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    Morning Report – Monday 12th August

    THE DAILY REPORT

    MORNING REPORT

    TOP THINGS TO KNOW

    Goldman Sachs economists fears rise that U.S.-China trade war leading to recession

    (Reuters 12/08/2019) - Goldman Sachs Group Inc (GS.N) said on Sunday that fears of the U.S.-China trade war leading to a recession are increasing and that Goldman no longer expects a trade deal between the world’s two largest economies before the 2020 U.S. presidential election.

    “We expect tariffs targeting the remaining $300bn of US imports from China to go into effect,” the bank said in a note sent to clients.

    U.S. President Donald Trump announced on Aug. 1 that he would impose a 10% tariff on a final $300 billion worth of Chinese imports on Sept. 1, prompting China to halt purchases of U.S. agricultural products.

    Goldman Sachs said it lowered its fourth-quarter U.S. growth forecast by 20 basis points to 1.8% on a larger than expected impact from the developments in the trade tensions.

    “Overall, we have increased our estimate of the growth impact of the trade war,” the bank said in the note authored by three of its economists, Jan Hatzius, Alec Phillips and David Mericle.

    Rising input costs from the supply chain disruption could lead U.S. companies to reduce their domestic activity, the note said. Such “policy uncertainty” may also make companies lower their capex spending, the economists added.

    WTI defies gravity and ends firmly in the green, below 20-DMA target

    (FXStreet 10/08/2019) - Despite the International Energy Agency on Friday lowering its forecast for 2019 demand growth, West Texas Intermediate travelled higher between a range of $52.40 and $54.89, ending on Wall Street 2.92% in the green to around $54.35 on signs that OPEC oil ministers are committing to market balances.

    The International Energy Agency on Friday lowered its forecast for 2019 demand growth by 100,000 barrels a day to 1.1 million barrels a day, citing the weaker prospects for the global economy noted which also prompted the agency to lower its 2020 forecast by 50,000 barrels a day to 1.3 million barrels a day as well.

    Bulls take back control

    Regardless, WTI for September delivery climbed $1.96, or 3.7%, to end at $54.50 a barrel on the New York Mercantile Exchange. The contract ended the week with a 2.1% loss. Earlier in the week, contributing to the lower weekly price, the same contract fell hard by 4.7% to $51.09 for its lowest settlement for the contract since Jan. 14, 2019.

    However, there are signals that OPEC oil ministers want to stabilise the price from here, feeling the pain associated with crumbling prices. "With the JMMC scheduled to take place in Abu Dhabi by mid-September, we suspect that OPEC signals will help to ease fears that the US-China trade war will see a market surplus re-emerge," analysts at TD Securities explained.

    "In the meantime, however, we note that the crude market has likely continued to tighten as OPEC production has remained constrained in July, and non-OPEC production is growing at a slower pace than many had expected. At the same time, however, momentum indicators continue to fire downside signals on all cylinders in WTI — leading CTAs to add to their shorts. That being said, we estimate that algorithmic trend followers have reached their target short position in Brent crude, suggesting less downside flow in Brent in the immediate future."

    WTI levels

    Technically, the price is back above the 61.8%% Fibo of the late Dec to 2019 range and has taken on the 50% Fibo of the same range, albeit still drowning below the 50 and 200 daily moving averages. Bears can target below the 50 handle on an escalation of the trade wars - 47.56 comes in as the 78.6% Fibo. Bulls can target the 20-day moving average at 55.50 and then a run towards 56.80 and then 60.50.

    TRADE OPPORTUNITIES

    Below are Trading Central's Intraday preference recommendations. Short (SELL) positions and long (BUY) positions have two targets issued which may be used as take profit levels. Above or below a certain figure indicates the pivot level which may be used as a level for stop loss.

    CRUDE OIL 30 Minute – Long positions above 53.40 with targets at 54.90 & 55.60.

    This is general advice only and does not take into account your personal circumstances. “It is the Policy of ForexCT to recommend the use of stop/loss function to reduce risk of significant losses to customers.

    GOLD 30 Minute – Short positions below 1505.50 with targets at 1495.00 & 1490.00.

    GBPUSD 30 Minute – Short positions below 1.2050 with targets at 1.1990 & 1.1970.

    SP 500 Daily – Short positions below 2980.00 with targets at 2820.00 & 2720.00.

    SILVER Daily – Long positions above 16.3500 with targets at 17.7000 & 18.2000.

    HANG SENG Daily – Short positions below 26920 with targets at 25400 & 24550.

    AUDNZD Daily – Buy above 1.0260, rebound targets 1.06 & 1.066.

    This is general advice only and does not take into account your personal circumstances. “It is the Policy of ForexCT to recommend the use of stop/loss function to reduce risk of significant losses to customers.

    Economic Announcements
    (times in AEST)

    Risk Warning
    Trading FX and CFDs involves a substantial degree of risk and should only be undertaken with risk capital. Please consider our PDS and FSG before trading with us. A copy can be found on our website www.forexct.com.au. Forex Capital Trading Pty Ltd provides general advice that does not take into account your objectives, financial situation or needs. Investors do not own or have rights to underlying assets. Forex Capital Trading Pty Ltd is regulated by ASIC (AFSL 306400), ABN (69119086270). Forex Capital Trading Pty Ltd’s AFS license and Australian regulation only applies to the financial services being provided in Australia only.

    Posted: August 12, 2019 | 5:41 AM