Preliminary US economic situation
The US dollar index (USD Index) has been fluctuating in a narrow range since mid-October after a decline from the short-term peaks created in early September due to lower demand for safe haven thanks to the expectation from the US-China deal and the possibility of hard Brexit. The reversal was quite short when the bright market outlook pushed expectations of the Fed's interest rate policy out of the moderate extremes. The impasse that continues to appear reflects the uncertainty as to whether the more positive story is truly grounded. A US-China trade agreement has not yet been finalized although sources from Washington and Beijing claim it is nearing completion, and Brexit remains a mystery until the general election in the UK on December 12.
This week, there are some notable fundamentals that will capture the global business cycle in the current context. The ISM services and manufacturing report, November employment report and Michigan Consumer Confidence report will be closely watched by speculators.
Leading PMI data shows that US growth has stabilized somewhat, bringing the fastest growth of non-farm activity in four months in November.
Meanwhile, data from Citigroup shows that the US economy has fallen below recent expectations. This can create a gloomy surprise when the news of the week is published.
However, the basic information from the economic calendar will fade if the US and China actually sign – instead of just talking about – a phase 1 trade deal. That means to set the stage for a more comprehensive reorganization of trade relations between the two countries.
Markets can pick up right from the start, which can cause the US dollar to drop.
However, the limited scope of any agreement in phase 1, can also affect the price when the status “Buy rumors, sell the truth” appears. Market sentiment is also likely to collapse when top issues (such as enforcement of intellectual property rights) are not addressed indefinitely.
The US dollar has rebounded against this backdrop. Large liquidity of USD will once again be a defensive solution when the market goes down.
Economics of England and Europe
The U.S. Trade Representative is in the process of completing a French Digital Services Tax (DST) investigation and fears of a trade war that could drag the euro into a weakening context.
In response, the ECB may open the door to further support the euro area when the Council is ready to adjust all its financial instruments, if appropriate, to ensure that inflation is under control. in a sustainable way.
However, updates on the Euro-area Consumer Price Index (CPI) may encourage the ECB to stay true to its current policy at the final meeting of 2019 when expected to rise to 0.9%. from 0.7% in October. At the same time, core inflation is forecast to show a similar momentum when forecast to rise to 1.2% from 1.1% in the same period.
The majority of ECB members may approve the wait until December 12 when the central bank asserts that more information is needed to re-evaluate inflation prospects and the impact of monetary policy measures. .
Meanwhile, ECB President Christine Lagarde may call on European legislators to bring fiscal stimulus to a hearing before the Council of Europe on December 2.
Thus, the increase of Eurozone CPI along with a series of less moderate comments may create an upward reaction to EUR / USD in the near future.
Polls before the British General Elections on 12 December will be the main driving force for the pound's fluctuations this week. The signals that the ruling Conservative Party will gain a majority will help the GBP to rise, while all signs that the opposition Labor Party prevails will weaken the currency.
The most recent polls show that the Conservatives have a lead of 7% to 11% but Labor has caught up and investors will wait to see if the support of the Conservatives falls to the whether either party has the majority of seats.
This has manifested to GBPUSD as the pair has been trading in a tight range for the past few days and it is unlikely to explode until the election results become clear at the beginning of December 13. , attention will return to Brexit and whether Boris Johnson's Brexit Agreement with the EU will win a majority of parliamentary votes.
Regarding the price of gold
The price of gold has experienced a difficult November, this is also the second worst month of this year. Gold prices in US dollars ended the week up 0.14%, but still closed down more than -3.21% in the month. The main factor weakening Gold in the past month is the Federal Reserve's rate cut and the first stage trade deal between the US and China. To this end, gold prices may start in December on a stronger platform.
Gold rose in late November when US President Donald Trump signed a human rights bill to show support for protesters in Hong Kong. With China insisting on a dual-state view of Hong Kong, Trump's move could be seen as an unnecessary provocation (a bill passed by the U.S. Congress with support). overwhelming, and US President Trump has no choice but to sign this bill).
