Craig Erlam

Craig Erlam

Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.

Oil Rally Driven by Saudi and Russian Cuts Continues Amid Economic Considerations

Oil Rally Driven by Saudi and Russian Cuts Continues Amid Economic Considerations

Craig Erlam Craig Erlam 19.09.2023 14:04
Saudi and Russian cuts continue to drive the price higher Could a cooler economy push it back? Momentum indicators continue to support the rally This oil rally has been relentless and I’m not seeing any signs of exhaustion yet. A 15% rally in the space of around three weeks to trade at levels not seen since last November and not far from triple figures, it’s been an impressive move and there could be more to come. Saudi Arabia and Russia have been very effective in squeezing a tight market that much further to create a situation in which oil prices are trading well above the zone they’ve been stuck around for much of the year. You would imagine there’ll be a limit to their ambitions, not to mention their desire to continue the additional voluntary cuts but that may well depend on the demand side over the coming months. They’re committed until the end of the year but if demand softens as those additional cuts expire then the price could cool somewhat. The group has been heavily criticized over the last year for what were labelled unjustified cuts but for the bulk of that time, the price hasn’t risen as much as thought. Is this a sign of cuts going a step too far or will demand weaken to the point of prices pulling back again?   No lack of momentum in the rally The key to this chart after such a powerful rally is the momentum indicators at the bottom and neither the stochastic nor MACD are showing signs of divergence.   BCOUSD Daily Source – OANDA on Trading View That doesn’t mean the price can’t fall or correct lower but it does suggest the rally is healthy, even after such a large move. If the rally does continue, it will be interesting to see whether divergences form on approach to $100. Psychology can often play a role in the markets and that could be the case again. This is also where the price failed last October and November barring a couple of brief moments above. $98 may also be an area of interest having been so at times in the past, although at that point I expect all of the talk will be about whether it can breach triple figures once more, and if so, where next?
Australian Employment Surprises with 64,900 New Jobs in August, Boosting AUD, While AUDUSD Charts Show Potential for Double Bottom

Australian Employment Surprises with 64,900 New Jobs in August, Boosting AUD, While AUDUSD Charts Show Potential for Double Bottom

Craig Erlam Craig Erlam 15.09.2023 08:41
Australian employment increased by 64,900 in August (2,800 full-time, 62,100 part-time) Participation hits 67%, a new high Is a double bottom forming in AUDUSD?   The Australian jobs data on Thursday was surprisingly good, with the number of new jobs created vastly exceeding expectations, although the bulk were in part-time roles. Participation also unexpectedly improved, hitting 67% for the first time which will be very welcomed by the central bank as it, and every other one around the world, seeks to defeat inflation while achieving a soft landing. That job will be much easier if the tightness in the labour market is eased through more people joining it, rather than people losing their jobs as higher interest rates bite. Despite these promising figures, markets are still positioning for another possible rate hike from the RBA over the coming meetings under the new leadership of Governor Michele Bullock. One more hike between now and the middle of next year is around 40% priced in which is arguably quite high under the circumstances.   RBA Interest Rate Probability Source – Refinitiv Eikon     Aussie buoyed by jobs figures The technical picture in AUDUSD is really quite interesting. On the face of it, it’s been range-bound for the last month and therefore doesn’t look particularly exciting. But two things stand out. One is the double top that formed between early June and August. The sell-off that followed was quite swift, falling around 230 pips over the following couple of weeks before the consolidation started. But with the double top itself being around 300 pips from the peak to the neckline, is there theoretically more to come? I’m sceptical considering how long it’s been trending sideways but it’s possible.   AUDUSD Daily Source – OANDA on Trading View     The second is the potential double bottom that’s now formed during that consolidation period. With the neckline around 0.6520, a break above here could be quite a bullish move and, in theory, offer a possible price projection based on the size of the pattern. Obviously, there are no guarantees but a break of the neckline would make things interesting.    
ECB Raises Rates by 25 Basis Points but Hints It May Be the Last in the Cycle

ECB Raises Rates by 25 Basis Points but Hints It May Be the Last in the Cycle

Craig Erlam Craig Erlam 15.09.2023 08:37
ECB raises rates another 25 basis points but signals it may be the last New forecasts show stubborn inflation but weak growth Close above 55/89-day SMA band suggests breakout still valid   The ECB raised interest rates again today, probably for the last time in the tightening cycle although it did leave itself some flexibility on that front. This certainly falls into the dovish hike category, with the ECB acknowledging inflation remains too high but also that growth is suffering. What’s more, it clearly indicated that it believes the current stance should be tight enough to return inflation to target, given time. It would appear the decision wasn’t unanimous though, with only a solid majority backing the decision. Again, we shouldn’t be surprised at this stage of the cycle that, considering the uncertain outlook, not everyone is in agreement on their assessment of the situation. The euro slipped after the decision and following comments from President Christine Lagarde, as did euro area yields. Further progress on inflation over the coming months, as the ECB anticipates, should enable pauses over the coming meetings, at which point the focus will gradually shift to the timing of the first rate cut.   Does the dovish hike change the outlook for the pair? Not necessarily. While markets were leaning towards a pause today, it was always expected to be either a dovish hike or a hawkish hold.   EURGBP Daily Source – OANDA on Trading View   The difference that would mean for the euro probably isn’t enormously different as the terminal rate would highly likely have been the same. But does the chart confirm this or not? It’s hard to say whether it confirms it but what I would say is the decline we’ve seen in the pair doesn’t necessarily change it in a bearish way. The pair had already broken 55/89-day simple moving average band and closed above it so, in my opinion, this corrective move does invalidate that. The fib levels for the September lows to highs may offer clues on whether the decline we’ve seen today and yesterday is corrective or just bearish.        
Strong Employment Surge in Australia: Is a Reversal in AUDUSD Imminent?

Strong Employment Surge in Australia: Is a Reversal in AUDUSD Imminent?

Craig Erlam Craig Erlam 14.09.2023 15:11
Australian employment increased by 64,900 in August (2,800 full-time, 62,100 part-time) Participation hits 67%, a new high Is a double bottom forming in AUDUSD? The Australian jobs data on Thursday was surprisingly good, with the number of new jobs created vastly exceeding expectations, although the bulk were in part-time roles. Participation also unexpectedly improved, hitting 67% for the first time which will be very welcomed by the central bank as it, and every other one around the world, seeks to defeat inflation while achieving a soft landing. That job will be much easier if the tightness in the labour market is eased through more people joining it, rather than people losing their jobs at higher interest rates bite. Despite these promising figures, markets are still positioning for another possible rate hike from the RBA over the coming meetings under the new leadership of Governor Michele Bullock. One more hike between now and the middle of next year is around 40% priced in which is arguably quite high under the circumstances. RBA Interest Rate Probability Source – Refinitiv Eikon   The second is the potential double bottom that’s now formed during that consolidation period. With the neckline around 0.6520, a break above here could be quite a bullish move and, in theory, offer a possible price projection based on the size of the pattern. Obviously, there are no guarantees but a break of the neckline would make things interesting.
New Zealand Dollar's Bearish Trend Wanes as Global Growth Outlook Improves

New Zealand Dollar's Bearish Trend Wanes as Global Growth Outlook Improves

Craig Erlam Craig Erlam 14.09.2023 10:19
RBNZ expects a contraction in Q3 and Q4, while Treasury sees growth continuing into Q3 (avoiding a recession) Monthly resistance hovers at 0.6015, September 1st high, while support resides at 0.5741, November 3rd low New Zealand overnight swap index price in a peak rate of 5.598% by the February 28th meeting The New Zealand dollar’s bearish trend that has firmly been in place since the middle of the summer appears to be running out of steam. All the China growth concerns and policy-driven recession might be fully priced in.  Price action on the daily chart shows bearish momentum accelerated after the break of key trendline support and the daily close below the 50-day SMA.  Initial support has emerged from the 0.5850 level, but for that to hold investors will need to become more optimistic with the Chinese growth outlook.         Despite an interest rate differential that will remain clearly in the dollar’s favor, the pair appears poised to consolidate between 0.5850 and 0.6000.  A break below that range will see sellers establish a more bearish bias, potentially eyeing the 0.5740 region. It is around that area that a bullish Gartley pattern could form.  Point D is targeted by both the 78.6% Fibonacci retracement of the X to A leg and the 161.8% Fibonacci expansion level of the B to C leg. If the global growth outlook stabilizes here, the kiwi could attempt to recapture the 0.6015 level.  The New Zealand economy could have a modest recovery in the fourth quarter, anticipating improving Chinese economic data, a peak in the US dollar put in place, and as commodity currencies outperform in the winter. RBNZ expects a contraction in Q3 and Q4, while Treasury sees growth continuing into Q3 (avoiding a recession) Monthly resistance hovers at 0.6015, September 1st high, while support resides at 0.5741, November 3rd low New Zealand overnight swap index price in a peak rate of 5.598% by the February 28th meeting   The New Zealand dollar’s bearish trend that has firmly been in place since the middle of the summer appears to be running out of steam. All the China growth concerns and policy-driven recession might be fully priced in.  Price action on the daily chart shows bearish momentum accelerated after the break of key trendline support and the daily close below the 50-day SMA.  Initial support has emerged from the 0.5850 level, but for that to hold investors will need to become more optimistic with the Chinese growth outlook.     Despite an interest rate differential that will remain clearly in the dollar’s favor, the pair appears poised to consolidate between 0.5850 and 0.6000.  A break below that range will see sellers establish a more bearish bias, potentially eyeing the 0.5740 region. It is around that area that a bullish Gartley pattern could form.  Point D is targeted by both the 78.6% Fibonacci retracement of the X to A leg and the 161.8% Fibonacci expansion level of the B to C leg. If the global growth outlook stabilizes here, the kiwi could attempt to recapture the 0.6015 level.  The New Zealand economy could have a modest recovery in the fourth quarter, anticipating improving Chinese economic data, a peak in the US dollar put in place, and as commodity currencies outperform in the winter.   Upcoming Data Friday’s August BusinessNZ Manufacturing PMI reading is expected to remain in contraction territory for a sixth straight month.  Business conditions will start to show signs of improving, but manufacturers will likely remain cautious.  China’s activity data should provide some evidence the economy is stabilizing.  Industrial production and retail sales should show modest improvements.    
The ECB to Hike, But Euro Rally May Be Short-Lived as Dollar Strength Persists

US CPI Data Indicates Hawkish Stance Remains, Dollar Strengthens

Craig Erlam Craig Erlam 14.09.2023 10:11
September still a hold, while swap contracts suggest odds a 49.3% chance of a hike at the November 1st FOMC meeting Supercore inflation rate rises most since March Two-year Treasury drifts lower by 2.1 bps to 4.999% Inflation is not easing enough for the Fed to abandon their hawkish stance.  The upside surprises might be small, but that should keep the hawks in control.  Core inflation heated up for the first time in six months and that should have markets leaning towards one more Fed rate hike in November.  Inflation will likely still be running well above the Fed’s 2% target for the rest of the year, but a weaker consumer supports the case the disinflation process will remain intact. ​   US CPI   Source: BLS This was a complicated inflation report. Everyone knew that gas prices were sharply higher and that the housing market is still seeing elevated prices(house prices are now rising, while rents have eased).  The headline inflation read showed CPI increased 0.6% in August from a month ago, which was the highest reading since June 2022.  The annual inflation reading rose from 3.2% to 3.7%, a tick above expectations.   Market reaction A weakening US consumer will continue as they battle surging gasoline prices, stubborn shelter prices, and increasing medical costs. US stocks are wavering as this inflation report will keep the Fed pushing the ‘higher for longer’ narrative. If Wall Street remains convinced that the labor market is cooling, that will do the trick for getting inflation closer to the Fed’s target. The US dollar and Treasury yields were initially higher given the core CPI delivered an upside surprise, but once traders digested the entire report, the bond market reversed course. Core inflation rose 0.3%, which was due to the rounding of 0.278% which somehow makes it a lot less hot.  Rent makes up 40% of Core PCE and prices posted the smallest gain since the end of 2021. Expectations are elevated for the consumer to be significantly weaker and that we could have a soft holiday spending season, which should support the disinflation process.   Dollar  5-minute Chart The dollar is wavering as Wall Street wasn’t able to come up with any definitive stances on when the Fed will signal the all clear that policy is restrictive enough.  The dollar’s strength is most notably against the Japanese yen, while the euro will likely react to Thursday’s ECB rate decision.  Following yesterday’s Reuters report that the ECB will have inflation projections above 3%, markets appear to be leaning towards a rate hike.          
Canadian Dollar Falters as USD/CAD Tests Key Support Amidst Rising Oil Prices and Economic Data

Canadian Dollar Falters as USD/CAD Tests Key Support Amidst Rising Oil Prices and Economic Data

Craig Erlam Craig Erlam 13.09.2023 09:02
Canadian dollar rally runs out of steam ahead of US inflation report Brent crude rallies over $91, highest levels since November BOC rate hike expectations hover around 34.3% for October 25th  meeting/ 17.5% for the December 6th meeting.       The USD/CAD (a daily chart of which is shown) as of Tuesday (9/12/2023) has shown bullish correctiveness is accelerating on the break of key trendline support that has been since July 31st.  If a bearish bias remains in place, downward momentum could target the lower boundaries of the Bollinger Bands range at 1.3486, followed by the 200-day SMA at 1.3466.  To the upside, the 1.3650 region will provide key resistance. Today’s price action saw the US dollar soften after a small business survey optimism drifted lower and the Canadian currency benefitted from surging oil prices.  The key for loonie will likely stem with what happens with both the US inflation and retail sales reports.  If investors grow confident that the US economy is weakening and that inflation pressures remain subdued, the dollar may tumble even further.  If US economic resilience drives rate hike expectations for the Fed to hike again in November, the dollar might have a path towards the 1.37000 level. NFIB The US small business sentiment optimism index showed inflation remains a top business problem.  The National Federation of Independent Business index fell from 91.9 to 91.3, which was also lower than the expected decline of 91.5.  The outlook is not inspiring for small business as NFIB economist noted, “With small business owners’ views about future sales growth and business conditions discouraging, owners want to hire and make money now from strong consumer spending.” The report highlighted that the net percent of owners raising average selling prices rose 2 points from July to a net 27% (seasonally adjusted). 23% of participants viewed inflation as their single most important problem in operating their business, which was higher than last month’s 21%. Small businesses have a rough road ahead of them and that should get worse if commodity prices remain elevated and as credit conditions tighten. Oil Crude prices are rallying after the OPEC monthly report showed the oil market is going to be a lot tighter than initially thought.  Heading into the OPEC+ decision at the end of last month, expectations were for the global market to have a supply deficit of just over 1 million barrels a day. ​ After the OPEC+ it was generally viewed that the supply deficit would be around twice that amount.  OPEC is now anticipating a 3.3 million barrels a day deficit over the next 3 months, which is one million more bpd of a deficit than some energy traders were anticipating. The oil market could get even tighter if the data starts to improve for Europe or China, which means we could easily see Brent crude make a run towards the $100 a barrel level.    
Crude Oil Prices Continue to Rise Amid Tight Supply and Economic Uncertainty

Downside Risks Loom Over Global Economy as Oil Market Remains in Deficit

Craig Erlam Craig Erlam 13.09.2023 09:00
Downside risks to the global economy remain Output restrictions from Saudi Arabia and Russia push oil market further into deficit Oil accelerates higher after brief consolidation   Oil prices are creeping higher again on Tuesday, with Brent trading around $92 despite there being a mixed view on the economic outlook. As we heard from the European Commission yesterday, growth in the euro area is going to be relatively minor, with Germany struggling to avoid another recession. The UK has shown a lot more resilience than anticipated but still faces recession risks and marginal growth at best. People are feeling a little more optimistic about the US, with last week’s services PMI backing that up, but even here there are significant downside risks. While China is a big unknown with efforts to stimulate the economy being targeted and far from guaranteed to boost growth substantially. That said, one thing we’re guaranteed is supply to continue to be restricted until the end of the year at least following the recent announcement by Saudi Arabia and Russia. That has created a deficit in the market that is supporting oil prices, with OPEC forecasting that the shortfall will run at around three million barrels per day, accelerating the drawdown in inventories.   Momentum appears to be picking up again The OPEC report gave oil prices an extra boost and that appears to have lifted the momentum indicators with it which could be a bullish signal if it continues.   BCOUSD Daily OANDA on Trading View     There’s no obvious resistance ahead of $100 which isn’t to say it will necessarily reach this level, or quickly, but last time it traded around here it was quite volatile between $90 and $100. An interesting level over the last year or so was $93.50 so it will be interesting to see how it trades around here again. The late-August and early-September rally was quite powerful and if we have now seen a break higher after consolidation, it will also be interesting to see whether that momentum continues or it faces more resistance.    
Bank of Japan Governor Hints at Rate Hike: A Closer Look

Bank of Japan Governor Hints at Rate Hike: A Closer Look

Craig Erlam Craig Erlam 12.09.2023 10:46
Ueda hints that BoJ could raise rates How seriously should we take the comments amid intervention speculation? Divergences suggest traders becoming nervous A relatively quiet start to the week from an economic data perspective but we’re still seeing some decent moves in the markets this morning, particularly in the Japanese yen. The yen has jumped this morning on the back of comments from Bank of Japan Governor, Kazuo Ueda, who hinted that interest rates may not be negative for much longer. Ueda reportedly claimed that if they become confident that prices and wages will keep rising sustainably, which could be as early as year-end, then an end to negative interest rates could be one option on the table. The focus for so long has been on the central bank’s yield curve control policy but perhaps these comments suggest abandoning that will not be the first major move. Of course, at a time of so much speculation around currency intervention and a rapidly weakening yen, you have to wonder what the real motivation behind these comments is and how seriously to take them. Only time will tell but for now, they’ve managed to give the yen a boost.     Are we seeing signs of nerves? The dollar has run into resistance repeatedly over the last week around 148 against the yen which suggests there’s some apprehension around these levels.   Source – OANDA on Trading View   We are very much in the territory where interventions have occurred in the past which may explain those nerves and Ueda’s comments gave traders further reason to fear action that could significantly boost the yen. You can see from the MACD in particular that recent rallies have not been matched by increasing momentum and that divergence may support the idea of nerves creeping in. A move below 145 would be interesting, with the area around here having been notable support recently and resistance back in late June and early July. It’s also around where the Ministry of Finance intervened last September. Traders have not been fully deterred by verbal intervention in the past though and if we do see another move to the upside, it will be interesting to see whether it’s matched by momentum or a deepening divergence.    
Euro-dollar Support Tested Amidst Rate Concerns and Labor Strikes

German Inflation Holds Steady at 6.1% Amid Economic Weakness, ECB's Dilemma Looms

Craig Erlam Craig Erlam 11.09.2023 11:33
German inflation dips to 6.1% The data calendar is light on Friday and EUR/USD is trading at 1.0707 in Europe, up 0.09%. There are no tier-1 events out of the eurozone or the US, which means we can expect subdued movement from the euro for the remainder of the day. The euro is poised to record a losing week for an eighth straight time. The euro has plunged about 500 points during that time, as the US dollar thrives over concerns that the Fed may have to keep hiking in response to the resilient labour market. The currency continues to struggle at 3-month lows and there aren’t any encouraging signs that the downturn is about to change. The economic outlook in the eurozone remains weak. Recent eurozone numbers have been soft and Germany hasn’t resembled the locomotive which could always be trusted to lift the eurozone economy. German PMIs pointed to contraction in the services and manufacturing sectors in August, and today’s inflation report was a reminder that the largest economy in Europe is grappling with high inflation and weak growth. German CPI remained unchanged in August for a third straight month. On a yearly basis, CPI was confirmed at 6.1% y/y, down a notch from 6.2%, while core CPI remained unchanged at 5.5% y/y. Food and energy prices rose but there was a bit of good news as services inflation ticked lower to 5.1%, down from 5.2% in July. The ECB meets next week and it remains unclear what Lagarde & Co. will decide. Inflation, which is at 5.3%, remains much higher than the ECB target of 2%. The ECB wants to lower inflation but further rate increases could tip the weak economy into a recession. The markets have priced in a pause at the September meeting at around 70%, which means that a rate hike still remains on the table despite weak economic conditions.   EUR/USD Technical EUR/USD is testing resistance at 1.0716. Above, there is resistance at 1.0831 There is support at 1.0658 and 1.0593        
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BoE Hints at Balanced Debate for Next Meeting as Weakness Looms

Craig Erlam Craig Erlam 11.09.2023 11:27
BoE hints at balanced debate at the next meeting Employment survey points to further weakness GBPUSD nearing major support zone   A big couple of weeks are in store for the Bank of England and figures today may support the case for a more balanced debate on 21st September, as policymakers hinted this week. Inflation is by no means under control but it is falling fast and, if the BoE is to be believed, it is expected to fall markedly over the remainder of the year. If the MPC is going to be confident of inflation returning sustainably to 2%, the labor market will likely be key to it so there’ll likely be a much greater focus on it going forward. We’re already seeing some progress on this front but much more is likely needed. Today’s survey from KPMG and REC suggests more weakness is on the horizon. Permanent placements, availability, and salaries are all promising from a BoE perspective and may contribute to some lively debate in a couple of weeks. Of course, surveys alone won’t be enough to convince them. The UK jobs report next week could offer another helping hand and put the decision on the 21st much more in the balance. Markets are currently convinced that another hike is coming but that may change if unemployment ticks higher again and wages soften.   GBPUSD continues to slide toward key SMA band The pound has continued to fall this week, aided by the comments from the BoE and perhaps today’s survey.   GBPUSD Daily Source – OANDA on Trading View After breaking below the August lows earlier this week, shortly after running into resistance from the 55/89-day simple moving average band, the pair is continuing to edge closer to the 200/233-day SMA band. This falls around 1.23-1.24 and also coincides with the lows from the second quarter of this year. A break below here could be a very bearish development, especially if aided by a weaker UK jobs report or stronger US inflation release.  
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EUR/USD Hits Two-Month Low as Eurozone and German Services PMIs Contract, Inflation Expectations Steady

Craig Erlam Craig Erlam 06.09.2023 12:59
EUR/USD declines to two-month low Eurozone, Germany Services PMIs indicate contraction Eurozone inflation expectations steady at 3.4% The euro is back to its losing ways on Tuesday, after holding steady a day earlier. In the North American session, EUR/USD is trading at 1.0745, down 0.48%. The euro has faltered badly, losing about 2% since Wednesday and trading at its lowest level since July. Eurozone inflation expectations edge higher ECB Christine Lagarde has been talking about the importance of beating inflation but has shrugged when asked about interest rate policy. Lagarde spoke in Jackson Hole in late August and again on Monday in London, hammering home the messsage that inflation remains too high and the ECB will maintain high rates for as long as necessary in order to bring inflation back to the 2% target. Lagarde’s hawkish message in these speeches gave no hints as to whether the ECB would raise rates at its meeting on September 14th. Perhaps she is keeping the markets guessing, but another reason could be that the ECB hasn’t yet decided whether to hike or hold, with doves and hawks at the ECB strongly divided on the next move. Inflation remains high at 5.3% but another hike increases the risk of tipping the weak eurozone economy into a recession. Lagarde stressed on Monday that it was critical for the ECB to keep inflation expectations firmly anchored. I can only imagine her frustration today on reading the ECB monthly survey which indicated that inflation expectations for the next 12 months remained at 3.4% in July, and rose from 2.3% to 2.4% for three years ahead. Eurozone inflation has been moving in the right direction, but it appears that bringing it back down to target could take years.   Eurozone, German services PMI indicate contraction The services sector has helped carry the eurozone economy at a time when manufacturing continues to decline. However, the expansion in services came to a crashing halt in August as indicated in today’s PMIs for the eurozone and Germany. The 50.0 line separates contraction from expansion. The eurozone Services PMI for August was revised to 47.9 from a preliminary 48.3 points. This marked the first contraction in services activity this year and was the weakest reading since February 2021. The news wasn’t much better from Germany, the bloc’s largest economy. The Services PMI was confirmed at 47.3, the first contraction in eight months and the lowest level since November 2022. The euro has fallen about 0.50% in response to the weak services data, another painful reminder of the fragility of the eurozone economy.   EUR/USD Technical EUR/USD is testing support at 1.0716. Below, there is support at 1.0658 There is resistance at 1.0831 and 1.0889    
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WTI Crude Oil Technical Analysis: Short-Term Uptrend Faces Potential Pull-Back

Craig Erlam Craig Erlam 04.09.2023 11:04
Erased prior two weeks of consecutive losing streaks to trade a current year-to-date closing high of US$86.31 per barrel printed on last Friday, 1 September. Price actions are oscillating within short-term and medium-term uptrend phases. Hourly technical indicators (RSI & Bollinger Bands Bandwidth) are suggesting the risk of an imminent minor pull-back in price actions after last week’s strong upside reversal. Watch the key short-term pivotal resistance at US$87.25 per barrel. This is a follow-up analysis of our prior report, “WTI Oil Technical: Potential bullish reversal to resume medium-term uptrend” published on 21 August 2023. Click here for a recap. The price actions of West Texas Oil (a proxy of WTI crude oil futures) have managed to snap its prior two weeks of consecutive losing streak and cleared above the US$84.90 resistance as highlighted in our previous report. Also, it recorded a weekly gain of +7.35% for the week ended last Friday, 1 September.     Rallied to a 10-month high Fig 1:  West Texas Oil medium-term trend as of 4 Sep 2023 (Source: TradingView, click to enlarge chart) In addition, last Friday’s bullish momentum has allowed it to surpass its recent medium-term swing high of US$84.92 per barrel printed on 10 August 2023 and notched a current year-to-date closing high of US$86.31 on last Friday, also its highest level since 15 November 2022. In addition, current price actions have managed to trade above their respective 20, 50, and 200-day moving averages which indicates that West Texas Oil is oscillating within short-term and medium-term uptrend phases. Risk of an imminent minor pull-back in price actions Fig 2:  West Texas Oil minor short-term trend as of 4 Sep 2023 (Source: TradingView, click to enlarge chart)       However, the current up move of +10.7% from its 23 August 2023 low of US$78.03 to its 1 September 2023 high of US$86.36 seems overstretched which suggests that the current short-term uptrend phase is due for a potential minor pull-back/setback. Two key technical conditions are advocating this potential minor pull-back/setback scenario for West Texas Oil within its ongoing short to medium-term uptrend phases. Firstly, the hourly RSI oscillator has exploded to an extreme overbought condition of 84.53, its highest level since 2 April 2023. Secondly, the hourly Bollinger Bands Bandwidth (%) has increased to a two-week high which indicates a significant expansion in short-term volatility. An expansion in short-term volatility as indicated by the widening of the hourly Bollinger Bands Bandwidth (%) tends to lead to a normalization of such a heightened level of volatility in the next few trading sessions which supports an imminent potential minor pull-back/setback for price actions. Watch the US$87.25 key short-term pivotal resistance to maintain the potential minor pull-back/setback scenario for West Texas Oil towards the intermediate supports at US$84.90 and US$83.60. However, a clearance above US$87.25 invalidates the minor bearish tone for a continuation of the bullish impulsive up move sequence to see the next resistance at US$89.10 (Fibonacci retracement/extension cluster; 38.2% Fibonacci retracement of the major downtrend from 7 March 2022 high to 4 May 2023 low & 0.618 Fibonacci extension of the medium-term uptrend from 28 June 2023 low to 10 August 2023 high projected to 23 August 2023 low). Content
US August Jobs Report: NFP Beats Expectations, Dollar Rallies, EURUSD Faces Bearish Pressure

US August Jobs Report: NFP Beats Expectations, Dollar Rallies, EURUSD Faces Bearish Pressure

Craig Erlam Craig Erlam 04.09.2023 11:03
NFP 187,000 in August (169,000 expected, 157,000 previously) Average hourly earnings 0.2% (MoM), 4.3% (YoY)  EURUSD slips after making earlier gains   If you’re a Federal Reserve official, you’ll find it hard not to be very pleased with the way this week’s gone from a labor market data perspective. The JOLTS release at the start of the week was extremely encouraging as it continued a clear trend that brought the number of vacancies back to levels not seen in two years and not far from the pre-pandemic norm. Even without today’s report, that will have come as a huge relief for the Fed. When you consider today’s report on top of that, the week couldn’t have gone much better. The headline NFP may have been a little stronger than expected but it’s still below 200,000 and the beat was more than offset by last month’s revision. Then there’s average hourly earnings which fell back to 0.2%, a level far more consistent with the Fed’s goal if it can be repeated and again, below market expectations. The cherry on the cake is the participation beat and jump in unemployment, both of which point to more slack appearing in the labor market. To be clear, the Fed won’t get carried away with today’s report. It’s just one that needs to be repeated on a number of occasions but there’s plenty of cause for optimism in there. If there was any doubt that the Fed will pause in September, today’s report surely puts an end to that debate.   USD rallies after initially falling The initial move in the dollar made a lot of sense, it fell after the release as it was viewed as being beneficial for interest rates (less chance of a hike, earlier cut next year), but it didn’t take long to reverse course.   EURUSD Daily     The catalyst for that is irrelevant but from a technical perspective, it doesn’t look great for the pair. Rather than looking to test this week’s highs, it’s slipping back toward the lows and near the 200/233-day simple moving average band. A move below last Friday’s lows could be viewed as a very bearish move, particularly in light of today’s report.
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Global Economic Snapshot: Key Events and Indicators to Watch in Various Economies Next Week

Craig Erlam Craig Erlam 04.09.2023 11:01
US The month started with a bang with the US jobs report but the following week is looking a little more subdued, starting with the bank holiday on Monday. Economic data is largely made up of revisions and tier-three releases. The exceptions being the ISM services PMI on Wednesday and jobless claims on Thursday. That said, revised productivity and unit labor costs on Thursday will also attract attention given the Fed’s obsession with input cost, wages in particular. We’ll also hear from a variety of Fed policymakers including Susan Collins on Wednesday (Beige Book also released), Patrick Harker, John Williams, and Raphael Bostic on Thursday, and Bostic again on Friday.  Eurozone Next week is littered with tier-three events despite the large number of releases in that time. Final inflation, GDP and PMIs, regional retail sales figures and surveys, and trade figures make up the bulk of next week’s reports. Not inconsequential, per se, but not typically big market events unless the PMI and CPI reports bring massive revisions. We will hear from some ECB policymakers earlier in the week which will probably be the highlight, including Christine Lagarde, Fabio Panetta, Philip Lane, and Isabel Schnabel. UK  Next week offers very little on the data front but the Monetary Policy Report Hearing in front of the Treasury Select Committee on Wednesday is usually one to watch. While the committee’s views are typically quite polished by that point, the questioning is intense and can provide a more in-depth understanding of where the MPC stands on interest rates.  Russia Inflation in Russia is on the rise again and is expected to hit 5.1% on an annual basis in August, up from 4.3% in July. That is why the CBR has started raising rates aggressively again – raised to 12% from 8.5% on 15 August. Even so, the ruble is not performing well and isn’t too far from the August highs just before the superhike. We’ll hear from Deputy Governor Zabotkin on Tuesday, a few days before the CPI release. South Africa Further signs of disinflation in the PPI figures on Thursday will have been welcomed by the SARB but they won’t yet be declaring the job done despite the substantial progress to date. The focus next week will be on GDP figures on Tuesday, with 0.2% quarterly growth expected, and 1.3% annual. The whole economy PMI will be released earlier the same day. Turkey CPI inflation figures will be eyed next week, with annual price growth seen hitting 55.9%, up from 47.8% in July. The CBRT is all too aware of the risks, hence the surprisingly large rate hike – from 17.5% to 25% – last month. The currency rebounded strongly after the decision but it has been drifting lower since, falling back near the pre-meeting levels. There’s more work to be done. Switzerland Another relatively quiet week for the Swiss, with GDP on Monday – seen posting a modest 0.1% quarterly growth – and unemployment on Thursday, which is expected to remain unchanged. Neither is likely to sway the SNB when it comes to its next meeting on 21 September, with markets now favoring no change and a 30% chance of a 25 basis point hike. China Two key data to focus on for the coming week; the non-government compiled Caixin Services PMI for August out on Tuesday which is expected at 54, almost unchanged from July’s reading of 54.1. If it turns out as expected, it will mark the eighth consecutive month of expansion in China’s services sector which indicates resilience despite the recent spate of deflationary pressures and contagion risk from the fallout of major indebted property developers that failed to make timely coupon payments on their respective bonds obligations. Next up will be the balance of trade data for August on Thursday with export growth anticipated to decline at a slower pace of 10% y/y from -14.5% y/y recorded in July. Imports are expected to contract further by 11% y/y from -12.4% y/y in July.   Interestingly, several key leading economic data announced last week have indicated the recent doldrums in China will start to stabilize and potentially turn a corner. The NBS manufacturing PMI for August came in better than expected at 49.7 (consensus 49.4), and above July’s reading of 49.3 which makes it three consecutive months of improvement, albeit still in contraction.   In addition, two sub-components of August’s NBS manufacturing PMI; new orders and production are now in expansionary mode with both rising to hit their highest level since March 2023 at 50.2 and 51.9 respectively. Also, the Caixin manufacturing PMI for August has painted a more vibrant picture with a move back into expansion at 51 from 49.2 in July, and above the consensus of 49.3; its strongest pace of growth since February 2023. Hence, it seems that the current piecemeal fiscal stimulus measures have started to trickle down positively into China’s economy. India The services PMI for August will be released on Tuesday where the consensus is expecting a slight dip in expansion to 61 from 62.3 in July, its highest growth in over 13 years. Capping off the week will be August’s bank loan growth out on Friday. Australia The all-important RBA monetary policy decision will be released on Tuesday. A third consecutive month of no change in the policy cash rate is expected, at 4.1%, as the recently released monthly CPI indicator has slowed to 4.9% y/y from 5.4% y/y, its slowest pace of increase since February 2022 and below consensus of 5.2% y/y. Interestingly, the ASX 30-day interbank cash rate futures on the September 2023 contract have indicated a 14% chance of a 25-basis point cut on the cash rate to 3.85% for this coming Tuesday’s RBA meeting based on data as of 31 August 2023. That’s a slight increase in odds from a 12% chance of a 25-bps rate cut inferred a week ago. On Wednesday, Q2 GDP growth will be out where consensus is expecting it to come in at 1.7% y/y, a growth slowdown from 2.3% y/y recorded in Q1. To wrap up the week, the balance of trade for July will be out on Thursday where the consensus is expecting the trade surplus to narrow to A$10.5 billion from a three-month high of A$11.32 billion recorded in June.  New Zealand Two data to watch, Q2 terms of trade on Monday and the global dairy trade price index on Tuesday. Japan A quiet week ahead with the preliminary leading economic index out on Thursday and the finalized Q2 GDP to be released on Friday. The preliminary figure indicated growth of 6% on an annualized basis that surpassed Q1’s GDP of 3.7% and consensus expectations of 3.1%; its steepest pace of increase since Q4 2020 and a third consecutive quarter of annualized economic expansion. Singapore Retail sales for July will be out on Tuesday with another month of lackluster growth expected at 0.9% y/y from 1.1% y/y in June; its softest growth since July 2021 as the Singapore economy grappled with a weak external environment. On a monthly basis, a slower pace of contraction is expected for July at -0.1% m/m versus -0.8% m/m in June.  
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Canada's Q2 GDP Eases, US Nonfarm Payrolls Expected at 177,000 - Impact on USD/CAD

Craig Erlam Craig Erlam 04.09.2023 10:58
Canada’s GDP expected to ease in Q2 US nonfarm employment payrolls expected to dip to 177,000 The Canadian dollar is calm in the European session, trading at 1.3500, down 0.07%. I expect to see stronger movement from USD/CAD in the North American session, as Canada releases second-quarter GDP and the US publishes the July employment report. Canada’s GDP expected to slow in Q2 Canada usually releases employment reports on the same day as the US, but Canada’s July jobs report won’t be released until next week. Instead, today we have Canada’s GDP, a key release, along with the US employment release. Canada’s economy rebounded in the first quarter, as GDP rose 0.8% q/q. This beat the consensus estimate of 0.4% and added support to the case for the Bank of Canada raising rates at the September 6th meeting. However, today’s GDP report could chill rate hike expectations if the economy took a step backward in the second quarter. The consensus estimate for Q2 GDP stands at 0.3% q/q, which would indicate weak economic growth. If GDP is stronger than expected, the odds of a rate hike will likely increase. The GDP report is the final key release out of Canada prior to the rate meeting, which adds significance to the GDP release. Investors will also be keeping a close eye on the July US employment report, highlighted by nonfarm payrolls. On Wednesday, ADP Employment Change fell sharply to 177,000, down from a revised 371,000. The nonfarm payroll report is expected to decline slightly to 170,000, compared to 187,000 in the previous reading.   If nonfarm payrolls is within expectations, it will mark the third straight month of gains below 200,000, a clear sign that the US economy is cooling. This would not only cement an expected pause by the Federal Reserve next week but would also bolster the case for the Fed to hold rates for the next few months and possibly into 2024. . USD/CAD Technical USD/CAD tested resistance at 1.3523 earlier. Above, there is resistance at 1.3580 1.3444 and 1.3377 are providing support  
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Euro Falls as Eurozone Inflation Data Contradicts Expectations

Craig Erlam Craig Erlam 01.09.2023 11:29
Flash HICP in August 5.3% (5.1% expected, 5.3% in July) Flash core HICP in August 5.3% (5.3% expected, 5.5% in July) Key moving average provides resistance once again   Eurozone economic indicators this morning have been something of a mixed bag, although traders seem enthused on the back of them rather than disappointed. We’ve seen regional data over the last couple of days which gave us some indication of how today’s HICP report would look and a drop in the core reading in line with expectations combined with no decrease in the headline seemed to make sense. Unemployment, meanwhile, remained at a record low despite an increase in the number of those unemployed. Perhaps there’s some relief that the headline HICP rate didn’t tick a little higher while the core did decline which combined with expectations for the coming months gives the ECB plenty to debate. Another hike in September still strikes me as more likely than not but on the back of this release, markets are swinging the other way, pricing in a near 70% chance of no increase.   ECB Probability   That’s helped the euro to slide more than 0.5% against the dollar this morning – similar against the yen and a little less against the pound while regional markets are seemingly unmoved and continue to trade relatively flat.   Further bearish technical signals following the eurozone data While the fall against the pound was a little less significant, it has enabled it to once again rotate lower off the 55/89-day simple moving average band, reinforcing the bearish narrative in the pair. EURGBP Daily   Source – OANDA on Trading View It’s run into resistance on a number of occasions around the upper end of this band, with the 100 DMA (blue) arguably being a more accurate resistance zone over the summer. Regardless, that still leaves a picture of lower peaks and relatively steady support around 0.85. While that may simply be consolidation, the lower peaks arguably give it a slight bearish bias, a significant break of 0.85 obviously being needed to confirm that.    
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Mixed Economic Signals: ADP Jobs, Revised GDP, and USD Trends

Craig Erlam Craig Erlam 31.08.2023 10:43
ADP posts 177,000 new jobs but traders not convinced US Q2 GDP revised lower to 2.1% (2.4% previously) USD pares six week gains after weaker figures this week   The recovery in equity markets appears to have stalled on Wednesday as traders likely eye the big economic releases later in the week. The ADP and revised GDP numbers may attract some attention but they were never likely to have too great an impact. The ADP report has long been ignored as a reliable precursor to the NFP report on Friday and at times it’s frankly been wildly off. That it’s come in at a reasonable 177,000 doesn’t offer any real insight in terms of Friday’s payrolls, with the focus instead remaining on them in relation to yesterday’s JOLTS data which saw a marked decline. If we see a trend of weaker hiring and fewer job openings then the Fed will be more at ease ending the tightening cycle. Today’s data was never likely to be overly impactful with tomorrow’s inflation, income, and spending figures, prior to Friday’s payrolls, always the primary focus. That could well set the tone for September ahead of some major central bank meetings.   EURUSD has been buoyed by the recent economic data, with the figures indicating that the higher for longer narrative may be less intense than feared.   EURUSD Daily       The pair has now rallied for three days and is closing on an interesting level around 1.10 where it may run into some resistance from the 55/89-day simple moving average band. It’s also a notable psychological level. There are also some interesting Fib levels around here if this is merely a corrective move following the sell-off of the last six weeks.
Oil Prices Find Stability within New Range Amid Market Factors

Oil Prices Find Stability within New Range Amid Market Factors

Craig Erlam Craig Erlam 30.08.2023 10:11
Oil prices stabilize after establishing a new range Hurricane season may have a greater influence amid tight market Head and shoulder neckline remains intact   Oil prices appear to be stabilizing around the middle of their new higher range, in the aftermath of OPEC+ cuts (voluntary Russia and Saudi in particular). Brent crude currently sits a little shy of $85 after rebounding higher off $82 last week and peaking just above $88 earlier this month. There remains considerable uncertainty around the outlook for the global economy, from China’s sluggish rebound to interest rates and possible recessions elsewhere. But on the supply side, major producers appear committed to ensuring the market remains tight and prices higher. They had little success earlier in the summer but that is no longer the case and the market is now vulnerable to spikes on the back of surprise outages and hurricane-related issues in the US.     The failure to break the neckline of the head and shoulders last week suggests there’s plenty of support for Brent following on from what was a potentially very bullish move just a month ago.   The break above the 200/233-day simple moving average band was the first time in almost a year that the price had traded above it. Whether that is now failing or the price is naturally stabilizing having been heavily manipulated on the supply side, only time will tell. If it had in fact turned bearish, the neckline may have fallen, at which point we could have seen a decent corrective move, based on the size of the pattern. Instead, it’s edging higher and a move above the right shoulder could be seen to weaken or break the pattern altogether.  
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US Labor Market Update: JOLTS Job Openings Slip, Consumer Confidence Falls

Craig Erlam Craig Erlam 30.08.2023 10:09
JOLTS job openings slip to 8.827m (9.465m expected, 9.165m previously) Consumer confidence also falls but the survey is volatile Is last week’s breakout stalling?   As we near the end of the summer, activity will start to pick up again and that may begin this week in the build-up to Friday’s jobs report. With Jackson Hole behind us, and not really living up to the usual hype, the focus now switches to the September central bank meetings and the key data releases that could sway them one way or another as policymakers ask themselves whether they’ve already done enough. From the Fed’s perspective, the week is off to a promising start with the JOLTS job opening report much softer than expected, alongside downward revisions to the previous month. The Fed needs to see a softer labor market to be confident that price pressures aren’t just abating but substantially and sustainably and this report is a move in the right direction. Job openings are now back at levels last seen in the summer of 2021 and not too far from where they were pre-pandemic. Further softness over the next few months looks very plausible which could contribute to a cooler labor market and sustainably lower wage growth. The CB consumer confidence number also suggests households are still wary, although the survey can be quite volatile and correlated with factors such as stock markets and gas prices, as we’ve seen the last couple of months alone.   Breakout to gather pace? Cable had been threatening to break lower throughout August and it finally happened at the end of last week, with the price moving below 1.26 and closing below the 55/89-day simple moving average band.       That could be viewed as a very bearish moving coming soon after a brief 38.2% retracement – July highs to early and mid-August lows – and a repeated test of that support. While it has consolidated a little higher since, that US data did briefly push it lower once more although it has since pared those moves. What’s interesting is the momentum indicators at the bottom as while the pair hasn’t accelerated lower following the breakout in a significant way, the MACD and stochastic look fairly healthy. There’s a lot of economic data this week though from the US that could sway this one way or another.      
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EUR/USD Reacts to Mixed Economic Data: Euro Recovers from Dip Below 1.08

Craig Erlam Craig Erlam 30.08.2023 10:04
Euro slips below 1.08 but recovers German GfK consumer climate falls US consumer confidence and job openings decelerate The euro fell below the 1.08 line on Tuesday after a weak German consumer confidence report but has recovered in the North American session after soft US data. EUR/USD is currently trading at 1.0840, up 0.20%. Germany is the eurozone’s largest economy and is considered the powerhouse of the bloc. That has changed dramatically as the German economy is looking more like a dead weight than a locomotive. With the economy sputtering, it’s no surprise that German business and consumer confidence is in the doldrums. Germany’s GfK Consumer Climate is forecasting a reading of  -25.5 for September, down from the revised downward figure of -24.6 in August and below the consensus estimate of -24.3. This was the lowest reading since May, with consumers pointing to high inflation and concern about potential unemployment as key reasons for concern. Last week, German Ifo Business Climate fell in August for a fourth straight month to 85.7, down from an upwardly revised 87.4 and shy of the market consensus of 86.7 points.   German CPI expected to fall to 6.0% Germany will release the July inflation report on Wednesday. Inflation is currently at 6.2% and is expected to dip to 6.0%, considerably higher than eurozone inflation which is at 5.3%. The ECB is committed to bringing inflation back to the 2% target but it’s unclear if the central bank will raise rates for an eighth straight time or take a pause and monitor how the economy is performing. The benchmark rate is relatively low at 3.75%, but the eurozone and German economies aren’t in the best shape and higher interest rates would raise the likelihood of a recession. In the US, it was a bad day at the office.  The Conference Board Consumer Confidence Index fell sharply to 106.1 in July, compared to 116.0 in August. JOLTS Jobs Openings slowed to 8.82 million in July, down from 9.16 million in June and well off the estimate of 9.46 million. The data is further evidence that the US economy is slowing as high rates continue to filter through the economy.   EUR/USD Technical EUR/USD is testing support at 1.0830. The next support line is 1.0731 There is resistance at 1.0896 and 1.0996    
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UK Yields Fall Amid Economic Uncertainty as BoE Considers Further Rate Hikes

Craig Erlam Craig Erlam 25.08.2023 09:34
UK yields fall amid economic uncertainty BoE expected to raise rates twice more this year to 5.75% Cable testing key support for a second day   The pound is on the decline again on Thursday, having fallen over the last couple of days on the back of some worrying economic figures from the UK. Whether we’re talking about a blip in the data or cracks finally appearing in the economy after a very aggressive tightening cycle from the Bank of England, traders are paring back expectations for interest rates once more. We’re seeing UK 10-year bonds rising today (yields falling) which goes against the trend we’re seeing across Europe, the US, and Japan, for example. Two more hikes are still priced in over the coming months but that could be pared back further if the data continues on the same path, especially if we see some better wage numbers following the spike in the three months to June. That weakness in the pound may be helping the FTSE to outperform today, with it being one of the only European indices still in the green after early gains – seemingly driven by knockout earnings from Nvidia – fizzled out over the course of the day.   Fourth time’s a charm? The pound has fallen close to 1.26 on three other occasions so far this month, each time falling a little short somewhere between 1.2610 and 1.2620 before rebounding higher.   The least convincing of these rebounds came yesterday, with the price once again trending down today to once again come close to those prior lows. The difference so far today is there’s no sign of a recovery and, at the time of writing, the price remains below the 55/89-day simple moving average band. On each of the last three occasions, the price closed back within here or higher. A close below here would be the first since March and if accompanied by a new two-month low and break of 1.26, could be a very bearish signal for cable. Of course, with Jackson Hole underway, there’ll be a lot of central bank speak over the next couple of days which could sway this one way or another which is worth bearing in mind. But right now, the pair is looking under some pressure.    
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New Inflation Methodology Sparks Hope for BoE as GBPUSD Faces Resistance

Craig Erlam Craig Erlam 23.08.2023 10:33
New inflation methodology offers hope for BoE 1.28 could be major resistance point for GBPUSD A break of 1.26 could be bearish signal   Recent UK economic data has been a mixed bag, with wages rising at a much-accelerated rate but inflation decelerating as expected. While the Bank of England will be relieved at the latter, the former will remain a concern as wage growth even near those levels is not consistent with inflation returning sustainably to target over the medium term. The ONS released new figures overnight that appeared to suggest core inflation is not rising as fast as the CPI data suggests. The reportedly more sophisticated methodology concluded that core prices rose 6.8% last month, down from 7% the previous month and 7.3% the month before. The official reading for July was slightly higher at 6.9% but down from only 7.1% in May. So not only is the new methodology showing core inflation lower last month but the pace of decline is much faster. That will give the BoE hope that price pressures are easing and they’re expected to do so much more over the rest of the year.     GBPUSD Daily     It’s not clear whether this will prove to be a resumption of the uptrend or merely a bearish consolidation. It is currently nearing 1.28, the area around which it has previously run into resistance this month and around the 38.2% Fibonacci retracement level. Another rebound off here could be viewed as another bearish signal, which may suggest we’re currently seeing a bearish consolidation, while a move above could be more promising for the pound. If the pair does rebound lower then the area just above 1.26 will be key, given this is where it has recently seen strong support. It is also where the 55/89-day simple moving average band has continued to support the price in recent months.
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Gold's Fate Hangs on US CPI Report: Will Strong Inflation Drive a Breakdown or Rebound?

