the RBA and the BoE. These currencies strengthened, though they should have weakened under normal conditions. Regulators are more likely to change the structure of the QE rather than the volumes. The balance sheets should not increase as fast as before.
Second, Joe Biden’s victory along with the divided Congress lowers the chances of a massive fiscal stimulus. The gold bulls’ hopes for the reflationary policy, which could have been performed along with the presence of the ‘blue wave’, haven’t met the reality. That is why the speculators are exiting the gold longs.
Finally, if the information about the effectiveness of the OCVID-19 vaccine is true, the global economic recovery will drive the global bond market rates up and encourage investors to sell off the XAUUSD. Gold uptrend might recover only if the dollar is weak, but that will hardly happen soon. The dollar should weaken against the euro only provided the EU cancels the restrictions.
Monthly gold trading plan
I recommend holding down the shorts entered at level $1965. It will be relevant to add up to the sell positions if the price fails to break out the resistance at $1900 and $1915 or tests the supports at $1875 and $1860.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/gold-pays-the-debts-back-10112020/?uid=285861726&cid=79634
Dynamics of central banks’ balance sheets
LiteFinance
Dollar is set back by euphoria. Forecast as of 09.11.2020
Weekly US dollar fundamental analysis
Euphoria rules the market. Investors forgot about both COVID-19, the US fiscal stimulus's unsettled issue, and Donald Trump rejecting the voting results. Traders are satisfied with the less uncertainty around Joe Biden’s policy, hoping for lower volatility. Analysts suggest that the divided Congress won’t allow Biden to carry out radical reforms in tightening taxation and regulation of technology companies. As a result, the S&P 500 grew by 7.3% in the first week of November, and the USD dropped to the lowest level since early September.
How long will the euphoria last? History proves that starting from 2000, if the S&P 500 was growing on election day, it continued growing in November and December. The first years of presidential terms were also favorable for the US stock indexes. The S&P 500 grew by 18.6% on average. However, the stock indexes’ trends during the time of the divided Congress, which prevented the White House from carrying out radical reforms, were controversial. During 45 years, starting from 1928, when one party controlled the US government, the stock market rose at an average rate of 7.46% annually, up from 7.26% in 46 years when the power was divided.
In my opinion, the markets are going too fast. Investors want to join the stock market’s uptrend, forgetting about the negative. However, are some negative factors that should have their effect. First, political uncertainty continues. Donald Trump is challenging the election results. Because of the second round of voting in Georgia, we will know the partisan makeup of the U.S. Senate only on January 5. It creates obstacles to the agreement on the new fiscal stimulus. Until a fresh stimulus is provided, the US economy will be slowing down, which presses down both the global GDP and the risk appetite.
Second, the coronavirus vaccines haven’t yet been developed, and the COVID-19 pandemic continues in the USA and in the euro area. The numbers of new coronavirus cases, hospitalizations, and deaths are hitting all-time highs, so investors’ optimism is surprising. The epidemiological situation in Europe is deteriorating. France, Germany, and other countries are locked down. This fact suggests that the divergence in the economic growth and monetary policy is in favor of the EURUSD bears.
Finally, the U.S. dollar may not be falling amid the growth of the S&P 500. The negative correlation between stocks and the USD is the strongest at the time of uncertainty, also because of the US presidential election. Once uncertainty eases, the negative correlation should stop working.
Weekly EURUSD trading plan
Euphoria rules the market, but it can’t last for long. If the EURUSD bulls fail to hold the price above 1.188, the pair should roll down to 1.183 and 1.1785. Otherwise, if the resistance is held up, the euro could continue the rally up to $1.195-$1.196 and even $1.2. Next, large traders should take some profits and exit the longs.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/dollar-is-set-back-by-euphoria-forecast-as-of-09112020/?uid=285861726&cid=79634
Reaction of S&P 500 to the political situation in USA
Weekly US dollar fundamental analysis
Euphoria rules the market. Investors forgot about both COVID-19, the US fiscal stimulus's unsettled issue, and Donald Trump rejecting the voting results. Traders are satisfied with the less uncertainty around Joe Biden’s policy, hoping for lower volatility. Analysts suggest that the divided Congress won’t allow Biden to carry out radical reforms in tightening taxation and regulation of technology companies. As a result, the S&P 500 grew by 7.3% in the first week of November, and the USD dropped to the lowest level since early September.
How long will the euphoria last? History proves that starting from 2000, if the S&P 500 was growing on election day, it continued growing in November and December. The first years of presidential terms were also favorable for the US stock indexes. The S&P 500 grew by 18.6% on average. However, the stock indexes’ trends during the time of the divided Congress, which prevented the White House from carrying out radical reforms, were controversial. During 45 years, starting from 1928, when one party controlled the US government, the stock market rose at an average rate of 7.46% annually, up from 7.26% in 46 years when the power was divided.
In my opinion, the markets are going too fast. Investors want to join the stock market’s uptrend, forgetting about the negative. However, are some negative factors that should have their effect. First, political uncertainty continues. Donald Trump is challenging the election results. Because of the second round of voting in Georgia, we will know the partisan makeup of the U.S. Senate only on January 5. It creates obstacles to the agreement on the new fiscal stimulus. Until a fresh stimulus is provided, the US economy will be slowing down, which presses down both the global GDP and the risk appetite.
Second, the coronavirus vaccines haven’t yet been developed, and the COVID-19 pandemic continues in the USA and in the euro area. The numbers of new coronavirus cases, hospitalizations, and deaths are hitting all-time highs, so investors’ optimism is surprising. The epidemiological situation in Europe is deteriorating. France, Germany, and other countries are locked down. This fact suggests that the divergence in the economic growth and monetary policy is in favor of the EURUSD bears.