In the near future, the best possible news for green gold prices will occur on the front of the trade war, if the first phase trade agreement between the US and China collapses before the end of this year.
The uncertainty surrounding the US-China Phase 1 trade agreement has pushed G10 central banks into a race to cut interest rates – central banks from around the world. is cutting interest rates to 0, and in some cases, bringing interest rates to negative levels. As uncertainty remains for global trade, it is unlikely for central banks to raise interest rates. This can help gold prices avoid too much recession.
Global bond yields fell along with signs that inflation is rising higher in the context of one of the main factors helping gold prices rise: economic environment conditions causing the decline in yields Actual bonds are rising.
Actual interest rates are those adjusted for inflation: for example, the 10-year interest rate of the US Treasury minus the inflation rate. Falling US real yields means that the difference between Treasury interest rates and inflation rates is decreasing (for example, US Treasury bond interest rates fall and inflation rises). If it is considered that holding gold does not yield anything (no dividends, …), it will follow the logic that gold will go green when the real interest rates of US bonds fall.
In terms of technical analysis, EURUSD is heading towards the Demand zone on the weekly chart. In fact, at the end of last week, EURUSD price had a slight test to this area at 1,0981, however, EURUSD price was pushed up right after that. This can be considered a good resistance for this pair, preventing further declining momentum. This Demand zone is also the area that broke the previous downtrend line on the weekly chart, connecting from 1.1412 to 1.1109. Demand on the daily graph also appears in the Demand Demand area, creating a steady overlap.
Stop loss 1,093
Profit taking 1,107
As for GBPUSD, the price is still stuck in the sideway range from 1.3 to 1,273. Flipzone from 1,273 to 1,279 will continue to be a strong support area in the near future. In addition, Demand 1,262 and 1,250 also play a key role in determining the current uptrend. If this zone is broken, GBPUSD is likely to sustain a strong decline.
Stop loss 1,272
Profit taking 1,297 – 1,316
Besides, gold is showing a quite uncomfortable downward pressure. The above supply at 1480 has not yet been touched. Meanwhile, prices tend to be pulled to the Demand 1440 area at least twice on the daily chart. This is also a key area. If this barrier is broken, a large chance of falling sharply to 1400 and deeper at 1380. However, there is no sign that the downward momentum will occur strongly. It is likely that gold this week will continue to fluctuate between 1430 and 1500.
Take profit 1455
Stop loss 1429
Stop loss 1495
Take profit 1470
Recommendation: This is forex Trading Idea only. For more accurate analysis, you should incorporate other indicators that you have mastered. In particular, always focus on capital management methods to prevent any possible market situation.
Author: Nguyen Chi Thanh
Posts same category
Analyze EURUSD, GBPUSD and Gold week from December 9 to December 14, 2019
Analyze EURUSD, GBPUSD and Gold week from November 25 to November 29, 2019
Analyze EURUSD, GBPUSD and Gold week from November 18 to November 22
Analyze EURUSD, GBPUSD and Gold week from November 11 to November 15, 2019
Analyze EURUSD, GBPUSD and Gold week from November 4 to November 8, 2019
Analysis of EURUSD, GBPUSD and Gold on October 28 to November 1, 2019
Analysis of EURUSD, GBPUSD and Gold for the week of October 21 to October 25, 2019
Analyze EURUSD, GBPUSD and Gold on October 14 to October 18, 2019
Analyze EURUSD, GBPUSD and EURGBP from October 7 to October 11, 2019
Analysis of Gold and Silver on October 7 to October 11, 2019
Gold and Silver Analysis week 30/9 to 4/10
Analyze EURUSD, GBPUSD and EURGBP for the week from 9/30 to 4/10
Gold trading strategy on September 26, 2019
Gold trading strategy on September 25, 2019