Craig Erlam Craig Erlam 11.08.2023 08:27
A strong inflation number could send it lower again Major support zone below Gold appears to be stabilizing a little ahead of the US CPI report, with traders paying close attention to the outcome as it could ultimately determine whether the yellow metal breaks the June lows or rebounds higher. Prices have been pressured by rising yields and a stronger dollar recently as traders have pushed back expectations around rate cuts for next year. While they appear confident that the Fed is done with tightening – for now – they’re less sure we’ll see the kind of easing that they were so convinced of earlier in the year. Another promising CPI release could change that and so today really is quite significant. There’s still a long way to go but the US has made significant progress, even at the core level, and more is expected over the rest of the year. If it can do so at a more accelerated rate than currently envisaged then gold could prosper.   The June lows not only represent a prior area of support, they also combine with the 200/233-day simple moving average band to create a potentially significant technical zone.     XAUUSD Daily     A move below here could be viewed as particularly bearish as it would indicate the recovery earlier in July was merely a corrective move. That said, a failure to make new lows would also be interesting as it may signal that the recent weakness was only temporary and traders are defending that support zone. Of course, much may depend on the data we see over the coming weeks.  
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Chinese Trade Data's Ripple Effect: Navigating Oil Price Dynamics

Craig Erlam Craig Erlam 10.08.2023 09:29
Chinese trade data only a temporary distraction Recovery not as bullish as it first appears Divergence a red flag Oil prices are advancing again today after briefly dipping on Tuesday following some weaker Chinese trade figures. While that data did appear to trigger some profit-taking in crude, it was never going to be a game-changer as oil market dynamics have turned much more bullish recently. Furthermore, weak global trade and an uninspiring Chinese rebound this year are not new stories. The numbers were naturally disappointing but nothing more. That the price recovered from the lows yesterday, following a quite large decline, to end the day in the green says everything you need to know.     Momentum is still an issue and it has been waning over the last week or so even as price has made new highs. This could be a sign of exhaustion and unless that changes, these sell-offs will remain a concern and the rebounds unconvincing.       The stochastic and MACD histogram both failed to make new highs last week alongside the price creating a divergence. In itself, that’s not necessarily bearish but it is a red flag and indicates the trend is weakening. With the price now approaching $87-$88, an area that has been a significant zone of resistance this year, it may come as a concern. Of course, momentum could return again and confirm the moves that we’re seeing in the price but as it stands, it’s lacking. The move above the 200/233-day simple moving average band was a very positive move but Brent is up more than 20% since the end of June so a corrective move wouldn’t come as a major surprise.    
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EURUSD Awaits Fed and ECB Decisions: Data Dependency and Dovish Hike Expectations

Craig Erlam Craig Erlam 28.07.2023 08:52
Fed and ECB will have a big role to play in EURUSD moves over the next 24 hours Will both offer a final dovish hike and emphasize data dependency? EURUSD faces a big test around 1.10 after breaking out earlier this month EURUSD is trading a little choppy over the last couple of days with traders clearly heavily focused on the outcome of the Fed and ECB meetings. In both cases, a 25 basis point rate hike is heavily backed in the markets, but at the same time, the language that accompanies the decision and what comes next is less obvious. I think there’s every chance that in both cases, policymakers opt to accept that a pause at the next meeting may be appropriate while in no way closing the door on further hikes in the months ahead. In other words, data dependency will be heavily emphasized with the overall tone perhaps being a dovish hike with a slight hawkish twist. The last thing policymakers want is for investors to perceive this to be the end of the tightening process but that will be a very tough message to get across, particularly in the absence of fresh forecasts. The economic data has undoubtedly improved as far as inflation prospects are concerned while the economy is clearly weakening, furthering the case for a pause in September. Both of these factors will likely be emphasized when signaling that further hikes will depend on the data.   The pair has pulled back over the last week or so after finally breaking above 1.10 earlier this month. EURUSD Daily   Source – OANDA on Trading View A weaker dollar has stemmed from data in the US becoming more Fed-friendly – weaker inflation, softer economy – but this week the ECB will be equally as influential in determining whether the pair stays above 1.10 or slips back below. Of course, the Fed is up first so it will set the tone to begin with. A hawkish Fed could strengthen the dollar and put pressure on support around 1.10, the lower bound of the range – 1.10-1.11 – that provided so much resistance over the course of 2023. Anything deemed dovish could see the pair rally once more, in effect confirming the breakout earlier this month and potentially putting pressure on last week’s highs, maybe even beyond.  
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USD/JPY Faces Resistance at 20-day Moving Average Ahead of BoJ Decision

Craig Erlam Craig Erlam 28.07.2023 08:47
The 20-day moving average has capped further upside in the USD/JPY so far since last Friday, 21 July. BoJ will release its monetary policy decision and latest quarterly outlook report tomorrow, 28 July. The consensus is an upgrade for its FY2023 consumer inflation forecast to be above 2% while maintaining the upper limit of the YCC at 0.50%. Recent minor downtrend phase from 21 July 2023 high of 141.95 to today, current intraday low of 139.38 may see a retracement. Key resistance zone at 140.70/142.50. The recent rebound of 456 pips seen in the USD/JPY from the 14 July 2023 minor swing low of 137.24 retested the downward-sloping 20-day moving average last Friday, 21 July that is acting as resistance around 142.10/142.50. Thereafter, the price actions of USD/JPY retreated twice so far this week at/near the 20-day moving average, declined by 254 pips to print a 5-day intraday low of 139.38 as of today, 27 July Asian session at this time of the writing. The current short-term weakness of the USD/JPY has materialized ahead of the Bank of Japan (BoJ)’s monetary policy decision tomorrow where the consensus is an upgrade of its consumer inflation forecast to be above 2% (above BoJ’s target) for FY 2023 for its latest economic quarter outlook, and no change on the upper limit of the Yield Curve Control (YCC) programme on the yield of the 10-year Japanese Government Bond (JGB) to capped at 0.50%. Interestingly, this upper limit of the YCC is a wild card for tomorrow as several ex-BoJ officials have advocated an upward revision to the 0.50% limit as the current economic conditions warrant it such as elevated sticky inflation conditions in Japan where the national-wide core (excluding fresh food), and core-core (excluding fresh food & energy) stood at 3.3% y/y, and 4.2% y/y for June; at a 31-year and 41-year high respectively. Before BoJ releases its monetary policy decision and updated quarterly projections, BoJ officials will have a chance to access the leading Tokyo area’s consumer inflation data for July which is being released three hours earlier tomorrow as a key input to debate and assess the suitability of a change to the limits of the YCC programme.       Price actions have traced out a potential medium-term bearish reversal “Head & Shoulders”     Fig 1:  USD/JPY medium-term trend as of 27 Jul 2023 (Source: TradingView, click to enlarge chart) The price actions of USD/JPY have evolved into a potential bearish reversal “Head & Shoulders” configuration since the high of 29 May 2023. The appearance of this potential “Head & Shoulders” suggests that the medium-term uptrend phase from the 16 January 2023 low of 127.22 to the 21 July 2023 high of 141.95 may have reached its terminal condition where a potential medium-term downtrend phase may materialize next, and a break below the 136.90 neckline support of the “Head & Shoulders” increases the odds.      Minor short-term downtrend from 21 July high reached an oversold condition     Fig 2:  USD/JPY minor short-term trend as of 27 Jul 2023 (Source: TradingView, click to enlarge chart)  The recent minor downtrend phase from the 21 July 2023 high of 141.95 to today, 27 July’s current intraday low of 139.38 has reached an oversold condition as indicated by the hourly RSI oscillator. This observation suggests the risk of a minor bounce to retrace a portion of the minor downtrend with the key resistance zone coming in at 140.70/142.50. Watch the 142.50 key medium-term pivotal resistance to maintain the short-term bearish bias and a break below the 139.15 near-term support exposes the next support at 137.65/136.90 (also the neckline of the “Head & Shoulders” & 200-day moving average). On the other hand, a clearance above 142.50 invalidates the bearish bias to see the next resistance coming in at 143.60.
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ECB Raises Rates by 25 Basis Points; Eurozone Yields Fall as Euro Slides

Craig Erlam Craig Erlam 28.07.2023 08:46
ECB hikes rates by 25 basis points Signals the central bank may pause at the next meeting in September Euro slides as eurozone yields fall   The ECB raised rates for potentially the final time in the tightening cycle on Thursday, although it refused to give any indication of what will happen going forward. Instead, the central bank is insisting that decisions will be guided by the economic data and that interest rates will need to remain sufficiently restrictive for some time. This is consistent with what we heard from the Fed a day earlier and what most major central banks will be communicating soon enough if they aren’t already. We remain in a period of uncertainty on the economic data, despite the progress that has already been achieved and the further moves that are expected over the rest of the year. If the inflation data continues to improve as many expect, there’s every chance the ECB pauses in September and doesn’t then feel it necessary to hike further by October. There are, of course, an abundance of upside risks to the inflation data from the economy continuing to display significant resilience, as we’ve already seen this year, or fresh energy or food price shocks. These things and more could tempt the ECB to hike further later in the year.     Euro falls below 1.10 against the dollar The lack of commitment to further rate hikes from the ECB today weighed on the euro and saw eurozone yields decline. The single currency plunged against the dollar, slipping back below 1.10 after coming close to 1.1150 earlier in the day.       It would appear the ECB has failed to open the door to a pause without triggering too much excitement, as it would have preferred. President Lagarde was desperately trying to avoid doing so in the press conference, repeatedly referring back to previous comments rather than directly answering questions, and it seems in doing so, traders have instead opted to read between the lines. We may see efforts to correct this in the weeks ahead.  
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Chinese Stimulus Hopes Fail to Lift FTSE; Unilever Reports Strong Earnings as UK100 Nears All-Time Highs

Craig Erlam Craig Erlam 26.07.2023 08:48
Chinese stimulus hopes fails to lift the FTSE Unilever among the best performers in the index after reporting earnings UK100 not far from all-time highs   It’s been another relatively flat session for equity markets, with investors seemingly having one eye on the Fed and ECB later in the week despite a strong showing in Chinese stocks earlier in the day. They were lifted by the promise of Chinese stimulus following the Politburo meeting this week and some potential relief for the property market. It’s been a tougher re-emergence from zero-Covid than many anticipated, with consumers still seemingly holding back and the property sector still reeling from the previous crackdown. The enthusiasm hasn’t filtered through to Europe and the US though, perhaps due to the lack of detail currently on the stimulus measures, but also the distraction of the central bank meetings over the next 48 hours. Progress on inflation could mean both the Fed and ECB are about to announce their final rate hikes of the tightening cycle; the question is will they acknowledge that or maintain a hawkish position over the rest of the summer? Unilever rallies amid hints at price pressures easing Unilever is among the top performers on the FTSE 100 today, buoyed by a surge in profits in the last quarter. It comes at a challenging time when high inflation is pushing up costs and there is a growing spotlight on producers and supermarkets amid claims of profiteering. What’s more, the cost-of-living crisis is pushing consumers toward cheaper own-brand products which partly contributed to a decline in sales volumes. The company did reassure investors that pressures are easing though which should be good news for households and the share price is also reaping the rewards, up around 5%.     Can the UK100 take the next step? The UK100 has been on a good run over the last few weeks, taking it towards 7,700 where it is now running into some resistance.     This has previously been a very notable area of resistance, most recently in the middle of June, and so overcoming it could be a significant bullish signal for the markets. The index is not trading too far from its all-time highs at this stage and so a break of this could draw attention to a few notable levels. We’ve seen 7,800 and 7,850 provide plenty of support and resistance over the course of this year and so that area stands out on the chart. After that, there are a few more areas where price previously ran into some difficulty ahead of the high just above 8,000. Around these levels, the stochastic and MACD indicators could offer some useful information on how much momentum remains with the rally and whether we’re potentially seeing doubts or profit-taking kicking in.
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Central Banks in Focus as Weak PMIs Impact Equity Markets; NAS100 Approaches Channel Lows Ahead of Fed Meeting

Craig Erlam Craig Erlam 25.07.2023 08:56
Fed, ECB and BoJ all meet this week Weak PMIs point to further cooling in the economy NAS100 nears channel lows  Equity markets are treading water at the start of what is going to be a very lively week. There are some huge central bank meetings this week, the most notable naturally being the Federal Reserve on Wednesday. Interest rates are finally at or very close to their peaks and this week could see the Fed and ECB announce the last rate hike in their tightening cycles. And a look at the PMI data may help to explain why, with economies around the world cooling at a decent rate. Inflation is also falling, primarily driven by favourable base effects at this stage, as well as falling energy prices and decelerating food costs. The PMIs from the eurozone, the UK, and the US today all tell a pretty similar story. Manufacturing is continuing to struggle – although not as much as expected in the US – while services growth expectations are slowing. There are clear signs in the surveys of more cooling on the horizon, fewer inflationary pressures, and weaker hiring. Central banks will be relieved, though almost certainly not enough to claim victory or explicitly declare the end of the tightening cycle. Policymakers will proceed with extreme caution, albeit very much buoyed by the data they’ve seen over the last month or two.     NAS100 nears channel lows ahead of the Fed The NAS100 pulled back over the last couple of sessions after coming close to 16,000, a level it hasn’t traded at since the start of last year. It was previously a notable level of support and resistance as well, which may explain why we’ve seen some profit-taking. It’s now pulled back to 15,250-15,500 where it saw plenty of resistance over the last couple of months and now coincides with the bottom of the rising channel. A break of this could be a bearish development after such a strong recovery this year.      
UK Inflation Shows Promising Decline, Signaling a Path to More Sustainable Levels

UK Inflation Shows Promising Decline, Signaling a Path to More Sustainable Levels

Craig Erlam Craig Erlam 19.07.2023 09:29
It's been a long time coming but inflation in the UK is finally on the decline and in a rare show of good news, it's falling at a faster pace than expected on both the headline and core levels.  We haven't been treated to many reports like this over the last couple of years, and even when we have any enthusiasm has quickly been extinguished. But this feels different. Without wanting to fall victim to the "this time it's different" mantra that often precedes a terrible turn of events, there is something more promising about this shift. It follows similar declines in the US and the eurozone in recent months, both of which were sharper than expected and at the headline and core level. Unless this is a blip across the board, which is possible, it may be a sign that inflation is on a path to more modest and sustainable levels.  Of course, there's still an awfully long way to go and the central bank is not going to declare victory on the back of one release. But those wild interest rate forecasts of 6.5%+ that we've been seeing may start to be pared back, perhaps quite significantly as it becomes clear that favourable base effects combined with lower energy and food inflation and the impact of past hikes start to have a substantial impact on the data.  The pound has fallen quite heavily on the back of the release which probably reflects those expectations now being pared back. I don't want to get too carried away but peak rate expectations may now be behind us which could make for a more hopeful second half of the year.  I say I don't want to get carried away but then, upon seeing the release, I was immediately reminded of the famous Office US "It's happening!" scene that is so often widely circulated on social media so perhaps I also, in the words of Michael Scott, need to stay calm.   Oil flat but recent developments have been positive Oil prices are a little flat early in the European session after bouncing back a little on Tuesday. Since breaking above the recent range highs late last week, oil prices have been a little choppy although importantly they have held above that prior range and, in the case of Brent crude, seen support around the previous highs. That could be viewed as a bullish technical signal, although that will naturally depend on a number of other factors including the economic data and what producers are doing. Both have been favourable for prices recently, helping Brent break back above $80 for the first time in almost three months.   Gold eyeing another move above $2,000?  Gold broke higher again on Tuesday after briefly paring gains late last week and early this. Lower yields and a weaker dollar are continuing to boost its appeal on the back of some more promising inflation data and lower interest rate expectations. The yellow metal broke above $1,960 yesterday before running into some resistance around $1,980. It's now closing in on $2,000 which is the next major barrier to the upside, a break of which may suggest traders have turned bullish on gold after two months of declines.   Is bitcoin looking vulnerable after yesterday's break?  Bitcoin is back above $30,000 today but looking vulnerable to another dip below. Broadly speaking, the cryptocurrency has been range-bound over the last month but it has drifted toward the lower end of this and the move below $30,000 yesterday may have made some nervous. If we do see a significant break lower, the next key area of support may be found around $28,000.
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Retail Sales Fail to Dampen Wall Street as Bank Earnings Inspire Investor Confidence; Dow Faces Major Obstacle at 35,000

Craig Erlam Craig Erlam 19.07.2023 08:20
Retail sales numbers don’t hold Wall Street back Bank earnings give investors hope 35,000 a big obstacle to overcome for the Dow   Stock markets have turned positive on Tuesday after falling earlier, with US retail sales data initially weighing slightly. The numbers were much weaker than expected for June but then the May figures were revised up so it wasn’t all bad. I’m not convinced today’s data really changes things as far as the consumer or economy is concerned, all things considered, nor has it really changed anything on interest rate expectations, with markets almost fully pricing in a hike next week and probably no more after that. Wall Street was also buoyed by Morgan Stanley and Bank of America results which gave investors some further cause for optimism early in earnings season. Of course, this is just one hurdle cleared but investors will be hoping it’s a sign of things to come.   35,000 the next big obstacle for the Dow US30 Daily   The US30 has rallied almost 1% today but it quickly ran into resistance around 35,000. This level has previously been a key area of support and resistance, most recently in December, and it’s proving to be the case again. A break above here would be significant as the US30 hasn’t traded above here since April last year when it peaked around 35,500. This would be the next notable resistance level if it can overcome 35,000.  
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RBA's Policy Dilemma: Uncertainty Surrounding Future Moves as Markets Anticipate One More Hike

Craig Erlam Craig Erlam 19.07.2023 08:18
RBA undecided on future policy moves Markets expect one more hike but not sure when AUDUSD facing significant resistance despite a weaker dollar   It’s safe to say there’s quite a balanced debate taking place at the Reserve Bank of Australia right now, with policymakers torn on whether conditions have become restrictive enough and if a little more will do more harm or good. While markets appear confident that the RBA will hike once more this year, when that will come is far less clear. And as we’ve seen so much this year, expectations have a knack of changing quite considerably over a matter of weeks, let alone months. In other words, investors are no more certain than the policymakers themselves.   Can AUDUSD break higher amid greenback weakness? The mixed messages aren’t helping to deliver much direction for the Australian dollar, with recent moves against the greenback being more driven by the latter’s weakness more so than the strength of the former.     AUDUSD Daily It ran into resistance recently around 0.6850-0.69 which has historically been a major barrier of support and resistance, most recently in mid-June. If it can break above here, 0.70 could be one to watch being a big round figure as well as a key level earlier this year when it made up both shoulders in a head and shoulders pattern. If the price continues to pull back as it has in recent days, 0.67 could be very interesting with it being the level that the 55/89 and 200/233-day simple moving average bands merge. It would also fall around the rising trend line from the May lows.        
UK Public Sector Borrowing Sees Decline in July: Market Insights - August 22, 2023

Goldman Sachs Predicts Significant Crude Deficit, Markets Price in Fed Rate Cut, and Bitcoin ETF Awaited

Craig Erlam Craig Erlam 18.07.2023 08:20
Goldman Sachs eyes a significant crude deficit in the second half of the year Markets price in 25% chance Fed cuts at December 13th FOMC meeting Bitcoin supporter Novogratz expects Bitcoin ETF gets done by end of year   Oil Crude prices are lower as China’s economic recovery stalled and as Libya resumed production at key oil fields.  Oil won’t catch a bid unless China finally unleashes meaningful stimulus that propels large parts of the economy.  Little rate cuts here and there and support for property markets won’t do the trick for revitalizing the China recovery trade.   If China doesn’t appear strong the global growth outlook will get slashed and that could keep oil prices heavy a while longer. WTI crude has major support at the $70 level and should consolidate above here until we hear from Chinese officials at the end of the month.       Gold Gold’s rebound will have to take a break until we know for sure if the Fed is done raising rates at the July 26th FOMC meeting.  The labor market is still hanging in there, but expectations remain for it to gradually weaken.  Earnings season will be key for the precious metal because more Fed tightening might need to get priced in if corporate America is too optimistic about both a recession being avoided and that consumer resilience will remain. Gold may start to form a broadening formation here between the $1945 and $1965 range.   Bitcoin Bitcoin remains anchored until the cryptoverse gets an update with any of the latest bitcoin exchange-traded-fund (ETF) applications. We are approaching crunch time for getting the final comments from all the top Bitcoin ETF applications.  There has been some progress in small crypto companies finding banks that can help facilitate transactions, as Customers Bancorp has emerged as the winner from the downfall of Signature Bank and Silvergate Capital Corp. Bitcoin’s range of $29,500 and $31,500 may hold until we get a major crypto headline.  
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The Weaker US Dollar and Potential Upside in Commodities Spark Inflationary Expectations

Craig Erlam Craig Erlam 17.07.2023 09:33
Current up moves in long-duration equities and fixed income came at the expense of a weaker US dollar. A persistent weak US dollar may lead to an upside revival in commodities prices. Inflationary expectations may creep up again due to higher oil/commodities prices. Disinflationary narrative seems premature and may be mispriced.   Market participants have taken a “disinflation ecstasy pill”, bidding up long-duration equities and fixed income in the past two sessions after the latest June US CPI data came in below expectations with the headline print dipped to 3% year-on-year, its slowest rate of growth seen in two years. The core consumer inflation rate (excluding food & energy) also slowed to 4.8% year-on-year from 5.3% recorded in May and dipped below the current Fed Funds rate of 5% to 5.25%. In terms of week-to-date performances as of 13 July, higher beta and long-duration equities outperformed, and the Nasdaq 100 rallied by +3.56%, just 7.7% away from its November 2022 all-time high. Over in the fixed income space, last week’s losses were almost recouped; iShares 20+ Year Treasury Bond exchange-traded fund (ETF) recorded a week-to-date gain of 2.84%, iShares Investment Grade Corporate Bond ETF (+2.61%), and iShares High Yield Corporate Bond ETF (+2.44%). This latest bout of “disinflationary optimism” has revived the “Fed Pivot” narrative where participants are now anticipating that the upcoming July FOMC meeting will likely see the last interest rate hike of 25 basis points (bps) to end this current cycle of monetary policy tightening in the US and negate the current “higher interest rates for a longer period” guidance advocated by Fed officials.     US Dollar Index’s major downtrend was reinforced via a break below 100.95 key support   Fig 1:  US Dollar Index medium-term and major trend as of 14 Jul 2023 (Source: TradingView, click to enlarge chart) The current disinflationary theme play has come at the expense of a weaker US dollar that sank to a 15-month low, the US Dollar Index has tumbled by -2.52% for this week, set for its worst weekly performance since the week of 7 November 2022 as it broke below the key medium-term support of 100.95. Right now, there are second-order effects at play where significant global financial market movements are likely to spiral into the real economy in the months ahead. A weaker US dollar may translate to higher commodities prices as most commodities; physical and paper (futures contracts) are priced in US dollars. This above-mentioned linkage of a weaker US dollar to higher commodities prices seems to be emerging in the financial markets; the week-to-date performance of WTI crude oil futures is up by +4.1% and a broader basket of commodities as measured by the Invesco DB Commodity Index Tracking Fund has rallied by 3.6% for this week.   Inflationary expectations may start to creep up   Fig 2:  WTI crude oil correlation with US 5-YR & 10-YR breakeven inflation rates as of 13 Jul 2023 (Source: TradingView, click to enlarge chart) Commodity prices such as oil have a high degree of direct correlation with forward-looking inflationary expectations. In the past three years, the price actions of WTI crude oil have moved in lock-step with the US Treasury’s 5-year and 10-year breakeven inflation rates (a measurement of inflationary expectations). If WTI crude oil can maintain its current upward trajectory, inflationary expectations may creep higher from this juncture.   Potential upside momentum in commodities may spark another ascend in US CPI   Fig 3: Invesco DB Commodity Index Tracking Fund major trend with US CPI as of 13 Jul 2023 (Source: TradingView, click to enlarge chart) In addition, from a momentum perspective, an imminent trend change may start to take shape for commodities prices after close to one year of downtrend since June 2022 using Invesco DB Commodity Index Tracking Fund (DBC) as a commodities benchmark. The current weekly MACD trend indicator of the DBC has just flashed a bullish crossover signal below its centreline that suggested that the major downtrend of DBC in place since the June 2022 high may have ended which in turn increases the odds of a bullish reversal for commodities prices. A similar MACD bullish crossover observation on the DBC occurred in early June 2020 that spiralled into the real economy where inflationary pressures; headline and core US CPI started their ascend. Therefore, a potential uptick in inflationary expectations coupled with the current positive momentum in commodities prices may put a halt to the current inflationary slowdown trajectory seen in the latest US CPI prints. The ongoing disinflationary narrative may be premature and mispriced at this juncture.      
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USD/JPY: Worst Weekly Loss, Support at 200-Day Moving Average Signals Potential Corrective Rebound

Craig Erlam Craig Erlam 17.07.2023 09:26
USD/JPY has shed -5.4% from its 30 June 2023 high of 145.07, on sight to record its worst weekly loss since 7 November 2022. Today’s intraday sell-off has managed to hold at the 200-day moving average acting as support at 137.65. Short-term momentum has turned positive which increases the odds of a corrective rebound. This is a follow-up on our prior analysis “USD/JPY Technical: “At risk of a minor bounce before bearish tone resumes” published earlier this week on 11 July 2023. The USD/JPY has tumbled in an almost straight-line fashion on broke below the 138.70 short-term support as highlighted (click here for a recap). The USD/JPY has torpedoed downwards by -5.40% from its recent high of 145.07 printed on 30 June 2023 to today, 14 July Asian session intraday low of 137.24 at this time of the writing. It has challenged the key 200-day moving average and recorded its worse weekly loss since the week of 7 November 2022. Talks of an imminent ultra-dovish monetary policy shift from the Bank of Japan (BoJ) in the upcoming monetary policy decision meeting on 28 July have started to make their rounds again. In today, 13 July Asian session, there are two news flows that advocate a tilt away from negative interest rates in Japan. Firstly, local Japanese media, Yomiuri reported that BoJ is likely to raise its FY 2023 annual inflation forecast to above 2% for its latest quarterly outlook report which is released on the same day as the upcoming 28 July monetary policy decision outcome. Secondly, former BoJ official, Hideo Hayakawa commented that he is expecting another tweak to the yield curve control programme on 28 July with a more aggressive bias of 50 basis points (bps) widening on the band of around 0% on the 10-year Japanese Government Bonds (JGB) yield to 1% from the current level of 0.5%. Previously, BoJ caught markets by surprise by widening the 10-year JGB yield band by 25 bps on 20 December 2022. Holding at key 200-day moving average   Fig 1:  US/JPY medium-term trend as of 14 Jul 2023 (Source: TradingView, click to enlarge chart) The current decline in place since 30 June 2023 has reached its 200-day moving average which confluences with a graphical support of 137.65 (former swing high areas of 15 December 2022, 8 March 2023, and 2 May 2023). In addition, today’s price action at this time of the writing has formed an impending bullish daily “Hammer” candlestick pattern which indicates that odds have risen for a potential minor rebound in price actions to retrace the prior five days of steep descent.   Positive short-term momentum has emerged     Fig 2:  US/JPY minor short-term trend as of 14 Jul 2023 (Source: TradingView, click to enlarge chart) The hourly RSI oscillator has flashed out another bullish divergence signal at its oversold region and just staged a bullish breakout above a key parallel descending resistance at the 43 level. These observations suggest the recent downside momentum has abated. Watch the 137.65/40 key medium-term pivotal support for a potential corrective rebound scenario with the next intermediate resistances coming in at 139.00 and 139.70/140.10 (also the 38.2% Fibonacci retracement of the current decline from the 30 June 2023 high to today’s 14 July intraday low of 137.24). On the flip side, a break below 137.40 invalidates the corrective rebound to expose the next support at 135.70/50 (the 61.8% Fibonacci retracement of the prior up move from 24 March 2023 low to 30 June 2023 high).  
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Crude Prices Surge on Output Cuts and Inflation Data, Potential Resistance at $83-$84 - 17.07.2023

Craig Erlam Craig Erlam 17.07.2023 09:12
Output cuts and inflation data continue to boost crude prices Temporary disruptions could add to the bullishness Potential resistance around $83-$84   Oil is trading relatively flat today but has made tremendous gains over the last couple of weeks and could still add to that over the coming sessions. The price has risen more than 13% from the lows on 28 June and, despite appearing to struggle at times yesterday, still has plenty of momentum. The break above $80 was very significant after multiple efforts by Saudi Arabia and its allies to manipulate the price to more sustainable levels, from their perspective. Temporary output disruptions, like those currently in Libya and Nigeria, could further lift prices in the short term as potential tightness in the market on the back of cuts and economic resilience boost demand.   Key Resistance Lies Ahead Brent could face an interesting test around $83-$84 if it keeps rallying, with the boost from US inflation data and Saudi/Russian cuts potentially giving it an additional boost, as well as the psychological lift from this week’s breakout.     The 200/233-day simple moving average has been a key zone of support and resistance previously and could prove to be so again. It hasn’t traded above here in more than a year so a break above would be significant. A move lower could draw attention back to $80 and whether we’ll get that confirmation of the initial breakout. A move below here wouldn’t necessarily be a particularly bearish move, with the 55/89-day SMA band around $76-$78 arguably more important, falling around the upper end of the descending channel. It could also fall around a key fib level depending where the price peaks first.       
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China Housing Prices Rise, Retail Sales Plunge: Central Banks' Decisions Awaited in China, Australia, and Japan

Craig Erlam Craig Erlam 17.07.2023 09:07
China The housing price index (new home prices) for June will be released this Saturday, and it will be closely watched to monitor the financial health of Chinese property developers that are still suffering from a bout of debt overhang due to overleveraging in the past 5 years. In the prior month of May, average new home prices have managed to inch up 0.1% year-on-year after consecutive months of contractions since April 2022. On Monday, we will have the release of Q2 GDP, industrial production, retail sales, and unemployment data. Retail sales and the youth unemployment figures will be pivotal for gauging the current state of internal demand which has been lackluster since March. Growth in retail sales for June is expected to plummet to 3.2% year-on-year from 12.7% recorded in May. On the labor market front, the youth unemployment rate surged to a record high of 20.8% in May, that’s about four times above the nationwide unemployment rate. On Monday, China’s central bank, the PBoC will decide on its one-year Medium-Term Lending Facility Rate (currently at 2.65%) followed by Thursday’s decision on the one-year and five-year Loan Prime Rates (currently at 3.55% and 4.20%, respectively).  Given the latest policy pledge by PBoC to stabilize growth via utilizing its arsenal of monetary policy tools, there is a possibility that another round of interest rate cuts may be implemented in the coming week.   India No major key data releases.   Australia The RBA minutes of the last monetary policy meeting held on 4th July will be released on Tuesday. Market participants will be scrutinizing the details of the minutes for hints on whether the current official cash rate of 4.1% is the terminal rate for the current tightening cycle after the RBA chose to stand pat on 4th July.  Based on the RBA Rate Indicator as of 14th July, the ASX 30-day interbank cash rate futures for the August 2023 contract has priced in a 29% probability of a 25-bps hike to bring the cash rate to 4.35% at the next monetary policy decision on 1st August; that’s a decrease in odds from 52% seen in a week ago. Labor market conditions for June will be out on Tuesday; employment change is expected to be lower at 17,000 versus 75,900 in May while the unemployment rate is expected to hold steady at 3.6%.   New Zealand Q2 inflation data is due out on Wednesday. Expectations are for a cooler print of 5.9% year-on-year from 6.7% printed in Q1. On a quarter-on-quarter basis, it is expected to slide to 0.9% from 1.2% in Q1. If this cooler consensus turns out as expected, it will be the second (y/y) and third (q/q) consecutive quarters of an inflationary growth slowdown.   Japan Balance of trade data for June is due out on Thursday; growth in exports is expected to improve to 2.2% year-on-year from 0.6% in May while imports are expected to deteriorate further to -11.3% year-on-year from -9.9% in June.   Inflation data will then be released on Friday. The core inflation rate for June is expected to tick slightly higher to 3.3% year-on-year from 3.2% in May while June’s core-core inflation rate (excluding fresh food & energy) is expected to remain at an elevated sticky level of 4.3% year-on-year in May. If these inflationary prints come in as expected, it is likely to put more pressure on the Bank of Japan to bring forward monetary policy normalization, a tilt away from the current ultra-dovish stance.   Singapore The key data to note will be the balance of trade for June to be released on Monday; non-oil exports growth declined to -14.7% year-on-year in May, its 8th consecutive month of contraction. Another weak reading is expected for June due to a weak external environment, especially from China, one of its major trading partners.  
Key Economic Events and Earnings Reports to Watch in US, Eurozone, and UK Next Week

Key Economic Events and Earnings Reports to Watch in US, Eurozone, and UK Next Week

Craig Erlam Craig Erlam 17.07.2023 08:57
US The week before the July 26th FOMC meeting will contain a handful of key economic reports and several key earnings results. The initial assessment of the economy is somewhat upbeat as CEO Jamie Dimon noted that the US economy continues to be ‘resilient’. Next week’s big earnings include Goldman Sachs, Tesla, Netflix, Morgan Stanley, and American Express.   On Monday, the ISM manufacturing report will show activity is slowing down, with the headline reading expected to fall back into contraction territory.  On Tuesday, the June retail sales report is expected to show strength, as major car discounts encouraged buying.  Demand for services might still remain strong but is expected to weaken once we get into the fall.  Industrial production probably won’t impress given the weakness we saw with the PMI readings.  On Wednesday, both building permits and housing starts should show some weakness.  Thursday’s releases include jobless claims which might only show modest labor market sluggishness and some weaker existing home sales.  Eurozone President Christine Lagarde’s comments at the ECB conference in Frankfurt on Monday may be the highlight next week as traders try to better understand whether the central bank is as close to the end of its tightening cycle as they think. The ECB has pushed back before but the data is looking on a much better trajectory. Final HICP inflation figures will also be released on Wednesday. UK  UK inflation data on Wednesday is undoubtedly the one to watch next week. It seems we’re seeing progress on inflation everywhere except the UK at the moment. The headline is expected to fall back to 8.2% for June, with core staying at 7.1%. But both have surpassed expectations on numerous occasions recently as inflation has remained stubbornly high. Are better readings from the US and eurozone a sign of things to come for the UK, finally? Retail sales will also be released on Friday.  
AUD Faces Dual Challenges: US CPI Data and Australian Labor Market Statistics

Dow Jones Industrial Average (DJIA) Underperforms S&P 500 and Nasdaq 100 as Sideways Range Persists

Craig Erlam Craig Erlam 17.07.2023 08:52
Dow Jones Industrial Average (DJIA) has underperformed the S&P 500 and Nasdaq 100 in the past two weeks. Last Friday’s initial bullish price actions of DJIA retreated at 34,630 key range resistance. Minor uptrend from the 10 July 2023 low of 33,595 has shown signs of exhaustion.     Last week’s advance halted at 7-month range resistance     Fig 1:  US Wall St 30 medium-term trend as of 17 Jul 2023 (Source: TradingView, click to enlarge chart) Since the 13 December 2022 high of 34,944, the US Wall St 30 Index (proxy of the Dow Jones Industrial Average futures) has continued to oscillate within a 7-month sideways range configuration. The 3% rally from the 10 July 2023 minor low of 33,595 has been rejected at the 34,640 range resistance for the third time last Friday, 14 July, and confluences with a major descending trendline that capped previous up moves since the 29 March 2022 high.     Short-term momentum has flashed a bullish exhaustion signal     Fig 2:  US Wall St 30 minor short-term trend as of 17 Jul 2023 (Source: TradingView, click to enlarge chart) The hourly RSI oscillator has flashed a bearish divergence signal at its overbought region which suggests that it is likely the upside momentum of the minor short-term uptrend from the 10 July 2023 low of 33,595 has been exhausted which in turn increases the odds of a minor decline. Watch the 34,630 key medium-term pivotal resistance to maintain the short-term bearish bias with near-term support coming in at 34,320. A break below it exposes the next supports at 34,000 and 33,840. However, a clearance above 34,630 sees a potential bullish breakout from the 7-month range with the intermediate resistance coming in at 34,940 in the first step.  
US Retail Sales Boost Prospects for 3% GDP Growth, but Challenges Loom Ahead

Brent Crude Struggles to Sustain Momentum Above $80 Amid Weaker Chinese Trade Data

Craig Erlam Craig Erlam 14.07.2023 16:05
  US inflation data takes Brent above $80 Chinese trade data disappoints again Momentum appearing to wane Oil prices are a little higher again in early trade, seemingly still buoyed by yesterday’s US inflation report, and are continuing to push for a convincing break above $80 in Brent crude. It is trading a little above $80 this morning and did at times yesterday, but rather than generating fresh momentum, it seems to instead be running into some difficulty. That would be understandable. After all, it’s rallied around 12% in two weeks, primarily on the back of the extension to the Saudi one million barrel cut to the end of August, alongside Russia’s 500,000 barrel export reduction. Some profit-taking at these levels wouldn’t be hugely surprising and may have come sooner if not for the US CPI data. What’s more, trade data from China overnight wasn’t exactly inspiring which may have dampened the rally a little. Chinese imports and exports slumped at a faster pace than expected in June in another sign of weakening global trade. We’ve seen this trend all year and clearly, conditions are not improving, quite the opposite. This will maintain pressure on the economy with domestic demand also disappointing, as seen by the weaker import numbers. Targeted stimulus may be needed sooner rather than later or the country’s once seemingly modest 5% growth target may be at risk of being missed. The breakout in Brent crude above the descending channel and above the 55/89-day simple moving average band was quite strong and it appeared to be building some momentum but there are signs that this is slipping today. The daily candle itself isn’t complete so I’m hesitant to comment on it but a close around where it currently lies is in theory bearish, being a shooting star candle.   Brent Crude Daily     The stochastic and MACD look ok at the moment on the daily chart, there aren’t any real red flags as far as they’re concerned. That’s less the case on the 4-hour and even the 1-hour charts which may point to a potentially corrective move in the short-term.   Brent Crude 4-Hour   Brent Crude 1-Hour   Either way, longer term this looks like a very bullish move. Breaking out of a two-month range on the back of supply cuts, weaker inflation readings, and the potential for softer landings for the economy. The China data is a concern but some stimulus could change people’s views on that front.        
Romania's Economic Growth Slows in Q2, Leading to Lower 2023 Forecasts

US Inflation Turning a Corner? Earnings and Dow Resistance Level in Focus

Craig Erlam Craig Erlam 14.07.2023 15:58
Has the US turned a corner on inflation? Earnings may determine whether rally can be sustained Dow testing major resistance level   It’s shaping up to be quite a relaxed end to the week, one in which we’ve seen stellar gains on the back of some very encouraging inflation data from the US. While there have been occasions when stock markets have performed well this year despite not appearing to reflect the fundamental reality of rapid economy-threatening rate hikes, the inability to really turn a corner on inflation has held them back. But perhaps that corner is now being turned. Inflation was already well off its highs but there was something about this report that was different. Not only did it beat on the headline and core level but both of the monthly readings were also incredibly positive. Now it’s just a question of whether that can be sustained. The light at the end of the tightening tunnel is getting brighter and investors are increasingly confident of emerging after one more hike in two weeks. At which point the focus will turn to the economy and whether a soft landing can still be achieved before the discussion pivots to rate cuts. The next risk comes from earnings season which gets underway today, with JP Morgan, Wells Fargo, and Citigroup all reporting on the second quarter.   Can the Dow break a more than one-year resistance level? The Dow is back trading around its highest levels in more than a year on the back of this week’s strong performance. It’s tested these levels a couple of times over the last month and many more over the last year, each time being pushed back, but could this time be different?   US30 Daily   The fundamentals look more attractive which could be enough to give it that extra bump. But I’m not convinced by the momentum indicators, on this chart being the stochastic and MACD. They look a little underwhelming and the same is true on the 4-hour chart. That’s certainly not definitive and a breakout could provide that momentum that there doesn’t appear to currently be but they aren’t particularly supportive at this point. As far as further resistance above is concerned, 35,000 stands out as the next test, with 36,000 above that then key. We could see some resistance around 35,500 as well as price has responded to it in the past  
Asia Weakens as UST Yields and Oil Prices Rise; Focus on US Inflation Data

Crude Prices Surge on Output Cuts and Inflation Data, Potential Resistance at $83-$84

Craig Erlam Craig Erlam 14.07.2023 15:57
Output cuts and inflation data continue to boost crude prices Temporary disruptions could add to the bullishness Potential resistance around $83-$84   Oil is trading relatively flat today but has made tremendous gains over the last couple of weeks and could still add to that over the coming sessions. The price has risen more than 13% from the lows on 28 June and, despite appearing to struggle at times yesterday, still has plenty of momentum. The break above $80 was very significant after multiple efforts by Saudi Arabia and its allies to manipulate the price to more sustainable levels, from their perspective. Temporary output disruptions, like those currently in Libya and Nigeria, could further lift prices in the short term as potential tightness in the market on the back of cuts and economic resilience boost demand.   Key Resistance Lies Ahead Brent could face an interesting test around $83-$84 if it keeps rallying, with the boost from US inflation data and Saudi/Russian cuts potentially giving it an additional boost, as well as the psychological lift from this week’s breakout. Brent Crude Daily     The 200/233-day simple moving average has been a key zone of support and resistance previously and could prove to be so again. It hasn’t traded above here in more than a year so a break above would be significant. A move lower could draw attention back to $80 and whether we’ll get that confirmation of the initial breakout. A move below here wouldn’t necessarily be a particularly bearish move, with the 55/89-day SMA band around $76-$78 arguably more important, falling around the upper end of the descending channel. It could also fall around a key fib level depending where the price peaks first.   
Senior Fed Officials Signal Rate Hike Pause as Key Economic Indicators Awaited

US Inflation Falls Faster than Expected, Fed Hike Still Likely

Craig Erlam Craig Erlam 13.07.2023 11:30
US inflation falls faster than expected; CPI 3% (YoY), Core CPI 4.8% (YoY) July Fed hike still highly likely despite inflation drop Nasdaq hits 18-month high after the data   Financial markets are buzzing at the US open on Wednesday, with investors buoyed by a very promising inflation report from the US. The report not only beat at the headline level but core actually slipped even further, dropping to 4.8% for the first time since October 2021. The monthly data was also extremely encouraging, with headline and core falling to 0.2% which was lower than the consensus forecast in both cases. It really is just what the doctor ordered. Of course, there’s been plenty of setbacks over the last couple of years so we don’t want to get too carried away with one inflation report but it really is about as good as we could have realistically hoped for. That said, it’s unlikely to change the outcome of the debate that takes place in two weeks. The Fed is still extremely likely to hike by 25 basis points, rightly or wrongly, as the labor market data on Friday simply wasn’t good enough. In fact, the wages component was quite the opposite and will likely convince the FOMC that one more hike is warranted, which is what markets are still heavily pricing in.   Fed Interest Rate Probability     But that may well now be the last and if we can see any further signs of progress over the summer then that will likely end the debate altogether, shifting the conversation from how many more hikes to the timing of the first cut.            
Oil Prices Soar on Prospect of Soft Landing, Eyes Set on $80 Breakout

Oil Prices Soar on Prospect of Soft Landing, Eyes Set on $80 Breakout

Craig Erlam Craig Erlam 13.07.2023 11:22
The prospect of a soft landing lifts oil prices Rally builds on efforts by Russia and Saudi Arabia to boost prices A break of $80 could be another big step Oil prices have been understandably lifted by the US inflation release today as it could be seen to increase the possibility of a soft landing. Brent was already trending higher though and is now at its highest point since April, having already broken out of the range it traded within for the last couple of months. ​ The next level for Brent to overcome is $80, which would be a big psychological leap. That may also see WTI break above its June high following the spike on the 5th. The move higher also suggests the latest efforts of Saudi Arabia and Russia are working in tightening the markets and boosting prices after multiple failed efforts.   A bullish breakout in Brent? Not only would a significant break of $80 be a big psychological move, but it would also come on the back of a break above the 55/89-day simple moving average band and the descending channel it traded mostly within over the last couple of years.     The next major resistance zone above here could come around $83-$84.50 where the price could come into contact with the 200/233-day SMA band. As far as support is concerned, the mid-May and June highs around $78.70-$78.80 could be interesting, as could the 55/89-day SMA band which coincides roughly with the peak a few weeks ago. A rebound off either of these could be viewed as bullish confirmation of the initial breakout.    
Unraveling the Path Ahead: Gold and Silver Prices Amidst Fed Expectations

Unraveling the Path Ahead: Gold and Silver Prices Amidst Fed Expectations

Craig Erlam Craig Erlam 13.07.2023 08:19
The recent retreat of gold prices to around $1,900 per ounce and silver prices to the area of $22 per ounce has sparked questions about the future direction of these precious metals. Market participants are eager to determine if gold and silver will find support at these levels, potentially leading to a rebound or a push towards historic highs. In seeking insights into this matter, we turn to the expertise of financial analyst Craig Erlam. According to Erlam, the expectations surrounding the actions of the Federal Reserve (Fed) play a significant role in shaping the outlook for both gold and silver prices. The impact of Fed decisions on yields and the value of the US dollar cannot be underestimated.   Erlam highlights the recent boost that gold and silver prices received following positive inflation data. This indicates that unless there is a substantial shift in the opposite direction, the current momentum could support prices in the short term. While economic data has been volatile, there is a growing sense of progress. The key lies in the policymakers' interpretation of this progress in the days ahead.       FXMAG.COM: The gold price has made a retreat to the vicinity of $1,900 per ounce. What's next for gold prices - will the King of Metals find support there from which to bounce? The silver price has made a retreat back to the area of $22 per ounce and what's next for the metal - does it have a chance to head toward historic highs?   Craig Erlam: In both cases, a lot comes down to what the Fed is expected to do, and what impact that has on yields and the dollar. As we've seen today, some very encouraging inflation data has given both gold and silver a big lift and unless we see a significant shift the other way, that could support prices in the near term. The economic data has been volatile but it does feel like we're finally seeing progress. We'll see from policymakers over the coming days whether they view recent progress to be substantial enough.
Quiet Start for Japanese Yen as USD/JPY Trades Higher

RBNZ Pauses Rate Hikes After Extended Cycle; Inflation Expected to Normalize, NZD's Performance Questioned

Craig Erlam Craig Erlam 12.07.2023 13:33
RBNZ leaves rates unchanged after near-two year hiking cycle Inflation is seen returning to target next year NZD performing better but potentially running on fumes   The RBNZ opted to pause its tightening cycle earlier today after a very aggressive tightening cycle over the last couple of years. After increasing the cash rate to 5.5%, there are signs that the economy is slowing which will bring inflation down. While inflation has only fallen to 6.7% so far, data next week is expected to show it falling further and the central bank is confident it will return to its 1-3% target range next year. New Zealand faced many challenges in the aftermath of the pandemic which contributed to surging inflation but much higher rates and levels of immigration appear to be easing those pressures.     Is the New Zealand dollar running on fumes? The kiwi has been gradually trending lower in the first half of the year but there have been some small signs that this may be about to change. The question is, if the RBNZ is done, has the bullish case softened somewhat? Or could a stronger economy draw investors back in?     NZDUSD Daily   Over the last month, it’s run into support around 0.60 against the US dollar which falls around the 50% Fibonacci retracement level – October 2022 lows to February 2023 highs. Then in late June, it rebounded slightly ahead of that previous low which could be viewed as a bullish signal but many will still be unconvinced. A break above the descending channel could be another stronger signal that the trend has turned for the pair, although so far, it appears to be running low on momentum just when it needs it most.     NZDUSD 4-Hour  
Assessing Energy Price Dynamics and Their Impact on Inflation in the Short and Medium Term

Markets expect BoE to raise rates another 1.25%. UK unemployment rises to 4% in the three months to May, up from 3.8%!

Craig Erlam Craig Erlam 12.07.2023 10:28
UK unemployment rises to 4% in the three months to May, up from 3.8% Average earnings hit 7.3% (excluding bonus) and 6.9% (including bonus) Markets expect BoE to raise rates another 1.25%   UK jobs data this morning was a mixed bag on the face of it but a deeper dive into the numbers may give the Bank of England more cause for optimism than pessimism. The earnings component of the report, while continuing to partly shield households from soaring inflation, is the part the MPC will be most concerned about. Getting inflation back to 2% on a sustainable basis simply won’t happen unless that wage growth falls dramatically and instead, it’s still rising, reaching 6.9% including bonuses and 7.3% without. The revisions to the April figures will not be welcome by the BoE either. That said, there is plenty within this report to suggest the trend in wages will soon reverse which will give the MPC cause for optimism. Unemployment in the three months to May jumped to 4%, up 0.5% from its low nine months ago and steadily rising. There are other signs too that labour market tightness is easing, like falling vacancies to unemployment and lower inactivity as people are drawn back into the labour force due to high inflation. While this isn’t hampering wage growth yet, it almost certainly will as bargaining power shifts and inflation falls. Lower energy and food prices, alone, should drive inflation down considerably over the coming months and that will filter into wage numbers over time which will give the BoE some confidence that pressures will ease.   Sterling makes small gains after initial volatility The pound has been quite volatile in the aftermath of the data which probably reflects the mixed nature of it. It is trading a little higher on the day still, even as yields are marginally lower.     It’s interesting to see momentum starting to slip as the pair gets closer to 1.30 which has previously been a very notable area of support and resistance, being a major psychological level. There appears to be a divergence forming between price, which has made new higher highs, and the stochastic and MACD, both of which thus far have not. That may change but if it doesn’t, it could be a potential red flag on approach to that notable level. Markets still expect the BoE to hike rates by another 1.25% over the next few quarters, including a significant chance of another 50 basis point move next month. Of course, those expectations could be pared back if we do finally start to see progress on the inflation front.     BoE Interest Rate Probability    
ECB Meeting Uncertainty: Rate Hike or Pause, Market Positions Reflect Tension

UK Jobs Report Anticipated to Show Strong Employment and Wage Growth, US Nonfarm Payrolls Decline Weighs on Dollar

Craig Erlam Craig Erlam 11.07.2023 08:20
UK jobs report expected to show strong employment and wage growth US nonfarm payrolls declined in June The British pound has drifted lower on Monday. GBP/USD is trading at 1.2827 in the European session, down 0.09%. UK employment data expected to remain strong The UK labour market remains resilient despite a cooling economy and high interest rates. Tuesday’s June jobs report is expected to show strong numbers. The economy is expected to produce 158,000 jobs in June, after a banner reading of 250,000 in May. The unemployment rate is projected to remain at a low 3.8% and unemployment claims are expected to continue declining. Wage growth is expected to rise to 6.8%, up from 6.5%. That sounds like great news, but not when you’re the Bank of England and need the labour market to show some cracks and wage growth to slow down. A tight labor market and strong wage growth have hampered efforts by the central bank to lower inflation and the OECD said last week that the UK was the only major economy where inflation is still rising. The May inflation report was a disappointment, with headline inflation remaining at 8.7% and the core rate rising from 6.8% to 7.1%. BoE Governor Bailey will likely comment on the job numbers and investors will be looking for clues about the BoE’s plans at the August 3rd meeting. The BoE has raised rates to 5.0%, but more tightening will be needed in order to curb inflation and the money markets have fully priced in a peak rate of 6.5% by February.   US dollar takes a hit after nonfarm payrolls decline The US dollar was broadly lower against the major currencies on Friday, after nonfarm payrolls slid to 209,000, below from the downwardly revised reading of 306,000 in May but not far from the 225,000 consensus estimate. The downturn may have surprised many investors who were caught up in the hype of a massive ADP employment release which showed a gain of 497,000. There was speculation of a blowout nonfarm payroll reading but in the end, the consensus estimate was close and the US dollar was broadly lower on expectations that the Fed could be close to winding up its rate-tightening cycle.   GBP/USD Technical GBP/USD tested support at 1.2782 earlier today. The next support level is 1.2716 There is resistance at 1.2906 and 1.2972  
CHF/JPY Hits Fresh All-Time High in Strong Bullish Uptrend

US Inflation Data Awaited as Jobs Report Supports Another Fed Hike, Weak Chinese Demand Stalls Inflation

Craig Erlam Craig Erlam 11.07.2023 08:16
It’s been a relatively slow start to the week but there’s still plenty to look forward to, most notably the US inflation data on Wednesday. Friday’s jobs report did nothing to level the debate on whether to pause at the next Fed meeting in two weeks. In fact, it may have even cemented another 25 basis point hike despite the NFP number falling short of expectations and, to the relief of many, well short of the ADP release. Wage growth remains a concern and on that front, the report was hot. At 0.4%, the monthly increase was a little higher than anticipated, while the annual reading remained at 4.4% (after an upward revision to the May number) despite an expectation that it would drop to 4.2%. Markets now see another hike as being almost 90% likely which seems fair under the circumstances. Weak Chinese demand sees inflation flatline in June The data from China overnight paints quite the opposite picture. An economy struggling on the demand side, despite initially rebounding strongly following the abolishment of zero-Covid. Excess supply is causing deflation at the PPI level and even CPI is now flat on an annual basis. This is more pronounced in goods, a trend we’re seeing elsewhere as services remain where the demand is, but even here we’re seeing more weakness than expected. Stimulus feels inevitable but so far it hasn’t been forthcoming enough and when it does arrive it will likely continue to be very targeted.  
Metals Update: SHFE Aluminium Inventories Hit 5-Year Low Amid Optimism in Steel Production and Gold's Bullish Sentiment Grows

USD/JPY Faces Risk of Medium-Term Uptrend Breakdown, Minor Bounce Possible

Craig Erlam Craig Erlam 11.07.2023 08:11
Medium-term uptrend of USD/JPY in place since 16 January 2023 at risk of breakdown. Steep decline from last Thursday, 6 July 2023 has reached oversold condition. Minor bounce cannot be ruled out at this juncture above 140.60 support. Watch the 142.50/142.80 intermediate resistance zone. This is a follow-up on our prior analysis “USD/JPY surged to a 7-month high, but fundamentals diverge” published on 23 June 2023. We have highlighted the risks of the overextended rally exhibited in the USD/JPY seen in the past six weeks as it approached a key resistance zone of 145.50/146.10 (click here for a recap). The price actions of the USD/JPY have indeed staged a retreat right below 145.50 (the lower limit of the key resistance zone) as it printed an intraday high of 145.07 on 30 June 2023 and dropped by 379 pips to hit a low of 141.28 in yesterday, 10 July US session.   Medium-term uptrend from 16 January 2023 is at risk of breakdown   Fig 1:  US/JPY medium-term trend as of 11 Jul 2023 (Source: TradingView, click to enlarge chart) Two key observations have emerged that indicated that the ongoing medium-term uptrend phase of the USD/JPY in place since the 16 January 2023 low of 127.22 may have reached its terminal point on 30 June 2023 which in turn may see the start of a multi-week corrective down move. Firstly, price actions have reintegrated below 142.50 (the pull-back support of the upper boundary of the medium-term ascending channel where price actions pierced above it on 22 June 2023) which suggests that the prior bullish breakout is likely a failure. Secondly, the daily RSI has broken below a key parallel ascending trendline support at the 48 level, indicating that medium-term upside momentum has waned.     A minor bounce cannot be ruled out as the decline reached short-term oversold condition   Fig 2:  US/JPY minor short-term trend as of 11 Jul 2023 (Source: TradingView, click to enlarge chart) In the realm of technical analysis, price actions of tradable financial instruments do not evolve in a vertical fashion but oscillate within a trend. As seen on the 1-hour chart of the USD/JPY, the steep decline since last Thursday, 6 July 2023 minor high of 144.65 has led the hourly RSI to reach an oversold condition (below the 30 level) and flashed out a bullish divergence observation (higher low in RSI but lower low in parallel price actions). These current observations have emerged as the decline in price actions is coming close to 140.60 key intermediate support (see daily chart). Hence if the 140.60 intermediate support manages to hold, a minor bounce may unfold with intermediate resistances coming in at 142.50 and 142.80 (20-day moving average). The key short-term pivotal resistance will be at 143.70 to maintain the ongoing short-term downtrend phase in place since the 30 June 2023 high of 145.07. On the other hand, a break below 140.60 exposes the next supports at 139.95 and 138.70.
ECB's Potential Hike Faces Limited Rate Upside as Macro Headwinds Persist

European Equity Markets Brace for a Shocking Week, Fueled by Economic Anxiety and Resilient Data

Craig Erlam Craig Erlam 10.07.2023 12:56
It’s been a shocking week for European equity markets, on course to shed almost 5% and it could get worse if the US jobs report reflects what we saw yesterday from ADP. You wouldn’t always guess it when looking at the performance of stocks but there is mounting anxiety about the resilience of the economy and what that will mean for interest rates going into the end of this year and 2024. Investors always seem to find a way to look on the bright side which may explain the disconnect between economic fears on the back of rapidly rising interest rates and the performance of indices. And that may be rewarded if central banks can achieve the soft landing they’re hoping for but with every piece of resilient data and additional rate hike, that’s looking harder and harder. And you can see it reflected in their language more and more. That’s not to say investors have suddenly turned bearish on the basis of this week, although it has been quite a sharp sell-off, but we may have reached a point in which they are questioning whether markets are no longer reflecting reality. The ADP report doesn’t always attract that much attention, in fact for years it’s been borderline disregarded, but it’s impossible to ignore yesterday’s release. It smashed expectations and once again indicated we may be looking at another consensus-beating NFP number. Further signs that the labor market is red-hot and resilient.   Choppy trading in bitcoin but ultimately range-bound Trading has remained choppy in bitcoin over the last week or so but we haven’t yet seen any significant developments, with it still largely contained to the $30,000-$31,000 range it’s traded within since bursting higher last month. There’s more cause for optimism on the back of the ETF filings but there’s no guarantee they will yield a positive outcome even if the chances are enhanced by the backing of those involved. It could also be a lengthy process which may explain the stall we’ve seen over the last couple of weeks.  
Oil Prices Show Resilience Despite Setbacks, Gold Holds Above $1,900 Ahead of US Jobs Report

Oil Prices Show Resilience Despite Setbacks, Gold Holds Above $1,900 Ahead of US Jobs Report

Craig Erlam Craig Erlam 10.07.2023 12:42
Oil continues higher despite setbacks this week Could we finally be about to see a breakout in oil prices after two months of consolidation? The rally over the last week or so from the range lows has been quite strong and backed by momentum – as well as fresh cuts from Saudi Arabia and Russia – and despite being pushed back from the recent highs over the last couple of days, it’s continued to drive higher in a way that could see the upper boundary buckle. Yesterday’s ADP number appeared to wipe out any momentum that had built up but a rally late in the day saw it end the session in the green and come within a whisker of 21 June peak. A failure to overcome that could further confirm the continuation of the gradual consolidation we’ve seen over the last couple of months, whereas a break above could be a very bullish signal.   Can gold hold onto $1,900 after the US jobs report? Gold came under pressure in the aftermath of yesterday’s ADP report but managed to hold above $1,900 and even recoup some of its losses. It’s trading marginally higher today but whether it will be able to hold onto those gains, and remain above $1,900, will probably depend on what kind of jobs report we get. Can it cling on if we get another red-hot report? Another strong report is looking increasingly likely on the back of yesterday’s ADP number, although as we’ve seen in the past it isn’t always that reliable a barometer. A cooler report could propel it higher given expectations have now undoubtedly risen. It’s still almost 8% from its highs and a cooler report could offer the opportunity for a corrective move which we’ve barely seen so far.  
USD/JPY: Japanese Authorities Signal Intervention Amid Rapid Currency Appreciation

Upcoming Economic Indicators: India, Australia, New Zealand, Japan, Singapore

Craig Erlam Craig Erlam 10.07.2023 12:40
India Out on Wednesday, consumer inflation for June is forecasted to dip slightly to 4.1% year-on-year from 4.25% in May, the lowest level of growth since April 2021. On a month-on-month basis, consumer inflation is forecasted to inch lower to 0.3% from 0.51% in May. Wholesale inflation for June will be released on the following day and are forecast to drop further to -3.7% year-on-year from -3.48% in May. If it turns out as expected, it will be the third consecutive month of contraction. To wrap up the week, the balance of trade for June will be out on Friday. Australia Two key soft data will be out on Tuesday; Westpac consumer confidence is expected to rise further to 3.2% month-on-month for July from 0.2% recorded in June. In contrast, the NAB Business Confidence for June is forecasted to deteriorate further to -6 from -4 in May.   Consumer inflation expectations for Jul will be released on Thursday, it is expected to dip slightly to 4.9% from 5.2% in June. New Zealand The RBNZ monetary policy decision is on Wednesday, with no change expected after the central bank hiked its official cash rate for the 12th consecutive time in May. This took it to 5.5%, its highest level since December 2008.  Japan Out on Monday, the current account surplus for May is expected to shrink slightly to JPY1,884.5 billion from JPY1,895.1 billion in April. Bank lending for June is forecasted to drop to 1.6% year-on-year from 3.4% in May. Eco Watchers Survey, a gauge for Japan’s service sector sentiment is forecasted to improve further to 56 in June from 55 recorded in May, its highest reading since December 2021. If it turns out as expected, it will be the fifth consecutive month of increases for service sector sentiment. Machinery orders for May will be released on Wednesday. The consensus is expecting a reduction in growth decline to -0.2% year-on-year from -5.9% in April. Singapore Flash Q2 GDP will be out on Friday; some forecasters are calling for a technical recession where -0.2% is being forecasted on a quarter-on-quarter basis for Q2. If it turns out as expected, it will be the second consecutive quarter of negative growth after Q1’s reading of -0.7% q/q. On a year-on-year basis, Q2 GDP is forecast to come in lower at 0.1% from 0.4% recorded in Q1.    
EUR Under Pressure as July PMIs Signal Economic Contraction

