Daily Market Analysis from Investizo.com

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General analysis XAUUSD for 12.05.2022

Current dynamics

The XAU/USD strengthened moderately on Wednesday, rebounding from a 3-month low. The instrument is now trading within a downtrend correction. The reason for yesterday's recovery is the release of mixed data on the US Consumer Price Index. The report confirmed that inflation is high enough for the Fed to remain on course for a rate hike. However, the small increase calls into question the expected scope for a monetary policy tightening.

The consumer price index rose by only 0.3% in April and although the figure was 0.1% higher than forecasted, this development is a signal that inflation has reached its peak. Of course, the increase of only 0.3% is due to the fact that gasoline prices in the USA fell by 6.1% in April, after rising by 18.3% in March. Such a small increase contrasts sharply with the 1.2% rise in March. Over the 12-month period, the consumer price index rose 8.3%.  Excluding volatile components such as food and energy, the index rose 0.6% after 0.3% in March. The core index rose 6.2% after March's jump of 6.5%, the biggest gain since 1982.

Also worth noting is the strengthening of gold amid falling US Treasury bond yields. At the start of Wednesday the yield on ten-year bonds was just under 3% and then on publication of the CPI the yield was above 3% but then fell to 2.93%. The yield development indicates that the report was weaker than bond sellers had anticipated.

Therefore the chance of a 75 basis points rate hike in the next two meetings is considerably reduced, however, even if inflation has peaked, it will remain high enough for an aggressive monetary policy of the Fed for a long time. At the moment, gold could stabilise, but the recovery will be limited. However, it should be taken into account that the situation might change sharply given that the May CPI data will be published before the regulator's meeting in June.Support and resistance levels


On the 4-hour chart the instrument is consolidating near the lower bollinger band. The indicator is pointing downwards and the price range is widening, indicating a continuation of the downtrend. The MACD histogram is in the negative zone, maintaining a sell signal. Stochastic has entered oversold area, a buy signal may be formed within 1-2 days.

 Support levels: 1833.50, 1828.25, 1814.10, 1800.30.
 Resistance levels: 1850.30, 1867.00, 1885.50, 1904.10, 1919.30.

Trading scenarios

•  Short positions should be opened below the level of 1833.50 with a target of 1814.50 and a stop loss at 1851.00. Implementation period: 2-4 days.
•  Long positions can be opened above the level of 1854.90 with a target of 1882.30 and a stop loss at the level of 1842.80. Implementation period: 1-2 days.

 

Analytical department investizo.com

 

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument.

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General analysis USDJPY for 16.05.2022

Current Dynamics

Japan's current account surplus decreased by 22.3%. Net profit of Japanese companies from the top list of the Tokyo Stock Exchange increased by 35.6% by the result of the year. Bank of Japan does not plan to change its monetary policy.

According to The Ministry of Finance of Japan's preliminary fiscal year 2021 fiscal year ending March 31, the current account surplus decreased by 22.3% to 12.64 trillion yen ($97.6 billion). The decrease was caused by a record rise in imports, which increased 35% to a record 87.15 trillion yen ($672 billion). Most of the growth in imports was due to higher energy prices, with the cost of purchasing liquefied natural gas up 58%. In addition, the recovery of the global economy affected the trade balance after the shutdown caused by the measures against the spread of COVID-19.

At the same time, the Japanese Ministry of Finance recorded a record 25.1% growth in exports, which reached 85.50 trillion yen ($659 billion). The supply of equipment largely influenced this for the production of chips.

It should be noted that the net profit of leading Japanese companies from the top list of the Tokyo Stock Exchange at fiscal year 2021 increased by 35.6% to 33.5 trillion yen (more than $275 billion), and the annual revenue of these companies on average grew by almost 8% to 500.4 trillion yen (about $3.9 trillion). This increase in profitability was due in large part to the weaker yen, boosting revenues of operating companies overseas when translated into local currencies.

On the back of this, Haruhiko Kuroda, governor of the Bank of Japan, said that the BOJ has no plans to change its monetary policy. Kuroda rejected the idea that the Bank of Japan may switch to a policy of tightening monetary policy following the example of the U.S. Federal Reserve and the European Central Bank. Kuroda also noted that Japan's economy is in the process of recovery from a major setback caused by the spread of COVID-19. The BOJ is considering keeping its current policy aimed at keeping the 10-year Japanese government bond yield near zero and leaving a space of 0.25% for a maneuver.

We can conclude that Japan is not going to change its monetary policy and the yen will continue to weaken in the near term.

Japan Producer Price Index released today was better than experts' expectations. So in year-to-year the index went up by 10% when the forecasted growth was 9.4%, and in monthly - by 1.2% when the forecasted growth was 0.8%.

Today at 08:00 (GMT+2) the machine tool orders for April will be published. Later in this day at 22:00 (GMT+2), there will be data on TIC Purchases of Long-Term Securities in the U.S. for March.

Support and resistance levels.

 

USD/JPY opened with a sharp move, breaking through the key Fibonacci 50 level, but failed to hold above. The current trend is upward. The RSI oscillator is near the 50 level in the lower part.

✔️ Support levels: 128.41, 127.52
✔️ Resistance levels: 128.97, 129.43, 129.88, 130.43, 131.34

Trading scenarios

✔️ Long positions can be opened above the level of 128.97 with target 129.88 and stop-loss 128.41: Implementation Period: 2-4 days
✔️ Short positions can be opened below the level of 128.41 with target 127.52 and stop-loss 128.97: Implementation Period: 2-4 days

 

Analytical department investizo.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument.

 

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General analysis AUDUSD for 16.05.2022

Current dynamics

Today in the afternoon AUD/USD is recovering after the losses during the opening Asian session. Weak macroeconomic reports from China were the reason for the decline of the trading instrument. Traditionally Pacific Rim currencies are extremely sensitive to the conditions of the Chinese economy. The main factor influencing the AUD is the iron ore prices, which Australia supplies to Chinese industry. In addition, a slowdown in Chinese economic activity has a negative impact on the global economy and weakens investor interest in currencies with high beta coefficients. 
At the same time, China is under enormous pressure due to the new outbreak of Covid-19. Investments, the majority of which are in the Chinese industrial sector, have fallen by up to 6.8% . Industrial production fell by 2.9% and retail sales decreased by 11.1%. Investizo thus assumes that Chinese GDP will slow down in the second quarter this year, the first time since the trade wars with the USA. In such a difficult environment, the Chinese regulator continues to hold the interest rate at the current level. At the same time, a loosening of monetary policy looks appropriate, but such a measure would weaken the national currency.
Also worth noting is the growing economic risks in Australia itself. Additional pressure is formed on the backdrop of the parliamentary elections which will be held on 21 May. The ruling party, headed by Prime Minister Scott Morrison, is losing popularity and, according to polls, is falling behind Labor. Australians fear a widespread crisis that has caused consumer confidence to plummet to its lowest level since August 2020. Another negative factor is the attempt of the Australian prime minister to retain his position by introducing controversial economic initiatives. Morrison wants to allow Australian citizens to use their pension savings to buy a home on the primary market. A number of opponents of the current prime minister have already called such a move economic papulism, which will lead to higher real estate prices and increase the price pressure in the economy.

