The precious metal is up over 1% intraday on Tuesday. The gains came after prices bounced off the lower support level near 1671.95.
Following this, the breakout of the falling trend line also confirms the upside view.
The next key price target is 1724.62. However, we expect prices to reverse off this level.
It could potentially push gold prices back to the 1671.95 level of support.
But a breakout from this level is also likely considering the consolidation.
In such an event, gold prices could be looking to move lower to the 1571.78 level where support could come in and stall the precious metal from further declines.
The US dollar shows a variety of trends against a basket of currency majors. The US dollar index (#DX) closed in the negative zone (-0.30%) yesterday. Investors expect the Fed meeting. We recommend paying attention to the comments by the Central Bank. Earlier this month, the hope that the US economy could recover faster than expected led to the fact that the US government bonds yield reached three-month highs and thereby supported the dollar. Therefore, it is possible that the Fed, which is not expected to change interest rates, may decide to adjust the yield curve to reduce 10-year treasury bonds. This, in turn, may lead to a decrease in the US currency.
Meanwhile, optimistic data on the US economy were published yesterday. Thus, the JOLTS job openings increased by 5.046M in April, while experts forecasted growth by 5,000M. Today, investors will also assess data on inflation in the US.
The “black gold” prices are consolidating. Currently, futures for the WTI crude oil are testing the $37.85 mark per barrel. At 17:30, the US crude oil inventories will be published.
Market indicators
Yesterday, there was a variety of trends in the US stock market: #SPY (-0.75%), #DIA (-1.05%), #QQQ (+0.72%).
The 10-year US government bonds yield has been declining. At the moment, the indicator is at the level of 0.79-0.80%.
The latest German data has raised further concerns over the health of the economy as a result of the COVID-19 crisis.
Industrial production data for April came in lower by 17.9%. This marked a severe deterioration from the -8.9% recorded in March and was worse than the -16% forecast. It was also the worst recorded monthly fall since records began in 1991.
With exports over the month falling by 24% from the prior month’s -11.7% and imports falling 16.5% from the prior month’s -5.1%, the German trade balance for the month fell to just 3.5 billion EUR.
This marks a shocking drop from the 17.4 billion EUR trade surplus registered over the prior month. It was also well below the 11.9 billion EUR surplus forecast.
German Export Engine Faltering
The German economy’s export market has long sat at the heart of the eurozone economy. However, the coronavirus crisis has badly damaged it. It had already been weak due to the global trade war which ravaged the global economy in the two years prior to the crisis.
The weakness in the German economy, particularly within the export sector, raises questions over the likely pace of the recovery.
Germany’s export sector has typically led the recovery from past recessions. However, it looks as though the recovery is going to have to come from another part of the economy this time around.
President Trump’s fresh threats of imposing import tariffs on EU autos and auto-parts further clouds the outlook for the German export sector.
Eurozone Q1 GDP Revised Higher
Still, the data has not been all bad this week.
Eurozone GDP for Q1 saw a mild upwards revision to -3.6% from the initially announced -3.8%. While the reading is still negative, at this stage, any improvement is good news. It marks a slightly higher starting point for the recovery effort.
This effort received further assistance from the ECB last week as it announced an additional 600 billion EUR in funds for its PEPP, taking the total stimulus in operation to 1.35 trillion EUR.
However, the decline in growth over Q1 still marks the largest quarterly decline since the EUR was introduced in 1999. It also raises the prospect of a technical recession being confirmed should Q2 growth also come in negative.
DAX Testing Key Fib Level
The GER30 has seen an impressive recovery rally since the 2020 lows registered in March. It has now recovered back to the 78.6% level of the drop from 2020 highs.
While we are seeing some initial selling here, focus remains on further upside and an eventual move back up to test the 2020 highs at 13813.7.
To the downside, the 11252.6 level remain the key support to watch and while above here, the outlook remains bullish.
After extending the descending impulse towards 1.1240, EURUSD has completed the ascending structure at 1.1360, thus forming a new consolidation range between these two levels. Possibly, today the pair may fall to reach 1.1300. If later the price breaks the range to the upside, the market may start another growth towards 1.1414; if to the downside – resume trading inside the downtrend with the target at 1.1208.