Finally, the U.S. dollar may not be falling amid the growth of the S&P 500. The negative correlation between stocks and the USD is the strongest at the time of uncertainty, also because of the US presidential election. Once uncertainty eases, the negative correlation should stop working.
Weekly EURUSD trading plan
Euphoria rules the market, but it can’t last for long. If the EURUSD bulls fail to hold the price above 1.188, the pair should roll down to 1.183 and 1.1785. Otherwise, if the resistance is held up, the euro could continue the rally up to $1.195-$1.196 and even $1.2. Next, large traders should take some profits and exit the longs.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/dollar-is-set-back-by-euphoria-forecast-as-of-09112020/?uid=285861726&cid=79634
Reaction of S&P 500 to the political situation in USA
LiteFinance
Dollar is following its heart. Forecast as of 06.11.2020
Weekly US dollar fundamental analysis
Markets are just like people. They follow their hearts from time to time and forget about common sense. Investors like the idea of the division in the Congress and the Democratic president. In this scenario, the risks of tax hikes and high tech companies' strict regulation are much lower. This fact supports the stock indexes. The S&P 500 has been up by 1% and more during four consecutive trading sessions, which has been for the first time since 1982. In percentage terms, those days have been the best since early April. Markets consider Joe Biden to be a better president than Donald Trump, which allowed the yuan to gain back more than 50% of the losses faced during trade wars. The EURUSD tested the resistance at 1.186-1.187.
The growing chance of Biden’s victory encourages investors to spend the cash, which they have been accumulating ahead of the US presidential election. They are buying stocks and bonds. However, traders forget about other factors, such as the pandemic, uncertainty around the new fiscal stimulus, and Donald Trump’s willingness to reject the voting results. It looks like an attempt to give out desirable for valid. According to TD securities, there should not be any concerns about challenging the voting results, which has pushed the risky assets up and weakened the US dollar. DZ Bank believes that the greenback is falling because the voting results were reported earlier than some had expected. I do not think the above arguments to be strong.
I suppose traders are following their hearts. They invest the capitals in the securities as they worry not to miss the uptrend, which sends the S&P 500 up, fuels global risk appetite, and weakens the US dollar against a basket of currencies.
How long can it be going on? It depends. People in love are passionate during different periods. However, common sense should win sooner or later. The USA performs better than the euro area at the current stage of the economic cycle. The Fed is not willing to boost the monetary stimulus while the ECB tends to increase the current QE pace. According to Bloomberg’s leading indicators, the largest euro-area economies face a deeper drawdown in the PMIs because of the new lockdowns. The euro-area bond yields fall, which signals that the markets expect the ECB to take active measures in December.
Weekly EURUSD trading plan
Let us be sensible during times of euphoria. Although the EURUSD has rebounded from the resistance at 1.186, the shorts entered in the zone seem vulnerable. It will be relevant to hold down the shorts if the pair goes below the support at 1.179. The S&P 500 rally could push the euro up above $1.188. The EURUSD medium-term outlook depends on whether the bulls can hold the price above 1.188.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/dollar-is-following-its-heart-forecast-as-of-06112020/?uid=285861726&cid=79634
Dynamics of world's currencies versus the US dollar
Weekly US dollar fundamental analysis
Markets are just like people. They follow their hearts from time to time and forget about common sense. Investors like the idea of the division in the Congress and the Democratic president. In this scenario, the risks of tax hikes and high tech companies' strict regulation are much lower. This fact supports the stock indexes. The S&P 500 has been up by 1% and more during four consecutive trading sessions, which has been for the first time since 1982. In percentage terms, those days have been the best since early April. Markets consider Joe Biden to be a better president than Donald Trump, which allowed the yuan to gain back more than 50% of the losses faced during trade wars. The EURUSD tested the resistance at 1.186-1.187.
The growing chance of Biden’s victory encourages investors to spend the cash, which they have been accumulating ahead of the US presidential election. They are buying stocks and bonds. However, traders forget about other factors, such as the pandemic, uncertainty around the new fiscal stimulus, and Donald Trump’s willingness to reject the voting results. It looks like an attempt to give out desirable for valid. According to TD securities, there should not be any concerns about challenging the voting results, which has pushed the risky assets up and weakened the US dollar. DZ Bank believes that the greenback is falling because the voting results were reported earlier than some had expected. I do not think the above arguments to be strong.
I suppose traders are following their hearts. They invest the capitals in the securities as they worry not to miss the uptrend, which sends the S&P 500 up, fuels global risk appetite, and weakens the US dollar against a basket of currencies.
How long can it be going on? It depends. People in love are passionate during different periods. However, common sense should win sooner or later. The USA performs better than the euro area at the current stage of the economic cycle. The Fed is not willing to boost the monetary stimulus while the ECB tends to increase the current QE pace. According to Bloomberg’s leading indicators, the largest euro-area economies face a deeper drawdown in the PMIs because of the new lockdowns. The euro-area bond yields fall, which signals that the markets expect the ECB to take active measures in December.
Weekly EURUSD trading plan
Let us be sensible during times of euphoria. Although the EURUSD has rebounded from the resistance at 1.186, the shorts entered in the zone seem vulnerable. It will be relevant to hold down the shorts if the pair goes below the support at 1.179. The S&P 500 rally could push the euro up above $1.188. The EURUSD medium-term outlook depends on whether the bulls can hold the price above 1.188.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/dollar-is-following-its-heart-forecast-as-of-06112020/?uid=285861726&cid=79634
Dynamics of world's currencies versus the US dollar
LiteFinance
Gold bulls will step back. Forecast as of 05.11.2020
Weekly fundamental forecast for gold
Gold, like most assets, lively reacted to the US presidential election. It first dropped amid the growing chance of Donald Trump’s victory; next, it resumed rising after the news about Biden’s likely victory. Gold follows Treasuries and greenback, so its short-term outlook is quite clear. Another matter is a more distant future.