Tomorrow at 03:30 (GMT+2) in Australia the minutes of the last meeting of the Australian regulator will be published. The release of the US retail sales data may also have a significant impact on the pair's dynamics tomorrow at 14:30 (GMT+2).Support and resistance levels

On the 4h chart the instrument is consolidating in the upper range of Bollinger Bands. The indicator has corrected sideways and the price range has contracted, indicating an imminent change in the current trend. MACD histogram is in the negative zone, holding a weak sell signal. Stochastic is approaching overbought area, sell signal may be formed within 1-2 days.
✔️ Support levels: 0.6800, 0.6840, 0.6875, 0.6915.
✔️ Resistance levels: 0.6970, 0.7045, 0.7095, 0.7160, 0.7255.

Trading scenarios

✔️ Short positions should be opened at the current price with targets 0.6845, 0.6825 and stop-loss at 0.6980. Implementation period: 1-2 days.
✔️ Long positions can be opened above the level of 0.6985 with a target of 0.7050 and a stop-loss at 0.6955. Implementation period: 1 day.

 

Analytical department investizo.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument.

 

[investizo.com]

 

General analysis USDCAD for 17.05.2022

Current dynamics

USD/CAD continues its sequential decline after a partial rise on Monday with a consolidation around 1.2835

The USD/CAD pair failed to consolidate the result of Monday’s intraday rise caused by the weakening intensity of US Treasury bond yields leading to greenback sell-offs. Further declines in quotes were driven by falling prices for crude oil, traditionally Canada’s main export item.

The fall in crude oil prices is due to a continued decline in demand from the People’s Republic of China, triggered by covid restrictions. This situation is reflected by weak macroeconomic data released on Monday. The fall in oil prices could have been much greater. Both waiting for European Union decisions on embargo on Russian energy imports and reduction of global supply of this resource in general, caused among other things by very modest increase of production and export by OPEC+ countries, significantly sloweddown the fall of black gold quotations.

The expectation of further tightening of the monetary policy affects the strengthening of the US dollar. Earlier Fed Chairman Jerome Powell promised a key rate hike of 50 b.p. (and possibly 75 b.p.) at each of the next two meetings, which will inevitably lead to a strengthening of the national currency. This in turn creates a bullish mood for the USD/CAD pair today.

The strong position of the greenback is also influenced by the difficult geopolitical situation: macroeconomic risks, the expected possible recession caused by the prolonged nature and the escalation of the armed conflict in Ukraine further contribute to a reduction of risk appetite of investors, which led to the yield of 10-year US government bonds dropping from a local high. Nevertheless, such trends in the longer term are increasing the demand for the USD as a safe haven currency, setting the stage for USD/CAD growth.

In addition to all of the above, important factors determining the pair’s future fate are expected news releases on the following data: US retail sales and speeches by FOMC member Loretta Mester and Fed Chair Jerome Powell on Tuesday, Canadian CPI and US crude oil inventories on Wednesday.

Support and resistance levels

Alligator is hungry: his mouth is wide open, his jaw (blue line) hovers high above his lips and teeth (green and red lines), the instrument is in a downtrend. The nearest fractal below the alligator’s teeth (red line) is at 1.28947

Awesome Oscillator (AO) and Accelerator Oscillator (AC) are both in the red area, which is a confirmatory sell signal.

✔️ Support levels: 1.28080, 1.27850, 1.27650
✔️ Resistance levels: 1.29120, 1.28780, 1.28540

Trading scenarios

✔️ Short positions should be opened at the 1.28080 with target 1.27850and stop-loss at 1.28350. Implementation period: 1-2 days.
✔️ Long positions can be opened at the 1.28540 with a target of 1.28780 and a stop-loss at 1.28350. Implementation period: 1 day.

Analytical department investizo.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument.

[investizo.com]

General analysis Brent for 17.05.2022

Current Dynamics

Production of shale oil in the U.S. is lower than projected. Saudi Arabia intends to increase oil production. The EU failed to agree on an embargo on Russian oil. India buys 40 million barrels of Russian oil in the last 2 months.

According to the April forecast of the US Energy Department, production of shale oil in the US in May was expected to reach 8.694 mln barrels per day. However, actual production in May was 8.619 mln barrels per day, which is 0.9% less than forecasted. It is worth noting that the number of wells drilled but not completed in April decreased by 70 units compared to February and amounted to 4.223 thousand. This is due to the fact that the US shale companies are focused on returning money to investors, rather than on increasing oil production on the background of the "green" agenda promoted by D. Biden.

Meanwhile, Venezuela registered in April average level production of oil at the level of 775 thousand barrels per day, which is 47 thousand more than in March. It is worth noting that the average daily oil production in Venezuela in 2021 was 636555 barrels per day.

At the same time, other countries are planning to increase oil production. Iran has declared its desire to double the supply of crude oil to the world market, if buyers are willing. However, Tehran does not publish data on oil production and exports because it is under U.S. sanctions.

Saudi Arabia is considering to increase oil production to 13 million barrels per day by early 2027. Currently, oil production in Riyadh has increased slightly to 10.4 million bpd from 10.28 bpd a month earlier.

Meanwhile, Minister of Foreign Affairs of the EU Josep Borrell said that there are serious disagreements in the EU on the issue about embargo on Russian oil. He also said that the issue is very difficult for a number of countries, especially for such countries as Hungary, which do not have access to sea. On its part, Germany said it would refuse to import Russian oil by the end of the year, even if the EU did not agree to the issue.

At the same time, Libya's Oil and Gas Minister said that the state does not have excessive volumes to supply to the European market in order to compensate Europe for Russian oil.

Russia, in its turn, will lower the export duty on oil by $4.8 to $44.8 per ton from June, 1, which will make Russian oil even more attractive. Since February 24, 2022, Indian importers have placed orders for at least 40 million barrels from Russia. It is worth noting that for the last year India bought only 16 million barrels of oil from Russia.

It can be concluded that the growth of oil production is not fast enough for prices to start decreasing. Economic sanctions against Russia and unsolved conflicts in the north of Africa, together with "smooth " increase of oil production by OPEC+ countries may signal that the growth of Brent oil prices will continue in future.

The American Petroleum Institute (API) will release data on weekly U.S. crude inventories at 22:30 (GMT+2) today. The Energy Information Agency (EIA) will publish data on crude oil inventories tomorrow at 16:30 (GMT+2). Inventories are expected to increase by 1.533M.

