New York City is Now Epicenter of Coronavirus COVID-19 Outbreak in the USA

US-China Phase One Trade Deal Signed, Now What’s Next to Inject Some Life into Eurozone Currency?

Could it Be Brexit?

Data Confirmed Continued US Economic Growth

On Sunday, Tragedy Strikes, Taking Away A Beloved NBA Legend.

Now that the US and China signed off on phase one of their trade deal. What’s next on the radar that could serve as catalyst for more EUR/USD price movements? Nothing, really! The next big event that could serve as catalyst remains dormant at the moment. That is Brexit news events. Ever since Johnson’s conservative party won the popular vote in Britain, the word “Brexit” has been off the radar. Let’s rewind a little bit. What is Brexit anyway?

Ok, simply put, the word “Brexit” exploded into existence on June 23rd, 2016 after British citizens voted to leave the European Union (EU) once and for all. The United Kingdom officially notified the European Council on March 29th, 2017 of its intention to leave the EU, immediately triggering Article 50 of the Lisbon Treaty. So, why did British citizens voted to leave the EU in the first place? Ha! That’s a subject for another article. If you would like me to write an article and host a video on that topic, then leave a comment below the video.

Weeks and days leading up to the phase one trade deal, saw aggressive upward movements of the EUR, but since then, things have cooled off for the Eurozone currency. The same thing happened leading up to the recent British election, where pro-Brexit Boris Johnson’s conservative party won easily. The EUR jumped to as high as 1.1239 but has since fallen on hard times. This posed a burning question.

What will happen to the EUR when Brexit finally comes to pass? Wow! Wait! Wait! You are not supposed to ask that question. That is too far in the future. What future? Well, suffice to say, the EUR’s economic future in the short-term doesn’t look too bright with Brexit lurking around the corner. We could passively ask the question, “What will the Eurozone economy look like without Great Britain?” In fact, the United Kingdom contributes roughly 16% to Eurozone GDP according to sources. As a member of the European Union, the UK contributes to the EU’s budget and the EU provides funding for various UK economic development programs and other programs.

In 2018 the UK contributed 13.2 billion Pounds to EU budget in return for 4.3 billion in public sector funding from EU. This comes out to be a total UK to EU contribution of 8.9 billion Pounds. The UK has the lowest unemployment rate in the Eurozone; therefore, a Eurozone economy without Great Britain will hurt dearly. How will this pain be felt?

This pain will be felt in the pockets of Eurozone consumers, simply because the Eurozone currency, the EUR, will lose a large fraction of its value. So, with this in mind, as a EUR/USD trader, how will you trade the EUR/USD currency pair? Will you go long or bullish on the EUR? Or will you sell or go short on the EUR and never buy the currency for fear of it drastically losing value after Brexit? As well-researched traders, that is for you to decide.

Hint, Hint, if one of the superstar players for your favorite sports team decides to stop playing for the team and leaves the team, then how well do you think your team will perform in the future? Do you think the team will win more games? Or do you think the team will become weaker and lose more games? Heck! Your team may not even make the playoff. They could be bottom dwellers for years to come, but that is a question for you the Forex trader to answer. I am not an adviser. I am merely your teacher. So, put your comments below, so we can start a discussion.

I can’t tell you what to do or what I am doing because what I am doing is my proprietary trade secret. But, if you can read between the lines, as a result of your diligent fundamental analytical study and determination to win and never lose in the foreign currency market again, then you are on your way to being, a successful Forex trader without losses on your resume.

This is how institutional foreign currency traders trade using Fundamental Analysis. You can’t leave home without it. As a well-balanced Forex trader, Fundamental Analysis must be at the forefront of your trading approach. Technical Analysis alone will not do you any good on a consistent, no-loss basis. If you are intending on having absolutely no losses in your Forex trading, then you must incorporate all three types of trading into your tool kit. They are Fundamental Analysis, Technical Analysis, and Sentimental Analysis.

I will keep a lid on Technical Analysis and Sentiment Analysis in this article because they are unreliable without solid Fundamental Analysis backing them up. Therefore, traders who solely depends on Technical Analysis and Sentiment Analysis alone are inconsistent winners in Forex trading. However, those traders who incorporates all three methods of trading have more consistent success in trading Forex.