The worst drop of Treasury yields over the past seven years has triggered the XAUUSD rally. If Biden could still become the President, the Democrats will hardly take the majority in the Senate. If so, the US government will hardly provide a massive fiscal stimulus. They will issue fewer bonds than it was earlier expected. Does it make sense to sell Treasuries in the secondary market?
Besides, the daily death rate of COVID-19 hits a record high; the number of infected people exceeded 600 thousand per day for the first time since the pandemic had started. Furthermore, some euro-area economies are locked down, the US economy has slowed down in the fourth quarter. Therefore, the Treasuries should continue falling. Nonetheless, the yield is at a level higher than that in summer, 0.6%, which signals that markets still expect a stimulus. Remember, gold can’t win over the income-generating assets, so the drop in Treasury yields is a bullish factor for the XAUUSD.
Gold should also benefit from a weaker dollar. The dollar is rising amid Trump’s success, and the chances for Trump’s reelection are going down. So, the USD is also going down. In fact, traders are working out the idea of the widening of the US twin deficit in the case of Joe Biden’s victory. Is there any use in trading based on a single idea? One had better focus on such factors as the leading pace of the US GDP compared to the euro-area growth, pressed down by lockdowns, and the continuing political uncertainty resulted from Trump’s willingness to reject the election results.
If the greenback starts rising, the gold rally will stop. Will the Fed’s pricing affect it? I don’t think the FOMC member would take active measures at the October meeting, as the voting results are still unknown. The Fed is likely to stick to its wait-and-see approach, going on with its vague speeches about the necessity of the fiscal stimulus and the US central bank’s willingness to take active steps if needed.
The uncertainty around the US presidential elections undermines the importance of not only the Fed’s meeting but also of the US jobs report. On the other hand, if it will be known who has won the elections by the time of the release of the US employment data, investors will consider the factor of the downturn in the US employment.
Weekly gold trading plan
Therefore, the greenback could soon start growing. If so, it should be relevant to enter short-term gold sell trades on the price rebound from the resistances at $1930-$1935 and $1965-$1970.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/gold-bulls-will-step-back-forecast-as-of-05112020/?uid=285861726&cid=79634
Dynamics of US Treasury yield
Weekly fundamental forecast for gold
Gold, like most assets, lively reacted to the US presidential election. It first dropped amid the growing chance of Donald Trump’s victory; next, it resumed rising after the news about Biden’s likely victory. Gold follows Treasuries and greenback, so its short-term outlook is quite clear. Another matter is a more distant future.
The worst drop of Treasury yields over the past seven years has triggered the XAUUSD rally. If Biden could still become the President, the Democrats will hardly take the majority in the Senate. If so, the US government will hardly provide a massive fiscal stimulus. They will issue fewer bonds than it was earlier expected. Does it make sense to sell Treasuries in the secondary market?
Besides, the daily death rate of COVID-19 hits a record high; the number of infected people exceeded 600 thousand per day for the first time since the pandemic had started. Furthermore, some euro-area economies are locked down, the US economy has slowed down in the fourth quarter. Therefore, the Treasuries should continue falling. Nonetheless, the yield is at a level higher than that in summer, 0.6%, which signals that markets still expect a stimulus. Remember, gold can’t win over the income-generating assets, so the drop in Treasury yields is a bullish factor for the XAUUSD.
Gold should also benefit from a weaker dollar. The dollar is rising amid Trump’s success, and the chances for Trump’s reelection are going down. So, the USD is also going down. In fact, traders are working out the idea of the widening of the US twin deficit in the case of Joe Biden’s victory. Is there any use in trading based on a single idea? One had better focus on such factors as the leading pace of the US GDP compared to the euro-area growth, pressed down by lockdowns, and the continuing political uncertainty resulted from Trump’s willingness to reject the election results.
If the greenback starts rising, the gold rally will stop. Will the Fed’s pricing affect it? I don’t think the FOMC member would take active measures at the October meeting, as the voting results are still unknown. The Fed is likely to stick to its wait-and-see approach, going on with its vague speeches about the necessity of the fiscal stimulus and the US central bank’s willingness to take active steps if needed.
The uncertainty around the US presidential elections undermines the importance of not only the Fed’s meeting but also of the US jobs report. On the other hand, if it will be known who has won the elections by the time of the release of the US employment data, investors will consider the factor of the downturn in the US employment.
Weekly gold trading plan
Therefore, the greenback could soon start growing. If so, it should be relevant to enter short-term gold sell trades on the price rebound from the resistances at $1930-$1935 and $1965-$1970.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/gold-bulls-will-step-back-forecast-as-of-05112020/?uid=285861726&cid=79634
Dynamics of US Treasury yield
LiteFinance
Yen places its opponent in check. Analysis as of 04.11.2020
Monthly fundamental forecast for yen
While the greenback is waiting for the election's final results, trading currency cross rates may be worth considering. The US political landscape will undoubtedly affect most currencies, but the pandemic remains a weightier factor in Forex pricing in the medium and long terms. The strategies based on the divergence in epidemiological situations, economic growth, and monetary policies continue to yield profits. Another confirmation is the realization of the targets at 122.9 and 121.8 set in mid-October for shorts in the EURJPY.
COVID-19 hit Japan less than the eurozone: in terms of Coronavirus cases per 100,000, Japan is one of the countries that tackle the pandemic most efficiently, along with China, Taiwan, and South Korea. The situation in Belgium, Spain, and Italy looks gloomy, on the contrary.
As a result, Europe is forced to introduce new restrictions, which will cut the eurozone's Q4 GDP by 2.3%, according to Financial Times. Thus, a double recession is certainly in the air. The organization of economic development and cooperation expects that the currency block's economy will reduce 7.9% in 2020, i.e., twice as much as during the previous global crisis. I dare suppose that the second wave may even downgrade those forecasts.
