5 Near-Term Themes
You probably had your fill of "2020 themes", so why not another? The one spot to watch for a jolt to global growth in ... China. The US-China trade deal removes a major worry for Beijing, which may take action as soon as early next week to enact some stimulus ahead of a week of holidays starting on Jan 24. Officials strongly hinted that another RRR rate cut isn't coming, but they are expected to cut the loan prime rate soon and may take additional stimulus measures on the fiscal side. That would be powerful -- and if they do, I see bright days ahead for the Australian, Canadian and New Zealand dollars.
Inflation watch
A pair of US inflation reports this week were on the low side of expectations but there is a clear trend higher in core measures and wage growth (to a lesser extent). The Fed has confined itself to the sidelines but there is life in inflation. Heading into next month, we roll over some tough comps and that sets a lower bar. I think there's a chance that at some point this year, inflation is a major theme in markets and that sparks talks about central bank hiking.
Housing
Central banks haven't been able to spark broad based inflation, but they've been remarkably successful at creating asset inflation. With all the rate cuts last year, an underrated risk is a surprise rise in house prices globally. We're already starting to see signs of tighter market in New Zealand which just posted a 12% rise in house prices. Thursday's home builder sentiment numbers in the US were a bit stronger as well.
Oil
US shale oil is not what it appears to be. Every budget that comes out points to less spending this year and the market is laser-focused on return of capital rather than production expansion. Natural gas is worthless in many parts of the US and is being burned off at unprecedented rates. On top of that, the risks for the US election are higher in energy than anywhere else. The market is overly comfortable around $60 but a fall below $50 would create a real reckoning in shale and that has a multitude of knock-on effects, particularly in junk bond.
Iran
A week ago we were on the brink of war and now the world has forgotten about Iran. Geopolitics are impossible to price in. You can't price in half-a-war. The thinking now is everyone got to flex their muscles, but a report on Friday said that 11 US soldiers were concussed in one of the blasts. That puts to bed the theory that Iran was knowingly dropping bombs that wouldn't hurt anyone (assuming the report was true). The chance of Iran or Iran-sponsored militias launching attacks remains high and the situation could quickly spin out of control from them.
US election
The election is the one risk that everyone can point to and it's undeniable. The world will change on Nov 3 but it's a binary risk and that's tough to price in. At some point there will be a pre-election de-risking but it's tough to say whether that comes in the autumn or sooner. The following remains valid...so far:
Trump is staying in the White House as long as a recession or a stock market crash are ruled out.
Forex Brokers' Share Price Performance
The latest on share price performance of major forex firms shows CMC Markets in the lead, up 34% since January 2019, followed by IG Markets' 20% and Swiss Quote at 9%.
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1. GBP/USD struggles to hold onto recovery profits beyond the 1.3000 mark.
2. December 23 low stays on the bears’ radar whereas December 31 pinnacle will assignment the customers throughout upside.
GBP/USD trades close to 1.3000 by the clicking time of Tuesday’s Asian session. In doing so, the pair stays inside the month-to-month falling fashion channel at the same time as also remaining below 200-bar SMA.
With this, sellers preserve eyes on December 23 low, close to 1.2900, as close to-time period key support throughout further declines.
In a case in which GBP/USD expenses stay weak underneath 1.2900, November 22 bottom around 1.2820 ought to go back to the chart.
On the upside, 61.8% Fibonacci retracement of the pair’s rise from November 22 to December 12, at 1.3086, can offer immediate resistance in advance of the stated channel’s top line and 200-bar SMA confluence near 1.3100/05.
If buyers manage to go 1.3105, 50% Fibonacci retracement level close to 1.3170 can offer intermediate halt previous to fuelling the pair in the direction of the excessive marked at the stop of 2019, at 1.3285.
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1. GBP/USD struggles to hold onto recovery profits beyond the 1.3000 mark.
2. December 23 low stays on the bears’ radar whereas December 31 pinnacle will assignment the customers throughout upside.
GBP/USD trades close to 1.3000 by the clicking time of Tuesday’s Asian session. In doing so, the pair stays inside the month-to-month falling fashion channel at the same time as also remaining below 200-bar SMA.
With this, sellers preserve eyes on December 23 low, close to 1.2900, as close to-time period key support throughout further declines.
In a case in which GBP/USD expenses stay weak underneath 1.2900, November 22 bottom around 1.2820 ought to go back to the chart.
On the upside, 61.8% Fibonacci retracement of the pair’s rise from November 22 to December 12, at 1.3086, can offer immediate resistance in advance of the stated channel’s top line and 200-bar SMA confluence near 1.3100/05.
If buyers manage to go 1.3105, 50% Fibonacci retracement level close to 1.3170 can offer intermediate halt previous to fuelling the pair in the direction of the excessive marked at the stop of 2019, at 1.3285.
Forex Signals
If you’re thinking about becoming a Forex trader then you’ll probably be looking for an accurate Forex signals provider.
Hot Forex Signalshttp://www.hotforexsignal.com/) is the best accurate Forex signals service provider.
Ashraf
As just one example today the US stocks are up huge, and the Pound down. This strong correlation that was develping with the Pound and US stocks for awhile has had to deal with various UK domestic headlines that can pull it in all kinds of directions.
Where do you think the bears return?