Pivot Trading Journal

Germany: Bremen matters

The final countdown has started. Four more days and the time has come. Another make-it-or-break-it election on 26 May. The fate of the German coalition depends on it. The fate of Europe, too. No, we're not talking about the European elections but state elections in Bremen

The final countdown
Bremen? What is all this about, you might ask. Bremen is the smallest state in Germany and one of the poorest, with the highest unemployment rate. A port city with a long and proud history, in which the Social Democrats, the SPD, have ruled in various coalitions almost continuously. And now, the red fortress is about to fall for the first time since World War II. Why should anyone outside of Bremen care? Because if the SPD suffers another severe defeat, it could have consequences in Berlin.

Tight race
In Bremen, the mayor election is a neck-and-neck race between the SPD and the CDU, with the very latest opinion polls seeing a lead for the CDU. If Bremen changes its political colour, there is a high risk that the SPD will withdraw from the federal government. Remember, the SPD only very hesitantly joined the federal government last year and has pledged a mid-term review of the government’s work after the summer. An upset in Bremen, combined with a potential loss in the European elections, would embolden those in the party who have argued against joining the government.

Symbolic loss
Losing Bremen would be more symbolic than losing in the European elections. But add to this the frequent speculation in the German media about Chancellor Angela Merkel stepping down before the 2021 elections to pave the way for a successor, and the ingredients for a stormy political summer in Germany are all in place. Obviously, neither a weakened CDU nor a defeated SPD have an interest in imminent snap elections, fearing further electoral losses. At the same time, pulling the plug on the government- either for the SPD to go into opposition or for the CDU to reposition itself and prepare Merkel's successor- should not be excluded.

When watching election results on Sunday, don't just focus on the European elections, keep a close eye on Bremen, too. The noise that these state elections produce could make their famous town musicians proud.

Source: ING’s Economic and Financial Analysis

I have to improve my trade management.
Both were far away from my cut out point.

S100 is still achievable target - I think ...

Global Times editor Hu Xijin tweets Americans are about to have a nervous breakdown

Digging in
Hu Xijin, ediitor from the China Global Times, has been getting more and more attention as a sounding board from the Chinese perspective.

He is tweeting:


Source: ForexLive

Today's calendar.


14:30
CAD
Core Retail Sales m/m

20:00
USD
FOMC Meeting Minutes

EURCAD update ...

AUDNZD

PSYCHO-CYBERNETICS,
A New Way to Get More Living Out of Life
By Maxwell Maltz

Tranquilizers Which Bring Peace of Mind

Tranquilizers work because they greatly reduce, or eliminate, our own response to disturbing stimuli. Tranquilizers do not change the environment. The disturbing stimuli are still there. We are still able to recognize them intellectually, but we do not respond to them emotionally.

Remember in the chapter on “happiness,” we said that our own feelings do not depend upon externals, but upon our own attitudes, reactions and responses? Tranquilizers offer convincing evidence of this fact. In substance they reduce or tone down our over-response to negative feedback.

The US won’t be able to press China to submit, however it will force China to re-prioritize economic development. China has been focusing on improving social justice and fairness for some time. Now to hit back at the US, China will see another upsurge of overall development boom.

Green CAD news.

Is S100 still valid target? Yes it is. I think so.

FOMC Meeting Minutes at 20:00!

China foreign minister: Some in US trying to hinder China's development process

China's Foreign Minister Wang Yi

China's foreign minister Wang Yi is on the wires regarding the US China trade dispute:

1. some people in the US trying to hinder China's development process
2. Pressure on Huawei is pure economic bullying
3. No unequal agreement will pass
4. China's door is always open to US for equal negotiations
5. talks failed as US wasn't willing to resolve China's reasonable concerns

Source: ForexLive

I closed it.
FOMC Meeting Minutes on the corner.

The Energy Information Administration's (EIA) Crude Oil Inventories measures the weekly change in the number of barrels of commercial crude oil held by US firms. The level of inventories influences the price of petroleum products, which can have an impact on inflation.

