Daily Market Analysis & Trading Ideas

[Analytix]

ISM data may boost chances for hawkish NFP outcome



FX price action on late Monday showed that investors still favor dollar despite recent gains, and the story of China defaults weighs on demand for risk. Among the G10 currencies, NZD has the largest growth potential due to anticipated RBNZ rate hike tomorrow and possible hint of another hike this year. Lagarde's comments are unlikely to move the EUR, and the British pound seems to have become less responsive to the risks related to the UK divorce from the EU.

Yesterday, the US currency retreated on almost all fronts with the equities’ downside providing surprisingly little relief. The source of additional pressure on USD was OPEC+ decision to hike output by 400K b/d which was considered as a bullish outcome as recent energy shortages worldwide stirred market rumors of supply failing to catch up with demand growth. The rapid rise in oil prices was also perceived as a reflection of dwindling world reserves, to which OPEC+ could respond with a more aggressive increase in production and it might look perfectly reasonable move. The decision to modestly boost production pushed prices higher by more than 2% on Monday, limiting demand for risk assets somewhat amid heightened expectations that central banks will rush to tighten policy as commodity markets, especially energy, indicate more cost-push inflation is ahead.

Demand for safe haven assets was also boosted by news that another Chinese developer, Fantasia, was unable to pay $205M on its bonds on Monday. The news was a warning that China's real estate problems could extend beyond Evergrande. China's high yield bond yields posted its biggest jump since 2013, indicating strong investor outflows. In general, the junk debt market in China has become, in a sense, a barometer of the situation associated with defaults, and now correlates with the demand for risk in foreign markets. This also implies that the risks of default by large companies in China is a highly supportive factor for the US currency. Monday USD decline proved to be short-lived with the index rebounding back to 94 handle on Tuesday with a short-term uptrend line staying largely intact:

In terms of eco data, non-mfg. PMI from ISM could revive bullish USD momentum, as a positive reading will boost chances of a strong Payrolls report, which in turn will weigh on Fed confidence in its exit from stimulus programs. It is worth paying special attention to the hiring component of this index, since a large share of employment in the US works in the services sector, and dynamics of the sub-index may shed light on possible direction of surprise of the NFP report on Friday.



Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Analytix]

Inflation threat worries US bonds

American markets closed with gains, but US equity futures today are on a slippery slope largely due to the pressure from rising Treasury yields. The yield on 10-year securities broke through the local high of 1.55%, signaling the resumption of the rally after a brief respite:

After a short period since the Fed September meeting, during which the Treasury yields has been rising thanks to the rise of real interest rate (as seen from the recovery of TIPS yield), inflation premium apparently becomes again the main component of rally in yields. Yesterday, the 5-year average expected inflation premium jumped 6 bps. - from 2.53 to 2.59%. Since the start of 2021, intraday increments of the bonds’ inflation premium were stronger only in 5% of cases:

Inflation expectations keep rising in the wake of rising energy prices, which set the stage for higher costs for firms, which may eventually be forced to transfer this pressure onto consumers.
After a short break, the dollar went on the offensive again. Higher US rates stimulate the inflow of foreign investors into fixed income instruments. Before the Fed meeting in November, in which the policymakers are expected to clarify the prospects for tightening next year, the current policy of the Central Bank is likely to be slightly stimulating, so bonds in the US are depreciating, sometimes taking short pauses. It follows from this that there is a high risk that risk assets will experience difficulties with growth due to the trend in bonds. As alternative investment instruments, they offer ever higher returns.

Yesterday's data showed that the US economy is doing well, the service sector PMI from ISM more than met expectations, showing an increase from 61.7 to 61.9 points (59.9 points forecast). Creation of new firms have slowed down, labor costs have risen, and labor shortages persist. Costs remained generally elevated, indicating the risk of higher consumer prices in the coming months, i.e. inflation. The corresponding sub-index rose from 75.4 to 77.5 points and is at its highest since 2008.

The biggest event of economic calendar today is ADP report which is the first part of US labor data in the NFP week. A gain of 428K is expected, but the number could easily beat forecasts given positive preliminary employment data and retreat of Covid in the US in early September, which, as recent history shows, creates the risk of underestimating the positive dynamics of hiring. In case of positive news, the dollar index will likely be poised to target resistance at the previous local high (level 94.50).

Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.

High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Analytix]

Bond markets discount weak NFP, focus is back on inflation


Weaker-than-expected September NFP report put a drag on broad USD rally. On Monday greenback index struggles to resume advance, hovering not far from 94 points, forming a breakout “triangle” pattern. At the same time, the price continues to consolidate near September 2020 highs:

US job growth totaled 194,000 in September, with more than 11 million job openings in the same month. The labor supply deficit continues to restrain employment growth, which should translate into even greater wage inflation. By the way, the growth of wages again exceeded the forecast and amounted to 0.6% instead of the expected 0.4%.

Earlier NFIB reports showed that the share of small businesses with open vacancies and experiencing shortage of skilled workers is at record levels:

The fact that the US government cut the number of jobs at once by 123K in September helped markets to discount the weak Payrolls figure.

The Treasuries market also ignored weak job growth as, after a short-term decline, bond yields began to rise again, signaling that the market was quickly discounting fears of a slowdown in economic activity due to the weak NFP print and again focused on inflation risks:

Chances that the Fed will announce QE tapering in November remain high, supporting the dollar and keeping bonds under pressure.

