Analytics › Weekly binary options technical forecast September 07-11

Weekly binary options technical forecast September 07-11

EUR / USD

An interesting week has come for the single European currency, the key event for which is the ECB meeting this Thursday. The EU Central Bank has something to think about. For the first time since 2018, the euro reached 1.20 against the dollar, and this is not a big deal if it reflects optimism about the future. But optimism could be heightened when EU finance ministers meet in the coming days to discuss their € 750 billion recovery fund.

But on a prudent trading basis, the euro is approaching six-year highs, putting pressure on prices. Inflation turned negative in August for the first time since 2016 - a red flag for the ECB, targeting inflation around 2%.

The aggressive incentive from COVID-19 is buying time, so no major action is expected. However, anxiety over deflation and a firm euro rate suggests that the ECB will take action very soon. Markets will look for clues when this might happen.

The situation is reversed in the United States. Less attention to inflation and more to the labor market, that was the message from Fed Chairman Jerome Powell at a virtual summit in Jackson Hole last month. Basically, this means that the Fed will not be worried about inflation exceeding the 2% target. That is, such rhetoric makes it possible to keep interest rates low for as long as the Fed wants.

This is good news for stock markets, real estate and other sectors that benefit from cheap money. Inflation appears to have little chance of hitting 2% in the near future at the moment. Even though inflationary expectations have risen recently.

US inflation data will be released this Friday. Inflation is expected to rise by 0.2% in August after rising 0.6% in July. If forecasts come true, inflation will rise to 1.2% on an annualized basis against 1% last month.

The Fed's preferred metric, the Basic Personal Consumption Expenditure Index, excluding food and energy, rose 1.3% in July. At such a rapid pace, asset price inflation could be a major headache for the Fed and will have to change its rhetoric by the end of the year.

Thus, at the beginning of this trading week, the euro has more trump cards.

GBP / USD

The UK government sees only a 30-40% chance of a post-Brexit trade deal with the EU. It is not hard to guess that there is little optimism on the eve of the resumption of negotiations on 8 September. Previous rounds have yielded no results, each side blaming the other for unwillingness to compromise.

The controversy is on several issues, from fishing quotas to the UK's willingness to use government aid to develop its technology sector. Less than a month remains to conclude the deal, which must then be ratified at the EU summit in mid-October.

However, already on Monday (today) the UK warned the EU that it could cancel the signed withdrawal agreement if the Euroblock does not agree to a trade deal before October 15.

British Prime Minister Boris Johnson said that if the free trade agreement is not concluded by October 15, both sides should "accept it and move on." “If we cannot agree by then, then I don’t see there will be a free trade agreement between us, and we both have to accept that and move on,” Johnson says, according to comments posted by his Downing Street office.

Without this deal, nearly a trillion dollars of trade between the UK and the EU could be in limbo due to tough EU rules that govern everything from auto parts and medicines to fruits and data.

However, such a radical move as leaving the EU without a deal will heighten tensions within the United Kingdom. Irish Foreign Secretary Simon Coveney, who played a key role in the negotiation of the Northern Ireland secession agreement and protocol, said on Twitter that the move "would be very unwise."

If the deal is reached, the UK will have a trade relationship with the EU like Austria, which will be a "good result," said Boris Johnson. “As a government, we are preparing for this at our borders,” he added. "We will have full control over our laws, our rules and our fishing waters."

In that case, the UK would be ready to find a reasonable solution with the bloc on practical issues such as flights, freight transport or scientific cooperation, according to the excerpts.

It is obvious that the week is going to be tense, both for the pound sterling and for the single European currency. Preliminary sentiment on the side of the euro.

OIL

Keisuke Sadamori, director of the International Energy Agency for Energy Markets and Security, said the oil market outlook is in the midst of either a second wave or a sustained first wave of coronavirus.

“There is tremendous uncertainty, but we do not expect any further major slowdown in the coming months,” he told Reuters in an interview. "Although the market does not expect real sustainable growth to resume soon, the outlook on demand is more stable than it was three months ago."

The global economy does not appear to be heading for any major slowdown due to covid-19, but accumulated inventories and uncertainty about oil demand in China are making it difficult for oil markets to recover, the IEA said.

The IEA also lowered its forecast for oil demand for 2020 in its monthly report, warning that the cut in air travel would reduce world oil demand by 8.1 million barrels per day.

China, the world's largest exporter of crude oil, emerged from the economic lockdown earlier than other major economies and used its financial strength to record oil imports in recent months, a rare bright spot amid falling global demand.

But geopolitical tensions may question the extent to which they can be sustained and last long. “There are so many uncertainties about the Chinese economy and their relationship with key industrialized countries such as the United States, and today even with Europe. This is not an optimistic situation - it casts a shadow on growth prospects, ”summarized Sadamori in the report.

As we can see, there are very few prospects for an increase in oil prices. At least Monday morning. Let's see what the trade negotiations between the EU and the UK show, whether a collapse in the supply chains between these countries is possible. All attention to the trading sentiment in the world and, of course, to the level of raw materials.


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