Ed Moya

Australian CPI expected to rise to 5.2% The Australian dollar is in negative territory on Tuesday. In the North American session, AUD/USD is trading at 0.6405, down 0.28%. Australian CPI expected to rise Australia releases the CPI report on Wednesday. In July, CPI eased to 4.9%, beating expectations and dropping to the lowest inflation rate since February 2022. CPI is expected to rise to 5.2% in August. Inflation remains more than double the 2% target, and the core rate is also high, with the trimmed mean dropping from 6.0% to 5.6% in August. The RBA has raised rates to 4.1%, the highest level since 2012. Have interest rates peaked? That is the thousand-dollar question. The futures markets have priced in a final rate hike before the end of the year at 35%, as investors are betting the Reserve Bank of Australia is likely done with rate tightening. The Australian economy has cooled off as a result of the RBA’s tightening, and the slowdown in China could tip the economy into a recession if rates were to move higher. The central bank is understandably more hawkish, as policy makers don’t want to close the door on further tightening with inflation still well above the target. The new RBA Governor, Michelle Bullock, has warned that the door remains open to further rate hikes and said that upcoming decisions will be based on key data. The RBA minutes from the September meeting indicated that members considered a rate hike, but in the end, opted to pause rates.   In the US, Consumer Board (CB) Consumer Confidence slipped to 103.0 in August, down sharply from a revised July read of 108.7 and shy of the market consensus of 105.5. This marked a 4-month low. Consumers noted concern over rising gasoline prices and high interest rates and the percentage of consumers who expect a recession rose in September, according to the CB. This does not bode well for consumer spending, a key driver of US growth. . AUD/USD Technical AUD/USD is putting pressure on support at 0.6380. The next support line is 0.6320 There is resistance at 0.6446 and 0.6506    

Franc posts 11th straight daily decline versus the dollar US consumer confidence falls to 4-month low 10-year Treasury yield rises 1.2 bps to 4.546% The relief rally was not meant to be for risky assets, but that didn’t seem to matter for USD/CHF.  The US dollar is rallying after consumer confidence fell to 4-month low, new home sales had their largest drop in almost a year, while S&P Corelogic Case-Shiller reported home prices rose to a record high. The economy sure looks like it might break, and it could easily get a lot worse if the Fed needs to take rates much higher.  The dollar is higher on both safe-haven flows and fears the Fed might not be done.   JPMorgan CEO Dimon warned that the Fed might not be done raising rates, highlighting that he is not sure the world is prepared for 7% along with stagflation.  The Dow is having its worst day since March, and it won’t take a lot for momentum selling to heat up.  A government shutdown seems likely as lawmakers are nowhere close to agreeing on deep spending cuts and how much aid should go to Ukraine. A stopgap solution is losing momentum and it seems that House Speaker McCarthy might lose his position as hard-right Republicans are not budging.  The worse the economic outlook becomes; the lower Fed rate hike odds should get but inflation is proving to be tricky here.  Wall Street won’t be able to say the peak is in place and that the disinflation process will remain if we are seeing record house prices, surging oil prices, and a surging dollar. US Data The economy is headed towards a rough patch if you believe the Conference Board’s latest consumer confidence report.  Given how high gas prices are becoming and the record prices it takes to buy a house, the consumer isn’t feeling too good.  Corporate stress is here and as credit conditions tighten further, the labor market is ready to weaken.  The Expectations survey plunged from 83.3 to 73.7, which is below the 80 level that typically signals a recession is coming.        USD/CHF Daily Chart     USD/CHF (a daily chart of which is shown) as of Tuesday (9/26/2023) has been locked into a very strong bullish trend.  Price action is close to hitting 0.9161 level, which is the 38.2% Fibonacci retracement of the 1.0150 to 0.8550 downward move.  If bullish momentum remains intact key resistance lies at the 0.9350 level.  Major support lies at the 0.89o0 level.  

