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Brazil: Central bank meeting presents little risk for BRL – TDS
Brazil: Central bank meeting presents little risk for BRL – TDS

Brazil: Central bank meeting presents little risk for BRL – TDS

December 12, 2018 02:33   FXStreet   Market News  

On Wednesday, the Central Bank of Brazil will announce its decision on monetary policy. Analysts at TDS, expect the BCB to keep rates unchanged and they see little BRL risk in the meeting, as the market has moved much more dovish on the policy path, and the chance of the BCB coming in more dovish is low.

Key Quotes: 

“We expect the BCB to remain on hold at the December meeting, but in light of recent inflation data developments, we now consider there to be a substantial risk to our call for a February start to the hiking. We however will wait to see the shift (that we expect) in the policy statement, before deciding where to push out our expected start to the hiking cycle.”

“The greater emphasis on domestic growth and the still very repressed inflation expectation picture will be as key as the BCB’s commentary on the impact of the less supportive external environment on BRL.”

“We expect very little reaction from FX as a result of the COPOM decision, given that the market already has a fairly dovish view priced in to the rates curve (that we don’t disagree with at this point). We continue to expect BRL to take its tone from broad USD moves, and domestic growth dynamics. 

“With the market having moved rates pricing since December for the start of the hiking cycle out by one to two months, with a full hike not priced until at least mid-2019, we think that the BCB would have to be extremely dovish to have a substantial market impact. This would likely be expressed through a bull-flattening in the curve.”
 

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Sino/US relations set to erupt; Trump administration to condemn China over hacking and economic espionage – WP
Sino/US relations set to erupt; Trump administration to condemn China over hacking and economic espionage – WP

Sino/US relations set to erupt; Trump administration to condemn China over hacking and economic espionage – WP

December 12, 2018 02:03   FXStreet   Market News  

The Washington Post has run a story titled” Trump administration to condemn China over hacking and economic espionage, escalating tensions between superpowers”, and this coincided with a pullback in US stocks in midday trade and contrasts with the European and early North American trade’s optimism over Sino/US trade relations. 

Officials from Washington and Beijing had reportedly been kicking-off trade talks once again via a phone call between Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He, according to The Wall Street Journal. Bloomberg was also reporting towards noon in the European day that China was moving to reduce the tariffs which it had recently levied on imports of cars. President Donald Trump tweeted Tuesday that the U.S. was engaged in “very productive conversations” with China. 

Sino/US relations set to erupt

However, The Washington post has reported that the Trump administration is preparing a series of actions this week to call out Beijing for what it says is China’s continued efforts to steal America’s trade secrets and advanced technologies and compromise sensitive government and corporate computers, according to U.S. officials.

“Multiple government agencies are expected to condemn China, citing a documented campaign of economic espionage and the alleged violation of a landmark 2015 pact to refrain from hacking for commercial gain.

In perhaps the most significant move, the Justice Department is expected to announce the indictments of multiple hackers suspected of working for a Chinese intelligence service and participating in a long-running espionage campaign that targeted U.S. networks.

Along with that, the administration is planning to declassify intelligence relating to the breaches, which date to 2014, and to sanction some of those believed responsible, according to people familiar with the plans.”

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DAX ended in positive territory, +1.49% to 10,780.51 on positive news-wires
DAX ended in positive territory, +1.49% to 10,780.51 on positive news-wires

DAX ended in positive territory, +1.49% to 10,780.51 on positive news-wires

December 12, 2018 01:53   FXStreet   Market News  

  • The German DAX ended in positive territory on Tuesday, + 1.49% to 10,780.51, following upbeat Geran ZEW data and Sino/USD optimism.
  • The pin bar on Tuesday’s close should be a warning to bulls.

European markets were turning around on Tuesday following a poor start to the week on fears that the US and China were about to go head to head over the recent arrest of Huawei Technologies’ CFO Wanzhou Meng on charges of violating the USA’s sanctions on exports to Iran. Such speculation sent global stocks off the edge at the start of the week, just several days after Trump and Xi had agreed to a cease-fire in the tariff wars at the end of last month’s G20 meet-up. 

However, such speculation was brushed aside and instead, more positive news flows superseded China’s stark warnings to the US should Wanzhou Meng not be released. Officials from Washington and Beijing entered trade talks once again via a phone call between Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He, according to The Wall Street Journal. Bloomberg reported later that China was moving to reduce the tariffs which it had recently levied on imports of cars. President Donald Trump tweeted Tuesday that the U.S. was engaged in “very productive conversations” with China; This news set a positive tone for the European session. 

