EURUSD H4 reacting above pivot, potentially for further upside

EURUSD H4 reacting above pivot where we may potentially see further upside towards 1st Resistance, in-line with -61.8% Fibonacci Retracement and 200% Fibonacci Extension. If price drops from the pivot, we may see it swing towards 1st Support, in-line with 38.2% Fibonacci Retracement and 127.2% Fibonacci Extension.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/eurusd-h4-reacting-above-pivot-potentially-for-further-upside"
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DAX H4 reacting above pivot , potential for further upside

DAX H4 reacting above pivot where we may potentially see further upside towards 1st Resistance, in-line with 100% Fibonacci Retracement and 100% Fibonacci Extension. If price drops from the pivot, we may see it swing towards 1st Support, in-line with 78.6% Fibonacci Retracement and 61.8% Fibonacci Extension.

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Market Spotlight: NIKKEI Breakout Hits Target

Channel Break In Play The channel break highlighted last week in the NIKKEI has seen the market moving well above the 29464.9 target issued. With the US labour reports diluting any likelihood of the Fed tapering in the near term, and with the Japanese PM candidate Fushida calling for a huge new economic stimulus package, the NIKKEI has been given plenty of room to run higher in the near term. Fushida’s chances of election have increased since current PM Suga announced that he will not be running for re-election. With risk assets likely to remain supported on the back of the US labour reports, the near-term outlook remains favourable for the NIKKEI while 29464.9 holds as support. Above here, bulls can look to 30502.8 as the next target.Key Data to WatchAside from domestic data, the main-focus this week is likely to be on the next round of US data with CPI and Retail Sales both due. Any further weakness is likely to act as an accelerant for the current moves, sending USD lower, allowing for risk assets to move higher. Any upside surprises, however, could see risk assets recoil if USD strengthens.

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Pedro Castillo: leftist outsider who rode to power in Peru

Pedro Castillo was “a virtual unknown” before he joined this year’s presidential race in Peru – eventually snatching a narrow win over his far-right rival Keiko Fujimori in June. A rural teacher and union activist who, as the Financial Times notes, rode to vote on horseback in “his trademark Stetson hat”, he had campaigned on the slogan “No more poor in a rich country” – tempered with reassurances that he was “his own man”, not beholden to the Marxist ideology embraced by some in the Free Peru party that had adopted him. 

A taste for outsiders

Still, any expectation that Castillo might lead a moderate government were dashed almost as soon as he donned the presidential sash, says Bloomberg. A day after taking office he appointed one of Peru’s most controversial politicians, Guido Bellido, as prime minister. Bellido is currently under investigation for being “an alleged apologist for terrorists” – having publicly supported members of the “Shining Path” Maoist rebel group that killed tens of thousands of Peruvians in an attempt to seize power in the 1980s and 1990s, says The Guardian. After a month of turmoil, the administration has just survived a vote of confidence motion in Parliament. It’s unlikely to be the last.

That some kind of political accord has now been cobbled together is largely down to financial fears. Already reeling from one of the world’s worst per capita Covid-19 death tolls and a savage recession, Peru has suffered a sobering financial shock since Castillo rode onto the scene. Stocks saw their worst crash in years on his election and the Peruvian sol has been hammered. Barclays estimates investors have pulled some $3bn out of the country since April, when the Peruvian electorate had to choose between an unreconstructed socialist or fascist government. 

How did a middle-aged country primary school teacher, untried in public office, rise to take power? Peru has always “had a taste for electing outsiders”, says The Economist, but none with “as little political experience or knowledge of the world” as Castillo. In his only previous bid for elected office – when he stood for mayor of a small town in 2002 – he lost. He was born in 1969 to an illiterate family of peasant farmers based in the remote Cajamarca region of the Andes. His life story resonated among millions left behind by uneven economic growth in the world’s second-biggest copper exporter. He paid for his studies to become a teacher selling ice-creams on the street. As a union leader, he travelled to outlying towns and villages, amassing grassroots support. “Rage against the political establishment” following the devastation of the pandemic was a big factor in his rise. Castillo played up to it by presenting himself as a crusader, notes the BBC. He was rarely seen without two key props: the traditional white hat of his region and “a huge inflatable pencil” representing his background in education. 

True to his populist credentials, Castillo has renounced the presidential palace (built on the site of the house of Francisco Pizarro, the Spanish conquistador of Peru) and vowed to draw a salary equivalent to what he was paid as a teacher. Opponents claim he’s little more than a puppet of hard-left ideologues. 