Support and resistance levels.

Brent broke through a key Fibonacci level of 61.8 and then moved to consolidation. The current trend is upward. The RSI oscillator is near the 70 level.

✔️ Support levels: 110.65, 107.65,104.80,101.20, 98.75, 95.40
✔️ Resistance levels: 120.05, 114.25

Trading scenarios

✔️ Long positions can be opened above the level of 114.25 with a target of 120.05 and a stop loss of 110.65. Implementation period: 2-4 days
✔️ Short positions can be opened below the level of 110.65, with a target of 107.65 and a stop loss of 111.65. Implementation period: 2-4 days
 

Analytical department investizo.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument.

[investizo.com]

General analysis AUDUSD for 19.05.2022

Current trends.

Wages in Australia are rising at a record pace since 2018. However, against the backdrop of record inflation in the country, real wage growth is declining. The country's unemployment rate is unchanged, but the share of the economically active population has declined.

The published Australia Wage Price Index YoY was 2.4% while experts forecasted growth of 2.5%. Despite this, this wage growth rate is the highest since 2018. However, the country's inflation rate is also at a record high of 5.1%. This means that real wages in the country decreased by 2.7%.

At the same time, published Minutes of the Monetary Policy Meeting of the Reserve Bank Board noted that the rise in core inflation will be driven by significant increases in fuel and new home prices, while real wages will not keep up with inflation.

Meanwhile, the Organisation for Economic Co-operation and Development showed that third of Australians over 65 years old are at risk of falling below the poverty line.  Despite this example, the Australian Minister announced a new policy on the housing market, which will allow Australians to withdraw up to 40% or $50,000 of their pension contributions to purchase a home. However, the decision may lead to an acceleration in house prices, which will speed up inflation.

The unemployment data released today came in a little worse than analysts had predicted. Even though unemployment rate stayed at 3.9% the level of economically active population decreased to 66.3%.

The data on increase of wages and unemployment rate may not allow the RBA to act aggressively and raise the interest rate on 40 bps. With USA plans to increase interest rates by at least 50bp in the next few meetings, it may be concluded that the AUD will remain under pressure in the longer term. However, in China Shanghai cancelled a total lockdown, which may provide support to the Aussie in the short term.

Published data on Australian Unemployment Rate amounted to 3.9% as experts forecast.

U.S. Initial Jobless Claims data will be tiled today at 14:30(GMT+2). Later the same day at 16:00(GMT+2) the U.S. secondary housing market sales data for April will be released; experts expect the index to reach 5.65M.

Support and resistance levels.

 

AUD/USD currency pair quotes fell below the key Fibonacci level of 38.2. RSI oscillator crossed the 50 level from the bottom to the top.

✔️ Support levels: 0.6931, 0.6830.
✔️ Resistance levels: 0.7265, 0.7160, 0.7040, 0.6995

Trading scenarios

✔️ Long positions can be opened from the current level with a target of 0.7098 and a stop loss of 0.6931 Implementation period: 1-3 days
✔️ Short positions can be opened below the level of 0.6931 with target 0.6830 and stop-loss 0.6995 Implementation period: 1-3 days

 

Analytical department investizo.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument.

[investizo.com]

General analysis AUDUSD for 23.05.2022

Current Dynamics

AUD/USD broke through the two-week high and consolidated at 0.7100 amid weakening U.S. dollar, news from the Reserve Bank of Australia and positive news on  COVID-19 from China.

First of all, the correction which started at the end of last week was triggered by expectations of interest rate hike, probably even higher than expected 25bp: rising inflationary risks may result in a 40bp hike as soon as June. 

The growing appetite to risk, which traditionally affects the market with growth of securities, fall of safe haven currencies, as it happened this time with the dollar and, accordingly, growth of high-yielding currencies, which are recently NZD and AUD, had no small effect on the situation.

The market has already reacted to the news of the expected 50 bps hike of the Fed key rate in the next two sessions, but at the moment the AUD/USD rally is constrained by rising U.S. Treasury yields and expectations of further inflationary growth, provoking further key rate hikes.

News on the epidemiological situation in the People's Republic of China also contributed to the growth of AUD/USD. The latest easing of the covid restrictions is forming expectations for growth of the world economy, stimulates the scourge of the stock market and raises the above-mentioned global appetite for risk. But in addition to these factors, we should not forget that the Chinese economy has a key role for the "Ozzie", being the main market for Australian exports, which inevitably leads to an increase in the value of AUD/USD.

Given the remoteness of Australia from the current hotbeds of geopolitical tension, we can expect positive trends to continue in the near future. 
Support and resistance levels

Alligator is hungry: its mouth is wide open, its jaw (blue line) is low under the lips and teeth (green and red lines), the instrument is in an uptrend. The nearest fractal above the alligator’s teeth (red line) is at 0.71250. Awesome Oscillator (AO) and Accelerator Oscillator (AC) are both in the green area, the bars are close to the zero level, which is a strong confirmatory buy signal.
Trading scenarios

✔️ Long positions can be opened above the 0.71250 level with a target of 0.71440 and a stop loss of 0.71000 Realization period: 1-3 days
✔️ Short positions may be opened below the level of 0.70880 with the target of 0.70680 and stop-loss 0.71000 Period of implementation: 1-3 days

 

Analytical department investizo.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument.

[investizo.com]

General analysis GBPUSD for 24.05.2022

Current Dynamics.

White House economic advisor Brian Deese said that a recession in the U.S. is not out of the question. Joe Biden is concerned that there will be no recession. Inflation in Great Britain has reached a record high level for the last 40 years. In October, 40% of Foggy Albion families will not be able to pay their light bills.

Brian Deese, economic adviser to the White House said that the risk of recession is always there, but added that the situation in the U.S. is better than in other major countries. It is worth noting that the Treasury Secretary Janet Yellen and the U.S. Fed Chair Jerome Powell said that there is no risk of recession in the United States. Along with this, at a press conference, U.S. President Joe Biden also said that there will not be a recession in the United States. According to Biden, U.S. GDP will grow rather not decline, and it will grow faster than in China for the first time in 40 years. However, he said that the U.S. is experiencing economic problems, like the rest of the world, but without such consequences as for the rest of the world.

Meanwhile, inflation in Britain reached 9% in April, the highest rate in 40 years. At the same time, the Bank of England expects inflation to peak at 10.25% in the fourth quarter of 2022. It is worth noting that according to several analysts in October 2022, 40% of families in Foggy Albion will not be able to pay for electricity. Currently, 20% of Bhutanese families are already facing this situation. At the same time, the U.K. government is allowing oil and gas extraction off the east coast of Scotland and extending the license for coal mining in South Wales. Thinks that a large number of new oil and gas fields in the North Sea that have a license, but have not yet received final approval, can be implemented without passing the "climate compatibility" tests.