The recent minor corrective pull-back of -4.7% from its 19 September 2023 high of US$93.05 is likely to have ended. Bullish reversal candlestick, a daily “Hammer” sighted after a retest on its upward-sloping 20-day moving average. Key short-term support to watch will be at US$90.30, the pull-back of the former minor “pennant” range resistance. This is a follow-up analysis of our prior report, “WTI Oil Technical: Bullish exhaustion sighted below US$93.80 per barrel key resistance” published on 20 September 2023. Click here for a recap. West Texas Oil (a proxy of WTI crude oil futures) has indeed shaped the bearish counter-trend pull-back movement of -4.7% from its 19 September 2023 minor swing high of US$93.05/barrel to a low of US$88.66/barrel printed yesterday, 26 September which fell short of the earlier highlighted short-term support zone of US$86.30/US$84.90 as per highlighted in our prior analysis. Overall, the price actions of West Texas Oil are still evolving within a major uptrend phase which is still intact since its 4 May 2023 low of US$63.67 per barrel.     Key bullish reversal sighted after a retest on the 20-day moving average   Fig 1:  West Texas Oil medium-term& major trends as of 27 Sep 2023 (Source: TradingView, click to enlarge chart) Interestingly, there was a significant change in sentiment yesterday that led to the formation of a daily bullish reversal “Hammer” candlestick pattern right after a retest on the upward-sloping 20-day moving average that is acting as a support at around US$88.90/barrel. These positive technical elements where price actions have staged an intraday reversal from yesterday, 26 September intraday low of US$88.66/barrel and closed near the upper end of its intraday range suggests a potential start of another medium-term impulsive up move sequence within its major uptrend phase.   Bullish breakout from minor “pennant” range configuration Fig 2:  West Texas Oil minor short-term trend as of 27 Sep 2023 (Source: TradingView, click to enlarge chart) Yesterday’s price actions of West Texas Oil have also staged a bullish breakout from a 5-day minor “pennant” range configuration which indicates a potential continuation of its prior short-term bullish movement above the 20-day moving average. Watch the US$90.30 key short-term pivotal support for a potential push up towards US$93.80 and a clearance above it sees the next intermediate resistance coming in at US$95.80. On the other hand, failure to hold at the US$90.30 key support invalidates the minor bullish breakout scenario for another round of corrective pull-back to expose the next intermediate support zone of US$88.90/US$88.06.  

Fed rate hike expectations for November 1st stand at 18.6% vs 30% from a week ago Germany IFO Business climate declines for a fifth straight month 10-year Treasury yield surges 7.7bps to 4.511% The euro softened earlier after an uninspiring German business outlook suggests the eurozone’s largest economy still has a rough road ahead.  This was the fifth straight month of declines for Germany’s business confidence. Investors focused on the expectations survey’s slight miss. The IFO economists believe that a third quarter contraction is likely.  As long as the ECB is done raising rates, the outlook should gradually improve for Germany.  US dollar strength remains as global bond yields shift higher on fears that central banks will follow the Fed’s lead and keep rates higher over the long-term. It is a slow start to Monday, with one economic release and one Fed speaker, but right now it seems a weaker consumer is steadily getting priced in.  The Chicago Fed National Activity index showed slower growth in August, which didn’t surprise anyone. Fed’s Goolsbee, one of the more dovish members, noted that the risk of inflation staying too high is the bigger risk. He is still holding onto hopes that a soft landing is possible, but he will likely be data dependent. Inflation flare up risks are growing and that still suggests the Fed might have to do more tightening despite the trajectory of the economy. Retail/US consumer Retail stocks, Foot Locker and Urban Outfitters both got downgraded to hold by Jefferies as the consumer is faced with headwinds. Softer spending with apparel and footwear will be driven on the resumption of student loan repayments.  Last week, Bankrate’s survey noted that 40% of Americans feel financially burdened by holiday shopping.  Two weeks ago, Deloitte forecasted soft holiday sales.   It is no surprise that the consumer won’t be spending as much this holiday season given excess savings will have disappeared, credit card balances will become crippling with higher rates, and the labor market will be seeing some type of a slowdown. Sticky inflation which comes with renewed dollar strength risks remain a risk on the table as oil prices appear poised to remain elevated all the way through the winter. Also on the minds of traders is the rising risk of a government shutdown next week. EUR/USD Daily Chart The dollar remains king but that could show some signs of exhaustion once the euro falls towards the 1.05 handle.  As long the global outlook doesn’t fall apart, the dollar should be nearing a peak.    