The BoJ expects that the Japanese GDP will fall by 5.5% by the end of the 2020/2021 fiscal year in March. Japan's economic loss doesn't look as significant as the eurozone's since the efficiency of anti-pandemic measures in Asia is higher than in Europe.
Christine Lagarde is sure the ECB will expand a monetary stimulus package in December as the coronavirus is spreading fast across Europe. Haruhiko Kuroda and his colleagues are ready to take action if necessary, but the BoJ's Head has not seen such a necessity so far. Both regulators got caught in a liquidity trap where softer monetary policies do not have any positive effect. Both agree to play currency wars, but the ECB's intentions are manifest, and the euro is therefore falling faster than other G10 currencies.
Monthly trading plan for EURJPY
The situation may seriously change soon: vaccines' development will support the global economic recovery and international trade, which is positive news for the euro. The European countries will lift restrictions, and Christine Lagarde's hints about QE expansion will remain mere hints. According to Governor of the Austrian National Bank Robert Holzmann, there is no point in increasing buy volumes as the inflation won't speed up anyway. Instead, a change in the QE program's structure must be in focus.
This scenario looks too optimistic, though. But why not hope for the best and use the EURJPY's drawdown to 120.65 for long-term buying?
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/yen-places-its-opponent-in-check-analysis-as-of-04112020/?uid=285861726&cid=79634
Recession and pandemic
Monthly fundamental forecast for yen
While the greenback is waiting for the election's final results, trading currency cross rates may be worth considering. The US political landscape will undoubtedly affect most currencies, but the pandemic remains a weightier factor in Forex pricing in the medium and long terms. The strategies based on the divergence in epidemiological situations, economic growth, and monetary policies continue to yield profits. Another confirmation is the realization of the targets at 122.9 and 121.8 set in mid-October for shorts in the EURJPY.
COVID-19 hit Japan less than the eurozone: in terms of Coronavirus cases per 100,000, Japan is one of the countries that tackle the pandemic most efficiently, along with China, Taiwan, and South Korea. The situation in Belgium, Spain, and Italy looks gloomy, on the contrary.
As a result, Europe is forced to introduce new restrictions, which will cut the eurozone's Q4 GDP by 2.3%, according to Financial Times. Thus, a double recession is certainly in the air. The organization of economic development and cooperation expects that the currency block's economy will reduce 7.9% in 2020, i.e., twice as much as during the previous global crisis. I dare suppose that the second wave may even downgrade those forecasts.
The BoJ expects that the Japanese GDP will fall by 5.5% by the end of the 2020/2021 fiscal year in March. Japan's economic loss doesn't look as significant as the eurozone's since the efficiency of anti-pandemic measures in Asia is higher than in Europe.
Christine Lagarde is sure the ECB will expand a monetary stimulus package in December as the coronavirus is spreading fast across Europe. Haruhiko Kuroda and his colleagues are ready to take action if necessary, but the BoJ's Head has not seen such a necessity so far. Both regulators got caught in a liquidity trap where softer monetary policies do not have any positive effect. Both agree to play currency wars, but the ECB's intentions are manifest, and the euro is therefore falling faster than other G10 currencies.
Monthly trading plan for EURJPY
The situation may seriously change soon: vaccines' development will support the global economic recovery and international trade, which is positive news for the euro. The European countries will lift restrictions, and Christine Lagarde's hints about QE expansion will remain mere hints. According to Governor of the Austrian National Bank Robert Holzmann, there is no point in increasing buy volumes as the inflation won't speed up anyway. Instead, a change in the QE program's structure must be in focus.
This scenario looks too optimistic, though. But why not hope for the best and use the EURJPY's drawdown to 120.65 for long-term buying?
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/yen-places-its-opponent-in-check-analysis-as-of-04112020/?uid=285861726&cid=79634
Recession and pandemic
LiteFinance
Will Aussie repeat the hat trick? Forecast as of 03.11.2020
Monthly Australian dollar fundamental analysis
What doesn't kill makes one stronger. The RBA’s monetary expansion should have crashed the Australian dollar. RBA not only cut the cash rate down to the all-time low of 0.1% but also boosted the purchases of assets with a maturity of 5-10 years within QE by AU$100 billion. The RBA has become one of the first to react to the second pandemic wave. However, the AUDUSD, instead of falling, surged up to the bottom of figure 71. Bloomberg experts anticipate such measures of the regulator, and the time for maneuver was not right. It is not wise to ease monetary policy on the day of the US presidential election, is it?
According to Philip Lowe, the increase of the QE size will support economic recovery amid lower costs of funding and exchange rate, as well as higher assets’ price than it would be in the opposite case. RBA must have tried to improve financial conditions, as the Fed did. It was one of the reasons for the US economic growth in the third quarter. In the fourth quarter, the US GDP should face a downturn because of the difficult epidemiological situation. Australia, on the contrary, has coped with the coronavirus through a strict lockdown in Victoria. So, Australia’s GDP can well go up.
According to the RBA forecasts, Australia’s GDP in the 2020/2021 financial year will expand by 6%, in 2021/2022 - by another 4%. The forecast for the unemployment peak has been cut from 10% to 8%. The core inflation will grow by 1% in 2021, and by 1.5% in 2022.
In addition to the domestic positive factors, foreign news also supports Aussie. Despite the disputes between Australia and China, which imposed tariffs on Australian barley, launched an anti-dumping investigation into Australian wine, and suspended imports of coal and lobsters from Australia, I believe that the trade relationships will be improved. China is the largest market for Australia. China’s economic growth by 1.9%, according to the IMF forecast, will support the AUDUSD bulls. Based on the yuan price changes, the AUDUSD looks undervalued.
