Will the Bank of England cut interest rates in January?

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Fasten your seatbelts and brace for potential Pound volatility in the week ahead as the Bank of England (BoE) meet and UK officially leaves the European Union on January 31.A pressing question on the mind of many investors is whether the BoE will cut interest rates for the first time since 2016. The endless Brexit drama has certainly not been kind to the UK economy over the past few years with Sterling still nursing deep wounds inflicted by the endless uncertainty. UK data continues to paint a mixed and confusing picture over the economic landscape, with this theme clearly illustrated... Read More


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XAUUSD: Bullish Impulse Under Formation Already?

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xauusd 1h

The current XAUUSD structure hints to a bullish impulse consisting of primary waves ①-②-③-④-⑤.

 The first four parts of the 5-wave move look fully complete, whereas wave ⑤ is still under development.

 Wave ⑤ consists of intermediate impulse waves (1)-(2)-(3)-(4)-(5).

 Wave (2) could be ending its correction shortly, which suggests that bulls could continue to push the prices to at least the 1611.9 top.

xauusd

An alternative scenario here sees the current structure corrective with wave ④ incomplete. In this projection, wave ④ is a zigzag and could be completed near 1521.6.

The estimated target is the 61.8% Fibonacci expansion of intermediate wave (A).

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Currency Strength Indicator – The Traders Secret Weapon

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The currency strength indicator is the secret weapon of successful trading. Through this trading guide, our team of industry experts will reveal our proprietary currency strength indicators pack. You will learn why our in-house indicator is superior along with an unorthodox currency strength trading strategy. If this is your first time on our website, our […]


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Can the Chinese New Year Impact The Price of Gold?

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Chinese New Year Impact

The short answer is, yes. The Chinese Lunar New Year routinely has an effect on the price of gold.

But just as important is why, and what that means for people who are interested in trading the precious metal.

So how much of an effect is it? And can we expect the effect to keep happening?

China’s Gold Obsession

It’s not surprising that the most populous country in the world would be a large consumer of any given product.

But gold is a special case in China, even more than the second-largest importer of gold, India. There are traditional, historic and simple practical reasons for this.

Let’s get an idea of scale. China produces over a third of the world’s gold, but even so is still the largest importer.

This isn’t just the government and financial institutions building reserves, but Chinese citizens are the largest holders of gold on a per capita basis.

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It’s More than a Tradition

T...


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GBP Crashes Despite Better UK Data

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Risk Assets

USD Breaks Resistance

The US dollar has been firmer over the last 24 hours with the USD index breaking above the 97.42 level yesterday. For now, momentum has stalled and price is sitting just above this level. The absence of any key US data this week means that moves have been light. However, USD sentiment is generally positive and further upside looks likely.

Euro Lower Following ECB

EURUSD has been firmly lower today. The ECB launched its strategy review at yesterday’s policy meeting though warned markets that while the review is underway, its monetary policy approach will not be on auto-pilot. EURUSD has broken through the 1.1072 level now and is trading 1.1049 last.

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GBP Down Despite Better Data

GBPUSD reversed sharply from initial highs on the session above the 1.3150 level to trade 1.3119 last. The UK manufacturing PMI released today was seen rising to a nine-month high, though still below the 50-lev...


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5SM Leader Resigns Ahead of Regional Italian Elections

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Regional Italian Elections

Italian politics has lurched back into the spotlight this week. Ahead of regional elections due over the weekend and into next week, there are fresh concerns for the political situation in the country.

5SM Leader Resigns

Luigi Di Maio, the head of the populist 5 Star Movement announced that he is standing down as the party leader.

5SM, which became known for its anti-establishment message, exploded in popularity over recent years. The party gained the most support in the 2018 elections.

However, following two consecutive coalition governments, the success of the party has visibly waned. Di Maio stated that he feels “an era is coming to an end”.

Regional Italian Elections This Weekend

The northern region of Emilia-Romagna will go to the polls on Sunday.

The expectation is that right-wing nationalists will oust the current center-left leaders there, which have been in place for decades. Such a result would mark a significant shift in voter sentiment. It would also cast jeopardy over the ...


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Euro & Aussie At Critical Lows

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The Coronavirus keeps spreading, weakening Aussie despite the upbeat jobs numbers. Technicals indicate that Aussie and Euro move hand to hand, with the former falling following a ‘holding’ ECB! Pound on the other hand, does relatively well as rate cut expectations diminish! Will it continue long?