GBPUSD, “Great Britain Pound vs US Dollar”
GBPUSD is consolidating around 1.2686. Today, the pair may form one more ascending structure to reach 1.2750. After that, the instrument may start another decline towards 1.2626 and then resume trading upwards with the target at 1.2868. If later the price breaks the range to the downside, the market may form a new descending structure to reach 1.2460.
USDRUB, “US Dollar vs Russian Ruble”
USDRUB is still consolidating around 68.80. Possibly, today the pair may reach 67.55 and then start a new correction with the target at 69.59.
USDJPY, “US Dollar vs Japanese Yen”
USDJPY is falling towards 107.49. After that, the instrument may form one more ascending structure to break 108.02 and then continue trading upwards with the first target at 108.40.
USDCHF, “US Dollar vs Swiss Franc”
After finishing the descending wave at 0.9484, USDCHF is consolidating near the lows. Possibly, the pair may form one more ascending structure to break 0.9515 and then continue trading upwards with the first target at 0.9565.
AUDUSD, “Australian Dollar vs US Dollar”
After finishing the descending wave at 0.6903, AUDUSD is still correcting towards 0.6983. Possibly, the pair may reach this level and then start another decline with the target at 0.6833.
BRENT
Brent is consolidating around 41.00. Today, the pair may correct towards 38.80 and then resume trading upwards with the short-term target at 43.43.
XAUUSD, “Gold vs US Dollar”
Gold is moving near the highs. Possibly, today the pair may reach 1720.40 and then form a new descending wave to break 1695.70. After that, the instrument may continue trading inside the downtrend with the short-term target at 1658.30.
BTCUSD, “Bitcoin vs US Dollar”
BTCUSD is consolidating around 9698.00. Today, the pair is expected to expand the range up to 9833.00. Later, the market may fall to break 9550.00 and then continue trading downwards with the target at 9100.00.
S&P 500
The Index continues the ascending wave towards 3250.5; right now, it is consolidating around 3212.2. Possibly, today the asset may grow to reach 3233.3 or even 3250.5 and complete this ascending wave. After that, the instrument may start a new correction with the target at 3125.5.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
As we see in the daily chart, after breaking the high at 1.2648, GBPUSD is forming a steady rising impulse towards 50.0% and 61.8% fibo at 1.2890 and 1.3240 respectively. The support is at 23.6% fibo at 1.2110.
The H4 chart shows more detailed structure of the current ascending movement. After completing the descending wave and then forming a new rising one to break high, the pair is moving towards the post-correctional extension area between 138.2% and 161.8% fibo at 1.2865 and 1.3000 respectively. At the same time, there is a divergence on MACD, which may indicate a possible pullback soon.
EURJPY, “Euro vs. Japanese Yen”
As we can see in the daily chart, after reaching 38.2% fibo at 123.22, EURJPY has started a new pullback. Later, the pair may complete the correction and resume growing towards 50.0% and 61.8% fibo at 125.95 and 128.67 respectively. The support is 23.6% fibo at 119.85.
In the H4 chart, EURJPY is falling towards the support at 23.6% fibo (119.85). After finishing the correction, the instrument may continue trading to reach the post-correctional extension area between 138.2% and 161.8% fibo at 126.08 and 128.10 respectively.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
The EUR/USD currency pair continues to be traded in a flat. There is no defined trend. Financial market participants have taken a wait-and-see attitude before the announcement of the results of the two-day Fed meeting. It is expected that the regulator will keep the key marks of monetary policy at the same level. We recommend paying attention to the comments by the Central Bank representatives. Currently, EUR/USD quotes are consolidating in the range of 1.1320-1.1380. Positions should be opened from these marks.
The Economic News Feed for 2020.06.10:
– Inflation report in the US at 15:30 (GMT+3:00);
– Fed interest rate decision at 21:00 (GMT+3:00).
Indicators signal the power of buyers: the price has fixed above 50 MA and 100 MA.
The MACD histogram is in the positive zone, indicating the bullish sentiment.
Stochastic Oscillator is in the neutral zone, the %K line has crossed the %D line. There are no signals at the moment.
Trading recommendations
Support levels: 1.1320, 1.1250, 1.1195
Resistance levels: 1.1380, 1.1450, 1.1500
If the price fixes above 1.1380, further growth of EUR/USD quotes is expected. The movement is tending to 1.1420-1.1450.
An alternative could be a decrease in the EUR/USD currency pair to 1.1260-1.1220.