30-year Treasury yield rose 12bps to 4.645% vs 15.19% which was the peak at 1981. Bloomberg dollar index has best rally in three weeks, which is also highest level since December BOJ Governor Ueda stands on dovish ground, yen free to fall; PM Kishida delivers plan to ease inflation pain Bank of Japan Governor Kazuo Ueda and his deputy governor Uchida are committed to their ultra-easy policy.  Governor Ueda noted that there was “very high uncertainty” over whether companies would continue to increase prices and wages.  Uchida stated that the central bank needs to patiently continue monetary easing.  He also reiterated that they are closely watching FX markets. Japan’s Prime Minister Kishida also unveiled new economic measures that should help deliver sustainable wage growth.  Kishida expressed his unhappiness with the yen, noting that excessive currency moves are not desirable and that he wants to monitor markets with vigilance. The pressure to stop the yen’s slide is building and the current move in Treasuries makes dollar strength likely to remain intact. USD/JPY Daily Chart     As of late March, the US dollar continues to assert renewed strength as a a result, USD/JPY has retested prior levels that  triggered intervention last year.  The path to 150 seems like it should be there given the major reset Wall Street is having with pricing in higher-for-longer. Everyone wants to know when does Japan step in and support the yen, or can they just ditch their easy policy?  Excessively overbought territory could last a while longer, but it seems  150 to 155 will remain key levels. Next months inflation report should include some upward revisions, which should mean traders might become more optimistic about a policy shift or the abandoning of yield curve control.  Yen weakness might last a little while longer, but FX traders are anxious for when Japan is ready to make a meaningful policy change.  

US dollar weakness emerges on as inflation expectations fall to lowest levels in over two year; November Fed rate hike odds remain a coin flip Oil rallies for a third straight week on tightness concerns US oil rig count rises by 2 to 515 The one-way move with oil prices has finally started to provide some underlying support for the Canadian dollar.  The Canadian currency however is starting to show some signs of exhaustion as short-term risks to the outlook grow.  The short-term crude demand outlook might be poised to take a big hit but it won’t matter as the global market supply deficit will keep oil above the $90 level throughout the rest of the year.  Unless sentiment deteriorates significantly for the Canadian economy, loonie strength could persist. USD/CAD should have decent support from the 200-day SMA which resides at the 1.3465 level. Canadian Economic Data/News: Canadian house prices declined again as the impact from the BOC’s tightening cycle continues to weigh on the housing market.  Existing Canadian home sales dropped 4.% in August from July, much worse than the expected 0.2% dip.  Housing shortages however kept home prices supported, rising 0.4% to C$757,600. The Canadian economy will likely see greater efforts by the PM Trudeau to address affordability concerns.  On Thursday, the PM unveiled plans to cut federal sales tax on construction of new apartment buildings.  Canada’s economy is softening, but optimism still remains weakness will happen in an orderly fashion.       Oil After a third week of gains, crude prices are not seeing the typical profit-taking as the short-term crude demand outlook gets a boost from improving US and Chinese economic data.  Oil is surging but so far it really has been passed on to the consumer as gas prices are still below $3.90 a gallon. $100 oil is not that far away, but that might not be a one-way trade as short-term risks to the outlook could shift consumer views and attitudes. The oil market is going to stay tight a while longer, but we might need to see a fresh catalyst to send oil to triple digits.    