Meanwhile, despite a deal to release oil from the strategic reserves, according to the American Automobile Association gasoline prices in the U.S. set a new record at $4.596 a gallon.

Against this backdrop, the U.K. Chief Secretary to the Treasury said though an emergency tax on energy companies profits has not been passed, it remains "on the table."

From the last speech of Governor of the Bank of England Andrew Bailey, it follows that the Bank of England is looking for support in a strong labor market. But labor force has shrunk by around 1% since the onset of Covid. The BoE's objective is to get inflation back to the target level and avoid so-called second round effects (when rising wages push up inflation).

From all of this it can be concluded that both countries support on a strong labor market, both countries have problems with energy resources, but the U.S. has taken a more hard-line monetary policy. It should be noted that the term "so-called second round effects" starts to appear. The current movement of GBP/USD quotes upward may be considered as the correctional movement.

The UK Composite PMI will be released today at 10:30(GMT+2).

Later in the day at 16:00(GMT+2) there will be data on new home sales in the U.S. for April. Later in the day, Fed Chairman Jerome Powell will give a speech at 18:20(GMT+2).

Support and resistance levels.
 

GBP/USD currency pair is consolidating in the zone between the key Fibonacci levels of 76.4 and 100. The RSI oscillator touched the 70 level and moved down.

✔️ Support levels: 1.2525, 1.2455, 1.2400, 1.2340, 1.2270, 1.2156
✔️ Resistance levels: 1.2595, 1.2637, 1.2760

Trading scenarios

✔️ Short positions may be opened from the current level with target 1.2455 and stop-loss 1.2637. Implementation period: 1-3 days
✔️ Long positions may be opened above the level of 1.2637 with target 1.2760 and stop-loss 1.2595 Implementation period: 1-3 days

 

Analytical department investizo.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument.

[investizo.com]

General analysis NZDUSD for 25.05.2022

Current Dynamics.

The NZD/USD is surging on fresh news confirming the Reserve Bank of New Zealand's (RBNZ) expected 50bp key rate hike and is currently wavering at 0.6500. The last time the pair traded at such level was at the beginning of May.

The central bank also released impressive estimates of further interest rate hikes in an effort to cope with steadily rising inflation. According to the plans, the rate will climb to a maximum of 3.9% in June 2023. The previous forecast for that date was 3.4%, but that rate is now expected by December 2002.

 

Despite the fact that the increase of the key rate always leads to the growth of the national currency quotes, the market has enough factors that can prevent the rapid growth of NZD/USD. Among them is an ambiguous situation with the appetite for risk.

 

On the one hand, the stock markets continue to grow consistently, unlike American treasuries, which slowed down amid negative news on housing construction, the U.S. dollar, therefore, weakens. This pattern is appropriate for a dynamic that supports investment in high-yielding currencies such as the "kiwi".

 

But at the same time, the collapse of hopes for a soon significant easing of the COVID-19 epidemiological restrictions in the People's Republic of China, the continuation of the lockdown until the end of the month, affects the "kiwi" not in the best way, because China is the largest importing country, consuming more than 25% of New Zealand's exports. Investors in the New Zealand dollar also have doubts about the prospects of New Zealand's strategic relationship with the United States in the context of IPEF, which is obviously anti-China, which can significantly worsen the economic relationship.

 

The publication of the data on April basic orders for durable goods in the United States (the expected value - 0.6%, the positive deviation from the expected one leads to the dollar's strengthening) and the protocols of the Federal Open Market Committee (FOMC) should be referred to the considerable forthcoming news able to influence the price dynamics on the NZD/USD pair. Both publications are expected during the day.

Support and resistance levels.

Alligator is hungry: its mouth is wide open, its jaw (blue line) is low under the lips and teeth (green and red lines), the instrument is in an uptrend. The nearest fractal above the alligator’s teeth (red line) is at 0,64710. Awesome Oscillator (AO) and Accelerator Oscillator (AC) are both in the green area, which is a confirmatory buy signal.

✔️ Key levels: 0.66420, 0.65910, 0.65690, 0.65430, 0.64710

Trading scenarios

✔️ Buy limit position may be opened from the level 0.64710 with target 0.65430 and stop-loss 0.64370. Implementation period: 1-3 days
✔️ Sell limit position may be opened from the level of 0.65430 with target 0.64710 and stop-loss 0.65690Implementation period: 1-3 days

 

Analytical department investizo.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument.

[investizo.com]

General analysis Brent for 25.05.2022

Current Dynamics

Gasoline prices in the U.S. are setting another record price. The U.S. administration is thinking about using diesel fuel from reserves. The president of Saudi Aramco is warning about a global oil crisis due to low investment. China is increasing its oil imports from Russia.

According to the American Automobile Association, which monitors fuel prices at over 60,000 gasoline stations in the US, the price of gasoline set a new record and has increased to $4.596 per gallon. Prices continue to increase despite the release of oil from strategic reserves as part of a deal with the International Energy Agency. Currently, Washington put up for sale another 40.1 million barrels of oil. In the meantime, the administration of U.S. President D. Biden is thinking of withdrawing additional diesel fuel from reserves in order to hold down prices.

In Brazil, after ignoring the government's demand not to increase prices and increase diesel fuel prices by another 8.9%, J.M. Coelho, president of Petrobras, left his post. It is worth reminding that he stayed in his post only for 40 days.

At the same time for the first time in two years, the Arab Emirates has sent about 1 million barrels of oil to Europe.

Against this background, the president of Saudi Aramco is warning about a global oil crisis due to low investment. Most companies are afraid to invest in the oil and gas sector because of the pressure of the "green agenda". Amin Hassan Nasser noted that Saudi Aramco intends to increase its oil production from 12 to 13 million barrels per day by 2027 but is hardly able to do it faster.

Meanwhile, Saudi Energy Minister Abdulaziz bin Salman Al Saud said Riyadh hopes to "work out an agreement with OPEC+ that includes Russia." The minister said that against the background of uncertainty on the market it is too early to talk about the details of the new agreement, but OPEC+ will increase production if there is demand.

Meanwhile, China has increased its imports of Russian ESPO oil, which is produced in Eastern Siberia.

Gasoline and diesel prices continue to rise despite the best efforts of the countries. The removal of limitations in China due to the COVID-19 could push prices higher.

According to the American Petroleum Institute (API) weekly crude inventories rose 0.567M while experts predicted a 0.690M decline.

Today at 16:30 (GMT+2) the Energy Information Agency (EIA) will release data on crude oil inventories. It is expected a decline of 0.737m in inventories.

Support and resistance levels.

Brent is consolidating near the key Fibonacci level of 68.8. The current trend is upward. The RSI oscillator is above the 50 level.