The GBP/USD currency pair
Technical indicators of the currency pair:
Prev Open: 1.27232
Open: 1.27259
% chg. over the last day: +0.06
Day’s range: 1.27062 – 1.27863
52 wk range: 1.1466 – 1.3516
GBP/USD quotes continue to show a steady uptrend. The British pound has overcome and fixed above key extremes. At the moment, the trading instrument is consolidating near 1.2785. The 1.2725 mark is already a “mirror” support. Today, investors will be focused on the Fed meeting. We recommend opening positions from key levels.
The news feed on the UK economy is calm.
Indicators signal the power of buyers: the price has fixed above 50 MA and 100 MA.
The MACD histogram is in the positive zone and above the signal line, which gives a strong signal to buy GBP/USD.
Stochastic Oscillator is near the overbought zone, the %K line has crossed the %D line. There are no signals at the moment.
Trading recommendations
Support levels: 1.2725, 1.2635, 1.2585
Resistance levels: 1.2785, 1.2850
If the price fixes above 1.2785, further growth of GBP/USD quotes is expected. The movement is tending to 1.2840-1.2860.
An alternative could be a decrease in the GBP/USD currency pair to 1.2660-1.2630.
The USD/CAD currency pair
Technical indicators of the currency pair:
Prev Open: 1.33753
Open: 1.34166
% chg. over the last day: +0.23
Day’s range: 1.33703 – 1.34280
52 wk range: 1.2949 – 1.4668
The USD/CAD currency pair has become stable. The loonie is currently consolidating. The local support and resistance levels are 1.3360 and 1.3425, respectively. Financial market participants expect additional drivers. Today we recommend paying attention to the news feed on the US economy, as well as the dynamics of oil prices. Positions should be opened from key levels.
Today, the publication of important economic releases from Canada is not expected.
Indicators do not give accurate signals: the price has crossed 50 MA.
The MACD histogram has started declining, which indicates the development of bearish sentiment.
Stochastic Oscillator is in the neutral zone, the %K line is above the %D line, which gives a signal to buy USD/CAD.
Trading recommendations
Support levels: 1.3360, 1.3300
Resistance levels: 1.3425, 1.3480, 1.3530
If the price fixes below 1.3360, a further drop in USD/CAD quotes is expected. The movement is tending to the round level of 1.3300.
An alternative could be the growth of the USD/CAD currency pair to 1.3480-1.3520.
The USD/JPY currency pair
Technical indicators of the currency pair:
Prev Open: 108.434
Open: 107.727
% chg. over the last day: -0.64
Day’s range: 107.287 – 107.874
52 wk range: 101.19 – 112.41
The USD/JPY currency pair shows a negative trend. Since the beginning of this week, the yen has increased by more than 200 points against the greenback. The trading instrument has set new local lows. At the moment, USD/JPY quotes are consolidating in the range of 107.30-107.65. The USD/JPY currency pair has the potential for further decline. We expect the results of the Fed meeting. Positions should be opened from key levels.
The news feed on Japan’s economy is calm.
Indicators signal the power of sellers: the price has fixed below 50 MA and 100 MA.
The MACD histogram is in the negative zone and continues to decline, which indicates the bearish sentiment.
Stochastic Oscillator is in the oversold zone, the %K line has crossed the %D line. There are no signals at the moment.
Trading recommendations
Support levels: 107.30, 107.10, 106.70
Resistance levels: 107.65, 107.90, 108.25
If the price fixes below 107.30, a further drop in USD/JPY quotes is expected. The movement is tending to 107.00-106.70.
An alternative could be the growth of the USD/JPY currency pair to 108.00-108.25.
Our opinion of Gold hasn’t changed over the last week of trading – despite the weak weekly close, and the massive surprise from the US labour market last Friday.
As a result, the yellow metal dropped below 1,700 USD and went for an attack of the region around 1,660 USD. Still, we remain mid-term clearly bullish for Gold.
One potential reason for the ‘big’ NFP number is how jobs were calculated and thanks to the massive PPP loan/grants, numbers beat expectations as they did, even though critics will certainly argue that PPP funded jobs should not be counted as “jobs added” to the private sector data.
In addition to that, the BLS already stated in their statement that […]there was also a large number of workers who were classified as employed but absent from work.[…] and that […]if the workers who were recorded as employed but absent from work due to “other reasons” (…), the overall unemployment rate would have been about 3 percentage points higher than reported[…]
However, technically the bearish divergence in the RSI(14) on a daily time-frame plays out now, resulting in a test of the short-term trend-support around 1,660 USD.