Monthly AUDUSD trading plan
In general, market sentiment indicates that the fourth quarter for the global economy will be similar to the second one, although the disaster scale will be smaller. If so, we have a pattern to trade the Aussie. In late March, I recommended buying the Australian dollar in the range of $0.59-$0.62 amid the expectations of the V-shaped recovery of China’s economy, and this trading idea was winning. Now, there is another chance to repeat the hat trick provided that Joe Biden wins the election.
Biden also promises to attack China for its economic and human rights violations, the US-China relations are going to improve. As a result, the entire Pacific region will benefit. Australia, with its successful COVID-19 strategy, is no exception. If Biden wins, buy the AUDUSD with targets at 0.729 and 0.733.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/will-aussie-repeat-the-hat-trick-forecast-as-of-03112020/?uid=285861726&cid=79634
Dynamics of COVID-19 cases in Australia
Monthly Australian dollar fundamental analysis
What doesn't kill makes one stronger. The RBA’s monetary expansion should have crashed the Australian dollar. RBA not only cut the cash rate down to the all-time low of 0.1% but also boosted the purchases of assets with a maturity of 5-10 years within QE by AU$100 billion. The RBA has become one of the first to react to the second pandemic wave. However, the AUDUSD, instead of falling, surged up to the bottom of figure 71. Bloomberg experts anticipate such measures of the regulator, and the time for maneuver was not right. It is not wise to ease monetary policy on the day of the US presidential election, is it?
According to Philip Lowe, the increase of the QE size will support economic recovery amid lower costs of funding and exchange rate, as well as higher assets’ price than it would be in the opposite case. RBA must have tried to improve financial conditions, as the Fed did. It was one of the reasons for the US economic growth in the third quarter. In the fourth quarter, the US GDP should face a downturn because of the difficult epidemiological situation. Australia, on the contrary, has coped with the coronavirus through a strict lockdown in Victoria. So, Australia’s GDP can well go up.
According to the RBA forecasts, Australia’s GDP in the 2020/2021 financial year will expand by 6%, in 2021/2022 - by another 4%. The forecast for the unemployment peak has been cut from 10% to 8%. The core inflation will grow by 1% in 2021, and by 1.5% in 2022.
In addition to the domestic positive factors, foreign news also supports Aussie. Despite the disputes between Australia and China, which imposed tariffs on Australian barley, launched an anti-dumping investigation into Australian wine, and suspended imports of coal and lobsters from Australia, I believe that the trade relationships will be improved. China is the largest market for Australia. China’s economic growth by 1.9%, according to the IMF forecast, will support the AUDUSD bulls. Based on the yuan price changes, the AUDUSD looks undervalued.
Monthly AUDUSD trading plan
In general, market sentiment indicates that the fourth quarter for the global economy will be similar to the second one, although the disaster scale will be smaller. If so, we have a pattern to trade the Aussie. In late March, I recommended buying the Australian dollar in the range of $0.59-$0.62 amid the expectations of the V-shaped recovery of China’s economy, and this trading idea was winning. Now, there is another chance to repeat the hat trick provided that Joe Biden wins the election.
Biden also promises to attack China for its economic and human rights violations, the US-China relations are going to improve. As a result, the entire Pacific region will benefit. Australia, with its successful COVID-19 strategy, is no exception. If Biden wins, buy the AUDUSD with targets at 0.729 and 0.733.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/will-aussie-repeat-the-hat-trick-forecast-as-of-03112020/?uid=285861726&cid=79634
Dynamics of COVID-19 cases in Australia
LiteFinance
Dollar caught a fish in dark waters. Forecast for 02.11.2020
Weekly US dollar fundamental forecast
October has become the worst month for the US stock market since March. The bond market has experienced the worst drop since September 2018. In the last week of October, the S&P 500 sank 5.6%, while the Treasury yield rose to 0.858%. According to Bespoke Investment Group, this has only been 17 times since 1962, when the US Treasury yields rose along with the stock indexes’ drop. Investors believe that Joe Biden’s victory will result in the fiscal stimulus boost provided that the Democrats take control over the Senate. If it doesn’t happen, the extra stimulus package will hardly be accepted by Congress. Is it better to buy currencies, selling stocks and bonds?
The S&P 500 bulls hope for a “blue wave.” However, it doesn’t guarantee that the stock index will resume the uptrend. In 2016, the Wall Street experts predicted the US stock market to fall in case of Donald Trump's victory. At first, everything was going on as expected, but the stock indexes quickly recovered afterward. A wrong forecast cost George Soros $1 billion. And not only him.
Nobody wants to repeat the same mistakes, especially since the S&P 500 could continue correction, no matter who wins. The main source of uncertainty is Donald Trump’s willingness to challenge election results. As of October 31, nearly 90 million Americans already have cast their ballots, which is over 65% of the total votes from 2016. Donald accuses the Democrats of election fraud.
Uncertainty makes investors buy safe-haven assets. However, when the Treasuries are being sold off, investors tend to buy the US dollar. Besides, the growing yield-gap between U.S. and German government bonds sends the EURUSD down as well.
Investors are selling the euro off amid the increase in the number of COVID-19 cases in Europe and the introduction of new restrictions by the euro-area governments. Although the euro-area economy grew by 12.7% and outperformed the U.S. growth in the third quarter, everything can radically change in the fourth quarter. The median estimate of 18 Financial Times experts suggests that the euro-area GDP will contract by 2.3% in October-December. At the same time, Oxford Economics predicts that the United States will expand by 3% over the same period. Divergence in economic growth sends the EURUSD down. Furthermore, there is also a divergence in monetary policies.
The ECB is willing to boost the monetary stimulus in December. 59% of analysts surveyed by Bloomberg believe that the Fed, on the contrary, won’t expand the assets purchases until the end of 2021. Working directly with the Federal Reserve, large banks do not expect any QE changes until the middle of next year.