If you would like to learn how to combine Fundamental Analysis, Technical Analysis, and Sentiment Analysis in your Forex trading, please visit our “Contact Us” page on Mstardom Finance at mstarom.com. We will send you the link and password to access our Forex course. You must provide your full name, email address, and phone number for us to send you the information. Thanks in advance.

Brexit News just in, British Prime Minister Boris Johnson just signed Brexit withdrawal deal in Brussels. On the EU side, European Commission President Ursula von der Leyen and European Council president Charles Michel signed the Brexit Withdrawal Agreement according to the European council. The European Parliament will vote to ratify the agreement next Wednesday, January 29th, two days before Britain’s official departure from the EU on Thursday, January 31st. This will mark the start of an 11-month transition period, during which Britain will continue to follow EU rules, before it finally breaks away from Brussels for good, at the end of the year.

So, what does this mean for the EUR/USD currency pair? Well, we can be assured that extreme volatility will be the dominant force heading into Friday, January 31st. The pair will most likely trend higher before crashing down to historic lows. Don’t be surprised if the pair skyrocket to $1.1300 before crashing down to $0.9000, where it could live forever. No one knows exactly how high the pair will rise or how low it will fall, but one thing we do know, volatility will be the monster dictating winners and losers among EUR/USD traders in the Forex market.

Brexit developments provided examples of how geopolitical events can shape investor sentiment in making Forex trades. This is what we mean when we fundamental traders say, “look at market fundamentals and market sentiment before relying on Technical analysis to execute Forex trades; It only make sense. Fundamental factors shape sentiments, and Technical analysis tells the trader when fundamental and sentimental factors will manifest into a market move.

So, if you don’t know that a severe market move is on the horizon, then you won’t know what precautions to take in order to protect yourself or profit from the impending market move. The trader will therefore get blindsided when this market movement occurs. This is what happens to a lot of traders who only trade using Technical Analysis. Fundamental Analysis and Sentiment Analysis are really what cause Financial markets to move. In other words, The Technical Analysis shows you when the movement is likely to manifest itself and become a reality.

Here is another basic example, during the Month of October, it rains a lot in Jamaica, my paradise Island; this is the historic fact or fundamental information that is the basis of my opinion, sentiment or theory that I will get a lot of rainfall to provide irrigation for my banana farm in October of this year; so, I will use this information to position myself to succeed from my farm by planting a lot of young banana plants during the month of October because I expect to get a lot of rain fall. The Technical Analysis aspect comes in the form of dark clouds hovering over-head before a huge down-pore of rain fall.

So, the Technical Analysis tells you when the event is about to occur. So, with this information I could start planting my young banana plants because I know that the rain is about to come down and provide copious amounts of water to water my young banana plants, which will cause them to grow faster than if I had planted them without copious amounts of rain water. The word “fundamental” means vital, most important, crucial, main, pivotal, chief. So, how can you leave this out of your trading by only relying on Technical Analysis? You are doomed to fail in your trading if you only rely on Technical Analysis.

Our hearts go out to Kobe Bryant and his family; Kobe Bryant passed away in a helicopter crash while I was writing this article. After coming home from work, my wife screamed out and ask me what happened to Kobe Bryant because she saw a story online while checking her social media profile. So, I replied, saying that I didn’t know because I was writing this week’s article, so I immediately googled the name “Kobe Bryant,” then I saw the unthinkable—Kobe Bryant and his 13-year-old daughter Gianna died in a helicopter crash in California. My wife asked me if it was fake news, so I said people don’t fake this kind of thing. I am writing this article with a heavy heart.

I am a New York, Knicks fan and an NBA fan, So, I respected Kobe for his greatness; even though I was always hoping my team could beat his team. With a heavy heart, it was very difficult for me to continue writing this article. It hurts very much because Kobe is no longer with us, no more Kobe for me to root against. It hurts. We all miss you Kobe! You were a true champion, both as a person and a legendary sportsman.  Our condolences go out to Kobe Bryant, his Daughter Gianna, and his entire family plus all the families that were in the crash. We miss you all. I am so sad, right now…very sad day for sure.

Let’s now talk about some macroeconomics. Institutional traders analyze macroeconomic data releases before formulating their trading plans. The first macroeconomic indicator we will look at came to us in the form of the monthly Core Consumer price Index (CPI). The Core CPI measures changes in the price of goods and services, excluding food and energy; it measures changes in respect to the consumer. The Core CPI serves as a key way to measure changes in purchasing trends and inflation.

