Articles

ADP Nonfarm Preview: Even a minimal beat could trigger a greenback comeback

ADP Nonfarm Preview: Even a minimal beat could trigger a greenback comeback

91967   November 30, 2020 23:56   FXStreet   Market News  

  • ADP´s private-sector labor report is forecast to show a modest increase of 420,000 jobs.
  • The payrolls firm has been mostly missing the mark after coronavirus broke out.
  • Even a minor beat could be sufficient to trigger a dollar bounce after the massive sell-off.

Setting achievable goals – a charitable of saying a low bar – makes beating it easy and could trigger a positive market reaction. Is the dollar set to jump?

Economists seem to have gotten used to disappointing figures from ADP’s jobs report and now expect a modest increase. The calendar is pointing to an increase of 420,000 private sector positions in November, a slower pace of job restoration. 

As the chart below shows, the actual figures published by ADP fell below estimates in five out of seven last publications. 

Source: FXStreet

The data also reveals another actionable phenomenon – the figures are significantly revised to the upside every month and to round numbers. Since the coronavirus pandemic broke out early in the year, ADP has been struggling to assess the number of workers in the US economy.

The sharp fluctuations and various furlough schemes have tested statistical models and wreaked havoc. The company has tended to report relatively low numbers in comparison to the official Nonfarm Payrolls report from the Bureau of Labor Statistics (BLS) and was forced to adapt. 

For traders, it means that any beat would be surprising in two ways – varying from the trend of missing estimates and suggesting an even higher increase in the official number of jobs. 

Dollar reaction

The US dollar has been on the back foot in recent weeks, as demand for the safe-haven dollar fell. Political certainty in the US and several encouraging covid vaccine announcements have pushed investors into riskier assets. 

This trend may have been overstretched, resulting in multi-month and nearly multi-year lows for the greenback against its major peers. EUR/USD, GBP/USD and AUD/USD are some of the examples.  

Oftentimes, it only takes a small spark to trigger a correction. Such a phenomenon was seen in late November when Markit’s Purchasing Managers’ Indexes beat estimates. America’s leading PMIs come from ISM, not Markit, yet the news triggered a rush into greenbacks. 

Will the same knee-jerk reaction return? The chances are high, even if the upside surprise is small, or perhaps in case of a minor miss such as 400,000 jobs gained in November. 

Conversely, a minor miss of estimates will likely be shrugged off by markets as yet another disease-distorted figure. The dollar is unlikely to suffer, as long as ADP prints a figure above 300,000. Only a substantial shortcoming would cause a pause for thought. 

Conclusion

The bar is low for ADP’s NFP to beat estimates, and given previous disappointments, any beat would seem promising for the US labor market. With the dollar stretched to the downside, the ground seems ripe for an upwards bounce in the dollar. 

More Markets return to normal, and traders may be loving it

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MUFG trade of the week: Staying short USD/CHF

MUFG trade of the week: Staying short USD/CHF

91965   November 30, 2020 23:45   Forexlive Latest News   Market News  

USD/CHF down 12 pips to 0.9051 today

USD/CHF down 12 pips to 0.9051 today

They’ve been talking about this one for awhile but Mitsubishi continues to reiterate selling USD/CHF in its trade of the week.

The have targeted a fall to 0.8650 with a stop at 0.9250.

“We are maintaining our short USD/CHF trade idea to reflect our expectations that the USD is likely to weaken further following the favourable US election result and positive vaccine news,” they write.

“The other safe have currencies have also underperformed alongside the USD. USD/CHF recently tested and held key support at the 0.9000 level but we expect it to break going forward. We continue to believe the election victory for Joe Biden supports our outlook for further USD weakness,” MUFG noted.

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United States Dallas Fed Manufacturing Business Index above forecasts (7.4) in November: Actual (12)
United States Dallas Fed Manufacturing Business Index above forecasts (7.4) in November: Actual (12)

United States Dallas Fed Manufacturing Business Index above forecasts (7.4) in November: Actual (12)

91964   November 30, 2020 23:45   FXStreet   Market News  

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer.

Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

Opinions expressed at FXStreet are those of the individual authors and do not necessarily represent the opinion of FXStreet or its management. FXStreet has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website, by FXStreet, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. FXStreet will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

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Bitcoin price hits a new all-time high at $19,863 on Binance

Bitcoin price hits a new all-time high at $19,863 on Binance

91962   November 30, 2020 23:45   FXStreet   Market News  

  • Bitcoin price just crossed the previous all-time high on Binance surging towards 19,863
  • The flagship cryptocurrency faces practically no resistance after this point.