It is difficult to expect inflation expectations to stabilize or turn into decline when there is a strong uptrend in the oil market and fears of possible deficits are not abating. On Monday, the WTI price tested $ 81.50, the highest since October 2014. Gas storage facilities in Europe are 76% full, with a 5-year average of 91% before the heating season. China is trying to ramp up coal production, but heavy rains in Shanxi are forcing some mines to suspend production.

Considering the recent rally, it was expected to see the growth of long positions of speculators in the COT data. The long position in WTI increased by 18K lots to 316K lots, but if you look at the July high of 426K lots, there is still room to build up long positions. On Brent, the growth in the net-long position of speculators turned out to be more modest - only 3.7K lots.

Also on the agenda of this week are OPEC and IEA forecasts for the growth of oil consumption. Investors will analyze growth forecasts, taking into account the demand that has arisen due to the transition from expensive gas to oil, because the stabilization and decline in gas prices could strongly affect the forced demand for oil and hit the prospects for a rally.




Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.

High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Analytix]

UK employment report opens the door for Pound’s short-term gains



The pound battles for a place under the sun after release of the latest jobs report. British firms increased hiring at a record pace in August, shortly before the end of the government's furlough scheme. Favorable dynamics of the key macroeconomic parameter for the Bank of England's policy is likely to bring the date of the first rate hike closer, which the Central Bank may hint at the upcoming meeting.

The number of employees in UK companies rose by 207K, while unemployment fell 0.1% to 4.5%. The dynamics of employment may allow the Bank of England to be the first among the large Central Banks to raise the interest rate. This is also indicated by inflation, which is now almost double the target level of 2%. The growth rate of wages, which makes a significant contribution to inflation, has slowed down, but remains at an elevated level (6.0%).

The furlough scheme has been discontinued on September 30 and the key question is how negatively this will affect the level of unemployment. At least 1 million Britons have benefited from the program.

The BoE is rumored to make its first tightening step on December meeting. By this time, the pound has a good opportunity to rise on corresponding expectations especially against EUR. However, in regards to performance against USD, the key piece of the puzzle is the tightening path of the Fed, which will likely be clarified at the key November meeting of the Fed.

Considering GBPUSD technical setup, we can note a positive short-term disposition for the pound and slightly downbeat in the medium term. The chart below shows how the pair bounced from the lower bound of medium-term downtrend (1.345), currently trying to extend its short-term uptrend, with the help of which buyers intend to gain a foothold above 1.36

As part of the current short-term uptrend, there is a chance to make a short movement to the upper border of the channel with a potential spike to 1.37 area. Positive expectations for the upcoming meeting of the Central Bank should contribute to this.

From a technical point of view, this can also be facilitated by the movement of the dollar to the lower border of the current pattern - a triangle

Nevertheless, the figure in the dollar indicates high chances of an upside breakout, so one should closely monitor the prospect of the dollar moving above the previous resistance zone - 94.50. From the steep slope of the lower bound of the pattern, we can see some solid bullish pressure of USD buyers which supports the outlook for trend resumption.



Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.

High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Analytix]

Stagflation may be soon become the biggest worry for financial markets


Worries about so-called stagflation - a combination of low growth and high inflation - continue to mount among asset managers, the latest BofA report shows. In the last survey, the share of respondents who believe that both inflation and economic growth will be above the long-term trend for some time has decreased, but the share of managers who believe that the global economy will face a combination of high inflation and weak growth rates rose:

In financial markets, these fears are mainly reflected by the flight from longer maturity bonds, which are more sensitive to changes in inflation rates. If, until recently, the United States stood out among the leading economies with this trend, which incidentally supported the dollar, then the rate of sell-off has recently increased as well in the sovereign debt markets of the Eurozone, Great Britain, Switzerland, Japan and other countries with low interest rates.

The source of inflation remains the slow adjustment of supply, coupled with fiscally stimulated demand, as evidenced by the decline in delivery times index and the jump in the indexes of input prices and new orders in the global PMI:

Signs of bond sell-offs extended this week, and the upcoming meetings of the Bank of Canada, the ECB and the Bank of Japan will be viewed in the context of central banks' responses to inflation challenges. Rate hikes are not on the agenda, however, central banks' expectations regarding persistence of inflation and its forecast for the next year are likely to cause volatility in EUR, JPY, CAD.

The ECB seems to be reluctant to make or communicate about any possible tweaks in policy in the near-term. As chief economist Lane recently stated, despite rising price pressures, service sector price increases and wage growth remain weak, so raising rates could simply disrupt economic growth. Christine Lagarde has about the same opinion. Despite this, the bond market prices in one 10bp rate hike by the end of 2022. If the ECB insists on a cautious approach, these expectations are subject to correction, which will have a negative impact on the euro.

At its meeting on Wednesday, the Bank of Canada may announce a new cut in the quantitative easing program. The September employment dynamics allowed the latter to reach the pre-crisis level. The forecast for further cuts in stimulus by the central bank will have an impact on the CAD, however, given the monthly weakening of inflation in August and September, the central bank may prefer to refrain from hawkish comments. The net effect for CAD can also be negative with the following technical scenario for the USDCAD pair:

In turn, the Bank of Japan is even further away from the inflation target. In September, it hit only 0.2% YoY and is far from the 2% target. Therefore, the Bank of Japan has the least incentive to do anything in the policy. Considering the technical picture of USDJPY, it can be noted that the correction, after reaching the maximums since 2018 (level 114.50), may come to an end, as the price approached the lower border of the trend channel, from where support is expected:

Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.