In other news

  • Market themes of the Day: The judgment day for the Brexit deal in parliament delayed indefinitely

Adding to the good-news wires, according to Italian daily La Repubblica, finance minister Giovanni Tria was trying to convince Rome to lower its target for the country’s budget deficit in 2019 to 2.0% as a proportion of GDP, versus the 2.4% goal initially tabled. However, Brussels was reportedly ready to accept a deficit goal of 1.95% of GDP.

As for data, the ZEW institute’s economic confidence gauge for December improved to a reading of -17.5 after a print of -24.1 for the month before.

Best and worst 

Volkswagen AG-Pref  + 2.38%. E.On SE  +1.88% and Wirecard AG +1.83%. As for the worst performers, Fresenius SE & CO KGAA came in the worst, losing -1.56%, Vonovia SE followed, down -1.43% and Deutsche post AG-REG lost -1.33%. 

DAX levels

  • Support levels: 10615 10513 10441
  • Resistance levels: 10887 10964 11202

While the index has managed to correct, supported by the doji, the pin bar on Tuesday’s close should be a warning to bulls although the close was positive and leaves the price action bullish. Daily RSI is turning positive and away from the 30 region and bulls can target R3 on a break of recent highs of 10887. The 50-D SMA at 11464 is a key upside level after a break of the 23.6% Fibo target at 11411.

 

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GBP/USD Technical Analysis: Cable under heavy pressure at the 2018 low
GBP/USD Technical Analysis: Cable under heavy pressure at the 2018 low

GBP/USD Technical Analysis: Cable under heavy pressure at the 2018 low

December 12, 2018 01:33   FXStreet   Market News  

EUR/USD daily chart

  • GBP/USD is trading in a bear trend below the 50, 100 and 200-day simple moving average (SMA).
  • As forecast at the start of the New York session, 1.2500 target has been hit. 

GBP/USD 4-hour chart

  • GBP/USD is strongly bearish as the market remains under heavy pressure at 17-month’s low. 


GBP/USD 30-minute chart

  • If 1.2500 support is broken to the downside, the 1.2440 level and 1.2400 figure are likely the next targets for Cable.

Additional key levels

GBP/USD

Overview:
    Today Last Price: 1.2524
    Today Daily change: -35 pips
    Today Daily change %: -0.279%
    Today Daily Open: 1.2559
Trends:
    Previous Daily SMA20: 1.2792
    Previous Daily SMA50: 1.2922
    Previous Daily SMA100: 1.2953
    Previous Daily SMA200: 1.3281
Levels:
    Previous Daily High: 1.276
    Previous Daily Low: 1.2507
    Previous Weekly High: 1.284
    Previous Weekly Low: 1.2659
    Previous Monthly High: 1.3176
    Previous Monthly Low: 1.2723
    Previous Daily Fibonacci 38.2%: 1.2604
    Previous Daily Fibonacci 61.8%: 1.2663
    Previous Daily Pivot Point S1: 1.2457
    Previous Daily Pivot Point S2: 1.2355
    Previous Daily Pivot Point S3: 1.2204
    Previous Daily Pivot Point R1: 1.2711
    Previous Daily Pivot Point R2: 1.2862
    Previous Daily Pivot Point R3: 1.2964

 

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EUR/USD Technical Analysis: Euro approaching 1.1300 figure as the US Dollar strengthens across the board
EUR/USD Technical Analysis: Euro approaching 1.1300 figure as the US Dollar strengthens across the board

EUR/USD Technical Analysis: Euro approaching 1.1300 figure as the US Dollar strengthens across the board

December 12, 2018 01:03   FXStreet   Market News  

EUR/USD daily chart

  • EUR/USD is trading in a bear trend below the 50, 100 and 200-day simple moving average (SMA).

EUR/USD 4-hour chart

  • EUR/USD is currently trading below its main SMAs. 
  • EUR/USD is testing 1.1300 figure.

EUR/USD 30-minute chart

  • EUR/USD is trading below its 200 SMA.
  • In the short-term, if EUR/USD breaks below 1.1300 the next destination should be the 1.1280 level.

