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By Jameel Ahmad, Global Head of Currency Strategy and Market Research at ForexTime

There are no real surprises that the Bank of England (BoE) left interest rates unchanged at the conclusion of its latest monetary policy meeting today, but the most interesting twist that occurred included the BoE following the lead of the Federal Reserve overnight and the ECB the day prior, by appearing downbeat on the economic outlook.

This results in yet another contrast and twist from a central banker when you consider that BoE Governor Carney, made optimistic comments on the potential for higher interest rates in the United Kingdom just one week ago!

Overall the main action in the FX markets is investors shorting the USD in the aftermath of the Federal Reserve indicating that it is preparing to lower US interest rates. The USD has dropped across the board during trading on Thursday as expected, including against all of the G10, most emerging and Asian currencies with Gold remaining close to a five-year high above $1390.

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By IFCMarkets

Positive data bullish for FR40

French retail sales increase and private business sector expansion were better than expected. Will the FR40 advance continue?

Recent French economic data were better than expected after final Q1 GDP report: Markit’s final reading of composite purchasing managers index for May confirmed business activity expansion accelerated in May with services sector also recording an expansion. And retail sales growth increased in April: retail sales rose 3.1% over year after 1.2% increase in March. At the same time trade deficit declined to 5 billion euro from 5.5 billion in March. Positive French data are bullish for FR40.

On the daily timeframe FR40: D1 is retracing higher after hitting 4-month low in the beginning of June, and has risen above the 200-day moving average MA(200). The price is rising after breaching above the resistance line. These are bullish developments.

  • The Parabolic indicator has formed a buy signal.
  • The Donchian channel indicates uptrend: it is tilted up.
  • The MACD indicator is above the signal line with the gap widening. This is a bullish signal.
  • The RSI oscillator is reaching overbought zone but has not yet breached into it.

We believe the bullish momentum will continue after the price breaches above the upper Donchian boundary at 5540.24. This level can be used as an entry point for placing a pending order to buy. The stop loss can be placed below the lower fractal at 5339.66. After placing the pending order the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop-loss level (5339.66) without reaching the order (5540.24) we recommend cancelling the order: the market sustains internal changes which were not taken into account.

Technical Analysis Summary
Order Buy
Buy Stop Above 5540.24
Stop loss Below 5339.66

Market Analysis provided by IFCMarkets

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By Dan Steinbock   

Compared to pre-2008 crisis levels, world economic growth has plummeted by half and is at risk of a long-term, hard-to-reverse stagnation. Returning to global integration and multilateral reconciliation could dramatically change the scenario

Since spring 2017, the US-led tariff wars have effectively undermined the global recovery. In the past years, global economy has navigated across several scenarios. Now it is approaching the edge.

I have been following four generic scenarios on the prospects of global economic growth since the U.S. 2016 election. The first two scenarios represent variants of “recoupling.” In these cases, global integration prevails, despite tensions. In the next two scenarios, global integration will fail, either in part and regionally or fully and globally.

What should worry us all is that, during the past few years, real global growth prospects have slowly but surely moved from the ideal and preferable scenarios toward the worst and darkest.

The Return to Cooperation Scenario

In this scenario, U.S. and China achieve a trade agreement. Both agree to phase out additional tariffs, renounce trade threats and establish working groups to defuse other friction areas in intellectual property rights, social and political issues, and military matters. Global growth prospects could – in the best scenario – even exceed the old OECD/IMF baselines at more than 4%.

This was always the least likely scenario to materialize. Today, its degree of probability is minimal. Yet, it is important to remember that, during the first Trump-Xi meeting, many observers saw the scenario still as possible, even probable.

The Muddling Through Scenario

In this scenario, the tariff’s economic impact would have been limited to 0.4% of Chinese GDP and 0.8% of U.S. GDP, respectively. U.S. and China develop a path to a trade agreement during the truce, but other friction areas, – particularly in advanced technology, result in new skirmishes.

Uncertainty decreases but fluctuates. Global economic prospects barely improve. Markets witness rallies and plunges. Global recovery fails. Global growth prospects remain close to 3.5%-3.9%.

Only half a year ago, this scenario was still seen as a viable one. Today, it feels like a bygone world.

The America First Scenario

In this scenario, the import-value stakes would be 10-fold relative to the start of the trade war, amounting to more than $0.5 trillion, with soaring collateral damage. In China, it could shave off 0.4% and in the U.S., 0.8% of the 2019 GDP, respectively. Neither the U.S. nor China would agree to phase out additional tariffs. Talks would linger, fail or lead to new friction. Uncertainty increases, volatility returns. Global prospects decline further. Markets linger.