China's Economic Watch: Inflation, Trade, and Geopolitical Developments

Craig Erlam Craig Erlam 10.07.2023 12:39
China Several key data and events to watch for this week. On the geopolitical front, US Treasury Yellen has kick-started her official visit to China and will be meeting top Chinese officials over the weekend, 8 July to 9 July. Market participants will be watching for signs of whether there will be progress made between the US and China in finding areas of common economic ground and opening communication channels for further dialogue amid a still frosty relationship between them over the current “tech war”. On Monday, inflation and producers’ prices data for June will be out and the consensus is set for a continuation of lackluster readings. Consumer inflation is expected to come in at 0.2% year-on-year, unchanged from 0.2% in April, a 26-month low. On the other hand, producers’ prices are expected to slip further to -5% year-on-year from -4.6% in May. If it turns out as expected, it will be the ninth consecutive month of contraction which increases the risk of a deflationary spiral in China. On Tuesday, outstanding loan growth together with M2 money supply data will be released. Loan growth is expected to inch slightly lower to 11.2% year-on-year in June from 11.4% in May; its weakest pace of increase since January 2023. On Thursday, the balance of trade for June will be out to gauge the latest conditions in external and internal demand. Exports growth is forecasted to shrink at a lesser magnitude of -3.1% year-on-year from -7.5% in May, a three-month low. Imports growth is forecasted to decline at a lesser rate of -2 % year-on-year from -4.5% in May. If it turns out as forecasted, it will be the fourth consecutive month of falling purchases, signaling the continuation of a weak domestic demand environment.  
Risk of Deflationary Spiral in China Impacts Confidence in Equities, while USD Holds Steady Against Yuan

Risk of Deflationary Spiral in China Impacts Confidence in Equities, while USD Holds Steady Against Yuan

Craig Erlam Craig Erlam 10.07.2023 12:28
Deflationary spiral risk has negated confidence in China equities. US dollar has continued to hold steady against the yuan despite a broad-based sell-off against other major currencies ex-post US non-farm payrolls. The key intermediate support to watch on the USD/CNH will be at 7.2160. Weak China inflation data offset positive China Big Tech news flow The dreaded fear of a deflationary spiral in China has reached “code red” where the latest consumer inflation rate for June has flattened to 0% year-on-year from a gain of 0.2% year-on-year in May and came in below expectations of an increase of 0.2%. This latest reading in CPI is the weakest rate since February 2021. In addition, producers’ prices (factory gate prices) continued to deteriorate further into contraction mode; it dropped -5.4% year-on-year, faster than a 4.6% fall in May, and worse than expectations of a -5.0% decline. Overall, it has marked the ninth consecutive month of producer deflation and its steepest fall since December 2015. Time is running out for Chinese policymakers to negate the steepening rout in the internal demand environment that can potentially lead to further loss in consumer and business confidence if the deflationary spiral starts to be persistent. It may lead to a liquidity trap scenario in China where monetary policy tools will be less effective to stimulate real economic growth. The forward pricing mechanisms of the stock market seem to have started to take into account some aspects of the negative feedback loop triggered by the liquidity trap scenario, earlier intraday gains of between 1% to 3.2% seen in today’s Asian session on the Hang Seng indices as well as China’s benchmark CSI 300 driven by China Big Tech equities as Chinese regulators have signalled on last Friday after the close of the Asian session to end a two-year plus of crackdown on the technology sector have been reduced by slightly more than half, CSI 300 (0.5%), Hang Seng Index (0.8%), Hang Seng TECH Index (1.25%), and Hang Seng China Enterprises Index (0.7%) at this time of the writing.     China’s yuan remained soft despite the broader USD sell-off       Fig 1:  US dollar rolling 1-month performance as  of 10 Jul 2023 (Source: TradingView, click to enlarge chart) The US dollar sold off last Friday, 7 July reinforced by technical factors after the US Dollar Index cracked below its 50-day moving average that had been acting as a prior minor support since 28 June 2023, also ex-post US non-farm payrolls for June that came in below expectations (209K added vs. 225K consensus). Based on the rolling one-month performances as of today, the USD is weakest against the EUR (-1.89%), GBP (1.81%), and CHF (-1.35%) while holding steady against the offshore yuan, CNH (+1.44%). In addition, the US Treasury 2-year yield premium over an average of key developed nations’ 2-year sovereign yields (Germany, UK, Japan, Canada, Switzerland, Australia, China) has narrowed as well.     USD/CNH short and medium-term uptrend phases remain intact     Fig 2:  USD/CNH short & medium-term trends as of 10 Jul 2023 (Source: TradingView, click to enlarge chart) Since the start of its upside acceleration on 4 May 2023, the USD/CNH has managed to evolve above its 20-day moving average and today’s price action has managed to stage a rebound after a retest on it. If the 20-day moving average now acting as a key intermediate support at 7.2160 is not broken down, the USD/CNH is likely to remain in its short-term bullish trend trajectory which in turn may see further potential weakness in the CSI 300 and Hang Seng indices. The only catalyst for a potential revival of bullish animal spirits in China equities is a clear signal from China’s State Council on the implementation of new fiscal stimulus measures in terms of scope and timing.  
Market Sentiment and Fed Policy Uncertainty: Impact on August Performance

Oil Retreats Despite Positive Momentum, Gold's Rebound in Jeopardy

Craig Erlam Craig Erlam 07.07.2023 09:00
Despite positive momentum, oil falls short once more Oil prices are retreating in risk-averse trade today. The ADP report has clearly had a negative impact given it likely means we’re facing another red-hot jobs report tomorrow and the prospect of higher rates for longer. It also came at an opportune time, with the price flirting with the peak from two weeks ago, only to turn south having fallen just shy of surpassing it. That means we’re seen yet another failed new high or low in recent weeks and the gradual consolidation, roughly between $72-$77 is still in play. This time it was close and there was good momentum going into the ADP release but it seems the jobs number was just too big. A repeat performance tomorrow could cement that and undo the efforts of the Saudis and Russians earlier this week in seeking to drive the price higher.   Is gold vulnerable to another big break? Gold’s brief rebound is seemingly over, with the price already struggling around $1,930-$1,940 before ADP delivered a hammer blow to it. The yellow metal is back trading just above $1,900, a level that’s now looking very vulnerable ahead of tomorrow’s jobs report. If it manages to hold above in the interim, a hot report could be the straw that breaks the camel’s back. Suddenly it will become a question of whether another hike in September is unavoidable against the backdrop of such a hot labour market. These aren’t the only figures that matter but they do significantly weaken the case for another pause.
Inflation Outlook: Energy Prices Drive Hospitality, Food Inflation Eases

Oil's Momentum Falters Despite Output Curbs, Raises Doubts for Breakout

Craig Erlam Craig Erlam 05.07.2023 08:35
Oil quickly loses momentum despite output curbs Oil prices are rising again today after giving back all of Monday’s early gains and more as the session progressed. Buoyed by the news of Saudi Arabia extending its voluntary one million barrel output cut by a month to August, alongside Russia cutting exports by 500,000 in the same month, Brent crude rallied more than 1% and looked on course to increase its winning streak to four sessions but that’s not how it turned out. Now prices are rising again but remain shy of yesterday’s peak and if it falls short today then doubts may grow around its ability to take the next step and even break above its recent trading range. That range has consolidated over the last couple of months but not to any significant degree that suggests a breakout is imminent, with prices recently fluctuating between $72 and $77.   A big hurdle to overcome for gold The gold recovery is continuing into a fourth day although so far it hasn’t been particularly inspiring. We’ve seen a modest rebound since the yellow metal slipped below $1,900 and nothing has really improved fundamentally that would warrant any more. Central banks are still desperately trying to gather any evidence that inflation is on a sustainable path back to target and falling short. The price has moved back towards a region that was a key area of support in May and early June and this could represent the first big test of the recovery. A move above the $1,930-$1,940 zone could be a bullish signal, at least in the short term, at which point $1,960, $1,980 and $2,000 could come back into focus. But that’s a big hurdle to overcome first.  
GBP: Softer Ahead of CPI Risk Event

Central Banks Tread Cautiously as RBA Pauses, Markets Anticipate Tightening, Musk and Zuckerberg Head for Showdown

Craig Erlam Craig Erlam 05.07.2023 08:30
It’s been a relatively quiet session with the US bank holiday naturally weighing on activity and those remaining having an eye on Friday’s jobs report but the day hasn’t been without interest as the RBA opted against hiking interest rates again. The central bank surprised last time out in raising rates another 25 basis points but this time around, policymakers opted for a hawkish pause. Like many other major central banks – BoE excluded – it has reached a point at which every decision could swing either way depending on recent developments. Central banks are keen not to overtighten due to the immense pressure past tightening has already put on households and businesses but after being so late to start the process, they desperately don’t want to pause too soon and risk inflicting higher rates for longer which could be much more damaging again. It would obviously be easier if they had seen more progress to this point but inflation is proving stubborn and economies, so far, very resilient. Further tightening still looks likely at this stage, with markets pricing in a 75% chance that we see that by the August meeting.   Things are going to get more heated between Musk and Zuckerberg Elon Musk may be aggravating his userbase at just the wrong time, with Meta announcing that it will launch its version of the platform, Threads, on Thursday. It will be a direct competitor to Twitter and, based on released screenshots, look and behave in a very similar fashion. With Musk desperately trying to push people to pay a subscription fee for Twitter, Threads may offer a simple alternative that may force a rethink of that strategy. Given the userbase Meta already has, Musk can’t afford to underestimate the threat that the new platform poses and it may be very hard to win the audience back if they rapidly switch en masse.
Oil Range-Bound, Gold Struggles Amid US Interest Rate Concerns

Oil Range-Bound, Gold Struggles Amid US Interest Rate Concerns

Craig Erlam Craig Erlam 03.07.2023 10:31
Oil remains range bound but ending the week on a positive Oil prices are edging higher again today but given how they’ve traded over the last couple of months I’m struggling to read too much into it. The inventory data on Wednesday was bullish on the face of it and the eurozone inflation data today won’t do it any harm either, but uninspiring Chinese PMIs overnight don’t fill me with confidence. Broadly speaking, it’s range-bound as it has been since early May, and showing little signs of breaking in either direction. The range is getting very gradually smaller but at such a slow pace that it doesn’t really tell us much at this point. It very much feels like traders are awaiting more information on inflation and, by extension, interest rates, and until we have a better idea of the outlook, it could remain in this pattern.   Gold struggling amid US interest rate concerns Gold continues to languish around $1,900 after slipping below here briefly on Thursday for the first time since March. Strong economic data from the US has reaffirmed fears that a resilient economy may stand in the way of the Fed ending the tightening cycle, increasing the possibility of more hikes and a harder landing. There are clear signs of progress on inflation but with the economy and labour market showing such resilience, officials may be concerned that getting from 4.4% to 2% may be much harder than what’s been achieved so far. And the longer it remains above, the longer rates will remain high which is a big risk to the longer-term economic prospects.  
Australia Retail Sales Rebound with 0.5% Gain; AUD/USD Sees Volatility - 28.08.2023

Bitcoin's Momentum and Potential for Surge Amidst Recent Developments. Market Watch: Fed, ECB, BoE, and BoJ Heads Awaited for Panel Discussion

Craig Erlam Craig Erlam 29.06.2023 08:34
Equity markets are cautiously higher in Europe while the US is poised to open relatively flat as we await appearances from the heads of the Fed, ECB, BoE and BoJ.   Fed Chair Jerome Powell, ECB President Christine Lagarde, BoE Governor Andrew Bailey, and BoJ Governor Kazuo Ueda are due to take part in a panel discussion at the ECB Forum on Central Banking around the opening bell in the US and their comments could set the tone for the rest of the day. Often in these situations, policymakers will stick to the script, preferring to leave big announcements for meetings and certain high-profile events. But with so many heads appearing at the same time, there’s every chance at least one says something that will either rattle or stimulate the markets. To make this event more intriguing, they’re all contending with very similar issues and yet their individual situations are quite different, which could make the discussion all the more interesting. The Fed is arguably closest to the end of its tightening cycle and will probably be the first to cut rates, the ECB appears to be making some progress but is also more pessimistic than many on how much more is needed, the BoE is in a mess, frankly, and the BoJ may simply watch as the whole thing passes it by.   It really is quite fascinating and it will be interesting to hear what each has to say about the current environment. Especially with the Fed and ECB until now adopting a more hawkish stance than most, the BoE coming across less hawkish but recently being forced to pivot back to larger hikes, and the BoJ pushing back against any hawkish expectation in the markets.   Is bitcoin going to take off from here? Bitcoin has steadied between $30,000 and $31,000 in recent days after surging on the back of encouraging ETF filings. The SEC lawsuits against Binance and Coinbase have not been forgotten but they’ve certainly drifted into the background and been overtaken by far more promising news flow. It would appear the cryptocurrency has good momentum once more and the community may well be wondering if this could be the kind of development that sees enthusiasm for cryptos surge again. It’s obviously been a fantastic year for bitcoin so far but the sell-off since mid-April was another reminder that it doesn’t come without major setbacks.  
Central Bankers and Key Data Awaited: Implications for Equity Markets and Economic Confidence

Central Bankers and Key Data Awaited: Implications for Equity Markets and Economic Confidence

Craig Erlam Craig Erlam 28.06.2023 09:00
It’s been a relatively slow start to the week so far but things are likely to pick up with more appearances from prominent central bankers and key data due for release in the coming days. Equity markets are a little higher early in the European session after what has been a tough couple of weeks. Stubborn inflation has investors concerned that there may be a much heavier economic price to pay for restoring price stability which appears to have shaken confidence a little. Not only are more rate hikes being priced in but the prospect of rate cuts this year has become more fantasy than reality. Obviously, some are faring much worse than others, the UK being a prime example, but progress has also been much slower than hoped elsewhere and the likelihood is that getting from 4% to 2%, for example, may prove more challenging again. We need to see some concrete signs of progress or sentiment could suffer much further.   Can bitcoin be propelled higher on ETF excitement? We’ve seen some consolidation in bitcoin in recent days after it hit fresh highs for the year late last week. There’s been no shortage of crypto newsflow but the excitement around an ETF may well be what’s pulled traders back in. Either way, it promises to be an intriguing and potentially volatile second half to the year as we await the outcome of that and the action brought against various exchanges from the SEC. ​  
Turbulent Times Ahead: ECB's Tough Decision Amid Soaring Oil Prices

The Bank of England Hikes Rates Amid Concerns of Inflation, MPC Split, and Pound's Volatility

Craig Erlam Craig Erlam 22.06.2023 13:46
The Bank of England accelerated its tightening efforts after meeting this week, hiking rates by 0.5% in response to another raft of worrying inflation data.  And it's not just yesterday's CPI data that will have caused considerable discomfort for the MPC, the April figures were also far too high and wage numbers we've had in the interim suggest its becoming increasingly embedded. That had to have caused serious alarm within the BoE, within seven members of the committee anyway. Two policymakers voted to hold rates steady for the fourth meeting highlighting the widening gulf between the views on the MPC which may make finding a consensus going forward that much more challenging.  There's every chance that those backing 50 basis points did so in the hope that doing more now may necessitate the need to do less later on and for a shorter period of time. That's not how markets are initially perceiving it though, with the odds of Bank Rate rising above 6% increasing. It could get rather painful in inflation doesn't improve soon. The pound appears to be weighing up both of these considerations, as is evident in the very volatile response we've seen in the currency. Rate hikes are generally good for a currency but when they're rising to levels that could seriously threaten the economy, there's certainly an argument for the opposite to happen.     Turkish interest rates finally heading in the right direction  Another interest rate decision was announced alongside the BoE, with the CBRT reverting back to hiking interest rates aggressively in order to put a lid on inflation and steady the currency which has fallen another 15% in recent weeks.   President Erdogan won the election promising to defend lower interest rates having led a campaign of aggressive rate cuts under Governor Åžahap KavcıoÄŸlu, before immediately replacing him and the finance minister after the vote. A rate hike today was widely expected but the range of forecasts was vast and if anything, the 6.5% hike was at the lower end of the range.  Turkey faces many problems going forward as a result of the misguided policies over the last couple of years and that will likely warrant more aggressive tightening in the future. For now, investors may be mildly relieved that rates are heading in the right direction, if not fast enough. The risk is that Erdogan hasn't really hesitated to sack Governors that raise rates in the past so investors will never feel fully at ease as long as he's President.
EUR: German IFO Data and Central Bank Hawkishness Impact Euro/USD Range Trade

European Stocks Set to Open Lower Following Powell's Testimony as Inflation Concerns Persist

Craig Erlam Craig Erlam 22.06.2023 11:52
European stocks are poised to open a little lower on Thursday, tracking moves we saw in the US on Wednesday following Jerome Powell's appearance in Congress. The Fed Chair appeared before the House Financial Services Committee and very much stuck to last week's script, which should come as a surprise to no one. Inflation is not under control and the vast majority at the Fed believe more rate hikes will be warranted was the message, although we got that from the dot plot.   For once, markets are buying what the Fed is selling and have priced in a 70% chance of a hike in July. But that's where they believe it ends with the easing cycle then starting around the turn of the year so the Fed and the markets aren't entirely on the same page. The data will likely determine whether markets remain in agreement on July as I imagine it will take less to convince investors that another hike isn't warranted than the Fed.   Will the BoE be tempted to hike by 50 basis points? What the Bank of England would do to be in a position to be debating whether another rate hike or two is even necessary. Instead today, the debate will be whether 25 basis points is even enough or if it should revert back to 50. The central bank has made almost no progress in getting inflation back to 2%, in fact, core inflation is still rising which should be causing some alarm on the MPC. Aside from the decision itself, the vote will be very interesting today. At each of the last three meetings, two policymakers have voted for a pause. Will they stand firm today or accept that more is needed and what will that hawkish pivot do to interest rate expectations? They're already pretty hawkish, with the terminal rate seen at around 6% early next year but that could cement the view that much more is needed.   Oil remains choppy but edging towards the upper end of its range Oil prices remain very volatile as we've seen over the last week. Trading has been very choppy as traders have tried to reconcile weaker Chinese growth, slightly more modest support from the PBOC, more hawkish central banks, and resilient economies. We appear to be in a position where we're either waiting for the economy to break or for central banks to achieve their soft landing aims. Brent remains in its lower trading range for this year between $70-$80 but we are getting closer to the upper end of that and there's still plenty of momentum in the move. A break above $80 could be a very bullish development and suggest traders are feeling less pessimistic about the economy.   Gold sell-off losing momentum ahead of the BoE Gold has been seriously testing its recent range lows over the last 48 hours but so far it's struggling to generate enough momentum for a significant move lower. Despite Powell's hawkish delivery in Congress, the yellow metal recovered earlier losses to close only marginally lower on the day, albeit below the lower end of the $1,940-$1,980 range it previously largely traded within. Ahead of day two of his testimony, this time in front of the Senate, gold is trading relatively flat and potentially in need of another bearish catalyst. The sell-off is losing momentum although it could get an extra nudge from the BoE if we see a more hawkish shift.
Nasdaq 100 Faces Bearish Breakdown Below Ascending Wedge and RSI Momentum Indicator

NB Signals Continued Tightening Amidst Inflation Concerns

Craig Erlam Craig Erlam 22.06.2023 11:50
The Swiss National Bank slowed the pace of its tightening cycle on Thursday, in line with market expectations but signaled there is more to come. While most central banks would dream of 2.2% inflation right now, the SNB has made clear that there will be no complacency. Today's hike likely doesn't mark the end of its cycle, with another 25 basis points expected in September.   Having previously indicated that he believes the neutral rate is around 2%, Chair Thomas Jordan has effectively signaled to the markets that they won't be done until at least this level is reached and today's comments support that. As did the forecasts, which assuming steady rates, had inflation remaining above 2% in two years' time. In other words, more tightening will be necessary, alongside currency interventions, in order to get inflation back below 2%. ​ Despite some initial volatility, the Swiss franc is only a little lower on the day and not far from its pre-release levels. Against the dollar it has been trending sideways for more than a month and today's decision has so far failed to sway it one way or another. A move below 0.8850 could make things interesting, as could a move above 0.91, but with the price sitting almost in the middle of these two levels currently, we may have to wait a little longer yet. Markets are pricing in a strong chance of another hike in the cycle while indicating a small chance that the central bank is done. There is still a long way to go in the global inflation fight and, if the last couple of years are anything to go by, there may be some more twists and turns to come. ​
GBP/USD Technical Analysis: Sideways Trend and Support Levels

Bank of England Scratches Its Head as Stubborn Inflation Challenges Price Stability Ambitions

Craig Erlam Craig Erlam 22.06.2023 08:31
Policymakers at the Bank of England will be scratching their heads this morning wondering what they have to do to get inflation down, with the latest CPI report another setback in the central bank’s ambition of delivering price stability and a soft landing. While there are many reasons to be confident that inflation should fall sharply over the coming months including lower energy and food price contributions, it’s hard to be too optimistic when the data keeps consistently coming in well above forecasts.   There is clearly immense stubbornness in the UK inflation numbers and the fact that the core also unexpectedly rose yet again by another 0.3% will be a huge concern to the BoE. Services inflation was always going to take longer to regain control of and today’s data once again suggests momentum is strong here. Market interest rate expectations are continuing to fluctuate after the release but there’s clearly now a much stronger case for a 50 basis point hike tomorrow, which would take Bank Rate to 5%. What’s more, markets now see it reaching 6% early next year which could be very damaging and increases the risk of the economy buckling under the pressure. The pound initially spiked after the release, hitting 1.28 against the dollar before giving around half of that back. Higher interest rates for longer against the backdrop of a more resilient economy may remain supportive for the pound for now but as soon as the economy starts to buckle, traders may be forced to rethink.   GBP/USD Technical For a look at all of today’s economic events, check out our economic.
Summer 2023: A Cool Down on the Inflation Front and Implications for Fed Policy

Stock Markets in the Red as Central Banks Remain in Focus; UK Inflation Data and Bitcoin's Trend Awaited

Craig Erlam Craig Erlam 21.06.2023 08:58
Stock markets remain slightly in the red on Tuesday but activity should pick up with the return of Wall Street from the long bank holiday weekend.   The focus this week remains on the central banks and whether we are as close to the end of the tightening cycle as everyone wants to believe. While there is the temptation to take what the Fed and others say with a small pinch of salt given their record over the last couple of years and the fact that any pivot was always likely to come late, they have been proven more accurate recently on their assertion that rates need to keep rising. Markets have been overly optimistic this year and there may be an element of luck on the central bank side – keen to not underestimate inflation again, they were always going to remain hawkish as long as feasibly possible – but the data simply hasn’t justified changing course yet.   That may change over the next couple of months but so far, especially in the UK, the turnaround in inflation has been more akin to a container ship performing a U-turn than a speedboat as many hoped. That may not dramatically increase the terminal rate but it may ensure it remains there much longer. Rate cuts this year look more fantasy than reality now. The BoE will be hoping for some good news from the UK inflation data tomorrow but I’m guessing policymakers are approaching it with a sense of dread rather than hope. We’re not likely to see any significant progress from the May data but avoiding another nasty surprise may be viewed as a win, allowing the MPC to proceed with 25 basis points rather than 50 which markets are pricing in a 30% chance of at this stage.   Bitcoin’s recent trend remains against it despite recovery Bitcoin drifted a little higher at the start of the week and is continuing to do so today. The move back toward $25,000 may have worried some but it’s recovered relatively well since then. The recent trend remains against it and until it breaks the pattern of lower highs – recovery rallies that fall short of recent peaks before falling again – it will continue to look vulnerable. A break below $25,000 could be another blow although gains this year would still remain extremely healthy.  
Japan's Economic Outlook: BoJ Policy and Scenarios

Oil Choppy But Flat in Lower Range as Gold Drifts: Market Analysis

Craig Erlam Craig Erlam 21.06.2023 08:55
Oil remains choppy but flat and in lower range Oil prices are relatively flat today, mirroring yesterday’s session which was broadly choppy but ultimately directionless. Crude has rebounded strongly since falling toward its 2023 lows early last week but remains in its lower range, roughly between $70-$80 per barrel and it’s showing little sign of breaking that in the short term.   While some believe the market will be in deficit later in the year, aided by the Saudi-driven OPEC+ cuts, which could support prices closer to what we saw late last year and early this, the economy remains one significant downside risk to this amid an adjustment in the markets toward higher rates for longer.     Gold drifting as we await more data Gold has started the week slightly softer but very little has changed, in that it remains in the $1,940-$1,980 range that it has spent the vast majority of the last month. It was a very quiet start to the week which is why gold has basically continued to drift and that may continue until we see a significant change in the data.   The Fed last week made it perfectly clear that it doesn’t believe it’s done and its commentary this week, including Chair Powell’s appearing in Congress on Wednesday, isn’t likely to change in any significant way from that. It will be interesting to see if we get any response to UK inflation data as a potential signal of stickiness more broadly but then, there’s every chance it could be viewed as a UK issue, rather than an indication of something more, considering how much more the country has struggled until now.
USD Weakness Boosts Commodity Complex as Oil Supply Disruptions Drive Prices Higher

Oil Prices Flat and Range-Bound, Market Braces for Economic Uncertainty. Gold Drifts as Data Awaited, Fed's Stance Holds Firm

Craig Erlam Craig Erlam 20.06.2023 13:07
Oil remains choppy but flat and in lower range Oil prices are relatively flat today, mirroring yesterday’s session which was broadly choppy but ultimately directionless. Crude has rebounded strongly since falling toward its 2023 lows early last week but remains in its lower range, roughly between $70-$80 per barrel and it’s showing little sign of breaking that in the short term. While some believe the market will be in deficit later in the year, aided by the Saudi-driven OPEC+ cuts, which could support prices closer to what we saw late last year and early this, the economy remains one significant downside risk to this amid an adjustment in the markets toward higher rates for longer.   Gold drifting as we await more data Gold has started the week slightly softer but very little has changed, in that it remains in the $1,940-$1,980 range that it has spent the vast majority of the last month. It was a very quiet start to the week which is why gold has basically continued to drift and that may continue until we see a significant change in the data. The Fed last week made it perfectly clear that it doesn’t believe it’s done and its commentary this week, including Chair Powell’s appearing in Congress on Wednesday, isn’t likely to change in any significant way from that. It will be interesting to see if we get any response to UK inflation data as a potential signal of stickiness more broadly but then, there’s every chance it could be viewed as a UK issue, rather than an indication of something more, considering how much more the country has struggled until now.  
UK Inflation Data: BoE's Hopes and Market Expectations. Bitcoin's Recent Trend: Recovery, Vulnerability, and Lower Highs

UK Inflation Data: BoE's Hopes and Market Expectations. Bitcoin's Recent Trend: Recovery, Vulnerability, and Lower Highs

Craig Erlam Craig Erlam 20.06.2023 13:05
Stock markets remain slightly in the red on Tuesday but activity should pick up with the return of Wall Street from the long bank holiday weekend. The focus this week remains on the central banks and whether we are as close to the end of the tightening cycle as everyone wants to believe. While there is the temptation to take what the Fed and others say with a small pinch of salt given their record over the last couple of years and the fact that any pivot was always likely to come late, they have been proven more accurate recently on their assertion that rates need to keep rising.   Markets have been overly optimistic this year and there may be an element of luck on the central bank side – keen to not underestimate inflation again, they were always going to remain hawkish as long as feasibly possible – but the data simply hasn’t justified changing course yet.   That may change over the next couple of months but so far, especially in the UK, the turnaround in inflation has been more akin to a container ship performing a U-turn than a speedboat as many hoped. That may not dramatically increase the terminal rate but it may ensure it remains there much longer. Rate cuts this year look more fantasy than reality now.   The BoE will be hoping for some good news from the UK inflation data tomorrow but I’m guessing policymakers are approaching it with a sense of dread rather than hope. We’re not likely to see any significant progress from the May data but avoiding another nasty surprise may be viewed as a win, allowing the MPC to proceed with 25 basis points rather than 50 which markets are pricing in a 30% chance of at this stage.   Bitcoin’s recent trend remains against it despite recovery Bitcoin drifted a little higher at the start of the week and is continuing to do so today. The move back toward $25,000 may have worried some but it’s recovered relatively well since then. The recent trend remains against it and until it breaks the pattern of lower highs – recovery rallies that fall short of recent peaks before falling again – it will continue to look vulnerable. A break below $25,000 could be another blow although gains this year would still remain extremely healthy.  
Senior Fed Officials Signal Rate Hike Pause as Key Economic Indicators Awaited

Mixed Signals: US Inflation, BoE's Challenge, and Bitcoin's Vulnerability

Craig Erlam Craig Erlam 20.06.2023 12:57
It’s been a quiet start to the week with stocks edging lower in light trade due to the US bank holiday. It feels like last week may have left us with more questions than answers in that the US inflation data was ok, not great, the Fed paused while forecasting multiple more hikes, and the ECB hiked while insisting more is to come.   Now it’s up to the BoE to continue its firefighting mission; one that is at risk of getting out of control despite the MPC’s efforts to contain it. Of all the major economies desperately trying to get a grip on inflation while delivering a soft landing, the UK looks least likely to achieve it. The BoE will be crossing its fingers for some good news from the May inflation data the day before its decision but if recent releases are anything to go by, we probably should get our hopes up. And if we get another nasty surprise, I wouldn’t be surprised to see markets price in 50 basis points on Thursday above the 25 we see now.   More pain to come for bitcoin? Bitcoin ended last week quite positively after dropping to three-month lows on Wednesday but it continues to look vulnerable to further declines. The two-month trend is not in its favour and the news flow isn’t exactly helping the situation either. It’s had a remarkable year and remains more than 50% higher so it’s hardly a dire situation. And against that backdrop, recent losses are merely a corrective move in a more promising bull run. But there isn’t much to suggest it’s going to improve just yet, especially with the SEC going in hard on major exchanges.
Are crude oil prices rebounding on the back of a possible debt ceiling deal?

Are crude oil prices rebounding on the back of a possible debt ceiling deal?

Craig Erlam Craig Erlam 19.05.2023 16:11
Are we seeing some bullish momentum in crude prices? Oil prices are rebounding again today alongside a slight uptick in market sentiment more broadly. Perhaps some of the confidence in Washington that a deal on the debt ceiling isn’t far away, amid “steady progress”, is filtering through to the markets, although default was almost certainly never a realistic possibility in the first place. Crude has gathered a little upward momentum over the last week or so, with prices making higher lows on the way which could be a bullish signal short term. Brent has continued to see resistance around $77-$78 though but a break of this, taking it back into December to March territory, would be encouraging, with $80 then being the next big test. Gold heading for a deeper correction? Gold prices fell again on Thursday but are seeing some support today around a very interesting support level. The yellow metal has been under pressure amid rising US yields and a stronger dollar and now it’s pulled back to $1,960, a big support zone in the second half of March and throughout April, as well as a big resistance point in early February. Read next: US GDP: The GDP number covers an odd quarter which was deceivingly strong over the first couple of months due to weather distortions| FXMAG.COM A significant break below here could be a very bearish signal in the near term, potentially signalling a much deeper correction is on the cards in the coming weeks. Another level of interest is $1,940, with a break of this further confirming that the tide has turned, with the focus then shifting back towards $1,900. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.
Crude oil to close the the post-OPEC+ gap? Gold "remains choppy"

Crude oil to close the the post-OPEC+ gap? Gold "remains choppy"

Craig Erlam Craig Erlam 21.04.2023 15:24
Was OPEC+ correct to cut production as the price tumbles once more? Oil prices are slipping further at the end of the week and looking increasingly likely to close the post-OPEC+ gap. The gap a few weeks ago came after the cartel announced a surprise output cut over the weekend triggering a gap open on Monday. The price has since fallen back within this on the back of weaker industrial activity and manufacturing PMIs this morning have further compounded that pressure. It would appear that, as we saw in October, OPEC+ pre-emptive action may have been taken on accurate assumptions on the economy and demand and will not propel the price back above $100. That’s not to say the price at the time wasn’t a motivation for a proactive move, rather than waiting for the data to warrant it, but we may now be seeing evidence in the price that markets agree with its assessment, with it now back in the pre-announcement range. Brent came very close to closing the gap earlier in the session today and may still do so soon enough. BCO/USD Technical   Traders in no mood to give up on gold at the moment Gold remains choppy as we near the end of the week, ​ slipping around 1% today and back below $2,000. Uncertainty over the path of interest rates, which should become much clearer over the next month or two, is driving the indecision we’re seeing in gold at the moment. Read next: Oanda's Kenny Fisher talks US dollar against Canadian dollar - April 21st| FXMAG.COM Higher yields in recent weeks have stalled the rally toward record highs but traders are clearly in no mood to give up on the yellow metal. As things stand, dips are being bought and it will be interesting to see if we see the same on this occasion as well. Big support remains around $1,940-$1,960. XAU/USD Technical  For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc. Oil decline continues, gold in choppy waters - MarketPulseMarketPulse
According to Althea Spinozzi, it's clear that inflation remains Fed most significant focus

Federal Reserve is at risk of... overtightening? Bitcoin seeing some support around $29K

Craig Erlam Craig Erlam 20.04.2023 16:02
European markets are in the red on Thursday in what continues to be a choppy week of trading driven by economic and interest rate uncertainty. We’re now at a pivotal point in the tightening cycle, one made all the more difficult by the mini-banking crisis last month and the ripple effects it will have on credit and the economy over the course of the rest of the year. Central banks, the Fed in particular, are now at even greater risk of overtightening just as the data may show price pressures easing considerably. The fear of that not materializing will probably drive another round of rate hikes next month, after which discussions will likely be far more balanced. It’s this uncertainty that appears to be driving the most recent period of choppy trading, especially when the economic data is not yet playing ball; the UK this week is a prime example of that. Justifying a pause in tightening when inflation is above 10% on the belief it will fall rapidly after being terribly wrong about it being transitory not long ago is tough and I’m not convinced central banks have it in them or feel there’s enough credit in the bank to take the risk. It’s going to be an anxious couple of months. The ECB decision-making is made slightly less complicated by the fact that interest rates haven’t risen quite as far after being so late to the party and the minutes may well reflect that. Of course, they may also highlight anxiety within the committee in relation to the proximity of the meeting to those bank failures. EUR/USD Technical Are we finally seeing profit-taking in bitcoin? Bitcoin is slipping again on Thursday after breaking back below $30,000 a day earlier, following a few choppy days of trade. It’s now seeing some support around $29,000 where it saw resistance in late March and early April but after such a prolonged rally since early January – more than 80% – the recovery may be running on fumes. BTC/USD Technical For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc. Rally stalls amid uncertainty over interest rates and the economy - MarketPulseMarketPulse
Federal Reserve isn't prepared to cut rates - gold may face challenges

Gold could be under pressure if yields continue rising. According to Oanda's Craig Erlam, we're continuing to see a correction in oil prices

Craig Erlam Craig Erlam 20.04.2023 15:43
Is oil looking to close the gap? We’re continuing to see a correction in oil prices following a more than 2% decline on Wednesday. That saw the price move below the post-OPEC+ cut lows from a couple of weeks ago and move into the void left by that surprise announcement. Now it’s a question of whether that gap will be filled, with the high from the Friday before falling just shy of $76 in WTI and $78 in Brent. That would require another drop of around 3% but only take the price back to the middle of the range oil was trading in for months prior to the SVB collapse. WTI/USD Technical Gold rebounds but may need Fed boost Gold prices rebounded on Wednesday after falling back toward $1,970, a little above the $1,940-$1,960 region that stood out as a big support region. We could still see further pressure to the downside for gold prices if yields continue creeping higher but that has stalled a little following a decent rebound in recent days. Read next: These findings of a review of the Reserve Bank of Australia may surprise you!| FXMAG.COM It still feels like markets are finding their feet in the aftermath of the mini-banking crisis last month and I don’t think we’re even nearly there yet. The full ramifications on credit markets and the economy will soon become clear, after which we could see a significant adjustment in interest rate expectations, bond markets, and therefore gold. If that adjustment is much lower for rates, record highs may not be that far away. XAU/USD Technical   For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc. Oil price correction continues, gold bounces back - MarketPulseMarketPulse
Crude oil to close the the post-OPEC+ gap? Gold "remains choppy"

Commodities: Craig Erlam talks gold and crude oil - April 5th

Craig Erlam Craig Erlam 05.04.2023 17:02
Oil holds gains after OPEC+ cut but remains around recent highs Oil prices are consolidating after the early week surge in the aftermath of the OPEC+ announcement. The decision to cut output has proven to be very controversial, much like the two million barrel reduction in October, but just like that, there’s no guarantee it will lead to dramatically higher prices. In fact, at this stage crude is only trading around the highs of the last four months and it’s tested these levels on a number of occasions. A break above here could be a bullish signal but at this point, we are still seeing plenty of resistance. Recent stress in the banking system has led to weaker economic expectations and lower interest rate forecasts and the cut could simply be a response to that. At this point, the only thing that’s clear is that OPEC+ has no appetite for Brent prices below $80 a barrel. That could make any future foray below there challenging as the group has now shown not only will it cut production, it will do so without warning. That is clearly the message they wanted to send. Brent Crude Oil Technical Gold edging ever closer to record highs Gold smashed through $2,000 on Tuesday as the latest JOLTS data showed openings declining and significantly so, in one of the first signs of the labour market cooling. It’s still very early days but the data will be a little encouraging for the Fed, especially if paired with a softer jobs report on Friday. Read next: Lagging S&P 500: Traders could have been using tech stocks as a hedge or risk offset to shield risk from the banking issues| FXMAG.COM We’ve heard a number of announcements of mass layoffs in tech and banking in recent months but that hasn’t yet been reflected in the data and it could be that we now start to see slack appearing. It comes at a good time as the Fed could do with a reason to pause the tightening cycle and the response we saw in yields and gold yesterday suggests investors believe it may now get that. For gold, it’s only traded at this level on two days ever so that doesn’t leave much guidance in terms of technical levels, beyond the all-time highs around $2,070. A weaker jobs report on Friday could see that tested, especially in what will likely be extremely thin trade given the bank holiday. Gold Spot/USD Technical For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/   Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc. Oil holds onto OPEC gains, gold punches past $2000 - MarketPulseMarketPulse
Crypto: according to Craig Erlam, there seems to be a gap between reality and prices

Crypto: according to Craig Erlam, there seems to be a gap between reality and prices

Craig Erlam Craig Erlam 30.03.2023 15:07
Stock markets are in the green once more on Thursday, with confidence slowly returning as we near the end of the second week without serious drama. Of course, I’m not including the bank sell-off we saw late last week considering there was no obvious trigger, and fear and panic played a huge role in it. That was more a symptom of what preceded it than evidence of further vulnerabilities in the banking sector. That isn’t to say that other vulnerabilities and casualties won’t emerge but investors will be feeling a little more comfortable with the situation as a result of this period of relative calm. That said, with another weekend looming, we’ll soon see just how much that shattered confidence has been repaired. Today is looking a little quiet again, as far as major economic releases go, with Friday the most action-packed of the week. Still, we have jobless claims being released shortly, with investors looking for signs that mass layoffs in tech, banks, and elsewhere are driving up claims and putting some slack back into the labour market. We’ll also hear from some Fed policymakers which again will be interesting in light of the last couple of weeks, as investors try to make sense of where we now stand and what longer-term damage has been done. And Treasury Secretary Janet Yellen, is also due to make an appearance in Washington which as we’ve learned in recent weeks, in this environment has great potential to cause a wobble in the markets. Read next: Potential recession requiring multiple rate cuts to play in favour of gold| FXMAG.COM Is Bitcoin defying reality with the latest rally? I feel like we’ve gone back in time to when everything was being argued to be bullish for crypto. Inflation, deflation, risk-on, risk-off, low rates, high rates; the list was endless. On the face of it, the last few weeks have been anything but positive and then you look at the price action. I’m intrigued to see where it goes from here as there seems to be a huge void between reality and prices but then, that can often be said of other markets too – perhaps to a lesser extent – and reality can eventually catch up. This feels particularly strange though and will certainly be one to follow. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Is Gold Ready to Shine Again? US CPI and Fed Policy Insights

Potential recession requiring multiple rate cuts to play in favour of gold

Craig Erlam Craig Erlam 30.03.2023 14:17
Oil prices have continued to recoup losses in recent days as sentiment has improved, yields have edged higher and global economic prospects have improved. Recent volatility has been a firm reminder of the uncertainty that lies ahead, even as we seemingly near the end of the tightening cycles. While some consequences of much higher interest rates will be obvious, others will be much harder to foresee and that brings downside risks for growth. But with the recent turmoil abating, the economic outlook is looking slightly better and that has enabled oil prices to recover a little over half of their losses. Further upside could be on the cards but that will depend on multiple factors. Brent and WTI are currently trading around the range lows from early December to early March and it will be interesting to see if they can break back above that psychological barrier. Gold holding firm Gold has given back a small portion of its recent gains but it continues to trade not far from the highs of the last couple of weeks. The reason for that is interest rates; expectations have not changed that much since the banking turmoil which suggests investors see scarring in credit markets that will do the Fed’s job for it and maybe even tip the economy into recession, requiring multiple rate cuts later in the year. Read next: S&P 500 ended the session 1.4% higher. This evening Japan's inflation goes public| FXMAG.COM This is positive for the yellow metal and could ultimately prove to be the catalyst that not only enables it to overcome the $2,000 psychological barrier but also eye up the all-time highs near $2,070. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil gains ground as risk appetite improves, gold steady - MarketPulseMarketPulse
Is Gold Ready to Shine Again? US CPI and Fed Policy Insights

Gold: investors don't seem to think the banking turmoils is over

Craig Erlam Craig Erlam 28.03.2023 16:55
A cautious recovery Oil prices are continuing to recover after popping higher at the start of the week. There’s been a broad improvement in risk appetite at the start of the week thanks to a weekend without drama in the banks. That’s enabled stocks to bounce back and yields to creep higher on stronger economic prospects which, in turn, is lifting crude prices. The rally on Monday was further supported by a halt to exports from Iraq’s Kurdistan region which knocked around 450,000 barrels per day offline. There’s no timeline for an agreement to be reached to restart flows and the tighter the oil market becomes, the greater the loss it will be. For now, it’s contributed to a small rise in the price, with Brent now trading around the lows of the months that preceded the min-banking crisis. Eyeing the highs? Gold is treading water so far today after pulling back strongly again at the start of the week. Risk appetite has improved and yields are rising so naturally, gold is giving back some of the banking panic gains it accumulated over the last few weeks. Even so, it isn’t trading too far from $2,000, seemingly a major psychological obstacle, and it’s well off its recent lows. That still suggests, along with moves elsewhere, that investors either don’t think the mini-banking crisis is behind us or, perhaps more likely, that scarring from it in credit markets has permanently reduced the tightening required from central banks. That could be bullish, if so, for gold and traders may even have one eye on the all-time highs if rate cuts this year become a reality. Read next: According to Conotoxia's Grzegorz Dróżdż, UBS shares seem to have stopped losing value| FXMAG.COM For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil rally continues, gold treading water - MarketPulseMarketPulse
BoE rates may remain uncut until the middle of 2024. Bank of England is expected to hike the rates 12th time in a row today

Bank of England decision: MPC seem to go for a 25bp rate hike despite concerning inflation data

Craig Erlam Craig Erlam 23.03.2023 11:45
Equity markets in Europe opened a little lower on Thursday following a very mixed session in Asia and some heavy selling on the other side of the pond on Wednesday. While investors have been relieved that this week has brought no new instability in the banking sector (yet), they are a little concerned by what they heard from the Fed and Treasury Secretary Janet Yellen yesterday. The central bank hiked interest rates by 25 basis points, in line with expectations, but the language that accompanied it was far less hawkish than before, reflecting the uncertainty that the recent mini-banking crisis has created. Jerome Powell and his colleagues are clearly concerned about the impact of recent events on credit conditions which may impact lending to households and businesses, slow the economy, and weigh on inflation. While this would do some of its job for it, in bringing inflation back to target, it won’t do so in the way that it will have wanted. Read next: Telegram adds Tether transfers support. According to Raoul Pal, it's the right time for Bitcoin to take its place alongside gold | FXMAG.COM What’s more, the risks of further fallout have left investors nervous and while the Fed is not pricing in any rate cuts this year, markets very much are. We may not see those risks reflected in Fed forecasts and the dot plot but they are evident in the language used, as they were with the ECB last week. BoE left with little wiggle room The Bank of England is up next and it also finds itself left with little option but to raise rates again despite the events of the last couple of weeks. Regardless of yesterday’s inflation data, the MPC may have opted for another 25 basis points anyway as its counterparts in the US and euro area have stuck to their plan without any negative repercussions. But the February CPI readings removed any flexibility they may have thought they had and now markets are pricing in a higher terminal rate of around 4.5% as a result. This makes the language that accompanies the decision key and I expect it will use the same playbook as the Fed and ECB in highlighting the uncertainty around the outlook and the need to take it one meeting at a time and be data-dependent. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. A dovish shift from the Fed - MarketPulseMarketPulse
Federal Reserve isn't prepared to cut rates - gold may face challenges

Amid recent Fed developments, USD and yields have softened while gold has risen

Craig Erlam Craig Erlam 23.03.2023 11:34
Signs of permanent damage in oil? Oil prices are a little lower today after gradually recovering in recent days. While no one can say with confidence that a banking crisis has been averted, there is growing confidence that the actions taken by central banks, regulators, and governments have significantly reduced the odds of one, particularly a severe scenario, and that is ultimately good for the economy and crude demand. So while we saw Brent and WTI plunge to late-2021 levels amid the panic of the various collapses, they have bounced back almost 10% in recent days. That said, they remain below the range lows that preceded the sell-off and have even run into resistance around those lows over the last couple of days. A move back above here may suggest confidence is returning while a failure to do so may indicate some more permanent damage to expectations. Gold shining once more? Gold has been buoyed by the less hawkish stance from the Fed and the market perception that the central bank will swiftly reverse course on interest rates. While Powell pushed back against this, markets have other ideas and that’s enabled the dollar to soften, yields to pull back, and gold to rally. Read next: Fed goes for a 25bp hike, S&P 500 ended the day 1.65% lower, Bank of England decides today| FXMAG.COM Throw in some risk-aversion on the back of Yellen’s comments on the government not considering blanket insurance for bank deposits and gold is beginning to shine once more. It now has $2,000 in its sights once more – a level it has rarely ever traded above – and record highs are not that far above either. This could potentially become a very favourable environment for the yellow metal. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil dips lower, gold gets boost from dovish Fed - MarketPulseMarketPulse
Euro's Rally Stalls as Focus Turns to Inflation and Data Disappointments

Commodities: Craig Erlam talks crude oil prices, gold and Bitcoin

Craig Erlam Craig Erlam 17.03.2023 23:59
Terrible week continues Oil prices have been pummelled this week as turmoil in the banking sector has increased the risk of a significant economic slowdown or recession this year. Clearly, traders are not convinced that the worst is behind us which continues to weigh heavily on the price of crude, particularly going into a weekend when anything can happen, as we saw a week ago. Should calm prevail, oil prices could bounce back and a peaceful weekend may be the first step toward that. Safe-haven push lifts gold Gold is pushing higher again in risk-averse trade at the end of the week. It’s hardly surprising that we’re seeing this going into the weekend as we learned last week just how much can happen over the two days when markets are not open. With yields edging lower and gold trading near levels last seen in early February, it’s clear traders are adopting a defensive stance. Whether that continues in early trade next week will be determined by how eventful a weekend it turns out to be. Key resistance levels remain $1,960 – around the February highs – and $2,000, a break of which would be a major psychological move and signal how much fear remains in the markets. Bitcoin rally unsustainable? There are various theories floating around regarding crypto’s strong performance over the last week and frankly, the majority of them are more wishful thinking than logic. But that’s irrelevant at this point as the only thing that matters is that it’s up another 7% at the end of the week, more than 30% since last Friday, and some major technical levels have been wiped out in that time. The next is $28,000, followed by $32,500 above that. It seems pointless to try and anticipate where the rally will peak as past moves often didn’t make much sense either but still kept going, although this time seems particularly unsustainable. It should be interesting, regardless. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil continues slide, gold higher, bitcoin surges - MarketPulseMarketPulse
Euro's Rally Stalls as Focus Turns to Inflation and Data Disappointments

According to Craig Erlam, we’re still seeing distress in the markets

Craig Erlam Craig Erlam 17.03.2023 23:57
Markets remain risk-averse A frantic week in financial markets draws to a close and it’s clear that investors are feeling very anxious about carrying risk into the weekend. We all saw how fast things can move over the weekend and risk-averse trade at the end of this week highlights how nervous investors are about further fallout. If we can get through the weekend without more drama, Monday’s open could look very different but it’s going to take time for the wounds to heal. Even with all of the measures undertaken by the Fed, Treasury, BoE, SNB, and US banks to stabilize the situation this week, we’re still seeing distress in the markets. Credit Suisse is down 10% today and not far from Wednesday’s lows, while First Republic is off 23% and down almost 80% in a little over a week. Other regional banks are also getting hit hard again on Friday, again a sign of dwindling confidence amid uncertainty over which will be next to require assistance. Authorities continue to work to stem the bleeding and more band-aids may be necessary to shore up confidence. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. An anxious weekend ahead - MarketPulseMarketPulse
Federal Reserve isn't prepared to cut rates - gold may face challenges

Gold price: so, is there any chance for gold price to near $2000?