✔️ Support levels: 110.65,107.65,104.80,101.20, 98.75, 95.40
✔️ Resistance levels: 120.05, 114.25

Trading scenarios

✔️ Long positions can be opened above the level of 114.25, with a target of 120.05 and stop loss of 110.65. Implementation period: 2-4 days
✔️ Short positions can be opened below the level of 110.65, with a target of 107.65 and stop-loss of 112.50. Implementation period: 2-4 days

 

Analytical department investizo.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument.

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General analysis USDJPY for 27.05.2022

Current Dynamics.

Bank of Japan Governor Haruhiko Kuroda said at the BOJ-IMES 2022 conference that a global surge in inflation is one of the current challenges for central banks. U.S. Federal Open Market Committee (FOMC) Meeting Minutes had no surprises.

Bank of Japan governor Haruhiko Kuroda said that a global surge in inflation is one of the current problems for central banks. Kuroda also noted that the monetary policy response to inflation will differ between countries, although the common task for each country is to identify the size and stability of inflationary pressures. At the same time, wages increased in Japan, but the growth rate remained moderate, while household pent-up demand was limited and the recovery in aggregate demand was slower than in Europe and the US. Also, from Kuroda's statement, it follows that constraints on supply in Japan may not be as serious as those in the United States.

At the same time, the U.S. Federal Open Market Committee (FOMC) Meeting Minutes notes that further rate increases will be appropriate. However, the Committee expects that inflation will return to its 2% objective and that the labor market will remain strong. Along with that, the committee will be ready to adjust the monetary policy stance if risks arise that could impede the achievement of the Committee's targets.

Meanwhile, Japan Tokyo Core Consumer Price Index (CPI) YoY was lower than 2% and was at 1.9%, while U.S. Initial Jobless Claims data was better than analysts' estimates and was 210K instead of 215K.

Obviously, the U.S. market is strong and Japan's inflation can't stay in the 2% level. It looks like the Fed will increase its key rate by 50bp at the next meeting, while Japan will keep its soft monetary policy, which will lead to further weakening of the yen.

The U.S. Federal Open Market Committee (FOMC) Member Bullard Speaks today at 1:35 pm(GMT +2) and the U.S. Core PCE Price Index will be released a little later at 2:30 pm(GMT +2).

Support and resistance levels.

USD/JPY is a little below the key Fibonacci 100 level. The RSI oscillator is below 50.

✔️ Support levels: 126.35, 125.25
✔️ Resistance levels: 131.30, 130.30, 129.66, 129.14, 128.62, 127.98, 126.94

Trading scenarios

✔️ Long positions can be opened at the current level with a target of 127.98 stop loss 126.35: Implementation period: 1-3 days
✔️ Short positions may be opened below the level of 126.35 with target 125.25 stop-loss 126.94: Implementation period: 1-3 days

 

Analytical department investizo.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument.

[investizo.com]

General analysis GBPUSD for 30.05.2022

Current dynamics

GBP/USD is consolidating at 1.26400 amid growing risk appetite.
The market, driven by the "risk-on" impulse pushed the GBP/USD quotes above 1.26500, after which the bulls somewhat cooled their enthusiasm and the pair came to consolidation around the above-mentioned level. With growing appetite for risk, traditional safe havens, in this case the U.S. dollar, are losing investments in favor of higher-yielding currencies. 
Thus, the negative macroeconomic data in the USA, expressed in the consumer price index (CPI) of over 8%, high inflation rates and intensifying price pressure, draw a high probability of economic recession, the US dollar index (DXY) continues to be at a monthly minimum. In such circumstances, it is quite difficult to imagine further increase of the FRS key rate in autumn. 
The news from the People's Republic of China also played an important role in the growth of risk appetite and the appearance of positive sentiment in the market. On June 1, the main epidemiological restrictions on COVID-19 will be canceled, and together with the end of the lockdown, the world economy will gradually start to grow.
High inflation, rising consumer price index (CPI) in the UK naturally led to another raise of the key rate by the Bank of England (BoE) by 50 bps after the Mays 25 bps. 
Among the news expected to affect the price dynamics of GBP/USD pair is the Manufacturing PMI for May, which will be released on June 1 with the expected value of 54.6, the same as the previous value for the UK, and the ADP Non-Farm Employment Change for May with the projected value of 300K versus 247K for the previous period for USA.    

Support and resistance levels

Alligator is hungry: its mouth is wide open, its jaw (blue line) is low under the lips and teeth (green and red lines), the instrument is in an uptrend. The nearest fractal above the alligator’s teeth (red line) is at 1.26650. Awesome Oscillator (AO) and Accelerator Oscillator (AC) are both in the green area, the bars are close to the zero level, which is a strong confirmatory buy signal.

✔️ Support levels: 1.25970, 1.26240
✔️ Resistance levels: 1.26650, 1.27170, 1.27730

Trading scenarios

✔️ Buy stop position may be opened from the level 1.26650 with target 1.27170 and stop-loss 1.2640. Implementation period: 2-3.
✔️ Sell stop position may be opened from the level of 1.26240 with target 1.25970 and stop-loss 1.2640Implementation period: 2-3 days.

 

Analytical department investizo.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument.

[investizo.com]

General analysis USDCAD for 31.05.2022

Current dynamics

The USD/CAD pair rose at the beginning of today's trading. The pair is in a strong downtrend since reaching its highest at 1.30763 in mid-May. 
The expectations of the Canadian Central Bank to raise the interest rate by another half a percentage point on the first of June, with the rise in oil prices as a result of the Russian-Ukrainian war, which led to the disruption of supply routes and raising energy costs, as it is considered the most important export to Canada, all this is a logical explanation for this superior performance of the Canadian dollar. 
On the other side, the Central Bank of Canada sees the utmost importance of raising interest rates, after the annual inflation rate reached its highest level in 31 years at 6.8% in April, which is more than three times the bank's target of 2%. 
Meanwhile, Bank of Canada Deputy Governor Tony Gravel said in a previous speech, “We are facing an economy that is showing clear signs of overheating, and very tight labor markets.” He stressed the need to raise interest rates in a neutral range of 2 to 3% in order to control the economy. Existing inflation and rebalancing the Canadian economy. 
Also Stephen Tapp, chief economist at the Canadian Chamber of Commerce, said in a statement Monday: "These cost pressures will continue to fuel inflation, which will add further pressure on the Bank of Canada to continue raising interest rates at a super-sized pace in its attempt to control inflation. 
However, the resilience of the Canadian dollar will be tested amid mounting concerns about an upcoming recession in recent weeks. Economists have lowered their 2023 global GDP forecast. 
Looking at the most important economic events expected today, the Canadian GDP data will be one of the most important data in the Canadian economic calendar, and on the first of June, the interest decision issued by the central bank will be the most important, which may cause fluctuations in performance if the output is unexpected.
Support and resistance levels

On the 4 hour chart, the tool is correcting at the lower band of the Bollinger Bands. The indicator is heading up and the price range has shrunk, which indicates the presence of corrective dynamics.  The Momentum histogram is above the 100 level, which gives sell signals. Envelopes indicator gives clear signals for sale. 
✔️ Support levels: 1.2630, 1.2585, 1.2530.
✔️ Resistance levels: 1.2680, 1.2725, 1.2770, 1.2820.