If the increase in crude inventories is more than expected, it implies weaker demand and is bearish for crude prices. The same can be said if a decline in inventories is less than expected.
If the increase in crude is less than expected, it implies greater demand and is bullish for crude prices. The same can be said if a decline in inventories is more than expected.

PSYCHO-CYBERNETICS,
A New Way to Get More Living Out of Life
By Maxwell Maltz

Your First Aid Kit

Practice Exercise: Create in your imagination a vivid mental picture of yourself sitting quietly, composed, unmoved, letting your telephone ring, as outlined earlier in this chapter. Then, in your daily activities “carry over” the same peaceful, composed, unmoved attitude by remembering this mental picture. Say to yourself, “I am letting the telephone ring” whenever you are tempted to “obey” or respond to some fear-bell or anxiety-bell. Next, use your imagination to practice non-response in various sort of situations: See yourself sitting quietly and unmoved while an associate rants and raves. See yourself going through your daily tasks one by one, calmly, composed, unhurried, in spite of the pressures of a busy day. See yourself maintaining the same constant, stable course, in spite of the various “hurry-bells” and “pressure-bells” in your environment. See yourself in various situations which have in the past upset you—only now you remain “set,” settled, poised—by not responding.

Today's calendar.


EUR!
Tomorrow, Saturday and Sunday - European Parliamentary Elections.

AUDNZD update ...

How EU Elections Could Impact Euro

EU Elections And Their Potential Impact

Keep an eye on euro because there could be big moves in the currency over the next few days. European elections kick off on Thursday and the rising power of a nationalist Euro-skeptic movement has many investors worried that populist parties could make strong headway. Elections will be held in 28 countries across the European Union for seats in the 751-member European Parliament. This Parliament will make crucial decisions for the Union over the next 5 years that will include border control, national autonomy and Britain’s relationship with the EU. This is the world’s second-largest democratic vote, after India’s general election and while turnout in past years has tended to be low, the races are tight and we could see greater-than-usual participation.

By Sunday, we should know whether anti-EU parties gained enough support to block rather than just slow or impede legislative business. The results could also have a significant impact on upcoming elections in Italy. Rome believes it should be allowed to let its fiscal deficit rise above the commission’s limit and if anti-EU parties see strong support, they could feel empowered to take a more confrontational approach.

While it is widely believed that anti-EU sentiment will be negative for the euro, populism hasn’t necessarily been negative for currencies. Just take a look at U.S. and Australia – protectionist policies helped rather than hurt the greenback while the Australian dollar surged following last weekend’s surprise victory by Prime Minister Morrison. Populism is spreading and it hasn’t been crushing for any of these currencies.

Does that mean the euro will rise if there’s strong support for Euro-skeptic or anti-European groups? It's hard to say but what is clear is that we can’t assume that their victory will be negative for the currency. The election results will come slowly, so breakouts could be limited until Sunday when there could be a gap open. Thursday’s Eurozone PMI reports are important but investors have discounted weaker Eurozone growth, so softer numbers may not have much impact on the currency. However if the data improves like economists anticipate, the deeply oversold currency could be vulnerable to a short squeeze or relief rally. Technically, EUR/USD is in a downtrend and that won’t change until the pair closes firmly above 1.1250.

Meanwhile, the selling pressure remains strong for other currencies. Sterling fell to fresh 6-month lows against the greenback following softer inflation data and a backlash toward Prime Minister May’s withdrawal offer. As reported by our colleague Boris Schlossberg:

USD/CAD reversed higher despite stronger-than-expected retail sales, which confirmed that the Canadian economy is easily outperforming its peers. After seeing record job growth last month, consumer spending ex autos rose by the largest amount since January 2017. Unfortunately, the Canadian dollar succumbed to risk aversion and a nearly 3% slide in oil prices as U.S. crude supply fell for the second week in a row. The Australian and New Zealand dollars were also under pressure despite stronger New Zealand retail sales. New Zealand’s trade balance was scheduled for release Wednesday night and after the prior month’s unexpectedly large increase, the risk is to the downside for this report.

Source: ForexLive

However if the data improves like economists anticipate ...
No, it didn't happen ...