In this scenario, global prospects would dampen as world GDP growth in 2019 would sink to 3% or worse.

The Global Trade War Scenario

In this scenario, all bets are off. U.S. and China fail to agree on a trade compromise. Additional tariffs are enacted and new trade threats declared. The White House escalates attacks against Chinese industries, in intellectual property rights, social and political issues, and military modernization. Volatility soars. Real GDP growth in the U.S. takes a severe hit. Chinese growth erodes.

Eventually, risks to global outlook overshadow world GDP growth, which could linger at 2%-2.5% or worse. World trade and investment plunges. Migration crises abound. The number of globally displaced, which has exceeded World War II figures since the mid-2010s, soars to record highs. A series of new geopolitical conflicts prove harder to contain.

Toward the Edge

So where are we today vis-à-vis these scenarios? A simple answer: Moving closer to the edge.

After trade frictions and the Trump tariffs undermined the global recovery momentum, the IMF finally woke up predicting global economic activity to slow notably. In early June, the World Bank estimated the world economy would only expand by 2.6%. The IMF has affirmed that the trade wars could wipe $455 billion off global GDP in 2020.

Worse, President Trump increased tariffs on $200 billion worth of Chinese goods exported to the U.S., and introduced an effective ban on American companies doing business with Chinese telecom giant Huawei in early May.

In brief, the status quo is shifting from the America First toward the Global Trade War scenario (see the red line in the Figure).

Figure   Trade War Scenarios: Risks to Global Economic Outlook

Sources: Difference Group (WEO/IMF growth data)

In effect, multilateral banks’ estimates still downplay effective collateral damage. If the Trump administration will continue to expand trade wars and geopolitical ploys in multiple regions, their models ignore the impending adverse feedback of such measures – as evidenced by Morgan Stanley’s business conditions index that just took the worst one-month hit in its history.

To understand how much expectations have been revised, let’s recall that before the 2008 global crisis global growth rate was around 4% to 4.3%. The current growth rate has almost halved from its pre-crisis level.

In relative terms, something similar occurred in the 1970s, which saw the end of three “glorious decades” of solid growth in major advanced economies.

What we are witnessing now is a potentially fatal fall into secular stagnation. In part, it is structural, resulting from maturing economies and aging populations. But in part, it is self-induced and the effect of misguided trade policies and unilateral geopolitical aggression. In the absence of tariff wars and geopolitical destabilization, global growth rate could now be closer to 3.5%.

The longer it takes to achieve multilateral reconciliation, the more likely it is that falling secular long-term growth rates will prove harder to reverse.

About the Author:

Dr. Dan Steinbock is the founder of Difference Group and has served at the India, China and America Institute (US), Shanghai Institute for International Studies (China) and the EU Center (Singapore). For more, see http://www.differencegroup.net/  

The original version was published by South China Morning Post on June 20, 2019

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Article By RoboForex.com

USDCAD, “US Dollar vs Canadian Dollar”

As we can see in the H4 chart, USDCAD has tested the support level while trading downwards and formed Hammer reversal pattern; right now, the pair is trying to break this level. The current situation implies that the reversal pattern may indicate a possible rebound from the horizontal line and a new growth with the target at 1.3400. However, we shouldn’t ignore a possibility that the instrument may break the support level and continue its decline to reach 1.3180.


AUDUSD, “Australian Dollar vs US Dollar”

As we can see in the H4 chart, AUDUSD has formed Hanging Man reversal pattern while testing the channel’s upside border. The current situation implies that the instrument may rebound and fall towards 0.6838. However, we shouldn’t ignore a possibility that the instrument may break the level and continue growing to reach 0.6950.


Article By RoboForex.com

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.

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By TheTechnicalTraders.com

We believe a unique Pennant/Flag formation is setting up in the US stock markets. We believe the Small Cap sector may provide a better technical reference to the price breakout we are expecting in late August or early September than the mid or large-cap sectors.  The charts tell a very interesting story when comparing the different sectors to the SPY.

As most of you are well aware, the very deep selloff between October and December 2018 prompted a low price pivot point that most technical analysts are using as a reference to support. What we find interesting is that these Small Caps have really failed to mount any type of price recovery.  We believe this is because of the continued capital shift where foreign investors and institutional investors are piling into mid-cap and large-cap equities chasing dividends and safety.  The small-cap index chart may provide the best technical reference for the pennant formation and eventual breakout move.