Still, as long as we don’t get to see a sustainable break lower, our take for the yellow metal stays clearly bullish and we expect rather than later a stint to the all-time high of around 1,920 USD.
One potential driver for such a move could be a sustainable drop in 10-year US Treasury yields below 0.60% which seems, in our opinion, only a question of time.
The reason here can be found in our expectation of a further “liquidity boost” from the Fed which has pushed its balance sheet above the 7 trillion mark last week and should rather sooner than later result in a further drop in US yields, probably initiated by today’s Fed rate decision at 6pm GMT:
Source: Admiral Markets MT5 with MT5-SE Add-on Gold Daily chart (between March 11, 2019, to June 9, 2020). Accessed: June 9, 2020, at 10:00pm GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.
In 2015, the value of Gold fell by 10.4%, in 2016, it increased by 8.1%, in 2017, it increased by 13.1%, in 2018, it fell by 1.6%, in 2019, it increased by 18.9%, meaning that after five years, it was up by 28%.
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The movement called “antifa” gets its name from a short form of “anti-fascist,” which is about the only thing its members agree on.
President Donald Trump and some far-right activists and militants have claimed antifa is allegedly conspiring to foment violence amid the protests sweeping the U.S. In my forthcoming book, “American Antifa: The Tactics, Culture, and Practice of Militant Antifascism,” I describe antifa as a decentralized collection of individual activists who mostly use nonviolent methods to achieve their ends.
Their goal is to resist the spread of fascism. That word can be an inexact term, but generally antifa activists see fascism as the violent enactment and enforcement of biological and social inequalities between people.
Fascists go beyond viewing particular categories of people as inferior, based on gender identity, race and ethnicity, religion and sexual orientation. They believe it is imperative to use violence to oppress and ultimately eliminate those groups. In addition, they use violence to oppose their ideological enemies, even if they are from groups they believe are not inferior, such as heterosexual white men.
The initial anti-fascist movements were founded in Europe and North America between the world wars, and were primarily organized by anarchists, communists and socialists – three groups that were frequently targets of fascist violence.
The modern-day anti-fascist movement in the United States, including antifa, grew out of the Anti-Racist Action Network, a decentralized activist movement resisting racist skinhead subcultures and public demonstrations by neo-Nazi and Ku Klux Klan organizations in the 1980s and 1990s.
Anti-fascists’ objections aren’t simply that they disagree with fascists. Their problems with fascism are much more fundamental.
My own research has found that a significant proportion of anti-fascists are women, people of color, members of LGBTQ communities, or otherwise have some characteristics fascists seek to control or eliminate.
These anti-fascists, therefore, often see fascists as a threat to their personal existence, and their physical and emotional well-being – as well as presenting threats of violence or vandalism to their communities and shared gathering spaces. They perceive their opposition as very much in personal and collective self-defense.
Because opposing fascism is a viewpoint rather than a formal organization, people’s actions vary widely. Informal or everyday anti-fascism can include speaking out against bigotry, standing up for victims of fascist harassment or confronting fascists in public places. Generally, these are relatively spontaneous actions that happen when anti-fascists encounter fascism in the normal course of their regular lives.
More formal anti-fascism can include large, well-funded mainstream organizations like the Anti-Defamation League and the Southern Poverty Law Center, who monitor fascist activity and provide the public information on its scope.
A CNN report on antifa participants.
Local action
But the antifa label is most often applied to smaller-scale groups of like-minded people who live in the same community, working to prevent fascists from threatening their targets and from attracting new followers.
These groups are rarely militant or violent. Most of them engage in commonly accepted forms of political activism. For instance, anti-fascists often work to find out where fascist groups and people are active in an area, and then share that information with the wider community, bringing that activity to public attention.
Culture is another part of anti-fascist work, including art and music. By creating T-shirts and stickers with inclusive messages, and hosting concerts, film screening and art shows, anti-fascists work to create an environment of inclusion and equality that doesn’t directly attack fascism but simply exists in opposition to it.
Some direct confrontation
There are more militant anti-fascists, too, who mostly engage in non-militant activism but are willing, at times, to use more confrontational tactics. These people are more open to counterprotesting, sabotage and the use of force, which includes acts of violence.