High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Analytix]

Bearish signals mount for the European currency



The S&P 500 hit a fresh high on Monday, despite the growing chances of policy tightening by the Fed as investors focus on surprises in US corporate reports and sliding Treasury yields. Tesla's capitalization has exceeded $ 1trillion on the back of the news that car-sharing company Hertz ordered 100K Teslas. Despite incriminating investigations, Facebook has delighted investors with solid user growth and an intention to buy back $50 billion in shares. The momentum may push the US market to a new high, as earnings surprises from Twitter, Alphabet and Microsoft, which are reporting today, are likely to be positive as well.

As of October 20, of the 500 companies included in the S&P 500, 67 companies reported. Earnings of 86.6% of them beat expectations, 11.9% disappointed, indicating potential presence of bullish bias in the US stock market.

In the FX, the dollar is trying to develop an upward movement after breakout of a two-week bearish channel. In the last few sessions, the dollar index consolidated close to the upper border of the channel, in addition, three tests of the support zone 93.50 lacked meaningful continuation:

A potential surge of optimism amid positive reporting by large US companies this week may nevertheless exert short-term pressure on the dollar.

The weakening of the euro amid a price shock in the commodity market will likely force the ECB to revise its short-term inflation forecast, which may become known at tomorrow's meeting. If the ECB does not clarify the timing of the curtailment of the main asset purchase program, in combination with the economic forecast, this could be a blow to the real yields of European bonds and lead to an additional Euro downside.

Yesterday's data showed that Germany's leading indicator of economic activity, the IFO index, declined for the fourth straight month in October

The indices of both the current situation and expectations deteriorated, which increases the risk of stagnation of the German economy in the fourth quarter. Given the slowdown in the bloc's leading economy, the ECB's bias to cut stimulus measures or report upcoming cuts may be small right now, which is definitely a bearish Euro signal.

Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.



High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Analytix]

Key USD bearish threshold remains intact

Eurozone inflation was materially higher than the consensus forecast in October, making it slightly difficult for the ECB to maintain a huge stimulus bias in the monetary policy. The data on Friday showed that the broad rise in prices in October amounted to 4.1% (forecast 3.7%). At the same time, core inflation, which doesn’t include fuel and other goods with volatile prices, also beat the forecast - 2.1% versus the expected 1.7%:

At a meeting on Thursday, the ECB gave a signal that officials are closely monitoring inflation, but still expect it to decay sooner than markets fear. Some officials, though, see a second round of inflationary effects, primarily caused by wage inflation, so they do not exclude that consumer inflation will remain above the target level of the ECB in 2023. In general, we can say that the European Central Bank signaled a reduction in asset purchases in December, which caused widening spreads between sovereign bonds of Eurozone countries and a positive reaction from the euro. The spread between the 10-year bonds of Italy and Germany jumped by 7 bp on Thursday as market participants became more confident that the ECB's artificial support for "second tier" EU sovereign bonds will soon begin to decline. Today this spread has added another 10 bp:

In addition to the factor of December tapering, Eurozone sovereign bonds are declining in price due to the risks of an early start of the ECB tightening cycle. Although Lagarde said it was important not to overreact to temporary supply shocks, the effects of which would soon wear off, market participants shifted their expectations of the ECB's first rate hike to October 2022, i.e. even earlier than previously expected. It is clear that the opinion of market participants regarding persistence of inflation is now very different from the opinion of the ECB, and if inflation risks do not materialize, battered bond prices may quickly recover, since the inflation premium will ultimately unwind. The euro will definitely benefit from this trend.

Today, the data is due on US inflation and consumer sentiment from U. Michigan for October, key for the Fed's policy. A higher-than-expected rate of inflation, measured in terms of percentage growth of consumer spending, could mean a more aggressive pace of phasing out the Fed's asset purchases, which it is likely to announce in November. Next week, market participants will focus on the October Non-Farm Payrolls report, which will additionally help to improve expectations about the Fed’s policy move in the near future. Risks for the dollar are biased towards further growth next week as this week's correction appears to have been run out of steam. If DXY manages to close above 93.50 mark, this should be another strong technical signal for recovery next week, since a key bullish trendline will remain intact:

Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.

High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Analytix]

USD may extend the rally on the FOMC hawkish surprise


The dollar rose sharply on Friday, breaking through a corrective channel and bouncing off a key bullish support line (scenario discussed on Friday):

One of the key drivers of the rally was US inflation report. Despite the fact that consumer inflation (Core PCE) rose by 3.6%, falling short of the forecast of 3.7%, the market was more concerned about dynamics of the labor cost index in the US - in the third quarter it rose by 1.3% against the forecast of 0.9%. Recall that both the Fed and the ECB have repeatedly said that a "second round" of inflationary effects may occur if inflation seeps into wages, since in this case further growth in consumer demand and accompanying inflation can be expected. By the way, the annual growth rate of labor costs in the United States is now at its highest level in more than 15 years:

Today, the US Dollar index is consolidating around 94 points ahead of the release of two important news this week - the decisions of the Fed and the NFP. After the latest update on labor costs data, chances are high that the Fed will announce the start of QE rollback on Wednesday. Further dollar upside will undoubtedly depend on pace of bond purchase tapering. The closest target for USD index is the previous resistance at 94.50-94.75, which the dollar is likely to test on Wednesday before the Fed decision.
It should also be noted that along with increased chances of imminent tightening of the Fed's policy, long-dated US Treasury bonds are beginning to price in future slowdown in inflation, possibly pricing in Fed policy error (i.e., that Fed starts to tighten too early, harming growth and inflation). This translates into decline of the spread between 10 and 2-year US Treasury bond yields:

Nevertheless, USD retains its short-term bullish prospects.


Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.

High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Analytix]

Dollar consolidates after a pullback, traders eye US CPI report


High inflation and central banks’ reaction function to it continue to remain the major trading themes this week. On Wednesday, bond and FX USD markets will zero in on October US CPI report, where an upside surprise (inflation of 6% or higher), may add bearish pressure to Treasury market and lift greenback. Today, Richard Clarida will comment economic expansion and possibly express some views on current and near-term Fed policy, which will be scrutinized for hints about what the Fed will do after it completes QE next year. Rising oil prices favor resumption of USD and commodity currencies rally.

The relatively strong US labor market report for October helped greenback to flirt again with the highs of this year (94.50) on Friday, however conclusive breakout didn’t follow. It’s worth to note that November looks to be a better month for an upside breakout as seasonal headwinds increase for USD in December.

Nevertheless, greenback may breach the key resistance area as early as this week. The move may be triggered with the release of US October CPI report. Consumer Prices are expected to rise by 5.8-5.9% YoY in October, however preliminary data such as PMI in services and manufacturing, data from the US labor market showed that input prices, wages rose in October at a faster pace compared to September. It means that slow supply adjustment to demand continues and likely exerted more pressure on consumer prices.

The Atlanta Fed, which calculates its own estimate of US GDP growth based on high-frequency data, has updated its forecast and assumes growth at solid 8.5% in the fourth quarter:

With such prospects for GDP growth and the Fed's shift to asset purchase tapering, the fixed income market, especially Treasuries with longer maturity could be hit again. Earlier, some Fed officials said about the risks of a slow unwinding of QE and comments of today's centrist Clarida in a similar vein may further put pressure on short-term bonds and support the dollar.

The technical picture for the dollar index (DXY) indicates high breakout potential:

OPEC's decision to gradually increase production helped oil prices rise a little more. Bullish momentum is gas prices in Europe is also gaining attention given the impact of this trend on oil prices. The upward movement of oil heats up the topic of the impact of commodity inflation on consumer prices and, accordingly, pressure on central banks to move to a tougher policy.



Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.

High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Analytix]

Technical pullback looms in EURUSD


The dollar rises a new high of this year (96.50 on DXY) amid Biden’s decision to extend the term of the current Fed Chairman Powell. Considering that Powell's main rival, Lael Brainard, is a champion of soft credit policy, the news had a positive effect on the dollar and a negative effect on the US sovereign debt, since fixed income definitely priced in the risk of the Fed changing its monetary policy to softer one under the new head so there was a retreat of those expectations. The yield on 2-year bonds increased by 6 bp, on 5-year bonds - by 7 bp. (new highs since the beginning of the pandemic), 10-year bond yields also rose, but local high of 1.70% hasn’t been challenged yet. Yields at the near end of the yield curve are predominantly responsive to news related to the Fed, while those at the far end to the news related to inflation.

In the Eurozone, consumer confidence fell by 2 points to -6.8 points in November. Historically, a value of -5 points characterizes a fairly high level of consumer confidence, so we can talk about a possible tipping point in the positive trend:

Covid and new lockdowns in the EU are hitting consumer confidence, and market participants are likely to revise their forecasts for consumer spending growth this quarter. Accordingly, this will affect expectations related to when the ECB will phase out PEPP and start raising rates. Angela Merkel said yesterday that the current wave of covid is worse than previous ones and urged local authorities to impose tougher social restrictions. There is a risk that the rest of the EU will also be forced to return some of the restrictions by Christmas, despite the fact that their vaccination rates is higher than in Germany and Austria. Naturally, the current forecasts for the growth of the Eurozone are under threat, and the Euro is looking towards new lows.

Nevertheless, from a technical point of view, EURUSD is overbought, the RSI on the daily timeframe has dropped to 26 points. The last time such an intensity of decline was observed in February 2020 and a pullback is probably not far off:

Consolidation prevails in the foreign exchange market today. The wait-and-see attitude may remain in place until the release of minutes of the Fed's November meeting on Wednesday. The US economic calendar includes Markit reports and the Richmond Fed survey.



Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.

High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Analytix]

Too early to bet on rebound


On Monday, risk assets rebounded as reports over the weekend suggest that the bout of covid hysteria on Friday could be an overreaction. Air travel halts have apparently eased off over the weekend, while the WHO and South African researchers alleviated concerns with a statement that there are no evidences yet that the new covid strain is more dangerous than dominating delta strain. In this regard, the flow of negative news for the market, mainly related to new shocks in air transportation, is likely to slow down this week.

