US Election Fever: Which way will it go?

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China hopes for recovery of the yuan with the Fed rates rise

The likely rate hike in December from the US central bank will have limited impact on declining in anticipation of the Fed's steps yuan, said on Tuesday the chief economist of the Bank of China.
Ma Jun said at a dinner with a small group of foreign journalists that the Chinese national currency is under pressure, weakening in the eve of the Fed's tightening policy, but it can be restored after the US Federal Reserve finally raise rates.
From the end of September, the yuan fell more than 1.5 percent against the US dollar, and some market participants are getting firm in anticipation of further reduction.
The official regulator said that in spite of this, the yuan in October has remained stable to a basket of currencies, which shows China's commitment to its new currency regime.
Ma added that the city authorities have recently taken action against the growth in property prices, which should cool the market and reduce the demand for mortgages. The official said that the Bank of China's monetary policy will examine the likely impact on the real estate sector.
He added that he is expecting a growth of the Chinese economy, the second largest in the world, by about 6.7 per cent this year.

The inverse correlation between oil and the US dollar was interrupted - Goldman

Analysts at Goldman Sachs believe that the inverse correlation between the rate of the US dollar and the price of oil has stopped.
Over the last month, both the assets significantly rose against the background of "significant events", the bank said in the review.
According to the analysts, the dynamics of the oil is particularly unusual, given the strong exchange rate of the American national currency.
Goldman Sachs analyst Jeff Currie believes that if Russia will freeze the oil production, it will probably happen by January-February 2017. OPEC's strategy to protect its market share has remained the same, he said in an interview with Bloomberg.

The Bank of England has called the fall of the pound "significant" will take into account in policy

The head of the British central bank Governor Mark Carney said that the fall in the value of sterling has appeared "quite significant" and the responsible for interest rate policy officials will consider it.
Speaking on Tuesday before lawmakers, Carney reiterated that the Bank of England is not aimed at a particular level of the pound, but is not indifferent to the exchange rate of the national currency.
Carney believes that the recent weakening of the pound after the annual conference of the ruling Conservative Party in October was not due to a change of opinion about the likely actions of the Bank of England's interest rate.
In early October, the pound fell to a minimum of 30 years.
Investors felt that the new British prime minister Theresa May will choose a hard-line approach to the forthcoming negotiations with the European Union about the Brexit, and this can greatly complicate access to European markets of London. May promises to begin formal negotiations on Brexit by March next year.
According to Carney, the pound starts to really vary, as time frame for lauching the 50th article is clarified, the pound is also sensitive from market perception - what will be the potential relationship between the United Kingdom and Europe.

Dollar at 8-month peak on expectations the Fed raising rates

The dollar rose on Monday to a new eight-month high against major currencies, supported by expectations of raising interest rates before the end of the year.
The dollar index, which tracks the US currency against a basket of six major rivals, rose by 0.1 percent to 98.718, after rising up to the level of 98.846, its highest level since February, 3rd.
Last Friday, the head of the Federal Reserve Bank of San Francisco John Williams repeated his appeal for rapid increase in Fed rates, telling reporters that "this year eligible" for the tightening of monetary policy.
His comments were preceded by "hawkish" statements and other central bank officials, including the president of the Federal Bank of New York William Dudley and Fed Vice Chairman Stanley Fischer.
Quotations of futures on the federal funds rate show that the market assesses the likelihood of Fed rate increase in December to 70 percent.
The dollar also received a support by a recent poll, according to which US presidential candidate from the Republican Donald Trump loses against representing Democrats Hillary Clinton on the eve of the elections on 8 November.
The euro weakened by 0.1 percent to $ 1.0874, approaching Friday's low of $ 1.0857, the lowest level since March 10.
Against the Japanese yen the dollar gained 0.1 percent, rising to 103.86 yen.
Published on Monday data showed that Japan's positive foreign trade balance in September is at the level of 498.3 billion yen ($4.8 billion) against the average forecast of 341.8 billion yen.
Offshore yuan, trades in which are held outside of mainland China, updated six-year low against the dollar after weakening of the yuan in the market of mainland China on the background of the growth of the dollar index.

Is parity between the dollar and euro seen on the horizon?

Euro/dollar on Friday successfully updated the minimum from eight months. On Thursday "bears" did not have quite a bit: the instrument stumbled on 1.0913 (the "bottom" stood at 1.0911), but on Friday the market has corrected this misunderstanding. Dollar rises in price everywhere, rapidly and confidently. The main trades in EUR/USD at the beginning of the week go around 1.0880, sellers goal shifted to 1.0821, a minimum of March 10 this year.
Nothing new has happened. Just in the background there was an empty macroeconomic calendar, investors continued to win back the results of the meeting of the European Central Bank, which took place on Thursday. The belief that Mario Draghi will soon (possibly this December) will announce the extension of the quantitative easing program, is growing with each passing hour. While in the ECB at the official level it is still not discussed, but also the time to make such a decision is enough.
Mitigating of European QE on the background of interest rate rises by the Federal Reserve System draws in the investors imagination very colorful pattern, where the euro is weak, falls on each sneezing, and the dollar is strengthening its market position. There, you see, speaks about parity become louder and louder.
However, it's not that simple. Perspectives outlined above are already in currency quotations, everything else is emotions and reactions. So in December will still be euro/dollar movements, perhaps with drops to 1,06-1,07, but the market quickly will play them back and will return in the medium range of 1,08-1,10.