Trading scenarios

✔️ Sell stop position may be opened from the level 1.26325 with target 1.25850 and stop-loss 1.26780. Implementation period: 1-2days.
✔️ Buy stop position may be opened from the level of 1.26780 with target 1.27250 and stop-loss 1.26325. Implementation period: 1-2 days.
 

Analytical department investizo.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument.

[investizo.com]

General analysis AUDUSD for 31.05.2022

Current dynamics

AUD/USD has been trading flat since the beginning of the week, consolidating near 0.7200.
Against the background of the Reserve Bank of Australia's (RBA) statements that the key rate hike during the next meeting, scheduled for June 7, is likely to take place, due to the continuing growth of inflation, the "ozzy" began to receive additional attention from investors. At the same time, the U.S. dollar also strengthened its positions. Thus, the positive news for the AUD/USD at the moment did not lead to the rapid growth of the pair only because of the accompanying positive circumstances for the "greenback".
The second positive factor for the strengthening of the Australian dollar, a high-yielding currency, sensitive to the risk sentiment, was the growing appetite for risk due to the easing of the COVID-19 restrictions in the People's Republic of China. The restrictions will be partly loosened on June 1, but yesterday the positive macroeconomic data on the Chinese economy has already come out. The Manufacturing PMI was 49.6 against the expected 48.0 and the Non-Manufacturing PMI was 47.8 against the previous 41.9.
The U.S. inflation rate is gradually declining, nevertheless the pause in tightening of the monetary policy that was discussed so much the previous days in the traders community, most likely, will not take place. Thus, Christopher J. Waller, a member of The Federal Reserve Board of Governors, says he intends to raise the key rate until inflation reaches 2% against the current 6%. Another growth driver for the U.S. national currency is another round of crude oil prices growth, which is a significant export item for the U.S. economy. The above-mentioned factors together with the growth of treasury yields have naturally led to the strengthening of the U.S. dollar.
The U.S. Consumer Confidence Index coming out today, the U.S. Manufacturing PMI and the Australian GDP data coming out tomorrow are among the news that may influence the AUD/USD pair's movement in the near future.

Support and resistance levels

Alligator is hungry: its mouth is wide open, its jaw (blue line) is low under the lips and teeth (green and red lines), the instrument is in an uptrend. The nearest fractal above the alligator’s teeth (red line) is at 0.72040. Awesome Oscillator (AO) and Accelerator Oscillator (AC) are both in the green area, which is a confirmatory buy signal. 
✔️ Support levels: 0.71500, 0.71160, 0.70940.
✔️ Resistance levels: 0.72040, 0.72310, 0.72560.

Trading scenarios

✔️ Sell stop position may be opened from the level 0.71500 with target 0.71160 and stop-loss 0.71500. Implementation period: 1-2days.
✔️ Buy stop position may be opened from the level of 0.72040 with target 0.72310 and stop-loss 0.71500. Implementation period: 1-2 days.

 

Analytical department investizo.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument.

[investizo.com]

General analysis Brent for 01.06.2022

Current Dynamics

According to the American Automobile Association, the cost of gasoline on U.S. gas stations reached $4.62 a gallon. For the year the price growth amounted to $1.57 or 51%. It is worth noting the statement of the head of the international energy agency, from which follows that the current energy crisis is much larger than the crises of the 1970s and 1980s.
Meanwhile, Petrobras has warned the Brazilian government about the possibility of deficit of diesel fuel on the national market. This may happen due to the discrepancy of internal prices on fuel and oil products with the situation on the world fuel market. It is worth noting that since the beginning of the year Brazil imported fuel and lubricants from the U.S. for $3.7 billion, which is almost 84% more than in 2021. Meanwhile, Brazilian government officials will discuss the possibility of privatizing Petrobras on June 2.
At the same time, EU leaders reached an agreement on a partial ban on Russian oil imports as part of the 6th sanctions package. As part of the agreement, oil is supposed to come to the EU only through one main oil pipeline, which is only 10% of the total volume of oil that the EU buys from Russia. However, the final version of the EU oil embargo against Russia is still unknown. Against this background, with reference on officials from the EU and the United Kingdom statements Financial Times (FT) stated that the UK and the EU have agreed to a ban on insurance of ships with Russian oil. However, it is worth noting that the British government refused to confirm this information to the FT.
Meanwhile, some OPEC members are exploring the idea of suspension of Russia's participation in the oil production deal (OPEC+), as Western sanctions and a partial European ban begin to undermine Moscow's ability to produce more oil, writes The Wall Street Journal, with reference of unnamed OPEC delegates. Releasing Russia from its oil production targets could potentially open the way for Saudi Arabia, the United Arab Emirates (UAE) and other OPEC producers to increase oil production. However, in early May the UAE and Saudi Arabia made it clear that OPEC+ would not be able to increase oil production, as any change would require a unanimous decision. It is worth noting that at the moment OPEC+ is behind the planned level of oil production on 2.6 million barrels per day. At the same time OPEC+ believes that today the oil market is balanced. 
Further growth of oil quotes limits fears of the market participants regarding the recovery of demand in China after the softening of the quarantine restrictions, as it is not known how quickly the economic growth will recover and the demand for fuel will recover in the country.

The American Petroleum Institute (API) will release data on weekly U.S. crude oil inventories at 22:30 (GMT+2) today. The Energy Information Agency (EIA) will release data on crude oil inventories tomorrow at 16:30 (GMT+2). It is expected a decline in stocks by 0.067M.
Support and resistance levels.

Brent has fallen below the key Fibonacci level of 76.4 and has moved into consolidation. The current trend is upward. The RSI oscillator after crossing the 70 level from top to bottom is near the 50 level at the top.
✔️ Support levels: 114.22, 112.30, 110.40, 108.05, 104.25

✔️ Resistance levels: 120.35, 116.52

Trading scenarios

✔️ Long positions can be opened above the level of 116.52, with a target of 120.35 and a stop loss of 114.22. Implementation period: 2-4 days
✔️ Short positions can be opened below the level of 114.22, with a target of 110.40 and a stop loss of 116.52. Implementation period: 2-4 days

 

Analytical department investizo.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument.