Bitcoin price managed to recover strongly from its last dip at $16,188 and has hit a new all-time high on Binance and a few other exchanges but not all. The flagship cryptocurrency got slightly rejected from the new top but remains trading at $19,700 aiming to crack the psychological resistance level at $20,000.

btc price

BTC/USD weekly chart

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US equities turn lower as selling hits in the final day of November

US equities turn lower as selling hits in the final day of November

91960   November 30, 2020 23:40   Forexlive Latest News   Market News  

It’s all about the calendar and the technicals today

It's all about the calendar and the technicals today

You have two big things working against stocks right now:

1) A 12% gain in the S&P 500 in November (and much more in some international markets) will lead to profit taking and forced selling on rebalancing, though much of that should already be done.

2) There’s some technical pressure in the S&P 500 form the all-time high

I think any dip in equities will be just like bitcoin — there is too much money on the sidelines.

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Dallas Fed manufacturing index +12.0 vs +15.8 expected
Dallas Fed manufacturing index +12.0 vs +15.8 expected

Dallas Fed manufacturing index +12.0 vs +15.8 expected

91959   November 30, 2020 23:33   Forexlive Latest News   Market News  


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Ripple Price Prediction: XRP sits on the verge of an explosive breakout

Ripple Price Prediction: XRP sits on the verge of an explosive breakout

91956   November 30, 2020 23:26   FXStreet   Market News  

  • Ripple price is trading right under a critical resistance area.
  • Several indicators show XRP could be aiming for a massive breakout towards $1.

XRP traded as high as $0.78 on November 24 before a brief period of a correction down to $0.456. Ripple price is trading at $0.655 at the time of writing, notably recovering from the dip and aiming to set higher highs.

Ripple price facing only one critical barrier before $1

On the 1-hour chart, Ripple price has established a robust resistance area between $0.64 and $0.655. Bulls managed to defend a support area formed on November 21. XRP has since bounced back up from the upper trendline of the support range.

xrp price

XRP/USD 1-hour chart

A breakout above the crucial resistance level at $0.655 could quickly drive Ripple price to the last 2020-high at $0.78 and towards the psychological level at $1. The cryptocurrency market seems to be recovering quickly, having gained back $100 billion in market capitalization over the past three days and adding more buying pressure to XRP.

xrp price

XRP Holders Distribution chart

On the other hand, it seems that the number of whales holding 10,000,000 or more coins has decreased notably from 332 to 324 in the past 24 hours, suggesting that many big investors are taking profits as Ripple price continues climbing higher. Rejection from the crucial $0.655 resistance level would push XRP towards $0.5.

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OPEC will wait until tomorrow to reach consensus with non-OPEC on 2021 cuts -report
OPEC will wait until tomorrow to reach consensus with non-OPEC on 2021 cuts -report

OPEC will wait until tomorrow to reach consensus with non-OPEC on 2021 cuts -report

91955   November 30, 2020 23:21   Forexlive Latest News   Market News  

Reuters report

OPEC has agreed to wait until tomorrow to reach a consensus with non-OPEC countries (namely Russia) to delay the planned taper in cuts, according to three sources cited by Reuters.

That’s no surprise. Oil jumped earlier but is now down 35-cents to $45.15 as profit taking hits ahead of the decision, which is widely expected to be a three-month delay.

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S&P 500 Index opens in the negative territory pressured by falling energy stocks

S&P 500 Index opens in the negative territory pressured by falling energy stocks

91953   November 30, 2020 23:17   FXStreet   Market News  

  • Major equity indexes post modest losses on Monday.
  • The S&P 500 Energy Index is down more than 1%.
  • Technology stocks post small gains in the early trade.

Wall Street’s main indexes started the last day of November in the negative territory as investors might be looking to book their profits following the impressive monthly rally. As of writing, the Dow Jones Industrial Average was down 0.82% on the day at 29,661, the S&P 500 Index was losing 0.42% at 3,622 and the Nasdaq Composite was falling 0.17% at 12,237.

Among the 11 major S&P 500 sectors, the Energy Index is losing 1.22% on the day pressure by falling crude oil prices. On the other hand, the Technology Index is posting small gains in early trade.

On Monday, the US Federal Reserve announced that it has extended liquidity facilities for commercial paper, money markets, primary dealers and paycheck protection program until March 31, 2021. This headline, however, failed to provide a boost to market sentiment.

S&P 500 chart (daily)

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GBP/USD prints daily highs above 1.3380 as US dollar slumps

GBP/USD prints daily highs above 1.3380 as US dollar slumps

91951   November 30, 2020 23:12   FXStreet   Market News  

  • GBP/USD trades just below highs of the day in the 1.3380s, as month-end flows hurt USD.
  • Sterling’s rally comes despite continued deadlock in Brexit negotiations.