Markets leaning towards possibly one last BOE rate hike (implied rate peak of 5.527% at Feb 1st 2024 meeting) UK house prices tumble to lowest levels since 2009 Doji pattern possibly invalidated as bearish momentum remains   The British pound is declining as expectations grow that for the BOE to deliver one last hike as the consumer is quickly weakening.  Stagflation risks are here as housing market concerns worsen and are now accompanied with a cautious consumer who is battling rising inflation expectations. Any lessons learned from the ECB could be that the BOE will have a much worse growth outlook. The latest update from retailer, John Lewis and Waitrose signaled a tough environment as the consumer struggles with inflation and becomes cautious with big-ticket goods.  John Lewis was expected to deliver a major overhaul, but a 4% drop with online sales means they won’t be turning profitable anytime soon.  If they have to wait till 2028 to turn a profit, investors might become more skeptical about the UK consumer spending trends. Housing Woes A key UK house price index fell to a 14-year low reinforced the belief that the property slump will not be improving anytime soon given how high mortgage rates have risen and over a deteriorating outlook. Both Halifax and Nationwide are highlighting falling house prices and that trend will likely continue.   GBP/USD Daily Chart   The GBP/USD (daily chart) as of Thursday (September 14th 2023) has made a significant breakdown below multiple support levels, indicating a potential acceleration for the pair.  Price action has fallen below the 200-day SMA and could target the June low at around the 1.2310 level.  Given the recent string of upbeat US economic data points, king dollar might have one major rally before exhaustion settles in. To the upside, the downward sloping trendline that started in the middle of July provides major resistance. If price is able to close above the 1.2550, further upside could be targeted if Wall Street is convinced that the Fed has a peak in place for rates.    

Euro falls to the lowest levels since May after ECB hikes rates and delivers an abysmal growth forecasts, while upgrading 2023 and 2024 inflation outlooks Post ECB decision – October 26th ECB rate hike odds hover around 35.4% US retail sales remained strong on back-to-school spending and despite the extra energy costs at the pump The euro initially spiked after the ECB raised rates, but quickly tumbled after traders digested the ECB forecasts that suggest stagflation might be here.  Shortly after, the US posted robust retail sales and jobless claims data, which basically drove home the message that the US economy will easily outperform the eurozone economy throughout the rest of the year.  Investors were thinking that the US might be poised to deliver more rate cuts than the eurozone, but that seems like that won’t be happening anytime soon.   EUR/USD – 30 minute chart   ECB The summer break is over for the ECB and they have a tough job ahead.  Inflation remains too high and that is forcing the ECB to signal that they ” will ensure that the key ECB interest rates will be set at sufficiently restrictive levels for as long as necessary.” The market was split on whether they would raise rates, but when they processed the forecasts, they realized stagflation risks are here.   ECB Forecasts:  2023 GDP forecast cut from 0.9% to 0.7% 2024 GDP forecast cut from 1.5% to 1.0% 2023 GDP forecast cut from 1.6% to  1.5% 2023 Inflation forecast raised from 5.4% to 5.6% (core steady at 5.1%) 2024 Inflation forecast raised from 3.0% to 3.2%(a tick lower to 2.9% 2025 Inflation forecast lowered from 2.2% to 2.1%(core a tick lower to 2.2%) ECB’S Lagarde Press Conference When asked if she was done with rate hikes, Lagarde noted that some members preferred to pause, but that still a solid majority of members agreed with the decision.  One of the key takeaways from Lagarde is that they won’t be cutting rates anytime soon as inflation is still far from target.  Lagarde repeated this quote a few times, “based on current assessment…. the key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target.” EUR/USD – Daily Chart   The euro might not be ready to punch a one-way ticket to the 1.05 level, but it sure seems like it is heading there.  Price action on the EUR/USD daily highlights the bearish trend has firmly been in place since mid-July.  As the risks for growth continue to deteriorate even further, the euro could see short-term weakness before a bottom is put in place.  Major long-term support could be provided by the 1.04 level, which is the 50% Fibonacci retracement of the September low to July high move. On the other side of the Atlantic, another round of US data supported USD strength after it reminded investors how strong the US economy remains; retail sales ex-auto had a fifth straight increase, producer prices came in hotter-than-expected, and jobless claims remained low.    