Craig Erlam Craig Erlam 16.03.2023 22:33
Volatile amid worrying economic outlook It’s been another volatile session in oil markets, bouncing back from their lows while remaining negative on the day. A failure to get back into the green would represent a fourth consecutive day of losses, albeit to a much lesser extent than the last three. Traders are clearly concerned about the economic outlook this year in light of recent bank failures and uncertainty at Credit Suisse. Authorities may have thrown their support behind the banking sector while managing the collapse of the mid-tier institutions in the US but traders are far from convinced that the worst is behind us. Especially if central banks persevere with hikes, as the ECB did today. Volatility is going nowhere soon. Read next: We may say that Bitcoin's rally sustainability is questionable| FXMAG.COM Eyeing $2,000? Gold has been choppy today but continues to trade near yesterday’s peak amid a dash for safety and lower bond yields. The question on traders’ lips now is whether fear is baked in, meaning yields could pare declines as (if) the dust settles, which could be a near-term headwind for gold, or if the turbulence is just getting started. Time will tell but further fallout could see gold move closer to February highs, around $1,960, with $2,000 then key above that. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil remains volatile, gold could be eyeing $2000 - MarketPulseMarketPulse
Bitcoin to US dollar - technical analysis by Petar Jacimovic on April 21st

We may say that Bitcoin's rally sustainability is questionable

Craig Erlam Craig Erlam 16.03.2023 22:22
It’s been another wild session in financial markets and the ECB had the unenviable task today of making a decision on interest rates amid all of the uncertainty and turbulence. One thing that was clear from Lagarde’s press conference is that it isn’t just markets that expect the tightening cycle may have come to an abrupt end following the events of recent days. Despite hiking by 50 basis points today – as planned and supported by forecasts that were created prior to the recent turmoil – the President refused to commit to further hikes as it did after previous meetings. That is, of course, a very sensible thing to do in light of such immense uncertainty and the specific situation that is unfolding in the banking sector. And time will tell whether today’s hike has rubbed salt into the wound or represents the necessary continuity and reassurance. Read next: Australia: employment report stronger than expected. Reserve Bank of Australia expected to pause| FXMAG.COM Today was always a case of determining the least worst option and I have no doubt policymakers would have loved nothing more than to postpone for a week, but it didn’t have that luxury. Of all the major central banks, the ECB probably had the least flexibility to pause due to it being so late to the tightening party and therefore behind the curve. Whatever it did would be a risk in some way and now we’ll have to wait and see how lucky it will be. We’re not seeing too many jitters in the markets at this point but they can obviously materialize at any point. The euro was a little choppy over the course of the press conference, as were bond markets, but the real test will come from how European banks trade over the hours and days ahead. It’s going to be a nervy end to the week and a potentially nervier weekend. Is the rally sustainable? Whatever is driving the bitcoin rally right now, it doesn’t look particularly sustainable in light of what’s happening elsewhere in the markets. Time will tell how much support for cryptos there is in these turbulent times but one thing looks clear, it’s going to be a wild ride and there could be many more surprises around the corner that will test any gains made over the last week. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. A gamble from the ECB? - MarketPulseMarketPulse
Small factors combine to pressure credit

Craig Erlam comments on recent market events and various variants of the European Central Bank decision

Craig Erlam Craig Erlam 16.03.2023 11:44
It’s been another remarkable day in financial markets and it, unfortunately, doesn’t feel like the worst is behind us. Fear has once again gripped the markets, concerned about a repeat of past crises – one in particular, for obvious reasons – and the implications for the financial system and the global economy. Of course, this is natural when so little is known about the situation and what it ultimately means for the health of the rest of the system. In the absence of facts, everyone is left with little choice but to speculate and frankly, what little commentary we’ve had hasn’t really helped. Quite the opposite, in fact. Ignoring the expected comforting words from Credit Suisse Chief Executive, Ulrich Koerner, and Chairman, Axel Lehmann, those of its largest shareholder, Saudi National Bank, and the lack of input from the central bank and regulator have only fueled fears. We’re now left in a situation in which stock markets have tumbled, banks around the world have been pummeled and everyone is wondering just how bad the situation is going to get. The bill may be coming due for more than a decade of rock-bottom interest rates and a massive quantitative easing experiment. Read next: S&P 500 shrank 0.7% yesterday, Nasdaq gained 0.42%. European Central Bank decides on the interest rate today| FXMAG.COM Perhaps the market reaction and all of the speculation today are overblown but in the absence of action or clarity from the relevant authorities, which is lacking currently, it’s hard to imagine the panic subsiding. Perhaps the silence is evidence of them attempting to get that clarity themselves and deal with it but I get the feeling it’s going to be a very eventful end to the week. European Central Bank decision Against this backdrop, it’s anyone’s guess what the ECB will do tomorrow. Markets are currently anticipating a 25 basis point hike but we’ve seen how much rate expectations have changed over the last week. And then you have to wonder what exactly would soothe market jitters? No change? Or does that suggest something deeply concerning is occurring? Or stick to 50 and pretend like nothing is going on? I just don’t know at this point. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Unraveling the Retreat: Exploring the Future of Gold Prices Amidst Dollar Weakness

According to Craig Erlam, gold may near $2000, if there isn't a significant improvement in the European banking outlook

Craig Erlam Craig Erlam 16.03.2023 11:36
Oil plummets amid economic fears Oil prices have been caught up in the doom and gloom of what we’re seeing in equity markets and after months of consolidation, economic concerns have triggered an aggressive breakout to the downside. Brent and WTI are off around 7% today and at levels last seen late in 2021 and it could get worse if the situation deteriorates further if the situation evolves into a broader banking crisis. There’s no evidence it will at this point and as such, there’s every chance oil prices bounce back but the break of the range lows may hold unless the situation dramatically improves. The market was previously caught between Chinese growth prospects and global economic risks and events of the last week have seen the latter dominate. ​ ​ Surging in risk-averse trade Gold is trading higher on Wednesday amid a flight for safety and as yields tumbled across the board once more. The yellow metal has rallied even against the backdrop of a much stronger dollar which highlights just how much risk aversion we’re seeing, particularly in Europe in response to Credit Suisse. Read next: S&P 500 shrank 0.7% yesterday, Nasdaq gained 0.42%. European Central Bank decides on the interest rate today| FXMAG.COM Unless we see a dramatic improvement in the European banking outlook, gold could eye the February highs around $1,960, with $2,000 then the big test. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Gold price isn't that impossible to reach $1975, Bitcoin decline "not that bad"

Gold price isn't that impossible to reach $1975, Bitcoin decline "not that bad"

Craig Erlam Craig Erlam 15.03.2023 23:51
US stocks are dropping as Wall Street anticipates further global banking turmoil after Credit Suisse fails to secure additional capital and their CDS hit crisis levels. ​ Weak banks are feeling exposed to the past year of global central bank tightening and they will likely now have to deal with skyrocketing funding costs. The bloodbath is not just hitting financials, but also sending energy, material, and industrial stocks lower. ​Yields/FX Treasury yields are in freefall and so our Fed rate hike expectations. ​ Fed fund futures are now pricing in no rate hike at next week’s FOMC meeting and over 100 basis points in rate cuts by the end of the year. ​ The 2-year Treasury yield fell 44 basis points to 3.811%. The euro dropped over 2% in early trade over contagion risks from the Credit Suisse crisis. The ECB was supposed to deliver a half-point rate hike tomorrow but it seems traders are doubtful that policymakers will be able to follow through on that pledge. Credit Suisse Credit Suisse shares plunged to fresh record lows after their largest investor, Saudi National Bank said they could not provide more assistance as that would take them above 10% ownership, which would become a regulatory issue. ​ Credit Suisse’s over 30% drop was the largest one-day selloff and is triggering further global banking turmoil fears. ​ Their (1-year) default swaps surged to almost 1000 basis points. ​ This is getting uglier by the minute. Any distressed bank is going to see surging funding costs, so banking turmoil will remain the primary focus on Wall Street. ​ Oil Oil continues to slide as global market turmoil is driving weaker growth concerns. Energy traders are watching excessive technical selling after WTI crude was unable to hold the $70 a barrel level. ​ Right now all the headlines appear to be rather bearish for the crude demand outlook: Credit Suisse is a bank that matters and contagion risks won’t be easing anytime soon, the US consumer is weakening, and China’s outlook is not looking so robust after unemployment rose and on worries over the real estate market. The oil market is going to be stuck in a surplus for most of the first half of the year, but that should change as long as we don’t see a major policy mistake by the Fed that triggers a severe recession. ​ Now near the mid-$60s, WTI crude’s plunge is at the mercy of how much worse the macro picture gets. ​ If Wall Street ends up seeing a retest of the October lows in the next week, that could support further downward pressure for WTI crude towards the $60 level. ​ Despite all the risks on the table, the oil market is still probably going to swing back to a deficit this summer, so some traders might be looking to scale into some long-term bets around the $60-65 region. Read next: Facebook and Instagram parent Meta has announced discontinuing NFT support on mentioned platformed | FXMAG.COM Energy stocks may remain under pressure a little while longer given the deteriorating crude demand outlook and short-term surplus with supplies. Energy stocks had a nice three-year run and outperformance over the past 12-months, so the current selling pressure could remain intense. ​ Longer-term views however still support having energy in your portfolios as a lot of the oil giants have robust balance sheets that support continued buybacks and dividends. Despite the macro risks, oil majors have a good chance of still keeping profitable outlooks given how quickly the oil market could swing back to being tight. Gold Wall Street is finding comfort in gold as safe-haven demand roars back over global banking turmoil, hedges against sticky inflation, and as many traders unwind stock positions. As investors grow nervous that a retest of the October stock market lows is coming, gold is looking like it has a clear path towards the $1975 level. ​ Bitcoin Bitcoin weakened as chaos across Wall Street saw another banking crisis trigger another wave of panic-selling of risky assets. ​ Credit Suisse is a bigger story than SVB and this has Wall Street extremely nervous. ​ Bitcoin’s decline isn’t that bad when you consider how much pressure is hitting stocks, oil prices, and the euro. Banking turmoil could ultimately prove to be rather bullish for Bitcoin, but for now crypto weakness is justified. ​ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Mid-Market Update: Stocks fall as banking worries persist, Credit Suisse crisis, Euro plunges, Oil crashes through $70, Gold demand surges, Bitcoin softer - MarketPulseMarketPulse
Deciphering the Economic Puzzle: Unraveling Britain's Mixed Signals

The UK Jobs Data Was Largely In Line With What Markets Were Expecting

Craig Erlam Craig Erlam 14.03.2023 14:22
Some calm appears to have returned to financial markets in early trade in Europe this morning but how long will it last? While everyone will be hoping that the turmoil that swept through markets since Friday is dealt with and behind us, I’m not sure anyone can say with any confidence that this is the case and investors will remain very sensitive to ongoing developments. What’s more, we’ve seen a dramatic repricing of interest rate expectations, to the extent that markets now price peak rates to be here or near and rate cuts this year to be highly likely. In much the same way that I wasn’t convinced by pricing in the aftermath of Powell’s appearances, barring much greater fallout in the financial system, I struggle to see expectations remaining so dovish. The timing of today’s inflation data is therefore all the more intriguing as, what was meant to be the dominant driver this week has fallen down the pecking order. But to what extent isn’t clear. And depending on the outcome, it could either compound expectations or create an even greater headache for the Fed which will already be questioning whether a pause this month may be the best course of action. Some good news for the BoE The UK jobs data was largely in line with what markets were expecting and didn’t really shift the dial in any significant way. The unemployment rate didn’t tick higher as expected, remaining at 3.7%, but hourly earnings did soften to 5.7% including bonuses – from an upwardly revised 6% – while excluding bonuses they fell a little further to 6.5%. All told, I don’t think either aspect of the report will fuel or ease concerns at the Bank of England about inflation and the path for interest rates. Meanwhile, markets are still pricing in a 25 basis point hike over the next couple of meetings and the pound is only marginally softer than it was pre-release. Focus now shifts to the budget tomorrow and whether the Chancellor will use the new-found fiscal headroom or save it for later. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
The Commodities Feed: US announces SPR purchase

Brent And WTI Was Testing The Lower End Of These In Response To The Turmoil

Craig Erlam Craig Erlam 14.03.2023 10:34
Wild fluctuations in oil Oil prices are continuing to whipsaw while remaining within the broad ranges they’ve traded within since early December. Yesterday we saw Brent and WTI testing the lower end of these in response to the turmoil that erupted in the financial system that triggered widespread risk aversion. Today we’re seeing them trade lower again, albeit still higher than yesterday’s lows. If we see markets settle down, that could prevent a break of the lows but oil traders, like those elsewhere, will remain nervous about the prospect of further turbulence. Suddenly, a break below the lows looks a much greater risk which may keep pressure on in the short term. A strong rally An extraordinary rally in gold over the last couple of sessions has seen it rebound almost 5% and move back above $1,900 which could have been a major barrier of resistance under normal circumstances. But that isn’t what we’re seeing at the moment and the dramatic decline in yields, combined with a softer dollar and clamor for safe havens sent the yellow metal soaring. That may not last if markets correct themselves, assuming the dust settles, which could see interest rate expectations shift higher. Then there’s today’s CPI data which may refocus attention on the Fed’s primary goal of price stability and the success it’s having, or not, in driving inflation back to target. It promises to be another interesting day for gold. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Riksbank's Potential Rate Hike Amid Economic Challenges: Analysis and Outlook

Week Ahead: The Australian Unemployment Rate, The ECB Is Widely Expected To Raise Interest Rates

Craig Erlam Craig Erlam 12.03.2023 10:13
US The labor market is still strong but is showing signs it is ready to soften as wages cool.  Wall Street will pay close attention to the February inflation report.  Disinflation trends are struggling here and a hot report could not only lock the Fed into boosting their hiking pace but possibly lead markets into expecting a higher peak rate.  Headline inflation is expected to slow from 6.4% to 6.0%.  The monthly inflation rate is expected to edge lower from 0.5% to 0.4%, while the core reading is expected to hold steady at the 0.4% pace.  While the inflation report will get the majority of the attention, traders should also pay close attention to the February retail sales data which should show consumer spending is weakening.  Housing data is expected to remain weak, while a couple of Fed regional surveys (Empire/Philly) should show manufacturing data remains deeply in contraction territory. Friday’s release of consumer sentiment is expected to hold steady, while many traders will pay close attention to see if inflation expectations continue to retreat.  With the Fed’s blackout period quickly approaching, only Bowman will make an appearance on Tuesday at the Community Bankers Event in Hawaii.  Eurozone The ECB is widely expected to raise interest rates by 50 basis points on Thursday but it’s what comes next that investors will be most interested in. This makes the new economic projections that are released alongside the decision, and the press conference, arguably the most important things to watch out for. UK Labor market figures on Tuesday are the standout release next week but it’s the spring budget a day later that people may be most interested in. The fact that the UK is not already in recession will come as a big surprise to many and one of the benefits of that may be a little extra fiscal headroom for the Chancellor. Unfortunately, giveaways may be few and far between for a number of reasons that may make holding off more appealing to the government.  Russia The CBR is expected to leave interest rates unchanged at 7.5% on Friday. Inflation has been declining but remains far above target which may encourage the central bank to stay on hold for now.  South Africa It’s a little light on economic data next week with manufacturing production and retail sales the only notable indicators on Tuesday and Wednesday, respectively.  Turkey No major data or events next week.  Switzerland It’s a little quiet next week but the focus will remain on what the SNB will do on 23 March, especially after the inflation overshoot in February. Markets are still pricing in 50 basis points with a small chance of 75. China The National People’s Congress (NPC) has made a more conservative forecast of 5.0% GDP growth in 2023. Recent economic data has shown a strong recovery in the economy, confirming expectations for an early recovery but softening expectations for fiscal and monetary stimulus. The lifting of the zero-Covid policy has led to a surge in business activity, reduced operational interruptions, and robust data on commercial activities.  Powell’s testimony this past week lifted the US dollar against the Chinese yuan pushing the pair close to the psychological level of 7.0000 which may attract attention once more.  Focus next week will remain on the data including retail sales, industrial production, fixed asset investment, and unemployment. India Markets are pricing in one more rate hike in the tightening cycle at the next meeting on 6 April but next week’s inflation data could change that. Recent trends around the world have seen more rate hikes being priced in and India is no exception after the inflation jump in January. If it doesn’t prove to be an anomaly, further hikes could be priced in. Australia & New Zealand Next week offers the Australian unemployment rate, employment change, and change in full-time employment on Thursday. From New Zealand, we’ll get fourth-quarter GDP data on Wednesday and we’ll also hear from Assistant Governor, Karen Silk on Sunday Japan There isn’t much on the agenda next week, with the minutes of the Bank of Japan’s January monetary policy meeting on Wednesday arguably the highlight. Minutes are often viewed as being outdated but nowhere is this more true than in Japan, where those of the January meeting are released after the March meeting has taken place. For that reason, it would take something extraordinary for them to have a big impact on the markets.  Kazuo Ueda, the new governor of the BoJ who will take office in April, recently stated that it is not a good time to abandon the current policy considering the current economic environment. He supports its continued commitment to massive quantitative easing and is not expected to significantly adjust the yield curve control, which has limited the attractiveness of the yen. Singapore Unemployment data on Monday is the only economic release this upcoming week. Economic Calendar Sunday, March 12 Economic Events New Zealand Food Prices Japan BSI Manufacturing Index Monday, March 13 Economic Data/Events India CPI  Mexico Industrial Production New Zealand REINZ House Sales Australia Westpac Consumer Conf, NAB Business Confidence BOE’s Dhingra speaks Tuesday, March 14 Economic Data/Events Fed’s Bowman Speaks at Community Bankers Event in Hawaii UK Claimant Count Rate, Jobless Claim Change, ILO Unemployment Rate Swiss Producer and Import Prices Italy Industrial Production India Wholesale Prices South Africa Mining Data BoJ Minutes of January Meeting BoJ Outright Bond Purchases Riksbank in hearing on the annual report, monetary policy Wednesday, March 15 Economic Data/Events US Empire Manufacturing, Retail Sales, PPI, NAHB Housing Market Index, MBA Mortgage Applications, Business Inventories, Net Long-term TIC flows China PBOC 1-year MLF Rate, Industrial Production, Retail Sales, Fixed assets, Nw Home Prices  UK Chancellor Hunt delivers annual budget EIA Crude Oil Inventories Sweden CPI  France CPI Poland CPI Italy Unemployment Rate, General Government Debt South Africa Retail Sales  India Trade Data New Zealand GDP  Australia Employment Change Thursday, March 16 Economic Data/Events US Initial Jobless Claims, Philly Fed Business Outlook, Import and Export Prices, Housing Starts, Building Permits Canada Wholesale Trade Sales ECB Rate Decision: Expected to raise Main Refinancing Rate by 50bps to 3.50%  ECB President Lagarde holds a post-rate decision press conference BOE releases Ipsos inflation survey  Japan Industrial Production Sweden Prospera’s Inflation Expectations Survey Czech Current Account Poland Current Account Swiss SECO March Forecasts New Zealand Q4 GDP  Riksbank Business Survey, Floden speaks UK OBR briefs on budget Japan Trade Balance Australia Employment Change Singapore Non-Oil Domestic Exports Friday, March 17 Economic Data/Events US Industrial Production, Leading Index, University of Michigan Sentiment, Canada Industrial Product Price Eurozone CPI, OECD Publishes Interim Economic Outlook Sweden Unemployment Rate Baker Hughes Rig Count Russia central bank (CBR) rate decision: Expected to keep rates steady at 7.50% Sovereign Rating Updates Turkey(Fitch) Belgium (S&P) Spain (S&P) This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Crude oil to close the the post-OPEC+ gap? Gold "remains choppy"

Oil Prices Rebounded, Yellow Metal Has Run Into Resistance

Craig Erlam Craig Erlam 07.03.2023 10:50
Pushing the highs Oil prices rebounded again on Monday, the second day in a row that they’ve reversed sizeable early losses to end the day in positive territory. They’re now on a good run and traders were clearly not deterred by China’s modest growth target for long. Against that backdrop, it may well be the case that Brent and WTI are about to test the upper end of their trading ranges that they’ve remained within since early December. A break above $89 would be a very bullish signal for Brent while the same would be true of $83 in WTI. Whether they have the momentum to pull that off may well depend on Powell’s dual testimonies and/or Friday’s jobs data. Tentatively higher Gold is edging tentatively higher ahead of Powell’s testimony, during which conditions could become much more volatile. The yellow metal has run into resistance around $1,860 this week which was always likely to be the first test to the upside. Above here, $1,890-$1,900 will be a big test, should it get that far. Of course, all of this may simply depend on what Powell has to say. A hawkish testimony could wipe out any bullish momentum built up over the last week, at which point attention will shift back to the lows around $1,780-$1,800. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Bitcoin amid recent banking sector situation: simply put, it is no longer a question of yield but safety

Crude oil benefited amid optimism that the Fed won't be triggering a hard landing, Gold might settle between $1835 and $1865

Craig Erlam Craig Erlam 06.03.2023 23:07
US stocks rallied as optimism grew for the end of the Fed’s rate hiking campaign. It looks like traders are now between two or three more quarter-point rate rises and that is good news for risky assets.  This is likely the most important week of the year as we will find out the short-term trajectory for both the world’s two largest economies. China’s conservative growth target of around 5% was disappointing as it implies we won’t be getting any aggressive stimulus as the economy bounces back with its COVID reopening.  This week will likely deliver a make-or-break moment for risk appetite as we will hear Fed Chair Powell’s testimony to Congress and find out if the hot January jobs report was an aberration. Stocks probably won’t be able to have a meaningful rally until we hear from Fed Chair Powell.  Oil Crude prices turned positive on optimism that the Fed won’t be triggering a hard landing. Earlier, oil was heavier on disappointment after China’s National People’s Congress delivered a slightly disappointing 2023 GDP growth target of 5.0%.  A lot of energy traders were counting on a growth target closer to 6%, which explains why oil dropped a dollar overnight.  Geopolitical risks also remain elevated as some uncertainty was thrown into mix after reports that Russia and Iran could foster a secret nuclear deal that could give Iran uranium transfers.  The oil market was getting closer to the bottom of its recent trading range and it seems too many upside risks should help prices stay comfortably above the $80 level for now.  Gold Gold prices are little changed ahead of what could be a massive week with pricing in peak Fed tightening.  Fed Chair Powell’s mission should be to continue to talk the hawkish talk, while preparing Congress for job losses.  While all eyes will be on Powell, it is important to notice that globally we are close to peak tightening as the Bank of Canada will hold rates steady again and as the RBA nears the end of their rate hiking cycle.  Read next: In crude oil, we are increasingly likely to see a year of two distinctive halves| FXMAG.COM Gold looks rangebound until we get through this busy macro week, which could see a massive move once we get the February jobs report. After Friday, we could have growing optimism that wage pressures might be ready to start easing.  Traders will pay close attention to see if the blowout January 517,000 jobs gain gets a serious revision lower and if average hourly gains show signs of cooling.  Gold might settle between $1835 and $1865 early, but traders should not be surprised if it has a major breakout once we are through all the noise.  Crypto Bitcoin continues to drift lower ahead of a big macro and potentially regulatory week.  The first couple months of the year have already unravelled most macro plays as Bitcoin has clearly outperformed.  Given the latest contagion risks, this time from Silvergate Capital, outflows (with ETP’s) have been steadily increasing. Bitcoin appears rangebound a while longer, but eventually prices should have a major move. It seems the more Wall Street positions itself for a major selloff with risky assets, markets refuse to break.  After this week, if we don’t get any surprises from Powell, we could potentially have a peak in rates firmly in place if the labor market shows signs of softening.  This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
The Momentum Of Bitcoin On The Daily Time Frame Chart Remains Positive

Bitcoin has stabilised, but the situation on the market is quite unsure

Craig Erlam Craig Erlam 06.03.2023 22:36
It’s been a calm start to the week as investors weigh up what China’s modest growth target means for the global economy and look ahead to a busy few days. Safe to say markets were surprised by the decision to target only 5% growth this year while signaling no significant stimulus to turbo-charge the economic recovery. It may well prove to be a wise decision when you consider how well the country has transitioned from zero-Covid to living with it, while policymakers around the world may also be breathing a sigh of relief. One of the upside risks to inflation this year was a turbo-charged Chinese recovery which would drive up demand for a host of commodities from oil to iron ore and as a result prices. So while we may not get the growth boost, we’re probably getting something far more valuable. It will be interesting to see if this is something that is referenced by central banks over the coming months as they near the end of their tightening cycles and battle what may be proving to be quite stubborn inflation. We may even get a reference to it from Jerome Powell during his testimonies in Congress over the next couple of days. Read next: In crude oil, we are increasingly likely to see a year of two distinctive halves| FXMAG.COM In reality, these are not the thrilling affairs they are often played up to be. But this time may be different as the Fed is not exactly in anyone’s good books after delaying the start of tightening and as a result having to go further in order to get a grip on it. And with the cycle now in such an unclear phase, I’m sure the grilling will be extra intense this time around. There’s no doubt what the main event will likely be this week though. The jobs report on Friday will tell us whether the January data was a blip or something to be more concerned about. No one is expecting a repeat of last month but any indication that the labour market is still red-hot could see a fourth 25 basis point hike be more priced in. Stabilized for now Bitcoin has managed to stabilize quite quickly after Friday’s plunge as traders take stock of the situation at Silvergate Capital. Fears naturally resurfaced following reports late last week and just as it seemed cryptos were moving past the FTX debacle. The question now is how widespread the ripple effects will be and how much it will undermine confidence in the space. Bitcoin had already been struggling to break above $24,500-$25,500 resistance and this has just made it that much harder. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
The Commodities Feed: Brent Breaks Above $80, Energy Market Dynamics and Trade Data Analysis

High print of Non-farm payrolls on Friday could lead to a decrease of gold price

Craig Erlam Craig Erlam 06.03.2023 22:27
Oil slips on modest Chinese growth target It’s not been a great day for commodities as a whole and that includes oil, which is down a little over 1% on the day. One big upside risk for oil prices this year was a strong, stimulus-driven, rebound in China and it would appear that isn’t going to happen. That said, the growth target is probably a minimum aim and one that could easily be surpassed but it does make stimulus less likely. Read next: In crude oil, we are increasingly likely to see a year of two distinctive halves| FXMAG.COM Oil prices are a little lower on the day but those losses pale in comparison to the rally last week. They’re still not too far from the upper end of their range of the last few months, although the news does make a breakout to the upside that much more challenging. Stalling ahead of Powell’s testimony Gold is edging lower today after a strong rebound last week. The yellow metal is struggling around $1,860 which was always likely to be the first big test above. A move above here could see $1,900 back in focus, although that may well depend on how the two-day testimony in Congress unfolds and, of course, Friday’s jobs report. Another red-hot report could see gold quickly lose any bullish momentum and potentially $1,780-$1,800 come under real strain. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Inflation Numbers Signal Potential Pause in Fed Rate Hikes Amid Softening Categories

Week Ahead - UK And South Africa's GDP, Russian CPI And Also All Eyes Will Be On The National People’s Congress (NPC)

Craig Erlam Craig Erlam 05.03.2023 09:20
US The US has a very busy week ahead.  The two main events are Fed Chair Powell’s semi-annual testimony to Congress and the nonfarm payroll report.  Powell’s two days at Capitol Hill will undoubtedly draw scrutiny from lawmakers as more tightening will raise the risk this economy is recession bound.  Traders will look to see how hawkish Powell will remain given the mostly strong data, recently. The nonfarm payroll report is the main economic release of the week.  After a jaw-dropping 517,000 jobs were created in January, traders will look to see if that number gets a serious downward revision and if February’s job growth slows to 200,000.  Wage pressures are also key and if average hourly earnings come in hotter-than-expected that could fuel more Fed rate hiking bets. President Biden is also expected to release his budget for fiscal 2024, which might include higher taxes. Republicans are calling for sharp spending cuts, but that is not expected to be in this version. Raising the US debt limit will start to become a focal point, but this is still the early stages.   Earnings season is coming to an end with key updates from Adidas, Brown-Forman, CrowdStrike, Daimler Truck, Deutsche Post, and JD.com.  Eurozone Christine Lagarde’s appearance in the middle of next week will be highly anticipated following the February inflation data. The ECB President has insisted repeatedly that the central bank has a lot more to do, and the latest figures – especially the core which unexpectedly spiked to a new high – will reinforce that. That aside, there’ll be some interesting data points but nothing tier-one. UK  Not the busiest week coming, with GDP data on Friday probably the only notable event on the calendar. The UK avoided a recession in the second half of last year and everyone will be looking for early signs of the economy performing better again at the start of 2023. That aside, any BoE appearances will naturally get a lot of attention. Russia The February CPI number is the big release next week, with pressures continuing to abate with an expected reading of 10.8%, down from 11% the week before.  That aside, the focus remains on the war in Ukraine and any sanctions that will follow. Oil output has already been hit, with another 500,000 barrel daily drop this month and some are expecting that to double by the end of the year. South Africa Fourth-quarter GDP data is the only highlight this coming week and it’s expected to show a contraction in the fourth quarter of last year, meaning the country is at risk of being in recession if it hasn’t bounced back since January. Turkey Labor market figures are eyed alongside industrial production on Friday. That aside it’s looking fairly quiet.  Switzerland SNB Chair Thomas Jordan’s appearance on Tuesday is probably the most notable event next week, coming a day after the latest inflation release. The CPI figure is expected to show price pressures easing but probably not enough to put the central bank at ease. Markets are still fully pricing in a 50 basis point hike on 23 March. China All eyes will be on the National People’s Congress (NPC), as it kicks off its annual session.  This will set the tone in Asia as China will announce major personnel changes, government policy goals, and growth targets.   It will also be a busy week filled with economic releases.  Some of the data however will be impacted by the Lunar New Year holiday.  The February trade balance is expected to decline, while both CPI and PPI soften.  China’s credit last month was most likely reined in as aggregate financing and new yuan loans declined.   India It is likely to be a relatively quiet week for India, with the exception of January Industrial production, which is expected to improve from 4.3% to 5.6%.   Australia & New Zealand The RBA is expected to deliver another quarter-point rate rise and maintain a hawkish stance as inflation remains elevated.  Analysts are unanimous in expecting rates to rise by 25bps to 3.60%.    In New Zealand, it will be a week filled with a few economic releases.  The ANZ commodity price reading occurs on Monday.  In the middle of the week, we get a look at February card spending.  Friday includes the manufacturing PMI release.    Japan The end of Kuroda’s tenure is here.  In his last meeting, the BOJ is expected to stay the course and have no changes with YCC or with rates. Governor Kuroda is widely expected to stick to his stance of maintaining monetary easing to aim for sustainable, stable 2% inflation. BOJ Governor nominee Kazuo Ueda has already hinted he will stay the course, but currency traders are eagerly awaiting any signs on how the BOJ will exit this ultra-easy policy.   Singapore No major releases are expected.  Economic Calendar Saturday, March 4 Economic Events Fed’s Daly gives a speech on inflation at Princeton University Sunday, March 5 Economic Events China’s National People’s Congress begins in Beijing Monday, March 6 Economic Data/Events US factory orders, durable goods Australia inflation gauge Euro area retail sales Mexico vehicle production/exports New Zealand commodity prices SNB releases 2022 results  CERAWeek energy conference by S&P Global JPMorgan’s Global High Yield & Leveraged Finance Conference   International Atomic Energy Agency board of governors meeting Tuesday, March 7 Economic Data/Events Fed’s Powell presents his semi-annual Monetary Policy Report to the Senate Banking Committee US wholesale inventories, consumer credit Australia trade balance, reserves China trade balance, reserves Germany factory orders Greece GDP Japan cash earnings Mexico consumer confidence, international reserves South Africa GDP Singapore reserves Spain industrial production Thailand CPI RBA decision: Expected to raise cash rate target 25bps to 3.60% ECB consumer expectations survey Poland Monetary Policy Council rate meeting Riksbank Governor Thedeen speaks on the current economic situation House Ways and Means Committee has a field hearing on the state of the US economy Wednesday, March 8 Economic Data/Events Fed’s Powell presents his semiannual Monetary Policy Report to the House Financial Services Committee US MBA mortgage applications, ADP employment change, trade balance, JOLTS job openings Canada merchandise trade Euro area GDP Germany industrial production Indonesia consumer confidence Japan BoP, bank lending, leading index BOC rate decision: Expected to leave rates unchanged at 4.50% Poland rate decision: Expected to leave rates unchanged at 6.75% EIA crude oil inventories RBA Governor Lowe speaks at the AFR Business Summit in Sydney ECB President Lagarde speaks alongside WTO Director-General Ngozi Okonjo-Iweala at an International Women’s Day event Riksbank’s Breman speaks on the economy BOE’s Dhingra speaks at the Resolution Foundation BOE’s Tenreyro speaks at Conference of British Industry event Thursday, March 9 Economic Data/Events US Challenger job cuts, initial jobless claims, household change in net worth China CPI, PPI, aggregate financing, money supply, new yuan loans Japan GDP, money stock, machine tool orders Mexico CPI New Zealand heavy traffic index, card spending South Africa current account balance President Biden to release his US budget proposal for fiscal 2024 Riksbank’s Bunge speaks on the economic and monetary policy outlook Riksbank’s Jansson speaks on central bank digital currencies BOE’s Breeden speaks on macro-prudential and monetary policy interactions   Friday, March 10 Economic Data/Events US Feb change in nonfarm payrolls: 215Ke v 517K prior, unemployment rate, average hourly wages, monthly budget statement Bank of Japan policy rate decision: No changes expected to YCC or balance rate in Kuroda’s last meeting Canada unemployment France trade balance Germany CPI India industrial production Japan household spending, PPI Mexico nominal wages New Zealand PMI, house sales Russia CPI Thailand consumer confidence, foreign reserves, forward contracts Turkey industrial production UK industrial production, services index, trade balance Apple annual meeting of shareholders Sovereign Rating Updates Belgium (Fitch) Norway (S&P) Portugal (S&P) Greece (DBRS) This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Decline of Canadian retails sales plays in favour of holding the rates by Bank of Canada

Canadian dollar: Slowing economy can in a way prevent Bank of Canada from another hike in March

Craig Erlam Craig Erlam 01.03.2023 23:58
The Canadian dollar showed some strong gains earlier today but has pared most of these gains. In the European session, USD/CAD is trading at 1.3627, down 0.14%. February was the Canadian dollar’s worst month since September 2022, as the Canadian dollar fell 2.5% against the greenback. Canada’s GDP comes up flat Canada’s economy looked sluggish in the fourth quarter, with an unimpressive growth rate of 0.0% y/y. This was far worse than the estimate of a 1.5% gain and below Q3’s downwardly revised gain of 2.3%. The Bank of Canada had projected a 1.3% gain in Q4. In December, GDP actually shrank by 0.1%, following a 0.1% gain in November and below the estimate of 0.0%. Any way you slice ’em, the GDP numbers aren’t good, but they could prove to be a blessing in disguise for the central bank. A slowing economy will give the BoC an excuse to pause at the March 22 meeting. This would be a significant move, as the BoC hasn’t paused since the current rate-tightening cycle began in January 2023. Governor Macklem has signalled that he would like to hold rates, which are currently at 4.50%. With the economy slowing and inflation falling to 5.9% in January (down from 6.3% in December), economic conditions seem appropriate for a pause in rate increases. Even if the central bank does pause next week, it’s doubtful that the BoC can afford to stay on the sidelines for very long, as inflation remains almost triple the target of 2%. Read next: Euro Is Rising, USD/JPY Falls Below 136.00, The Aussie Pair Also Gains| FXMAG.COM In the US, this week’s releases have been far from impressive. Earlier today, Conference Board consumer confidence for February slipped to 102.9, down from 106.0 in January and below the estimate of 108.5 points. This follows Durable Goods Orders for January, which plunged 4.5% following a 5.6% gain in February and missed the forecast of -4.0%. If upcoming releases continue to miss expectations, we could see the markets shift their rate pricing downwards and again talk about a Fed pivot. USD/CAD Technical 1.3701 and 1.3784 are the next resistance lines 1.3571 is a weak support line, followed by 1.3478 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Canadian dollar steady, GDP stagnates - MarketPulseMarketPulse
Asia Morning Bites - 22.05.2023

Positive Signals From China, Bitcoin Is Trading More Than 2% Higher

Craig Erlam Craig Erlam 01.03.2023 11:43
Equity markets in Asia are enjoying some decent gains overnight, with China and Hong Kong the obvious outperformers, while Europe is also enjoying a positive start on Wednesday. Choppy trading conditions are still evident this week although the latest Chinese PMIs have provided some cause for more optimism. It was already believed that the transition from zero-Covid to living with it was going smoothly but this survey data suggests businesses are now extremely optimistic about the future. That bodes well not just for China but regionally as well, as strong demand boosts trade and a resurgence in tourism restores the battered industry. There’s still a long way to go and there could be setbacks along the way but investors will no doubt be encouraged by these early signs. Those with close economic links with China have seen their currencies perform well in the aftermath of the releases, while the yuan is also trading much stronger on the day. While the initial reopening data may be noisy, a strong rebound will be very welcome after a very challenging 2022. Read next: Some Mcdonald's Locations Don't Promote Hip-Hop Stars' New Meal| FXMAG.COM A timely boost Not one to miss out on a bump in risk appetite, bitcoin is trading more than 2% higher this morning. It appears to have consolidated around late-February lows in recent days after failing to break key resistance – $24,500-$25,500 – in the middle of the month. That could be a sign of weakness, at least in the short-term, although ultimately it’s hard to imagine that occurring if we do see risk appetite continue to improve. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Crude oil to close the the post-OPEC+ gap? Gold "remains choppy"

The Chinese PMI Helped The Crude Oil Price, Gold Has Approached A Key Support

Craig Erlam Craig Erlam 01.03.2023 11:35
PMIs a big positive for oil It’s not just equities that have been lifted by Chinese PMIs, oil is also rallying today on the prospect of a stronger Chinese recovery and resilient global demand. While this was just one survey, the breakdown of the surveys was undoubtedly encouraging and that’s lifting Brent and WTI in early trade. All we need to see now are signs of cooling price pressures and perhaps less heat in the labour market in order for crude to potentially break higher. Higher interest rates forcing a hard landing remains the main downside risk for crude prices which has driven the consolidation we’ve seen in recent months, and recent data has only fed those fears. But with China transitioning well and survey evidence indicating resilient demand, all we’re missing is the removal of that downside growth risk. We may need to wait a little longer though as the data points traders will be most focused on for that are released over the next few weeks. A repeat of January could come as quite a shock. Read next: Some Mcdonald's Locations Don't Promote Hip-Hop Stars' New Meal| FXMAG.COM Creeping higher Gold is quietly heading for a third day of gains, boosted by a softer dollar today as other currencies react favourably to the Chinese survey data. The yellow metal fell almost 8% from its highs in February, coming close to key support around $1,780-$1,800. With momentum fading on approach, it would not come as a shock to see it pare those losses ahead of crucial US data over the coming weeks. Of course, it’s reliant on yields not spiking again and some improvement in risk appetite wouldn’t do it any harm either. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Rates Spark: Bracing for more

Markets Should Be Prepared For Return To 50bp And No Cuts This Year

Craig Erlam Craig Erlam 28.02.2023 14:43
It hasn’t been the most thrilling start to the week but that didn’t stop investors from piling back into stocks on Monday in the hope that January data proves to be an anomaly. That enthusiasm didn’t flow through to Asia overnight where indices are a mix of tiny losses and gains, and Europe looks poised to open in a similar fashion. In reality, the bumper start yesterday was simply a process of unwinding the losses from late last week which further suggests investors are in no mood to be discouraged. While bond markets have pivoted quite considerably from pricing in peak interest rates in the near future and rate cuts later in the year to multiple more hikes, perhaps even a reversion to 50 basis points, and no cuts this year, the message doesn’t appear to have gotten through to equity markets. That may well change if the February data continues to point to red-hot labour markets, stubborn inflation, and healthy household spending. But I expect that won’t be the case and investors may well be banking on that too. We all want to see resilience in the economy but if that leads to much higher interest rates, which are already now very high, that resilience won’t last long and hopes of a soft landing will quickly fade. Profit-taking kicking in? Bitcoin is trading a little lower today after giving up the bulk of its Monday gains late in the session. We’re still seeing strong resilience in cryptos but perhaps there’s some profit-taking kicking in after what has been a remarkable start to the year. There remains considerable resistance around $24,500-$25,500, a break of which could be a very bullish signal. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Crude oil to close the the post-OPEC+ gap? Gold "remains choppy"

Oil Prices Remain Very Choppy, Gold Is Weak Again

Craig Erlam Craig Erlam 28.02.2023 10:49
Choppy trade ahead? Oil prices remain very choppy with gains today largely offsetting losses at the start of the week. We may have to wait for more hard-hitting economic data next week before we see the upper or lower ranges tested as the uncertainty appears to be preventing a serious move in either direction. Should the January data prove to be a blip, it could put pressure on the upper end of the range as longer-term economic prospects improve, while another month of hot data could necessitate much higher rates and threaten a soft-landing, weighing on demand prospects. In the interim, choppy trading looks likely to persist. Testing major support Gold is edging lower again this morning, moving ever closer to a very interesting area of support between $1,780 and $1,800. There is a lot of technical support around here from the 50 fib – November lows to February highs – to the 200-day simple moving average. It was also previously a major rotation level and with momentum slipping on approach this time, it could prove to be the case again. Ultimately, the data may determine how firm a support zone it will be but either way, how it reacts to this level could give a strong indication of sentiment in the markets at this time. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Riksbank's Potential Rate Hike Amid Economic Challenges: Analysis and Outlook

Week Ahead: Unemployment In Russia Is Expected To Have Jumped To 4%

Craig Erlam Craig Erlam 26.02.2023 13:17
US Disinflation trends are struggling and now Wall Street will look to see if improving manufacturing and service activity will further fuel pricing pressures. On Monday, durable goods data for January is expected to show higher borrowing costs are hurting manufacturers. Wall Street will also get a couple of Fed regional surveys from Dallas and Richmond.  Traders will pay close attention to Wednesday’s ISM manufacturing report and Friday’s Services Index.   Central bank speak will be closely monitored, especially new Fed member Goolsbee’s comments on Tuesday.  Jefferson will speak on inflation and the dual mandate on Monday, while Waller will talk about the outlook on Thursday. On Friday, we will hear from Logan, Bostic, and Bowman.   US President Biden will also host German Chancellor Scholz at the White House. Traders will look to see if they announce any new efforts to support Ukraine or sanctions against Russia.   Earnings season continues with key updates from Bayer, Berkshire Hathaway, Broadcom, Budweiser Brewing Co. Apac, Costco Wholesale, CRH, Dell Technologies, Dollar Tree, HP, Kroger, Kuehne + Nagel International, Lowe’s, Merck, National Bank of Canada, Occidental Petroleum, Salesforce, Toronto-Dominion Bank,  VMware, and Workday. Eurozone Next week offers a number of economic data points, the most notable of which will be the flash HICP readings. While headline inflation has been falling, core remains at the peak and policymakers are unlikely to ease off the brake until they’re seeing progress on this front. Forecasts suggest it’s still a little early for that. Markets are still pricing in a 50 basis point hike at the meeting in March although there’s an almost equal chance of 75, based on current rates. Which brings us nicely to the central bank speak, kicking off with President Lagarde who’s due to appear at the G20 conference over the weekend.  UK  It’s all a bit calm next week, with central bank appearances the most notable thing on the calendar. That includes Governor Bailey on Wednesday and Chief Economist Pill on Thursday. With 25 basis points almost entirely priced in for March and the committee clearly a little divided on the correct path going forward, I’m not sure what they could say that would cause much of a shock at this point. Russia Unemployment is expected to have jumped to 4% in January, from 3.7% the month before. Meanwhile PMIs on manufacturing and services on Wednesday and Friday, respectively, will be eyed. South Africa A quiet week in store with unemployment the only notable release. Turkey The CBRT cut rates last week by an unusually modest 50 basis points, taking the repo rate to 8.5%. Inflation remains extraordinarily high, with the official rate released by the Turkish Statistical Institute, sitting at 57.68%. The February reading will be released on Friday, while GDP data is due on Tuesday.   Switzerland A selection of data points will be eyed this upcoming week which should give an up-to-date view on the state of the economy. The week will start with GDP data on Tuesday for the fourth quarter, alongside the KOF indicator for February. This will be followed by retail sales for January and the manufacturing PMI for February on Wednesday.  China The official manufacturing and non-manufacturing PMIs for January will be released on Wednesday, in what will otherwise be a relatively quiet week. Of course, all eyes are on the transition and how quickly and strongly the economy will bounce back, with stimulus measures over the next couple of months likely to turbo-charge the recovery. India GDP and PMI data eyed next week, with the economy seen performing strongly again in the third quarter and surveys indicating ongoing optimism.  Australia & New Zealand The RBNZ’s first interest rate meeting of the year last week was in line with market expectations of another 50 basis point hike. The central bank minutes mentioned that a potential recession in the second quarter of this year might occur, putting pressure on the New Zealand dollar. Focus this week will be on Australian retail sales data for January and GDP for the fourth quarter, and New Zealand retail sales for the fourth quarter. Japan According to Japanese lawmakers, BOJ Governor nominee Kazuo Ueda is to speak in the upper house on 27 February, and deputy governor nominees are to appear in the upper house on 28 February. Ueda will attend the hearing at the National Diet and give a speech, which may have an impact on Japanese markets.  Retail Sales and the Tokyo core CPI will be in focus next week. Singapore Retail sales and the February PMI survey are the only releases of note. Economic Calendar Saturday, Feb. 25 Economic Events Berkshire Hathaway reports earnings   G-20 finance ministers and central bank governors conclude meetings Sunday, Feb. 26 Economic Events German Chancellor Scholz meets with Indian PM Modi Japan’s ruling LDP holds its annual convention Monday, Feb. 27 Economic Data/Events US durable goods Eurozone economic confidence, consumer confidence Hong Kong trade Israel unemployment Japan BOJ outright bond purchases Mexico trade US Congress returns after a recess US Treasury Secretary Yellen talks with President Zelenskiy ECB chief economist Lane speaks on “Macro-Financial Stability in the EU” ECB’s de Cos speaks at EIB event in Luxembourg BOE’s Broadbent speaks at a digital technologies conference in London Tuesday, Feb. 28 Economic Data/Events US wholesale inventories, Conference Board consumer confidence Australia current account, retail sales Canada GDP Finland GDP France CPI, GDP India GDP Japan industrial production, retail sales Mexico international reserves Singapore unemployment South Africa unemployment, trade balance Sweden GDP Switzerland GDP Thailand trade Turkey GDP Chevron investor day Mayoral election in Chicago New Fed member Goolsbee speaks at Ivy Tech Community College BOE chief economist Huw Pill makes closing remarks at digital technologies conference BOE’s Mann and ECB’s Vujcic speak at the EIB forum in Luxembourg Earnings from Target Wednesday, March 1 Economic Data/Events US construction spending, ISM Manufacturing, light vehicle sales Australia GDP China manufacturing PMI, non-manufacturing PMI, Caixin manufacturing PMI European Manufacturing PMIs: Eurozone, Germany, France, and the UK Germany CPI, unemployment India Manufacturing PMI New Zealand building permits Russia unemployment Start of the annual Conservative Political Action Conference (CPAC) Bundesbank publishes annual report BOJ’s Nakagawa speaks in Fukushima BOE Governor Bailey speaks at a conference focused on the cost of living crisis ECB’s Villeroy speaks at the French National Assembly’s finance committee ECB’s Visco speaks in Frankfurt Earnings reports from Dollar Tree, Kohl’s, Salesforce, and Lowe’s   Thursday, March 2 Economic Data/Events Australia building approvals Brazil GDP Eurozone CPI, unemployment Hong Kong retail sales Hungary GDP Italy CPI, unemployment Japan capital spending Mexico unemployment South Korea industrial production Spain unemployment Sri Lanka rate decision US initial jobless claims Bloomberg Intelligence’s Market Structure event in New York. Speakers include Securities and Exchange Commission Chair Gary Gensler and NYSE COO Michael Blaugrund The due date for the DOJ’s amicus brief with its view on Donald Trump’s claim that he should get absolute immunity against civil lawsuits seeking to hold him liable for the Jan. 6, 2021 attack on the US Capitol ECB publishes accounts of February policy meeting Bank of Japan board member Hajime Takata gives speech in Kanagawa BOE chief economist Huw Pill speaks on the economic outlook Retail earnings continue with Macy’s, Costco, and Nordstrom all reporting Friday, March 3 Economic Data/Events US President Biden and German Chancellor Scholz meet at the White House China Caixin services PMI Czech Republic GDP Eurozone Services PMI, PPI France industrial production Italy GDP Japan unemployment, Tokyo CPI Singapore retail sales ECB’s Vasle and Muller speak on inflation Italian PM Meloni visits Abu Dhabi BOE’s Hauser speaks at a workshop on market dysfunction hosted by the Initiative on Global Markets in Chicago Sovereign Rating Updates Austria (Fitch) Czech Republic (Fitch) Hungary (Moody’s) European Union (DBRS) This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
BRICS Summit's Expansion Discussion: Impact on De-dollarisation Speed

All Fed Policy Makers Supported Further Tightening Of Monetary Policy

Craig Erlam Craig Erlam 23.02.2023 14:03
Equity markets are heading for a positive start to the session, paring Wednesday’s gains as investors digest the latest Fed minutes. The usual caveat applies to the minutes, being that a lot of time has passed, and to a great extent, the contents of them are either outdated or known. Still, as we saw on Wednesday, that doesn’t always matter and markets can still respond accordingly. The starkest takeaway was arguably that some policymakers could have gotten behind another 50 basis point increase and all backed further tightening ahead. While that aligns with some commentary we’ve had recently, the meeting took place before the jobs and inflation reports, and the retail sales data for January, all of which were very strong. So either policy makers came to this judgment in anticipation of those reports or they did it despite a series of softer prints that had convinced investors that the end of the tightening cycle was just around the corner. While I do take Fed commentary with a relative pinch of salt – as I believe the plan has always been to remain hawkish and keep financial conditions tight until the last minute and then quickly pivot once success is all but assured – the latter may well indicate that at least a few hikes are planned and any hope of cuts this year are, as communicated, slim. That could be the difference between a recession and a soft landing, although again, I take these warnings with a large pinch of salt. If January proves to be a blip in the data due in part to warmer weather – and the fact that bumps in the road back to 2% were always highly likely – we could quickly see market pricing shift once more. And we’ll get another full round of data before the next meeting which will give us a much better idea of whether this is a blip or a trend. Growing belief Bitcoin is continuing to show remarkable resilience as it trades up 2% today and back above $24,000. Don’t get me wrong, it’s not alone in doing so, we’re seeing similar in equity markets although to a lesser extent. There’s clearly belief returning to crypto markets and some confidence that the darkest days are behind it. If the newsflow can remain onside then that could prove to be the case and a break of $24,500-$25,500 could further fuel that belief. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Crude oil to close the the post-OPEC+ gap? Gold "remains choppy"

The FOMC Minutes Were Another Setback For Gold, Crude Oil Prices Creep Higher

Craig Erlam Craig Erlam 23.02.2023 13:41
Glacial consolidation Oil markets are continuing to consolidate, albeit at a glacial pace, and today we’re seeing prices creep higher just as they near the lows from earlier this month. While traders remain optimistic about China, they have become less so about the global economy as more and more rate hikes have been priced in. If one of those narratives changes, or we see a significant shift in another driving force in the oil markets – Russia, OPEC+, etc – then we could see prices break out of this range. But they seem rather comfortable within them, mirroring the feeling of consuming countries and producers alike, it seems, both of which have been much less vocal on the price and imbalance in the markets. Gold correction run its course for now? The FOMC minutes were another setback for gold, reaffirming the hawkish messages we’ve heard from policymakers for weeks now. The yellow metal has once again run into some support around $1,820 though, which may reaffirm its position as a temporary barrier to the downside. Of course, if the economic data between now and the next Fed meeting in a month doesn’t play ball, it may not hold for much longer. But the correction does seem to have run its course for now which could lead to further profit-taking and a retracement higher. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Gold Commodity Asset: Daily Chart Analysis and Bearish Outlook

Oil remains choppy, gold is edging lower once more

Craig Erlam Craig Erlam 21.02.2023 14:14
Choppy trading continues Oil remains choppy this week with Brent and WTI slipping around 1% in early trade on Tuesday, wiping out similar gains at the start of the week. There is undoubtedly more optimism around the Chinese economy which will stimulate more demand this year but at the same time, sentiment is cooling on the global economy as interest rates are projected to go a little higher than previously anticipated. This was always likely to be a quarter of big swings in sentiment as it was too much to ask for the inflation data to simply retreat back without any setbacks along the way. That naturally has consequences for economic expectations and therefore oil demand which is why we could see the market remain choppy over the rest of this quarter and into next. Correction losing momentum Gold is edging lower once more today following some choppy trade at the start of the week. While bulls may be encouraged by Friday’s rebound, others may take a little more convincing. That it came around notable support, in the $1,820 region, and on weaker momentum could be the biggest sign that the corrective move is seeing pushback. That isn’t to say it’s fully run its course and we could see the yellow metal pare losses before the correction continues but near-term prospects are looking a little more promising. The first test in any recovery may come around $1,860, with $1,890-$1,900 then being a major test of resistance. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Upcoming Corporate Earnings Reports: Ashtead, GameStop, and DocuSign - September 5-7, 2023

PMI report showed businesses are becoming less pessimistic, Bitcoin is trading close to $25,000

Craig Erlam Craig Erlam 21.02.2023 14:09
It hasn’t been the most thrilling start to the week but the good news is that it should improve from here as the US rejoins and the economic calendar fills out. We were basically treading water on Monday which is often the case on a US bank holiday. The fact that the calendar was as thin as it was elsewhere naturally doesn’t help and it may be no bad thing either. We’ve become so accustomed to relentless action in the markets this past year in particular that a day of calm can be a good thing. But don’t expect it to last. This week may not be as all-action as others we’ve experienced this month but there is still plenty for investors to get their teeth stuck into. Today is littered with economic releases throughout, with the PMIs being a key feature of that. At a time of such uncertainty over inflation, interest rates, and the economy, these forward-looking business surveys carry extra weight. And what’s more, they’re expected to show businesses are becoming less pessimistic which would be a small win but a win nonetheless. That said, the Japanese manufacturing PMI was expected to do just that and instead dipped much further into contraction territory. The decline was driven by lower output, new orders, and new export orders; once again indicating waning global demand and trade. The services survey was much better but that is being driven by improved tourism as restrictions were removed, and government support. All in all, there are more concerning signs than promising ones. Unnerved The RBA minutes from earlier this month highlighted how unnerved policymakers are by recent inflation developments, with a pause in tightening not even discussed despite that at one stage appearing to be where the central bank was heading. In fact, the debate centered around whether there was a need to accelerate the hiking cycle which may unsettle investors that have become more relaxed on the belief that the end is near. The message, often not heard, from policymakers around the world has consistently been that there’s more to do and that rates may need to stay higher for longer but investors have not always been receptive to that. That seems to be changing and a 50-basis point hike would have very much driven that home but the RBA instead opted for 25 this time, backed by the belief that monthly meetings allow for a more gradual exit. ​ Can bitcoin overcome major resistance? There is no shortage of optimism in bitcoin this year and it’s continuing to push higher again today. The cryptocurrency is trading close to $25,000, a huge test considering the scale of recovery we’ve seen in the last seven weeks. The region around $24,500-$25,500 was big on the way down so it will be a big psychological test this time around, too. But with bitcoin up around 50% already this year, you have to wonder how much further it can go. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
IG analyst to FXMAG.COM: In my opinion commodity prices already reflect higher oil prices

There's a chance crude oil gains are caused by China's revival

Craig Erlam Craig Erlam 20.02.2023 16:04
Choppy trade continues Oil prices are bouncing back a little after slipping throughout the last week from their recent highs. The optimism around China today may be responsible for the gains we’re seeing in crude which would make a lot of sense given it’s the world’s largest importer and expected to recover strongly from the Covid transition. But as we’ve seen over the last few months, there’s more to this story than just China and the decline over the last week was likely a reflection of more pessimistic global expectations against the backdrop of higher interest rate forecasts. Sentiment remains very fragile and the economic data is inconsistent. Until we see an improvement in the latter, the former will likely remain choppy, as will the price of oil. Read next: Despite the rise in interest rates, we’ve seen over the past few months, the US economy has held up reasonably well, with strong growth in Q3 as well as Q4| FXMAG.COM Does the correction have further to run? Gold traders do not share the eternal optimism that equity and crypto traders possess and recent weeks have highlighted that perfectly. The yellow metal fell into a corrective pattern and has struggled to get out since. It pared some losses on Friday to end the session higher around notable support in the $1,820 region. The long lower wick from the days’ trade may be a bullish signal in the near term, although I’m not convinced the correction has run its course. Below here, the key zone falls around $1,780-$1,800. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil remains choppy, gold under pressure - MarketPulseMarketPulse
Asia week ahead: Policy meetings in China and the Philippines

Chinese stocks have performed well and the country's economy may be doing well for some time

Craig Erlam Craig Erlam 20.02.2023 16:00
Stock markets in Europe are treading water in thin trade at the start of the week amid a light economic calendar and a US bank holiday. It was always likely to be a slow day under the circumstances and that’s exactly what it’s turning out to be. Stock markets remain in a surprisingly strong position despite the uncertain outlook and rising interest rate expectations due to stubborn inflation. While other areas of the market appear to have adopted a more defensive position, equity investors remain undeterred. It would appear it’s going to take a lot more than a few nasty economic releases to put a dent in their optimism. China optimism remains The outlier is once again China, where stocks have enjoyed a very good start to the week. That came despite one and five-year loan prime rates remaining unchanged, as was widely expected following last week’s MLF hold. The bullish case for the Chinese economy remains solid and the likely release of stimulus over the next couple of months as it gathers pace could super-charge that. Domestic demand is going to be the cornerstone of the economic revival and policymakers appear poised to unleash that to its full potential. How they plan to do so should become clearer over the next month although we’ve already seen big steps in the right direction. Read next: Despite the rise in interest rates, we’ve seen over the past few months, the US economy has held up reasonably well, with strong growth in Q3 as well as Q4| FXMAG.COM Eternal optimism Cryptos are seemingly existing in a world of their own with bitcoin rising 2% again on Monday and eyeing the highs of the last week once more. This could be a really pivotal level for bitcoin and a break of it could generate plenty more enthusiasm. And we’ve all seen what happens when enthusiasm and euphoria exist in cryptos. The price can take off regardless of fundamentals or broader sentiment. That isn’t to say we’ll necessarily see that on this occasion but the 50% recovery so far this year does suggest something may be happening. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Treading water - MarketPulseMarketPulse
Summary Of The Situation Of Equity Markets And Bitcoin

Summary Of The Situation Of Equity Markets And Bitcoin

Craig Erlam Craig Erlam 19.02.2023 11:05
Equity markets are ending the week in the red after finally falling victim to the persistent disappointment of US economic data on Thursday. It’s taken a lot but it would appear investors’ eternal optimism is being shaken, with the latest PPI figures finally driving the message home that bringing the economy in for a soft landing will be extraordinarily challenging and there’ll likely be plenty of turbulence along the way. In reality, the message should have sunk in much sooner but investors were seemingly so convinced that these were just blips in the data that they failed to see how quickly they were stacking up. Don’t get me wrong, I’m still of the view that the data will improve again but I’m not so willing to turn a blind eye to what it’s telling us now. And most importantly, neither is the Fed which has been less willing to get carried away with what came before. Suddenly the topic of conversation has changed from one more 25 basis point hike and then two cuts later in the year, a few weeks back, to perhaps reverting back to 50 in March and hiking by another 75 in total. It was always going to be a rollercoaster ride this quarter and maybe next and the first seven weeks of the year have been just that. Taking off? Bitcoin is in retreat at the end of the week, not immune it seems to the sharp shift in risk appetite throughout the markets. That comes after an immense rally earlier this week that saw it hit an eight-month high on Thursday. While the risk element will no doubt be a key factor, that the correction is occurring in the $24,500-$25,500 zone suggests to me that there’s a coincidental element to it as well, as we could have expected to see some profit-taking around these levels regardless. The risk mood may have just helped that along. Regardless, bitcoin bulls will no doubt be excited by recent developments in the price and may feel more optimistic than they have since 2021. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Week Ahead: Russia is expected to show the deflation trend remains intact