Creating another Venezuela?

What happens next is anyone’s guess. Castillo has said he wants to “rewrite the nation’s charter” along similar lines to that of other Latin American radicals such as Hugo Chávez in Venezuela. Opponents say they will resist that at all costs. Investors used to say that Peru’s economy is impervious to “crazy politics”, says the FT. In the current morass, they are now discovering “that politics matters after all”. 

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The RBA and its impact

Stock markets are mostly higher across the Asia-Pacific region, with markets still in risk on mode. The RBA stuck to its guns and scaled back asset purchases slightly, but at the same time, the cash rate was maintained and purchases extended until at least mid-February next year, which should take the sting out of the announcement, although the ASX still underperformed and declined -0.1% against gains of 1.1% and 1.0% in Topix and JPN225. The Hang Seng lifted 0.9%, the CSI 300 0.7% and Shanghai Comp and Shenzen Comp gained 1.1% and 0.8% respectively, after stronger than expected trade data out of China and as tech stocks continue to recover. Treasury yields climbed 1.5 bp to 1.34% and New Zealand’s 10-year rate climbed 0.5 bp to the highest since 2019. Australia’s 10-year rate meanwhile fell back 0.3 bp to 1.25%.

RBA left policy rates unchanged and maintained plans to taper QE. The bank acknowledged the impact of the rapidly spreading Delta variant but Governor Lowe still confirmed that the bnk will purchase government bonds at a pace of AUD 4 bln a week, down from AUD 5 bln – but with purchases extended until at least mid-February. The previous schedule had included a review in mid November. Lowe said in a statement that the decision to extend purchases “reflects the delay in the economic recovery and the increased uncertainty associated with the delta outbreak”. He added that “the board will continue to review the bond purchase program in light of economic conditions and the health situation”.

At the same time, Australia is still grappling with the Covid outbreak which has left most of its population placed under some restrictions. The arrival of the delta variant and subsequent lockdowns have been leaving their mark, while the monthly inflation number from the Melbourne institute showed prices unchanged over the month, bringing the annual rate down to 2.5%. The Australian Dollar however, continues to recover from August lows despite restrictions. The AUDUSD has risen from the August 20 low of 0.7105 back to 0.7477 and currently pullbacked down sustaining a floor at 0.7400.

The Australian dollar benefited from the prospect of a slowdown in the US economy which suffered a setback amid rising cases of the Delta variant, hitting consumer and business confidence, triggering a slowdown in economic output and hiring; this was confirmed in the disappointing August jobs report. Despite the strengthening of the Australian Dollar, downside risks remain. These declines include China’s slowing growth rate in recent months. And this will lead to reduced demand for Australian commodity exports.

As seen last week,  the Australian Q2 GDP growth came in at 0.7% q/q, and the Q1 growth was revised higher to 1.9% q/q. So activity levels were higher than previously thought when the latest wave of virus restrictions hit. Private consumption boosted the recovery in Q2, but will be hit most by the current level of restrictions, which are likely to lead to a subdued Q3 number, especially as fiscal support is being scaled back. Still, with economies starting to adjust to living with the virus and vaccination levels rise, the impact should not be as hard as during the last wave. The experience to date has been that once restrictions are lifted again, the economy will bounce back quickly.

Meanwhile the GBPAUD has fallen from a high of 1.9152 on August 20 to 1.8530 , turnign below the 38.2% Fib level seen on 2020’s downleg.  Further decline coudl retest the  1.8262 (50.0%Fib. level of 8-months rally) with immediate suppoer at 1.8500 and the 1.8370 (200-day EMA). The momentum indicators comply with the decline suggesting a shift to a negative outlook for the asset. The RSI is at 40 sustaining still a move above an  oversold condition, while MACD lines turned negative, with signal line above 0. These implies to a possible consolidation in the near term, while if the asset finds a foot at 1.8500, a correction could retest the 1.8755 and 1.8900 .