Additional key levels

EUR/USD

Overview:
    Today Last Price: 1.1314
    Today Daily change: -41 pips
    Today Daily change %: -0.361%
    Today Daily Open: 1.1355
Trends:
    Previous Daily SMA20: 1.1359
    Previous Daily SMA50: 1.1413
    Previous Daily SMA100: 1.1511
    Previous Daily SMA200: 1.1738
Levels:
    Previous Daily High: 1.1444
    Previous Daily Low: 1.135
    Previous Weekly High: 1.1424
    Previous Weekly Low: 1.1311
    Previous Monthly High: 1.15
    Previous Monthly Low: 1.1216
    Previous Daily Fibonacci 38.2%: 1.1386
    Previous Daily Fibonacci 61.8%: 1.1408
    Previous Daily Pivot Point S1: 1.1322
    Previous Daily Pivot Point S2: 1.129
    Previous Daily Pivot Point S3: 1.1229
    Previous Daily Pivot Point R1: 1.1415
    Previous Daily Pivot Point R2: 1.1476
    Previous Daily Pivot Point R3: 1.1509

 

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USD/CAD Technical Analysis: Greenback ready for a correction to 1.3300 figure against Loonie
USD/CAD Technical Analysis: Greenback ready for a correction to 1.3300 figure against Loonie

USD/CAD Technical Analysis: Greenback ready for a correction to 1.3300 figure against Loonie

December 12, 2018 00:53   FXStreet   Market News  

USD/CAD daily chart

  • USD/CAD is trading in a bull trend above the 200-day simple moving average (SMA).
  • As forecast, USD/CAD regained the 1.3400 figure.

USD/CAD 4-hour chart

  • 1.3450 is the level to beat for bulls. 

USD/CAD 30-minute chart

  • The bull run has likely run its course for the time being as the market is likely set to correct to 1.3300 figure

Additional key levels

USD/CAD

Overview:
    Today Last Price: 1.3416
    Today Daily change: 10 pips
    Today Daily change %: 0.0746%
    Today Daily Open: 1.3406
Trends:
    Previous Daily SMA20: 1.3264
    Previous Daily SMA50: 1.314
    Previous Daily SMA100: 1.3087
    Previous Daily SMA200: 1.3019
Levels:
    Previous Daily High: 1.3418
    Previous Daily Low: 1.3292
    Previous Weekly High: 1.3445
    Previous Weekly Low: 1.316
    Previous Monthly High: 1.336
    Previous Monthly Low: 1.3048
    Previous Daily Fibonacci 38.2%: 1.337
    Previous Daily Fibonacci 61.8%: 1.334
    Previous Daily Pivot Point S1: 1.3327
    Previous Daily Pivot Point S2: 1.3247
    Previous Daily Pivot Point S3: 1.3202
    Previous Daily Pivot Point R1: 1.3452
    Previous Daily Pivot Point R2: 1.3497
    Previous Daily Pivot Point R3: 1.3577

 

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USD/CHF rebounds from 8-week lows and points to further gains
USD/CHF rebounds from 8-week lows and points to further gains

USD/CHF rebounds from 8-week lows and points to further gains

December 12, 2018 00:33   FXStreet   Market News  

  • Short-term outlook now favors an extension of the correction in USD/CHF after a strong bounce. 
  • Despite falling against US Dollar, Swiss franc gains momentum against its European rivals. 

The USD/CHF dropped earlier today to 0.9862, the lowest level since October 16 and then rebounded sharply, amid a rally of the US dollar following US data and on the back of ongoing concerns about Brexit and the Italian budget drama. 

The price rose back above 0.9900 and climbed to 0.9921, hitting the highest level since Friday. It was holding near the top, with the bullish tone intact. The greenback reversed after the release of higher-than-expected PPI numbers for November. 

The Swiss franc remains supported amid Brexit concerns and also after the Italian finance minister Tria said that the government won’t make major changes to the budget. His comments renewed concerns over Italy’s budget conflict with the European Commission.

USD/CHF Levels to watch 

The pair has risen back above the critical 20-SMA in the four-hour chart that is turning to the upside. If the US dollar holds above 0.9900 the short-term, the technical outlook will remain bullish. Currently is testing the 0.9920, above the next resistance levels might be seen at 0.9940 and 0.9955. On the flip side, the immediate support now is the 0.9900 area, followed by 0.9875 and 0.9860 (Dec 11 low). 