Weekly EURUSD trading plan
Under such conditions, the EURUSD is likely to continue falling towards 1.16 and 1.154-1.156. The absence of the “blue wave” and/or Donald Trump’s rejection of the election results will suggest a deeper correction down.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/dollar-caught-a-fish-in-dark-waters-forecast-for-02112020/?uid=285861726&cid=79634
Dynamics of U.S.-Germany 10-year yield gap
Weekly US dollar fundamental forecast
October has become the worst month for the US stock market since March. The bond market has experienced the worst drop since September 2018. In the last week of October, the S&P 500 sank 5.6%, while the Treasury yield rose to 0.858%. According to Bespoke Investment Group, this has only been 17 times since 1962, when the US Treasury yields rose along with the stock indexes’ drop. Investors believe that Joe Biden’s victory will result in the fiscal stimulus boost provided that the Democrats take control over the Senate. If it doesn’t happen, the extra stimulus package will hardly be accepted by Congress. Is it better to buy currencies, selling stocks and bonds?
The S&P 500 bulls hope for a “blue wave.” However, it doesn’t guarantee that the stock index will resume the uptrend. In 2016, the Wall Street experts predicted the US stock market to fall in case of Donald Trump's victory. At first, everything was going on as expected, but the stock indexes quickly recovered afterward. A wrong forecast cost George Soros $1 billion. And not only him.
Nobody wants to repeat the same mistakes, especially since the S&P 500 could continue correction, no matter who wins. The main source of uncertainty is Donald Trump’s willingness to challenge election results. As of October 31, nearly 90 million Americans already have cast their ballots, which is over 65% of the total votes from 2016. Donald accuses the Democrats of election fraud.
Uncertainty makes investors buy safe-haven assets. However, when the Treasuries are being sold off, investors tend to buy the US dollar. Besides, the growing yield-gap between U.S. and German government bonds sends the EURUSD down as well.
Investors are selling the euro off amid the increase in the number of COVID-19 cases in Europe and the introduction of new restrictions by the euro-area governments. Although the euro-area economy grew by 12.7% and outperformed the U.S. growth in the third quarter, everything can radically change in the fourth quarter. The median estimate of 18 Financial Times experts suggests that the euro-area GDP will contract by 2.3% in October-December. At the same time, Oxford Economics predicts that the United States will expand by 3% over the same period. Divergence in economic growth sends the EURUSD down. Furthermore, there is also a divergence in monetary policies.
The ECB is willing to boost the monetary stimulus in December. 59% of analysts surveyed by Bloomberg believe that the Fed, on the contrary, won’t expand the assets purchases until the end of 2021. Working directly with the Federal Reserve, large banks do not expect any QE changes until the middle of next year.
Weekly EURUSD trading plan
Under such conditions, the EURUSD is likely to continue falling towards 1.16 and 1.154-1.156. The absence of the “blue wave” and/or Donald Trump’s rejection of the election results will suggest a deeper correction down.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/dollar-caught-a-fish-in-dark-waters-forecast-for-02112020/?uid=285861726&cid=79634
Dynamics of U.S.-Germany 10-year yield gap
LiteFinance
Dollar's farewell performance. Review as of 30.10.2020
Can the USD index's rise right before the election be a tribute to retiring Trump?
Those Americans are so strange: less than a week is left, and they still don't know who will be the president! Financial markets appear not to understand that either. The S&P 500's fall on the eve of the election indicates that the party in power's candidate will lose. The ratings indicate the same, but the US dollar is growing by leaps and bounds, while investors know: what is good for the greenback is good for Donald Trump. Can the Republican still have a chance? Or is it the USD's farewell performance for Trump?
Even if we forget about the pandemic and trade wars, we'll see that a weak dollar has run all through Trump's presidency. The US' 45th president did his best to weaken the greenback, accusing China and Europe of manipulating their currencies, asking the Fed to cut rates and revive QE, and calling Jerome Powell the USA's main enemy.
In the end, things didn't go the way Trump wanted. The USD index was consolidating stably from the beginning of 2018 and up to May 2020. The strong economy helped the Fed raise rates several times, which other central banks couldn't afford. Tax cuts and deregulation became a boon for US companies and the whole stock market. That drove capital to the USA and strengthened the dollar. The trading war slowed global trading down, cut the euro's rate, and boosted demand for safe-haven assets. The greenback won all the same.
The US' 45th president will enter history books as a man who spoiled everything and as a man who first speaks and then thinks. His attempts to describe things better than they are make everybody smile and make him lose his authority. Trust is like paper: once creased, it's hard to smooth it out. Trump called the US' Q3 GDP growth "best in history" and said the year 2021 would be fantastic. However, Sleepy Biden's tax hike may "kill it all"! In fact, the US economy is now 3.5% worse than at the beginning of 2019. To get back to the previous figures, it needs to expand 15% in Q4, which is practically impossible. The current president is to be blamed for that too, as anti-pandemic measures weren't taken in good time. People say a clever man admits his faults, a cunning man blames others, and a stupid man is proud of them. Sounds true.
The key-note of Donald Trump's presidency was looking for a scapegoat. It was either China or Jerome Powell. The president's opponents would keep silent, understanding what consequences return criticism may have. Joe Biden won't keep silent. He says recovery is slowing down or even standing still, while the current high GDP value doesn't help millions of ordinary Americans who have lost their jobs.
What frightens me the most is that the new US president is neither Trump nor Biden...but Alzheimer!
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/chatty-forex/dollars-farewell-performance-review-as-of-30102020/?uid=285861726&cid=79634
Can the USD index's rise right before the election be a tribute to retiring Trump?
Those Americans are so strange: less than a week is left, and they still don't know who will be the president! Financial markets appear not to understand that either. The S&P 500's fall on the eve of the election indicates that the party in power's candidate will lose. The ratings indicate the same, but the US dollar is growing by leaps and bounds, while investors know: what is good for the greenback is good for Donald Trump. Can the Republican still have a chance? Or is it the USD's farewell performance for Trump?