The small-cap Russell 2000 which is considered as a better proxy of the US economy has just broken below its key 200-day moving average. It is the worst-performing major US benchmark stock index since August 2023. Its recent major downtrend phase from 5 November 2021 to 16 June 2022 started ahead of the other indices; S&P 500, Nasdaq 100, and Dow Jones Industrial Average. Given such a leading element, a further down move in the Russell 2000 may trigger a similar negative feedback loop into the other US benchmark stock indices. Watch its key short-term resistance at 1,865.   Since the US regional banking crisis that imploded in early March this year, the performance of the small-cap Russell 2000 has not made any headway as it failed to break above its major “Symmetrical Triangle” range resistance at 2,009 in place since 16 August 2022. Also, in the past two months, it has been the worst-performing major US benchmark stock indices where it ended August with a loss of -5.17%, way below the S&P 500 (-1.77%), Nasdaq 100 (-1.62%), Dow Jones Industrial Average (-2.36%). For the current month-to-date performance as of 13 September, the Russell 2000 has remained in the doldrums with a loss of -3.10% and underperformed against the S&P 500 (-0.89%), Nasdaq 100 (-0.98%), Dow Jones Industrial Average (-0.42%) over the same period.   Broke below key 200-day moving average   Fig 1: US Russ 2000 major and medium-term trends as of 14 Sep 2023 (Source: TradingView, click to enlarge chart) The current price actions of the US Russ 2000 Index (a proxy for the Russell 2000 futures) have inched lower since the 1 August 2023 high of 2,009 and it is now almost at a similar price level during the onset of the US regional banking liquidity crisis that erupted on 9 March 2023. Technical analysis and momentum factor are now flashing signs of potential medium-term weakness as yesterday’s daily price action at the close has broken below its key 200-day moving average slightly at the end of yesterday, 13 September US session. Also, the US Russ 2000 Index is the sole US benchmark index that has breached below the key 200-day moving average ahead of the others (S&P 500, Nasdaq 100 & Dow Jones Industrial Average). Interestingly, in the prior major downtrend phase, the US Russ 2000 Index kickstarted the bearish movement ahead of the rest where its all-time high of 2,464 peaked on 8 November 2021 before the respective peak periods of all-time highs of the S&P 500 (4 January 2022), Nasdaq 100 (22 November 2021), Dow Jones Industrial Average (5 January 2022).   Therefore, if the US Russ 2000 starts to exhibit another bout of multi-week down move sequence thereafter and breaks below the major “Symmetrical Triangle” range support at 1,734, it may signal the start of another major downtrend phase for the US benchmark stock indices. Oscillating within a short-term minor downtrend   Fig 2: US Russ 2000 short-term minor trend as of 14 Sep 2023 (Source: TradingView, click to enlarge chart) Since its 1 September 2023 high of 1,931, the price actions of the US Russ 2000 Index have evolved within a minor descending channel and traded below a downward-slopping 20-day moving average which indicates a short-term minor downtrend is in motion. Watch the 1,865 key short-term pivotal resistance to maintain the short-term bearish scenario to see the intermediate supports coming in at 1,832 and 1,814 (Fibonacci extension from 1 September 2023 high, lower boundary of the minor descending channel & 3 April/19 April 2023 swing lows). On the flip side, a clearance above 1,865 negates the bullish tone for a squeeze up towards the 1,894/1,898 resistance zone (congestion area of 1 September/6 September 2023 & 61.8% Fibonacci retracement of the current minor down move from 1 September 2023 high to 13 September 2023, US session low).  

