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Veselka Nikolova
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EURUSD: Technicals and Expiries

Traders might have assumed that the decision of the Italian government to set a budget deficit goal of 2.4 per cent for the years 2019-21, well above what analysts had originally expected, wouldn't lend support to the euro. Indeed EURUSD spent the Asian session in the lower levels of the range of the last 24 hours. Yet EURJPY rose. Despite market qualms about Italy's budget plans, traders in Asia embraced a risk on approach, possibly as a response to apparently successful talks between US President Donald Trump and Japanese Prime Minister Shinzo Abe that saw a substantial rally in Japan's stock market on Friday. Risk appetite, by feeding through into broad yen weakness helped give EURJPY something of a lift, but traders in Europe might take some convincing that a slight bounce in EURJPY, essentially derived from yen weakness not euro strength, means the euro's more general woes are necessarily over. The 100-day moving average, currently at 1.1653, may exercise some early technical influence on EURUSD in Europe today, while traders may also be mindful of the 55-day moving average at 1.1618. Traders might also wish to bear in mind that there are very sizeable option expiries on Friday (1500h UK time) that may also influence the price action until expiry time. In EURUSD, according to analysts at IFR, there are 4.25 billion euros of expiries at 1.1630 today, 2.78 billion euros in the 1.1640-75 range, and 1.46 billion euros at 1.1700.

by Neal Kimberley, External Currency Analyst.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The thoughts and opinions expressed here are solely those of the writer and do not necessarily reflect the view of ActivTrades Plc. This commentary is for information purposes only and should not be considered as investment advice. Any forecasts given are not a reliable indicator of future performance and the decision to act on any ideas and suggestions presented is at the sole discretion of the reader.

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CAC 40: Testing a daily resistance

The French consumer price index (CPI) came in at 2.3% year-on-year in August, unchanged comparing to the 2.3% registered in the previous month and matching analysts’ estimates of 2.3%. It remained the highest inflation rate since May of 2016, supported by stable services and tobacco prices.

Since the beginning of September, the French index CAC 40 grew more than 2.0% and is in a bullish phase since late September.

On yesterday session, the index rallied with a wide range but found enough resistance to trim some of its gains and closed in the middle of the daily range, in addition, managed to close within Wednesday range, which suggests being slightly on the bullish side of neutral.

The stochastic is showing an extremely overbought market and is displaying a lack of momentum.

In early September, the French main index began a sharp downward correction that breached August low at 5,277.5 but found enough support at 5,238.0 to bounce backs up and since then has been in a strong upward move. Now is testing a daily resistance where it may prove to be a tough nut to crack and it may begin a pullback before another move upward.

Fra40 is a CFD written over CAC 40 futures.

Written by Hugo O’Neill, External Analyst.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with ActivTrades. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The thoughts and opinions expressed here are solely those of the writer and do not necessarily reflect the view of ActivTrades Plc. This commentary is for information purposes only and should not be considered as investment advice. Any forecasts given are not a reliable indicator of future performance and the decision to act on any ideas and suggestions presented is at the sole discretion of the reader.
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EURUSD: Markets Eye Italy Budget Talks

Euro bulls might have hoped for a calm start to the European session given that the euro wasn't overly buffeted by Wednesday's Federal Reserve rate hike but a report in Italy of a possible delay to Thursday's Italian government budget meeting contributed to a dip in EURUSD in the late Asia session. It remains to be seen whether traders in Europe will feel that dip provides an opportunity to pick up euros at more attractive levels or whether the downward move has further to run. Certainly the EURUSD has traded in Asia below its 10-day moving average at 1.1718, and that occurrence may have flushed out a few stale long euro exposures, but is that enough to justify a further run lower for the euro? Traders will have their own opinions, and much this morning may depend on headlines out of Italy, but there is a narrative that suggests neither the Fed announcement or the following press conference materially changed market expectations of the trajectory of US monetary policy tightening and that as a consequence fresh market demand for USD might be limited. Of course that narrative puts heavy emphasis on the USD side of EURUSD, but it might resonate with some traders especially if, as Denmark's Danske Bank wrote of Italy on Thursday morning, "With markets now fully pricing in a budget deficit well below the 3 per cent of GDP threshold, we would have to see a significant negative surprise to see any spill over to FX markets and naturally the EUR in particular." But the core of the market's problem, as regards Italy, might well lie in the fact that Danske Bank is correct and that the market will therefore be wrong-footed if events in Rome turn out differently. It won't suit those who see the euro higher but Dutch bank ING argued Thursday that it was "no surprise that EUR crosses have headed south on this news [out of Italy]" and that if there is any Italian budget delay it would be ING's expectation for "EURUSD, EURJPY AND EURCHF to all move sharply lower."

by Neal Kimberley, External Currency Analyst.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The thoughts and opinions expressed here are solely those of the writer and do not necessarily reflect the view of ActivTrades Plc. This commentary is for information purposes only and should not be considered as investment advice. Any forecasts given are not a reliable indicator of future performance and the decision to act on any ideas and suggestions presented is at the sole discretion of the reader.
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USDJPY: Potential double top

The Federal Reserve increased the interest rate by 25 basis points (bps) to 2.25% at its September meeting, as widely expected by market analyst. Policymakers expect one more rate hike this year, 3 increases in 2019 and 1 in 2020, in line with previous forecasts.