This weekly chart of TNA highlights exactly what we are referencing in comparison to the mid-cap and large-cap charts. Pay very close attention to the support level near $53.50.  Also, notice that define panic formation setting up after the December 2018 bottom. We believe the price rotation in the small-cap index is clearer and more identifiable than the rotation in the mid-And large-cap indexes.  We also believe the small-cap index will show early warning signs of price weakness or strength after the apex of this move.

The mid-cap and large-cap weekly charts paint a very different picture than the small-cap chart. We can see the upward price slow after the bottom in December 2018 was much more aggressive. We can also see an upward sloping Pennant formation setting up between the lower, blue, price channel and the magenta upward sloping price channel from the recent lows.  Please pay close attention to the upper and lower support zones we drawn on this chart. Any future break down in price will likely find support near the upper support zone and possibly pause near this level before attempting a breakdown further if needed.

This last SPY weekly chart highlights the similarities between the made In the large-cap indexes. The way price reacts to these channels as well as creates these Pennant formations in unison is rather interesting. Compared to the small chart, the TNA, it is clear that the main and large-cap prices are moving somewhat in tandem.

At this point in the process, we are waiting for wave 3 to end and wave 4 to begin of the pennant formation.  As price continues to consolidate within the pennant range, we should take advantage of opportunities that exist within this rotation and prepare for a brief breakout to new all-time highs. After new all-time highs are reached, we believe an immediate downside price rotation will begin sometime in September 2019 and last possibly into October or November 2019 – possibly longer.

Pay attention to vertical line number 10 on this chart. This price cycle reference occurs on September 8, 2019. It also occurs right after the apex of the pennant formation between the red and magenta lines. Our researchers believe a washout high price rotation, targeting new price highs, will be the likely resulting breakout move.  After the washout high exhausts, we believe an immediate downside move will likely begin and push prices back below the 282 to 270 level while attempting to find support.  Ultimately this downside move may attempt to retest the 240 level or lower. Time will tell.

Our suggestion is to pay attention to the small-cap index in relation to the mid-cap and the large-cap symbols. We believe the small-cap sector will provide greater detail for technical analysts and researchers. Overall, every one of these charts paints a fairly clear picture. We believe our research is accurate and that the market will do exactly as we are suggesting. The only thing that we are unsure of, at this point, is where the new all-time high price level will peak.

Our ADL predictive modeling system is providing some guidance in regards to this peak level.  We will continue to provide further guidance and research as these price swings continue. It would be wise to prepare to trade a tightening price channel as this pennant formation continues – then be prepared for some very big price swings in late August and all through September.

We have a good pulse on the major markets and can profit during times when most others can’t which is why you should join my Wealth Trading Newsletter for index, metals, and energy trade alerts.

I can tell you that huge moves are about to start unfolding not only in metals, or stocks but globally and some of these super cycles are going to last years. These super cycles starting to take place will go into 2020 and beyond which we lay out in our new PDF guide: 2020 Cycles – The Greatest Opportunity Of Your Lifetime

I am going to give away and ship out silver rounds to anyone who buys a 1-year, or 2-year subscription to my Wealth Trading Newsletter. You can upgrade to this longer-term subscription or if you are new, join one of these two plans listed below, and you will receive:

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(Could be worth hundreds of dollars)

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(Could be worth a lot in the future)

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Chris Vermeulen
Founder of Technical Traders Ltd.

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Article By RoboForex.com

AUDUSD, “Australian Dollar vs US Dollar”

AUDUSD is trading at 0.6892; the instrument is moving below Ichimoku Cloud, thus indicating a descending tendency. The markets could indicate that the price may test the cloud’s downside border at 0.6905 and then resume moving downwards to reach 0.6805. Another signal to confirm further descending movement is the price’s rebounding from the resistance level. However, the scenario that implies further decline may be cancelled if the price breaks the cloud’s upside border and fixes above 0.6945. In this case, the pair may continue growing towards 0.7015.


NZDUSD, “New Zealand Dollar vs US Dollar”

NZDUSD is trading at 0.6569; the instrument is moving above Ichimoku Cloud, thus indicating an ascending tendency. The markets could indicate that the price may test the cloud’s upside border at 0.6545 and then resume moving upwards to reach 0.6645. Another signal to confirm further ascending movement is the price’s rebounding from the support level. However, the scenario that implies further growth may be cancelled if the price breaks the cloud’s downside border and fixes below 0.6505. In this case, the pair may continue falling towards 0.6425.