Is GBP/USD going to gain a foothold above 1.2295?

The pair GBP/USD has maintained a positive attitude on Wednesday. The British pound spent a day in a sideways channel. Partially recovered, the pair consolidated between 1.2250 and 1.2350 levels, moving up and down between them. Despite the recent growth, the general background of the pair is negative.
On Thursday in the UK comes only a report on retail sales in the country. On the motion of the trading instrument may affect the results of the debate for the US presidency, which took place early in the morning on Thursday and the release of US labor market, which will be released later in the US session.
Strengthening of the dollar as a result of the debate and in the case of a positive report on the labor market could put pressure on the pair GBP/USD. As a result, the pound sterling would eliminate all past achievements.
If the dollar will rise again, then quotes of the pound will move down. The first objective of the sellers - the level of 1.2250. Successfully overcoming it, prices will fall towards 1.2150 or below 1.2100.
At the same time strengthening of the pound would lead to growth of the last above resistance 1.2350. Further development of the dynamics of the pair will be held towards the 1.2400 and 1.2450 marks.

Euro is defensive before the ECB meeting

Euro is close to the minimum of three months expexting the ECB meeting on Thursday and after completion of the final debate in the run-up to the November elections in the US.
The euro weakened by 0.1 percent to $ 1.0969, not very far from the minimum of three months, reached on Wednesday at $ 1.0955.
The main interest for investors is the question will the ECB President Mario Draghi point on the willingness of the bank to reduce the bond purchase program.
The ECB is expected to leave unchanged its monetary policy after a meeting on Thursday, confirming plans to continue the purchase of assets in the amount of EUR80 billion per month, at least until the end of March 2017.
At the same time investors are increasingly worried about what will happen next: many of them fear that after the unprecedented expansionary policies by the world central banks over the years, their ability to support growth and inflation seriously weakened.

The pound did it

Surprisingly, but fact - the pound found strength for growth. The British currency opened the new week with a gap, collapsed against the dollar to a mark of 1.2154. However, by the end of the day, taking advantage of the weakness of the dollar, the pound has returned to the resistance of 1.22. Market participants still do not believe that the pound is able to compensate the decline and to recover above 1.24. Fears of fierce Britain from the EU-ended output procedures, significantly increased risks of inflation exceeding the target value of 2%, the drop in GDP, as well as the continuing catastrophic pace of capital outflows remain for pound status as the main market outsider. Today we are expecting the data on inflation in the UK. Considering that 23 June the British currency fell by more than 15%, it can be assumed that the consumer price index will overwrite the multi-month highs. If these assumptions are justified, the consumer activity in the country will be threatened, provoking even greater loss in the national currency.
Recommendation on GBP/USD: Sell, TP - 1,20, SL - 1,23.

EUR/USD: Euro is ready to reduce

Scenario "Monday against Friday" worked. At the end of the day the euro closed by growth against the US dollar. Yesterday the calculated objective of 1.1016 was achieved in trading in Asia. The economic calendar was empty, so no one bothered "eurobulls" to adjust the price to the balance.
In the current situation, two scenarios can be considered. First - the return of the price to the level of 1.1058. The second scenario - rebound from the upper border of the channel. The second option is better, since most of the positions in the market are long, and so many market traders will be difficult to move.
The most interesting is that "urobulls" still do not take profits on their long positions. They expect that the growth will continue. Current ratio of buy/sell positions is 70/30. If it becomes equal to 60/40, the market will start to flat, and it is unlikely that we will see a minimum update. Break the top of the channel cancels the scenario for reduction.
According to the technical analysis of the intraday outlook: minimum - 1.0974, maximum - 1.1030, closing - 1.0995.

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Dollar ends the week positive

After yesterday's profit-taking the dollar with new forces resumed climbing. The currency already completely won back the losses incurred on Thursday, and ends the week in a decent positive territory against major competitors. The main driver for purchases of USD is expectations for the US rates. This week the likelihood of raising the cost of lending has reached 70% and is held close to this value.

Against this background, EUR/USD this week slipped by more than 1.5%. During the last three days the pair is actively testing the 1.10 mark and currently is approaching lows from ​​the end of July at 1.0985, thereby violating the integrity of the psychological level, and signaling a high probability of breakdown in the preservation of positive mood of the USD.
As the fresh release from the United States shows, in September retail sales rose by 0.6%. More importantly, the sales index excluding autos jumped by 0.5% against the forecast of 0.4%, rebounding after falling by 0.1%. Positive signals from the consumer sector can support the arguments in favor of the normalization of policy on one of the next Fed meeting.