The varied and decentralized nature of anti-fascist efforts means it includes virtually anyone who opposes violent enforcement of social inequalities to engage in activism. A diverse range of participants and tactics falls under the umbrella of a broad effort to stop fascism.
For lots of office workers, coronavirus proved to their companies that remote working is possible. Working from home has been unexpectedly effective for many. But not for all financial traders. The shift to trading from home may even have contributed to the market crash on March 9. Either way, as lockdown measures begin to lift, executives and policy makers hope to reopen socially distant trading rooms while retaining their unique dynamic.
Having spent years researching the realities of life on the trading floor, it came as little surprise to us that trading remotely during a market crisis would prove difficult. If we want to limit financial crises down the line, banks must figure out a way to replicate the benefits of physical proximity, whether it is through technology, partial reopening of the trading floors, or a combination of the two.
Some banks were quick to evacuate their staff for safety reasons – HSBC and JP Morgan sent London staff home well before the UK went into lockdown. But as the exodus started, one finance executive in the City was quoted in the Financial Times expressing fears that working at home would reduce the amount of risk traders would feel comfortable taking, which would compound problems of poor liquidity and cause market instability.
There were technical problems too – Bloomberg reported concerns about bad mobile reception and lack of fixed phone lines at home. As traders decamped home, the self-deprecating hashtag #ronarigs was coined to share photos of improvised domestic trading setups.
Events quickly came to a head. On March 9, the combination of a large drop in the price of oil and uncertainty about coronavirus created the worst global market fall since the 2007-09 financial crisis. In its post-mortem, the respected Bank for International Settlements (BIS) pointed to a quantitative trading strategy that came undone. Crucially, the BIS added that “a factor that likely exacerbated the situation was the activation of work-from-home arrangements on a hitherto unprecedented scale”.
Some already knew the limits of at-home trading. In New York, one large bank asked its equities traders to continue working from the floor, even as one of its traders fell ill with COVID-19. The traders duly obliged and the bank made exceptional profits, but 20 of them ended up infected. In the following weeks, the banks that kept their trading floors open in London became very discreet about it (according to people we’ve spoken to, these were the more “aggressive” US banks).
Reading the room
Trading rooms are no longer loud arenas where sales are shouted across the floor. By the time one of us (Daniel Beunza) started his research on Wall Street in 1999, information had moved to the screen. Traders continued clustering in trading rooms, but this time the goal was better interpretation, especially for the more complex trades that also were the most lucrative.
As finance turned mathematical through the 1980s, the advantage had shifted from having early information to being first to figure out a complex situation. Operating from a trading floor provides the necessary social cues to put the pieces together.
Beunza became hooked to trading floors after witnessing a minor panic in one of them. Back in 2000, during one of his regular research visits to a bank, he witnessed a day of high market turbulence. His own informants, usually polite and welcoming, suddenly seemed unhappy to see him. Actually, they were just busy and nervous. But their behaviour had an effect on Beunza’s emotions, triggering the same nervousness that the traders felt even before he had the chance to discuss the market with them. Trading rooms, Beunza concluded, were remarkably effective at emotional contagion.
There was more. The manager of the trading floor that Beunza came to interview initially beckoned him to his office for a private conversation. But as soon as this manager closed the door, he became uneasy and changed his mind. He did not want to be out of his usual desk on the floor when markets were turbulent. Social cues and impromptu conversations were absolutely critical to this manager. He would even rotate the layout of the desks in the room to ensure that traders engaged with each other casually.
Keeping markets effective
Subsequent research has shown that this work of social integration is not just good for a bank’s bottom line. As studies by Donald MacKenzie and Gillian Tett contend, organisational fragmentation leads to mispricings, and is a leading explanation of the 2007-09 global financial crisis (along with sheer opportunism). Well-functioning trading floors, in other words, keep markets effective.
This brings us to the present dilemma facing trading floors in the City of London. As the economy reopens and bankers move back to work, how can they adapt to social distancing? Trading floors are currently experimenting with various combinations of partial reopening, specialised chat systems like Bloomberg or Symphony, and other technologies.
As these plans take shape, bank managers will do well to keep in mind the unique possibilities afforded by trading rooms. If we face another financial panic and the City’s trading rooms are not performing as they should, liquidity may suffer, and a crash will be more likely.