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Crude Down Despite Inventories Draw

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crude oil

The latest report from the Energy Information Administration has added further downside pressure for crude prices this week.

The EIA update showed that US crude inventories fell by 400k barrels last week.

News of a drawdown is typically positive. However, on the back of last week’s 2.5 million barrel drawdown, the market had been expecting a 1 million barrel decline. Therefore, it was disappointed by the news of a weaker than expected draw.

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Gasoline Inventories Increase

Other elements of the report were also more obviously bearish.

The data showed that gasoline inventories were higher by 1.75 million barrels over the week. This increase was above the expected 1 million barrel level.

However, distillate stockpiles were far lower than expected. These dropped by 1.2 million barrels over the week versus an expected build of 3 million barrels.

Crude prices have been weighed down due to the outbreak of the Wuhan v...


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Equities Turn Slightly Weaker Near the Top

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technical analysis

Equity markets were seen trading rather flat for the third consecutive day. The rally looks to be pausing for the moment as the earnings season gets underway.

The declines were attributed to mostly weaker banking stocks leading the way. On the economic front, data from the US was rather quiet.

Euro Falls on Dovish ECB Comments 

The European Central Bank held its monetary policy meeting on Thursday. The central bank left interest rates unchanged as widely expected. The central bank also announced that it would begin a strategic review of its monetary policy.

At the press conference, ECB Chief Lagarde cited that downside risks for the euro still remain. This saw the markets reacting negatively to the comments.

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EURUSD Breaks Out to the Downside

The euro broke past its sideways range to the downside. Losing over 0.4% on the intraday basis, EURUSD is now likely to continue to drift lower. The next major suppor...


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Asians assets attempt to find surer footing amid coronavirus concerns

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Asian currencies and equities are offering a tepid response following news that the death toll from the coronavirus’ spread has climbed to 25, with new cases being reported in more countries, such as Vietnam and Singapore. The subdued trading volumes in the region ahead of the Lunar New Year festivities are likely preventing a more pronounced reaction in the markets.Market participants perhaps can take heart from China’s efforts to lock down the epicenter of the outbreak by imposing travel curbs on seven cities, and the World Health Organization’s holding back from labelling the situation... Read More


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Oil prices slide on China virus fears; Gold steadies

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“What goes up will eventually come back down” perfectly describes oil’s explosive movements since the start of 2020. After initially rallying on geopolitical tensions during the early parts of January, WTI Crude and Brent have both taken a painful beating over the past few weeks. Rising concerns over Asian economic growth and oil demand weakening from the coronavirus outbreak in China sent oil prices tumbling to levels not seen since November 2019 below $55 on Thursday. WTI Crude has depreciated more than 5% this week and almost 10% since the start of the year! The... Read More


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GBPUSD: 1.336 Could End Corrective Zigzag

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After the completion of the cycle-degree impulse wave a, we could see a ‘three’ wave b taking place. The corrective Ⓐ-Ⓑ-Ⓒ formation seems to suggest that we are in a primary zigzag pattern.

The zigzag’s wave Ⓐ is fully completed, whereas the ‘three’ correction wave Ⓑ is still under development.

Wave Ⓑ consists of intermediate waves (A)-(B)-(C) and has ended two-thirds of the correction leg.

The last intermediate impulse (C) could be completed near 1.336. That target is a duplication of wave (A)’s range.

GBPUSD

The current GBPUSD structure however it’s rather subjective, enabling us to consider an alternative scenario where wave b is a triangle and consists of primary waves Ⓐ-Ⓑ-Ⓒ-Ⓓ-Ⓔ.

Based on the ratios of that triangle, wave Ⓓ could be completed near 1.323. This could be followed by wave Ⓔ’s conclusion near the 1.299 zone, at the price/trendline intersection.

The post GBPUSD: 1.336 Could End Corrective Zigzag appeared first on Orbex Forex Trading Blog.


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CAD Sinks on Dovish BOC

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Risk Assets

Dollar Holding Below Resistance

The US dollar has been fairly stagnant over the last 24 hours. The lack of any key US data this week has created an absence of directional drivers which has seen the USD index remain in consolidation mode just below the recent 97.42 resistance level.

Some weakness in equities over the week as a result of concerns over the outbreak of the coronavirus has helped keep USD underpinned at recent levels.

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Euro Lower Ahead of ECB

EURUSD has been a little weaker today. The residual strength in USD over the week has weighed on EUR. The ECB meets today and while no change in policy is expected, traders will be keen to hear the details of the bank’s strategy review. Special attention will be paid to the details around the inflation target. EURUSD trades 1.1089 last.