Australia’s consumer confidence falls sharply Australia’s business conditions improve Markets eye US inflation report on Wednesday The Australian dollar has edged lower on Tuesday after starting the week with massive gains. In the North American session, AUD/USD is trading at 0.6412, down 0.28%. Australia’s consumer confidence slides Australian consumers are in a sour mood, as they feel the squeeze of high interest rates and stubborn inflation, which has led to heavily-debted households. The Westpac Consumer Sentiment Index fell by 1.5% in September to 79.7, following a decline of 0.4% in August. This missed the consensus estimate of 0.6%. Consumer sentiment remains at its lowest levels since 2020, during the Covid pandemic. The corporate sector is showing more confidence than consumers, as businesses have shown stronger resilience to higher rates and increasing inflationary pressures than consumers. NAB Business Conditions climbed to 13 in August, up from 11, while business confidence remained at 2 points, indicative of slight optimism. The Australian dollar roared out of the gates on Monday, gaining 0.85%. The driver of the uptick was China’s August inflation release. CPI rose 0.1% y/y, after a surprise decline of 0.3% in July. China’s slowdown has raised alarm bells about the impact it will have on global growth, and the Asian giant is Australia’s number one trading partner. The Aussie is sensitive to economic developments in China, as we saw on Monday, and China’s Industrial Production, which will be released on Friday, could be a market-mover for the Aussie. Next week features a host of central bank meetings, and one of the most closely watched will be the Federal Reserve meeting on September 20th. Jerome Powell has broadcast loud and clear that the battle against inflation isn’t over and rate hikes remain on the table, but are the markets paying attention? Investors have priced in a pause in September at 93% and are talking about rate hikes in 2024.   The US releases the August inflation report on Wednesday, which is unlikely to change expectations about a September hold, although the inflation release could have an impact on the Fed’s rate path for the final quarter of the year. . AUD/USD Technical AUD/USD is putting strong pressure on support at 0.6405. Below, there is support at 0.6330 There is resistance at 0.6453 and 0.6528    

Post-BOJ Initial reaction – yen jumped, dollar fell, gold rallied, and equities rose. Some of these moves have started to reverse Japan’s Overnight Swap Indexes have an implied rate of 0.042% by the January 23rd BOJ policy meeting US 3-year Treasury attracts highest yield since 2007 (4.660% vs 4.650% pre-sale) The Japanese yen surged in Asia following BOJ Governor Ueda’s verbal intervention. Ueda noted that the BOJ might know enough about wage pressures by year-end, in other words if they could be ready to abandon negative rates.  The BOJ blackout period typically starts two days before the first policy meeting, which means we could have a full week of verbal intervention before the September 21st policy meeting starts. Japan officials will likely hesitate to actually intervene until some of the major US risk events are behind us. ​ No sense in selling dollars before seeing the latest US inflation report, which could easily upend any action. ​ A new week is here, and it looks like financial markets were ready for a major reset. Dollar-yen bearishness could also gain momentum if risk appetite deteriorates here. The yen got a boost after some weekend reading reaffirmed Wall Street’s belief that the Fed will pause rate increases in September, then review the latest economic data and assess if more rate hikes are needed in November/December.  The WSJ’s Nick Timiraos, who’s also known as the Fed whisperer has markets convinced that officials view the risks as more balanced, so a September surprise is very unlikely. It seems many risk events are on this week’s calendar, so we could see other drivers besides more chatter from Japanese officials and US CPI/retail sales data/inflation expectations.  The $AAPL This will be a big week for tech given the recent slide with some of the mega-cap tech stocks.  Apple was in the headlines after they decided to stick with Qualcomm’s 5G modems for their smartphones. Apple was trying to produce similar chips as soon as 2024, but it seems they aren’t there just yet.  The Qualcomm deal for Snapdragon 5G Modem-RF Systems will cover smartphone launches in 2024, 2025 and 2026.  This is great news for Qualcomm shares, while Apple shares will mostly await what happens with Tuesday’s important launch event.  Expectations are for Apple to unveil the new iPhone 15 and show how AI will be used.   $TSLA Tesla is also getting a boost after Morgan Stanley upgraded the EV giant and raised their price target from $250 to a street-high $400 a share.  The upgrade was driven by hopes that their Dojo supercomputer could help accelerate the adoption of robotaxis and network services.   Equities and risk appetite will have a handful of events to determine if a rebound is justified: Tuesday is all about the Apple event. Wednesday focuses on the US inflation report, which should show rising gasoline prices sent headline inflation higher, but the core readings are likely to remain subdued.  Thursday will be busy with the UAW strike deadline, a potential pause by the ECB, slight labor weakness from jobless claims data, and a soft retail sales report.  For Wall Street, Thursday’s focus should fall on the UAW strike deadline, which falls a minute before midnight.  A potential UAW strike of 10 days could trigger a recession for the Michigan economy and cost $5.6 billion in US GDP.  Friday contains the release of the University of Michigan inflation expectations, which are important for the higher for longer trade. Any yen strength could be short-lived until we get beyond some of the big market events of the week.   USD/JPY Daily Chart      Bearish price on USD/JPY , a daily chart of which is shown, is tentatively respecting key trendline support that started from the July 28th low.  The knee-jerk selloff spurred from BOJ Governor Ueda’s verbal intervention might not be the beginning of a new trend just yet.  Given the state of the US economy and its resilience, it appears that Japan’s central bank remains very concerned with the yen’s levels.  If USD dollar strength reemerges, the 147.80 level remains critical resistance.  On the other hand, if risk aversion runs wild, the 145.00 level provides initial support, followed by the 143.75 level.  