Even if we forget about the pandemic and trade wars, we'll see that a weak dollar has run all through Trump's presidency. The US' 45th president did his best to weaken the greenback, accusing China and Europe of manipulating their currencies, asking the Fed to cut rates and revive QE, and calling Jerome Powell the USA's main enemy.
In the end, things didn't go the way Trump wanted. The USD index was consolidating stably from the beginning of 2018 and up to May 2020. The strong economy helped the Fed raise rates several times, which other central banks couldn't afford. Tax cuts and deregulation became a boon for US companies and the whole stock market. That drove capital to the USA and strengthened the dollar. The trading war slowed global trading down, cut the euro's rate, and boosted demand for safe-haven assets. The greenback won all the same.
The US' 45th president will enter history books as a man who spoiled everything and as a man who first speaks and then thinks. His attempts to describe things better than they are make everybody smile and make him lose his authority. Trust is like paper: once creased, it's hard to smooth it out. Trump called the US' Q3 GDP growth "best in history" and said the year 2021 would be fantastic. However, Sleepy Biden's tax hike may "kill it all"! In fact, the US economy is now 3.5% worse than at the beginning of 2019. To get back to the previous figures, it needs to expand 15% in Q4, which is practically impossible. The current president is to be blamed for that too, as anti-pandemic measures weren't taken in good time. People say a clever man admits his faults, a cunning man blames others, and a stupid man is proud of them. Sounds true.
The key-note of Donald Trump's presidency was looking for a scapegoat. It was either China or Jerome Powell. The president's opponents would keep silent, understanding what consequences return criticism may have. Joe Biden won't keep silent. He says recovery is slowing down or even standing still, while the current high GDP value doesn't help millions of ordinary Americans who have lost their jobs.
What frightens me the most is that the new US president is neither Trump nor Biden...but Alzheimer!
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/chatty-forex/dollars-farewell-performance-review-as-of-30102020/?uid=285861726&cid=79634
LiteFinance
The dollar spoiled it all. Forecast for 29.10.2020
Fundamental forecast for dollar for today
Donald Trump risks being remembered as a person who spoiled everything. He inherited a record-long employment growth streak, but in September, the indicator lacked 10.7 million people to equal February's values. He got a weak dollar and tried to make it even weaker to support US exporters. But in fact, the USD index has consolidated by 18% since Barack Obama's 2008 victory. Trump wanted to do his best to slow down China. Instead, he approached the moment when China's economy will outperform the US' one due to the difference in pandemic management approaches.
It's not surprising that ordinary Americans and financial markets have changed their attitude to the current president. He's losing to Joe Biden, and the S&P 500's fall on the eve of the election indicates the Republican's eventual defeat. According to Strategas Research Partners' study, the stock market has predicted election results right 20 out of 23 times since 1928. If it was growing one week before the elections, the party in power's candidate won in 86% of cases.
The drowning Trump is catching at a straw. He says US GDP can grow over 30% in Q3, but obviously, the economy risks slowing down in Q4 amid fiscal stimulus exhaustion and epidemiological state worsening. According to Oxford Economics, the slowdown may go down to 3%.
Fears of the S&P 500's another collapse result in the US stock market sales and the USD consolidation. Investors consider the upcoming election to be the most uncertain ever, even more so because the White House current tenant may not recognize the results. One month ago, markets were sure restrictions would be targeted, yet they face a different picture in October.
The sharp growth of new cases in Europe forced Germany and France into closing bars, restaurants, and other service sector businesses. According to Bloomberg, that will cut French Q4 GDP by 0.8-2%.
The eurozone may face a double recession faster than the US, and the economic growth divergence is advantageous to EURUSD bears. The current correction now looks reasonable, and even more so because the pandemic's spread urges on the ECB. Bloomberg's experts expected the ECB would expand QE in December, but now no one can tell for sure it won't do that on 29 October.
Trading plan for EURUSD for today
Fundamentally, the main currency pair's pullback is quite logical. However, it's surprising that the market isn't trying to exploit the factor of Joe Biden's victory. The EURUSD's rally in the next 5-7 days, followed by a sudden reversal, would be an optimal scenario. The bulls still can do some fighting if the quotes rise above 1.179-1.18 against a backdrop of the ECB's meeting.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/the-dollar-spoiled-it-all-forecast-for-29102020/?uid=285861726&cid=79634
COVID-19 cases in Europe
Fundamental forecast for dollar for today
Donald Trump risks being remembered as a person who spoiled everything. He inherited a record-long employment growth streak, but in September, the indicator lacked 10.7 million people to equal February's values. He got a weak dollar and tried to make it even weaker to support US exporters. But in fact, the USD index has consolidated by 18% since Barack Obama's 2008 victory. Trump wanted to do his best to slow down China. Instead, he approached the moment when China's economy will outperform the US' one due to the difference in pandemic management approaches.
It's not surprising that ordinary Americans and financial markets have changed their attitude to the current president. He's losing to Joe Biden, and the S&P 500's fall on the eve of the election indicates the Republican's eventual defeat. According to Strategas Research Partners' study, the stock market has predicted election results right 20 out of 23 times since 1928. If it was growing one week before the elections, the party in power's candidate won in 86% of cases.
The drowning Trump is catching at a straw. He says US GDP can grow over 30% in Q3, but obviously, the economy risks slowing down in Q4 amid fiscal stimulus exhaustion and epidemiological state worsening. According to Oxford Economics, the slowdown may go down to 3%.
Fears of the S&P 500's another collapse result in the US stock market sales and the USD consolidation. Investors consider the upcoming election to be the most uncertain ever, even more so because the White House current tenant may not recognize the results. One month ago, markets were sure restrictions would be targeted, yet they face a different picture in October.