Week Ahead: Russia is expected to show the deflation trend remains intact

Craig Erlam Craig Erlam 18.02.2023 09:20
US The latest round of economic data (retail sales, CPI, PPI, jobless claims) are all signaling more Fed rate hikes are coming.  Wall Street will pay close attention to the flash PMIs, which could show manufacturing and service sector activity is stabilizing, existing home sales, jobless claims, and personal income & spending data.  The second look at Q4 GDP and core PCE are also expected as is the final sentiment reading from the University of Michigan. The debate between quarter-point and 50 basis point rate rises by the Fed has returned.  The FOMC minutes will closely be watched, especially after Fed’s Bullard and Mester noted they were thinking about half-point rises.  Fed speak includes appearances by Bostic and Daly on Thursday, while Jefferson, Collins, and Waller speak on Friday.   Earnings seasons continues with key updates from Alibaba, Baidu, BASF, BHP, Block, Booking, CIBC, Cheniere Energy, Deutsche Telekom, eBay, Engie, Eni, Home Depot, HSBC, Iberdrola, Intuit, Keurig Dr Pepper, Moderna, Munich Re, Nvidia, Rio Tinto, Walmart, and Warner Bros Discovery.  Eurozone It’s unlikely to be a game-changing week but there are some very interesting economic data releases that traders will pay close attention to. The one that stands out is the HICP inflation data, although being a revised number we may not get much from it. The PMI surveys could be of greater consequence, being flash readings that will continue to paint a picture of how well the bloc is holding up.  UK  A quiet week for the UK with the early part bringing PMIs from the services and manufacturing sectors and the latter BoE appearances. The outlook for the UK remains confusing despite all of the optimism and just as we’re seeing setbacks elsewhere, there will likely be plenty here too. Investors appear convinced the end of the tightening cycle is nigh, buoyed by the MPC’s confidence on the path of inflation this year. The PMIs will offer further insight into the state of the economy while the speeches may shed a little more light on what this all means ahead of next month’s meeting. Russia The monetary policy report may be of interest next week, although rates have now been on hold for the last five months. PPI data is expected to show the deflation trend remains intact, something that may trigger a change in thought on rates should it filter through to the CPI numbers.  South Africa Unemployment and PPI data are released next week, the latter of which may catch the eye a little more given the potential implications for CPI inflation and interest rates. We’re still a way off from the next SARB meeting which takes place at the end of March but with inflation now only a little above the 3-6% target range and core well within, the case for further rate hikes is weakening.  On Wednesday, Finance Minister Enoch Godongwana will deliver the National Budget speech to Parliament. The government has numerous priorities that it must address and finding that balance will be no easy feat. Markets, as ever, will be watching. Turkey There’s no doubt what the main event is next week. The CBRT is expected to resume its easing program with another 1% cut, taking the key rate to 8%. The central bank hasn’t been shy about going further than markets expect before, or particularly concerned about the consequences. So we shouldn’t be surprised if it does so again. Switzerland Very little of note on the agenda next week, the most notable possibly being the ZEW survey. A 0.5% rate hike is still expected at the next scheduled meeting on 23 March but with inflation still running uncomfortably above target; the only risk is the SNB won’t wait that long.  China The amount of support that will get pumped into China’s economy might depend on how well their reopening goes.  This week’s main event for China is the decision on loan prime rates.  Given the PBOC kept the key rate steady earlier this month, both the 1-year and 5-year loan prime rates are expected to remain unchanged from a month ago at 3.65% and 4.30% respectively.  China is still widely expected to ease sometime soon and that should keep the outlook strong for Asia.      India No major economic releases or events are expected.  Australia & New Zealand The RBNZ is widely expected to deliver its 10th-straight rate hike, with the majority of analysts expecting a half-point rate rise to 4.75%. The consensus range is anywhere from a quarter-point rate rise to as high as a 75 bp rate increase.  Extreme weather may keep inflation pressures going, so the RBNZ should remain somewhat hawkish.  New Zealand’s second-tier data releases also include PPI, trade balance, and credit card spending.    The main economic release for Australia is Q4 wage data that is expected to show pay growth remained, but struggled to keep up with inflation.  The release of Q4 private capital expenditure should show an improvement from -0.6% to +0.9%.   Japan The focus in Japan will be on two big events.  Kazuo Ueda, the government’s nominee to become the next BOJ  governor, is expected to speak at a confirmation hearing at the lower house of parliament on February 24th. Japan’s inflation report is also expected to show core prices rose to the fastest levels since 1981.  Singapore The January inflation report is expected to be hot as the labor market remains tight and foreign travelers return.  Industrial production is also expected to improve, with the year-over-year reading increasing from -3.1% to -1.9%.  Economic Calendar Saturday, Feb. 18 Economic Events Major leaders attend the 59th Munich Security Conference Hungary PM Orban gives his annual state-of-the-nation speech Sunday, Feb. 19 Economic Event US Secretary of State Blinken’s European trip includes visits to Turkey, Germany, and Greece   Monday, Feb. 20 Economic Data/Events US markets closed for President’s Day China loan prime rates Eurozone consumer confidence Finland CPI Malaysia trade Philippines balance of payments Sweden CPI Taiwan export orders Thailand GDP US President Joe Biden is scheduled to visit Poland   EU foreign ministers meet in Brussels Sweden’s Riksbank releases minutes from its February monetary policy meeting BOE’s Woods speaks at the Association of British Insurers annual dinner Tuesday, Feb. 21 Economic Data/Events US existing home sales, PMI Canada retail sales, CPI Eurozone PMI, new car registrations Finland unemployment France PMI Germany PMI, ZEW survey expectations Japan PMI Mexico retail sales, international reserves UK PMI Russian President Putin to deliver his first state-of-the-nation address RBA releases minutes from its February policy meeting Riksbank’s Floden speaks   Riksbank’s Ohlsson participates in a roundtable about the current economic situation Wednesday, Feb. 22 Economic Data/Events Fed releases minutes from its Jan. 31-Feb. 1 policy meeting Germany CPI, IFO business climate Italy CPI New Zealand trade Russia industrial production US MBA mortgage applications Reserve Bank of New Zealand rate decision: Expected to raise rates by 50bp to 4.75% ECB Governing Council meets in Lapland, for a non-monetary-policy meeting BOJ board member Naoki Tamura speaks in Gunma, Japan Riksbank’s Governor Thedeen speaks about the economy and monetary policy South African Finance Minister Godongwana presents the national budget Hong Kong annual budget presentation Thursday, Feb. 23 Economic Data/Events US 2nd look at Q4 GDP, initial jobless claims Eurozone CPI Singapore CPI Taiwan industrial production G-20 finance ministers and central bank governors meet in India Turkey interest-rate decision: Expected to cut rates by 100bps to 8.00% Mexico’s central bank releases minutes from its February policy meeting Fed’s Bostic speaks at the bank’s 2023 banking outlook conference BOE’s Mann speaks at the Resolution Foundation on “The Results of Rising Rates: Expectations, Lags and the Transmission of Monetary Policy” BOE’s Cunliffe delivers a keynote address at a G-20 financial and central bank deputies meeting on “Leveraging National Payment Systems to Enhance Cross-Border Payment Arrangements” Riksbank’s Floden speaks on the economy and monetary policy Japan Emperor’s Day holiday Friday, Feb. 24 Economic Data/Events US PCE deflator, personal spending, new home sales, University of Michigan consumer sentiment Germany GDP Japan CPI Mexico GDP Singapore industrial production One-year mark of Russia’s invasion of Ukraine German Chancellor Scholz leaves for a three-day trip to India BOE’s  Tenreyro participates in a panel discussion titled, “Back to 2% inflation?” BOJ governor-nominee Kazuo Ueda appears before Japan’s lower house Sovereign Rating Updates Netherlands (Fitch)  Austria (S&P) Austria (Moody’s) Sweden (Moody’s) This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
The RBA’s aggressive rate tightening cycle will be continued

Markets Are Still Pricing In A Few More 25-Basis Point Hikes From The RBA

Craig Erlam Craig Erlam 16.02.2023 10:28
Equity markets are poised to open in the green once more on Thursday, continuing what has been a rather strange week of trade so far. We’ve seemingly gone from euphoria at the start of the year on the back of some really encouraging economic data to turning a blind eye to it when it suits. It’s all really quite odd, especially when other corners of the market are behaving in a more orthodox manner, which begs the question, what do equity (and crypto) traders know that the rest of us do not? In the last two weeks, we’ve had a red-hot jobs report, a more modest decline in inflation data, and a really strong retail sales release. As you would expect, that’s triggered a retreat in gold and an adjustment in bonds to account for rates likely rising further and maybe no longer falling later this year. That seems perfectly reasonable. While I am of the view that the pendulum has now probably swung too far the other way on rate expectations this year, I’m not quite as willing to ignore these releases as many clearly are. It could come back to bite them if we don’t see a swift cooling next month. Cause for concern for the RBA The Australian dollar has recovered earlier losses that came on the back of weaker employment figures. For a second straight month, the unemployment rate ticked higher and employment fell, alongside a slight downward revision to December on the latter. While this wouldn’t typically be considered good news, investors have been forced to accept the possibility of higher interest rates recently as inflation has stayed stubbornly high. A slightly looser labour market will alleviate some of those fears of inflation becoming entrenched, although more evidence will be required to appease RBA policymakers after the last couple of inflation prints. Markets are still pricing in a few more 25-basis point hikes over the coming months before cuts begin either late this year or early next. A further deterioration in the labour market could see those expectations pared back further. Oil preparing to break higher? Oil prices are very choppy at the moment, with traders having a lot to take in, be that a 500,000 barrel decline in Russian output in March, a strong Chinese economic recovery, and an uncertain global outlook amid ongoing monetary tightening, among other things. It would appear crude has settled into a range, although it continues to trade at the upper end of that recently which may indicate a breakout attempt is developing. A move above $89 could be a very bullish development and suggest a tighter market is being more heavily priced in, aligning with comments from OPEC on Tuesday. First big test Gold traders don’t share the enthusiasm in equity markets and the yellow metal has continued to trend lower in the aftermath of recent data releases. It ran into support around $1,830 on Wednesday, around the upper end of the first barrier to the downside. This sits around the 38.2% retracement of the move from the November lows to February highs and coincides with support and resistance in December and January. The bigger test arguably lies a little lower around $1,780-$1,800, should it get that far. A bright future for bitcoin? It’s been a fantastic 24 hours for bitcoin and one that could generate further enthusiasm for cryptos, with it hitting a new six-month high and breaking above another big moving average only days after a bullish rebound off the 200-day SMA. While regulatory crackdowns continue to drive some unease, there’s clearly a growing sense of relief that the worst is behind it for the industry and 2023 could be a much better year. The next big test falls around $24,500-$25,500, a break of which could convince any remaining doubters that the future is bright. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
FX Markets React to Rising US Rates: Implications and Outlook

The Trend Remains Positive But It May Be Stalling

Craig Erlam Craig Erlam 15.02.2023 14:05
Equity markets are poised to open a little softer on Wednesday following similar moves in Asia overnight as investors weigh up the latest setback in US data. The inflation report really needed to over-deliver after the red-hot labour market figures earlier in the month and it simply didn’t do it. The trend remains positive but it may be stalling and that won’t give the Fed any encouragement to stop raising interest rates. The next 25 basis point hike was never really in doubt anyway but now markets are factoring in much more, including another in May and a good chance of one more in June. What’s more, those rate cuts that were priced in for the end of the year only a couple of weeks ago are no more. Markets are pricing in the possibility of one but the anticipated year-end rate is now significantly higher, as is the terminal rate. A long way to go UK inflation may still be far too high but the January CPI report has offered some cause for optimism, slipping faster than expected on both a headline and core basis. The headline number remains above 10% so there’s still a very long way to go but favourable base effects and lower energy prices should go a long way in driving this much lower over the course of the year. The BoE may be particularly encouraged by the core decline as this is where we’re likely to see stubbornness but we must remember that this is just one release and there will likely be many setbacks over the course of the year. Correction run its course? Bitcoin enjoyed a decent rebound on Tuesday despite broader market sentiment being more challenging on the back of the US inflation report. We continue to see resilience in cryptos which is very encouraging despite regulatory headlines not being particularly good. Of course, it’s now retraced back to a level that was a notable area of support in late January and early February before it corrected and we’ll soon see whether that’s become a bearish resistance zone or the corrective move has run its course. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
OPEC+ Meeting: Saudi Arabia Implements Deeper Voluntary Cuts to Boost Oil Prices

A Shockingly Large Inventory Build Reported By API On Tuesday Is Contributing To The Decline Of Crude Oil

Craig Erlam Craig Erlam 15.02.2023 14:01
Large inventory build weighs Oil prices are a little lower again today but remain broadly within the same range they’ve traded in over the last couple of months. China has been a very bullish development for crude oil but the global economy as a whole is much more uncertain. In addition, the US decision to release oil from the SPR has come as a surprise given previous commitments to refill the reserve. What’s more, a shockingly large inventory build reported by API on Tuesday is contributing to the decline ahead of today’s widely followed EIA report. If that’s backed up later today, we could continue to see oil drift away from its range highs. Gold correction continues The corrective move in gold is continuing today after the yellow metal did not get the lift from the US inflation report that some were hoping for. It’s now broken back below $1,850 and could continue lower from here, with the next support potentially coming around $1,820-$1,830, although a bigger test may come around $1,780-$1,800. Ultimately the recent data has not been particularly favourable and that’s been evident in the shift in interest rate expectations this year. A higher terminal rate and potentially no rate cuts this year is not a good near-term development for the yellow metal. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Is Gold Ready to Shine Again? US CPI and Fed Policy Insights

Gold Remains Choppy In The Lead-Up To The Inflation Report

Craig Erlam Craig Erlam 14.02.2023 15:02
Paring gains Oil prices are falling again on Tuesday after initially recouping losses at the start of the week. While traders remain very optimistic about China and to a lesser extent, the resilience of the global economy this year, the fact remains that it won’t be a smooth process, and that has already been evident in the economic data in the opening weeks of 2023. It will be interesting to see how oil prices respond to today’s US inflation data as interest rates are now at a point where every 25 basis points matter and could be the difference between a soft landing and a recession. Equity markets don’t appear to be fully capturing that at the moment but oil appears to reflect that much more. Read next: GBP/USD Pair Rose Sharply Above $1.22, EUR/USD Pair Also Rose| FXMAG.COM Awaiting the inflation release Gold remains choppy in the lead-up to the inflation report. It was starting to drift lower again late last week but that appears to have slowed, probably with an eye on today’s release. A strong inflation reading could weigh heavily on the yellow metal and intensify the second wave of the correction. While it has seen some support around $1,850 this past couple of sessions, the interesting levels remain $1,820-$1,830 and $1,780-$1,800. Another weak inflation print could draw an abrupt end to the correction and see gold rally once more, at which point $1,890-$1,900 may provide the initial test. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Deciphering the Economic Puzzle: Unraveling Britain's Mixed Signals

In UK Labour Market Figures Showed Wages Excluding Bonuses Rising Once More

Craig Erlam Craig Erlam 14.02.2023 14:52
Stock markets got the week off to a strong start and that optimism is carrying through to the inflation report release, it would appear. European indices are trading around half a percentage point higher early in the day and US futures indicate a slightly positive open as well. Of course, all of that will probably change between now and the opening bell, with the inflation data being released an hour before. As was the case yesterday, I’m quite surprised at the level of optimism we’re seeing in the run-up to the report. The inflation data has a lot of heavy lifting to do in order to alleviate clear concerns over the tightness of the labour market. The January report has heaped more pressure on the CPI to deliver and forecasts are not that hopeful. Time will tell whether investors have been a little bit complacent on this one. A concerning wage number for the BoE UK watchers may be feeling a little less optimistic this morning after labour market figures showed wages excluding bonuses rising once more in December. They were expected to stay flat at 6.5% but instead jumped to 6.7%, a level still far below headline inflation and not consistent with it falling back to target any time soon. Including bonuses, the number was a slightly more modest 5.9% which is still too high but at least a deceleration from the month before. Following the release, UK yields were given a nudge higher, lifting the pound in the process alongside expectations on the terminal rate which is now seen hitting 4.5% and probably not falling this year. Read next: GBP/USD Pair Rose Sharply Above $1.22, EUR/USD Pair Also Rose| FXMAG.COM All hangs on CPI Bitcoin has also consolidated in the run-up to today’s inflation number. This ultimately becomes a case of whether markets go into risk-on or risk-off mode following the release. It has entered into a corrective move but that’s unlikely to continue if today’s inflation print falls short of expectations again. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Kenny Fisher talks British pound against US dollar. UK economy declined 0.3% in March, Bank of England chose the 25bp variant

Data This Morning Confirmed The UK Avoided A Recession At The End Of 2022

Craig Erlam Craig Erlam 10.02.2023 14:39
Equity markets are ending the week on a flat or slightly downbeat note which has largely reflected the mood all week, really. Central bankers, particularly from the Fed, have been out in force stressing caution over interest rate expectations. And it’s clearly had an impact following that red-hot jobs report last Thursday. Markets are now pricing in two more hikes from the Fed and possibly one cut later in the year. No time for sparkling wine I think it’s safe to say the sparkling wine can remain on ice after data this morning confirmed the UK avoided a recession at the end of 2022 by the narrowest of margins. So much so that there’s every chance that a tiny revision over the next couple of months confirms quite the opposite. Ultimately, this isn’t a story of whether the UK is in recession or not as that’s just a simple technical definition. It’s a story of zero growth – quite literally in the case of the fourth quarter – and the fact that this likely represents the recent past, present, and near-term future prospects for the UK economy. High but falling inflation and basically no growth for some time. It’s all a bit bleak really. Of course, that’s better than where we expected to be at this point so that’s a positive. The data towards the end of the year is actually quite difficult to pick apart due to the impact of one-off or temporary events like the world cup, the loss of premier league football, and most importantly, the many, many public sector strikes that continued into the new year. The negative impact on the pound was brief though as the data doesn’t tell us anything we didn’t already know, nor does it alter the outlook on inflation or interest rates. First big test of the recovery After showing solid resilience over the past few weeks, bitcoin finally appears to have entered into a correction phase after falling almost 5% on Thursday. The community won’t be too dismayed by the move as it was never just going to go from strength to strength and this correction will enable us to see just how quickly money pours back in. It should be an interesting couple of weeks. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Crude oil to close the the post-OPEC+ gap? Gold "remains choppy"

Gold Has Moved Into A Correction, Situation Of Chinese Economy Should Stimulate Demand For Oil

Craig Erlam Craig Erlam 10.02.2023 14:17
Stronger China buoys oil Oil is heading for a strong week of gains, wiping out last week’s losses, as analysts continue to be encouraged by China’s transition to living with Covid. While the buzzword for large parts of the global economy this year is “resilience”, when it comes to China it’s more a question of just how strongly it will bounce back. The assumption, once they began removing restrictions, was that the first quarter or two would be tough but the second half of the year would see growth unleashed backed by fiscal and monetary measures. Now it would appear those expectations are being brought forward which should stimulate demand for oil and other commodities. While oil has been somewhat rangebound over recent months, a stronger Chinese recovery could well strongly test those upper limits. Deeper correction on the cards? Gold may be in the green on Friday but I’m not convinced its near-term prospects are particularly bullish. The yellow metal has moved into a correction phase over the last week or so and while the back end of last week saw it fall quite sharply, there may be further to go. It’s been a week of consolidation and clawing back some losses but it’s struggled to gather any real momentum in that and for a fourth day yesterday it ended the session well off its highs. While $1,820-$1,830 is the next technical support area below, it’s $1,780-$1,800 that really intrigues me, should it get that far. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
The Commodities Feed: Specs continue to cut oil longs

Oil Prices Have Been Trending Higher In Recent Days

Craig Erlam Craig Erlam 08.02.2023 12:39
China to drive stronger demand China may well be the outlier in all of this as there has been no need for excessive monetary tightening and rather, the slowdown in growth is almost certainly behind it. In fact, the transition from zero-Covid to living with it is reportedly going very smoothly which could boost the economy earlier and by more than expected, leading to higher growth forecasts for 2023. While that could support the global economy through a difficult period, it may also worsen the inflation problem due to much higher demand for commodities including crude oil. Oil prices have been trending higher in recent days on these improved forecasts, although they still remain around the middle of the range they’ve traded within since early December. Read next: Douyin Wants To Enter The Food Delivery Industry| FXMAG.COM Gold only mildly buoyed Fed Chair Powell’s soothing words generated some relief in gold as well overnight, although compared to the declines late last week, it was quite mild. The yellow metal has been on a phenomenal run since early December and a correction was growing ever more likely. While traders have welcomed Powell’s consistent stance, it may not be enough to save gold and a deeper correction could well be on the cards. It’s seeing some support now around $1,860 but more substantial support may be found around $1,820-$1,830. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Rates Spark: Riding the hawkish wave while it lasts

Traders Had Become A Little More Defensive On The Expectation Of A Hawkish Shift

Craig Erlam Craig Erlam 08.02.2023 12:35
European equity markets are expected to open a little higher on Wednesday following a positive shift on Wall Street on Tuesday, while Asia overnight was a very mixed bag. Investors appear a little relieved at Fed Chair Jerome Powell sticking to last week’s script despite Friday’s jobs report indicating that the labour market remains red hot. It would appear traders had become a little more defensive on the expectation of a hawkish shift but Powell refrained from taking the leap. And credit to him for doing so. The central bank, like others, has long talked about one data point not making a trend and while there are causes for concern in last week’s jobs report, it’s not a game changer. Wages are still heading in the right direction, and participation also improved. That said, we are getting a consistent message from policymakers across various central banks. While headline inflation is falling and will likely fall much further, core services inflation remains a big concern, and tight labour markets make achieving lower wage growth consistent with 2% inflation targets very difficult. It’s been clear for a while that the journey back to 2% was likely to be more treacherous than the path to peak inflation, and the data in the first quarter in particular, perhaps the second also, was going to highlight that. Recent jobs reports alone have epitomized that and sentiment in the markets is likely to continue mirroring it in the coming months. ​ The year of the crypto revival Bitcoin also enjoyed some light relief from Powell’s risk rebound overnight and it came at a good moment as the cryptocurrency was beginning to flirt with range lows. It’s now safely back in the middle of a near three-week range and still holding onto the bulk of the new year gains. 2023 may well be the year of the crypto revival. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
The RBA’s aggressive rate tightening cycle will be continued

The RBA Is On A Similar Trajectory To The Fed Now

Craig Erlam Craig Erlam 07.02.2023 15:39
Equity markets are treading water on Tuesday, as investors take a pause following quite an eventful week. Investors seem a little lost this week, disheartened by the jobs report in particular but also poor tech earnings and a still-hawkish Federal Reserve. The central bank may have softened its tone a little but once you take the economic data into consideration, the case for a couple more 25-basis point hikes is clearly there. That’s come as quite a setback following what has been a much more optimistic start to the year, in which interest rate expectations have been broadly pared back. But as was always likely to be the case, and will likely remain so this quarter at least, the data is going to be inconsistent and sentiment is going to reflect that. The path to peak inflation seemed very linear and sharp but the journey back to 2% is likely to be anything but. Clearly, there is a lot of underlying strength in the labour market that is going to make the case for pausing challenging, although I suspect there’ll be plenty of examples over the next couple of months that may make it seem more appealing. A slight hawkish shift from the RBA? The RBA is on a similar trajectory to the Fed now, even a little ahead, in that it’s on a meeting-by-meeting path and has been hiking in 25 basis point increments since October. That said, based on the language overnight, it would appear the light at the end of the tunnel may be dimming and the RBA could be laying the groundwork for a prolonged exit. Core inflation has remained stubbornly high and while a return to super-sized hikes looks unlikely, the expectation now for the next couple of meetings is that 25 basis point hikes are widely expected. Read next: EUR/USD Drop Below 1.0700$ And GBP/USD Drop To 1.967$, The Aussie Pair Holds Above 0.69| FXMAG.COM Tick and tick Bitcoin continues to look in a fairly strong position, having weathered the recent storm quite well. It remains not far from its highs and within the range it’s traded in for most of the last few weeks. Sentiment remains a dominant factor but what the community will likely be hoping for more than anything right now is for headlines to not turn against them and for cryptos to show some resilience. So far, both of those boxes are being ticked. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Gold Commodity Asset: Daily Chart Analysis and Bearish Outlook

Gold Pare Some Losses, Oil Prices Are Bouncing Back

Craig Erlam Craig Erlam 07.02.2023 15:35
Still rangebound Oil prices are bouncing back again today, continuing their better start to the week. The apparent success of China’s transition from zero-Covid to living with it owes a lot to the rebound we’re seeing as a strong recovery will naturally drive much higher demand and competition. That said, markets have been basically range-bound since early December – albeit in a wide range – and the latest recovery simply takes the price back into the middle of that range. The temporary suspension at the Ceyhan terminal following the earthquake in the region may have also lifted prices a little on Monday but with that likely to be lifted soon after no damage was discovered, it’s unlikely to have been a significant factor in the price moves. Read next: EUR/USD Drop Below 1.0700$ And GBP/USD Drop To 1.967$, The Aussie Pair Holds Above 0.69| FXMAG.COM Correction may have further to run The gold sell-off appears to have stalled around $1,860, where it has seen some support over the last couple of sessions. This was a notable level on the way up as well last month but I suspect it may not represent the end of the correction, given how considerable the rally was from the start of November until last week. We could see gold pare some losses, at which point $1,900 would obviously be interesting, being such a significant area of support in recent weeks. A move lower could draw interest to $1,820-$1,830 which stands out as a big initial test. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Are crude oil prices rebounding on the back of a possible debt ceiling deal?

Commodities: Oanda's Craig Erlam comments on gold and crude oil

Craig Erlam Craig Erlam 03.02.2023 16:45
Oil settles after a volatile start to 2023 Oil prices are a little lower again at the end of the week, settling it seems somewhere around the middle of the new year range. Sweeping risk aversion in the markets and concerns around a potential deeper slowdown driven by higher rates will have that effect but once again it’s worth noting that sentiment in this market is fickle. It clearly doesn’t take too much, as we saw in early January, for investors to become euphoric, nor does it take much for them to lose their nerve. That could remain a key feature of the first quarter and ensure oil prices remain highly volatile. Read next: Today's ECB Policymakers Comments Seem To Help The EUR/USD Pair, The Australian Dollar Fall Against Strong US Dollar| FXMAG.COM Lost momentum and setting up for a correction The Fed surge in gold appeared to be built on weak foundations as momentum simply didn’t match the price rally. That isn’t to say it couldn’t play catch up but yesterday’s plunge may suggest that won’t happen just yet. Instead, the yellow metal finds itself testing interesting support around $1,910 and then $1,900. The first is the ascending trend line from early November and the second is recent support but could also be considered the neckline of a two-week double top. Either way, a break of these levels could propel the yellow metal into a correction phase. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil prices edge lower, gold under pressure - MarketPulseMarketPulse
Worst behind us for UK retail despite fall in sales

The BoE Is Hiking The UK Economy Into Recession, Meta Managed To Put A Smile On Investors’ Faces

Craig Erlam Craig Erlam 02.02.2023 13:07
Equity markets are off to a strong start on Thursday, buoyed it seems by the Fed’s latest decision and Meta earnings. While Powell was determined not to overplay the shift in the Fed’s views on inflation and interest rates, certain comments were well received by the markets. The acceptance that the disinflation process has begun, being one obvious comment, but this was also paired with him stressing that they need substantially more evidence and to hike a couple more times before monetary policy is appropriately restrictive. All things considered, I think there was enough there to conclude we’re almost at an end on tightening and market expectations of one more 25 basis point hike and maybe a couple of cuts later in the year look reasonable. Of course, there’s plenty of data to come before the next meeting in March so a lot could change in that time. What will the ECB and BoE deliver? Now it’s over to the ECB and BoE to deliver their decisions, both of which are expected to be 50 basis point hikes. But what comes next is the key question in both cases. The BoE is hiking the UK economy into recession but inflation remains stubbornly very high. The ECB meanwhile was very late to the party and has some catching up to do, while the economic backdrop looks a little better than it did in December. The BoE decision is also accompanied by a press conference with Governor Andrew Bailey and his colleagues, as well as the latest monetary policy report and new projections. That should make this event very interesting, indeed, as we’ll get a better insight into how effective the MPC believes past hikes have been, when we’ll see the results and how much more they think are necessary. Read next: Santander Bank Polska Shareholders Can Expect A Solid Dividend ,The ETH Liquid Staking Narrative Is Already Going Strong| FXMAG.COM Can big tech follow in Meta’s footsteps? Earnings season has been tough so far this quarter but Meta managed to put a smile on investors’ faces, announcing slightly better revenues than expected, a plan to reduce costs and make the company more efficient this year, and a $40 billion share buyback. That has seen the share price rise almost 20% in premarkets, and Nasdaq futures to rise more than 1%. The question now is can Apple, Amazon, Alphabet and others deliver similar results today. Oil drifts lower Oil prices drifted lower again on Wednesday on the back of weaker manufacturing activity data from the US and a strong build in the EIA inventory data. Prices have been on the decline over the last week or so as investors have become less confident in the strength of the outlook, something we could see change repeatedly in this first quarter due to the lack of visibility on interest rate and China’s Covid transition. Gold liked what Powell had to say Gold was clearly buoyed by what the Fed and its Chairman had to say, with the price rallying back above $1,950 and out of its recent range. It’s now trading around $1,955, the one concern being the weak momentum backing it. That could change of course but it likely faces strong resistance on approach to $2,000, with $1,975 being an interesting test last time around. Major resistance ahead Bitcoin has done very well in a much improved risk environment so far this year and it has taken another step in the right direction over the last 24 hours, hitting a new 6-month high in the process. It now faces significant resistance around $24,500-$25,500, a break of which could give it a massive psychological lift. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Bank of England raised the interest rate for the 12th meeting in a row

A week full of macroeconomic events ahead of us. Let's have a look at Craig Erlam's (Oanda) view

Craig Erlam Craig Erlam 20.01.2023 22:49
US It will be a busy week filled with the first look at Q4 GDP, corporate earnings, and US debt ceiling gridlock. There is a lot of risk on the table and a key focal point for many will be the modest growth we will see alongside a plethora of data points that are signalling recession warnings. Traders will want to see if the contraction manufacturing and service PMI readings we saw in December show any improvement this month.   Wall Street is also fixating on what will happen with debt ceiling talks. Special measures are being used and that should stave off default until June 5th, but flare-ups will most likely happen along the way.    Earnings season shifts away from the banks and now focuses on broader parts of the economy.  Key earnings include results from Tesla, Chevron, the airlines, Lockheed Martin, Visa, American Express, 3m Abbott Labs, JNJ, GE, IBM, and Colgate-Palmolive.   EU The flash PMIs early in the week will be of keen interest as investors continue to assess how much trouble the economy is in. A relatively mild winter to date has boosted the bloc’s economic prospects as gas prices have fallen considerably. This isn’t expected to be reflected in the PMIs though, with the prospect of much higher interest rates and a tougher global economic environment continuing to weigh. It will be interesting to see if there is any improvement as a result of this and China’s growth prospects. Read next: $1 Million In Sanctions Against Former President Donald Trump, Netflix Co-Founder Reed Hastings Has Stepped Down As CEO| FXMAG.COM Regardless, markets expect the ECB to hike by another 150 basis points over the coming meetings and officials have been keen to ensure investors don’t become complacent on that. I expect more commentary along those lines next week. UK  While the PMIs would typically be the standout release next week, investors may have more of an eye on the PPI inflation data for signs of inflationary pressures subsiding. The CPI data in December declined for a second month but remains far too high, above 10%. We’ll need to see much greater signs of those pressures abating before the Bank of England can become more comfortable. Russia The only economic release of note is the PPI data. That aside, the focus will remain on the war in Ukraine.  South Africa The SARB is expected to raise interest rates by another 50 basis points on Thursday, taking the repo rate to 7.5%, although they could opt for only 25. Inflation has been heading in the right direction since peaking in the summer and could be back within the 3-6% target range before long. Investors will be looking for signs on whether the tightening cycle is now at or near an end.  Turkey The CBRT left the repo rate unchanged at 9% in January after opting to pause the easing cycle late last year. The quarterly inflation report may offer insight into whether rates will fall again and when but that aside, I’m not sure it will contain much of note given the logic adopted to justify cutting interest rates over the last couple of years. Switzerland Trade data is the only notable release next week.  China This Saturday is Chinese New Year’s Eve, followed by the Spring Festival. The New Year atmosphere which generally extends until at least the end of January may further stimulate domestic consumption and investment in China. The billions of trips made during the Chinese New Year could bring the second wave of Covid-19 to largely unaffected rural areas and smaller cities. Given that the general population will have a higher level of immunity, the economic impact of a second outbreak should be less in areas that have already withstood the main wave of evacuations. India No major data or central bank appearances are expected.  Australia & New Zealand China’s full reopening since the beginning of January this year and its renewed focus on ‘economic development’ will benefit economic growth in Australia and New Zealand. The largest potential upside from reopening itself sits within the services sector given China is the largest consumer of Australian tourism and education exports.   Australia recently released its CPI for November at an annual rate of 7.3%, in line with expectations but higher than the previous value of 6.9%, indicating that Australia’s inflation level may still not have peaked.  The RBA’s CPI for December will be released on Thursday, as well as its revised CPI average quarterly rate for the fourth quarter. New Zealand’s CPI for the fourth quarter will offer clues on whether sustainable disinflation is underway.  Japan The Bank of Japan monetary policy decision saw them defer any major decisions until at least Governor Kuroda’s last meeting in March, barring any surprises in the interim. Following that, the summary of opinions on Wednesday could be of interest, as will the December minutes, released Monday. Despite being outdated now, it will provide perspective on the decision to unexpectedly tweak its yield curve control band.   Next week also focuses on the Japan PMI readings, leading index, and Tokyo’s CPI.  Singapore The release of the December inflation will be followed closely.  MAS sees core inflation averaging 3.5%–4.5% this year.  Economic Calendar Saturday, Jan. 21 Economic Events US Treasury Secretary Janet Yellen visits Senegal, Zambia, and South Africa Sunday, Jan. 22 Economic Events Germany Chancellor Scholz and French President Macron hold a joint news conference after a Franco-German cabinet meeting in Paris Italian PM Meloni visits Algiers Monday, Jan. 23 Economic Data/Events US Conference Board leading index Euro area consumer confidence EU foreign ministers meeting in Brussels Russian Foreign Minister Lavrov is expected to travel to South Africa’s Pandor ECB’s Panetta speaks in the European Parliament ECB President Lagarde makes a speech at the Deutsche Boerse annual reception Bank of Japan releases minutes of its December meeting Tuesday, Jan. 24 Economic Data/Events US flash PMIs; Richmond Fed Manufacturing Australia Judo Bank PMI, business confidence Chile PPI European flash PMIs: Eurozone, Germany, UK, and France Japan PMIs, department store sales Mexico international reserves, bi-weekly CPI New Zealand performance services index Thailand trade South Africa leading indicator ECB’s Knot speaks at the Future of the Financial Sector conference in Frankfurt German Foreign Minister Baerbock addresses the Council of Europe in Strasbourg SNB’s Vice Chairman Schlegel speaks in Zurich Earnings from Danaher, General Electric, Intuitive Surgical, Johnson & Johnson, Lockheed Martin, Microsoft, Raytheon Technologies, Texas Instruments, 3M, Union Pacific, and Verizon   Wednesday, Jan. 25 Economic Data/Events US MBA mortgage applications, Philadelphia Fed non-manufacturing activity Australia CPI, leading index Canada rate decision: Expected to raise rates by 25bps to 4.50% Germany IFO business climate Japan leading index Mexico economic activity IGAE   New Zealand CPI, credit card spending Russia PPI, weekly CPI Singapore CPI Thailand rate decision: Expected to raise rates by 25bps to 1.50% The Republican National Committee winter meeting is held Nordic economic outlook published by Finland’s Nordea Bank Germany’s Economy Ministry publishes its annual report with updated forecasts BOJ announces the outright purchase amount of government securities Earnings from Abbott Laboratories, ASML Holding, AT&T, Boeing, IBM, and Tesla Thursday, Jan. 26 Economic Data/Events US Q4 GDP, new home sales, initial jobless claims, goods trade balance, US durable goods, wholesale inventories, retail inventories Canada CFIB business barometer Japan PPI services, machine tool orders Mexico unemployment rate Russia gold, forex reserves Singapore industrial production South Africa rate decision: Expected to raise rates by 50bps to 7.50% New Zealand releases financial statements for the five months to Nov. 30 BOJ releases summary of opinions from January meeting Earnings from American Airlines, Blackstone, Comcast, Intel, LVMH Moet Hennessy Louis Vuitton, Mastercard, SAP, Southwest Airlines, and Visa Friday, Jan. 27 Economic Data/Events US personal income/spending, University of Michigan consumer sentiment, pending home sales Australia PPI, export/import price index Japan Tokyo CPI Mexico trade balance New Zealand business confidence Singapore home prices South Korea business survey Thailand foreign reserves, forward contracts Spain GDP Earnings from American Express, Chevron, and HCA Healthcare Sovereign Rating Updates Denmark (Fitch) Greece (Fitch) Hungary (S&P) Netherlands (Moody’s) Portugal (DBRS) This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Week Ahead - Earnings season a highlight - MarketPulseMarketPulse
Euro against US dollar and British pound - Technical Analysis - May 17th

United Kingdom: citizens spend less, wages up, but inflation level flees

Craig Erlam Craig Erlam 20.01.2023 22:45
It’s been another eventful week and one that serves to remind us that while there may be more sources of optimism this year, compared with last, it’s going to be a very bumpy ride. There’s no doubt that there’s been plenty more cause for optimism so far this year, especially compared with what we became accustomed to in 2022. The US could achieve the soft landing that many have doubted is possible, China could bounce back strongly from the dropping of Covid restrictions and the euro area may avoid a recession. That’s not a bad shift in expectations at all. But just as quickly as they turned more favourable, they could switch again. Economic data from the US this week has been far less promising. Rather than focus on disinflation and the labour market, it’s been other economic indicators and earnings that have taken the spotlight and it hasn’t been great. What’s more, it seems we’re seeing more regular warnings of imminent layoffs, the latest coming from Alphabet which plans to cut 12,000 staff globally. For so long companies have been reluctant to lay staff off following the post-pandemic re-hiring struggles but the tide appears to be turning and it could accelerate from here, at which point the economic data may become much more downbeat. UK retail sales slump again It’s been a busy week for UK economic data and many may be just as confused about the outlook as they were before. Data has previously indicated that the country may have managed to avoid a recession in the fourth quarter but at the same time, retail sales strongly suggest that households are feeling the strain which begs the question, did the World Cup just delay the inevitable? Read next: $1 Million In Sanctions Against Former President Donald Trump, Netflix Co-Founder Reed Hastings Has Stepped Down As CEO| FXMAG.COM Meanwhile, labour market figures remain strong, so much so that wages are continuing to accelerate higher while still failing to keep up with inflation. While that explains why households are spending less, it doesn’t alleviate fears within the BoE that getting inflation sustainably back to 2% could necessitate inflicting more pain on households. An unenviable dilemma, but policymakers are in agreement that inflation must take priority. And when that is still above 10%, it’s clear that means the rate hikes will keep coming. Volatility is back It’s been a very choppy week for bitcoin after the cryptocurrency surged back to life, buoyed by a much-improved risk environment. A period of relative calm in the crypto space has allowed for such a rebound, time clearly being a great healer and all that. Still, as we’ve seen in crypto, the volatility works both ways and what we’ve seen this past week suggests there’s plenty more to come. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. It's going to be a bumpy ride - MarketPulseMarketPulse
The Commodities Feed: Specs continue to cut oil longs

Commodities: Gold price quite close to all-time highs. According to Oanda's analyst, crude oil is ahead of an interesting year

Craig Erlam Craig Erlam 20.01.2023 22:35
Speed bumps ahead Oil prices have been choppy this week after climbing back towards their late December/early January peaks. It would appear the rally is running short of momentum amid a week of less promising data from the US and a downturn in market sentiment, more broadly. That’s to be expected. After all, it’s not like we were going to go from the doom and gloom of 2022 into relentless optimism just like that. It’s going to be a bumpy ride this year and this week has simply been the first speed bump of many. With so many other factors also influencing the oil price, I expect volatility is going nowhere. Gold not far from record highs Another rally on Thursday saw gold surpass last week’s peak but already it’s running into resistance and trading slightly lower on the day. While not the end of the world, it’s clear that momentum is fading which, following a strong rally since November, could suggest a correction is possible. The environment remains favourable for gold but a correction could be healthy considering it’s now rallied almost 20% from its early November lows and sits a little over 6% from all-time highs. Read next: $1 Million In Sanctions Against Former President Donald Trump, Netflix Co-Founder Reed Hastings Has Stepped Down As CEO| FXMAG.COM For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil remains choppy, gold near record high - MarketPulseMarketPulse
ECB enters final stage of tightening cycle

European Central Bank's President Christine Lagarde warns, but...

Craig Erlam Craig Erlam 19.01.2023 22:23
It’s been a solid start to the year for equity markets but that optimism appears to be fading as policymakers queued up in Davos to push back against market interest rate expectations. Let’s be clear on this; the markets have a much better record over the last 18 months of anticipating shifts in interest rates than central banks so to some degree these warnings will fall on deaf ears. But then, they come at a time when stocks have had a good run so perhaps it’s a case of any excuse to lock in some profits. Lagarde’s warnings falling on deaf ears? ECB President Christine Lagarde was among those to warn about overly optimistic market expectations, insisting that she would “advise market participants to revise their positions”. It’s hard to take the advice too seriously considering how late to the party the ECB was. While every situation was different, to have seen the experience of most other central banks and think “that won’t happen to us” before diving into an aggressive catch-up tightening cycle doesn’t leave you with much credibility. CBRT holds for now Of course, compared with the CBRT the ECB looks like it’s doing a stellar job. While the latter was late to acknowledge that the house was on fire, the former decided the throw fuel on it and see what happens. After another series of rate cuts, the CBRT recently decided it was time to pause again and assess the damage. Official data recently showed inflation is falling but from extraordinarily high levels. I’m sure we’ll see further cuts at some point in the future but it would seem today was not the time. Although at this stage I have no idea exactly what they’re looking for and how they’re coming to the conclusions they are. Oil eases around prior highs It would appear the profit-taking we’re seeing elsewhere is weighing on oil as well, with Brent and WTI off around half a percentage point after reversing off their highs yesterday. The reversal occurred slightly above the late December and early January peaks so it’s perhaps a natural profit-taking zone, especially occurring around a broader risk reversal. Gold eyeing a correction? Gold is pushing higher again today but the broader rally appears to have stalled. That may not come as a big surprise, occurring in a zone between $1,880 and $1,920 where we’ve seen plenty of support and resistance in recent years. It had plenty of momentum going into these levels but that has now faded which could signal a potential correction. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Central bank warnings - MarketPulseMarketPulse
UK Budget: Short-term positives to be met with medium-term caution

Data Shows That The Bank of England Is Needing To Keep Raising Interest Rates

Craig Erlam Craig Erlam 18.01.2023 14:47
Equity markets are marginally higher in Europe, with the Nikkei outperforming in Asia on the back of a much weaker yen. BoJ stands firm The Bank of Japan has decided to stand its ground against market forces that have forced it to purchase huge amounts of JGBs in order to defend its yield curve control upper band. Despite mounting speculation that it could be prepared to further tweak the tool or abandon it altogether, the central bank has stubbornly dug in its heals and seemingly prepared itself for another onslaught in the bond markets. The surprise decision last month to widen the threshold in which it will allow the 10-year yield to trade has further fueled speculation that it’s planning to phase out YCC, so rather than ease the pressure on the central bank as it hoped, it has intensified. In standings its ground today, it’s effectively invited the backlash and the yen has been hammered as a result. Inflation eases but still far too high UK inflation eased slightly in December, the second month in which it has fallen, indicating that it has peaked and barring another surge in energy prices, it could now steadily decline. That will come as a relief to households and businesses suffering the cost-of-living squeeze although, with the headline CPI still above 10%, there’s still obviously a long way to go. The Bank of England now finds itself in the uncomfortable position of needing to keep raising interest rates as inflation is still more than five times its target. Even core inflation is above 6% and we haven’t really seen much progress on that front. Markets are pricing in another 1% of rate hikes in the coming months but if inflation remains stubbornly high, they may have to do more. Especially if the economy shows the kind of surprising resilience that it appeared to in the fourth quarter. Read next:The Japanese Yen (JPY) Weakened, The Aussie Pair Is Trading Above 0.70$| FXMAG.COM Steadies after huge surge It’s been a phenomenal week for bitcoin, up around 20% and looking in a far healthier position. The lack of further contagion in the aftermath of the FTX collapse and the surge in risk-appetite has seen a flurry of support for cryptos which have had a rough few months to put it lightly. Well, they’ve made up for lost time and bitcoin is now steadying above $21,000. Whether it can significantly build on this rebound is another thing but the fact that it’s trading back in the pre-FTX range will come as a huge relief to the industry that will have feared further plunges or negative headlines. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Gold Commodity Asset: Daily Chart Analysis and Bearish Outlook

Oil And Gold Prices Are A Little Higher Again

Craig Erlam Craig Erlam 18.01.2023 14:40
Continuing higher Oil prices are a little higher again on Wednesday trading around the peak we saw earlier this month. The optimism that’s driving equity markets higher is filtering through to commodity markets as well, with the prospect of stronger growth in the world’s two largest economies boosting demand expectations. A move back towards $90 in Brent would take us to levels not seen since early November and suggest traders are feeling much better about the global economic outlook. Of course, that’s probably going to be subject to frequent change unless we get a steady stream of good data, while earnings season could put a dampener on sentiment. Another run at resistance Gold is pushing higher once more after stalling just above $1,920. The zone between $1,880 and $1,920 has been a major zone of support and resistance in recent years and it appears to have slowed its ascent on this occasion too. That said, momentum has remained strong with the rally so the pause may only be brief. Should it fail to hold that momentum during this latest move higher, it could trigger further profit-taking and potentially a correction. ​ ​ For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Despite The Improvement In The Outlook Due To Falling Energy Prices, The Economic Environment In Britain Remains Difficult

Today's UK Data Should Ensure The Bank Of England Continues Tightening

Craig Erlam Craig Erlam 17.01.2023 16:51
Equity markets are a little softer on Tuesday as investors await more earnings from the US and closely monitor events in Davos. Stocks have had a strong start to the year on the belief that interest rates may not go as high as feared and even move into reverse later in the year. While that is looking plausible in the US, it may not be the case in Europe where policymakers are seemingly still some way from considering the tightening cycle complete. The ECB, for example, was very late to the party and could be at least three 50 basis point hikes away from the terminal rate which we could see around the middle of the year. Inflation in the euro area declined last month but core inflation is still on the rise which is why we’re continuing to see pushback to the idea of slower hikes and cuts this year. That narrative may change once the data moves in a more positive direction. Pressure mounting on BoE In the UK, the data remains quite troubling. Labour market figures released today showed earnings growth accelerating to 6.4%, meaning while we’re still seeing negative changes in real terms, as far as the central bank will be concerned they’re still far too high to be consistent with inflation returning to target. And the longer it goes on, the more stubborn inflation will become. That should ensure the BoE continues tightening by 50 basis points next month, at which point we’ll get fresh economic projections. Encouraging figures from China The data from China overnight was broadly positive even if it confirmed one of the slowest annual growth rates in decades. The economy ended on a stronger note despite the surge in Covid infections as the leadership suddenly pivoted from a zero-tolerance approach to allowing it to run free. That was expected to take a heavy toll on the economy initially but the figures for December from retail sales to industrial production and fixed asset investment suggest a much more modest hit. That may offer hope that the opening months of the new year will not be as bad as initially feared. Bouncing back Bitcoin seems to have been one of the big winners from the new year risk rally, after struggling for much support in recent months as a result of the FTX collapse. Perhaps it’s making up for lost time as traders look to capitalize on such heavily discounted levels compared with the 2021 peak. That said, it will take a lot more than a risk revival to get traders fully back on board. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds
The Commodities Feed: Oil maintains positive momentum

The Mood Of Oil Appears To Have Become A Little Bit More Bullish

Craig Erlam Craig Erlam 17.01.2023 16:34
Buoyed by China data Oil prices are a little higher today after paring gains at the start of the week to remain near the highs of the last month, or so. Brent crude has mostly traded between $76 and $86 since early December but the mood appears to have become a little bit more bullish thanks to some promising economic data. The prospect of a soft landing in the US and a shallower economic hit in China from the Covid transition, not to mention a strong rebound, has driven the latest rebound in crude prices and the narrative on both of these doesn’t appear to be shifting. The China data overnight was a real positive, enabling Brent to reverse yesterday’s declines. Now it’s over to Davos and earnings season to get a look at how policymakers and business leaders perceive the latest developments, and whether companies are planning for tough conditions ahead. Paring gains Gold is paring gains for a second day as the dollar rebounds slightly and yields creep higher. Perhaps we’re just seeing some broader market profit-taking ahead of what could be another eventful week. Gold briefly surpassed the upper end of what in recent years has been a tough trading zone between $1,880 and $1,920. That may be contributing to some profit-taking, with the next major test being $2,000, where gold briefly traded above last March. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Bitcoin price may be stealing the show soon. We could say that this week Bank of Japan decision draws more attention than usually

Bitcoin price may be stealing the show soon. We could say that this week Bank of Japan decision draws more attention than usually

Craig Erlam Craig Erlam 16.01.2023 22:57
A relatively muted start to the week amid lighter expected trade due to the US bank holiday, with Europe and much of Asia posting small gains. It’s been quite a frantic start to the year so investors may be capitalizing on the opportunity to catch their breath. They won’t have long given the flurry of central bank speak as policymakers gather in Davos this week and as earnings season heats up in the US. There’s certainly an increasing sense of optimism about 2023 as we make our way through the opening month of the year. The economic data has been kind, to say the least, which is not something we were afforded for the vast majority of the year just gone. The question now is whether earnings season will enhance that new sense of hope or spoil the party before it really gets going. Companies have until now been reluctant to let staff go which has kept the labour market tight even as certain economic indicators weaken and inflation dampens the outlook for demand and costs. A bad earnings season could undermine hopes of a soft landing that looks more possible now than it has for many months. Commentary from central bankers will also be closely monitored this week, as it always is at this time of year for the famous gathering in Switzerland. But this time it comes amid much better data from the US and when policymakers have been reluctant to deviate from their hawkish position. We saw signs of change last week, culminating in 25 basis points being heavily priced in for February. Could we finally see the full dovish pivot? The end of YCC? One standout event this week will be the BoJ meeting, amid plenty of speculation around the yield curve control tool and whether it’s time to abandon it. The central bank has been very active in the market trying to protect the upper boundary around 0.5% on the 10-year JGB but the market is continuing to push back. Last month’s tweak, rather than buying the central bank time, appears to have massively intensified the pressure on the BoJ and we may learn this Wednesday whether the time has come to tweak it again or abandon it altogether. Is bitcoin making a comeback? The biggest winner in all of this may be cryptos which have had a rough few months in the aftermath of the FTX collapse. A boost in risk appetite has triggered a surge in bitcoin which spent the final weeks of last year languishing between $16,000 and $17,000. It is up more than 25% since the turn of the year, breaking back above $20,000 this morning in the process. Whether this is a sign of it bottoming out and experiencing a resurgence or just a brief rebound isn’t clear but there are clearly still some very bullish traders out there. It should make for an interesting few weeks. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Eyeing Davos and earnings - MarketPulseMarketPulse
Swiss Pension Fund Publica Will Increase Its Share Of Gold To 1%

If Gold price closes at more than $1920, $2000 enters the game

Craig Erlam Craig Erlam 16.01.2023 22:54
Oil buoyed by economic optimism Oil prices are marginally lower today but have recovered the bulk of their earlier losses. They’ve been on a good run since getting the year off to a bad start in the opening couple of sessions. No doubt the improved optimism over the economy is playing a big role in that, with the prospect of fewer rate hikes and maybe even cuts before the year is out making the headwinds less fierce. China is also a big factor in all of this. Of course, it’s tough to get a true gauge of the disruption the current wave is having on the economy but there’s no shortage of optimism for the rest of the year, particularly the second half. It could even come as early as the second quarter although that very much depends on how rapidly it spreads now. Brent may now be stabilizing in the $85-90 range, with WTI just a little lower around $80-85. Eyeing record highs? Gold is marginally lower today after peaking earlier in the session. It’s running into a little resistance just above the upper end of a key zone, between $1,880-$1,920. This had the potential to cause it some difficulty, having done so repeatedly in the past but that doesn’t appear to be the case. It’s rallied strongly again in recent days and momentum has been rising along with it. A close above $1,920, backed by momentum, could see attention turn to $2,000, a level it hasn’t traded above since March last year, and even then it only lasted about a week before it fell back below. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil boosted by optimism, gold has momentum - MarketPulseMarketPulse
According to Althea Spinozzi, it's clear that inflation remains Fed most significant focus

UK economy saved from recession by... World Cup? Next week's economic calendar: Canada's CPI and more