GBP/USD has moved back towards the top of its recent 1.3300-1.3400 range, buoyed by broad USD weakness that has seen the Dollar Index (DXY) slump to fresh lows of the year in the 91.50s. GBP/USD currently trades in the 1.3370s, up around 70 pips higher or with gains of over 0.5%.

GBP immune to continued Brexit deadlock

Pound sterling remains largely immune to negative Brexit headlines. GBP is one of the best performing G10 currencies on Monday, despite mixed/negative news flow on the state of talks over the weekend. An EU source reportedly said that EU/UK talks over the weekend in London were difficult and “massive divergences” remain on the three main areas. UK and EU officials have confirmed that differences between the two sides persist.

With GBP/USD close to multi-month highs, markets appear to place a high probability that a deal will be reached in the coming days, thus leaving the currency highly vulnerable to disappointment (i.e. if talks were collapse). However, despite continued gridlock in negotiations and no end to the impasse in sight just yet, most analysts do still a deal to be reached at some point prior to the end of the year, given just how strongly it is in the interest of both the UK and EU to get a deal done as both regions struggle to prop up their economies amid the Covid-19 pandemic.

Elsewhere, comments from Bank of England Monetary Policy Committee member Tenreyro largely went under the radar, as did UK lending data (Mortgage approvals beat expectations but Net Lending to Individuals and M4 Money Supply were soft). Looking ahead for GBP, aside from the key theme of Brexit this week’s calendar is looking quite sparse.

USD slumps amid month-end flows

Negative US dollar month-end flows appear to be one factor driving the buck lower on Monday; a number of bank models flagged a relatively strong sell signal for USD vs the rest of the G10 currencies aside from JPY.

More broadly, various other market narratives continue to keep USD suppressed; the path of the Covid-19 pandemic in the US is looking increasingly unfavourable vs the Eurozone and other parts of the world. Combine that with the fact that the current lame-duck Congress is unlikely to be able to deliver another much-needed stimulus package and Fed action in December is looking increasingly likely. Officials and the recently released minutes of the November meeting already hinted at tweaks to the bank’s QE programme if economic conditions continue to worsen.

Analysts note that the threat of Fed action undermines the safe-haven appeal of USD compared to JPY and CHF, whose respective central banks are maxed out, policy-wise. Meanwhile, vaccine optimism and growing hope for the post-pandemic global economic recovery, that ought to be hastened by the better global trade environment fostered by a Biden presidency, has been weighing on havens such as USD more broadly.

GBP/USD moves back into the top half of recent range

GBP/USD has made decent strides to the upside on Monday, the pair thus recovering back into the upper half of its recent approximate 1.3300-1.3400 range. If recent USD weakness continues, it seems plausible that the pair would be able to break the top of this range, even in absence of a Brexit deal (for trading the theme of Brexit, EUR/GBP is arguably the more appropriate instrument to look at).

Such a break would open up the door for a run at 1.3450 and then onto 1.3500 and the year-to-date high at 1.3516 just above it.

If the recent USD downside proves more short-term, with the bulls perhaps picking up again after a day of dollar negative month-end flows, GBP/USD might well turn lower again, but faces stiff support between 1.3290-1.3310. Below that, last Monday’s low sits in the 1.3260s ahead of the 21-day moving average just above the psychological 1.3200 level.

GBP/USD one hour chart

gbpusd

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US: Pending Home Sales decline by 1.1% in October vs. +1% expected
US: Pending Home Sales decline by 1.1% in October vs. +1% expected

US: Pending Home Sales decline by 1.1% in October vs. +1% expected

91950   November 30, 2020 23:12   FXStreet   Market News  

  • Pending Home Sales in the US continued to fall in October.
  • US Dollar Index remains deep in the negative territory near 91.50. 

Pending Home Sales in the US fell by 1.1% on a monthly basis in October following September’s decline of 2%, the data published by the US National Association of Realtors showed on Monday. This reading came in worse than the market expectation for an increase of 1%.

On a yearly basis, Pending Home Sales rose by 20.2%.

Market reaction

The US Dollar Index showed no immediate reaction to this report and was last seen losing 0.27% on the day at 91.55.

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United States Pending Home Sales (YoY) declined to 20.2% in October from previous 20.5%
United States Pending Home Sales (YoY) declined to 20.2% in October from previous 20.5%

United States Pending Home Sales (YoY) declined to 20.2% in October from previous 20.5%

91949   November 30, 2020 23:12   FXStreet   Market News  

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer.

Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

Opinions expressed at FXStreet are those of the individual authors and do not necessarily represent the opinion of FXStreet or its management. FXStreet has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website, by FXStreet, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. FXStreet will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

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