 

[investizo.com]

General analysis USDJPY for 02.06.2022

Current Dynamics

The leader of Japan said that the Bank of Japan has kept its position on inflation targets. Japan has adopted a supplementary budget. Japan begins restarting nuclear reactors.
Prime Minister Fumio Kishid said in a joint statement of the Bank of Japan and the Japanese government at a meeting of the Budget Committee of the House of Councilors (upper house) of the Parliament that they don't plan to change of their target for inflation rate of 2%. At the same time the Japanese parliament adopted a supplementary budget of 2.7 trillion yen ($21.2 billion) for fighting the sharp rise on fuel and food prices in the current fiscal year. Almost 1.2 trillion yen ($9.4 bln) will be used for prolongation of the current program of oil subsidies till the end of September.
It is worth noting the statement of Japanese Minister of Economy, Trade and Industry Koichi Hagiuda that Japanese government will not leave the Sakhalin-2 project even if they are told to do so. "Sakhalin-2" is an oil and gas project in which Japanese companies Mitsui and Mitsubishi have a 12.5% and 10% stake respectively.

Along with this, at a press conference in Tokyo, the Cabinet Secretary Hirokazu Matsuno announced the restart of reactor No. 2 at Shimane Nuclear Power Plant. It was also said that with the current deficit in energy supply and the continuing growth of fuel prices it is necessary to maximize the use of nuclear energy, based on safety considerations.
Meanwhile in the USA the citizens of Texas risk overpaying for the electric power again, the demand for which reached the maximum levels of May in the history of observation because the citizens try to save from heat with the help of air conditioners. It should be reminded that after the unexpected shutdown of several power plants, prices per megawatt hour in Texas have been raised above $4,000. It is also worth noting that the Atlantic Ocean off the coasts of the U.S. and Mexico begins the storm season, which will end in November.

Increasing prices for energy and energy products will put inflationary pressure on both currencies. However Japan is trying to get inflation up to 2% and the USA is starting to tighten its monetary policy in order to hold inflation rate, which is already above 8%.

Japan Services Purchasing Managers' Index (PMI) for May will be released tomorrow at 02:30 (GMT+2) and is expected to rise to 51.7 points. Later at 14:30 (GMT+2), the U.S. Unemployment Rate for May will be released, expected to decrease to 3.5%.
Support and resistance levels.

USD/JPY failed to break through the key level of 76.4 Fibonacci and corrected down, but stayed above the key level of 61.8 Fibonacci. The current trend is upward. The RSI oscillator crossed the 70 level from top to bottom and stayed near the 70 level.✔️ Support levels: 129.43, 128.85, 128.26, 127.53, 126.36
✔️ Resistance levels: 130.16, 131.33

Trading scenarios

✔️ Long positions can be opened above the level of 130.16, with a target of 131.33 and stop loss 129.43: Implementation period: 2-4 days
✔️ Short positions can be opened below the level of 129.43 with a target of 128.26 and stop loss 130.16: Implementation period: 2-4 days

 

Analytical department investizo.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument.

[investizo.com]

General analysis AUDUSD for 06.06.2022

Current Dynamics

The energy crisis in Australia has led to a six-fold increase in electricity prices in the eastern states. In Australia recommended a 5.1% wage increase. Some experts believe the Reserve Bank of Australia may raise interest rates by 40 bps tomorrow.

The Australian federal government is struggling to find a solution to the country's worsening energy crisis. At the moment, electricity prices for electricity are six times higher than usual price per megawatt hour in the eastern states and reaches $600.

Now the Australian government is exploring the possibility of imposing trade limitations, designed to bring more gas to the local market, but even if the measures are adopted, their effect will only be seen by the end of the year.

Meanwhile, the Australian Labor Minister said the government has decided to recommend a 5.1% wage increase for all "low-wage workers".
Worth noting that wages and spending data convinced ANZ economists to expect a 40bp interest rate hike tomorrow rather than a 25bp hike. While GDP was in line with ANZ forecasts, wage data showed that average hourly non-farm payrolls rose more than 5% in half a year.
The U.S. labor market released last week was better than forecasts. U.S. Nonfarm Payrolls came in at 390,000, better than the forecast of 325,000. The U.S. Unemployment Rate remained the same at 3.6%. Also, the U.S. Hourly Wage Growth in May was 0.3%, which is a bit worse than expected but at the same level as in April.

Thus, strong U.S. data points to the fact that the Fed will not have to correct its plans and slow down the tempo of key rate increase. At the same time even if the RBA decides to increase the rate by 40bp, it is less than 50bp on which the Fed will raise the rate, so the Australian dollar will be under pressure.

Tomorrow at 6:30 (GMT+2) the Australia Interest Rate Decision will be released, forecasting an increase for 25bp to 0.60%. Later that day at 14:30 (GMT+2), U.S. Trade Balance data will be released.

Support and resistance levels.

AUD/USD currency pair quotes fell below the key Fibonacci level 61.8. The current trend is going upward. RSI oscillator is near the 50 level in the upper half.

✔️ Support levels: 0.7143, 0.7068, 0.6977, 0.6830
✔️ Resistance levels: 0.7457, 0.7308, 0.7216

Trading scenarios

✔️ Long positions can be opened from the current level with target 0.7308 and stop-loss 0.7143 Implementation period: 1-3 days
✔️ Short positions may be opened below the level of 0.7143 with target 0.6977 and stop-loss 0.7216 Implementation period: 1-3 days

 

Analytical department investizo.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument.

 

[investizo.com]

Fundamental analysis GBPUSD for 06.06.2022

Current dynamics

GBP/USD strengthens on Monday, compensating for Friday's losses. Despite good macroeconomic data from the US at the end of the last week, today's strengthening of sterling came thanks to major political headlines. A vote of confidence in the UK Prime Minister will take place today. A spokesman for Johnson's Downing Street office said: "The Prime Minister welcomes the opportunity to convey his position to MPs and remind them that when they come together and focus on the issues that matter to voters, there will be no more intimidation of political power."

Markets believe the vote will end months of speculation and allow Johnson's government to focus on political and economic priorities if Johnson receives a vote of confidence.

Despite the clouds surrounding the UK economy as a result of a surge in inflation, there remains optimism that the Bank of England will raise interest rates by 50 basis points in June, which could have a positive impact on the sterling.

For his part, a member of the Monetary Policy Committee explained that the Bank of England may need to raise interest rates further in the coming months to ensure that inflation returns to the desired target of two percent in the medium term.

As Bank of England deputy governor, John Cunliffe added: " It's now above pre-pandemic levels and now, of course, we have to make sure that the inflation we are seeing in the economy, I think most of it, but not all, comes from shocks that people understand externally - is not rooted in the economy."

Recently, many have been betting aggressively that the bank rate could rise to 2% by the end of the year, despite assurances from the Bank of England that such an outcome is unlikely. At the same time, MPC members have also highlighted that there are various circumstances in which inflation expectations and conditions in the economy may merit further increases.