Craig Erlam Craig Erlam 13.01.2023 20:57
US It will be a busy week filled with a wide range of economic indicators, lots of Fed speak, and earnings season heats up.  Wall Street will now not just fixate on inflation data, but also on how quickly the economy softens.  Traders will pay close attention to the Empire manufacturing index, retail sales, PPI, industrial production, NAHB housing market index, weekly jobless claims, and existing home sales data.   Fed speak will happen all week long and expectations are high for more members to signal they are comfortable with downshifting their tightening pace again.   Earnings season continues with more bank earnings, the airline’s report, Procter & Gamble earnings will include insights on pricing trends, and Fastenal reports.   EU  The run-up to the February ECB meeting is going to bring immense focus on incoming data and central bank speak, with investors becoming increasingly hopeful that global interest rates may nearly be peaking and perhaps not as high as feared even a couple of weeks ago. On the former, the standout release will be the final inflation number for December while the ZEW surveys will also be of interest. On the latter, the ECB minutes will be poured over, as will comments from President Christine Lagarde and colleagues towards the end of the week. Markets are still pricing in three 50 basis point hikes at the upcoming meetings but that could be pared back. UK  So it turns out the UK may have just about avoided a technical recession in 2022 thanks to the World Cup. The GDP data for November showed unexpected growth which, when combined with the 0.5% gain in October makes it unlikely that the economy will have fallen into a recession after all, barring surprise downward revisions or a shocking number in December. Perhaps Gareth Southgate will get that knighthood after all. Ultimately, it makes no difference. The spending that boosted November’s number will probably simply be shifted from elsewhere. The cost-of-living crisis is squeezing the economy and will likely further intensify this year, potentially tipping the economy into recession, anyway. We’ll get a lot more data this week including unemployment, inflation, and retail sales. Russia No data or events are scheduled for next week so the focus will remain on developments in Ukraine. South Africa The currency has stabilized after tumbling last week amid speculation around the changing of the SARB mandate. While the ANC hasn’t given up hope, any changes are unlikely, for the foreseeable future, anyway. That leaves investors to focus on the inflation and retail sales data next Wednesday, the first of which still sits above the SARB 3-6% target range. Turkey The CBRT meets next week and frankly, I have no idea what they will do. Official inflation fell from 84.39% to 64.27% in December which the central bank could look to capitalise on, despite previously indicating it was done with its latest easing cycle.  Switzerland The World Economic Forum takes place in Switzerland next week and on Friday, SNB Chair Thomas Jordan will be among many central bankers throughout the week making an appearance. China All eyes will be on China this week. To kick off the week, the PBOC is expected to cut its one-year MLF rate by 10 basis points to 2.65%.  On Tuesday, we see the impact Covid had on GDP, industrial production, retail sales, and fixed asset investment. Fourth quarter GDP is expected to drop from 3.9% to 1.5%, while December’s retail sales plunge from -5.9% to -12.0%.  At the end of the week, China is expected to cut its loan prime rates.   Much attention will remain on China’s Covid situation and whether the economic outlook continues to brighten with improving reopening trends.   India Inflation has been falling and that is starting to make some traders doubt that the RBI will need to continue to raise rates.  The upcoming week contains wholesale price data that is expected to show disinflation trends remain. Trade data is also due.   Australia & New Zealand China’s reopening momentum has been good news for both Australia and New Zealand. China-Australia relations are expected to return to a healthy and stable development, with China’s ambassador Xiao Qian recently commenting positively on China-Australia relations. The relationship has been constructive so far. The main economic release for Australia will be the December employment report.  Hiring is expected to slow down from 64,000 to 15,000.   For New Zealand, traders will pay close attention to the REINZ House Sales data, Food prices, and manufacturing PMI. Japan The Bank of Japan’s monetary policy decision is expected to keep rates on hold. Traders are still digesting the surprising decision to adjust its government bond yield curve control.  BOJ watchers are looking for hints that they could soon move toward normalization by the end of July. Next week also focuses on the Japan PPI, machine tool orders, Tertiary industry index, core machine orders, industrial production, and trade data.    Singapore Second-tier data includes the release of non-oil domestic exports for December. Economic Calendar Saturday, Jan. 14 Economic Events Second and final day of voting for Czech president Assistant Trade Representative McCartin leads a US delegation in trade talks with Taiwan counterparts in Taipei. Sunday, Jan. 15 Economic Data/Events No major events expected Monday, Jan. 16 Economic Data/Events US markets closed for Martin Luther King Day Australia inflation gauge Canada existing home sales China property prices, medium-term lending India wholesale prices Japan PPI, machine-tool orders UK Rightmove house price index The World Economic Forum’s annual meeting kicks off in Davos, Switzerland EU finance ministers meet in Brussels Tuesday, Jan. 17 Economic Data/Events US Empire State manufacturing survey Australia consumer confidence Canada CPI, housing starts China retail sales, industrial production, GDP, surveyed jobless rate Germany CPI, ZEW survey expectations Italy CPI Japan tertiary industry index Mexico international reserves New Zealand house sales Singapore trade South Korea money supply UK jobless claims, unemployment Fed’s Williams gives speaks at an event about equitable growth hosted by the bank ECB’s Centeno participates in a panel at the World Economic Forum in Davos Big earnings from Goldman Sachs, Morgan Stanley, and United Airlines Wednesday, Jan. 18 Economic Data/Events US retail sales, PPI, industrial production, business inventories, MBA mortgage applications, cross-border investment Fed release Beige Book BOJ rate decision: Expected to keep rates on hold Eurozone CPI South Africa CPI UK CPI Canada industrial product prices Italy trade Japan machinery orders, industrial production New Zealand card spending South Africa retail sales Taiwan jobless rate, GDP Thailand car sales NATO Military Committee in Chiefs of Defence session opens Fed’s Bostic gives welcoming remarks at a conference on model risk management hosted by the bank Fed’s Logan speaks at the University of Texas Austin McCombs School of Business Fed’s Harker speaks at the Lyons CEEE Economic Forecast event   Alcoa report earnings Thursday, Jan. 19 Economic Data/Events US housing starts, initial jobless claims, Philadelphia Fed index Norway Rate Decision: May hold rates or deliver a 25bp rate increase Turkey Rate Decision:  Expected to keep the one-week repo rate unchanged at 9.00% Argentina trade Australia unemployment China Swift global payments Japan trade New Zealand food prices Spain trade ECB publishes the account of its December 2022 policy meeting ECB President Christine Lagarde speaks in a panel at World Economic Forum in Davos ECB’s Schnabel speaks in a webinar on monetary policy Fed’s Collins speaks at a conference on housing hosted by the bank Fed’s Williams speaks at an event hosted by the Fixed Income Analyst Society in NY France’s main labor unions’ first day of strikes over the government’s plan to raise the retirement age Procter & Gamble and Netflix report earnings Friday, Jan. 20 Economic Data/Events US existing home sales BOJ announce outright purchase total of government securities Japan CPI Canada retail sales China loan prime rates Germany PPI Mexico retail sales New Zealand PMI, net migration Thailand foreign reserves, forward contracts UK retail sales ECB President Christine Lagarde and French Finance Minister Bruno Le Maire speak on a panel in Davos Schlumberger and American Airlines report earnings Sovereign Rating Updates Hungary (Fitch) Ireland (Fitch) – Norway (Fitch) Austria (DBRS) EFSF (DBRS) ESM (DBRS)  This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Week Ahead - Earnings season underway - MarketPulseMarketPulse
Kiwi Faces Depreciation Pressure: RBNZ Expected to Hold Rates Amidst Downward Momentum

The UK Economy Is Still Under Immense Strain, The Bank Of Korea May Be The First To End Raising Rates

Craig Erlam Craig Erlam 13.01.2023 14:48
It’s been another lively week in financial markets and one in which investors have become increasingly hopeful that 2023 won’t be as bad as feared. In a way, the week started with the jobs report the Friday before as it was this that enabled the enthusiasm to build. The labour market has been a major barrier to optimism as the Fed was never going to pivot quickly unless there were signs in the labour market that slack was building and wages cooling. We’re now starting to see that. That optimism has been compounded by the first monthly inflation decline in two and a half years and further sharp annual declines in both the headline and core readings. While the final hurdle to 2% may be the most challenging, there’s no doubt we’re heading in the right direction and the threat of entrenched inflation has greatly receded. Now it’s over to corporate America to potentially spoil the party as the enthusiasm on inflation is not yet matched to the economic outlook. We haven’t seen mass layoffs yet but a number of firms, starting in the tech space but spreading further, have warned of large redundancies in the coming months. The fourth quarter earnings season may bring investors back down to earth with a bang. The start of the year has been fantastic but the rest of it will still be very challenging. More bleak Chinese trade data That’s very evident in the Chinese trade data, as it has in the data of other major trading nations in recent months. Imports and exports both slumped again, albeit to a slightly lesser degree than expected. The drop in imports reflects the Covid adjustment which is likely weighing on demand and the local economy. Exports is a global issue, with those to the US and EU sliding the most, reflecting the challenging economic environment. That may not improve in the near term but there will be a hope that it could in the second half of the year. Can UK avoid recession? The optimists may put to some of the recent data as an indication of some resilience in the economy but I’m not convinced. Take the UK, for example. It may not be in a technical recession after all, with spending around the World Cup enabling a better performance in November, delivering growth of 0.1% after a 0.5% gain in October. Aside from the fact that December could be worse as a result, or some of those gains could be revised out, those numbers don’t change the reality of the cost-of-living crisis and if accurate, it more likely reflects shifted spending patterns as opposed to a more willing consumer. A recession may be delayed but the economy is still under immense strain. The end of the tightening cycle The Bank of Korea may be among the first central banks to bring its tightening cycle to an end, after raising the Base Rate by 25 basis points before removing reference to the need to hike further. This was replaced with a commitment to judge whether rates will need to raise rates depending on multiple factors including incoming data. I think most others won’t be far behind, with in most cases the end coming at some point in the first quarter. All we have to contend with then is the economic consequences of the tightening. BoJ under pressure to abandon YCC And then there’s the anomaly out there. I’m not talking about the CBRT which I just can’t take seriously and that’s saying something at the moment. The Bank of Japan shocked the markets in December by widening its yield curve control buffer around 0% and it’s been paying the price ever since. Another unscheduled bond buying overnight occurred on the back of the 10-year JGB breaching 0.5%, as investors bail on Japanese debt on the belief that the YCC tool is being phased out and will be abandoned altogether before long. This makes the meeting next week all the more interesting. Revival underway? The risk rally over the last week has even lifted bitcoin out of its pit of despair. It goes without saying that it’s been a tough few months for cryptos but the lack of recent contagion in the space, or new revelations, and the risk rebound in broader markets has lifted it off its lows to trade at its highest level since the FTX scandal erupted. It’s trading at $19,000 and traders may harbour some hope of a move back above $20,000, a level once deemed a disturbing low but now potentially representing a sign of a revival. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Gold Commodity Asset: Daily Chart Analysis and Bearish Outlook

Gold Is Continuing Its Powerful Start, Curde Oil Also Is Rising

Craig Erlam Craig Erlam 13.01.2023 14:41
Will economic optimism be spoiled? Oil prices are on the rise again on Friday, buoyed by renewed optimism on interest rates. The fact remains that the first half of the year, at least, will be enormously challenging for the global economy but lower terminal rates and even cuts later in the year will cushion the blow and could see it outperform current expectations. That, along with the resurgence in China, will be a big plus for crude demand and could keep the price well supported. Of course, it now has to contend with what Wall Street has to throw its way in the coming weeks. That will likely include weak earnings, bleak forecasts and potentially job loss announcements. Maybe we’ll all feel a little less hopeful if that materialises as feared which could weigh a little on oil after the recent surge. Record highs in sight? Gold is continuing its powerful start to the year with another small gain on Friday, breaching $1,900 in the process. It’s now right in the middle of the $1,880-$1,920 range that has been so pivotal in recent years. That could see it run into strong resistance in the coming sessions, although as yet momentum is only improving. That will give gold bulls comfort and should it hold long enough to breach the upper end of that range, it could be a very positive signal. Suddenly $2,000, even record highs, could be in sight. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
From UFOs to Financial Fires: A Week of Bizarre Events Shakes the World

The Fed Doesn’t Want To Be Responsible For A Needlessly Sharp Downturn

Craig Erlam Craig Erlam 12.01.2023 11:53
European equity markets opened cautiously higher on Thursday, following a mixed session in Asia amid nerves around the US inflation release later in the day. This inflation print has been the main topic of conversation all week. The jobs report last Friday changed the dynamic in the markets and ensured that not only was this CPI report going to be important but in all likelihood pivotal ahead of next month’s Fed meeting. We’ve gone from inflation declining but the labour market being stubbornly tight to both appearing to sing from the same hymn sheet. Cracks are appearing in the economy following a very aggressive tightening cycle that’s leading to cooling demand, prices, and wage demands. Unemployment remains low as employers have been reluctant to lay people off but there’s every chance that will follow. The Fed doesn’t want to be responsible for a needlessly sharp downturn and the lag effect of monetary policy means that is a risk when the central bank is raising rates as aggressively as they have been. Another good inflation report today, particularly on the core side, will give policymakers more than enough reason to slow the pace of tightening further and even lower the terminal rate projections in March if it continues. Read next: The New Disney Drama: Disney Is Opposing Activist-Investor Nelson Peltz| FXMAG.COM Bitcoin buoyed by risk recovery Bitcoin is capitalising on the improvement in risk appetite that we’re seeing in the broader markets, rallying more than 4% today before paring gains just shy of the December peak. After weeks of treading water between $16,000 and $17,000, cryptos have been given new life by the jobs report and the risk rally that has ensued. Another positive inflation reading today could see it trading at levels not seen since the early days of the FTX collapse. ​ For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Crude oil to close the the post-OPEC+ gap? Gold "remains choppy"

The Gold Rally Is Continuing To Stall, This Could Be A Good Year For Crude Oil

Craig Erlam Craig Erlam 12.01.2023 11:49
Oil steadies as traders grow more optimistic Oil prices have steadied this morning after recovering strongly on Wednesday. Enthusiasm is building in the aftermath of last week’s jobs report and a positive inflation reading today could further fuel that. The prospect of a softer landing, even avoiding recession, is as good as investors could have realistically hoped for once it became clear how high inflation was going to rise last year. A softer landing for the US, and perhaps elsewhere, combined with a strong economic rebound in China following the current Covid wave could make for a much better year than feared and stimulate extra crude demand. Of course, this case very much focuses on the promising scenarios but they are also increasingly looking like the more plausible ones as well. Read next:The New Disney Drama: Disney Is Opposing Activist-Investor Nelson Peltz| FXMAG.COM Gold trading around pivotal technical zone The gold rally is continuing to stall around $1,880, the lower end of a range that has been a major point of support and resistance in recent years. The range between $1,880 and $1,920 could be pivotal once more, either as a barrier of resistance in the event that inflation disappoints, or a signal of renewed bullishness if a positive report is the catalyst for a break above. Either way, we could see plenty of volatility in the aftermath of the release. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Gold price: Oanda's analyst talks technically possible price of $2000 per ounce

Gold price: Oanda's analyst talks technically possible price of $2000 per ounce

Craig Erlam Craig Erlam 11.01.2023 22:00
Buoyed by economic optimism Investor optimism going into tomorrow’s US inflation report appears to be feeding through to the oil market, with Brent and WTI both up more than 2% on the day. It will be interesting to see if they can hold onto those gains considering how they’ve failed to do so over the last four days. Another failure to do so would make this recovery rally look very weak. Perhaps that will also hang on the inflation data tomorrow, with another softer reading paving the way for fewer hikes and even cuts later in the year. That would be supportive of the economy and therefore demand, potentially boosting oil prices. $2,000 in sight? Gold looks to have entered into a holding pattern ahead of the inflation data after rallying strongly once more in the aftermath of the jobs report. The yellow metal has started the year really strongly, buoyed by lower yields and favourable data, and the CPI numbers tomorrow could be supportive on both of these fronts. Read next: Czech Republic: CPI inflation hits 15.8%, noticeably less-than-expected| FXMAG.COM There is significant resistance above at the moment, between $1,880 and $1,920 but if it can overcome this on the back of the CPI data, it could gather further momentum with $2,000 then not far away. An underwhelming report could reinforce that resistance and even trigger a correction. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil and gold jump ahead of inflation report - MarketPulseMarketPulse
Federal Reserve splits highlighted by May FOMC minutes

Tomorrow's "good" inflation print could affect Fed hawkishness. BTC could be supported by CPI and news, but Craig Erlam remains "sceptical" about Bitcoin's increase

Craig Erlam Craig Erlam 11.01.2023 21:56
Investors remain in an upbeat mood going into tomorrow’s US inflation report, buoyed still by the December jobs report and the prospect of the economy being less squeezed by interest rates. Fed Chair Jerome Powell may have refrained from commenting on the monetary policy outlook on Tuesday but the chances are he wouldn’t have said anything investors would have liked even if he had addressed it. It’s been clear from other commentaries that policymakers are sticking to the hawkish script. Another good inflation number tomorrow could change that as the trend has already been very encouraging and the jobs data that appeared to throw a spanner in the works last month has since been revised out. From an investor perspective, it would take something pretty terrible tomorrow – the inverse of what we were treated to on Friday – to really rock the boat. Read next: InPost delivered 44% more parcels year-on-year. Stock price increased significantly| FXMAG.COM Building confidence Bitcoin is missing out on today’s risk rally but traders will be relieved by how the last couple of days have gone. It’s back above $17,000 and suddenly the mid-December peak doesn’t look too far away. Friendly newsflow and a solid CPI number tomorrow could help it gain some momentum from here but I remain sceptical about how much upside can be achieved in an otherwise hostile environment. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. All eyes on the inflation report - MarketPulseMarketPulse
Gold Commodity Asset: Daily Chart Analysis and Bearish Outlook

Gold Momentum Remains Favourable For The Bulls, Turbulent Session In The Oil Market

Craig Erlam Craig Erlam 10.01.2023 15:32
Demand to pick up later this year It’s been a choppy session in the oil market, where Brent is hovering around $80 and WTI $75. We’ve now seen three sessions on the bounce in which oil prices have rallied before ending the day well off the highs. Not a particularly bullish signal. There’s a lot to consider in oil markets at the moment and the near-term risks probably are more tilted to the downside. The start of the year could see countries fall into recession as the cost-of-living crisis bites, interest rates are hitting a level that could significantly hurt economic activity and China is likely to experience the worst of the Covid surge after relaxing its approach. Beyond that, things could start to look up for a number of reasons. China could bounce back strongly, especially if backed by monetary and fiscal stimulus, central banks may discover they have room to cut rates if inflation falls substantially and economies are in recession and Russian output could be squeezed as sanctions take their toll. A lot of ifs and buts of course, but that is the uncertain world we now live in. Holding on Gold is holding onto gains well considering the Fed’s efforts to address market interest rate expectations. Yields remain near their recent lows and gold near the highs around $1,880, indicating that policymakers have a lot more convincing to do. That may be made harder on Thursday if core inflation is lower than expected, undermining the central bank’s hawkish stance. Of course, there will come a time when that will have to change and it may be fairly abrupt. For now, the yellow metal faces strong resistance around $1,880-$1,920, a region that we’ve seen a lot of activity around in recent years. Momentum remains favourable for the bulls but that may change now that the price is testing that $40 range. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Hawkish Fed Minutes Spark US Market Decline to One-Month Lows on August 17, 2023

The Commentary From Fed Officials Was More Hawkish Than What Investors Wanted

Craig Erlam Craig Erlam 10.01.2023 15:26
European stock markets are softer in early trade on Tuesday following a similar session in much of Asia as investors turn more cautious ahead of Thursday’s US inflation data. The commentary from Fed officials at the start of the week was more hawkish than what investors wanted to hear following a knockout jobs report. Considering the rhetoric in the weeks leading up to Friday, it shouldn’t have come as a great surprise that policymakers are sticking to the “higher for longer” narrative. There has been a determination to not allow financial conditions to loosen on the expectation of lower rates down the road as it undermines tightening efforts now. While the central bank’s assessment of future rates may be more hawkish than the markets, it’s also possible that they’re being intentionally overly hawkish now in an attempt to stop investors from getting carried away. The jobs report may not have been enough to warrant a shift in the language, but that doesn’t mean we aren’t close and any change could be quite stark. The inflation report on Thursday could further justify such a move although investors will be very wary that a bad one could ensure policymakers dig their heels in for a while longer yet. Tentatively higher Bitcoin is marginally higher after breaking back above $17,000 yesterday, buoyed by an improvement in risk appetite. That remains fragile though and a nasty surprise this Thursday from the US inflation report could send risk assets into reverse. The broader crypto environment remains the dominant driver though and it’s gone a little quiet on that front which will be welcome. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
A Further Rise In Gold Is Very Likely, The Dovish Expectations Are Feeding Well Into The Bond Markets

Precious metals: Gold retreats as traders await tomorrow's jobs report

Craig Erlam Craig Erlam 05.01.2023 20:06
A rough couple of days Oil is slightly higher on Thursday, paring losses from the last couple of days. Prices fell almost 10% over the last couple of days as China’s efforts to rapidly transition away from its zero-Covid campaign led to a powerful surge in cases, threatening to disrupt activity in the opening months of the year. While most would agree that the move should lead to higher, more sustainable growth later in the year, the near-term outlook is clouded by the transition. With oil now dipping back to levels at which the US has hinted it will be a buyer in order to refill the SPR, it will be interesting to see whether support arrives or WTI is able to slip below $70. Paring gains Gold is giving back some of its new year gains on Thursday, with traders no doubt having one eye on tomorrow’s jobs report. The Fed minutes contained no surprises, with policymakers keen to stress their commitment to raising rates and driving down inflation. Read next: Oil pares losses, gold eyes NFP - MarketPulseMarketPulse Whether they’ll follow through is another thing and there is a growing divide between what the Fed is saying and what markets are pricing which in part explains why the central bank continues to be so forceful. It doesn’t want to contribute to a loosening of financial conditions, even at the expense of its communication effectiveness it seems. The decline we’ve seen in yields in recent days highlights this and has been supportive of gold. Another strong jobs report tomorrow may quickly put an end to that. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil pares losses, gold eyes NFP - MarketPulseMarketPulse
Lagarde's Dilemma: Balancing Eurozone's Slowdown and Inflation Pressure

US Stocks: Amazon (AMZN) and Salesforce (CRM) lay off employees

Craig Erlam Craig Erlam 05.01.2023 20:00
It’s been a mixed day of trade in Europe and the US is poised to open marginally lower as traders take a step back following a lively start to the year. The Fed minutes may have put a slight dampener on things although I’m not entirely sure. The narrative from the central bank is very much in line with what we should expect. Policymakers are desperately trying to convince markets how serious they are about defeating inflation, to the point that investors are seemingly paying less attention. I can understand the Fed’s caution given the erratic nature of the data and its own credibility issue having turned up casually late to the party. The risk now is that it overcompensates during the exit from tightening and pushes the economy into a deeper downturn than necessary. This is why we may well see it maintain the hawkish position in the near term but ultimately not follow through and instead quickly pivot, perhaps later in the quarter. That will all depend on the data and the jobs report last month was not what the central bank wanted to see. It will be hoping for something more modest on Friday, with a particular focus falling on wages which surprised substantially to the upside in November. The ADP report wasn’t a promising precursor but then, it’s rarely a reliable one either. Amazon and Salesforce continue tech layoffs Tech firms have often been the outlier in markets in recent years and now they are for all the wrong reasons. While most companies have been reluctant to lay off staff, having been burned in the aftermath of the pandemic by a surprisingly tight labour market, tech firms have been quick to pull the trigger and in emphatic fashion. There is no crystal ball that the firms’ bosses have access to that others have not; rather it’s a reflection of the intense hiring spree they went on in recent years as business boomed and stock prices soared. The economic cycle has turned rapidly, leaving those companies over-staffed and while that would ideally not result in mass lay-offs, it was always likely to. While other sectors may also gradually start laying off staff in response to the economic downturn, I don’t expect it will be on the same scale, not unless the outlook worsens considerably. Pre-data nerves? Bitcoin isn’t offering much in terms of excitement today, down marginally and with a relatively tight trading range. Whether that’s a little pre-jobs report apprehension or something more defensive amid a welcome quiet period for crypto isn’t clear but we’ll find out soon enough. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Tech leading the way - MarketPulseMarketPulse
Gold Is Expected The Further Upside Movement

Precious metals: We may say gold has entered a fast lane called 2023

Craig Erlam Craig Erlam 04.01.2023 23:17
Slide continues amid uncertain China outlook Oil prices have tumbled again today, hit it seems by the uncertain near-term economic prospects for China amid surging Covid cases. While reliable data is seemingly hard to come by, the view appears to be that there’ll be significant disruption in the coming months and then a recovery from around the middle of the year which should then boost demand. Brent has now slipped back below $80 a barrel while WTI has fallen below $75, with both now only around 5% from the December lows. Despite this, the medium-term prospects still appear quite bullish, especially if China can bounce back strongly later this year and fully transition to living with Covid, like much of the rest of the world. Of course, Russia remains the wildcard in all of this, both in terms of its output and influence within OPEC+. Read next: We are preparing to see the S&P500 decline in the first weeks of the new year down to 3600 | FXMAG.COM Gathering momentum ahead of FOMC minutes Gold is charging higher again buoyed by lower yields and a softer dollar. The yellow metal was running on fumes into the end of the year but appears rested and revitalized at the start of 2023. Not only is it rallying, but it’s also building momentum, something that was lacking towards the end of December. Of course, whether that will be sustained will depend on the Fed minutes and, maybe more so, Friday’s jobs report. We’ve had many setbacks over the past 12 months but who knows, maybe 2023 will be the year of positive surprises. Or perhaps that’s all the festivities talking again. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil takes a hit, gold extends rally - MarketPulseMarketPulse
The Market May Continue To Buy The Pound (GBP) This Week

ISM manufacturing PMI and JOLTS job opening can, according to Craig Erlam, can mix things up

Craig Erlam Craig Erlam 04.01.2023 23:02
Equity markets are pushing higher on Wednesday, buoyed by softer yields and some promising PMI revisions in Europe. It would appear investors are increasingly coming around to the idea that central banks will be forced into cutting rates earlier than previously anticipated in order to support the economy. That would also suggest they anticipate inflation will subside faster than previously thought which would be welcome if true after a year of overshoots. I’m sure this is a position that will change a lot in the coming months just as it has in those passed but it’s seemingly boosting risk appetite in the first week of the year. You just have to wonder how much resilience economies have in the interim to weather the cost-of-living storm. This is where the other data points will become increasingly influential. The PMIs this morning, for example, were largely contractionary but only marginally so and the upward revisions for Germany, France, Italy, Spain, and the bloc as a whole will offer some encouragement. Read next: Exxon And Chevron Abandon The Global Market And Focus On The Americas| FXMAG.COM I feel we’ll have a lot more clarity by the end of the first quarter in a number of ways from the path of inflation, terminal rates, and the ability of economies to continue to withstand those pressures. It will no doubt be a whirlwind quarter but one after which the rest of the year could look more promising. Or maybe this optimism is just a hangover from all of the festivities. Fed minutes eyed There’s plenty more to come today that could potentially dampen the mood, most notably the Fed minutes from the December meeting. The central bank is determined to reinforce its hawkish stance on investors and prevent an unwanted loosening of financial conditions and the minutes could be another opportunity to do so. Whether investors will be in the mood to listen is another thing. And then there are the ISM manufacturing PMI and JOLTS job openings, both of which have the potential to shake things up during such an uncertain period. It promises to be a very interesting second half of the week. Cautiously higher There isn’t much to add on the bitcoin front. It remains in consolidation, buoyed slightly by better risk appetite in the market but still in the $16,000-$17,000 range. A move above here is possible if risk appetite remains positive but I’m not sure traders will get too carried away. Headwinds remain significant for cryptos and it may take some time for traders to get back on board. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Growing Optimism? - MarketPulseMarketPulse
FX Daily: Upbeat China PMIs lift the mood

The Caixin Future Output Index Suggests Firms Are More Optimistic About The Longer-Term Outlook Since Covid-Zero Was Abandoned

Craig Erlam Craig Erlam 03.01.2023 12:40
A mixed start to trading on Tuesday as traders return following the festive break to some rather gloomy forecasts for the coming year. The IMF is among those warning of a tough year, more so than the one we’ve just left, as the simultaneous slowing down of the US, EU, and China takes its toll. Of course, all forecasts at this moment are subject to enormous uncertainty around the war in Ukraine, inflation, interest rates, and China’s Covid response, among others, but it seems almost everyone is going into 2023 with a healthy dose of trepidation. And following a series of nasty shocks last year, who can blame them? There is the potential for surprises this year to be of a more positive nature, of course, but as it stands, the outlook is understandably gloomy and will remain so unless something significant changes, either on the war in Ukraine or inflation. If inflationary pressures remain stubborn – and a strong, successful transition from zero-Covid to zero restrictions could enable that – then central banks will have little choice but to continue tightening monetary policy in order to bring it down. That is something the IMF strongly urged them to do, with stubbornly high inflation deemed a far greater risk over the longer term. As far as the economic calendar is concerned this week, we’re easing ourselves back in today with mostly revised PMIs and other tier-three data. Things will pick up on that front from tomorrow, with the December Fed minutes being released alongside some more significant data and that will continue into the end of the week when we get the first jobs report of the year. Read next: New Record For Electric Car Manufacturer - Tesla Deliveries Increased By 40% Year-On-Year| FXMAG.COM One interesting release this morning came from China, where the Caixin manufacturing PMI painted a less pessimistic picture than the official number over the weekend. While the surveys are different in the kind of firms they cover, it was interesting that the official number pointed to greater concern around the sector at the moment. That said, there does seem to be some promise in the Caixin future output index which suggests firms are more optimistic about the longer-term outlook since Covid-zero was abandoned despite the prospect of near-term difficulties. Range-bound Bitcoin has remained quite stable recently, hovering in the $16,000-17,000 range over the last few weeks. That may come as a relief to the crypto crowd after another rough few months. The new year no doubt has plenty in store for cryptocurrencies but in the short term, the community may just be hoping for no new scandals that will drive investors away. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Weekly Commitment of Traders update - Buying of crude oil moderated, ICE gas oil net long reduced to a 30-month low

Traders Continue To Price In Stronger Chinese Demand For Crude Oil, Gold Is Rallying Strongly

Craig Erlam Craig Erlam 03.01.2023 12:32
Oil recovery continues Oil prices are a little higher this morning as they continue to rebound strongly from their lows. Brent and WTI have recovered almost 15% from the lows a few weeks ago as traders continue to price in stronger Chinese demand. At the same time, the US is looking to refill the SPR after huge withdrawals during last year’s oil price spike. The outlook remains highly uncertain though which should ensure oil prices remain highly volatile. The G7 price cap has had little impact so far, the same can be said of Russia’s response, but that could change if oil prices keep moving higher, nudging Russian crude ever closer to the cap level and forcing some very difficult decisions. Read next: New Record For Electric Car Manufacturer - Tesla Deliveries Increased By 40% Year-On-Year| FXMAG.COM Finding momentum Gold is rallying strongly on Tuesday, up more than 1% and gathering momentum after seeing it slip in recent weeks. The yellow metal appeared to be stuttering around $1,800 but that’s suddenly changed, perhaps buoyed by the mild risk-aversion we’re seeing in the markets and the expectation that the environment is looking more favourable. This could be a year in which global growth slows significantly and traders are questioning whether that will warrant monetary policy to be loosened later in 2023. Central banks have pushed back strongly against the idea and I imagine the IMF would too at this point but we could see markets moving in that direction if the data doesn’t continue to haunt us. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Source: Oil continues to rise, gold rallies - MarketPulseMarketPulse  
Bitcoin Is Again In The Framework Of A Strong Downward Movement

According to Oanda's Craig Erlam, 2023 could be "another intriguing year" for cryptocurrency market

Craig Erlam Craig Erlam 30.12.2022 23:47
Risks tilted to the upside? Oil markets are bouncing back in another volatile session at the end of the year. Going into 2023, the risks are arguably tilted to the upside, although that has been the narrative for much of the year and yet we’re on course to end it not far from where we started. While producers have finally caught up with post-pandemic demand, other risks remain next year, notably Russian output amid the new price cap and its threats to cut output and not supply any countries abiding by it. That isn’t a problem now but if prices do start rising, that could accelerate the move quickly. Gold lacking momentum Gold is pushing higher again on Friday but once more it lacks the momentum to build on recent gains in any considerable way. The outlook may still look very positive for the yellow metal with central banks surely nearing peak interest rates and the economic outlook rather bleak but in the near term, a correction may be on the cards in the absence of another bullish catalyst. Another intriguing year The crypto community won’t be sad to see the back of 2022 and who can blame them? Who knows what’s to come in 2023 but at the very least, they’ll be hoping to put the FTX scandal behind them and focus once more on innovation and adoption. That may be a lot to ask in the short term, especially if other market factors aren’t favourable. No doubt it will be another intriguing year for the space. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil bouncing back, gold pushing on, bitcoin steady - MarketPulseMarketPulse
Brent hits one-month high! Saudi and Russian cuts supporting recent moves

Unclear, "choppy" trading week and confusing COVID realities

Craig Erlam Craig Erlam 30.12.2022 19:28
Another big year ahead though Stock markets are limping into 2023, with investors seemingly making the most of the festive break to refuel for what is going to be another wild year. Equities are a little lower on the final trading day of the year but broadly speaking, over the last week there has been no development, just choppy trading with no conviction or direction. It would appear investors are positioned for an opening quarter of significant uncertainty, which is about right. So much now hangs on the economic data and how companies plan to adapt to a potentially impending recession. The data towards the back end of 2022 wasn’t as promising as hoped and the communication from the Fed and others has remained more hawkish than investors would like. Read next: “Eat the Rich” – review and story behind the Netflix mini-series| FXMAG.COM China’s move away from zero-Covid doesn’t appear to be going to plan with anecdotal evidence suggesting cases are soaring and the health system is being stretched. If it weathers the storm over the next month or so, it could bode well for the rest of the year but past evidence suggests the road to zero restrictions is filled with potholes. The decision by the BoJ to tweak its yield curve control policy tool could also backfire as traders view it as the first step towards abandoning it altogether. It may be forced to be even more active in the markets as a result as emboldened JGB bears seek to test the central bank’s resolve. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Limping into 2023 - MarketPulseMarketPulse
The Commodities: In The Near Term The Oil Market Remains Relatively Well Supplied

Oil Prices Are Falling, Markets Have Been Volatile Over The Last Few Weeks And There Are No Signs Of A Change Next Year

Craig Erlam Craig Erlam 29.12.2022 13:58
We continue to drift into year-end with investors having little to cling onto that’s going to drive markets one way or another. That is so often the case this time of year and while 2022 could have been different, given how chaotic the rest of the year has been, it has proven to not be the case. Investors are going into 2023 with a cautious mindset, prepared for more rate hikes, and expecting recessions around the globe. The bar is low but arguably reasonably so. While markets have remained choppy over the last couple of weeks, we haven’t seen any major developments that have changed the narrative at all going into next year. Well, perhaps ex-Japan where the central bank’s policy tweak may embolden those wanting to take it on more forcefully in the months ahead. Elsewhere, the focus will remain on terminal rates and just how forceful central banks will be in their bid to defeat inflation. The Fed in particular has remained very bullish on its rate intentions, so much so that it may have spooked investors a little at this month’s meeting. But that could quickly change in Q1 if the data allows. And then there’s China and its u-turn on Covid prevention. It’s been quite the shift from fighting every case to living with the virus and that creates enormous uncertainty for the start of the year as case numbers surge and the health system is overwhelmed. How the leadership will respond is about as clear as the data itself so for investors it will be a case of learning as we go using what little data and anecdotal evidence we have. That creates challenges domestically and in all likelihood globally as well. Paring gains again Oil prices are dropping for a second day, erasing some more of the pre-Christmas rally amid uncertainty over the Chinese outlook and the limited impact of Russia’s response to the G7 price cap. Volatility is likely going nowhere fast as we navigate another highly uncertain year, albeit one that surely promises plenty of surprises and twists and turns along the way. The US refilling the SPR should be supportive for the market and could have put a bit of a floor in place, although with so many moving parts, I don’t think anyone can say anything with any strong degree of conviction. OPEC+ could make an announcement at any point and suddenly everything changes. Not to mention Russia’s war in Ukraine and how that develops. Read next: EUR/USD Pair Remains Within Its Horizontal Trading Range, The Aussie Failed To Break The Resistance At 0.68| FXMAG.COM Settling around $1,800 Gold is continuing to hover around $1,800 where it has traded roughly $30 on either side throughout the bulk of December. It seems gold traders, like the rest of us, have an idea of what the Fed will do early next year but are holding back as it doesn’t quite align with the hawkish narrative coming from the central bank. Patience may well be key on that front but with momentum running thin, the prospect of a correction is growing. More twists and turns ahead Bitcoin continues to happily tread water and watch the storm pass as it fluctuates in a range of around $16,000-$17,000. That’s broadly been the case over the last couple of weeks and it doesn’t look like changing in the coming days, barring any unexpected headlines. The question for many now is whether it has bottomed and how long it will take confidence to return, enabling a strong recovery. I’m not convinced by either in the near term and think there are plenty more twists and turns to come early next year. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
USDX Will Try To Test And Break Below The 103.50 Level

Markets seem to still be in festive moods. We may say Bitcoin has been enjoying holidays

Craig Erlam Craig Erlam 28.12.2022 23:45
We’re seeing choppy trade in financial markets on Wednesday in what is always quite thin trade as traders continue the festivities into the new year. And there’s certainly a strong sense of holiday trade to the markets today, with light news flow combined with lower liquidity creating choppy but ultimately insignificant moves. It very much feels like we’re now just drifting into 2023 at which point I expect things will quickly pick up again. The key trading themes will continue to dominate in early January, most notably how far central banks are willing to push interest rates in order to display their determination to get inflation back to target. Many have already started easing off the brake and we’re seeing plenty of signs of pressures easing, albeit perhaps not as much as policymakers would have liked by now. Still, the risks now appear very much tilted to the downside as far as hikes are concerned against the backdrop of a very aggressive tightening in a short period of time and with many countries facing recession. Having started too late, central banks are now at risk of tightening too much and therefore overcompensating for a sloppy start with a painful exit. Read next: 2023 predictions: All in all I forecast the S&P to fall 5% on the year but the Nasdaq will fall 10% says Ivan Brian, Chief Equity Analyst at FXStreet | FXMAG.COM Treading water Bitcoin has been treading water over the festive period and I’m sure the crypto community will be perfectly happy about that. It’s not been an easy few months and the next few could prove to be challenging as well. It’s become a matter of damage limitation for the industry and the hope that the storm has now passed with another not quickly behind it. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. An eye on the New Year - MarketPulseMarketPulse
The Commodities Feed: Specs continue to cut oil longs

Unclear picture of crude oil market, China's shift to loosening COVID restrictions to be digested yet

Craig Erlam Craig Erlam 28.12.2022 23:40
China key to oil prices Oil prices are paring recent gains in the middle of the week, slipping more than 2% after recovering strongly over the last few weeks. The outlook remains highly uncertain for the oil market and recent sanctions by the G7 and countermeasures by the Kremlin do little to change that at the moment. Both will only be tested if crude prices rise to the point that Russian crude is trading uncomfortably close to the $60 cap or should be above, which is not the case right now. So as it is, it’s all theoretical. China’s success in pivoting away from zero-Covid could be key to all of this but with trustworthy data on the spread since restrictions were eased hard to come by, we may have to wait some time to fully understand the implications for the economy and therefore oil demand. ​ Read next: 2023 predictions: All in all I forecast the S&P to fall 5% on the year but the Nasdaq will fall 10% says Ivan Brian, Chief Equity Analyst at FXStreet | FXMAG.COM Holding gains for now Gold is trading around $1,800, the level it’s largely fluctuated around throughout December. Whether it’s a reflection of traders not buying the Fed’s hawkish determination or bulls being unwilling to give up on the recovery rally, it’s continuing to hang on in there, albeit on ever-weakening momentum. We could see a correction early in the new year in the absence of a dovish shift in the Fed commentary or some favourable economic data. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil pares gains, gold steady - MarketPulseMarketPulse
Wage agreement may be game-changing in a way. First meeting of the new BoJ Governor Ueda takes place on April 28th

What to expect next week? Bank of Japan to decide on interest rate

Craig Erlam Craig Erlam 17.12.2022 00:02
US Wall Street will have a busy week of economic data releases and a handful of important earnings.  Investors will pay close attention to Nike’s results after the bell on Tuesday. Nike could provide insight into how strong the Chinese consumer is and provide one of the latest updates for holiday spending.  Other key earnings include General Mills, Carmax, Micron, and FedEx.  Housing economic indicators will be plentiful this week, with weakness expected across building permits, housing starts, existing home sales, and new home sales. Final Q3 GDP is expected to remain at 2.9% and the GPD price index should hold steady at 4.3%.  Personal income and spending data should soften but still remain positive, while consumer confidence is expected to slightly improve.   EU  As will be the case in many other countries next week, there isn’t too much of note to come from the eurozone next week. The ECB unofficially brought the curtain down on 2022 for the bloc with its 0.5% rate hike, while signaling more will follow. There are a few data points scheduled but nothing stands out that could be a game-changer. UK  Strike action is likely to dominate UK headlines over the festive period, with little else to talk about beyond the cost-of-living crisis. The BoE displayed two things with its 0.5% rate hike in December; it currently remains committed to defeating high inflation whatever the cost and there is no unified view on the correct course of action next year. The economy is already likely in recession and that will become clearer in the first quarter, at which point rate hikes will be harder to justify if inflation is falling. That is the focus now in the absence of any notable events next week, beyond a revised third-quarter GDP reading. Russia The war in Ukraine and whether either side will make a move over the next couple of weeks will be the key focus as far as Russia is concerned. The central bank has paused its rate-cutting cycle and beyond PPI, it’s very thin on the data front. South Africa There is nothing of note on the economic calendar next week. President Ramaphosa is seemingly safe for now, temporarily eradicating political risk from the rand, assuming he is re-elected party leader this weekend, as expected.  Turkey The CBRT previously indicated that it will pause its easing cycle which should make next week’s rate decision fairly straightforward and uneventful. If we weren’t talking about the CBRT, I would say that with more confidence. As it is, nothing would surprise me, barring a rate hike of course.  Switzerland The SNB hiked rates as expected to 1% and could go further in the future. Next week though looks a little flat, with the quarterly bulletin the only moderately interesting release. China China’s reopening is seeing a surge in cases that could test some healthcare capacity. Any announcements on major changes to policies might be delayed if this surge shows no signs of peaking.   The focus will also fall on rates.  Both the 1-year and 5-year Loan Prime Rates are expected to remain steady at 3.65% and 4.30% respectively.  Efforts are ongoing to stabilize the property sector and commercial banks could lower their quotes on five-year loan prime rates by 10 basis points.   India No major data is scheduled for release.  Australia & New Zealand The minutes of the December 6th RBA policy decision will be dissected for any further clues to when they will finish raising rates.  RBA Governor Philip Lowe said that rate rises are “not on a pre-set course”.   Economic data will be plentiful in New Zealand. Both Trade data and ANZ business confidence will be released on Tuesday. On Wednesday, credit card spending data will be released.    Japan The BoJ is expected to keep rates steady and maintain their dovish guidance. Policymakers want to see how bad global growth gets before removing stimulus.  Traders will look for any hints on whether the BoJ will review its policy in the near future. Attention will also be on whether core inflation continues to accelerate higher.   Singapore On Friday, the release of Singapore’s industrial production and CPI data will closely be watched.  Industrial production in November is expected to further weaken, while inflation is expected to slightly ease.  Economic Calendar Saturday, Dec. 17 Economic Events The Central Economic Work Conference, an annual economic planning meeting of Chinese leaders concludes with an expected growth target to be discussed   South Africa’s governing party, the African National Congress, meets in Johannesburg for its elective conference Ireland’s parliament is expected to vote in Leo Varadkar as Taoiseach, or prime minister Sunday, Dec. 18 Events World Cup final in Qatar Monday, Dec. 19 Economic Data/Events US House committee investigating January 6th insurrection concludes Germany IFO business climate New Zealand consumer confidence, performance services index ECB Vice President de Guindos addresses the Nuevo Economía Forum in Madrid EU energy ministers meet in Brussels Russian Defense Minister Shoigu travels to India for meetings with his Indian counterpart and other officials Tuesday, Dec. 20 Economic Data/Events US housing starts Canada retail sales China loan prime rates Eurozone consumer confidence Japan rate decision: Expected to hold rates steady Mexico international reserves New Zealand trade, business confidence Taiwan export orders Thailand car sales ECB Governing Council member Kazimir presents updated economic forecasts for Slovakia in Bratislava UK PM Sunak appears before Parliament’s Liaison Committee to discuss foreign affairs and the economy Nike earnings The Reserve Bank of Australia releases minutes from its December interest rate meeting Wednesday, Dec. 21 Economic Data/Events US existing home sales, US Conference Board consumer confidence Australia leading index Canada CPI Hong Kong BoP Japan machine tool orders New Zealand credit card spending, consumer confidence South Korea trade 20 days EIA crude oil inventory report RBI Gov Das to speak at a Business Standard event Thursday, Dec. 22 Economic Data/Events US Q3 final GDP, initial jobless claims, US Conference Board leading index China Swift global payments Japan leading index Thailand trade Turkey rate decision: May keep rates steady UK GDP Friday, Dec. 23 Economic Data/Events US consumer income, new home sales, durable goods, University of Michigan consumer sentiment US bond markets close at 2pm Japan CPI, department store sales Mexico trade Singapore CPI, industrial production Spain GDP Taiwan industrial production, money supply Thailand forward contracts, foreign reserves The BOJ releases minutes of its October policy meeting This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Week Ahead - Into the festive season - MarketPulseMarketPulse
At The Close Of The New York Stock Exchange 728 Securities Closed In The Red

Stock market: No Santa Rally this year? Central banks didn't let markets be very optimistic

Craig Erlam Craig Erlam 16.12.2022 23:33
Stock markets are going into the festive period in a downbeat mood, as central banks this week reaffirmed their commitment to raising rates. The prospect of a Santa rally is fading as we near the end of 2022, very much in keeping with how the rest of the year has unfolded. Going into December, there was growing optimism that policymakers could be a source of optimism going into the new year but instead, they’ve taken on the role of grinch, bringing a swift end to the celebrations. Considering the eagerness of investors to embrace the imminent end of the tightening cycle, you can understand the positions being adopted by central banks. The faintest hint at pausing the hiking cycle now will likely see financial conditions loosen, undermining their efforts to get a grip on inflation again. I expect the data will allow a change of heart early in the new year and central banks won’t necessarily fully follow through on what they’re signaling to the markets now. Of course, considering the numerous surprises this year, I don’t say that with enormous conviction. Expect the unexpected may well remain the mantra next year. Read next: EU economy expected to grow 0.8% in 2023. Following ECB hikes can be higher than Fed ones | FXMAG.COM I get up, but I get knocked down again Bitcoin’s revival was short-lived and it now finds itself back around $17,000. It was always going to be difficult to build on the early week gains in any considerable way and the wave of risk-aversion in the markets was enough to knock it down once more. It’s going to take some favourable headlines and significantly improved risk appetite in the markets to lift it back toward $20,000 in the near term. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Playing the Grinch - MarketPulseMarketPulse
A Further Rise In Gold Is Very Likely, The Dovish Expectations Are Feeding Well Into The Bond Markets

Gold was having a good time, while Fed entered the room and ended the party

Craig Erlam Craig Erlam 16.12.2022 23:14
Can WTI break $70? Oil prices are slipping once more in volatile trade. There are so many driving forces in the oil market at the moment and a more sombre economic outlook on the back of the hawkish central bank message this week appears to be the dominant one going into the weekend. The interesting thing for me remains how prices respond to the December lows, should they be tested again, with the level in WTI also representing the point at which the White House has indicated it will start refilling the SPR. We’ll see how much of a floor that puts in the price but in the short term it could at least offer some support. Read next: German and Eurozone manufacturing rise above expectations of 46.1 and 47.1 respectively| FXMAG.COM A correction on the cards? It hasn’t been the best week in the end for gold, which appeared to be on the brink of a very bullish breakout following the US inflation data on Tuesday. The Fed appeared to put an end to those hopes in the near term and a wave of risk-aversion towards the back end of the week has boosted the dollar and yields, further weighing on the yellow metal. With momentum already waning in the run-up to this week’s events, we could be looking at some exhaustion combined with the hawkish commentary to drive a correction. It’s seen some support around $1,770-1,780 over the last day or so, with the next key level falling around $1,760 and then $1,730. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil under pressure, Fed weighs on gold - MarketPulseMarketPulse
The EUR/USD Pair Has A Potential For The Breakout Mode

European Central Bank is expected to go for a less hawkish hike, but economic projections may be worth even more attention

Craig Erlam Craig Erlam 15.12.2022 13:15
Equity markets are back in the red on Thursday as investors reel from the nasty shock delivered by the Fed and look ahead to the plethora of central bank rate decisions on the agenda today. Safe to say, investors simply didn’t see that coming. Two months of better-than-expected inflation data were enough to convince them that the Fed would not only ease off the brake but signal it would do so more in the coming months. Whether through complacency or a desperate desire to see value in equity markets, investors overlooked the concerns that have plagued policymakers for months. The fear of entrenched inflation has been a much greater concern and it’s been better encapsulated in the jobs and wage figures than the headline inflation numbers that have spurred investors on recently. Of course, that isn’t to say the Fed will simply ignore the progress we’ve seen in the inflation data. But perhaps that investors should give more consideration to the upside risks to it. While I still believe the Fed won’t raise rates as far as the dot plot indicates, the next hike may be another 50 basis points unless we see something more sustainable in the labour market and wage numbers. Of course, markets have been ahead of the Fed a number of times this year and the central bank may simply be pushing back as a means of preventing complacency from appearing in the markets, undermining its own tightening efforts. But the case remains that the path back to 2% will likely be far less smooth than that to 7.1% and potentially just as disappointing at times. We should probably accept that now. BoE to continue pushing back, ECB projections key The question now becomes whether other central banks will take a similarly hawkish position against the markets and ruin any hope of a Santa rally this year. Of course, that very much depends on the individual circumstances. Take the BoE for example; it has already been pushing back against market expectations but in a very different way, with the message from the MPC being that it doesn’t expect to tighten as aggressively as the economy falters. The ECB faces other challenges, most notably the fact that inflation is still 10% and it was very late to the party when it comes to raising interest rates. At the same time, the bloc faces a period of huge economic and energy uncertainty and probably recession. The central bank is expected to slow the pace of tightening today following two consecutive 75 basis point hikes but the economic projections are what will likely get the most attention as traders try to determine just how far the central bank plans to push rates. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. More shocks coming? - MarketPulseMarketPulse
A Further Rise In Gold Is Very Likely, The Dovish Expectations Are Feeding Well Into The Bond Markets

Gold weakens, Fed needs to be more convincing to investors

Craig Erlam Craig Erlam 15.12.2022 12:26
Oil edges lower Oil prices are a little lower on Thursday after recording three consecutive days of gains. A stronger post-Fed dollar, fears of slower growth, or a surprisingly large inventory build from EIA may be contributing to today’s declines but in reality, we’re probably just seeing a little profit-taking following a decent rebound. The outlook remains highly uncertain given the risks to Chinese demand as it exits zero Covid, the war in Ukraine and the impact of the G7 price cap, and OPEC+, among other factors. The rebound off $70 suggests there may be a psychological element as well after the White House previously indicated it would start refilling the SPR around these levels. Read next: From the fundamental point of view, these facts may become a game changer, sending the EUR/USD pair to the parity level | FXMAG.COM Gold pulls back but traders not buying new projections Gold is off around 1% today following the disappointment of the Fed projections. While the dollar initially pared gains, it has been on the rise since which is weighing on the yellow metal. The rally had already been losing momentum in the run-up to the meeting which is probably contributing to today’s pullback. Whether it can make further progress from here may depend on how good a job the Fed does in convincing traders of its intentions, with the initial reaction suggesting they’re not fully buying it. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil edges lower, Fed sends gold lower - MarketPulseMarketPulse
Volatility may be still there as crude is being impacted by loosening COVID restrictions in China, Russian-Ukrainian war and more

Volatility may be still there as crude is being impacted by loosening COVID restrictions in China, Russian-Ukrainian war and more

Craig Erlam Craig Erlam 14.12.2022 20:22
Huge uncertainty for oil There remains immense uncertainty over the outlook for crude demand and supply which is leading to plenty of volatility in oil markets. The price has rebounded in recent days after WTI fell close to $70, the level at which the White House has previously indicated it will start refilling the SPR following a year of repeatedly drawing it down. With China finally navigating away from zero-Covid, which alone brings huge uncertainty for next year, the global economy slowing, Russia continuing its war in Ukraine, and OPEC+ seeking to maintain balance, I don’t expect volatility to subside in any significant way soon. Gold eyeing Santa rally Gold is paring its post-CPI gains ahead of the US interest rate decision. It finally broke $1,810 but failed to hold on and eventually ended the day back around that level. A dovish Fed today could seal the deal and deliver a Santa rally for the yellow metal in the final weeks of the year. Read next: The Australian Dollar Held Above $0.68, Today The Fed Will Make Its Last Decision Of The Year| FXMAG.COM For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil showing volatility, gold eyes Fed - MarketPulseMarketPulse
Bank of England Confronts Troubling Inflation Report; Fed Chair Powell's Testimony Echoes Expected Path

The Pound (GBP) Is Relatively Steady After The Release Of The UK Jobs Data

Craig Erlam Craig Erlam 13.12.2022 12:28
Stock markets are tentatively higher in Asia while Europe and the US are poised for a similarly modest start to trade in what is the start of a hectic 72 hours in the markets. For so many weeks now, the December Fed decision has dominated the minds of traders, while sentiment in the markets has been dictated by how small changes in various data points influence the outcome of the meeting. When a meeting or event generates this much hype, it can often disappoint and be something of an anticlimax but I’m not sure that will be the case this time. It’s not so much the decision itself but what accompanies it that will set the stage for next year. For so long the question has been will the Fed hike into a recession. In that time it’s remained convinced that a soft landing can be achieved and the resilience of the economic data has supported that but unfortunately, the same resilience has also supported the case for more hikes and a higher terminal rate. Last month’s CPI release gave investors real hope that in much the same way that inflation’s acceleration higher this year blew expectations out of the water, the path lower may also not be as gradual as feared. Unfortunately, some of the data since then hasn’t been so favourable – most notably the wages component of the jobs report – so a lot is now hanging on today’s release. Another number below forecasts of around 7.3%, year on year, could get the excitement flowing once more. Jobs data keeps pressure on BoE The pound is relatively steady after the release of the UK jobs data that was in line with market expectations. Unemployment rose marginally to 3.7% while wages rose by 6.1%. While the data does indicate some additional slack in the labour market, the wages number – despite falling well short of inflation – will be of concern to the BoE and ensure its foot remains firmly on the brake in the short term. Steady despite FTX developments and Binance concerns Bitcoin continues to trade around $17,000, undeterred by reports of Sam Bankman-Fried’s arrest and possible charges for money laundering against Binance. Withdrawals on the platform highlight the uncertainty and shattered confidence in the space, a desperation not to be caught up in another FTX event. Even when the situation looks very different. But that’s what fear does, especially in a situation where confidence has been so severely damaged, as it has in recent weeks. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Kiwi Faces Depreciation Pressure: RBNZ Expected to Hold Rates Amidst Downward Momentum

Raising Policy Rate By The Fed, The ECB, The Bank Of England And The SNB Ahead, China Is Facing A Potential Surge In Cases As COVID Rules