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Andria Pichidi

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. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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The IndeX Files 07-09-2021

Equities Rally Following NFP MissGlobal equities benchmarks have had a mainly positive start to the week as markets remains supported in the wake of last week’s US August jobs report. There had ben some trepidation ahead of the release that a strong number might once again re-ignite Fed tapering expectations, fuelling a spate of USD buying, which would ultimately weigh on asset markets. However, with the headline NFP number falling well below estimates at 230k vs 750k expected, the US Dollar has remained fairly subdued following a Friday sell-off. For now, the near-term outlook for asset markets remains supportive as rising delta concerns keep the focus on continued central bank easing.This week, traders will look to the ECB for its latest monetary policy update. While there is some speculation that the ECB might announce a reduction in its monthly asset purchases, there are downside risks, highlighted by recent data weakness. In any case, it would likely take a firm, hawkish surprise from the ECB to unsettle European investor sin the near term with the greater likelihood being that the bank once again sticks to a message of caution, highlighting the remaining uncertainty in the outlook.Technical ViewsDAXThe DAX continues to stagnate within the 15743.01 – 16015.97 range which has framed price action over the last month. On a broader scale, the last few months’ ascent can be seen as a rising wedge pattern, highlighting risks of a downside reversal in the near term. On any break below the bottom of the range (and the rising trend line support) the next level to watch will be 15486.96.S&P500For now, the S&P continues to grind higher within the bullish channel which has framed price action this year. With indicators still bullish, the focus is on continues upside for now. To the downside, any correction lower will see support firstly at 4475.25 followed by the channel low and 4383.50 below.FTSEThe recent channel retest saw the FTSE once again finding a bid with the index now trading back above the 7137 level. While above here, the focus is on a continued push higher, supported by bullish indicators, with the 7241 highs the next upside marker to note.NIKKEIThe bear-channel break has seen an explosive move higher in the NIKKEI over the last week. Price has cleared several key technical levels and with indicators turned firmly bullish, while the 29464.9 level holds as support, the focus remains on further upside in the near term with the 30502.8 level the next target for bulls.

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China may be cheap, but is it cheap enough to make investing there worth it?

BlackRock, the world’s biggest asset manager, announced in May that it was very keen on China, which, it told us, had “emerged from the pandemic with renewed confidence”. Its economy and market had both nicely outperformed during the crisis, something that “deepened” BlackRock’s view that it could expect “relatively better returns for Chinese assets over peers”.

It is early days of course. We must never judge an investment call on three months’ performance, but so far this is not going well. Not at all. When I run my eye down a list of my investments, the one that stands out from a long list of pleasant positive numbers is the Fidelity China Special Situations investment trust. It is down 15% in the past three months.

It is not alone in its misery; look at the worst-performing funds and trusts in the UK and you will find most are China-focused. The clue to what has gone wrong here is embedded in the BlackRock gush: “a stable economic background has made authorities more comfortable emphasising structural reforms over short-term growth targets”. That’s true; it has. It’s just that it turns out that the market is not comfortable with quite the same things as China’s leaders. 

There were hints that there might be a problem brewing last year with the halting of Ant Group’s IPO and ban on ride-hailing firm Didi Global registering new users a mere two days after its US IPO. At $4.4bn, the valuation was naturally based on it registering new users. 

China’s crackdown spreads beyond Big Tech

But we are now well beyond the hinting stage. In late July the once highly profitable tutoring companies in China were told they are no longer allowed to make profits. The market cap of the sector was about $100bn at the start of the year. It’s now more like $10bn. Why it now has any value at all is something of a mystery given that the value of a share is based on the expectation of the distribution of profits, and here we have companies banned from making profits.

These specific examples now look to be the tip of a looming iceberg. This week we’ve seen announcements of new rules about how Chinese kids, companies and celebrities should behave. 

Tech companies that can influence public opinion have been told to register their algorithms with the government: they must work to “spread positive energy”. Delivery companies have been hit by demands that all workers must get the local minimum wage. Parents are to lose more of what little agency they still have over their children, with the state mandating a limit of three hours a week using the “electronic drugs” that are video games, enforced by facial recognition technology. And “irrational fan culture”, as officials put it, is no longer to be allowed: popularity charts for the biggest Chinese celebrities have been removed from microblogging site Weibo, for example.

This is all in the name of what Beijing calls “safeguarding the internet’s political security and ideological security” as well as providing a “safe spiritual home” for the general population. As opposed to a safe home for tech stock profits...

There’s more. President Xi Jinping isn’t just after safe spiritual homes for Chinese people, he’s after providing more equal homes. Enter the announcement that he intends to “regulate excessively high incomes”. That’s been a shock to the share prices of the world’s luxury goods companies: Chinese consumers buy a good 40% of their products and, as anyone who has ever browsed the products of LVMH will know, you need an excessively high income to even drag up the courage to enter the store. 

“Experts” say it’s fine – but it’s really not

Maybe this is all OK. JPMorgan reckons you can still “navigate” the Chinese market on the basis that there have been “clear domestic motivations” for each destabilising action. The move against Ant was to rein in shadow banking; that against Didi was to protect data (data protection in China has been weak); and that against the for-profit education sector to “ease the financial burden on households to incentivise higher birth rates”.

