EUR/USD: Long At 1.1280
- ECB President Mario Draghi said that Eurozone growth is gaining momentum but uncertainty is high and the inflation outlook is subdued so the European Central Bank stands ready to act if necessary. He added, “Uncertainty remains high and downside risks are still significant due to the continued fragile state of the global economy and geopolitical developments… We stand ready to act by using all the instruments available within our mandate, if necessary, to achieve our objective. In particular, the ECB is ready for all contingencies following the UK’s EU referendum.”
- But Draghi also highlighted the ECB's approved but not fully implemented measures, supporting arguments from policymakers that patience with the bank was needed. The ECB started corporate debt purchases less than two weeks ago and offers super cheap loans - known as targeted longer-term refinancing operations - later this week, looking to cut borrowing costs for firms.
- With the ECB having just upped its QE to include corporate bond purchases and about to embark on new TLTRO, it is unlikely that the message would have been any different. What is concerning is the stubborn nature of low core inflation and inflation expectations that have failed to pick-up despite ECB easing and more importantly the persistent way in which more and more Eurozone bonds have been moving into negative yield territory. These suggest a lack of faith that inflation will pick-up and the potential need for the policy levers to shift from monetary to fiscal policy.
- Fed Chair Janet Yellen said the central bank’s ability to raise interest rates this year may hinge on a rebound in hiring that would convince policymakers the US economy is not faltering. In testimony before Congress that expressed general optimism about the economy and played down the risk of a recession, Yellen nevertheless said the Fed will be cautious about interest rate increases until it is clear the job market is holding up. Immediate risks, like the potential fallout from Britain's June 23 vote on whether to leave the European Union, could darken the US economic outlook, she told the Senate Banking Committee, as could a downturn in productivity growth that may prove a permanent drag on the economy.
- Her comments suggest the US central bank is unlikely to raise rates at its next policy meeting in late July, since it will only have one additional monthly employment report in hand by that time.
- There was more explicit attention during Yellen's testimony to the possible implications of the "Brexit" vote, which she said could have "significant repercussions." Asked if Britain's departure from the EU could trigger a recession in the United States, Yellen said: "I don't think that is the most likely case, but we just don't really know what will happen and we will have to watch very carefully."
- Although the outcome of the British referendum will be known this week, the jobs issue may take longer to sort out. Fed officials have said they expected US job growth to slow from the average 200k per month typically seen during the post-financial crisis recovery. But the drop to an average of 80k in April and May was particularly sharp and put the economy below the level of job creation the Fed considers necessary to accommodate new labor force entrants. In her testimony, Yellen called the slowdown likely a "transitory" phenomenon. But concerns the hiring slowdown may be longer-lasting, coupled with a lowered sense of US economic potential, mean the Fed's benchmark overnight interest rate is likely to remain low "for some time" Yellen said.
- Current Fed policymakers' projections foresee two rate increases this year and three each in 2017 and 2018, a slower pace from what was forecast in March. Yellen will appear before a House committee on Wednesday to complete her semi-annual testimony before Congress.
- The dollar erased its early modest gains on Wednesday. Yellen appeared to be a bit more cautious than before – we cannot rule out two rate hikes this year, but the likelihood of a move in July is very low now. We used yesterday’s strengthening of the USD to buy EUR/USD at 1.1280.
FOREX - MAJOR PAIRS:
FOREX - MAJOR CROSSES:
PRECIOUS METALS:
It is usually reasonable to divide your portfolio into two parts: the core investment part and the satellite speculative part. The core part is the one you would want to make profit with in the long term thanks to the long-term trend in price changes.
Such an approach is a clear investment as you are bound to keep your position opened for a considerable amount of time in order to realize the profit. The speculative part is quite the contrary. You would open a speculative position with short-term gains in your mind and with the awareness that even though potentially more profitable than investments, speculation is also way more risky.
In typical circumstances investments should account for 60-90% of your portfolio, the rest being speculative positions. This way, you may enjoy a possibly higher rate of return than in the case of putting all of your money into investment positions and at the same time you may not have to be afraid of severe losses in the short-term.
How to read these tables?
1. Support/Resistance - three closest important support/resistance levels
2. Position/Trading Idea:
BUY/SELL - It means we are looking to open LONG/SHORT position at the Entry Price. If the order is filled we will set the suggested Target and Stop-loss level.
LONG/SHORT - It means we have already taken this position at the Entry Price and expect the rate to go up/down to the Target level.
3. Stop-Loss/Profit Locked In - Sometimes we move the stop-loss level above (in case of LONG) or below (in case of SHORT) the Entry price. This means that we have locked in profit on this position.
4. Risk Factor - green "*" means high level of confidence (low level of uncertainty), grey "**" means medium level of confidence, red "***" means low level of confidence (high level of uncertainty)
5. Position Size (forex)- position size suggested for a USD 10,000 trading account in mini lots. You can calculate your position size as follows: (your account size in USD / USD 10,000) * (our position size). You should always round the result down. For example, if the result was 2.671, your position size should be 2 mini lots. This would be a great tool for your risk management!
Position size (precious metals) - position size suggested for a USD 10,000 trading account in units. You can calculate your position size as follows: (your account size in USD / USD 10,000) * (our position size).
6. Profit/Loss on recently closed position (forex) - is the amount of pips we have earned/lost on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account.
Profit/Loss on recently closed position (precious metals) - is profit/loss we have earned/lost per unit on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account.
Source: Growth Aces - Forex And Precious Metals Trading Signals