Craig Erlam Craig Erlam 10.12.2022 11:47
US Two blockbuster events will have Wall Street on edge as the disinflation trade may have gotten ahead of itself. The last major piece of economic news before the Fed meets will be the November inflation report which is expected to show pricing pressures are decelerating.  The headline reading from a month ago is expected to rise 0.3%, a tick lower from the pace in October.  On a year-over-year basis, inflation is expected to decline from 7.7% to 7.3%. There is still a lot more work that needs to be done with bringing inflation down, but for now, it seems the trend is headed in the right direction.  The FOMC decision will be “Must See TV” as the Fed is expected to downshift to a half-point rate-hiking pace and yet still reiterate that they are not done raising rates.  The Fed will likely show that rates could rise anywhere from 4.75-5.25%, which will be very restrictive and should lead to a quicker cooling of the labor market.   EU  The ECB meeting next week promises to be a defining moment in the bloc’s fight against inflation. It was late to the party, very late in fact, but once it arrived it quickly started playing catch up culminating in a 75 basis point rate hike last week. The belief is that it won’t have to go as far as others in raising rates, with the terminal rate currently believed to be around 3%. That means the central bank is expected to already slow the pace of tightening on Thursday, with a 50 basis point hike, followed by another 100 over the first three meetings in the new year.  It’s not just the decision that investors will be focused on. The press conference and new macroeconomic projections will tell us everything we need to know about where the central bank sees itself in the tightening cycle and whether it is aligned with the markets. UK It’s all going on in the UK next week. The third week of the month brings a variety of major economic indicators including inflation, employment, retail sales, GDP and PMIs. This month has the added spice of the BoE meeting, the central bank that is arguably most stuck between a rock and a hard place among its peers. The economy is suffering and probably already in recession, inflation is 11.1% – although that is expected to drop slightly ahead of the meeting – and the cost-of-living crisis in squeezing those households least able to cope with it most. And yet the BoE is of the belief that the only policy response is to keep hiking rates. Markets expect another 50 basis points on Thursday and a further 100-125 in the first half of next year. The central bank has previously pushed back against market positioning and we may see language to the same effect in the statement, not to mention more dovish dissent.  Russia A week of no change is on the cards, it would appear. The CBR is expected to leave the Key Rate unchanged at 7.5% on Friday, the second consecutive hold after many months of hikes and then cuts following the invasion of Ukraine. On Wednesday, the third quarter GDP reading is also expected to be unchanged at -4% annualized.  South Africa The political environment appears to have cooled a little but President Ramaphosa isn’t necessarily safe yet. The focus will remain on this but there’s also inflation and retail sales data in the middle of the week that will be of interest. Turkey A few notable data releases next week although maybe not anything that will move the needle under the circumstances. Unemployment and industrial production stand out. Switzerland The SNB is expected to raise its policy rate by 50 basis points to 1% next week as it attempts to get a grip of inflation. It’s currently running at 3%, above its target of below 2% and the SNB has been clear in its determination to bring it down.  China China is facing a potential surge in cases as COVID rules are loosened. Following the protests over the zero-Covid policy in several Chinese cities last week, the Chinese government is pivoting its policy.  The elimination of key tenets of its virus elimination plan suggests they will try to learn to live with the virus. It will be a busy and not-so-good week of Chinese economic data. At some point this week we will see the release of aggregate financing, new yuan loans, and money supply data.  On Thursday, industrial production, retail sales, fixed assets, and the surveyed jobless rate will be released, with most expecting a softer print. The PBOC is also expected to hold its 1-year medium-term lending facility rate at 2.75% as volumes (CNY) could decline from 850 billion to 500 billion.     India All eyes will be on the November inflation report which could show a deceleration in pricing pressures coming closer to the upper boundaries of the RBI’s 2-6% target. Given the growth slowdown that is forming, inflation could continue its decline next quarter which should help finish the job of bringing it back to target.  India is also expected to see industrial production drop from 3.1% to -0.6%.   Australia & New Zealand Following the recent RBA rate decision, investors expect the bank to be nearing the end of its tightening cycle.  The focus for Australia now shifts to business conditions/confidence and the labor market.  The Australian economy is expected to add 15,000 jobs, a slower gain than the 32,000 seen in the prior month.   New Zealand’s GDP growth will quickly cool as the latest tourist boom eases. Third quarter GDP on a quarterly basis is expected to soften from 1.7% to 0.8%.   Japan Investors will have to be patient until the spring when the new leadership team has been created. The BOJ policy review could lead to the end of a decade-long ultra-loose monetary policy. The upcoming week is filled with economic data releases. The main highlights include the BOJ’s Tankan report which will show big manufacturers are struggling and non-manufacturing activity got a boost on easing covid rules. The November PPI report will show minimal pricing relief, while the trade deficit is expected to narrow.  The preliminary PMIs could show both manufacturing and service activity are weakening.     Singapore It could be mostly a quiet week for Singapore with the exception of the release of non-oil domestic exports.    Economic Calendar Saturday, Dec. 10 Economic Events The annual Bund Summit continues in Shanghai The International Coffee Organization conference takes place in Vietnam Sunday, Dec. 11 China FDI, Aggregate Financing, Money Supply, and New Yuan loans expected this week Monday, Dec. 12 Economic Data/Events India CPI, industrial production Japan PPI, machine tool orders Kenya GDP New Zealand net migration Mexico industrial production Turkey current account UK industrial production Brazil’s presidential election is expected to be certified Tuesday, Dec. 13 Economic Data/Events US November CPI M/M: 0.3%e v 0.4% prior; Y/Y: 7.3%e v 7.7% prior Australia consumer confidence, household spending Germany CPI, ZEW survey expectations Hong Kong industrial production, PPI Israel trade Italy industrial production Japan Bloomberg economic survey New Zealand home sales, food prices Philippines trade South Korea money supply Turkey industrial production UK jobless claims, unemployment The Bank of England releases its financial stability report US House Financial Services Committee holds an initial hearing on FTX’s collapse US President Joe Biden hosts the US-Africa Leaders Summit New Zealand’s government releases its half-year economic and fiscal update Wednesday, Dec. 14 Economic Data/Events FOMC Decision: Expected to raise the target range by 50bps to 4.25-4.50% Eurozone industrial production India trade, wholesale prices Japan machinery orders, industrial production Mexico international reserves New Zealand current account GDP ratio, BoP Russia GDP South Africa CPI, retail sales South Korea jobless rate Spain CPI UK CPI EIA crude oil inventory report The European Union and the Association of Southeast Asian Nations will celebrate the 45th anniversary of their partnership at a summit in Brussels US Senate Banking Committee holds a hearing on FTX’s collapse The US-Africa Leaders Summit continues with keynote remarks from Biden The Bank of Japan will announce the outright purchase amount of Japanese government securities RBA Gov Lowe delivers an address at the 2022 AusPayNet Annual Summit Thursday, Dec. 15 Economic Data/Events US Retail Sales, cross-border investment, business inventories, empire manufacturing, initial jobless claims, industrial production ECB Rate Decision: Expected to raise Main Refinancing rate by 50bps to 2.50% BOE Rate Decision: Expected to raise rates by 50bps to 3.50% Switzerland rate decision: Expected to raise rates by 50bps to 1.00% Norway rate decision: Expected to raise rates by 25bps to 2.75% Mexico rate decision: Expected to raise rates by 50bps to 10.50% Australia unemployment, consumer inflation expectation Canada existing home sales, housing starts China medium-term lending, property prices, retail sales, industrial production, surveyed jobless Eurozone new car registrations France CPI Japan tertiary index, trade New Zealand GDP Nigeria CPI Poland CPI Spain trade Friday, Dec. 16 Economic Data/Events US deadline for a new funding deal to avert a federal government shutdown US markets observe “Triple witching”, which is the quarterly event where the expiry of stock and index options occur with those of index futures US preliminary PMIs Australia preliminary PMI readings  European flash PMIs: Eurozone, Germany, UK, and France   Hong Kong jobless rate Italy CPI, trade Japan PMIs, department store sales New Zealand PMI Russia rate decision: Expected to keep rates steady at 7.50% Singapore trade Thailand foreign reserves, forward contracts, car sales Bank of Finland Governor Rehn speaks on the Nordic nation’s economy South Africa’s governing party begins its five-yearly elective conference in Johannesburg Sovereign Rating Updates Luxembourg (Moody’s) This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
A Better Situation In China May Prevent A Much Sharper Fall In Oil Prices

A Better Situation In China May Prevent A Much Sharper Fall In Oil Prices

Craig Erlam Craig Erlam 08.12.2022 14:36
A floor in oil prices? Oil prices remain under pressure as traders continue to price in a slower global economy next year and the prospect of deeper recessions. China’s efforts to reduce restrictions are probably preventing a much steeper decline in the oil price, although this won’t be without disruption as Covid spreads like wildfire throughout the country after such a long period of zero-Covid measures. Then there’s also the pledge by the White House to restock the SPR once oil falls to around $70 a barrel, only a couple of dollars below where it is now, which could in theory put even a temporary floor under the price considering how much it’s been drawn down this year. Gold awaiting the Fed meeting Gold appears to be steadying ahead of the inflation data from the US and, of course, the Fed meeting next week. The jobs report was a setback and one that could stand in the way of another break higher before the Fed meeting. The inflation data tomorrow and on Wednesday could give the yellow metal a boost but it’s the fear of entrenched inflation that could nudge the terminal rate higher. Investors will want to hear what the Fed has to say on the nasty wages surprise last week. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
The G20 And IMF Are Already Preparing Their Crypto Regulation

Oanda's Craig Erlam talks RBA, crypto, stocks and more

Craig Erlam Craig Erlam 06.12.2022 23:40
Stock markets are making small losses on Tuesday, while US futures are relatively unchanged ahead of the open. The recovery rally has lost momentum in recent sessions which is understandable after that jobs report. That’s not to say optimism can’t and won’t return but that wages component was a huge body blow. Investors are a little winded and it may just take a little time to get their breath back. The PPI data on Friday could offer a helping hand on that front but even then, it will be hard to ease the concern Fed policymakers will undoubtedly have about the pace of wage growth, consumer resilience and the still large savings buffer. None of this aligns with a swift and relatively pain-free return to 2% inflation. Read next: To Simplify The Organization, Pepsico Will Lay Off Thousands Of Workers At The Headquarters In The USA | FXMAG.COM RBA maintains flexible approach The key takeaway from the RBA meeting today was flexibility. There is no pre-set path and while policymakers expect to need to raise rates at upcoming meetings, the data will dictate if so and by how much. That doesn’t help investors gauge exactly what we can expect from the central bank but in such uncertain times, that makes a lot of sense. And you can see that reflected in the interest rate probabilities for the first quarter of next year. As it stands, no change or 25 basis points in February is a coin toss, while 3.35% in March (25bps above the current rate) is seen as being 50% likely with 25bps either side around 25% each. Clearly, the RBAs communication strategy is going to plan. Households feeling the squeeze this festive season It will come as a surprise to no one that UK consumer spending remains subdued, with BRC reporting a 4.1% annual increase. With inflation running at 11.1%, spending is falling well behind, as is the case with wages, which suggests people are buying less and being more selective with what they do this festive season. Again, what can you expect when the economy is probably already in recession amid a terrible cost-of-living crisis that hurts those worst off most. The road to recovery for the UK is going to be long and painful, it seems. Stabilising? The risk-reversal trade on Monday took the wind out of bitcoins sails, not that it would have taken much in the circumstances. It’s trading back around $17,000 where it has spent most of the last week, which the community will probably be relieved about. Anticipating what’s going to come next for cryptos feels incredibly difficult and dependent on the ongoing fallout from FTX. To reiterate what I’ve said recently, silence is bliss. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Wind out of the sails - MarketPulseMarketPulse
Crude Oil Upward Trend Remains Limited

G7, OPEC+ and Covid realties affects crude oil market outlook

Craig Erlam Craig Erlam 06.12.2022 23:11
The only guarantee for oil markets It’s been a volatile start to the week in oil markets, continuing in much the same way we ended last, with traders still working through the announcements from the G7 and OPEC+, as well as the latest Covid moves from China. In many ways, none of the above improve visibility in the crude oil space; they arguably actually make the outlook more uncertain. But the intial response to the above has seemingly been negative for crude prices, with the loosening of Chinese Covid curbs not enough to offset the $60 price cap and unchanged OPEC+ decision. The cap is probably viewed as a business as usual for now, with Russia reportedly selling below these levels already and improving its ability to get around the sanctions. Which means output remains broadly steady. Read next: Canada: A 25bp rate hike is highly expected. BoC terminal rate is expected to hit 4.5%| FXMAG.COM The move from OPEC+ was probably driven by the lack of visibility on China and Russia but as the group has warned in the past, should prices fall too far and the market become imbalanced, it won’t wait until the next scheduled meeting to respond. It seems that the only thing guaranteed in the oil market for now is volatility. Gold paring losses The dollar recovered strongly on Monday as trade became increasingly risk-averse, hitting gold and forcing it back below $1,800 where it briefly traded above. It’s attempting to pare those losses today, up around half a percent on the day but it may struggle in the short-term. It’s been an incredible recovery until now but Friday was a massive setback. We now have to wait for PPI on Friday for some good news, with Fed policymakers in the blackout period ahead of the final meeting of the year, next week. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil remains volatile, gold pares losses - MarketPulseMarketPulse
Equity Markets Rise, VIX at 12 Handle After ECB Rate Hike and US Economic Resilience

Final PMIs, Revised GDP, CPI And Retail Sales Ahead

Craig Erlam Craig Erlam 04.12.2022 10:16
EU There are a number of economic releases on the calendar next week but it’s almost entirely made up of tier two and three data. That includes final PMIs, revised GDP and retail sales.  The most notable events for the EU over the next week are speeches by ECB policymakers ahead of the last meeting of the year a week later – including President Lagarde on Monday and Thursday – and the final negotiations on the Russian oil price cap as part of a package of sanctions due to come into force on Monday. UK  Compared with the soap opera of the last few months, next week is looking pretty bland from a UK perspective. A couple of tier two and three releases are notable including the final services PMI, BRC retail sales monitor and consumer inflation expectations. I’m not convinced any will be particularly impactful, barring a truly shocking number. Russia The most notable economic release next week is the CPI on Friday which is seen moderating further to 12% from 12.6% in October, potentially allowing for further easing from the CBR a week later. South Africa Politics appears to be dominating the South African markets at the moment as efforts to impeach President Cyril Ramaphosa go into the weekend. The rand has seemingly been very sensitive to developments this week, with the prospect of a resignation appearing to trigger sharp sell-off’s in the currency and the country’s bonds. Under the circumstances, that could bring weekend risk for South African assets depending on how events progress over the coming days.  On the data front, next week brings GDP on Tuesday and manufacturing production on Thursday.  Turkey Ordinarily, especially these days, inflation releases are widely followed but that is less the case for a country and central bank that has such little interest in it. Official inflation is expected to ease slightly, but only to 84.65% from 85.51% in October, hardly something to celebrate. The central bank has indicated that its easing cycle will now pause at 9% so perhaps another reason to disregard the inflation data. Switzerland A quieter week after one of repeated disappointment on the economic data front. Whether that will be enough to push the SNB into a slower pace of tightening isn’t clear, although it has repeatedly stressed the threat of inflation and need to control it. The meeting on 15 December remains this months highlight while next week has only unemployment on Wednesday to offer. China The PBOC announced on 25 November its decision to cut the reserve requirement ratio for banks by 25 basis points, lowering the weighted average ratio for financial institutions to 7.8% and releasing about 500 billion yuan in long-term liquidity to prop up the faltering economy.   In response to the various property crises that have emerged in the real estate sector over the past year or so, i.e. debt defaults by real estate companies, mortgage suspensions leading to unfinished buildings, and real estate-related non-performing loan crises, the Chinese government has issued a new 16-point plan. Focus next week will be on the Caixin services PMI, trade data, CPI release and the protests. China’s strict zero-Covid measures are hammering growth and the public is clearly becoming increasingly frustrated. It will be a fine balance between managing protests and easing Covid-zero measures to support growth in a country not used to the former. India The RBI could potentially bring its tightening cycle to a close next Wednesday with a final 35 basis point hike, taking the repo rate to 6.25%. While the outlook remains cloudy given the global economic outlook, there is some reason to be optimistic. The tightening cycle may soon be at an end, the economy exited recession in the last quarter and Indian stock hit a record high this week, something of an outlier compared with its global peers. Australia & New Zealand Recent figures show that inflation (YoY) in Australia rose to 7.3% in the third quarter, compared to the target range of 2%-3%. The RBA began to weaken their hawkish stance in the past two months, raising rates by just 25 basis points each time to bring the official rate to 2.85%. The market is currently expecting a 25 basis point rate hike next week as well. Also worth noting is Australia’s third quarter GDP trade balance figures. New Zealand inflation (YoY) surged 7.2% in the third quarter, compared to the RBNZ’s inflation target range of 1%-3%. Previously, the RBNZ had been raising rates by 50 basis points but that changed last month as they ramped it up with a 75 basis point hike. The current official rate is now 4.25%. Japan The Japan Tokyo CPI rose by 3.8% year-on-year in November, up from 3.5% in October and the 3.6% expected. Ex-fresh food and energy it increased by 2.5%, up from 2.2% and above the 2.3% expected. Japan’s manufacturing PMI fell to 49.4 in November, the worst in two years, with both new export orders and overall new orders declining and falling below 50 for the fifth consecutive month, which alines with the unexpected 0.3% fall in Japanese GDP in the third quarter. Japan department store sales rose 11.4% year-on-year in October, down from 20.2% in September.    The poor PMI and retail sales data may have reinforced the BOJ’s view that domestic demand is weak and CPI inflation is largely input and cost driven and, therefore, unsustainable. The central bank will likely continue to pursue an accommodative monetary policy, especially in light of the current poor global economic outlook. Final GDP for the third quarter is in focus next week, with the quarterly figure expected to be negative meaning the economy may be in recession. Lots of other releases throughout the week but the majority, if not all, are tier two and three. Singapore Singapore’s CPI for October was 6.7% (YoY), below expectations of 7.1% and the 7.50% reading. GDP for the third quarter (YoY) was 4.1%, below expectations of 4.2% and 4.40% previously. On the quarter, it was 1.1% down from 1.50%. Next week the only release of note is retail sales on Monday. Economic Calendar Saturday, Dec. 3 Economic Events ECB President Lagarde chairs a roundtable on “The Global Dimensions of Policy Normalization” at a Bank of Thailand conference Sunday, Dec. 4 Economic Data/Events Thailand consumer confidence OPEC+ output virtual meeting ECB’s Nagel and Villeroy appear on German television Monday, Dec. 5 Economic Data/Events US factory orders, durable goods orders, ISM services index Eurozone Services PMI Singapore Services PMI Australia Services PMI, inflation gauge, job advertisements, inventories China Caixin services PMI India services PMI Eurozone retail sales Japan PMI New Zealand commodity prices Singapore retail sales Taiwan foreign reserves Turkey CPI European Union sanctions on Russian oil are expected to begin ECB President Lagarde gives a keynote speech on “Transition Towards a Greener Economy: Challenges and Solutions” ECB’s Villeroy speaks at a conference of French banking and finance supervisor ACPR in Paris ECB’s Makhlouf speaks in Dublin EU finance ministers meet in Brussels The US Business Roundtable publishes its CEO Economic Outlook survey Tuesday, Dec. 6 Economic Data/Events US Trade Thailand CPI RBA rate decision: Expected to raise Cash Rate Target by 25bps to 3.10% Australia BoP, net exports of GDP Germany factory orders, Services PMI Japan household spending Mexico international reserves South Africa GDP Georgia’s US Senate runoff The first-ever EU-Western Balkans summit is held in Albania Goldman Sachs Financial Services conference Wednesday, Dec. 7 Economic Data/Events US Trade MBA mortgage applications China reserves, Trade Australia GDP, reserves Eurozone GDP Canada central bank (BOC) rate decision: Expected to raise rates by 25bps to 4.00% India central bank (RBI) rate decision: Expected to raise rates by 25bps to 6.15% Poland central bank rate decision:  Expected to keep rates steady at 6.75% Singapore reserves Germany industrial production Japan leading index BOJ’s Toyoaki Nakamura speaks in Nagano EIA crude oil inventory report Foreign policy forum is held in Moscow with Russian Foreign Minister Lavrov speaks at a foreign policy forum in Moscow. Thursday, Dec. 8 Economic Data/Events US initial jobless claims Australia trade Indonesia consumer confidence Japan GDP, BoP Mexico CPI New Zealand heavy traffic index South Africa current account, manufacturing production ECB President Lagarde speaks at the European Systemic Risk Board’s sixth annual conference SNB’s Maechler participates in a panel discussion ECB’s Villeroy speaks at the Toulouse School of Economics European Defence Agency holds its annual conference in Brussels Friday, Dec. 9 Economic Data/Events US PPI, wholesale inventories, University of Michigan consumer sentiment China CPI Russia CPI  China PPI, aggregate financing, money supply, new yuan loans Japan M2 New Zealand card spending, manufacturing activity Spain industrial production Thailand foreign reserves, forward contracts Portuguese PM Costa, Spain PM Sanchez, and French President Macron attend a meeting in Spain Sovereign Rating Updates United Kingdom (Fitch) EFSF (Moody’s) ESM (Moody’s) Netherlands (Moody’s) Saudi Arabia (Moody’s) This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
The Commodities: In The Near Term The Oil Market Remains Relatively Well Supplied

Russia Already Sells Oil To Its Trading Partners At Significantly Discounted Levels

Craig Erlam Craig Erlam 02.12.2022 13:23
Steady going into a highly uncertain weekend Oil prices are quite steady on approach to the weekend. There remains considerable uncertainty around the action OPEC+ will take when it meets on Sunday, although there’s every chance that the meeting will be delayed or that discussions take longer than normal, as a result of the price cap being finalized by the EU. A cap of around $60 is now reportedly close to being signed off, the impact of which is still unclear as Russia already sells to its trading partners at significantly discounted levels. The Kremlin has threatened countries that abide by the cap with being cut off which will leave some in a very uncomfortable position; choosing between losing access to cheap Russian crude or facing G7 sanctions. As ever, the devil will be in the detail. But one thing is clear, crude carries significantly more weekend risk and could be extremely volatile on the open next week. Read next: If ECB policymakers should make a decision between fighting inflation and avoiding recession, they will likely choose fighting inflation says Ipek Ozkardeskaya| FXMAG.COM Rally pauses ahead of the jobs data Gold is basically unchanged on the day, with traders clearly having an eye on the US jobs report before deciding what to do next. Given the data of recent weeks, Powell’s comments on Wednesday, and the recent trend in the yellow metal, gold bulls may have good reason to be optimistic, especially if handed a remotely favourable – or not overly hot – jobs report. Of course, when the narrative is set this way going into a release, it always feels there’s scope for a nasty shock and unusually large negative reaction. What is interesting is that gold has breached $1,780 which had been a solid area of resistance recently having been a major level of support in the first half of the year. It broke through there in the aftermath of Powell’s comments before settling around $1,800. A break above here following today’s jobs report could put gold in a very bullish position. Can bitcoin continue its relief rally? Bitcoin has benefited from the improved risk appetite in the broader financial markets this week, allowing for a minor relief rally back toward $17,000. This is only the upper end of its range from the last few weeks but a period of not making new lows in response to further disturbing headlines relating to the FTX collapse will always be welcome. A period of consolidation may be the best the crypto community can hope for at this point, although given where it’s trading now, it will be interesting to see how it responds to a weaker jobs report, should it materialise. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Turbulent Times Ahead: Poland's Central Bank Signals Easing Measures

An Encouraging NFP Report Could See Markets End The Week On A High

Craig Erlam Craig Erlam 02.12.2022 12:27
A tentative start to trading on Friday as we wrap up another action-packed week with the US jobs report in a couple of hours. Jerome Powell’s comments on Wednesday made clear the direction of travel that Fed policymakers are keen to undertake but ultimately, the data must allow for it. So far, that has very much happened with inflation falling more than anticipated in October, the manufacturing sector softening, supply chains improving and labour market performing less well. US nonfarm payrolls expected to fall to 200K Today’s jobs report will offer further insight into whether this last point continues to be the case. Jobs growth around 200,000 would continue the trend since earlier this year and, alongside rising jobless claims, point to a cooling in the labour market. But it’s the wages that the Fed cares most about. A moderation in earnings growth is essential to get policymakers on board and perhaps even bring down the terminal rate over the coming months. It’s not just about putting inflation on a better trajectory, it’s about ensuring it can return to target on a sustainable basis and that requires earnings to rise at a more modest rate to ensure inflation doesn’t become entrenched. Read next: If ECB policymakers should make a decision between fighting inflation and avoiding recession, they will likely choose fighting inflation says Ipek Ozkardeskaya| FXMAG.COM Considering the data we’ve seen since the last meeting, it would take something truly shocking for the Fed to change course now, I feel. And perhaps even that would need to be backed up by a nasty shock from the inflation data a day before they announce their next rate decision. Of course, at this point, the terminal rate is what matters most so an encouraging report today would be very welcomed and could see markets end the week on a high. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Gold Is Expected The Further Upside Movement

Powell’s Comments Had Positive Impact On Gold's Bulls

Craig Erlam Craig Erlam 01.12.2022 13:10
A huge few days for oil markets Oil prices have rebounded strongly over the last few days – up around 10% from the lows – buoyed by the prospect of a lower price cap on Russian crude, another large production cut from OPEC+ this weekend, and China’s evolving Covid stance. There remains considerable uncertainty surrounding all of the above though which will likely ensure prices remain volatile going into the weekend. That could carry more risk than normal if the OPEC+ meeting does go ahead as planned on Sunday and the EU hasn’t agreed to the price cap level by the close of play Friday. The range of possibilities on these two things alone is huge which will make rumours and speculation over the coming day or two all the more impactful. Gold testing range highs Gold bulls were particularly happy with Powell’s comments on Wednesday with the yellow metal rallying strongly to trade at the upper end of its recent range. It faces strong resistance around $1,780 though which was a significant level of support in the first half of the year. With so much data to come over the next day or so, it may not prove particularly resilient if traders are given further hope that rates will rise more slowly and peak lower. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
FX Daily: Upbeat China PMIs lift the mood

The Signals Coming From China Look Very Positive

Craig Erlam Craig Erlam 01.12.2022 13:04
We’re seeing green flashing across the board on Thursday, with sentiment buoyed by positive signals on Fed rate hikes and China’s Covid response. While it could be argued that Jerome Powell’s comments on Wednesday were relatively balanced – slower tightening now but rates high for longer – the last year has proven that anticipating the path of inflation for even a short period ahead is incredibly difficult. Knowing what the Fed intends to do next is far more valuable than what it thinks it may do 6-12 months down the line. And anything that is perceived to reduce to possibility of an interest rate recession is going to be a positive for equity markets. The Fed has every opportunity to tighten more in the months ahead if the data doesn’t play ball. What’s far more difficult is undoing the damage caused by moving too fast now with little to no visibility on how impactful past tightening has been. Positive signals The signals coming from China also look very positive. While we shouldn’t expect a dramatic shift in policy from the leadership, particularly before the March Congress, any modest softening in its Covid-zero policy will and should be welcomed. The approach has been extremely damaging to growth and confidence and the protests highlight how public opinion towards it is changing. We shouldn’t be naive to the fact that a move away from the policy won’t be easy and there’ll be plenty of setbacks. But it’s certainly a step in the right direction that, along with the measures announced to revive the property market, could put the economy on a much better path. Some relief for cryptos The risk relief rally is coming at just the right time for bitcoin, helping it to recover from the lows to trade around $17,000. This is around the highs of the last few weeks since it settled after its latest plunge. Whether it will be enough to revive interest in the cryptocurrency, I’m not sure. The FTX fallout is continuing to weigh heavily on the space and the prospect of more contagion or scandals is hard to ignore. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Volatility may be still there as crude is being impacted by loosening COVID restrictions in China, Russian-Ukrainian war and more

EU works on a price cap on Russian oil. According to Craig Erlam (Oanda) OPEC+ think of a production cut

Craig Erlam Craig Erlam 30.11.2022 18:27
Immense uncertainty It was always shaping up to be a volatile week in oil markets and it’s certainly living up to that. Brent and WTI are up more than 2% on Wednesday as the EU continues to work towards an agreeable price cap on Russian crude and OPEC+ consider another large production cut this weekend. Both carry significant uncertainty and a wide range of outcomes that should ensure oil remains volatile in the coming days, especially if both go into the weekend still up in the air. When OPEC+ can’t even commit to meeting in person, you know nothing is straightforward. Read next: Euro feels a bit better after the release of European inflation data| FXMAG.COM Despite rumours circulating of another possible two million barrel cut, it wouldn’t come as a surprise for OPEC+ to hold off on this occasion and wait until everything becomes clearer on the price cap and China. Nor would it be alarming for the alliance to wait a couple of extra days for details on the cap which could be more easily factored into its forecast and decision. This may be why they’ve opted for a virtual meeting as it offers more flexibility. Rallying ahead of Powell’s appearance Gold is benefiting from improved risk appetite as the dollar softens and US yields edge lower. It remains very much within the same range though, between $1730 support and $1,780 resistance as we await some major economic reports and, of course, the speech from Jerome Powell. Whether the Fed Chair will be so bold as to say something that could have a material impact on the yellow metal when there is some major data due over the next couple of weeks, I’m not so sure. But there’s certainly a risk he will and a break of either of these levels could be significant. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil rallies on China's opening, gold's great month - MarketPulseMarketPulse
WTI Oil Shows Signs of Short-Term Uptrend Amid Medium-Term Uptrend Phase

Euro feels a bit better after the release of European inflation data

Craig Erlam Craig Erlam 30.11.2022 18:12
Equity markets are off to a positive start on Wednesday as we await a slew of big economic releases and a speech from Fed Chair Jerome Powell. It’s already been a very headline-driven week, particularly where oil is concerned, while Covid restrictions and protests in China have very much set the tone in Asia, and to a lesser extent elsewhere. The headwinds facing China are intensifying and the protests of recent days could make it even more challenging to navigate. That said, what we’ve heard so far has been promising and potentially indicative of a plan that was already in the works. But we shouldn’t kid ourselves. In the event that China commits 100% to its vaccine drive, especially among the elderly and vulnerable, the move away from zero Covid will take time as the virus spreads rapidly throughout the country necessitating swift action to control the spread. Even the best-case scenario is one of significant turbulence for the world’s second-largest economy next year. Chinese PMIs highlight the challenges ahead The PMIs highlight just how difficult the situation is in China, with the zero-Covid stance combined with the property market crackdown severely impacting domestic sentiment, while a slowing global economy weighs on external demand. With both the manufacturing and non-manufacturing PMIs falling deeper into contraction territory than anticipated, the country really has a mountain to climb in order to achieve decent, consistent growth once more. Some rare good news on inflation The euro is a little higher on the day against the dollar after CPI data for the currency bloc slowed to 10%, far below market expectations of around 10.4%. While still extraordinarily high, it does offer hope that inflation may have peaked and the deceleration could be faster than anticipated, in much the same way it was on the way up. The single currency was choppy in the aftermath of the release, while markets now view the possibility of a 50 or 75 basis points hike in December as a coin flip after previously heavily favouring the latter. That could be a positive for the euro if it means less of an economic slump, with the bloc already likely heading for recession. Rising for now Bitcoin is making steady gains in the session, up more than 2% and eyeing a second positive session. It did run into resistance around $1,700 again, the upper end of its range over the last couple of weeks. While we could see a bigger correction to the upside, especially if we’re treated to some dovish commentary from Powell, I’m not convinced it would be anything more than that. The industry has been shaken by the FTX collapse and as a result, bitcoin could remain vulnerable to further plunges in the price. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Cautiously optimistic - MarketPulseMarketPulse
A Further Rise In Gold Is Very Likely, The Dovish Expectations Are Feeding Well Into The Bond Markets

Oanda's Kenny Fisher predicts gold to fluctuate in the following days

Craig Erlam Craig Erlam 29.11.2022 22:22
So much uncertainty in the oil markets It’s already been a very volatile week in oil markets and that’s unlikely to change over the coming days given the immense uncertainty over the Russian price cap, China’s Covid stance, and the OPEC+ meeting. The market is being led by speculation and leaks, of which there have been plenty and will likely be much more, which makes for very lively conditions given the wide array of possible outcomes. And as you’d expect, all of the above are linked to varying degrees. A record surge in Covid cases is leading to tightening restrictions weighing on activity, spurring protests, and forcing a rethink of the country’s zero-Covid policy. They’ve also weighed heavily on prices with China being the world’s second-largest economy which will impact the demand forecasts from OPEC+ unless the group opts to hold on and await more clear signals and data. Also influencing the group’s analysis will be Russian sanctions, most notably the price cap which is yet to be fully agreed upon. The latest rumours suggest the cap could be agreed to as low as $62 which is much lower than the $65-70 previously leaked and could therefore have a bigger impact on Russian output. And of course, Russia itself is a key member of the OPEC+ alliance, just to complicate matters further and could throw its weight around in those discussions and make an agreement harder and more uncertain. Oh and the EU does have a tendency to make full use of deadlines, with the next sanctions due to come into force the day after OPEC+ meets, which is of course on a Sunday for some reason. Not that the alliance always comes to quick agreements and on this occasion, you could easily forgive them for not. Needless to say, this is certainly a recipe for volatile trading conditions. Volatile and awaiting key US data Gold is rallying again on Tuesday on the back of a softer dollar but has only largely wiped out Monday’s losses leaving it basically net even on the week. I expect to see plenty more volatility in the coming days given the amount of US economic data that are being released including inflation, GDP, and the jobs report. That sets us up nicely as we move into the final month of the year with only a couple of weeks to go until the hotly anticipated CPI inflation report and Fed meeting. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil showing volatility, gold rallies - MarketPulseMarketPulse
The Bitcoin Price Movement Is In The Bullish Channel

Wow! Bitcoin trades at ca. 75% lower level than... a year ago...

Craig Erlam Craig Erlam 29.11.2022 22:03
Investors in Europe remain in a cautious mood on Tuesday as they await a huge influx of economic data in the coming days, while US futures are also pointing to modest gains ahead of the open. Stocks in China soared after a difficult start to the week, on the hope that the country’s zero-Covid policy stance may be relaxed further. That had been the expectation in recent weeks, with a modest softening recently seen being followed by a more substantial shift in the spring. But protests in recent days on the back of record Covid cases and tighter restrictions could have gone either way and that made investors extremely anxious on Monday. While I can imagine the path from zero-Covid to zero restrictions will be long and full of potholes and hurdles, the response to the unrest has appeared more promising than feared. It may well be that the leadership had already been gauging the public mood on restrictions and had, as has been rumoured, already been planning its exit strategy which recent comments align with. Either way, it appears zero-Covid has reached a crossroads and the direction of travel now will determine investor appetite toward Chinese stocks going into 2023. Today’s rebound suggests there’s some optimism. Choppy and vulnerable Bitcoin has also reversed its Monday losses, rallying 1.5% so far today. The cryptocurrency has remained volatile in the aftermath of another plunge following the FTX collapse and now trades more than 75% from its highs just over a year ago. Even now it remains vulnerable as we continue to discover what the full contagion effect will be and what else will be uncovered. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. A promising response to protests - MarketPulseMarketPulse
Effects of the FTX crash are here to stay. Traders are said to stay vigilant

Effects of the FTX crash are here to stay. Traders are said to stay vigilant

Craig Erlam Craig Erlam 28.11.2022 19:20
It’s been a pretty quiet start to the trading week, with the negative session in Asia continuing into Europe and the US ahead of the open on Wall Street. Chinese stocks have been hit particularly hard amid unrest over Covid restrictions. The protests really do highlight how increasingly frustrated the public is becoming with the leadership’s zero-Covid policy, even if it has been modestly relaxed recently. Record cases across multiple cities are putting the policy to the test and the unrest highlights the enormity of the challenge facing President Xi Jinping and his commitment to zero-Covid. The combination of these creates huge uncertainty, both in terms of how the protests are handled and what the whole experience means for the future of the policy and the economy. It comes at a time when Chinese stocks had been boosted by the prospect of the policy being relaxed, with more easing expected in the spring. So much now is uncertain which may continue to weigh on sentiment until we get a better idea of the direction of travel. Despite how much time has passed and what other countries have achieved, it would appear China is not prepared for a significant loosening of restrictions which could mean that frustration we’re seeing continues to bubble over. The rest of the week promises to be extremely lively with the US returning from the Thanksgiving holiday and the calendar packed with big-hitting economic data from around the globe. That includes what is normally considered the biggest of the lot – maybe now second behind inflation – the US jobs report to wrap up the week. Buckle up, it could be a bumpy ride. Cryptos on the ropes Bitcoin remains under pressure despite recovering slightly last week. Cryptos are still suffering the fallout from the FTX collapse and the still unknown full extent of the contagion. Not to mention the fact that traders will now be hyper-alert to similar vulnerabilities elsewhere in the crypto world. The fact that risk appetite is weak today also won’t be helping and bitcoin is off around 2% as a result and not far from $16,000. While it’s seemingly trying to form a base around $15,500-17,000, it may be easier said than done in this environment. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Stock slide amid China unrest - MarketPulseMarketPulse
The Special Edition Of The Saxo Market Call Podcast: The Wild Year Of 2022 For Commodities And What May Be In Store In 2023

Commodities: Crude oil suffers from situation in China

Craig Erlam Craig Erlam 28.11.2022 19:08
China and the Russian price cap weigh on crude Events in China aren’t just hitting local equity markets, oil prices are also crumbling under the pressure of record Covid cases and huge economic uncertainty. The country’s commitment to zero-Covid has seriously damaged growth in the world’s second-largest economy and by extension, crude demand. This has helped to soften the impact of the Ukraine war on energy markets to some extent and we could be seeing it weigh on oil prices once more. Read next: Meta fined by Irish regulators amidst privacy concerns| FXMAG.COM Discussions are also continuing on the details of the Russian oil price cap. Most notably, where it should be set. It’s looking increasingly likely to be done at a level that doesn’t particularly hinder Russia’s ability to sell crude – which is contributing to the drop in oil prices – or put its buyers in an uncomfortable position. The outcome will likely factor in how OPEC+ responds this weekend and I expect the rumour mill will therefore be busy as the week progresses, which in turn could trigger a lot of oil price volatility over the course of the week. A volatile period ahead for gold? Gold has performed well again over the last week but now appears to be settling ahead of a busy week of economic data. It’s now sitting in the middle of a potential new range between $1,780 resistance – a major level of support in the first half of the year – and $1,730 support – a big resistance level in September and October turned support last week. With so much data coming from the US this week including inflation, GDP, and the jobs report, we could see one of these give way in the coming days, setting us up nicely for the Fed meeting in two weeks. The latest inflation data will also be released a little over 24 hours before that interest rate decision so it could be a volatile couple of weeks for the yellow metal. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil under pressure, gold settles down - MarketPulseMarketPulse
Equity Markets Rise, VIX at 12 Handle After ECB Rate Hike and US Economic Resilience

There’s A Whole Host Of Lot Of Data Next Week

Craig Erlam Craig Erlam 26.11.2022 16:09
US Wall Street returns after the Thanksgiving holiday and what a week we have in store. The jobs report on Friday is the obvious highlight, with Fed policymakers keen to see further signs of inflationary pressures easing and less tightness in the labour market. There’s a whole host of other data due next week as well including the core PCE price index – the Fed’s preferred inflation measure – GDP, income, spending, jobless claims, and more. We’ll also hear from Fed policymakers throughout the week including Chair Jerome Powell on Wednesday. EU An action-packed week for Europe, with a plethora of key economic data and ECB policymaker appearances. In the run-up to the ECB rate decision on 15 December, that commentary is going to provide crucial insight into which way the committee is leaning, with another 75 basis points currently heavily priced in. With that in mind, the flash CPI release stands out as the one to watch on Wednesday. UK The UK has repaired some of its tarnished reputation in recent weeks but the economy is still likely in recession and it won’t be an easy road back. There isn’t much data next week to support or refute that but there are appearances from various BoE policymakers that will be of interest. Russia A few economic numbers of note next week include GDP, retail sales, unemployment, real wages, and the manufacturing PMI. Unemployment is expected to tick higher again to 4.1% from its September low of 3.8%. South Africa The SARB continued its aggressive tightening cycle in November with another 75 basis point hike, taking the repo rate to 7%. The central bank expects inflation to remain above its 3-6% target range until the second quarter of next year and only return to the mid-point in the second quarter of 2024. Next week brings the release of unemployment data on Tuesday. Turkey As expected, the CBRT cut rates by 1.5% in November and ended its easing cycle, leaving the policy rate at 9%. Next week its quarterly GDP and the manufacturing PMI on offer as traders look for clues as to the cost of the monetary policy experiment on the economy. Switzerland A data-heavy week that includes the PMI survey and inflation on Thursday – which the SNB has repeatedly stressed is too high – GDP on Tuesday, and KOF and ZEW surveys on Wednesday.  China Official Chinese manufacturing and non-manufacturing PMIs for November will be released on Wednesday as well as the Caixin Manufacturing PMI.  As these figures have been fluctuating above and below the 50-the threshold separating contraction from expansion for the past few months, they suggest that the Chinese economy is still hovering between contraction and expansion. However, the long-term positive fundamentals of the Chinese economy remain unchanged. Industrial profits figures are also released over the weekend. India A number of interesting economic releases next week including GDP on Wednesday and the manufacturing PMI on Thursday. Australia & New Zealand Inflation in Australia and New Zealand remains high, and the new Governor of the Reserve Bank of Australia, Philip Lowe, has said in a speech that he is determined to ensure that the current high inflation is temporary, while the RBA is expected to raise interest rates further in the future.  The RBNZ’s 23 November central bank rate meeting hawkishly raised rates by 75 basis points to 4.25% to continue the fight against inflation, and the market now expects the RBNZ’s terminal rate may rise to 4.75%.    Next week, the focus will be on Australian retail sales and CPI for October on Monday and the speech by the new RBA Governor Philip Lowe on Wednesday. Other data released throughout the week will also be of interest. Japan Coming up next week is data on unemployment, retail sales, and industrial production for October as well as the latest manufacturing PMI for November.  Singapore At the 29th APEC Economic Leaders’ Meeting on 17 November, President Xi Jinping met with Singaporean Prime Minister Lee Hsien Loong in Bangkok. The China-Singapore relationship is forward-looking, strategic, and exemplary, Xi said. Lee Hsien Loong said Singapore sees China’s development as positive, wishes the GDI well, and will explore ways to participate. Both countries expressed their willingness to continue to deepen their cooperative relationship and work together to promote new progress in the all-around partnership between the two countries as they move with the times. According to Caixin Global, on 22 November, Singapore police said it was investigating Binance. This comes after the Monetary Authority of Singapore noted that Binance was being investigated as it may have violated the Payment Services Act. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Franc Records 11th Consecutive Daily Decline Against the Dollar as US Economic Concerns Mount

More effects of FTX crash could show up

Craig Erlam Craig Erlam 25.11.2022 16:32
We’re seeing subdued trading at the end of the week, with the absence of the US leaving markets lacking any notable direction. This isn’t really unusual and at the end of the week too, it really makes sense. Barring a flurry of big headlines from elsewhere, we could now see equity markets just drift into the weekend with investors already having an eye on next week. Read next: The ECB Members Remained Concerned About Inflation Becoming Entrenched| FXMAG.COM Perhaps today people are trading in their charts for some Black Friday deals, the outcome of which will certainly be on everyone’s radar. Going into the holiday season, we’ll get an early idea of the state of play for household spending in the midst of a cost-of-living crisis. Of course, it will naturally be difficult to distinguish how much of that bargain hunting will prove to be holiday season shopping brought forward in an attempt to get the “best deals”. But if Black Friday shopping takes a hit this year, it won’t bode well for the rest of the holiday period which is so important to retailers. PBOC cuts the RRR The PBOC cut the RRR by 25 basis points this morning in a bid to support the economy which is once more going through a difficult period. How effective that will prove to be when cities are seeing restrictions and effective lockdowns reimposed is hard to say. But combined with other measures to boost the property market and ease Covid curbs, the cut could be supportive over the medium term when growth remains highly uncertain. Bitcoin still extremely vulnerable Bitcoin is edging lower again today after recording three days of gains. That dragged it off the lows but didn’t really carry it that far from them. It’s trying to stabilize around the $15,500-$17,000 region and weather the storm but I’m not sure it will be that easy. There’s likely more to come from the FTX collapse and the contagion effects, not to mention potentially other scandals that could be uncovered. This may continue to make crypto traders very nervous and leave the foundations supporting price extremely shaky. ​ For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Black Friday lull - MarketPulseMarketPulse
The Commodities Feed: OPEC+ meeting ahead

Discussions Around The Price Cap On Russian Crude | Gold Is Marginally Lower

Craig Erlam Craig Erlam 25.11.2022 14:28
Oil pares losses as price cap talks continue Oil prices are higher on Friday, continuing to pare losses after being hit heavily in recent weeks by surging Covid cases in China and discussions around the price cap on Russian crude. Lockdowns in all but name appear to be popping up in major Chinese cities in an attempt to get a grip on record cases which will weigh heavily on economic activity once more and in turn demand. It’s now a question of how long they last but clearly investors’ enthusiasm toward the relaxation of Covid restrictions was a bit premature. Talks will continue on a price cap but it seems it won’t be as strict as first thought, to the point that it may be borderline pointless. That’s hit oil prices again this week as the threat to Russian output from a $70 cap, for example, is minimal given it’s selling around those levels already. Gold establishing a range ahead of key data releases Gold is marginally lower today but has been quite choppy throughout the session, and broadly lacked any real direction. We could be seeing a little profit-taking as the dollar edges higher following the relief rally that followed the Fed minutes. The yellow metal is trading roughly in the middle of what may be a newly established range between $1,730 and $1,780, potentially now awaiting the next catalyst ahead of the December Fed meeting. With another jobs and inflation report still to come, a lot could change between now and when the FOMC next meets. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
The Bitcoin Price Movement Is In The Bullish Channel

Chinese stocks decreased as COVID situation worsens. Bitcoin struggles

Craig Erlam Craig Erlam 24.11.2022 16:25
Equity markets are making steady gains in Europe and Asia on Thursday, while Wall Street is closed for the Thanksgiving bank holiday. The day got off to a decent start as investors on this side of the pond played catch-up following the late rally in the US. All considered it hasn’t been the most lively of weeks but the FOMC minutes did ensure investors went into the Thanksgiving break on a bit of a high. A dovish boost before Thanksgiving The most notable takeaway from the minutes – which were never going to be game-changing – were the discrete references to the difference in support for slowing the pace of tightening now and those raising their estimates of the terminal rate. Clearly, the latter has much less support which means a lower rate hike is on the cards in December – probably 50 basis points – while a higher terminal rate is only a possibility and will depend on the data. While not ideal for investors, the net effect is undoubtedly less hawkish and that’s at least partly what drove that late rally. Read next: G7 work on a Russian oil price cap, gold has gained as dovish Fed signals spread through the market| FXMAG.COM Destructive lockdowns again for China? Record Covid cases in China, more testing and restrictions, and even possible lockdowns went some way towards undermining that positivity coming from the US in Asia on Thursday. Stocks in China slipped while Hong Kong underperformed its regional peers as investors weighed up the prospect of more growth-destructive lockdowns and uncertainty for the world’s second-largest economy. This comes as authorities sought to slightly ease the burden of Covid restrictions and support the property market, both of which are difficult if record case numbers force people indoors. Another disappointing manufacturing survey The plunge in Japan’s manufacturing PMI to a two-year low below 50 – which separates growth from contraction – perfectly highlights how challenging the current environment is around the world. Higher input costs combined with lower domestic and external demand is hammering the manufacturing sector and is likely to continue until inflation abates and growth bounces back. Navigating blind The Bank of Korea has become the latest central bank to jump aboard the “slower for longer” train, raising rates by 25 basis points while leaving the door wide open to further rates hikes. The decision to join the RBA and BoC, with the Fed likely not far behind, comes as the economic headwinds mount. The problem many now face is a result of acting late and aggressively. As rate moves come with a lag, policymakers are being forced to make decisions without full visibility of the impact recent moves have had. They must therefore decide when to slow the pace of tightening in order to avoid unnecessary economic hardship and deflation while inflation is still very high. It may work out in the end but there’s a big risk on both sides that it won’t. CBRT brings an end to its easing cycle I’m not sure that particular analogy works when describing the Turkish central bank. In this case, it’s more like driving a car in reverse while looking forwards in the hope you somehow make it home ok. The CBRT cut interest rates by another 150 basis points today, taking it back to 9% while declaring the end of its easing cycle. That comes as official inflation sits at 85.5% in October, despite various efforts to control the currency movements. A dead cat bounce? Bitcoin is in the green for a third day, albeit only just, as it continues to try and stabilize in the aftermath of the FTX collapse. The event was unsurprisingly a huge setback for the whole industry, both from a contagion perspective but also a reputational one. Traders are correctly now asking themselves who else is exposed, how big will the ripple effects be, and where else this kind of activity is taking place. In such an unregulated world, these fears are very real and could undermine faith in the crypto space for some time, further weighing on prices in the process. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. A "dovish" boost - MarketPulseMarketPulse
A Better Situation In China May Prevent A Much Sharper Fall In Oil Prices

G7 work on a Russian oil price cap, gold has gained as dovish Fed signals spread through the market

Craig Erlam Craig Erlam 24.11.2022 16:13
Oil tumbles amid price cap talks and stricter Chinese restrictions Oil prices are a little lower again on Thursday as the G7 continues to work towards a price cap on Russian oil. Brent crude fell heavily on Wednesday amid reports that the group could settle on a level around $65 which is roughly where they currently sell it at, and with a sizeable profit. That would blunt the effectiveness of the cap and ensure we don’t see any shortages in supply. But it may be what is necessary to keep all stakeholders on board, with some countries concerned about the domestic implications of a stricter cap. Read next: EUR/USD: The Eurozone Readings Were Just Bad| FXMAG.COM The discussions will continue but these reports have weighed on the price of oil at a time when restrictions, maybe even lockdowns, in China threaten demand in the world’s second-largest economy. And amid a report – since denied – that OPEC+ could boost output next week. I’m not sure what the motive would be at this point but perhaps it’s heavily conditional on the outcome of the G7 talks. Gold buoyed by “dovish pivot” Gold bulls very much welcomed the FOMC minutes on Wednesday and we’re continuing to see the price benefit today. The yellow metal has massively benefited from the “dovish pivot” last month if we can even call it that, as policymakers appeared to support a slower pace of tightening from next month, which was then backed up by the minutes. It remains within a range though, with $1,730 providing support below – around the September and October highs – and $1,780 resistance above – a key area of support in the first half of the year. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil prices slip, gold higher after FOMC - MarketPulseMarketPulse
FXStreet’s Dhwani Mehta Opinion About Gold Movements

Whether Gold Can Build On Its Recovery Rally This Month

Craig Erlam Craig Erlam 23.11.2022 12:11
Is an output hike really feasible? Oil prices are marginally higher on Wednesday, continuing the recovery from a sell-off that was triggered by speculation that OPEC+ could consider a significant hike in output when it meets early next month. The move would certainly come as a surprise considering its two million barrel cut last month, the deteriorating global economic outlook, Chinese Covid restrictions, and the uncertainty around the Russian oil price cap. Of course, the cap may be part of the reason for the discussions, if they have in fact taken place. Without the backing of Russia, that would create a whole new dynamic within the group, even threaten the “+” element of it which would be a big shock. Those rumours have been strongly denied though which is why the price has recovered its losses. The only issue now is the economy, China, and what impact the G7 decision will have on Russian output. I don’t think volatility is going anywhere. Can the FOMC minutes be the catalyst for a breakout? Gold appears to have established a range over the last week or so, with the upper end falling around $1,780 – a major area of support in the first half of the year – and the lower around $1,730 – a major barrier of resistance in September and October. The FOMC minutes may determine which of these levels gives way first and whether gold can build on its recovery rally this month after such a long period of declines. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Swiss Inflation Falls Below Expectations; US Markets Closed, Fed Minutes Awaited

The RBNZ Accelerated Its Pace Of Tightening This Morning

Craig Erlam Craig Erlam 23.11.2022 12:09
Equity markets appear to be treading water on Wednesday as we await the latest batch of FOMC minutes later in the day. Asia played a bit of catchup overnight after Europe and the US posted decent gains on Tuesday that built throughout the session. But futures on both sides of the pond are barely changed from yesterday’s close which may change as the day progresses, of course. I’m not sure whether it’s the FOMC minutes release, the Thanksgiving bank holiday, or just the lack of major catalysts that are driving the inactivity in futures markets. There’s also a huge amount of data on the calendar today which could get things moving including flash PMIs, as well as US durable goods, home sales, consumer sentiment, and jobless claims. That should keep us entertained throughout the day. The minutes are obviously the standout here, although as always I do wonder what exactly we’re going to learn from them that isn’t already evident from the decision, statement, press conference, and flurry of central bank commentary since the event took place. Often it’s not the substance of the minutes but the subtle changes that investors get carried away with. The dovish pivot that may or may not have actually been has been the focus in recent weeks, with Fed commentary since not exactly clearing anything up. Investors may be on the hunt for clues that they’ve acted prematurely, or that there’s actually more support for such a slowdown in tightening and less for a higher terminal rate than they previously thought. Either way, the potential for a big response may be what’s creating this paralysis in the markets this morning. And as can often be the case, it may all be for nothing if the minutes do in fact tell us nothing we already don’t know, leaving us none-the-wiser about the terminal rate but perhaps more assured that 0.5% is more likely in December than not. Of course, the inflation data shortly before the meeting could change that. RBNZ accelerates its tightening The RBNZ accelerated its pace of tightening this morning with a record 75-basis point hike which was in line with expectations. There was plenty of volatility in the New Zealand dollar around the release though as the central bank set a much higher terminal rate and forecast a recession starting next year. A more aggressive approach, in its view, is needed to get inflation back to the target range of 1-3% as the labour market is too tight and inflation is at risk of becoming increasingly embedded. Is the case for $10,000 greater than that for $20,000? Bitcoin is in the green for a second day, up more than 2% in early trade and desperately trying to establish a bottom in the market. That may be easier said than done at a time when the headlines are far from favourable due to the fallout from the FTX collapse. Everyone is wondering who the next victim will be and whether this debacle will uncover similar practices in other areas of the market. Against that backdrop, it’s hard to imagine bitcoin managing any kind of significant, sustainable recovery. The next area of resistance falls around $17,500, a break of which could make things more interesting. But that could be very difficult to overcome. There’s arguably a greater case for the price to fall to $10,000 at the moment, than rising to $20,000. ​ For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
The Special Edition Of The Saxo Market Call Podcast: The Wild Year Of 2022 For Commodities And What May Be In Store In 2023

Craig Erlam calls effects of the FTX crash "uncovered". Saudi Arabia confirms OPEC+ won't increase output in December

Craig Erlam Craig Erlam 22.11.2022 23:16
As was to be expected, it’s been a choppy week so far in financial markets with Europe a very mixed bag on Tuesday while US futures are marginally higher after making marginal losses on Monday. On the one hand, we could be seeing investors warily waiting for the FOMC minutes and taking in all of the speeches from various Fed officials in the meantime. On the other, this week may just be a void in an otherwise turbulent year thanks to a lack of major catalysts and the US Thanksgiving bank holiday at the end of the week. Read next: OPEC+ reject reports of increased output. Crude oil up| FXMAG.COM Saudi Arabia has gone some way to filling that void, with so much attention now likely to be on the Gulf over the coming weeks. It goes without saying that it came as quite a shock as everything unfolded as it wasn’t what anyone was expecting, quite the opposite in fact. And it could have a major impact on the outcome next month. But the 2-1 win over one of the tournament favourites, Argentina, was a monumental victory and undoubtedly one of the biggest shocks in World Cup history. It’s blown Group C wide open and cast serious doubt over whether Lionel Messi will ever get his hands on the trophy. In other news, Saudi Arabia also rejected reports that OPEC+ is considering increasing output on 4 December. Another dead cat bounce? Bitcoin is trading higher on Tuesday, but for how long? The knock-on effects of the FTX collapse are still being uncovered, with more names being added to the exposure list every day. Confidence in the markets has been shattered and it may take time to rebuild. There remains considerable uncertainty around the full consequences of the FTX collapse and as long as that remains the case, any rallies we see in cryptos may simply become dead cat bounces, as opposed to market bottoms. The latest occurred around $15,500, where it rebounded off a couple of weeks ago, and a break of this could trigger another sharp decline. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Filling the void - MarketPulseMarketPulse
Commodities: Crude oil price could be supported by technicals