Nevertheless, it is too early to say that correction is over - the lack of reliable data on the new strain should keep risk appetite largely subdued this week. According to the WHO, it will take from several days to several weeks to understand whether a new variant of the virus is more aggressive and resistant to vaccines.

With regard to contagiousness, there is a reason for concern. South Africa saw a jump in reported cases of covid in November before the news about the new strain hit the wires, which may be indirect evidence that the virus is more easily transmitted from person to person:

New updates on covid, important for the markets, will appear today - Britain will gather ministers of the Ministry of Health of the G7 countries to discuss options for response, in the evening Biden will deliver a message. It should help to understand the readiness of the governments to take painful preventive decisions.

A barometer of expectations for a tightening of the Fed's policy - long-term rates, halved declines on Monday thanks to the relief rally. The yield on 10-year Treasury bonds rose 7 basis points to 1.54%, and the yield on 2-year bonds also gained about the same amount. European markets rose cautiously – gains do not exceed 1%, and it’s difficult to expect more. The optimism of buyers in the oil market is now mainly based on rumors that OPEC will postpone the planned hike in production by 400K barrels in January, but if we see more reports more countries opted to close borders, a larger drop cannot be avoided.

Noteworthy reports this week are Germany's CPI in November (slated for release today), ADP and NFP US November report. In addition, the first two days of the week are full of speeches from Fed representatives (Powell, Williams). Markets are unlikely to be able to react in cold blood to the comments which may touch on the topic of the new strain, as this will call into question the Fed's intentions to accelerate the phasing out of stimulus measures (QE). In general, one way or another, trading in the market this week should be reduced to reactions to news associated with covid, and should be characterized by more or less homogeneous risk-off/risk-on.

There is a risk of further decline in EURUSD, since Europe’s bullish rate expectations are under pressure due to recent trend to reinstate lockdowns, besides, it is geographically closer to South Africa and, if the new virus is indeed infectious, a new wave may hit it earlier than the United States. Considering the dollar index (DXY), the pullback after strong growth sets the stage for a further rally towards 97.70, where the next key resistance may reside:

Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.

High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Analytix]

EURUSD looks vulnerable on dampening covid risk, aggressive Fed



Markets continue to price in a positive view on how the story with the new covid strain will unfold. In addition to the positive statements of influential health officials in leading countries such as the US, it is also useful to look at the daily cases data in the country where the strain was originally identified in order to see the dynamics of the spread of a strain that is supposedly “resistant to existing vaccines”. We are talking about South Africa, and the curve of daily cases there looks like this:

Actually, it is clear that after the surge in the incidence against the background of news about the new strain, there wasn’t any concerning development of the growth trend. The incidence rates remain high, but keep within 15 thousand cases per day.

Zerohedge provides the following interesting chart that shows how the markets are quickly discounting the threat posed by the new strain. This is the ratio of the recovery stocks index to the index of stocks that rallied during social restraints (the so-called stay at home stocks). In about two weeks, the decline in this ratio was fully recouped:

The VIX opened with a gap down more than four points in premarket, indicating strong bullish momentum confirmed in the US index futures which are currently gaining strength.

Given the growing speculation that the Fed will step up with withdrawal of stimulus in the near future due to strong pro-inflationary factors (mainly wage pressures), the balance of risks for EURUSD is increasingly shifting downward. The differential of rates on short-term bonds of the US and Germany has turned to growth again and is approaching a local recent maximum and is likely to break through it soon. The growing differential factor is the main bearish driver for EURUSD now. From a technical point of view, the vulnerable level is the lower border of the trend channel - the level 1.111, the rebound from the previous point of contact with the channel has already been completed, the risks associated with the new strain are mitigated, and the increasingly aggressive position of the Fed against the background of the moderate position of the ECB will most likely continue to provide downward pressure on the pair:

Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Analytix]

EURUSD May Continue Decline Ahead of ECB And Fed Meetings Next Week



Unfavorable widening of the short-term rate differential has recently acted as the main driver of EURUSD weakness. The pressure on the common currency also stems from increasing carry-trade activity of European investors corresponding with fading pandemic risk. The ECB should deliver an unlikely hawkish surprise at the meeting next week to tip the balance in favor of a strong euro. So far, Euro does not look overbought despite the strong downtrend and fresh lows are possible.

The news about the omicron initially supported the euro due to the flight of carry-trade European investors from risk assets abroad. Now the bears are gradually withdrawing the bet that the omicron risks will materialize, the yield hunting is gaining momentum again, along with this, the downward risks for EURUSD starts to mount again.

There is one more factor of the Euro shorts and it is the recent revision of growth forecasts for the Eurozone due to restrictions in Germany and other European countries. Markets may be pricing European assets with a higher likelihood of restrictions than in the US due to higher covid risks, which ensures upward pressure in yield differential. Recently, the correlation of the latter with the EURUSD has risen, which suggests that sovereign bond capital flows may be playing the main role in driving Euro downtrend against the US currency.

Due to many dovish risks priced in the Euro the sensitivity of EURUSD to the statements of the ECB may turn out to be asymmetric - statements that the bank will not rush to raise rates will be largely ignored, but an unexpected signal that the ECB is going to catch up with the Fed in plans to curtail stimulus measures, on the contrary, may create the ground for a EURUSD reversal. Next week, meetings of both central banks will take place and a surprise is expected from the Fed in the direction of a greater tightening of policy, at the same time, there are no such expectations for the ECB meeting. Consequently, the markets will most likely now begin to factor in an even greater widening of the bond yield differential following the meetings, therefore, despite attempts to gain a foothold above 1.13, EURUSD is vulnerable to further decline in the first half of next week.