The sharp growth of new cases in Europe forced Germany and France into closing bars, restaurants, and other service sector businesses. According to Bloomberg, that will cut French Q4 GDP by 0.8-2%.
The eurozone may face a double recession faster than the US, and the economic growth divergence is advantageous to EURUSD bears. The current correction now looks reasonable, and even more so because the pandemic's spread urges on the ECB. Bloomberg's experts expected the ECB would expand QE in December, but now no one can tell for sure it won't do that on 29 October.
Trading plan for EURUSD for today
Fundamentally, the main currency pair's pullback is quite logical. However, it's surprising that the market isn't trying to exploit the factor of Joe Biden's victory. The EURUSD's rally in the next 5-7 days, followed by a sudden reversal, would be an optimal scenario. The bulls still can do some fighting if the quotes rise above 1.179-1.18 against a backdrop of the ECB's meeting.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/the-dollar-spoiled-it-all-forecast-for-29102020/?uid=285861726&cid=79634
COVID-19 cases in Europe
LiteFinance
Dollar rocks on the waves. Analysis as of 28.10.2020
Weekly fundamental forecast for the dollar
The fear of coronavirus makes US stock market bulls retreat, which results in the US dollar’s consolidation. The number of new cases hits a record high in the USA. The US also reported record high hospitalization rates since 19 August, while France recorded the highest daily death toll since April. Emmanuel Macron is rumored to introduce another lockdown. That dropped the EURUSD quotes below the bottom of figure 18. The fall might have been deeper if not for expectations of the Democrats’ victory on 3 November.
According to 75% of 59 Reuters experts, a blue wave will be the best option for the US economy. It will help the fiscal stimulus package worth $1.8 trillion pass easily through Congress. Experts forecast that the US GDP will draw down 4% in 2020 and expand 3.7% and 2.9% in 2021-2022, respectively.
A blue wave and post-election reduction in political uncertainty suggest that volatility may fall. That’s good news for S&P 500 and bad news for the greenback. The world’s largest financial manager BlackRock, which manages assets worth $7.3 trillion, thinks that the USD will be moderately weak for 1-3 years. The giant joints USD bulls, such as Goldman Sachs and UBS. Its position explains why hedge funds are selling out dollars in the forward market.
Uncertainty feeds the dollar. The markets seem to know already the presidential election’s results. The election factor excluded, the second wave may drop EURUSD quotes significantly. We may face the global economy’s double recession and another collapse of the S&P 500 and the greenback’s hike like it was in March. All the previous achievements will be canceled. Few are those who will remember the housing prices’ growth in the USA and the fifth consecutive month of increase in US durable goods orders.
At first sight, the second pandemic wave must push the ECB to active actions as early as at the 29 October meeting. However, QE expansion won’t solve the COVID-19 issue. European banks stop crediting, fearing bad debt growth. So, Christine Lagarde’s main task is to calm down financial markets. A hint about an additional stimulus in December may help with that task.
Weekly trading plan for EURUSD
Thus, the pandemic returned to Forex’s forefront and consolidated the USD. However, I think it’s still possible to exploit the factor of Joe Biden’s victory in the short term. The EURUSD’s retracement from support at 1.1745 or return to 1.1815 and higher may be a signal to open long positions for impatient and adventurous traders.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/dollar-rocks-on-the-waves-analysis-as-of-28102020/?uid=285861726&cid=79634
Reuters survey: What will support the US economy?
Weekly fundamental forecast for the dollar
The fear of coronavirus makes US stock market bulls retreat, which results in the US dollar’s consolidation. The number of new cases hits a record high in the USA. The US also reported record high hospitalization rates since 19 August, while France recorded the highest daily death toll since April. Emmanuel Macron is rumored to introduce another lockdown. That dropped the EURUSD quotes below the bottom of figure 18. The fall might have been deeper if not for expectations of the Democrats’ victory on 3 November.
According to 75% of 59 Reuters experts, a blue wave will be the best option for the US economy. It will help the fiscal stimulus package worth $1.8 trillion pass easily through Congress. Experts forecast that the US GDP will draw down 4% in 2020 and expand 3.7% and 2.9% in 2021-2022, respectively.
A blue wave and post-election reduction in political uncertainty suggest that volatility may fall. That’s good news for S&P 500 and bad news for the greenback. The world’s largest financial manager BlackRock, which manages assets worth $7.3 trillion, thinks that the USD will be moderately weak for 1-3 years. The giant joints USD bulls, such as Goldman Sachs and UBS. Its position explains why hedge funds are selling out dollars in the forward market.
Uncertainty feeds the dollar. The markets seem to know already the presidential election’s results. The election factor excluded, the second wave may drop EURUSD quotes significantly. We may face the global economy’s double recession and another collapse of the S&P 500 and the greenback’s hike like it was in March. All the previous achievements will be canceled. Few are those who will remember the housing prices’ growth in the USA and the fifth consecutive month of increase in US durable goods orders.
At first sight, the second pandemic wave must push the ECB to active actions as early as at the 29 October meeting. However, QE expansion won’t solve the COVID-19 issue. European banks stop crediting, fearing bad debt growth. So, Christine Lagarde’s main task is to calm down financial markets. A hint about an additional stimulus in December may help with that task.
Weekly trading plan for EURUSD
Thus, the pandemic returned to Forex’s forefront and consolidated the USD. However, I think it’s still possible to exploit the factor of Joe Biden’s victory in the short term. The EURUSD’s retracement from support at 1.1745 or return to 1.1815 and higher may be a signal to open long positions for impatient and adventurous traders.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/dollar-rocks-on-the-waves-analysis-as-of-28102020/?uid=285861726&cid=79634
Reuters survey: What will support the US economy?