As for the most important events that could affect the pair's performance, certainly, today's vote of confidence in the UK Prime Minister will be one of the important events, as will next Wednesday's PMI, while the Bank of England's interest rate decision next week will have the biggest impact on the pair's performance, as we could see big swings if the results are unexpected.

Support and resistance levels

On the 4-hour chart, the instrument is correcting in the middle band of the Bollinger Bands. And the price range has shrunk, which indicates the presence of corrective dynamics. The momentum chart is above the 100 level, which is giving sell signals. Envelopes indicator gives signals to sell.

✔️ Support levels: 1,26525, 1,26125, 1,25750.
✔️ Resistance levels: 1,25350, 1,25000, 1,24500, 1,24050.

Trading scenarios

✔️ Long positions can be opened at the level of 1,25350, with a target of 1,25750 and stop loss 1,25000: Implementation period: 1-2 days.
✔️ Short positions can be opened at the level of 1,25000 with a target of 1,24500 and stop loss 1,25350: Implementation period: 1-2 days.

 

 

Analytical department investizo.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument.

[investizo.com]

General analysis AUDJPY for 07.06.2022

Current dynamics

The AUD/JPY breached the 96.00 level and fluctuates around the 94.35 level amid decisive hawkish measures taken by the Reserve Bank of Australia (RBA).

The rate hike was clearly expected by all market participants, as rising inflation in the Australian economy can only be stopped by tighter monetary policy. The Reserve Bank of Australia (RBA) raised its key rate by 50 basis points, from 0.35 percent to 0.85 percent, exceeding analysts expectations, who were divided in their forecasts between a final rate of 0.6 percent or 0.75 percent. This is the second consecutive monthly increase in an effort to control growing inflation. Such a big interest rate hike was the biggest increase since 2000 and has naturally woken up the bulls enormous appetite for the "ozzie".

This shock, caused by the Reserve Bank's decision not meeting traders expectations, is caused by the fact that in addition to problems with rapidly rising inflation, the Australian economy is experiencing significant complications in the labor market. Making such a decision, so sharp and consistent increase in the key rate, is quite risky for the national Australian economy, increases the likelihood of recession, puts the labor market at risk.

News from the Land of the Rising Sun also contributed to the pairs rapid rally. Head of Bank of Japan (BOJ) Haruhiko Kuroda said that right now a weak yen is good for the national economy. He defends soft monetary policy saying that a tightening of monetary policy would be inappropriate and have a negative impact on both domestic consumption and capital investment. Recent macroeconomic indicators showed a divergence in average wage and overtime pay growth and a drop in the household spending index.

Upcoming AUD/JPY news that could have an impact on the future course of events include the release of Adjusted Current Account and quarterly and annual GDP data for Japan and the Australian Business Confidence Index, which will be released on Wednesday.

Support and resistance levels

Alligator is hungry: its mouth is wide open, its jaw (blue line) is low under the lips and teeth (green and red lines), the instrument is in an uptrend. The nearest fractal above the alligator’s teeth (red line) is at 94.430. Awesome Oscillator (AO) and Accelerator Oscillator (AC) are in the gray area, showing a divergence, which is not a reliable signal to open a position.

✔️ Support levels: 94.800, 94.430, 93.810.
✔️ Resistance levels: 97.190, 96.570, 95.960.

Trading scenarios

✔️ Long positions can be opened at the level of 95.960, with a target of 96.570 and stop loss 95.350: Implementation period: 1-2 days.
✔️ Short positions can be opened at the level of 94.800 with a target of 94.430 and stop loss 95.350: Implementation period: 1-2 days.

 

Analytical department investizo.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument.

[investizo.com]

General analysis Brent for 07.06.2022

Current Dynamics

The U.S. Department of Energy reported a decline in strategic stocks. The U.S. State Department allowed two companies to trade oil from Venezuela. Saudi Aramco increased selling prices of oil for Asia. OPEC+ agreed to increase oil production in July and August on 648,000 bpd.
The U.S. Department of Energy claimed it had released an additional 40 million barrels of oil from strategic reserves. Nevertheless, oil prices went up to $120 per barrel. The current level of strategic stocks in the U.S. is at its lowest level since 1987. As noted by Bloomberg, from February 22 to May 27, 2022 the volume of reserves decreased by 52.2 million barrels. 
Meanwhile, the U.S. State Department has allowed the Italian company "Eni" and the Spanish company "Repsol" to resume oil supplies from Venezuela to Europe. However, the volume of oil received by these companies will not be large, which will have little effect on the market.
The largest oil field in Lebanon has resumed its work after 2 months of its suspension, reports Argus agency. However, there was no statement from the Libyan National Oil Company that it had resumed work.
Meanwhile, Saudi Aramco increased selling prices for July Arab Light for Asia by $2.1 from June levels and will increase prices for the Oman/Dubai basket by $6.5. For Northern Europe and the Mediterranean, the price has been increased by $2.2 and $2, respectively. It is worth noting that prices for US consumers remained unchanged. 
At the same time in Russia there has been registered a decrease in oil production by 11.5% (38 mln tons) in April as against March 2022.
At the meeting of OPEC +, which took place on June 2, it was decided to increase oil production in July and August for 648 thousand barrels per day by equal distribution of the September quota. 
Meanwhile, Bloomberg, referring to an unnamed source, stated that the oil refining companies in India are planning to sign an extra six months contract with the Russian oil company Rosneft for the supply of oil. It is also worth noting that just now begins the recovery of demand for oil and energy resources in China after the removal of restrictions on major cities, which were implemented earlier due to Covid-19.
Decline in oil production in Russia and the beginning of the recovery of demand in China may point at the fact that oil prices will continue to grow. Currently, the major oil exporters will not be able to increase oil production quickly.

U.S. crude inventories will be released today at 22:30 (GMT+2) by the American Petroleum Institute (API). The Energy Information Agency (EIA) will publish data on crude oil inventories tomorrow at 16:30 (GMT+2). Expect the stocks will decrease by 1.800M.
Support and resistance levels.

Brent prices have broken through the key Fibonacci level of 100.00 but cannot hold above. The current trend is upward. The RSI oscillator is near the 50 level at the upper part.

✔️ Support levels: 118.10, 116.52, 114.22, 11.30, 110.40, 108.05, 104.25
✔️ Resistance levels: 125.00, 120.35

Trading scenarios

✔️ Long positions can be opened above the level of 120.35, with a target of 125.00 and a stop loss of 118.10. Implementation period: 2-4 days
✔️ Short positions can be opened below the level of 116.52 with a target of 114.22 and stop-loss 118.10. Implementation period: 2-4 days

 

Analytical department investizo.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument.