The US economy grew surprisingly weak in the second quarter

The US economy grew surprisingly weak in the second quarter after anemic growth at the beginning of the year. The cause were weak business investment, which largely offset fairly solid increase in consumer spending. This shows a preliminary assessment.
Gross Domestic Product of the US, which is the most common measure of the production of goods and services, increased in the second quarter by 1.2% with an average forecast of accelerating growth to 2.6 percent. Meanwhile, the final data for GDP growth in the first quarter fell to 0.8% from 1.1%.
Consumer spending, a key engine of the economy, rose in the second quarter by 4.2% following weak growth of 1.6% at the beginning of the year. It should be kept in mind, that the domestic consumption forms more than two-thirds of the growth of the world's leading economy. Although expectations were for an even better growth of 4.4%, the increase in consumer spending of 4.2% was the best since the end of 2014, the cost of purchases of goods increased by 6.8%, while those for services - by 3%.
On the other side are business investments, which shrank in the second quarter by 2.2% after falling by 3.4% at the beginning of the year.
Meanwhile, exports in the second quarter rose by 1.4% while imports fell by 0.4%, which means that international trade has added 0.23% to the growth of the US economy.

The hope for the growth of the dollar has faded after FOMC

The last FOMC statement was not able to maintain the upward trend of the dollar, sending it in the opposite direction. On Friday on the Asian session will be held even more important (and expected) meeting of the Bank of Japan, which may well surprise the markets, which do not know what to expect from him.
The market has decided that the slight increase in "degrees" in the last accompanying statement of the Federal Open Market Committee is not sufficient to support the growth of the dollar. Bulls on the dollar decided it had enough, and have closed long positions in USD and the break of 1.1000 in EUR/USD was short-lived.
It is easier to squeeze water from a stone, than achieve by the Fed raising expectations. But the dollar is not that important event, but rather just a factor that threatens him sluggish consolidation until the end of the summer, of course, if the Bank of Japan did not delight us with something new.
As a result of a reversal USD came under pressure again, although yesterday's dynamics could signal a possible continuation of the summer blues in August. Recently it is written a lot about the importance of growth in USD Libor - is an important factor, but so far it had no effect on the dynamics of the dollar.

Why are everybody is waiting for the meeting of the Bank of Japan?

USD/JPY is now a fairly complex market. Tomorrow's meeting of the Bank of Japan's is getting nerves of traders heated up much stronger than yesterday's meeting of the Federal Reserve. Market participants are in doubt - bet on increasing of monetary stimulus, or mentally prepared for the fact that on Friday the Bank of Japan would not live up to expectations?
The fact that on Wednesday the Japanese prime minister Shinzo Abe announced a solid amount of fiscal stimulus measures package of 28 trillion yen increases the pressure on the Bank of Japan in terms of action. Earlier, the head of the Central Bank Kuroda emphasized that fiscal and monetary easing are effective when used together. Apparently, the Japanese government wants from the formally independent central bank further policy easing. According to one point of view, for the Bank of Japan it is strategically important to act now, because with conscientious actions with the government the effect of the measures will be higher. According to Bloomberg, 80% expect the Bank of Japan will increase incentive program this week.
From another point of view, the measures taken by the Japanese government as well as the fact that the USD/JPY is trading at 105.00, and not at a critical level at 100.00, on the contrary, mean that the Bank of Japan decides to reserve monetary stimulus for "rainy days". Huge amounts of money, which the Japanese regulator has poured into the financial system of the country, could not help inflation. The more money "prints" the Japanese Central Bank, the harder it becomes to manage the situation. The lack of action by the regulator will cause the resumption of downtrend of USD/JPY, and bears rush to new lows. The Bank of Japan, of course, is aware of the pressure under which it is located and the potential consequences of inaction - that's why the majority of analysts believe that the amount of monetary stimulus will still be increased tomorrow.

Another day has gone, pound calm as never before

It's time to recharge, I understand it.

But, pound so calm?

Walking around with sunflower slippers?

Maybe I should too...

For me, as a trader, another day has gone.

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Euro will move from the death point next week

Friday's trading session was annoyingly calm.

On the currency market were not observed any movements.

The euro was traded for three consecutive days in the flat, playing with my nerves with the level of 1.10. The recent meeting of the ECB has not helped the pair to determine its direction, because it did not bring any concreteness for the current situation. Only one thing is clear - additional incentives are not excluded, but the regulator does not intend to hurry.

Next week, the main event will be the meeting of the Federal Reserve on Wednesday, July 27. It is possible that up to this event, the main currency pair will continue to consolidate, and the decision of the US regulator will be the long-awaited catalyst that will bring back EUR/USD to life. Some sugnifficant actions by the central bank are not expected, but the rhetoric, as in the case of the ECB, will attract the attention of market participants. Players will catch hints for the timing of the next rate hike.

In this aspect, it will be interesting to observe the evaluation of the current state of the US economy. It is possible that after the June employment report, the Fed will mark the stabilization of the labor market after the May decline. If the tone of the Central Bank will prevail positive notes, the pressure on the euro may increase. In the case of such a scenario, investors will rush to buy defense assets, such is the dollar. Thus, the single currency could come under a double pressure.

Fear vs. Greed: Pyramiding in action (Part 2)

A bit about Macro-psychology

Every trader knows, that it's better to trade with the trend. But the market is changing every second and the trend often looks different in different time frames. And exactly in the dynamics you can find the beauty of the trading.
Actually, there are so many instruments to measure the market's moods, that sometimes I start to doubt which drives whom - the instruments show the market movements, or the market is leaded by the instruments?
Otherwise, how would you explain me the existence of the concept of Support and Resistance?

By the way, if there weren't the things like Support and Resistance, the market would look like this:

(It's the same graph from the Part 1, but reversed in 90 degrees).

Read me soon for Part 3 :)

EUR/USD is flirting with 1.1000 in anticipation of the ECB meeting

EUR/USD has calmed down after the Brexit in anticipation of the meeting of the European Central Bank, scheduled for Thursday. In the background, waiting for the Fed's rate raising slowly climbing up, providing support for the dollar across the board.
EUR/USD is floating around the key level of 1.1000 before tomorrow's meeting of the Governing Board of the European Central Bank, which is unlikely to be able to support the euro; Meanwhile, the pound this morning, managed to overcome the important level of 1.3100.
The IMF warned on Tuesday that Brexit will lead to a slowdown in global economic growth of 0.1%, as well as greatly increase the economic and political uncertainty.
Yesterday an informal "voice" of the Federal Reserve, the author of articles in the Wall Street Journal, John Hilsenrath noted, that the Fed did not approve how low the market value the probability of a rate hike at the next meetings of the Federal Open Market Committee.
 The graph for EUR/USD continues to reflect the uncertainty, but I believe more probable movement will be due south, as the pair is now testing the key 1.1000 area. At a meeting of the monetary policy on Thursday, the ECB Governing Council is unlikely to report anything that can support the currency.

The dollar is surrounded, but not defeated

Last week the dollar fell against European opponents. The currencies were influenced by the general market sentiment, that has developed in favor of purchases of risky assets. Forgetting Brexit stock indexes plunged into euphoria. Only by the end of the week European markets went out of the race, being under the influence of the tragic events in Nice. However, as a rule, factors like these are played fairly quickly, after which investors are switching to the usual drivers.
A good recovery we have seen in the pair GBP/USD. Pound was supported by the resolving of the political situation in the country, where there was a change of the Prime Minister, although it was expected that this process will continue until the autumn. Meanwhile, the Bank of England "spared" the currency, hinting at easing during the next meeting. In addition, the recent collapse, the British currency has settled at attractive levels for purchases. These factors, coupled with the widespread demand for higher-yielding assets fueled interest in the pound, which rose from lows below 1.29 to the area of ​​1.33, recovering from losses from the previous week.

Friday's American statistics helped the dollar somewhat to rehabilitate. In June, retail sales reflected the significant growth - an indicator excluding autos jumped to 0.7% from 0.4%. Meanwhile, core inflation has reached the forecast level of +0.2%. In response to releases, the dollar added to the price. However, in fact, there is nothing enchanting in these figures. Retail sales increased mainly due to the downward revision of the May values, and the main CPI remained at 0.2% instead of the expected 0.3%. So that the current bullish momentum may soon exhaust itself. In addition, the Fed is now in the background, and the focus is on the central banks, which are expected to launch easing - the Bank of England and the Bank of Japan.
Next week there will be a meeting of the ECB. However, markets do not expect easing from the regulator in response to the risks that accompany Brexit. First, even the Bank of England refrained from adopting stimulus measures in the past week. Second, in the financial markets it is not panic observed, which would indicate major impact from Britain's exit. Finally, in March, the regulator introduced a wide range of measures, the effect of which has not yet manifested itself in full volume. Thus, I do not expect any serious pressure on the euro in the light of this event.

Fear vs. Greed: Pyramiding in action (Part 1)

To enter the market shorty from the bottom and to exit with a profit 20 minutes before weekly closing (200 pips higher) - is it possible?

Yes, it is.
You might ask how?

Every single moment the market is changing. It in fact is a violent mind battle between bulls and bears. The fat books say, that in the base of trading lay two major psychological factors - fear and greed.

Let me show you what happens in a market, where fear and greed don't exist:

(Somehow, it reminds me of flatline).

The chart shows the correlation between Euro and Bulgarian Lev (the currency of my country). The Bulgarian Lev is in currency board with euro since 1997. The board was taken to secure our currency and economy because of the hyperinflation that year.

Read me tomorrow for Part 2 :)

Credit Agricole waiting for growth of the pound to 1.35 dollars

The pound registered a winning session against the dollar on Thursday. British currency acquitted positive expectations and fully recovered the losses that was accumulated the previous day. Meanwhile, resistance at 1.3342 was breached and the pair made a test of the key level at 1.3496. If bullish sentiment continues in the future, it will be broken soon. Trade on Thursday started at a price of 1.3144 and the pound rose by 196 pips during the day. The highest value for the day was reached at 1.3469.

The pound may continue to grow to levels around 1.3500 dollars, which is the original purpose of growth, according to currency strategists at Credit Agricole. Bank of England made it clear that their policy probably will change in August.

The inaction of the Central Bank on Thursday was a surprise to the markets, which expected a reduce of interest rates. The bank's decision highlights the difficulties faced by the Bank of England in the absence of clear data on the country's economy after Brexit, as risk sentiments are recovered and the British pound corrected recently, commented analysts of the bank.

Yesterday the Bank of England unexpectedly left interest rates at 0.5%. Futures pointed likely to reduce interest rates at yesterday's meeting of 86% compared to 11% on June 23, the day of the referendum, say analysts.

Nobody likes euro

Nothing supports euro - not fundamentally nor technically. Among the most significant at the statistics today will be indicators on industrial production for May, and they need to demonstrate a pre-slowdown in the sector. That is, on expectations decrease in the pair, and if the published data is negative, the further dynamics of couple is more likely to also be negative.
Trading sentiments for the pair EUR/USD today: to sell below 1.1090 with targets 1.1035 and 1.1015. Alternative scenario: The upside breakout of 1.1090 will open the way to 1.1105 and 1.1125.

The pound is getting stronger

On Tuesday GBP/USD rose to 1.3265, rebounding from a 31-year low of 1.2794 reached last Wednesday.
The pound strengthened position after it became known that Theresa May will take over after David Cameron, easing political uncertainty, that has fallen off the national currency after Brexit.
But the prospects for the pound remain weak amid expectations, that the Bank of England will reduct the rate during the meeting this Thursday.
On Tuesday, the head of the Bank of England Mark Carney said that Brexit negative impact on the UK economy may force the Central Bank to act, which means that the bank is ready to new stimulus.

USD reduces losses in inactive trading

The dollar stopped falling against other major currencies in quiet trading on Tuesday, as investors continue to focus on the upcoming meetings of the central bank on a background of high expectations of additional stimulus.
GBP/USD rose by 1.47% to 1.3182, rebounding from a 31-year low of 1.2794, reached last Wednesday.
Also on Tuesday, the International Monetary Fund said that Brexit likely to have a "negligible" impact on US economic growth.
USD/JPY rose by 1.66% to 104.49, the highest value since June 24, while USD/CHF rose 0.20% to 0.9848.
The yen weakened after the ruling coalition of Prime Minister Shinzo Abe won a landslide victory in elections on Sunday.
Coalition victory strengthened hopes for fresh stimulus measures.
EUR/USD rose by 0.26% to 1,1870.
Australian and New Zealand dollars rose sharply, AUD/USD rose by 1.31% to 0.7633 and NZD/USD rose 0.97% to 0.7289.
Earlier, the National Bank of Australia said that the index of confidence in the business community rose to 6 in June from 3 the previous month.
USD/CAD fell 0.63% to 1.3036, reaching the highest level since June 28.
Commodity currencies also rose, as on Tuesday, oil prices rose after the Organization of Petroleum Exporting Countries said that in 2017 global oil demand will increase, and excess reserves decrease.
USD index showing the US dollar against a basket of major currencies, was down 0.20% to 96.40, rebounding from the low of the day 96.08.

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In search for security assets

Global investors are now actively search for security assets, which is reflected in government bond yields and prices of "quasi" security assets. For example, Swiss government bonds are traded at a negative rate, the yield on the 50 years is approximately -0.05%. Similar trends are observed in countries with ultrasoft monetary policies.
The most interesting situation occurs in the UK property market. Brexit provoked major withdrawals of real estate funds, forcing them to stop trading shares of funds, due to the lack of liquidity in the real estate market and the inability to implement the withdrawal of assets. What of course will continue to negatively affect the prices both commercial and private real estate due to rising uncertainty around the UK.
This, by the way, is only one of many possible consequences of Britain's exit from the EU. Even taking into account the fact, that the actual impact on the economy will not be as sharp as many fear, the feeling of uncertainty will cause investors to diversify risks, including in the portfolio emerging markets with different from the developed countries type of risk.

The game of the central banks

A week after Brexit markets are still in a state of turbulence. The first euphoria designated by central bank's support measures are gradually coming to "no", the sellers return to the market, and the demand for protective assets once again are at a record level. As a result, the yield on the thirty-year US Treasury bonds renewed historical minimum and they are now trading at 2.13%, oil quotes have gone below $50 per barrel (Brent), under pressure were the emerging markets, as well as the British pound.
One of the most important upcoming events for the markets is the meeting of the Committee on the open market of the US Federal Reserve on 26-27 July. Although the markets do not believe in a rate hike at the next meeting, extremely high attention will be drawn on what would Yellen say in her comments. If market expectations will meet and the Fed will adjust their plans to tighten monetary policy, the trend in the reduction of interest rates on the long end of the curve will continue, but the demand for risky assets will start to grow again. Otherwise, we may see a correction.
It is necessary to pay attention to the statistics coming out. The June's PMI in almost all developed countries are above 50, which means that the industry expects growth in demand. It is, first of all, a positive signal for commodity prices and for the emerging economies. "The Big Spoil" is China, where the fourth month in a row on the contrary we see a decline in PMI. But Chinese risk is largely incorporated in the prices of assets and is unlikely to be "trigger" of sales, in the conditions when the central bank poured liquidity to the market.

AUD/USD - long position from 0.7459

BASIC PARAMETERS

• Price: 0.7459 (market)
• Stop: 0.7400
• Limit: 0.7630
• Expected time for reaching the target: 3 days

The decision of the Reserve Bank of Australia left its main interest rate unchanged at 1.75%, failed to support the Aussie for a long term. The pair is currently trading below the psychological level of 0.7500. Given the negative data expected overseas, I see an opportunity to open a long position in AUD/USD with shallow stop on 0.7400. On hourly chart RSI suggests an impending upward movement. The limit of today's commercial idea is under the maximum from June 23 - 0.7630.