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EUR/GBP Technical Analysis: Euro corrective slide targets the 0.8970 level
EUR/GBP Technical Analysis: Euro corrective slide targets the 0.8970 level

EUR/GBP Technical Analysis: Euro corrective slide targets the 0.8970 level

December 12, 2018 00:03   FXStreet   Market News  

EUR/GBP daily chart

  • EUR/GBP is trading in a bull trend above a flat 200-day simple moving average.
  • Bulls tested the August high. 

EUR/GBP 4-hour chart

  • Euro bulls bumped into a strong resistance at 0.9100 figure.

EUR/GBP 30-minute 

  • EUR/GBP is most likely in corrective mode after the spike up of the last 24 hours.
  • Traders can expect mild support at 0.9000 as the market is likely set to trade down to the 0.8970 level next.

Additional key level

EUR/GBP

Overview:
    Today Last Price: 0.9017
    Today Daily change: -24 pips
    Today Daily change %: -0.265%
    Today Daily Open: 0.9041
Trends:
    Previous Daily SMA20: 0.8881
    Previous Daily SMA50: 0.8833
    Previous Daily SMA100: 0.8888
    Previous Daily SMA200: 0.884
Levels:
    Previous Daily High: 0.9089
    Previous Daily Low: 0.8958
    Previous Weekly High: 0.897
    Previous Weekly Low: 0.8863
    Previous Monthly High: 0.8932
    Previous Monthly Low: 0.8656
    Previous Daily Fibonacci 38.2%: 0.9039
    Previous Daily Fibonacci 61.8%: 0.9008
    Previous Daily Pivot Point S1: 0.897
    Previous Daily Pivot Point S2: 0.8898
    Previous Daily Pivot Point S3: 0.8838
    Previous Daily Pivot Point R1: 0.9101
    Previous Daily Pivot Point R2: 0.9161
    Previous Daily Pivot Point R3: 0.9233

 

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Gold’s staying power depends on certainty that the Fed will not move towards restrictive policy next year
Gold’s staying power depends on certainty that the Fed will not move towards restrictive policy next year

Gold’s staying power depends on certainty that the Fed will not move towards restrictive policy next year

December 11, 2018 23:53   FXStreet   Market News  

  • Gold is losing its safe-haven appeal and testing key trend-line support.
  • Sino/US trade talks appear to be back on and global stocks have rallied. 

Gold has found a footing above the 38.2% Fibo of late, following an increasingly dovish sounding tone from Fed Chair Powell and other FOMC members. This, in combination with trade optimism after the G20, initially sent the USD moved lower and the Chinese Yuan strengthened to the benefit of precious metals. However, on the breakdown of trade relation sentiment after Canadian authorities confirmed the arrest of Huawei Technologies’ CFO Wanzhou Meng on charges of violating the USA’s sanctions on exports to Iran, the dollar spiked and gold wobbled. 

Market sentiment is the driver, regardless of the facts. Despite speculation, it seems as though the markets got too ahead of themselves for their own good. Instead, on Tuesday, European markets got back into rally mode with stocks rallying from between 1.5%-2% in the open, boosted by upbeat economic data out of the region’s biggest economy, and positive signals on the global trade front once again, despite the mood over the arrest of Wanzhou Meng.

  • US Dollar climbs to over 1-week tops, sits comfortably above 97.00 mark

The Wall Street Journal reported that a phone call took place between  Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He and this news were followed up by a Tuesday morning from President Trump who said “Very productive conversations going on with China! Watch for some important announcements!” U.S. benchmark stocks tracked the stronger performance in European markets and opened sharply higher on Tuesday.

The news has given risk a big boost and that is damaging for gold prices which have started to feel the pressure from a solid dollar at the start of this week already. The price has been pressured to the rising trend support line which meets the pivot point located at 1245. 

The next major risk events ahead of the Fed come with US CPI tomorrow, (expected 0.2% m/m and 2.2% y/y), the ECB and further Brexit related headlines. 

  • Market themes of the Day: The judgment day for the Brexit deal in parliament delayed indefinitely
  • ECB Preview: The end of the asset purchasing at the time of uncertainty may reposition Euro higher

Gold levels

A break of the pivot point will open S1 located at 1240, guarding S2 at 1236 and finally, S3 located at 1231. 1238, however, should be a strong level of support where the 38.2% Fibo of the 2018 downtrend has been located. On the upside, the 50% Fibo is at 1262, just above the 200-D SMA that is found at 1256. On the way there, R2 is at 1255. On a break of this confluence, the 61.8% Fibo can be found at 1286.