Now players are shifting their attention to the forthcoming speech of Fed's chairman J. Yellen. From her rhetoric will depend not only the motion vector of the dollar pairs under the end of the week, but the general mood of the financial markets on Monday. In the case of tightening of Yellen's tone, the expectations for rasing rates may dramatically increase, and the dollar will be in demand. If the head of the central bank will adhere to the precautionary and "soft" tone, risky assets will be supported across the board.

GBP - keep on selling

GBP/USD should be sold for two reasons. First, the published on Wednesday FOMC meeting minutes did not disappoint investors, because they was not negative, but rather pointed to the need to raise interest rates. In the current environment, where the trend is gaining momentum in the dollar (the dollar index USDX basket is now at the maximum for the last 7 months) the absence of bad news from the US is in itself positive. Secondly, strengthening the greenback put pressure on the commodity market instruments, primarily for oil, as the value of all commodities are denominated in the US currency. Brent crude oil can not confidently fix to a maximum of the current year at $52.99/barrel and in the near future we can expect a reduction of quotations to the psychological level of $50/barrel, which will increase the pressure on the sterling. Against this background, during the day we should opened short position on the growth of quotations in the area of 1.2200/1.2250 and take profit at the level of 1.2120.

The dollar took a pause in the light of the events risk

The US currency gained support after the publication of the Fed minutes, however, it was short-lived growth. Despite the rather "hawkish" tone of the document, confirming a high probability of tightening monetary policy until the end of the year, the dollar, updating the long-term highs, moved to the correction mode. Most likely, the players decided to partially withdraw profits at high levels, as the USD tomorrow should pass two important tests - the speech of the Central Bank J. Yellen and report on retail sales.

Pound in British airports fell below the euro

The average exchange rate of the pound sterling against the euro in the exchange offices of many British airports for the first time fell to 99 cents.
The worst rates of those that offer 17 exchange offices in different parts of the country, was in the office at the airport of Southampton Moneycorp - 0.88 euro per 1 pound, BBC reported.
The best was 1.06 euro per 1 pound - in the office of Change Group at Prestwick airport in Glasgow.
The course of the British currency continued to decline since June of this year, after in a national referendum residents of the country decided the British withdrawal from the EU.
The average exchange rate of the US dollar increased in British airports to $ 1.08 for 1 pound.
Currency exchange offices at airports are known for their relatively low rates.

Sales in the euro/dollar resumed again

Euro again sold in tandem with the US dollar. Partly stabilization in early October was short, and investors are back to the sale of the main currency pair. Currently, bids are around 1.1120. The macroeconomic calendar today does not offer the essential statistical data.
Both the euro zone and the United States do not shine in the recent reports on macroeconomics, private reports does not count. Consequently, the fundamental factor is to remain in the shade, and to the forefront will come technical signals and speculative mood. Strong support in the euro/dollar is at 1.1110, below - 1.1080. On upside direction - if the formed on H4 formation remains double bottom, the first support is seen at 1.1160, next - 1.1200.

The euro is under pressure because of the Deutsche Bank

Last week the focus of market participants was on Deutsche Bank (DE: DBKGn), the largest bank in Germany. Worries around the Institution triggered a wave of demand of risk-free assets, and is also reflected on the behavior of a single currency. EUR/USD on Friday registered 9-day low, jeopardizing the integrity of the 1.1150 zone.
Let me remind, that the US Department of Justice require form the German giant to pay $14 billion for the latest embezzlement. But that is not all. Hedge funds massively began to refuse services of Deutsche Bank for clearing. And it threatens a large-scale withdrawal of funds from the bank. And in June, the IMF warned of the risks posed by the institute. Since the beginning of the year the bank's shares fell more than 50%, but on Friday have fallen by whole 8%.

In the light of the circumstances, the talks, that Deutsche may repeat the fate of the infamous LehmanBrothers increase. Some market participants at this stage believe, that without timely support from the authorities, the bank is threatened with bankruptcy. Last week, the German government has denied the rumors about the imminent aid package to the bank. If in the near future the authorities do not soften their position and not serve markets a message of hope, the sale of the stock markets in Europe will continue, because the frightened customers will continue to actively withdraw funds from Deutsche.
Under unfavorable scenario, the euro could come under more pressure, and in the medium term, the tactics of sell EUR/USD on growth can affirm. While quotes continue to "cling" at the level of 1.12, the bearish momentum seems limited. In the case of testing and steady breakdown of the level 1.1150,the forecast for the pair will worsen.

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Long vacation, new strength

Hi, dear friends!

Miss me? :)

Me and my family made a great adventurous vacation with traveling across Europe. Enjoy some photos:

Flying back home to Bulgaria:

 Family reunion on my baby's 9-th Birthday:

The Ravadinovo castle, Bulgaria:

Leaving Bulgaria:

Amazing village in Germany:

Adorable village in France:

Mmmmmm... Delicious French pastry:

Notre Dame de Paris at night:

:)

The gang on the ferry to the UK:

So, after these great adventures, with new strenght, I'm ready to surf the financial markets again.

Happy trading to all! :)