Most other analysts appear to think the same: the worst is over and China will now move into a “compliance phase”; companies will adapt, and that will be that. This is possible, but even if the policies have a clear agenda behind them, that doesn’t bring the profits back – and given what we know about how government intervention tends to destroy innovation, it seems unlikely to foster new ones either. 

It’s also fair to say that analysts predicting there will not be another round of new regulation did not help their case by failing to predict the first one. After all, if tutoring companies can be told that it is their job to make life cheaper for families, why not tell housing and healthcare companies the same – note that only a few days ago the government moved to cap rises in rents. “Renewed confidence” sounds good, but I’m not sure that this tsunami of totalitarian speak and OTT legislation represents the kind of state confidence that works for stockmarkets.

You’re probably already exposed enough to Chinese stockmarkets

Still, there is no such thing as an uninvestable market, only a market that isn’t priced to reflect its risks. You could argue that many Chinese equities are now cheap enough that the risk really is in the price. Tencent and Alibaba, for example, now trade at major discounts to US tech groups, which aren’t exactly 100% free of state interference either.

Compare the two and you might be a big buyer. However, before you fall for that bit of relativity consider another bit. I’ve mentioned the Russian market in the past. When it was on a price/earnings ratio of about five to six times, I noted that it was not just priced as an emerging market but pretty much discounting a return to communism, something that was unlikely. I bought some shares.

China may be jammed full of potentially high-growth companies, but it still isn’t priced to reflect the unpredictability of a government that can already be as communist as it likes. With that in mind note that the cyclically-adjusted price/earnings ratio for Russia is about ten times.

It’s 17 times in China, about the same as in the UK, where I would argue political risk is rather less of a problem. We all probably have Chinese exposure via our pensions and any global growth funds (Alibaba, Tencent and Meituan alone make up 12% of Scottish Mortgage Investment Trust’s portfolio – which I also own – for example). That’s probably enough.

Like most people, I am not certain of much about China, but one thing I know is this: when its government refers to “prosperity for all”, the definition of “all” does not include me – or you.

• This article was first published in the Financial Times

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Two shipping funds to buy for steady income

If I had to find an adjective to describe the global shipping industry, I would go for “volatile”. Measures of shipping rates such as the Baltic Dry Index show that revenues from owning ships can fluctuate wildly. 

In the past, investors worldwide have lost a lot of money in this sector. In 2009, a survey by data firm Scope found 17 funds in the German shipping fund sector were close to bankruptcy. Another 70 were struggling to survive. The sector has improved since then, but it hasn’t fully recovered. 

London’s first shipping funds

So it’s probably not surprising that we had to wait until 2018 for the first shipping fund, Tufton Oceanic (LSE: SHIP), to list on the London stockmarket. This fund now has a competitor, Taylor Maritime Investments (LSE: TMI), and both are now trading at a large premium to their net asset value (NAV). Does that tell us that these funds have succeeded in making a volatile sector boring? 

Certainly, both funds have worked hard to reduce risk. They don’t use lots of complex debt. They tend to own straightforward ships such as bulk carriers and container ships. Crucially, they have both focused on a more active ship model: they’ll buy cheap ships, work them hard and then if necessary trade them out. 

Additionally, most of the leases seem to be of shorter durations, which means they aren’t tied to one big client. For example, Tufton’s list of assets show the majority of its ships will come off charter in 2023 or 2024. Short-term leases are both an advantage (they show us when the shipping cycle waxes and wanes) and a disadvantage (they’ve got to find someone else to charter them).

Tufton is targeting a recently revised dividend yield of 6.7% which it expects to be covered 1.7 times over the next 18 months. The net yield on the ships in its portfolio is running at around 14%. Recent trading looks to be on the up, as the shipping market booms after the pandemic: NAV rose 10% over the quarter to 30 June to $1.158 per share. The fund also released numbers suggesting its assets are holding their value on the resale market: it sold the containership Kale for $21.5m, an internal rate of return of 31% and a 70% premium to depreciated replacement cost.

Taylor Maritime is the new kid on the block. It raised $253.7m when it floated in May 2021, and subsequently raised another $75m. It focuses on smaller second-hand bulk carriers and its seed portfolio held 23 ships with an average age of 11 years and an estimated remaining life of 17 years. It has since acquired nine more. The first quarterly NAV was $1.1263, a 15% increase since the fund’s launch. This was driven by a 10.5% ($33.3m) increase its portfolio’s value. The manager reports that charterers are seeking longer-term contracts in expectation of rising charter rates. Given this backdrop, it’s not surprising that its ships are producing gross cash yields of around 20%.