Japanese consumer price index increased to 1.3% year-on-year in August, comparing to the 0.9% registered in the previous month and stronger than analysts’ expectations of 1.1%. It was the highest rate since February, fuelled by a rise in prices of food and a quicker growth in the cost of transport.

Since the beginning of September, the USDJPY rallied almost 1.5% and remains in a bullish phase since late August.

On yesterday session, the currency pair tried to rally but found enough selling pressure near the key level at 113.176 to reverse and closed near the low of the day, in addition, managed to close below Thursday low, which suggests a strong bearish momentum.

The stochastic is showing an extremely overbought market and is displaying lack of momentum.

September began on the left foot but since then the currency pair has been in an upward movement that seems to have ended, for now at least. Yesterday price action shows a strong bearish momentum accompanied with rising volume, potentially signalling a downward correction, which in turn can lead to a double top pattern.

Written by Hugo O’Neill, External Analyst.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with ActivTrades. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The thoughts and opinions expressed here are solely those of the writer and do not necessarily reflect the view of ActivTrades Plc. This commentary is for information purposes only and should not be considered as investment advice. Any forecasts given are not a reliable indicator of future performance and the decision to act on any ideas and suggestions presented is at the sole discretion of the reader.
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Fed Preview With A Kuroda Twist

Today's Federal Reserve policy announcement (1900h UK time) will be a major focus for traders with markets pricing in the near-certainty of another 25 basis point rate hike. With the rate hike fully priced, trader attention may turn instead to the Summary of Economic Projections (SEP). On September 12, Fed Governor Lael Brainard, whose own stance on rates has evolved over 2018 to become more hawkish, argued that US monetary policy tightening could continue "over the next year or two" rather than the Fed pausing in 2019. Admittedly the rise in US Treasury interest rates this month, ahead of the Fed, has been one of the largest 1-month moves of this Fed hiking cycle, so Fed policymakers might be inclined not to give the new SEP forecast too much of a hawkish tone. Yet with the US economy expanding at a robust pace, and US equity prices at record highs, the Fed might also be inclined to think that the risks to US inflation in 2019 are on the upside. That could lead some Fed policymakers to be more hawkish in their individual rate forecasts. A neutral hike or a hawkish hike might therefore be the likeliest outcome. Traders might feel a dovish hike to be less likely given recent US economic data. A neutral-to-hawkish US rate rise might be seen as supportive of the US dollar. If so traders might be inclined to recall a few lines from Bank of Japan Governor Haruhiko Kuroda's speech in Osaka yesterday. "Partly because central banks in the United States and Europe are proceeding with monetary policy normalization recently, some market participants speculated that a policy rate hike would take place soon even in Japan. However the situation regarding the price stability target in Japan differs substantially from that in the United States and Europe," Kuroda said. Kuroda then added that "In terms of clarifying this point, it is very important to make clear that the Bank [of Japan] will maintain the current extremely low levels of short- and long-term interest rates for an extended period of time." With Kuroda's comments in mind, traders might rationally conclude that USDJPY could be a prime move if the Fed does deliver a neutral-to-hawkish hike today.

by Neal Kimberley, External Currency Analyst.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The thoughts and opinions expressed here are solely those of the writer and do not necessarily reflect the view of ActivTrades Plc. This commentary is for information purposes only and should not be considered as investment advice. Any forecasts given are not a reliable indicator of future performance and the decision to act on any ideas and suggestions presented is at the sole discretion of the reader.
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Gold: Sideways movement awaiting Fed monetary policy

The US dollar index fell with an expected Federal Reserve (Fed) rate rise generally priced in by traders, who will be looking for clues on the future pace of rate hikes from the central bank at 19:00 GMT+1.

The depreciation of the US dollar increases the value of other countries’ currencies and potentially leading to a rise in demand for commodities expressed in US dollars including gold, consequently pushing upward the precious metal price.

Since the beginning of September, the precious metal is running flat, unchanged but remains in a bearish phase since late June, after the death cross.

On yesterday session, gold initially rose with a narrow range but found enough selling pressure to trim some of its gains but closed in the middle of the daily range, in addition, the precious metal managed to close within Monday’s range, which suggests being clearly neutral, neither side is showing control.

The stochastic is showing a strong bearish momentum and is crossing below the 50 midline.

After the upward correction in late August, the precious metal turned sideways, in a tight consolidation for 19 days in a row. This sideways movement may be attributed to the Fed's monetary policy statement and interest rate decision to be released later today.

Written by Hugo O’Neill, External Analyst.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with ActivTrades. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The thoughts and opinions expressed here are solely those of the writer and do not necessarily reflect the view of ActivTrades Plc. This commentary is for information purposes only and should not be considered as investment advice. Any forecasts given are not a reliable indicator of future performance and the decision to act on any ideas and suggestions presented is at the sole discretion of the reader.
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