From a technical point of view, the latest COT data shows that the aggregate net short position of the Euro against the G10 currencies is still far from extreme values and there is room to sell. In turn, the technical analysis for the pair indicates the persistence of strong short-term resistance at 1.137 (two previous peaks on November 18 and 30), potential selling target is the lower border of the current downtrend (1.113 mark):

Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Analytix]

Fed’s bullish surprise this week may pave the way for new highs in USD



This week is full of event risks thanks to a number of central banks in developed and EM economies holding their policy meetings, suggesting a high chance of significant market shifts in FX. Key among them is undoubtedly the FOMC policy decision. Broad-based greenback rally on Monday suggests expectations are building up that the Fed will most likely capitulate due to persistently high inflation and accelerate bond purchase tapering. There is a growing risk of policy lag this week between the Fed and central banks with low propensity to hike rates (CHF, EUR) which may have profound FX implications. It will also be interesting to look at the updated Fed dot plot as the shifts in FOMC outlook regarding rates are often strong catalysts of USD trends (recall USD bullish reversal in June). Assuming that the dot plot will indicate the median forecast of two rate hikes (instead of one), money market rates in the US will be forced to adjust upward again, which could pull the dollar along with it.

It is also worth noting an interesting technical trend continuation pattern, which is formed by the dollar index - the "triangle":

If we assume that the uptrend will continue, the nearest target where resistance can be expected is the level of 97.70.

As for the Bank of England meeting this week, the risk of disappointment is high. In November markets priced in a December rate hike due to inflation threat similar to the one in the US, however closer to the meeting the chances of such an outcome began to dwindle. Particularly discouraging was the PM Johnson's warning that Britain could face a wave of new cases due to the spread of Omicron in the country while the head of the Ministry of Health said that there is no certainty that the government will keep schools open. It is clear that the central bank cannot but take these concerns into account.

If the British Central Bank disappoints this week, postponing the rate hike until better times, in combination with the aggressive Fed, this could mean that the GBPUSD fall may accelerate and bears may start to target the next important support at 1.30. Buyers weren't particularly resisting when GBPUSD tested the lower bound of the main downtrend, the 1.3150-1.32 zone, last week:

At the ECB meeting, rather moderate expectations are formed: the regulator seems adamant in its view that inflation peaks by the end of 2021 (albeit higher than expected) and starts to decline in 2022. Accordingly, there is no outlook about early rate hikes. It is worth noting that the market as a whole agrees with the ECB in its opinion on inflation: Bloomberg experts polled in December also that suggest inflation might have peaked in the Eurozone that’s why there is no need to rush for the ECB.

Accordingly, the fate of EURUSD is likely to be decided by the Fed this week, since no surprises are expected from the European Central Bank. EURUSD looks set to resume downtrend targeting 1.10:

Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Analytix]

Surging US inflation expectations suggest the Fed may act big in December


The Fed’s decision time looms and markets appear to be increasingly sensitive to inflation reports from the US, the predictive power of which, regarding the policy of the Central Bank, is increasing. Suffice it to recall that the moderate CPI report for November (no surprise on the side of acceleration) disappointed buyers of the dollar, causing a decline in the US currency index from 96.40 to 96.20 and a positive reaction of stock indexes. At the same time, yesterday's NY Fed report on consumer expectations raised the stakes on the hawkish decision again, disappointing equity markets. The report showed that inflationary expectations of US households rose to shockingly high levels in November. Household inflation expectations for the year ahead jumped even higher, to 6%:

Inflation expectations affect future actual inflation, so it is important for the Fed to keep them under control - not to let them fall or soar too much. As we can see, so far it is not quite successful and the risk of an abrupt shift in the Fed’s policy grows. The report made a negative impression on markets, the major US stock indexes closed in the red yesterday, index futures again tend to decline today due to concerns about tougher restrictive measures in the monetary policy.

Employment growth in the UK fell short of expectations, amounting to only 149K instead of 228K. At the same time, wage growth beat forecasts - 4.9% YoY against 4.6%. The British economy, it seems, is facing the same problem in its recovery as, for example, the United States - a labor shortage due to the effect of hysteresis (long “idle” of the labor force). Consequently, firms are now spending more on wages, which poses the risk of higher end prices in the future, a strong if not key argument in favor of the Bank of England's unexpected rate hike this week. However, fragility of the recovery, increased risk of a surge in new infections due to the new strain speaks in favor of maintaining the stimulus bias in monetary policy, at least for several more months. In addition, considering employment in dynamics, it can be seen that the momentum in employment seems to be dying out, and with it, the pressure in wages may begin to subside:

The pound, as we can see, wavers in anticipation of the BoE decision, GBPUSD is consolidating near the 1.32 mark, bracing for an aggressive Fed maneuver on Wednesday. Against the euro, the pound is building up its advantage in a moderate way, the pair is “moving” in the channel with a downward slope, the focus is on a repeated test towards the lower parallel to the 0.8450 area, and then potentially to the 0.8350 area:

The rapid decline to the 0.8350 area is likely to require the Bank of England to unanimously vote for a rate hike and play down the risks of the Omicron strain on activity and, in addition, hint at a rate hike in February. Nevertheless, the base scenario remains the option where the Central Bank does not touch the rate at the next meeting, but hints at a February increase. In this case, the decline in EURGBP is likely to be moderate.


Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Analytix]

Strong US PPI rise calls for decisive Fed response



The cable rallied against the dollar on Wednesday thanks to release of a bullish inflation report which showed that the rise in consumer prices accelerated in November, beating forecasts. The headline inflation rate reached 4% against the forecast of 3.7%, while in the previous month inflation averaged to 3.4%. The BoE has a difficult choice: to agree to a greater inflation risk, leaving the policy soft to smooth out the risks of a new wave of a pandemic, or to raise the rate now by limiting the risk of inflation, but making the economy less resilient in the face of possible new restrictions, which the government seems to be mulling over. In any case, GBPUSD strengthened on the data release, which means that some market participants are betting on a hawkish outcome of the Bank of England meeting this week.

Release of US PPI report on Tuesday shows that inflation pressures rise in unabated fashion
despite the Fed assurance made earlier that the upside momentum should soon start to fade. The monthly growth in production prices exceeded the forecast and amounted to 0.8% against the forecast of 0.5%. At the same time, the core PPI rose almost double the forecast, and this is no less important, because this inflation gauge excludes goods whose prices are subject to strong monthly fluctuations. In annual terms, PPI shows extremely strong growth, of course, some can be attributed to the low base last year, but what is important to note, after some short stabilization in August-September, the indicator turned to growth again, which should probably worry the Fed, because in the end, this growth will seep into the consumer prices:

The data formed the basis for yesterday's rally in greenback index (DXY) to the level of 96.50, as now the perception of inflation threat by the Fed and its response, which we will learn about at today's meeting, is the key driver in FX.

Meanwhile, the dollar is trying to get out of the triangle pattern and resume the upward movement, anticipating a hawkish outcome of the Fed meeting:

It is possible that this is a trap, as it often happens, and the markets may be disappointed by the Fed's response to inflation challenges, which will cause dollar sell-off, as recent USD gains were fueled by expectations that the Fed will pull decisively ahead in the tightening race today. However, taking into account the latest data on inflation, namely, inflation expectations of US households, which jumped to 6% and PPI, which growth is beating expectations, the Fed does not have much room for maneuver. Inflation in the US needs to be contained, the question is how decisive the answer should be.




Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Analytix]

US fiscal stimulus risk spoils Christmas rally

A new week has come and it must be admitted that “contrarian” New Year rally, despite the storm of decisions by central banks last week, did not take place. Last Friday's pessimism seeped into investor sentiment on Monday, European markets and US futures slumped. Investors were upset by the news that a large spending package in the United States, the so-called Build Back Better may not be approved (its approval has hitherto been taken for granted), as Democrat Senator Manchin unexpectedly objected, saying that he could vote against. The politician's stance really should be taken seriously: Goldman Sachs removed the fiscal stimulus from its baseline scenario, and also lowered its forecast for US economic growth in the first quarter from 3% to 2% in the first quarter, from 3.5% to 3.0% in the second quarter and from 3.0% up 2.75% in the third quarter.

Along with the sell-off of risk assets, the yield of Treasuries, both near and long term, continues to slide at a moderate pace. It is noteworthy that the dollar was growing on Friday amid correction of equities, and today it is declining along with them, especially losing ground against the European currency. At the same time, EM holds well against the dollar, USDRUB does not yield to risk-off trading near the opening. This all looks very much like investor bets are dropping on the Fed starting to raise rates shortly after the end of the QE and this is likely due to the fact that the FOMC was considering that fiscal policy would pick up the stimulus baton in the form of the aforementioned spending package, when monetary incentives begin to gradually recede into the background. Now a situation is potentially emerging where this will not happen, which implies a risk for the forecast of monetary tightening. In other words, the market may perceive now that the failure to approve the spending package will force the Fed to postpone the rate hike. Goldman adheres to the same position, already doubting its previous forecast that the first increase in the federal funds rate will occur in March 2022. Against this background, currencies, where central banks are actively trying to suppress inflation by tightening policy, look attractive.

In addition to the increased attention to the prospects for fiscal stimulus in the US, this week it is worth taking a closer look at such reports as consumer confidence in Germany from GfK, consumer confidence from U. Michigan, as well as profits from Chinese industrial enterprises. By the way, speaking of the Chinese economy, the story is gaining momentum that in the cycle of tightening-easing regulation, increasing-decreasing leverage in the economy by the Chinese government, a favorable phase is beginning, as forecasts for the growth of the Chinese economy are declining (only 3.3% YoY this quarter) as well as the growing risks of external demand, which to a large extent influences economic activity of China. A few weeks ago, instructions were issued to the banking sector to increase lending to small and medium-sized enterprises, companies engaged in the renewable energy sector and developers, and to increase the issuance of mortgages. In addition, PBOC recently lowered the reserve ratio for banks (the main policy instrument of the Central Bank). With the increase in the number of stimulus measures, it can be expected that the stimulating effect will seep into external markets, and in addition, this should stimulate the demand for risk locally, including for securities of distressed developers.