A convincing case 

The appeal of both funds is clear. They offer a strong, asset-backed stream of regular cash dividends in excess of 5% a year. Operating yields are well in excess of those single-digit numbers, which could imply increased payouts in time. The underlying assets are traded on a global market, so investors can take comfort from their second-hand values. 

Times are good at the moment, but rates usually go into freefall for a while when the economy turns. The test will be whether the funds have managed potential volatility by picking the right ships, and whether they can keep paying out the dividends if those assets can’t be leased out against a backdrop of plunging capital values. Longer-term, climate change policies are also a concern. If owners must update their fleets due to new emissions regulations, that could cut into the resale values for the wrong sort of ships.

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Bitcoin is now legal tender in El Salvador. What does that mean for investors?

• SEE MORE A beginner’s guide to bitcoin: what is bitcoin?

El Salvador has become the first country in the world to adopt bitcoin as legal tender.

What initially began a cryptocurrency experiment between two Americans at the beach town of El Zonte is now being closely watched by the world to see what happens when bitcoin becomes legal tender in a nation for the first time.

El Salvador’s government has started building bitcoin ATMs and created a $150m fund to help facilitate exchange between bitcoin and the US dollar.

But the country is still deeply divided as to how it will work and whether it is in the best interests of the people. So what is El Salvador’s legal tender law and why should you care about it?

What does legal tender mean?

Generally speaking, legal tender is the officially recognised payment mechanism that is used to meet a financial commitment. It is the economic medium of exchange that is recognised by the legal system.

Officially, legal tender relates to coins and banknotes. The US dollar and the pound are obvious examples. So where does legal tender fit in the scope of El Salvador’s “Bitcoin Law”?

Probably the biggest change is that both companies and the government will technically have to accept bitcoin as a form of payment for goods and taxes, although president Nayib Bukele has said that it will be optional and that salaries and pensions will still be paid in US dollars.

Why is El Salvador doing this?

El Salvador’s native currency was the Salvadoran colon from 1892 until 2001, when the country effectively adopted the US dollar (a process known as “dollarisation”).

So why the change? El Salvador is highly dependent on remittances sent by citizens who live and work abroad. Remittances came to almost $6bn in 2019, accounting for 16% of GDP. So one reason behind the move is the hope that Salvadorans will increase the value of remittances they send back – some argue that it will be cheaper to send the money as bitcoin, though this is disputed.

Proponents also argue that it will help promote “financial inclusion” for those without bank accounts.

El Salvador has also floated the idea of using geothermal energy to power bitcoin mining, says CoinDesk: “Diversifying the country’s dollar reserves into bitcoin could create opportunities to earn yield, thus increasing the size of the reserves.”

Whether that happens or not remains to be seen, but polls certainly suggest that the country is largely unprepared to adopt bitcoin – most Salvadorans are against it and those quoted in various news reports largely seem understandably confused by the whole thing – while the World Bank rejected a request from El Salvador in June to help it implement bitcoin as legal tender.

Where did the idea come from?

In 2019, cryptocurrency pioneers Nicholas Burtey and Michael Peterson launched a bitcoin project in El Zonte, a small beach town that has a modest population of 3,000 people. The project paved the way for multiple services including salon treatments and groceries to be paid for with bitcoin.

Since then, bitcoin and the wider cryptocurrency market have become very contentious issues in El Salvador. While the bitcoin law has been welcomed by crypto enthusiasts, mass protests have taken place, with citizens worried that the government has given them too little information about cryptocurrencies and how the legal tender law will work.

Salvadorans may also be concerned about the volatile nature of cryptocurrencies. After hitting a high of almost $63,000 in July, the price of bitcoin more than halved to trade below $29,000 by July due to a host of reasons, including crackdowns by China. Since then it has largely recovered and is now trading at around $50,000.

That might be fine for a high-risk portfolio investment, but it’s not ideal for businesses or consumers who rely on their money being worth roughly the same from one day to the next. So how El Salvador plans to shield its citizens against crypto volatility remains a big question for the government.

What are the challenges?

To date, no other country has adopted bitcoin or any other cryptocurrency as legal tender, so plenty of eyes are on El Salvador.