USDCAD, “US Dollar vs Canadian Dollar”

USDCAD is trading at 1.3233; the instrument is moving below Ichimoku Cloud, thus indicating a descending tendency. The markets could indicate that the price may test Tenkan-Sen and Kijun-Sen at 1.3290 and then resume moving downwards to reach 1.3155. Another signal to confirm further descending movement is the price’s rebounding from the resistance level. However, the scenario that implies further decline may be cancelled if the price breaks the cloud’s upside border and fixes above 1.3395. In this case, the pair may continue growing towards 1.3475.

Article By RoboForex.com

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.

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By Orbex

Following a recent string of supply inventory surpluses which have weighed on price, crude was higher yesterday after news of a larger than expected drawdown.

The latest report from the Energy Information Administration showed that in the week ending June 14th, US crude stockpiles fell by 3.1 million barrels. This was almost three times more than the forecast 1.1 million barrel drawdown the market was looking for.

The data also showed that US gasoline inventories were down 1.7 million barrels over the week. Again, this far outstripped analyst expectations for a 935k barrel rise. This latest decline brings inventory levels down from levels which recently rose to their highest point since July 2017.

Net Crude Imports Fall

Distillate stockpiles, which include diesel and heating oil, were also seen falling over the week. These moved lower by 551k barrels.

This was in stark contrast to the forecasted 712k barrel increase. Elsewhere, the report showed that net US crude imports were down by 444k barrels. Meanwhile, exports rose by 300k barrels per day to 3.4 million barrels per day. This is just under the 3.6 million barrel per day record hit in February.

The data also showed refinery crude runs having risen over the week by 200k barrels per day. And refinery utilization rates edged up by 0.7% to 93.9% of total capacity, marking their highest levels since January.

US Crude Production Softens

The report had further good news for crude bulls. It showed that domestic crude production had fallen 100k barrels per day. Production is now at 12.2 million barrels per day, slipping back from the record high of 12.4 million barrels per day hit 2 weeks ago.

Despite the drawdown in overall crude levels, crude inventories are still at 482.4 million barrels. This is around 7% higher than the 5year average seasonally.

Indeed, crude stores at the Cushing delivery hub in Oklahoma rose by 642k barrels to 53.6 million, their highest levels since December 2017.

Trade War Still Weighs

Crude has been heavily weighed on over recent months. This is due to fresh escalation in the trade warbetween the US and China.

Last year, the ballooning trade war between the world’s two largest economies was responsible for driving crude heavily lower. While the declines have paused for now, with neither the US or China looking like backing down, there is a very real threat of yet a further escalation and crude prices taking another step down.

Iran Conflict Supports

Away from the trade war, the threat of potential military conflict between the US and Iran also remains a very real presence.

However, for now, it seems the market has been downplaying these rising tensions. And this usually translates into higher oil prices. This is likely due to the current sanction on Iranian oil which restricts a large percentage of Iranian exports.

Technical Perspective

The recent block of consolidation has seen oil settling between the 61.8% retracement from last year’s lows at 51.50 and the broken 59% retracement at 54.37. Price is now breaking back above here, putting focus on the next topside level to watch which is the 57.16 zone. To the downside, any break lower will put focus on a move into the 47.49 level support next, which is the 78.6% retracement from last year’s lows.

By Orbex

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by JustForex

The EUR/USD currency pair
Technical indicators of the currency pair:
  • Prev Open: 1.11924
  • Open: 1.12260
  • % chg. over the last day: +0.38
  • Day’s range: 1.12257 – 1.12730
  • 52 wk range: 1.1111 – 1.2009

Yesterday USD got weakened against the majors. The EUR/USD set the new local maximums. As expected, the Federal Reserve kept the key interest rate at 2.25-2.50% and released mixed economic forecasts. The Central Bank made it known that it’s willing to review the softening of the monetary policy due to growing stress on the world economy and relatively weak inflation. The statement that the Central Bank is willing to remain calm about the further corrections of the interest rates disappeared from the FOMC communique. According to the CME FedWatch Tool 57.4% of market participants expect the range to decrease by 25 points in July, while 42.6% expect it to drop by 50 basis points. The key trading range for EUR/USD is 1.12400-1.12700. The quotes can grow further. You should open positions from the key levels.

At 15:30 (GMT+3:00) the Philadelfia Federal Reserve will release the Manufacturing Index.

The price fixed above 50 MA and 100 MA which points to the power of the buyers.