GBP Pauses At Highs

GBPUSD has been a little softer today, pausing just below the recent 1.3152 highs. GBP has been much s...


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New Zealand Q4 Inflation Coming Up

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nz q4

Unlike most countries, New Zealand publishes its inflation data only once per quarter. This means there are a lot more expectations ahead of the release.

Many analysts are saying this is a key point that will set the trend for monetary policy for the next three months. And, by extension, this would affect how the NZD will trade for that period.

The current outlook suggests that the RBNZ is less likely than before to continue easing, and inflation is seen to finally have turned the corner. Until recently, optimism of Chinese growth following signing the Phase 1 trade deal with the US helped the outlook for New Zealand.

However, now with the outbreak of the coronavirus, there are increasing concerns that the Kiwis could be affected by a drop in travel, and slowing consumption in the Asian giant.

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What We Are Looking For

Expectations are for the quarterly CPI change rate to slow this time around to just 0.1% co...


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Metals Lose Momentum Following Trade Deal

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metals

Gold

Its been a rather muted week for the yellow metal. Following moves in both directions, gold is trading roughly flat on the week as of writing.

In the absence of any key US data, there has been limited movement in the USD, which is typically a big source of direction for gold prices. However, on the back of a slew of better data last week, the greenback has been broadly supported over the week, capping upside moves in gold.

The signing of the US/China trade deal has also taken some of the upward pressure out of gold. With the US and China now legally agreed on the terms of the phase-one trade deal, the market is confident that talks will soon progress onto the second phase of the deal, boosting expectations that the trade war will soon be brought to a proper end. This improved level of optimism around negotiations has again weakened safe-haven demand for gold.

However, the metal has found some support this week on lingering risk factors.

The outbreak of coronavirus in China, which ...


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Jan ECB Meeting Unlikely to Surprise

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ecb meeting

Investors look to today’s ECB’s monetary policy meeting knowing full well that the central bank will maintain the status quo. At best, the ECB will only review the impact of its monetary policy so far.

In terms of any surprises, the chances are minimal.

From a monetary policy perspective, the central bank will maintain interest rates at 0%. The marginal lending rate is likely to remain at 0.25% and the deposit facility rate at -0.50%. The central bank will also keep the asset purchases at the current 20 billion euro a month.

The decision to leave rates and asset purchases unchanged comes as the governing council prefers to assess the impact. The ECB last made changes to its monetary policy in September 2019.

This was done in response to sluggish inflation and slowing growth. This came at a time when the German economy was particularly hit hard. Being the growth engine for Europe, the decision came out as a timely response to stoke growth.

Regarding the larger scope of the monetary poli...


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Bank of Canada Keeps Rates Steady

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technical analysis

The Bank of Canada held its monetary policy meeting on Wednesday. As widely forecast, the BoC left the key interest rate steady at 1.75%.

Ahead of the BoC meeting, Canada’s inflation data came out. Consumer prices were seen to be fairly stable for December. The BoC, in its statement, gave a cautious assessment of the economy as it stays alert to persisting slower growth and geopolitical risks.

US Existing Home Sales Rise More than Forecast

Existing home sales report for December beat expectations strongly. Data from the National Association of Realtors showed that existing home sales rose by 5.54 million in December, representing about a 3.6% increase on the month. This came after a drop of nearly 1.7% just the month before.

EURUSD Settles into a Range

The common currency is clearly seen moving into a sideways range between the 1.1100 and 1.1072 region. We expect this sideways movement to continue into today’s ECB meeting.

A breakout from either of these levels will potentially signal ...


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Oil Weak on Virus Concerns

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Concerns about the spread of the Coronavirus have continued to push #oil prices down, in addition to a poor API report.

Meanwhile, Gold and Silver trade sideways, which seems to suggest that a breakout could be coming soon.

Will the ECB trigger a breakout today?

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Will the coronavirus be the trigger for a market correction?

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The coronavirus has the world on alert. After the SARS epidemic killed nearly 800 people across 37 countries in 2003 causing a lot of panic and economic disruption along the way, there are serious concerns about another outbreak of a new coronavirus that has spread in Chinese cities, including the capital Beijing and Shanghai.Currently, it's unclear whether the existing outbreak constitutes a public health emergency of international concern, which requires a coordinated global response. However, when looking at financial assets’ behaviour, there are clear signs of investor scepticism.... Read More


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