As deVere Group’s chief executive Nigel Green puts it, many other countries are likely to follow suit. "Other countries, in particular other Central and South American nations, will be watching with great interest to see if the experiment works to shore up El Salvador's shaky economy.”

The main challenge is likely to be citizens being unwilling to use cryptocurrencies. A poll conducted by the Central American University (UCA) found that only 4.8% of respondents understood bitcoin. And three out of four Salvadorans were still sceptical about its adoption in July, according to Reuters.

The government is offering $30 (£22) worth of free bitcoins to citizens in the hope that they will use the national wallet system (Chivo – Salvadoran slang for “cool”, notes the FT) and warm up to the idea of bitcoin as a legal tender. The government has also started installing bitcoin ATMs, to help citizens swap their digital tokens into cash.

But despite this, protests have been taking place in the country’s capital, San Salvador. And even if individuals do accept bitcoin, it’s hard to see why they would spend them, rather than dollars, on their daily grocery shopping, given the potential for appreciation.

Another challenge is technological infrastructure. Citizens in El Salvador need the internet to access bitcoin. Yet only 45% of the population has access to the internet. There are also concerns that bitcoin becoming legal tender will accelerate crime levels in a country which is already notorious for high corruption.

What does this mean for investors?

Much depends on how cryptocurrency prices fare once the adoption takes place and whether other countries follow suit. At the time of writing, bitcoin is trading 3% higher at around $51,700. If the country makes a success of the legal tender and overcomes any “teething problems” it can encourage others to do the same and may result in bitcoin becoming a mainstream legal tender. But if the opposite happens, cryptocurrency prices could come under pressure.

As LIAN Group’s Josue Lopez, who has also been involved in advising El Salvador’s government on bitcoin, puts it: “The imminent success of the use of cryptocurrency in the Central American nation will dictate the future for other countries that are hesitant on adopting bitcoin as legal tender.”

Meanwhile social media groups are calling for people to purchase small amounts of bitcoin to “support” El Salvador’s legal tender move. Social media users on platforms such as Reddit and Twitter are openly encouraging users to buy around $30 of bitcoin to commemorate the bitcoin law coming into effect.

But some – probably rightly – think that investors will neither gain nor lose from El Salvador’s plans. “Bitcoin investors will be keen to see how the experiment works, but I don’t think it will make a huge difference,” says Neil Wilson of Markets.com. In all, he tells the BBC, “this looks like nothing more than an attention-seeking move by the autocratic regime.”

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Investment Bank Outlook 07-09-2021

Credit AgricoleAsia overnight: As investors hope that a change in leadership in Japan will lead to new policies, this continues to boost the Nikkei and drag Asian bourses higher. This positive sentiment was boosted by an upside surprise in China’s trade data. Most Asian bourses and the S&P 500 futures were trading higher at the time of writing. The Antipodean currencies were the biggest movers in the G10 in the Asian session. Despite the RBA deciding to taper its asset purchases, a less upbeat RBA statement weighed on the AUD. The NZD was dragged lower by the AUD. The rest of the G10 was caught in ranges with the CHF and SEK being slight outperformers.EUR: We expect the EUR to emerge as one of the better-performing currencies this week. In particular, we think that the ECB could unveil a set of upgraded economic forecasts and reduce the pace of its PEPP asset purchases while delaying any discussion about extending its QE beyond March 2022. In turn, this could give both EGB yields and the EUR a boost. We further expect any EUR gains to be more pronounced vs fellow low-yielders like the CHF and the JPY. On the day, focus will be on the German ZEW for September and the SNB FX reserves data for August. Starting with the former, the consensus expectation is for some moderation in the more important ZEW expectations component and a further improvement of the current situation component. The data should be largely consistent with the slight cooling down of German business sentiment signalled by the recent PMIs and ifo. That being said, to the extent that the ZEW respondents continue to highlight the favourable financial conditions in the Eurozone and the apparent success of the vaccination campaign, the release could corroborate expectations that the ECB will strike a more constructive tone on the economy on Thursday and thus give the EUR a boost.NatixisEuro zone: investor morale declined further in September due to another drop in expectations (fourth in a row) amid concerns about new COVID-19 restrictions. Meanwhile, the sub-index of current conditions stayed unchanged. Sentix index declined to 19.6 points after 22.2 points in August. United Kingdom: construction industry has been hit by severe shortages of building materials, with prices rising sharply. The construction PMI fell to 55.2 down from July's 58.7. The composite PMI also fell strongly to a six-month low of 54.9 after July's 59.2.China: Vice Premier Liu He promised that the government would continue supporting the private sector amid rising fears that a regulatory crackdown was hurting businesses. Also, the market regulator’s head affirmed that the government would continue a policy of solid support for both the private and public sectors. Exports rose by 15.7% YoY in August, and imports by 23.1% YoY, both above expectations.