OPEC+ reject reports of increased output. Crude oil up

Craig Erlam Craig Erlam 22.11.2022 23:11
OPEC+ speculation drives oil market volatility Oil prices are bouncing back as OPEC+ members continue to reject reports of an output hike at the next meeting. An announcement from the G7 around the Russian oil price cap is due any day now and could complicate the group’s mission to balance supply and demand in the market, especially if the Kremlin responds by slashing exports to participating countries, as they’ve threatened. Read next: Canada: Retail sales declined, what can make a 50bp rate hike a less probable variant| FXMAG.COM That Russia is a key member of the alliance seriously complicates matters. I do wonder whether members could consider reconfiguring output targets, rather than boosting them, in order to account for lost Russian crude. Of course, that would likely require the backing of Russia which may not be forthcoming. Oil prices will likely remain highly volatile over the next couple of weeks against this backdrop, with the EU embargo and potential price cap scheduled to start the day after the OPEC+ meeting on 4 December. If the cap agreement goes to the wire, OPEC+ may opt to delay the meeting given the uncertainty it would generate. Gold rebounds off the prior resistance level The slight recovery in risk appetite today is coinciding with a pullback in the US dollar and a rebound in gold. The yellow metal has held onto the bulk of November’s gains over the last week, seeing support around $1,730 on Monday where it met firm resistance on multiple occasions in September and October. The key level to the upside remains $1,780 where it peaked around last week and saw substantial support around in the first half of the year. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil rebounds, gold gains ground - MarketPulseMarketPulse
ECB's Tenth Consecutive Rate Hike: The Final Move in the Current Cycle

The Fed Needs A Significant Change In Inflation To Change Its Monetary Policy

Craig Erlam Craig Erlam 21.11.2022 11:45
The week is off to a relatively slow start, with Asia trading mostly in the red and Europe and the US poised to do the same. We don’t get many quiet weeks these days but this may turn out to be one of the few, with the US Thanksgiving bank holiday cutting the week short for many traders and the Fed minutes on Wednesday potentially weighing on activity beforehand. The recovery rally has stalled over the last week or so as Fed commentary has remained more hawkish than investors wanted. The rebound was also much stronger than is arguably warranted, with the Dow up almost 20% from its October lows. Policymakers appear keen to stress that one inflation number doesn’t make a trend and further evidence will be needed to justify a slower pace of tightening. While they will probably be quietly satisfied that inflation has turned a corner, there may also be a determination not to accept that publicly at the risk of undermining its tightening efforts until now. Another good report next month and the tone will almost certainly notably change. China stocks tumble as Covid cases rise The recent news has been less good from China, where surging Covid cases have wobbled markets just as we were seeing an improvement in sentiment. A slight relaxation of Covid restrictions and the prospect of more early next year, alongside a 16-point plan to boost the property market, had triggered a strong rebound in stocks in China and Hong Kong but that has been undermined by the recent surge and restrictions. Not only would fresh lockdowns in major cities take a sledgehammer to growth into year-end, but it could also complicate any plans that are being put in place to soften the zero-Covid policy next year. We’re back into uncertain territory which could slow the recovery in stock markets. Darker days ahead for crypto? The landscape is not getting any better for cryptos as we continue to learn more about the fallout from the FTX collapse. Bitcoin is off around 4% this morning, trading below $16,000 and looking very vulnerable. Another sharp drop looks very possible as sentiment in the space has been shredded. It could take some time for that to be repaired and the uncertainty that the FTX scandal has created is an enormous headwind for cryptos in the near term. At this point, I wouldn’t be surprised to see $10,000 tested again in the not-too-distant future. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Crude Oil Sees Its Biggest Weekly Pull Back Since April

The Gloomy Economic Outlook Is Weighing On Crude Oil Prices

Craig Erlam Craig Erlam 21.11.2022 11:37
Oil slips further amid China woes The prospect of more restrictions and therefore lower demand in China has weighed on crude prices recently. Brent slipped back below $90 last week and could register the fourth day of declines if it remains in the red. We’re seeing bleak economic prospects all around the globe which continues to weigh on oil prices and if interest rates keep rising as they are, expectations will likely deteriorate further. That will make the next OPEC+ meeting in a couple of weeks all the more interesting. The group came under fire early last month for its decision to cut output targets by two million barrels per day, even as many countries fight inflation and recession in part as a result of higher oil prices. The question now is whether the group be so bold as to cut output again in light of recent price moves and economic developments. Paring gains but still encouraging Gold prices are slipping at the start of the week in risk-averse trade that is supporting the US dollar. The yellow metal has performed extremely well in recent weeks as investors have been buoyed by slightly less hawkish rhetoric from the Fed and some much more positive inflation prints. It’s stalled around $1,780 which was previously a very significant area of support and given some back in recent days but it continues to trade well off the lows which is encouraging. The next test of support could be $1,730 where it met strong resistance on the way down in September and October. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
The South America Are Looking For Alternatives To The US Currency

Next week RBNZ decides on interest rate. What else? Let's see Craig Erlam's preview

Craig Erlam Craig Erlam 18.11.2022 18:22
US Wall Street’s shortened trading week will be jam-packed with the FOMC minutes, more Fed speak, the flash PMIs and the final look at the University of Michigan’s inflation expectations.   One of the key events of the trading week will be the Fed’s minutes from the November policy meeting.  Financial markets will want to know if the Fed still believes that the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action. The Fed is expected to downshift to a half-point rate-hiking pace in December, but that rate-hiking cycle could last longer if pricing pressures become more entrenched.   US stock and bond markets will be closed Thursday for Thanksgiving Day and will close early on Friday.  Traders will pay close attention to Black Friday shopping data, which will give the latest pulse on the health of the US consumer.   EU  The highlight next week may well be the monetary policy accounts, although, with a steady stream of central bank commentary since the last meeting and a raft of economic data, it’s hard to say just how impactful they’ll ultimately be. The flash PMIs may tell a more interesting story of an economy heading for recession, while appearances from various policymakers – including President Christine Lagarde on Sunday – could fill in any gaps that haven’t already been filled. UK  It’s hard to get too excited about next week’s PMI data and central bank speak following the assessment from the OBR on the economic outlook, taking into consideration the latest fiscal squeeze. The UK is heading for its largest squeeze on living standards in six decades – a 7.1% decline – as interest rates continue to increase, taxes rise and the cost-of-living crisis intensifies.  The only question that remains is how soon the BoE can pause its tightening among all of these other pressures. It alluded to the fact that markets are pricing in too much at the last meeting but at this moment, another 150 basis points are still priced in. Russia Another quiet week on the economic data side, with PPI numbers the only notable releases. The focus remains on its invasion of Ukraine and how it handles recent losses in Kherson. South Africa Next week is action-packed, with inflation data being released on Wednesday ahead of the latest SARB rate decision a day later. While the headline CPI is expected to ease slightly to 7.4%, from 7.5%, core is seen rising from 4.7% to 4.9%, meaning both remain far too high. The SARB inflation target is 3-6%.  That is expected to push the SARB to hike interest rates again next week by 75 basis points, taking the repo rate to 7%.  Turkey The CBRT is expected to cut interest rates by another 150 basis points next week despite soaring inflation and a desperately weak currency. The latter has been managed with capital controls over the last couple of years and the new reserve-management system appears to be stabilizing it at record lows despite continued easing. The hope for President Erdogan is this can be carefully managed into next year’s election to at least give the impression of stability amid a potential deceleration in official inflation.  Switzerland No significant economic data or releases next week. The central bank continues to drive home the message that FX intervention could occur on either side. An inter-meeting rate hike can also not be ruled out. China The focus stays on China’s Covid situation. China’s Covid cases are near record highs and that is threatening to delay any looser rules. Expectations are now for China to reopen sometime after March. Investors widely expect Chinese commercial banks to keep both the 1-year and 5-year Loan Prime Rate (LPR) unchanged at 3.65% and 4.30% respectively. The PBOC might be delaying rate cuts until next quarter as they are concerned about yuan weakness.   India It is expected to be a quiet week for India.   Australia & New Zealand This week is mostly about New Zealand as the RBNZ is expected to deliver its sixth straight half-point rate hike. Hot inflation and wage data are expected to prevent the central bank from downshifting to a slower pace of tightening. Investors hoping for the bank to pause tightening in February might be surprised if the policymakers are worried that inflation isn’t falling quickly enough.    The lone release for Australia will be the preliminary PMI readings.  Last month the service sector fell into contraction territory while manufacturing activity continues to soften.   Japan A busy week filled with Japanese data, including preliminary PMI data for the services and manufacturing sectors in November and core CPI data for the Tokyo region in November. Inflation in Japan has hit a four-decade high and that is complicating what the BOJ wants to do.  Some economists are expecting Tokyo’s core inflation to slow for the first time since January but that is hardly the overall consensus.   Singapore The October inflation report is expected to show pricing pressures eased from 7.5% to 7.0%.  The final Q3 Q/Q GDP reading is expected to be revised a tick lower to 1.4%. Economic Calendar Saturday, Nov. 19 Economic Events The APEC Economic Leaders’ Meeting concludes Fed’s Bostic speaks at the Southern Economic Association annual meeting in Florida Sunday, Nov. 20 Events World Cup begins with Qatar hosting Ecuador ECBs Lagarde participates in formal dinner of European Roundtable for Industry Monday, Nov. 21 Economic Data/Events US Chicago Fed national activity index China loan prime rates Germany producer prices New Zealand credit card spending Sweden home prices, industry capacity utilization Taiwan export orders, current account balance Thailand GDP The Bank of Japan announces the outright purchase amount of Japanese government securities Ukraine President Zelenskiy speaks at NATO Parliamentary Assembly’s annual session ECB’s Holzmann and Simkus speak at the Conference on European Economic Integration hosted by Austria’s central bank Bank of Portugal Governor Centeno speaks at the CNN Portugal Summit Bundesbank President Nagel speaks at an evening event of the ICFW Frankfurt business journalists’ club Tuesday, Nov. 22 Economic Data/Events US Richmond Fed manufacturing index Canada retail sales Euro area consumer confidence Mexico retail sales, Banamex survey of economists New Zealand trade South Africa leading indicator Turkey consumer confidence South African President Cyril Ramaphosa is on a state visit to the UK The OECD releases its latest Economic Outlook German Chancellor Scholz speaks at the SZ-Wirtschaftsgipfel conference in Berlin ECB’s Holzmann speaks at the presentation of the Austrian National Bank’s financial stability report Fed’s Mester gives speech on wages and inflation Fed’s Bullard participates in a policy panel at the Central Bank of Chile’s annual conference RBA’s Lowe speaks at the annual CEDA dinner Wednesday, Nov. 23 Economic Data/Events FOMC minutes of November meeting US MBA mortgage applications, durable goods, initial jobless claims, preliminary PMIs, University of Michigan sentiment, new home sales European Flash PMIs: France, Germany, UK New Zealand central bank (RBNZ) rate decision: Expected to raise rates by 75bps to 4.25% Australia PMIs Mexico international reserves Russia industrial production, monthly PPI, weekly CPI Singapore CPI, GDP South Africa CPI Thailand trade balance EIA crude oil inventory report German Chancellor Olaf Scholz addresses the Bundestag on the country’s 2023 budget ECB’s de Guindos speaks at the Encuentro del Sector Financiero in Madrid Thursday, Nov. 24 Economic Data/Events US stocks and bond markets closed for Thanksgiving holiday Canada small business optimism France business, manufacturing confidence Germany IFO business climate Japan PMIs, department store sales, leading index, machine tool orders Russia gold and foreign-exchange reserves Sweden central bank (Riksbank) rate decision: Expected to raise rates by 75bps to 2.50% Turkey central bank (CBRT) rate decision: Expected to cut rates by 150bp to 9.00% South Africa central bank (SARB) rate decision: Expected to raise rates by 75bps to 7.00% Turkey real sector confidence South Africa PPI Mexico publishes monetary policy minutes ECB publishes accounts of its October policy meeting EU energy ministers hold an emergency meeting in Brussels ECB’s Schnabel speaks at the Bank of England Watchers’ Conference Friday, Nov. 25 Economic Data/Events US stock and bond markets close early Retailers hope for a strong Black Friday performance France Consumer confidence Spain PPI Sweden PPI Germany GDP Japan Tokyo CPI, PPI services Mexico GDP, current account balance New Zealand consumer confidence index, retail sales ex-inflation Singapore industrial production Thailand foreign reserves, forward contracts Sovereign Rating Updates Switzerland (Moody’s) Turkey (Moody’s) Poland (DBRS) This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Week Ahead - Central banks remain hawkish - MarketPulseMarketPulse
Changing correlation of Bitcoin and US stocks. Brazil: Lower house of Congress approved crypto regulation bill

The question is - who and to what degree will be affected by the FTX crash

Craig Erlam Craig Erlam 18.11.2022 15:03
Equity markets are back in the green on Friday after a choppy week in which the recovery rally has stalled. Efforts by Fed policymakers to manage market expectations have cooled the sense of immense relief that has delivered a strong rebound over the last month. The S&P was up more than 15% at one point while the Dow jumped more than 18%. Not bad on the back of what was ultimately one good inflation month. Read next:  James Bullard unleashed a flurry of hawkish views on Thursday which didn’t get a warm reception in the markets initially. But then they did rebound and are higher again today so it seems investors are still taking them with a pinch of salt. The Fed is clearly concerned that “dovish pivot” speculation could be undermining its tightening efforts which could explain why it’s being so steadfast in its hawkish message. There will also be a concern that the labour market and household spending are showing little sign of weakening despite interest rates rising at an extraordinary rate over the past year. I don’t think that will stop the central bank from slowing the pace next month, especially if we see another drop in inflation just before, but it could cause the Fed to persevere for longer which is a concern for investors. UK retail sales blip no reflection of what lies ahead No one in the UK will be fooled by the latest retail sales report into thinking all is not as bad as it seems, not after yesterday’s Autumn Statement. The OBR expects living standards to decline by 7.1% over the next two years, the sharpest drop in six decades, as the country battles a cost-of-living crisis, severe fiscal consolidation, higher interest rates, and a recession. Against that backdrop, it’s hard to get remotely excited by an expectation-beating 0.6% jump in sales in October. Needless to say, it is not the start of a promising trend. BoJ still unlikely to change course Japanese inflation data may on the face of it give the impression that the Bank of Japan has achieved its inflation goals and can afford to soften its grip on the bond market but the reality is quite different. What is believed to be unsustainable factors like a weak yen, and high imported energy and food prices, are behind the increases, which the BoJ has been very willing to look through and will likely continue to do so. Especially with the pressure of yen devaluation far less intense after the US dollar’s correction over the last month. Crypto volatility subsides for now Bitcoin volatility is subsiding which will no doubt come as a relief to the crypto industry as the fallout from the FTX collapse continues. We’re continuing to learn who exactly is exposed to the collapse, to what extent, and what the ripple effects will be. One obvious impact is that of confidence in the space which could take time to repair in already challenging markets. I’m not sure anyone can be confident that the worst of the rout is behind us which means bitcoin is vulnerable to another plunge, with $15,500 being the first test of support and then potentially $14,000 below that. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Uncertain times - MarketPulseMarketPulse
The Commodities Feed: OPEC+ meeting ahead

Oanda's Craig Erlam wonders whether OPEC+ could go for a bigger output cut

Craig Erlam Craig Erlam 18.11.2022 14:48
Brent below $90 ahead of December OPEC+ gathering Oil prices are continuing to retreat against the backdrop of increasingly gloomy economic prospects and surging Covid cases in China which risk further restrictions and lockdowns, threatening demand in the world’s second-largest economy. Brent crude has broken back below $90, testing the mid-October lows and, if sustained, the patience of OPEC+. Read next: Canda's CPI inflation prints didn't surprise, consensus points to a 25bp rate hike, but chances of a greater variant are still there| FXMAG.COM The group was heavily criticized for its two million barrel per day output cut and yet oil prices are now not far from the September lows that preceded the decision. Could OPEC+ go even further if the outlook continues to deteriorate when it meets again in a couple of weeks? Gold holding onto gains Gold is flat on Friday after paring gains over the last couple of days. The yellow metal has recovered strongly over the last month, around 10% from its lows, as risk appetite has improved and interest rate fears abated. It’s not out of the woods yet but its resilience after hitting resistance at $1,780 is encouraging. This is a major obstacle, having been such a substantial level of support from January to July. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil extends decline, gold steady - MarketPulseMarketPulse
Forex: British pound against US dollar - technical analysis - January 2nd

UK: Bank Rate may hit ca. 4.5%, but... it's not that bad considering earlier values

Craig Erlam Craig Erlam 17.11.2022 18:27
The risk rebound in the markets has stalled and equity markets are down around 1% on Thursday following quite a good run over the last month. The day we’ve all been waiting for The Autumn Statement has been a long time coming after the disastrous mini-budget almost two months ago. The UK’s fiscal credibility was in the gutter, the pound was crushed and borrowing costs soared. Since then, a lot has changed and today’s budget highlighted just how much that is the case. Read next: Many sued in FTX scandal, Elon Musk to reduce his time at Twitter, EU stocks edged higher on Thursday| FXMAG.COM Fully regaining credibility won’t be easy but markets appear far happier now than they were back in September. The pound is lower on the day but only marginally so and the bulk of the announcements will have been priced in as they were leaked in recent days. Borrowing costs are slightly higher on the day and Bank Rate is expected to peak around 4.5%, still very high but far from the levels reached in September. All in all, the government may be pleased with how today has gone but time will tell whether the public agrees as everyone pours over what was quite an extensive budget. It’s not just the markets that needed convincing today after all, with a little over two years until the next election and a significant deficit still to overcome in the polls. US data reinforces Fed position on rates despite weak housing The latest US economic data represented a continuation of what we’ve seen for months. A housing market suffering under the pressure of higher interest rates and a labour market that is incredibly resilient to them. While the former may be a concern for the central bank as it further raises rates in the months ahead, the latter remains the reason why many at the Fed support such moves as it increases the possibility of inflation remaining stubborn on the way back down. Risks remain tilted to the downside The ripple effects of the FTX debacle continue to flow through the crypto industry revealing other vulnerabilities and weighing heavily on prices even amid a broader financial market risk rebound. Bitcoin is trading relatively flat today around $16,500 but the risks remain skewed to the downside amid immense uncertainty. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Stalled rebound - MarketPulseMarketPulse
Crude oil went up after news about missile, which landed in Poland. Black gold said to be affected by situation in China

Crude oil went up after news about missile, which landed in Poland. Black gold said to be affected by situation in China

Craig Erlam Craig Erlam 17.11.2022 18:19
Oil slips amid easing geopolitical risk and China woes Oil prices are slipping as we move through the week, with easing geopolitical risk and Chinese demand weighing. Prices spiked earlier in the week after missiles landed in Poland, risking a dramatic escalation in the war in Ukraine. Thankfully, those fears have abated and the situation de-escalated, which has seen oil gains unwound. Read next: Many sued in FTX scandal, Elon Musk to reduce his time at Twitter, EU stocks edged higher on Thursday| FXMAG.COM China remains a downside risk for oil in the near term, despite its recent relaxation of certain Covid curbs. A surge in cases in major cities, mass testing, and restrictions will hit economic activity despite recent measures which will weigh on demand in the world’s second-largest economy. Still, Brent remains within its $90-$100 range for now and OPEC+ may continue to ensure that largely remains the case. Gold stalls but the future may be looking bright We’re seeing more risk aversion in the markets today after a strong rebound in recent weeks. Gold has performed well in this period, particularly in the aftermath of the Fed decision and jobs report and then after the inflation data. The PPI numbers further supported the view that inflation is easing and could be sustained which saw gold rally towards $1,780 where it stalled. It is now paring gains for a second day, off around 1%, but still holding onto the bulk of the gains of recent weeks. If the data continues to improve on the inflation side, we could see gold build on recent gains as the dollar eases and yields are pared back. That’s a big “if” after what we’ve seen this year but the data we’ve seen in recent weeks has been very promising. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil prices fall, gold stalls - MarketPulseMarketPulse
The RBA Will Continue At A 25bp Pace At Coming Meetings

Reserve Bank of Australia (RBA) Could Move Back To 50bps Should The Data Warrant It

Craig Erlam Craig Erlam 15.11.2022 11:45
Equity markets are looking slightly positive in early trade on Tuesday, adding to modest gains at the start of the week. While the rally is perhaps slowing a little after the strong gains of recent weeks, there doesn’t appear to be much appetite at this stage to bail on it. Perhaps the experience of the last year and the huge declines in equity markets have left investors seeing substantial value and they’ve become excited at even the prospect of a bull run. Perhaps there’s some FOMO at play after a long time of such opportunities being few and far between. Not a great UK labour market report I’m not entirely sure who will look at the UK labour market and be able to take many positives from it. The unemployment rate ticking up when job vacancies have fallen for the fourth month may suggest to the BoE that slack is appearing. But at the same time, the rate remains very low and wages excluding bonuses rose by 0.2% to 5.7%, exceeding expectations, which will be a concern when inflation is already above 10% and rising. Inactivity is another negative takeaway as this makes the job of increasing slack in the labour market all the more difficult. Whichever way you look at it, this isn’t a great report and it will likely keep the pressure on the BoE to keep hiking aggressively, creating further headwinds for the economy. Sensible RBA minutes move away from the era of forward guidance The key takeaway from the RBA minutes overnight was that forward guidance will no longer be a tool the central bank leans on unless there is value in doing so. The RBA wants to maintain a flexible approach based on the incoming data rather than be tied to its guidance, which makes a lot of sense in these highly uncertain times. It highlighted the benefits of explicit and specific guidance in certain situations but the current one simply doesn’t tick any of those boxes. As such, while a 25 basis point hike was appropriate at the last meeting – and I assume will be at the next – the central bank could move back to 50bps should the data warrant it. That all sounds very sensible. Traders may be tempted to sidestep cryptos for a while Bitcoin is fighting back this morning but it remains very much on the ropes. Gains of more than 2% barely offset the losses since Friday, let alone what came earlier that week. Cryptos remain very vulnerable, not just to the fallout from FTX – the full extent of which remains a cloud of uncertainty over the industry – but also to what else may be uncovered as the environment becomes ever more challenging. What we’ve seen recently will be discouraging to some who may have become tempted in recent years but with rates no longer at zero and more traditional assets arguably becoming attractive once more, traders may be tempted to sidestep cryptos and wait for the storm to pass. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Weekly Commitment of Traders update - Buying of crude oil moderated, ICE gas oil net long reduced to a 30-month low

Crude Oil Prices Remain Uncertain | The Gold Only Slightly Higher

Craig Erlam Craig Erlam 15.11.2022 11:34
Oil treading water Oil prices are basically flat on Tuesday, sitting a little below the middle of their recent trading ranges as traders continue to weigh up the global economic outlook, OPEC+ production risks, and China’s Covid approach. Prices remain choppy and that’s likely to remain the case given the ongoing uncertainty around these key areas. Everyone became much more optimistic around the US after last week’s inflation report but that appears to have quickly faded. Enormous downside risks remain around the global economy next year even if the Fed does pause its tightening a little sooner and perhaps that reality is kicking in again. Gold rally stalls at key resistance level The great gold recovery has stalled, with the yellow metal only slightly higher on the day after dipping a little earlier in the session. That follows a similar pattern to Monday and could be viewed as a positive sign given the reluctance to allow the recent rally to retrace in any considerable way. It has been a very impressive recovery though, up around 10% from the lows earlier this month, so a corrective move wouldn’t come as a surprise. It’s seeing resistance around $1,780 at the moment, a level that was a major area of support earlier in the year and again in May before finally crumbling in early July. A move above here would be a significant technical breakout. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
India’s Investing In Program For The Green Hydrogen Industry | Covid Situation In China Is Getting Serious

In China Will Remain Heavy Restrictions And Lockdowns

Craig Erlam Craig Erlam 14.11.2022 10:43
It’s been quite a choppy start to the trading week, with much of the focus on China where Covid relaxation measures and property market support have brought some relief. Unfortunately, both come at a time of record Covid infections in major cities including Beijing and Guangzhou. And those relaxation measures that were announced are not ambitious enough to make any difference in those cities seeing rising cases which means activity is going to weaken. There is hope that China could further relax its zero-Covid policy next spring but for now, mass testing, heavy restrictions, and lockdowns are here to stay, despite growing opposition and fatigue. Those hoping that this initial relaxation phase would be more substantial were always setting themselves up for disappointment. Property stocks in China and Hong Kong were given a big lift at the start of the week as Beijing unveiled its 16-point plan to support the industry. Having almost brought the industry to its knees as part of its reform efforts, Beijing is attempting to build it back up but as it’s already finding, the former is much easier to do than the latter. Confidence is shattered and it will take time, effort, and patience to restore it. Now it’s a question of how much these measures will undermine Beijing’s initial reform measures and whether they’ll even succeed in reinvigorating the industry. Efforts until now have been like pushing on a piece of string. Bad timing Bitcoin waited patiently for this moment, forming a base around $20,000 in anticipation of inflation falling and the Fed narrative becoming much less hawkish. Unfortunately, that moment coincided with the spectacular collapse of FTX which has sent shockwaves through the industry and hammered crypto prices. Rather than taking off, bitcoin has plummeted to levels not seen in two years and further pain may lie ahead. There’s now enormous uncertainty in the space which could hold it back in the near term and weigh on prices. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
The Commodities: The EU Is Looking At A Price Cap Level Of Around US$60/bbl

The US Inflation Data Last Week Gave Crude Oil Another Boost

Craig Erlam Craig Erlam 14.11.2022 10:37
Oil is steady but upside risks remain The prospect of looser restrictions has boosted the price of oil recently and yet Brent still finds itself trading around the middle of its $90-$100 range. The US inflation data last week gave crude another boost as traders were left to dream again about a possible soft landing if the data continues that way and the Fed raises rates less. There’s still a long way to go though and much of the world won’t be so lucky, assuming it isn’t already too late for the US. But further signs of inflation peaking will no doubt be welcome; you just wonder whether it will also be the catalyst for oil to break $100 again, further complicating the growth outlook once more. Gold’s spectacular rebound It’s been a fantastic 10 days for gold, with the yellow metal going from at risk of breaking below $1,620 support to rallying almost 10% to its highest level in almost three months. It’s been quite the ride, fueled by signals from the central bank that the next hike could be less aggressive and then that inflation report. Can gold hold onto this momentum and break $1,800, taking it into territory that it hasn’t traded within since late-Spring, early-summer? It’s a big ask but if the data is generous and the dollar continues to give back some of its enormous gains from the past year, there’s every chance gold could build momentum from here. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Economic Calendar Details and Trading Analysis - August 7 & 8

In India Headline Inflation Is Expected To Ease | How Quickly Growth Is Slowing In Europe

Craig Erlam Craig Erlam 12.11.2022 08:29
US After a round of soft inflation data triggered a buy-everything relief rally, Wall Street will focus on Fed speak and a plethora of data points that might show the economy remains resilient.  The key economic readings include manufacturing activity, retail sales, and housing data. There will be no shortage of appearances by the Fed this week. Brainard and Williams speak on Monday, while Tuesday includes speeches by Harker, Cook, and Barr. Wednesday brings Williams, Barr, and Waller, and on Thursday we will hear from Bullard, Bowman, Mester, Jefferson, and Kashkari. In addition to a swathe of economic releases, traders will also closely monitor big retail earnings from Walmart, Target, Macy’s, and Kohl’s. We should learn more about the health of the consumer and if we should expect a further easing of prices as we enter the holiday season. EU  It’s a relatively quiet week for the EU with the two standout economic releases being flash GDP and final HICP. With the economy facing a recession, the GDP data will be an interesting insight into how quickly growth is slowing going into an uncertain winter. The inflation data will naturally be of interest but it may take a significant revision to really grab investors’ attention. UK The Autumn statement has been a long time coming, it feels. The markets have calmed down a lot since the ridiculous mini-budget but it will still take time for the government to regain credibility and the confidence of the markets. It starts next week and all eyes will be on Parliament as we learn how the new government plans to balance the books while not piling more misery on the economy. The BoE monetary policy report hearing next week is another highlight but there’s also a lot of economic data due. The path for interest rates remains uncertain so it’s not just what policymakers have to say that matters, it’s whether the data allows them to slow the pace of tightening going forward as they so clearly want to do. CPI on Thursday is the obvious highlight but there’s plenty more throughout the week. Russia A quiet week with no economic data of note. South Africa Another quiet week with the only economic release being retail sales on Wednesday. Turkey No major economic releases next week, with investors still focused on the central bank and inflation. Switzerland Tier three data dominate next week. Focus remains on what the SNB will do in December, with Chair Jordan acknowledging on Friday that monetary policy isn’t restrictive enough to bring inflation back into the range of price stability over the medium term. The risk of a pre-meeting rate hike remains. China Weeks of speculation around China’s commitment to its zero-Covid policy have spurred a recovery in local stocks and we may be about to get more information on what that will entail. A relaxation of quarantine measures has been announced in recent days and a press briefing is now reportedly scheduled for Saturday. At the same time, China is seeing a steady rise in Covid cases resulting in more restrictions and mass testing.  China’s October retail sales, industrial production, and investment data will be released next week.  The PBOC is also expected to keep its one-year medium-term lending facility rate at 2.75% in November.   India A key inflation report could show pricing pressures are easing which might allow the RBI to be less aggressive with its tightening path.  Headline inflation is expected to ease from 7.4% to 6.7%.    Australia & New Zealand The focus for both Australia and New Zealand might stay on China and their weakening outlook due to their struggles with COVID.  Australian employment data is expected to show job growth continues, while unemployment remains at 3.5%. Wage pressures in the third quarter are expected to rise, but some of that is attributed to the increase in the minimum wage.    In New Zealand house sales data and producer prices will be released. Japan Japan’s third-quarter GDP reading is expected to show significant weakness as import costs skyrocketed.  Japan’s core inflation is also expected to surge from 3.0% to 3.5%, which should clearly weigh on consumer spending.  Given the weakness in the US dollar, the BOJ might save its ammunition and hold off intervening anymore in the foreign exchange market. Singapore It is expected to be a quiet week with the exception of non-oil domestic export data.   Economic Calendar Sunday, Nov. 13 Economic Data/Events China medium-term lending The ASEAN summit concludes in Cambodia. Monday, Nov. 14 Economic Data/Events Eurozone industrial production India trade, CPI, wholesale prices New Zealand performance services index Fed’s Williams moderates a panel at the Economic Club of New York ECB’s Fabio Panetta speaks in Florence ECB’s de Guindos speaks in Frankfurt. BOJ announces the outright purchase amount of Japanese government securities Tuesday, Nov. 15 Economic Data/Events US empire manufacturing, PPI France CPI Poland CPI  Eurozone GDP Hungary GDP Canada existing home sales China retail sales, industrial production, surveyed jobless France unemployment Germany ZEW survey expectations Japan industrial production, GDP Mexico international reserves New Zealand home sales, net migration South Korea export/import price index, money supply UK jobless claims, unemployment G-20 summit in Bali IEA monthly oil market report ECB’s Elderson speaks Fed’s Harker speaks at GIC Annual Monetary & Trade Conference Former US President Trump is due to make an announcement in Florida RBA releases minutes of its November interest rate meeting Wednesday, Nov. 16 Economic Data/Events US business inventories, cross-border investment, retail sales, industrial production Australia leading index Canada CPI, housing starts China property prices Israel GDP Italy CPI Japan machinery orders, tertiary index, department store sales Philippines Bloomberg economic survey Russia GDP South Africa retail sales UK CPI EIA crude oil inventory report G-20 summit in Bali BOE Gov Bailey appears before the Treasury committee   Fed’s Williams and Brainard, SEC’s Gensler speak at the 2022 Treasury Market conference ECB Financial Stability Review ECB President Lagarde speaks ECB’s Fabio Panetta speaks Thursday, Nov. 17 Economic Data/Events US housing starts, initial jobless claims Italy trade Singapore trade Australia unemployment China Swift payments Eurozone CPI, new car registrations Hong Kong jobless rate Japan exports, trade balance New Zealand PPI Singapore non-oil exports UK fiscal statement, economic forecasts Fed’s Kashkari and Jefferson speak at the Federal Reserve Bank of Minneapolis Fall Institute Research Conference Fed’s Mester speaks at the Federal Reserve Bank of Cleveland and the Office of Financial Research Annual Financial Stability Conference Fed’s Evans speaks ahead of his retirement BOE’s Silvana Tenreyro speaks SNB’s Maechler speaks at Money Market Event in Geneva BOE’s Huw Pill speaks at the Bristol Festival of Economics on ‘What Next for Central Banks’ Friday, Nov. 18 Economic Data/Events US Conference Board leading index, existing home sales Norway GDP Japan CPI Thailand foreign reserves, forward contracts, car sales ECB President Lagarde, Nagel, and Knot speak alongside BOE’s Mann Fed’s Collins speaks at the Federal Reserve Bank of Boston Economic Conference BOE’s Jonathan Haskel speaks Sovereign Rating Updates Italy (Fitch) Sweden (Fitch) Turkey (Fitch) Ireland (S&P) South Africa (S&P) Portugal (Moody’s) South Africa (Moody’s) Denmark (DBRS) This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
US Inflation Forecasted at 3.3%, UK GDP Projections at 0%, Fed Member Harker's Views on Rates

Today’s US Inflation Report Becomes Even More Important

Craig Erlam Craig Erlam 10.11.2022 12:04
We’re seeing some risk aversion in financial markets on Thursday as we await inflation data from the US later in the week. It probably won’t come as a surprise to many that we’re seeing stock markets in the red considering how well they’ve performed in recent days and weeks. It would appear we’ve seen a lot of buying on the hope of a Fed pivot and some weaker inflation and labour market figures. Well, the Fed kind of pivoted but indicated that the terminal rate may be higher. The labour market is still extremely tight and Friday delivered another hot report. Big tech seems to find itself in the minority in terms of its decision to let go of large numbers of staff, with Twitter and Meta most notably making huge redundancies in recent weeks. With neither the Fed nor the labour market fully delivering – and one could argue they never were likely to – today’s inflation report becomes ever more important. Another hot reading could be the latest in a growing list of setbacks for investors, who have been all too keen to buy at discounted levels in the hope the data rewards them. So far it hasn’t. That will turn at some point of course and this could be that moment. The million-dollar question is how fast will it fall. As this will ultimately determine the Fed’s response. The best thing about a slower pace of tightening is that it allows time for the data to justify smaller rate hikes and an eventual end to the tightening process. Without it, the Fed will be in a very uncomfortable position of blindly weighing up inflation, recession and overtightening risks. Is FTX a one-off? Bitcoin is trading up more than 5% today but that comes following two terrible days for cryptos. Bitcoin fell more than 25% from the start of trade on Monday before finding some support around $15,500 and recovering slightly. The situation at FTX has unravelled at a remarkable pace, culminating on Wednesday evening with Binance bailing on its rescue offer following some due diligence and new allegations. The ripple effects throughout the industry have been severe so far, with the fear not just being which other tokens could be exposed but whether similar vulnerabilities exist elsewhere. As Warren Buffett says, it’s only when the tide goes out that you learn who has been swimming naked. Well, it may well be on its way out and traders are fearing what it will uncover. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Crude Oil Sees Its Biggest Weekly Pull Back Since April

Stabilized Gold | Brent And WTI Crude Oil Are Settling Towards The Lower End

Craig Erlam Craig Erlam 10.11.2022 11:41
Oil slides amid Chinese Covid restrictions Oil prices fell again on Wednesday, taking losses over the last couple of days to more than 5%. Brent and WTI are basically flat on the day at the time of writing, settling towards the lower end of their recent trading ranges. While the narrative in recent weeks has focused on the potential for Chinese Covid restrictions to be relaxed, which has driven Chinese equities higher and lifted oil prices, the reality has seen case numbers soaring, restrictions reimposed and mass testing undertaken. This doesn’t exactly add substance to the rumours and we may be seeing some unwinding of those positions. Gold steadies ahead of CPI data Gold has steadied over the last 24 hours or so after surging late last week and early this in the hope that inflation data delivers what the Fed, and investors, crave so much. It’s a very hopeful-looking move and one that could end badly if the CPI data continues this year’s trend of disappointing to the upside. I just wonder at this point what investors need to see because the recovery of the last week has been strong – more than 5% – which suggests expectations are quite high. Time will tell if hopeful traders will be burned once more. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
The US PCE Data Is Expected To Confirm Another Modest Slowdown

Investors Continue To Watch Events Unfold In The USA

Craig Erlam Craig Erlam 09.11.2022 12:16
Equity markets are mixed on Wednesday as investors continue to watch events unfold in the US for a sense of what impact they’ll have on sentiment. The impact of the midterms will probably be short-lived, if impactful at all, as far as markets are concerned. Of course, the political implications may be significant if Democrats can manage to retain control of the House and Senate but at this stage, only one of those looks plausible which means deadlock in Washington. The bigger takeaway from the election may well be what support there is for Trump-backed candidates and what that does for his own re-election hopes in two years. But that’s unlikely to sway the markets now, not with so much else to focus on. Investors are more focused on the inflation data on Thursday and whether that will pave the way for a slower pace of tightening in December and early next year. There’s unease about the central bank’s views on the terminal rate but those could abate if we see a favourable inflation number tomorrow. Turmoil at FTX sees cryptos plunge For a long time, bitcoin has aligned itself with broader risk appetite in the markets but it goes without saying that Tuesday was not one of those days. Cryptocurrencies have been pummeled at the start of the week with bitcoin down almost 20% in two days at one stage amid concerns over FTX and the implications for the FTT token. Alameda’s balance sheet is a major factor in those fears which has seen that pain spread to Solana, with contagion fears dragging on the crypto space as a whole. Bitcoin fell to a near-two-year low at one stage and is down almost 3% again today. Nervy days ahead for cryptos as Binance looks to come to the rescue. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
FXStreet’s Dhwani Mehta Opinion About Gold Movements

The Next Test To The Upside For Gold Falls |Oil Prices Are A Little Lower Again

Craig Erlam Craig Erlam 09.11.2022 12:14
Oil eases amid a surge in inventories Oil prices are a little lower again on Wednesday after falling around 3% a day earlier. This came following a strong move in recent weeks in which crude prices rallied around 20% on the back of the OPEC+ output cut and the prospect of less restrictive Covid measures in China, which have not been confirmed. The API inventory data came late in the day on Tuesday after the bulk of the losses had already occurred. If the large inventory build is confirmed by EIA today, it will be interesting to see if it generates a bigger reaction in the markets, with Brent now trading back in the middle of the $90-100 range. Gold surges ahead of CPI A surge in gold on Tuesday saw the yellow metal smash through $1,680 and then $1,700 resistance and settle above here, as risk appetite improved and the dollar retreated. While it’s hard to attribute the rally to any particular event, the technical loss of both of those resistance levels won’t have done it any harm. The question now is whether it can hold onto those gains once the latest inflation report drops. It may well be that gold’s revival, and the dollar’s retreat, are driven by an expectation that the CPI data will be favourable but we’ve seen what the dangers of that are before. Especially when it comes to inflation data. The next test to the upside for gold falls around $1,730, while prior resistance of $1,700 and $1,680 could now become support. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
From UFOs to Financial Fires: A Week of Bizarre Events Shakes the World

The Fed Has Made Clear It Intends To Slow The Pace Of Tightening

Craig Erlam Craig Erlam 08.11.2022 12:45
A cautious start to trading on Tuesday, with investors seemingly having one eye on midterm results in the US and another on Thursday’s inflation data. It’s hard to see past both of these things this week. The question for many is whether investors will respond positively to the deadlock in Washington. On the one hand, the prospect of less spending could be viewed as aiding the inflation fight but on the other, the economy could be headed for recession, and inaction in government won’t help the situation. The Republicans are strongly favoured to take back control of the House and with the Senate currently split, they are likely to edge that as well, meaning Biden’s economic agenda will come to a standstill ahead of the 2024 election. Arguably the most important takeaway from the midterms will be how Trump-supporting Republicans fare, particularly those so fiercely sticking to the “stolen election” line, among others. With Trump himself due to make a “big announcement” soon, it would appear he’s about to throw his hat into the ring and declare any victories a show of support for his own nomination. With the US likely heading for recession, whoever wins the Republican race stands a good chance of winning the race in 2024. It may now become a question of how much of a grip Trump still has on the Republican party and whether the manner of his exit will prove to be a barrier or a supportive factor within the base. Of course, the more pressing issue in the near term is inflation and so, regardless of the midterm results, we may still see some trepidation in the markets ahead of Thursday’s release. The Fed has made clear it intends to slow the pace of tightening in December and this data could either throw that into question or start to build the case for a lower terminal rate than the central bank hinted at last week. Bitcoin plunges below $20,000 It’s been a rough couple of days for bitcoin which finds itself back below $20,000 and down more than 4% on the day. It has recovered a little after previously being off more than 6% but this is a far more severe decline than we’re seeing in other risk assets which may be a worrying sign for crypto bulls. The declines may be linked to the plunge in FTT which nosedived amid reported concerns over Alameda’s balance sheet. We’ve seen this kind of situation have ripple effects on prices before and this may explain the sharper declines we’re seeing this week. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Weekly Commitment of Traders update - Buying of crude oil moderated, ICE gas oil net long reduced to a 30-month low

Speculation Around China’s Zero-Covid Commitment Helped The Price Of Crude Oil

Craig Erlam Craig Erlam 08.11.2022 12:36
Oil pares gains as China Covid cases jump Oil prices are easing a little on Tuesday, a day after Brent crude came within a whisker of $100 again. It’s traded below this major psychological level since July but recent developments have propelled the price higher again, up more than 20% from the September lows. OPEC+ had a big hand to play in that but speculation around China’s zero-Covid commitment may also be a factor in recent gains. That said, those rumours still haven’t been confirmed and in fact, outbreaks in Guangzhou and other major cities have led to increased restrictions. It may be a little early to get carried away with speculation, especially when any significant change in policy would represent an enormous shift from the status quo. Still, the performance of Chinese stocks suggests there’s a belief that there’s no smoke without fire, which may also be enabling the continued rise in crude. Gold edges lower amid a stronger dollar The dollar is staging a small recovery around its recent lows which is weighing a little on gold this week. The yellow metal surged late last week following the jobs report before stumbling around $1,680 which has previously been a notable level of resistance. Still, it’s holding onto the bulk of those gains quite well which suggests traders are anticipating some good news from the inflation data on Thursday, at least good enough to convince the Fed of the need to slow the pace of tightening next month. Anything that suggests they won’t need to rise as high as the Fed indicated could give gold another boost. Although given what the central bank said last week, you have to wonder if they are in fact anticipating another stubborn reading. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Crude decreases amid risk boosting greenback and unclear situation in China

Situation in China acts on crude oil prices. Brent price doesn't seem to play in favour of Democrats

Craig Erlam Craig Erlam 07.11.2022 22:39
Continuing to creep higher Oil prices are continuing to creep closer to $100 amid ongoing speculation over China’s Covid-zero commitment and a little more positive sentiment in broader markets. Brent and WTI are treading water but it’s been choppy at times, with the former coming within a dollar of triple figures. That won’t make good headlines at a time when the Democrats in the US need all the good headlines they can get as people head to the polls. But with OPEC+ cutting output aggressively in anticipation of a demand shock, there’s little they can do. As we’ve seen following President Biden’s wasted trip to Saudi Arabia months ago. Gold choppy after jobs report Gold is choppy at the start of the week but largely holding onto Friday’s gains. I struggle to see how the jobs report was good for gold – especially to the tune of 3% – but that is the markets right now and perhaps there was some delay from what was an overreaction to the Fed a couple of days earlier. Still, the yellow metal is trading around $1,680 where it has now stalled. This has been a notable area of support and resistance in recent months and so it is proving again. If it can overcome this, $1,700 will be the next test, followed by $1,720 above that. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Oil ticks higher, gold choppy - MarketPulseMarketPulse
Forex: US dollar against Japanese yen amid volatility and macroeconomics

Craig Erlam (Oanda) previews the next week - 04/11/22

Craig Erlam Craig Erlam 04.11.2022 23:03
US This week will be massive for markets as investors closely watch to see how inflation moderates. In addition to watching to see if inflation comes down from a 40-year high, Wall Street will pay close attention to the midterm elections. Right now polls are suggesting Republicans have a good chance to take over both the House and Senate.   In addition to the inflation report and the midterm election, traders will also closely monitor the preliminary University of Michigan Survey. Sentiment is expected to soften, but traders will pay close attention to inflation expectations, which have been pushing higher.   EU  A quiet week as far as upper-tier economic data is concerned which means the focus next week will be on commentary from ECB policymakers including President Lagarde on Monday, among others.  UK The dust continues to settle in the UK but as BoE Governor Bailey indicated last week, it’s going to take time to regain confidence and credibility in the markets. The events of the last couple of months have severely damaged the UK’s reputation which was already tarnished by those of recent years. All eyes are now on the Autumn Statement on 17 November.  We’ll get a steady stream of BoE commentary throughout the week which comes on the back of a very dovish rate hike, in which Bailey and colleagues pushed back strongly against market expectations. GDP data on Friday will be of interest but most have already accepted that the country is in recession. Russia Inflation data is the most notable release next week after the central bank left its key rate unchanged at 7.5% in October.  South Africa A relatively quiet week containing a few tier two or three economic releases, the highlight of which is probably manufacturing production figures on Thursday, both of which are expected to have declined in September. Turkey Official inflation reached more than 85% in October as the central bank continues to slash interest rates. The inflation data is clearly no deterrent and if anything, President Erdogan sounds more determined than ever to see rates fall further.  Industrial production and unemployment data among the economic releases next week. Switzerland Inflationary pressures eased a little last month which may come as a relief to SNB policymakers, some of whom we’ll hear from next week including Chairman Jordan. Further hikes still look likely but to what extent? Policymakers may shed some light.  China As China’s zero-Covid policy continues, the recently released manufacturing and non-manufacturing PMIs for October fell to 48.7 and 49.2, respectively, below the 50 threshold separating contraction from expansion.  Investors should pay close attention to China’s foreign trade data for October on Monday to see if China’s trade surplus is tending to deteriorate. The CPI on Wednesday is also key as an increase will reduce the ability of the PBOC to support the economy. The market is currently discussing the possibility of the PBOC lowering the reserve requirement ratio again in order to release more liquidity. These policies may support a more accommodative monetary policy environment in China, which will support growth.    India Very few economic releases are due next week with the only one of note being industrial output on Friday.  Australia & New Zealand The AUDUSD and NZDUSD have rallied slightly as market risk sentiment has warmed over the past two weeks. They’ve been broadly weak overall against the US dollar as China’s zero-Covid policy continued, and the market was still digesting the Fed rate moves.  The RBA raised interest rates by 25 bps at its monetary policy meeting on 1 November, raising the cash rate from 2.60% to 2.85%. The RBA updated its forecasts, raising its expectation for peak inflation to 8.0% from 7.75%. Third quarter CPI released last week rose by 7.3% in October, above market expectations of 7.0% and the previous value of 6.1%. The RBA is likely to continue its policy of raising interest rates at the next meeting on 6 December.  As the overall level of inflation in New Zealand remains high, the market expects a 50-75 bps rate hike at the RBNZ’s next central bank rate meeting on 23 November.  Japan The Bank of Japan remained committed to its super-loose monetary policy at its last meeting while raising inflation expectations across the board (the CPI ex-fresh food forecast for FY2023 was raised from 1.4% to 1.6% per annum). It will release its summary of opinions from board members on Monday. Japan may intervene again in the FX market in the coming weeks if USDJPY continues to aggressively rally. There has been discussion in the market about whether the Bank of Japan will undertake a step-by-step exit from its yield curve control (YCC) in the future, although policymakers have pushed back against this. Singapore According to the Monetary Authority of Singapore, core inflation risks remain tilted to the upside, and the economy is expected to grow at a below-trend rate in 2023. Singapore’s CPI recently hit 7.5% in September, with the core CPI at 5.3%. Business confidence also fell sharply to -20 in the third quarter, compared to -8 previously.  No major economic releases are due next week. Economic Calendar Saturday, Nov. 5 Economic Events Berkshire Hathaway Inc reports Q3 earnings Sunday, Nov. 6 Economic Events Daylight Saving Time ends in the US The annual UN climate summit, COP27 begins in Egypt Monday, Nov. 7 Economic Data/Events Australian Foreign reserves China foreign reserves and trade Singapore foreign reserves Germany industrial production Thailand CPI ECB President Lagarde speaks to the European Commission/ECB high-level conference on the framework for a digital euro ECB board member Panetta participates in a panel discussion at the same event Fed’s Collins and Mester speak at a symposium on women in economics hosted by the Cleveland Fed Fed’s Barkin participates in a discussion about inflation Eurozone finance ministers meet in Brussels Tuesday, Nov. 8 Economic Data/Events US midterm elections Australia consumer confidence, household spending Eurozone retail sales France trade Japan household spending, leading index Mexico international reserves New Zealand truckometer traffic index, inflation expectation Bundesbank symposium; speeches by Nagel and Enria Riksbank’s Breman speaks about the global economy ECB’s Wunsch gives a public lecture in Geneva entitled “Germs, War and Central Banks” BOE’s Mann participates in a panel at a conference on global risk, uncertainty and volatility hosted by the Swiss National Bank, Fed and BIS in Zurich BOE Chief Economist Pill participates in a panel at the UBS European Conference in London BOJ announces the outright purchase amount of government securities Wednesday, Nov. 9 Economic Data/Events US wholesale inventories, MBA mortgage applications Mexico CPI Hungary CPI Russia CPI  China aggregate financing, PPI, CPI, money supply, new yuan loans Japan BoP, bank lending New Zealand card spending Poland rate decision: Expected to keep base rate unchanged at 6.75% South Korea jobless rate, bank lending to households UK RICS home prices EIA crude oil inventory New York Fed President John Williams speaks at a conference on global risk, uncertainty and volatility jointly hosted by the Swiss National Bank, Fed and BIS in Zurich Fed’s Barkin speaks about the economic outlook at the Shenandoah University School of Business in Winchester, Virginia RBA Deputy Governor Michele Bullock speaks at the 2022 ABE Annual Dinner in Sydney ECB’s Elderson participates in a panel at an event organized by Euro-Mediterranean Economists Association Norges Bank and Riksbank release their respective financial stability reports BOE’s Haskel speaks at a Digital Futures at Work Research Centre event titled “Restarting the Future: How to Fix the Intangible Economy” Hong Kong Chief Executive Lee is scheduled to address a British Chamber of Commerce-organized webinar  Thursday, Nov. 10 Economic Data/Events US CPI and jobless claims Norway CPI Australia consumer inflation expectations Italy industrial production Japan money stock, machine tool orders Mexico rate decision: Expected to raise the overnight rate by 75bps to 10.00% New Zealand home sales South Africa manufacturing production Thailand consumer confidence Dallas Fed President Logan and Kansas City Fed President George speak at an energy and economy conference jointly hosted by their banks Cleveland Fed President Mester speaks about the outlook for the economy and monetary policy at a virtual event hosted by Princeton University BOE Deputy Governor Ramsden participates in a panel at the Next STEP Global Conference 2022 hosted by PIIE and National University of Singapore’s Lee Kuan Yew School of Public Policy in Singapore BOE’s Tenreyro delivers a keynote speech at the Society of Professional Economists Annual Conference in London SNB’s Maechler delivers keynote speech at the 17th Annual Meeting of SFI in Zurich ECB’s Schnabel, Kažimír and Vasle speak at an event in Ljubljana, Slovenia. Schnabel also participates in a roundtable discussion at the Bank of Slovenia ECB publishes its Economic Bulletin RBNZ releases a review of monetary policy implementation United Nations publishes its “Food Outlook” report Friday, Nov. 11 Economic Data/Events US Veterans Day holiday. The stock market will be open US University of Michigan consumer sentiment China FDI Singles’ Day (Shopping event) in China ECB’s Panetta delivers a talk at the Italian Institute for International Political Studies in Milan ECB’s de Guindos, Pablo Hernández de Cos and Centeno speak at XXVII Encuentro de Economía en S’Agaró ECB’s Holzmann speaks to journalists at the Club of Economic Writers in Vienna ECB Chief Economist Lane participates in a policy panel at the 23rd Jacques Polak Annual Research Conference in Washington EU releases its autumn economic forecast Germany CPI Hong Kong GDP India industrial production Japan PPI Mexico industrial production New Zealand food prices, PMI Turkey industrial production, current account UK industrial production, GDP Sovereign Rating Updates Switzerland (Fitch) Iceland (S&P) This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. Week Ahead - Control of Congress - MarketPulseMarketPulse
From UFOs to Financial Fires: A Week of Bizarre Events Shakes the World

Fed Fear That The Dovish Pivot Will Send The Wrong Signal And The Markets Would Overreact

Craig Erlam Craig Erlam 04.11.2022 11:44
It’s been another fascinating week in financial markets and it’s not over yet, with the US jobs report still to come amid some interest rate uncertainty. The Fed meeting on Wednesday left investors scratching their heads a little. What was meant to be the pivot moment quickly became something very different; an admission that markets need to price in more. The central bank had given with one hand and taken with the other and investors were left to sulk once more. But perhaps the takeaway is more positive than the markets would have us believe. In scaling back its tightening (probably) in December, the central bank is buying itself time for the data to improve and justify a lower terminal rate. It’s possible that the fear at the Fed was that a slower pace – or “dovish pivot” would send the wrong message and markets would overreact, undermining its tightening efforts. By adding the terminal rate caveat, it’s kept markets on their toes and bought the Fed more time. Or maybe I’m simply reading too much into it but frankly, who isn’t at this point? The fact remains that the pace of tightening will be slower and the Fed will be able to continue making monetary policy restrictive but in a potentially less damaging way while enabling more visibility on the economy. This puts additional emphasis now on the data which could lower the terminal rate and further slow the pace of tightening. While all of the data will be closely monitored and factor into the Fed’s decision-making in December, the two releases at the top of the list are undoubtedly the inflation and jobs reports. And we’ll get two of each of those, the first of which being the October jobs report, later today. Needless to say, investors are a little on edge ahead of the release. Not only was Powell’s caveat unexpected and unwelcome by investors, the labour market remains extremely healthy which means today’s report is likely to be red hot once more. If that doesn’t turn out to be the case, investors may start to see the upside to the Fed’s statements on Wednesday. Optimism ahead of the jobs report Bitcoin is bouncing back ahead of the jobs report alongside other risk assets. Whether it will be able to hold onto those gains will obviously depend on the strength of the report itself, especially in light of the recent Fed comments. Clearly, there’s some sense of optimism out there and bitcoin could be eyeing up $21,000 once more where it ran into resistance in late October. Of course, a failure to hold onto these gains could see $20,000 come under pressure once more. For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.