The MACD histogram is in the positive zone and above the signal line which gives a strong signal to buy EUR/USD.

The Stochastic Oscillator is in the overbought zone, the %K line is crossing the %D line. There are no signals at the moment.

Trading recommendations
  • Support levels: 1.12400, 1.12100, 1.11800
  • Resistance levels: 1.12700, 1.13000, 1.13250

If the price fixes above 1.12700, expect further growth towards 1.13000-1.13250.

Alternatively, the quotes can descend towards 1.12100-1.11900.

The GBP/USD currency pair
Technical indicators of the currency pair:
  • Prev Open: 1.25566
  • Open: 1.26408
  • % chg. over the last day: +0.78
  • Day’s range: 1.26259 – 1.27084
  • 52 wk range: 1.2438 – 1.3631

GBP/USD shows agressive sales. During the last two days the quotes grew by 150 points. GBP pdated the key maximums, the demand for USD grows. GBP is testing the local resistance at 1.27150 with 1.26550 actiong as a key support. The investors are focused on the meeting of the Bank of England. The regulator will leave the monetary policy parameters the same. Keep an eye on the comments by the representatives and open positions from the key levels.

The Economic News Feed for 20.06.2019:

  • – Retail Sales Report (UK) – 11:30 (GMT+3:00);
  • – Monetary Policy Review (UK) – 14:00 (GMT+3:00);

The price fixed above 50 MA and 100 MA which points to the power of the buyers.

The MACD histogram is in the positive zone and keeps rising which gives a strong signal to buy GBP/USD.

The Stochastic Oscillator is in the overbought zone, the %K line is crossing the %D line. There are no signals.

Trading recommendations
  • Support levels: 1.26550, 1.26100, 1.25800
  • Resistance levels: 1.27150, 1.27600

If the price fixes above 1.27150, expect further growth towards 1.27600-1.27800.

Alternatively, the quotes can descend towards 1.26300-1.26000.

Registration

The USD/CAD currency pair
Technical indicators of the currency pair:
  • Prev Open: 1.33780
  • Open: 1.32787
  • % chg. over the last day: -0.79
  • Day’s range: 1.32277 – 1.32854
  • 52 wk range: 1.2727 – 1.3664

USD/CAD is in a strong descending trend. During the last two days the quotes fell by 140 points. The trading instrument updated the key minimums. The demand for USD weakened after the Federal Reserve meeting. CAD is supported by the positive oil quotes trends. The quotes are testing the support at 1.32250 with 1.32600 actng as the nearest resistance. The USD/CAD can descend further. Open positions from the key levels.

The Economic News Feed for 20.06.2019 is calm.

The price is below 50 MA and 100 MA which points to the power of the sellers.

The MACD histogram is in the negative zone and below the signal line which gives a strong signal to sell USD/CAD.

The Stochastic Oscillator is in the overbought zone, the %K line is crossing the %D line. There are no signals at the moment.

Trading recommendations
  • Support levels: 1.32250, 1.32000, 1.31700
  • Resistance levels: 1.32600, 1.33000, 1.3320

If the price fixes below 1.32250, expect further descend towards 1.32000-1.321700.

Alternatively, the quotes can recover towards 1.32800-1.33000.

The USD/JPY currency pair
Technical indicators of the currency pair:
  • Prev Open: 108.446
  • Open: 108.099
  • % chg. over the last day: -0.31
  • Day’s range: 107.467 – 108.143
  • 52 wk range: 104.97 – 114.56

USD/JPY quotes started to descend after long consolidation. The quotes updated the local extremums. Right now they are consolidating around the local support at 107.500 with 107.900 acting as a mirror resistance. JPY has a tendency to grow further against the USD. Keep an eye on the US Treasury bonds’ yield and open positions from the key levels.

The Bank of Japan kept the monetary policy at the same levels, as expected.

The price fixed below 50 MA and 100 MA which points to the power of the sellers.

The MACD histogram is in the negative zone and below the signal line which gives a signal to sell USD/JPY.

The Stochastic Oscillator is in the overbought zone, the %K line is crossing the %D line. There are no signals at the moment.

Trading recommendations
  • Support levels: 107.550, 107.000
  • Resistance levels: 107.900, 108.200, 108.500

If the price fixes below 107.550, expect further descend towards 107.000.