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Dollar Edges Higher; Central Bank Meetings in Focus

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Market Update – September 7 – Dovish RBA to buy Bonds for longer

Market News Today 

• RBA leaves rates unchanged – but surprises by extending its AUD 4 bln/week Bond purchases until February (from November)- “Delta outbreak is expected to delay, but not derail, the recovery”. No rate hikes expected until 2024 (no change). AUD  Spiked on no change to 0.7468, down to 0.7410 on Bond news, back to 0.7425 now.
• USD (USDIndex 92.18) continues to hold over 92.00
• Yields ticked up, as Treasuries slipped, (10yr 1.34%), while
• Equities pushed higher in Asia Nikkei +1.3% again to today on expectation of more stimulus and mixed JPY data, (Earnings & Leading strong, big slip for Household spending). – USA500 FUTS at new highs 4548 earlier)
• USOil recovers from $68.00, back to $69.00 now, no positive news from Asian.
• Gold slips to $1816 now, from 1828 yesterday and 1833 on Friday.
• Overnight – Major beat for Chinese trade, exports in particular pushing trade surplus over $8bn better than expected. ($58bn vs 50bn). German Industrial production & CHF Unemployment inline with expectations.

A military coup in Guinea (one of the world’s biggest suppliers of bauxite, a necessary component of aluminium). – saw Aluminium at its highest in more than a decade due to concerns over supplies.

European Open – The December 10-year Bund future is down -7 ticks at 172.29, with Treasury futures underperforming slightly. DAX and FTSE 100 futures are down -0.1% and -0.2% respectively, indicating a lower open for European markets. The RBA’s decision to stick to taper plans, all be it extending the time frame, should not dent the likely ECB move to go ahead and scale back monthly purchase volumes closer to those seen in the first quarter. That would still mean sizeable support and Lagarde is likely to sweeten the pill with an affirmation of the very dovish guidance on interest rates.  EURUSD and Cable at 1.1864 and 1.3825 respectively. USDJPY has lifted to 109.92 from Monday’s low at 109.68.

Today – German ZEW Survey, EZ Revised GDP and Final Employment, ECB weekly purchases. Government treasuries from the UK, Germany and the US.

Biggest Mover @ (06:30 GMT) GBPAUD (+0.32%)  All AUD pairs volatile on surprise from RBA, 1.8550 to 1.8650. Faster MA’s aligned higher, MACD signal line & histogram breaking above 0 line and rising. RSI 63.88 and rising.  H1 ATR 0.0023, Daily ATR 0.0112.

Click here to access our Economic Calendar

Stuart Cowell

Head Market Analyst

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. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

from HF Analysis /268663/
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Daily Market Outlook, September 7th, 2021