A higher than expected reading should be perceived as positive for the U.S. economy and bullish for the USD, while a lower than expected reading should be perceived as negative for the U.S. economy and bearish for the USD. The current months over months Core CPI reading released on Tuesday, January 14, 2020 at 8:30 am, New York Time, missed market expectation of 0.2%, posting a less than desirable 0.1%, coming in less than last month’s reading of 0.2%.  The Bureau of Labor Statistics released the monthly Core CPI report.

These results coupled with current month over month Core Producer Price Index (PPI) readings, shows that consumers could be feeling the squeeze brought on by higher inflation. The current Core PPI readings of 0.1% missed forecasts of 0.2%, while coming in three tenth of a percentage point higher than last month reading of -0.2%. The Core PPI measures changes in the selling price of goods and services sold by producers, excluding food and energy; The Core PPI measures price changes in respect to the seller.

If manufactures sell their products at higher prices to consumers, this means that producers paid higher prices for raw material used in producing their products. So, producers are forced to charge consumers a higher price for goods and services, but consumers can afford to pay the higher prices because the economy is booming. In fact, the higher producer price could’ve been a result of supply and demand characterized by too many producer dollars chasing too few raw materials available to be purchased because producers have simply bought up the available raw material too fast as a result of the rapid growth of the U.S. economy. If this is the case, then the rise in PPI numbers spells good news for the U.S. economy and the USD.

Now we can see why consumers could have begun to feel the squeeze of paying higher prices for goods and services. This scenario tells us that inflation has gotten higher by 3 percentage points from what it was last month, in regards to the monthly Core PPI. The Core PPI serves as a leading indicator of consumer price inflation, which accounts for a significant portion of overall inflation. This also means that the U.S. economy as expanded since last reading. An increase in inflation such as what we see here could be looked at in a positive light if the increase inflation happened over a long period of time and didn’t happen too quickly.

As we would expect, the current inflation rate or year over year Core CPI came in at 2.3%, matching market expectation of 2.3% and a previous reading of 2.3%.

A higher than expected Core PPI reading should be perceived as positive for the U.S. economy and bullish for the USD, while a lower than expected reading should be perceived as negative for the U.S. economy and bearish for the USD. So, we did witness a rise in inflation, but consumers can handle it because this increase in inflation came about as a result of an expanding economy. Has anyone seen the stock market lately? The stock market has been delivering record highs, lately. The Bureau of Labor Statistics released the Core PPI report on Wednesday, January 15th 2020 at 8:30 AM, New York Time.

Let’s see if our Core Retail Sales Numbers can shed some light on consumers’ wiliness to spend money on retail items. Remember that consumers will only spend money when they have money to spend and when they think the economy is in good shape.  Ok, here we go!

On Thursday, January 16th, 2020 at 8:30 AM, New York Time, the Month-over-Month Core Retail Sales Report for December came in at 0.7%, beating market expectation of 0.5% and a previous reading of 0.1%. The Core Retail Sales Report measures changes in the total value of sales at the retail level in the U.S., excluding automobile. It serves as a key indicator of consumer spending and also serves as a pace indicator for the U.S. economy. The U.S. Census Bureau released the Core Retail Sales Report.

A higher than expected reading should be perceived as positive for the U.S. economy and bullish for the USD, while a lower than expected reading should be perceived as negative for the U.S. economy and bearish for the USD. Here comes the moment of reckoning. Well, consumers have money to spend based on the positive retail numbers. Not only that, consumers also feel that the economy is firing on all cylinders.

Wonder what the Consumer Sentiment Index has to say about this proclamation? Let’s find out. Well, to no one’s surprise, the University of Michigan Consumer Sentiment Index Current Conditions Component beats market expectation of 115 by posting a 115.8, beating-out a previous reading of 115.5. This number serves as the preliminary and more impactful number of the Michigan Consumer Sentiment Index; so, it takes precedence and serves as the final number. The University of Michigan released the Michigan Current Conditions Report on Friday, January 17, 2020.