 

[andengireng]

https://charts.mql5.com/31/32/gbpusd-h1-fullerton-markets-inc.png

GBPUSD today as we see here, the price is bullish, so it is good for you if you open buy position, you can open buy position when the price touch middle area at 1.33597 with potential target up to resistance area 1.34298

 

[Analytix]

FOMC December minutes: no time to wait

The minutes of the last Fed meeting was a surprise for investors, despite the fact that Powell at the press conference clearly outlined the course for policy tightening. Inflation in the US is on the rise and the covid is expected to only fuel this trend, so the central bank needs decisive action to maintain price stability. Minutes showed that officials discussed an increase in the pace of curtailment of asset purchases, as well as a transition to a rate-hiking cycle earlier than expected, while the document said that this opinion is shared by “many” of the participants, that is, the consensus tends to increasing the pace reduction of monetary support for the economy. In other words, at the next meeting, the Fed goal will most likely be to communicate the plans about a rate hike already in the first quarter of 2022. Previously, this scenario was not a baseline, although it figured in the forecasts of large US investment banks.
Equity markets, as expected, reacted negatively to the news; one of the important barometers of investor risk preferences, the crypto market, also tanked right after the release of the Minutes, which clearly illustrates what was the key driver behind crypto rally in 2021. Treasury yields also reacted accordingly, pushing through the previous local high (1.7%), although it should be noted that the scenario of Fed becoming more decisive in its response to inflation has been priced in since the beginning of the year, when 10Y Treasury yields began to rally sharply from the 1.5% pivot point:

The dollar reacted positively to the news, but somewhat trimmed gains today. Speculations about what the next step will be for the Fed is unambiguously favoring the strengthening of the dollar, since other central banks, in particular those with low-yielding currencies, cannot offer a compelling counter-argument to the Fed’s stance. Nevertheless, it should be noted that, for example, the German sovereign debt market is trying to price in that the ECB will follow the suit of the Fed - the yield on 10-year bonds opened with a gap up and is trading in the area of -0.04% at the time of writing. This is a highest level for two and a half years.
With increasing attention from central banks, including leading ones, to the outlook for inflation, today's German inflation report could spark a strong market reaction, especially if the forecast that price pressures have peaked in the main Eurozone economy is confirmed. Annual inflation in December is projected at 5.1%, anything below is likely to weaken the euro against the dollar, setting the stage for a breakout below 1.13:

Some support for EURUSD is provided by risk-off in the market - European investors are trimming their investments in foreign risk assets and the outflows are offering support to the common currency. When the fall in risk assets stabilizes, one can expect that the selling pressure on EURUSD will subside too
The upside potential for the dollar is expected to become more evident today after the release of ISM's services PMI report. Two sub-indices will be of primary importance - incoming prices and hiring. The second indicator will allow you to estimate what kind of surprise to expect from the NFP report. The Omicron wave in the US could have held back hiring and a weak NFP print may well be attributed to the continuing imbalance between strong labor demand and a shortage of labor supply. The dollar is likely to focus on wage growth rather than job creation, as this is now a key proxy for labor market imbalances and a possible Fed’s aggressive shift in stance.

Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Analytix]

Post-Fed Minutes market rush eases, NFP in focus


The rush in the markets after the Fed minutes has somewhat subsided and investors are turning their eye on the release of US labor market data today. According to the consensus forecast, the economy added 400K jobs while wages rose 0.4% on a monthly basis. The ADP report released on Wednesday, which more than doubled the forecast (807K job growth), laid the groundwork for expectations of a positive surprise today. However, the ISM Service PMI was disappointing yesterday, where the headline reading fell short of expectations, but remained strong (62 points), the hiring sub-index was also below forecasts (54.9 points versus 56.5 expectations). The sub-index of prices paid remained near multi-year highs (82.5 points). The key parameter in terms of the implications for the Fed's policy is wage growth, since the Central Bank is now concerned about inflation, and wage inflation is seen as one of the precursors of the growth of consumer prices. The lack of job growth relative to the forecast and strong growth in wages will most likely not change the expectations regarding the March Fed rate hike, which odds are now estimated by the market at about 66%:

The chances of a rate hike almost doubled after the release of minutes from the Fed's December meeting.

A weak Payrolls reading, combined with sluggish wage growth, could trigger a situation where early signs of a slowdown in the economy coincide with a hawkish shift in Fed rhetoric, which could worsen growth expectations and put risk assets at risk. Weak labor data have a positive effect on risk assets when there are expectations of slowdown and recession and expectations that the Fed is on an easing path. Now the situation is different, so the market will interpret the effect of a negative report on the labor market as it is, and not vice versa.

In favor of the strong Payrolls report is the important fact that the slowdown in activity due to Omicron began in the second half of December, while the collection of statistics for the NFP ended on December 18th.

The German inflation report surprised yesterday, providing significant support to the euro. Expectations that inflation will recede were not confirmed. The headline inflation rate was 5.3% YoY against the forecast of 5.1%, the spread between short US and German bonds retreated from the recent local high, given the fact that the outlook for accelerating inflation in both countries have somewhat leveled off:

Also, the European currency was supported by the data for the EU bloc: core inflation beat forecasts rising to 2.6% YOY, retail sales grew much faster than expected - 7.8% against the forecast of 5.6%.


Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 72% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.