The rating agencies have questioned the sustainability of the United Europe's ideas

International rating agency Standard & Poor's downgraded the credit rating of the European Union from AA+ to AA after the British decision to exit the EU. At the same time, short-term rating was affirmed at A-1+, with a stable outlook on all ratings.
Analysts of the agency explained that after the referendum in Britain on June 23, they revised their conclusions about the economic impact of the general growth of disunity in the EU countries. Now the rating upgrade is possible only by increasing the average overall rating of the bloc's members or by strengthening its political unity, not only on the basis of ratings of such anchor countries such as Germany and France. The downgrade is also possible with a decrease in average total GDP of the EU members or with  a lack of support from their side in the most important areas of Brussels politics.

Bulls Triumph

The week after Brexit finished with the triumph of "bulls". Almost all asset classes are now trading above the levels prior to the referendum and the likely demand for risk will remain high and the next week. The reason for the growth in buying activity - the central banks, that have announced supporting programs, which in fact means the conservation of ultrasoft monetary policies of leading central banks for a long time.
Even from the Fed, investors no longer expect a rate hike this year. According to Bloomberg consensus, the likelihood that the Fed will raise the rate on one of the next meetings is close to zero. Conversely, the likelihood, that the controller can reduce the rate is increased. As a result, we are seeing demand for dollar assets: yields on US long-term treasuries updated their historical lows, the S&P500 is trading close to its highs.

Bank of England may "soften" in August

"Brexit" made adjustments not only in the behavior of the world markets, but also in the course of monetary policy of key central banks. So, now there are few left, who believe, that the Fed will increase rates later this year. More then that - it's began to talk, that the US regulator perhaps even "gives back up" and would lower the rates.
However, the exit of Britain, of course, concerns the Bank of England in a first place. Mark Carney has already begun to prepare the markets, that during the summer period, the regulator can go to "some" easing of monetary policy. To the next meeting remain exactly two weeks. Most likely, in July, the regulator will pave the way for launching additional incentives at the next meeting. During this time, the authorities will try to assess the potential damage from "Brexit" and to identify the extent of mitigation.
For the UK economy this "divorce" definitely will not pass unnoticed. One of the most painful losses could be massive reduction of investments in the country, which are very needed. This will be particularly noticeable for electric power industry, which requires modernization and, consequently, the participation of investors. This threat is quite real, because now a number of companies indicates the reluctance to engage in new projects or intentions to cut investments in the existing ones.
Investment factor served as one of the reasons that all three major rating agencies downgraded the UK together with a negative forecast. Probably, in such circumstances, the Bank of England will have no choice - the economy will need a support from the regulator.
In the light of these prospects, which at this stage look not rosy, in long term the pound is likely to remain under pressure. Therefore, market participants may choose to sell GBP/USD on growth. Now quotes remain under pressure, not being able to test the 1.33 mark, not to mention the closure of the gap, formed as a result of the collapse of the pound to 31-year low the previous week.

Euro is stable on positive data

The European currency continues to respond to all data, relating to the launched process of collapse of the EU. Negative impact on the mood of traders yesterday made the words of British political elite, that Article 50 of the Lisbon Treaty may be initiated only after early elections, which are to be held at the end of the following spring.
In the morning, the euro was supported by the national statistics. As it became known, the number of applications for unemployment benefits in Germany in June decreased, suggesting that the labor market of the lead engine of the EU remains the strongest among the euro area countries. The number of applications fell by 6K per month in June. It is surprising that the level of employment in Germany, practically does not affect the influx of migrants. I think, that a million refugees who are now in the country are at risk of overshadow the statistics later this year. Even more interest yesterday was caused by the statistics of the consumer price index in the euro zone. Contrary to expectations, the inflation pressure within the currency bloc rose to 0.1% compared to the previous -0.1% in May.
Given that the indicator managed to escape from a deflationary zone, market participants prefer to defer speculations about expansion of economic incentives by the European regulator. It is worth noting that buying euros still involve great risk. Traders are only discussing the negative consequences that will face the EU. Very soon, these discussions will appear in the statistics, and then the correction of the European currency would not be avoided.
On Friday trading on the foreign exchange market are relatively quiet. The euro strengthened against the dollar to 1.1143. The growth could continue to 1.1170/80.