“We think that this breakout has staying power, but the yellow metal may need more certainty that the Fed will not move towards restrictive policy next year before prices move towards the $1,300/oz territory,”

analysts at TD Securities argued. 

 

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Merkel: There will be no further Brexit negotiations
Merkel: There will be no further Brexit negotiations

Merkel: There will be no further Brexit negotiations

December 11, 2018 23:33   FXStreet   Market News  

According to German Conservative sources, Angela Merkel told German parliamentary group that there will be no further Brexit negotiation.

At the same time, Merkel said efforts are being made to give the UK reassurances that the Irish border backstop agreement won’t be never-ending.
 

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GBP/USD Technical Analysis: Cable bears en route to 1.2500 figure and a new 2018 low
GBP/USD Technical Analysis: Cable bears en route to 1.2500 figure and a new 2018 low

GBP/USD Technical Analysis: Cable bears en route to 1.2500 figure and a new 2018 low

December 11, 2018 23:03   FXStreet   Market News  

EUR/USD daily chart

  • GBP/USD is trading in a bear trend below the 50, 100 and 200-day simple moving average (SMA).
  • GBP/USD broke a multi-month support yesterday (Monday December 10).

GBP/USD 4-hour chart

  • GBP/USD is strongly bearish.

GBP/USD 30-minute chart

  • The 1.2560 support is the last bastion for bears. 
  • If 1.2560 is broken, the 1.2500 figure is likely the next destination for Cable. 

Additional key levels

GBP/USD

Overview:
    Today Last Price: 1.2586
    Today Daily change: 27 pips
    Today Daily change %: 0.215%
    Today Daily Open: 1.2559
Trends:
    Previous Daily SMA20: 1.2792
    Previous Daily SMA50: 1.2922
    Previous Daily SMA100: 1.2953
    Previous Daily SMA200: 1.3281
Levels:
    Previous Daily High: 1.276
    Previous Daily Low: 1.2507
    Previous Weekly High: 1.284
    Previous Weekly Low: 1.2659
    Previous Monthly High: 1.3176
    Previous Monthly Low: 1.2723
    Previous Daily Fibonacci 38.2%: 1.2604
    Previous Daily Fibonacci 61.8%: 1.2663
    Previous Daily Pivot Point S1: 1.2457
    Previous Daily Pivot Point S2: 1.2355
    Previous Daily Pivot Point S3: 1.2204
    Previous Daily Pivot Point R1: 1.2711
    Previous Daily Pivot Point R2: 1.2862
    Previous Daily Pivot Point R3: 1.2964

 

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USD/JPY continues to find decent support near 113.00 handle amid risk-on mood
USD/JPY continues to find decent support near 113.00 handle amid risk-on mood

USD/JPY continues to find decent support near 113.00 handle amid risk-on mood

December 11, 2018 22:53   FXStreet   Market News  

   •  Global risk-on trade dampens JPY’s perceived safe-haven demand.
   •  Renewed USD selling bias fails to provide any meaningful impetus.
   •  Bulls seemed rather unimpressed by stronger core US PPI figures.

The USD/JPY pair has managed to recover a major part of its early losses, albeit struggled to gain any strong follow-through traction.

Some renewed US Dollar selling on Tuesday failed to assist the pair to build on the overnight goodish rebound from the very important 100-day SMA, rather prompted some profit-taking; though a combination of supporting factors helped form a firm base around the 113.00 handle.

A goodish pickup in the US Treasury bond yields and a strong rally across global equity markets, which tends to undermine the Japanese Yen’s safe-haven demand turned out to be key factors that helped limit any deeper losses.

Market sentiment got a strong boost after China was reported to move on US car tariffs cut. According to a Bloomberg report, a proposal to reduce tariffs on cars made in the US to 15%, from the current 40%, has been submitted to China’s Cabinet to be reviewed in the coming days.

Meanwhile, the USD bulls seemed rather unaffected by today’s release of hotter than expected core PPI figures from the US, coming in to show that the price of finished goods and services sold by producers rose 0.3% m/m in November. 

Technical levels to watch

Valeria Bednarik, FXStreet’s own American Chief Analyst explains: “Given that the pair has bounced twice from its 100 DMA these last few days, now trading roughly 100 pips above it, the risk is skewed to the upside, toward the 114.00 price zone. Below 112.90, bulls will likely give up and a retest of the 112.20 comes back to play.”
 

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