Consumer sentiment is sky high. Consumers have money to spend, so they go shopping in droves. If this is correct, business inventory should be struggling to keep up with the high demand that consumer spending is putting on business inventories. As a result of this, business inventories should be running low because businesses continue to run out of supplies as soon as they stock-up with inventory. So, if it’s true that the U.S. economy continues to demonstrate healthy growth and expansion, our low inventory scenario should be the case. Now, let’s find out if this is the case by reviewing the Month-over-Month business report for November.  Ok, here we go!

The Business Inventory Report for November beat market expectation of -0.1%, posting a -0.2% reading, beating-out the previous month’s reading of 0.1%. Wow! This is further proof that the U.S. economy has indeed picked up the pace in growth. The Business Inventories Report measures changes in the amount of unsold goods held by manufactures, wholesalers, and retailers. Therefore, a high reading indicates a lack of consumer demand for goods, and a low reading indicates an increase in consumer demand for goods.

In regards to the U.S. economy and the USD, a higher than expected reading should be perceived as negative for the U.S. economy and bearish for the USD, while a lower than expected reading should be perceived as positive for the U.S. economy and bullish for the USD. Therefore, the fact that the current Business Inventories Report beat expectation, we can say, with a high degree of confidence, that the US economy has gone into overdrive. This is another reason why the stock market has been doing so well. There you have it. The U.S. Census Bureau released the Business Inventory Report on Thursday, January 16, 2020 at 10 AM, New York Time.

Consumers have more money to spend, but where do they get all this money from? Yep, you said it; their jobs. So, we will now talk about the current Initial Jobless Claims. The Initial Jobless Claims Report measures changes in the total number of individuals filing for unemployment insurance for the first time in the past week. It serves as the earliest U.S. economic indicator, although its market impact varies from week to week.

The Department of Labor Initial Jobless Claims Report beats market expectation of 216K by posting a reading of 204 thousand, beating-out the previous week’s reading of 214 thousand. We can now see why consumers possessed so much disposable cash; Why? They have jobs. A higher than expected reading of the Initial Jobless Claims Report should be perceived as negative for the U.S. economy and bearish for the USD, while a lower than expected reading should be perceived as positive for the U.S. economy and bullish for the USD. The Department of Labor released the Initial Jobless Claims Report on Thursday, January 16, 2020 at 8:30 AM, New York Time.

Consumers now have jobs that gives them money to spend. So, if consumers have jobs and money, then they will be buying homes. Therefore, the Housing Starts Report should be able to reflect this fact. Let’s take a look at the new Housing Starts Report to see if consumers spending is going toward the building of new homes.

The Housing Starts Report for December beats market expectation of 1.375 Million by posting a 1.608 Million, beating-out last month’s reading of 1.375 Million new construction. Housing Starts measures changes in the total annualized number of new residential building that began construction in the reported month. It serves as a leading indicator reflecting the state of the U.S. economy. New homeowners usually purchase homes from a previous homeowner, but some home buyers choose to buy newly constructed homes or choose to have a new home designed and built for them. Therefore, the new Housing Starts Report shows the number of new homes currently being built. And why does this matter? Housing Starts data indicates the demand for newly build homes. Therefore, a strong Housing Start measurement indicates high demand for newly build homes, a strong housing sector and a strong U.S. economy. This further confirms that the U.S. economy has indeed expanded in December.

A higher than expected Housing Starts reading should be perceived as positive for the U.S. economy and bullish for the USD, while a lower than expected reading should be perceived as negative for the U.S. economy and bearish for the USD. The U.S. Census Bureau released the Housing Starts Report on Friday, January 17, 2020 at 8:30 AM, New York Time.

Based on the macroeconomic data presented above, the U.S. economy still continues to experience healthy growth. So, as a EUR/USD Forex trader, we can see that the USD reigns supreme over all currencies, so betting against it will be ill-advised.

US-China Phase One Trade Deal Signed, Now What’s Next to Inject Some Life into Eurozone Currency?

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Disclosure

The Mstardom Finance trading team currently trades the EUR/USD currency pair, utilizing long, short, and hedging strategies. 

Disclaimer

Information in this video, and in our articles published on Mstardom.com, may contain forward-looking statements, which could involve high risks and uncertainties. Markets and instruments profiled in our videos and in our published articles, are for informational purposes only and should never be taken as professional investment advice or recommendations to buy or sell in these assets. You should do your own in-depth research before making any investment decisions. Mstardom Finance does not guarantee that the information presented in our videos and articles is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is timely in nature. Investing in Open Markets involves a high degree of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

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