Daily Market Outlook, September 7th, 2021 Overnight Headlines Biden Seeks To Shift Focus To Domestic Issues After Afghanistan Exit Goldman Cuts US Growth Forecast As Consumer Sees Harder Path Canada's Trudeau, Trailing In Polls, Goes On Attack Ahead Of Vote UK PM To Unveil GBP 10.0B/Year Tax Rise To Fund NHS, Social Care UK Retail Sales Lose Steam as Firms, Shoppers Fret Over Prices Chinese Trade Unexpectedly Surges Despite Virus Outbreaks Japan PM Candidate Kishida Calls For $270.0B Stimulus Package RBA Holds Cash Rate; Confirms Plans To Taper Bond Purchases Oil Wobbles As Demand Woes Stalk Market After Saudi Price Cuts Japanese Nikkei 225 Rallies As Reshuffle Extends Japan Stock Gains The Day Ahead Global equities closed higher on Monday amid muted trading as the American stock and bond markets were closed for Labour Day. European stocks rallied on Monday after Friday’s weaker US job data suggest that the Federal Reserve’s pandemic stimulus may stay longer than previously expected, thus putting on less pressure for the ECB to taper its similar program as well. The pan-European STOXX Europe 600 rose 0.7%; key equity benchmarks in Germany, France and the UK all finished higher. In the Asia Pacific, Japanese shares extended last week’s rally to Monday following Prime Minister Suga’s announcement that he would not run for party leadership; the Nikkei 225 jumped 1.8%. Hong Kong and Chinese stocks rose as well. US stock futures pointed higher this morning. Eurozone sovereign bond yields were steady ahead of the ECB’s meeting on Thursday. Germany’s benchmark 10Y bund yield was little changed at -0.37%. The dollar made some recovery from last week’s selloff, strengthening against most G10 currencies. Spot gold was down modestly (-0.2%) to $1822.79/oz. Looking Ahead – Economic Data (GMT) • 09:00 DE Sep ZEW Economic Sentiment, 30.0 f'cast, 40.4 prev; Current Conditions, 34.0 f'cast, 29.3 prev • 09:00 EZ Q2 Employment Final YY, 1.8% f'cast, 1.8% prev; QQ, 0.5% f'cast, 0.5% prev • 09:00 EZ Q2 GDP Revised QQ, 2.0% f'cast, 2.0% prev; YY, 13.6% f'cast, 13.6% prevG10 FX Options Expiries for 10AM New York Cut(Hedging effect can often draw spot toward strikes pre expiry if nearby) USDJPY - 110.50/60 583m. 110.20/30 698m. 109.90/110.00 777m. 109.50/60 589m. EURUSD - 1.1900 466m. 1.1840/50 851m. 1.1800/10 444m. AUDUSD - 0.7400/10 766m. 0.7370/80 431m. 0.7290/0.7300 792m. NZDUSD - 0.7050 418m. USDCAD - 1.2630/40 961m. 1.2540 842m. 1.2300 1.00bn (C). GBPJPY - 153.10 392m. Technical & Trade ViewsEURUSD Bias: Bearish below 1.19 Bullish above Firm tone in quiet Asian session EUR/USD opened slightly lower at 1.1872 after hitting 1.1856 low in London The range in Asia was 1.1871/85 while maintaining a firm tone Heading into the afternoon it is trading around 1.1880 Resistance at double-top at 1.1909 with break targeting 100-day MA at 1.1949 Support is at the 10-day MA at 1.1827 and break eases upward pressure EUR/USD may consolidate ahead of ECB meeting on Thursday Improving EZ economic outlook raising expectations ECB will be upbeatGBPUSD Bias: Bearish below 1.39 Bullish above. Bid, as the positive setup targets a 1.3900 break +0.1%, near top of a busy 1.3837-1.3855 range with the USD slightly softer UK launches GBP 270 mln fund to support green heating... Charts; 21 day Bollinger bands flat line, 5, 10 & 21 DMAs base or rise Neutral signals have finally turned positive with 1.3819 200 DMA supporting Next stop 1.3893, 76.4% Jul-Aug fall, then 1.3917 upper 21 day Bolli band 1.3837 Asian low and Monday's 1.3863 Asian high first support and resistance Close below 1.3777 21 day moving average needed to end topside bias With key levels broken, sterling has room to climbUSDJPY Bias: Bullish above 109 Bearish below USD/JPY, JPY crosses sideways, await US yield moves USD/JPY, JPY crosses quiet in Asia ahead of US re-open, yield moves USD/JPY 109.67-84 EBS, well within recent 109.50-110.50 core range Holding near 109.76 Ichi daily kijun, 109.74 100-DMA Ichi cloud 110.00-11 above, still wafer thin but to fan out some US yields on firm side, USD supportive, Treasury 10s indicated @1.340% Option expiries both sides - 109.15-40 total $1 bln, 110.00-60 $1.9 bln Tokyo market thin, volume low, focus on upcoming LDP vote, elections Nikkei up more with PM Suga stepping down, hopes for stronger govt EUR/JPY 130.27-44, GBP/JPY 151.88-152.13, both buoyant AUD/JPY 81.61-84, NZD/JPY 78.28-52, better bidAUDUSD Bias: Bearish below 0.75 Bullish above Briefly moves higher as RBA continues with tapering plan AUD/USD briefly moved higher after the RBA decided not to pause taper plans... RBA did say however - they would continue 4 Bln per week until Feb instead of Nov Opinion was divided among analysts so reaction is relatively muted The high so far has been 0.7469 - below Friday's 0.7477 high RBA acknowledged economic recovery interrupted by Delta outbreak The AUD/USD has backed off from the high and is trading around 0.7435 Market was positioned long into the RBA decision - so upside limited Support is at previous resistance at 0.7426

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/daily-market-outlook-september-7th-2021"
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BTCUSD bullish burst within the ascending channel | 7th Sep 2021

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from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/btcusd-bullish-burst-within-the-ascending-channel-or-7th-sep-2021"
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