Alternatively, the quotes can grow towards 108.100-108.300.

by JustForex

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by JustForex

The US dollar weakened against a basket of major currencies after the Fed meeting. The regulator left the interest rate in the range of 2.25-2.50% per annum but made it clear that it could cut the rate even by half a percentage point before the end of the current year due to the uncertainty in the economy and the weak rate of inflation. The US currency is under pressure as a result of the news that US President Donald Trump believes that he has the authority to appoint another head of the Fed instead of Jerome Powell. The US dollar index #DX closed yesterday in the negative zone (-0.59%).

The Bank of Japan, in turn, left the main parameters of monetary policy unchanged, as well as confirmed plans to keep the key rate at the “extremely low” level until spring 2020. Today, the Bank of England meeting is in the focus of attention. As analysts forecast, the regulator will keep the interest rate unchanged at 0.75%.

The “black gold” prices are rising due to the reduction of US oil inventories. At the moment, futures for the WTI crude oil are testing the mark of $55.45 per barrel.

Market Indicators

Yesterday, the bullish sentiment was observed in the US stock market: #SPY (+0.23%), #DIA (+0.09%), #QQQ (+0.38%).

The 10-year US government bonds yield dropped significantly. At the moment, the indicator is at the level of 2.00-2.01%.

The news feed on 2019.06.20:

– Report on retail sales in the UK at 11:30 (GMT+3:00);
– Bank of England interest rate decision at 14:00 (GMT+3:00);
– Philadelphia Fed manufacturing index at 15:30 (GMT+3:00).

by JustForex

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By Lukman Otunuga, Research Analyst, ForexTime

A collective sigh of relief has roared across financial markets after the Federal Reserve confirmed market expectations of the probability that interest rates in the United States will likely be cut over the coming months.

The Fed has essentially left the gates wide open for speculation to persist that a reduction in US interest rates could occur as early as July. Investors on a global level have historically enjoyed the suggestion of lower interest rates from developed central banks, and the most developed central bank of them all signaling lower interest rates is going to fuel another market rally. Equity markets will not be the only asset class to enjoy this news, with the prospects of a weaker Dollar moving forward accelerating another superb move higher in Gold.

It is emerging markets however who will most enjoy the news of lower interest rates. We can expect for flows to move back towards emerging markets moving forward, meaning that EM stocks and their currencies will continue to edge higher against the USD. This rally will stretch across multiple corners including the Chinese Yuan, Malaysian Ringgit, South African Rand and as far afield as the Mexican Peso.

Emerging markets across Asia, Africa, Latin America and the Middle East will all move to applaud the news that lower interest rates in the United States will encourage capital to spread across multiple developing regions.

How soon can we expect the Fed to potentially cut rates?

Persistent uncertainties around the global economic outlook and muted inflationary pressures are already presumed to have encouraged at least one voting member of the Federal Reserve, such as James Bullard, to cut interest rates this month. Expectations are high that the anticipated interest rate cut from the Fed could occur as early as July, but there is the possibility that it might not occur as soon as financial markets are hoping for.

It must also be kept in mind that a rate cut in July is contingent on the outcome of the G20 meeting between US President Donald Trump and Chinese President Xi Jinping.

If the United States and China do find a resolution to the long-standing trade tensions, this will cause a rapid shift in the economic outlook and could even mean that the Federal Reserve throws the keys to lower US interest rates out of the fast-moving car.

The bottom line is that should the G20 meeting in Japan end on a positive note, with US-China relations improving and stronger US economic data emerging, the Fed is unlikely to push the button on lower interest rates.

This is a potential outcome that can very well become frightening and represent a significant risk to global equity markets, when considering how confident everyone has become today that the Fed will be cutting US interest rates.

Weakness in the USD encouraged Dollar Index to slide down ladder

Appetite towards the Dollar is weakening at lightning speed on market confidence that the Federal Reserve will be cutting interest rates. This can be seen in the Dollar Index (DXY), which is trading below 97. The DXY is likely to sink towards 96.50 in the near-term as investors attack the Dollar.

Weakness in the USD will mean a coordinated round of strength for currencies across the world.

Gold smiles on US rate cut expectations

Gold is shooting to the stars, comfortably securing a fresh 5-year high above $1390 this morning thanks to a downbeat Federal Reserve.

It is widely known that Gold flourishes and blooms in low interest rate environments, with a weakening Dollar supporting upside gains. With geopolitical tensions, ongoing US-China trade developments and concerns over slowing global growth clearly straining risk sentiment, Gold is likely to remain in fashion moving forward. In regards to the technical picture, the precious metal is heavily bullish on the daily charts. The bullish momentum has the potential to send prices towards $1400 by the end of this week.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Article by ForexTime

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