US This week is all about the US CPI report and retail sales data. If the US demand for goods didn’t weaken that much and if inflation heated up, rate hike expectations for the November meeting might become the consensus.  The inflation report might not be as clear as headline inflation will obviously rise given the surge in gasoline prices, but core might deliver another subdued reading.  Moderation with consumer spending will be the theme as Americans deal with higher energy prices, rising debt levels, and as confidence softens.   Investors will also pay close attention to the University of Michigan’s inflation expectations on Friday. The 1-year outlook for prices may drop from the 3.5% August reading.  Fed speak will be nonexistent as the blackout period begins for the September 20th policy meeting.   Eurozone The European Central Bank meets next week and it’s not clear at this stage what decision they will come to. Refinitiv is pricing in around a 65% chance of a hold, which may signal the end of the tightening cycle – not that the ECB would in any way suggest that at this stage – but expectations do differ. There’s every chance the committee will push through one more, at which point the data is expected to improve regardless making a Fed-style exit all the more difficult. Ultimately, it will likely come down to the projections which will be released alongside the decision. ZEW surveys aside, on Tuesday, the rest of the week is made up of tier-three data. UK  Potentially a big week for the UK ahead of the next monetary policy meeting on 21 September. Andrew Bailey and his colleagues this past week hinted that the decision is in the balance and not the foregone conclusion many expect. Markets are pricing in a more than 70% chance of a hike and more than 50% of another after that by February. If what they said is true, then the labor market report on Tuesday could be hugely significant as further slack could give those on the fence the reassurances they need that past measures, among other things, are working and more may not be needed. Huw Pill also speaks on Monday while Catherine Mann will make an appearance in Canada on Tuesday. GDP on Wednesday could also be interesting, with the rest of the week made up of less influential releases. Russia The CBR is expected to leave the key rate unchanged at 12% on Friday. It hiked very aggressively at the last meeting – from 8.5% – so there is scope for another surprise, with inflation having risen again last month to 5.1%. The rouble has also been in steady decline after rebounding following the last announcement, to trade not far from its recent lows against the dollar.  South Africa A relatively quiet week ahead, with manufacturing figures due on Monday and retail sales on Wednesday. Turkey The CBRT is desperately trying to get inflation under control again with successive large interest rate hikes. In response the currency has stopped making new lows but it has drifted lower again over the last couple of weeks since the surprisingly large last hike. It’s sitting not far from the pre-meeting lows now and inflation data this past week won’t have helped, rising to 58.94% annually. More rate hikes are likely on the way. Next week the focus is on unemployment and industrial production figures on Monday. Switzerland A very quiet week to come, with PPI inflation the only economic release. We’ve been seeing some deflation in recent months in the PPI data which will be giving the SNB some comfort that price pressures are back under control. Another rate hike is no longer viewed as guaranteed, with markets slightly favoring a hold over the coming meetings but it is tight.  China The much sought-after consumer and producers’ price inflation data for August will be released this Saturday where market participants will have a better gauge of the current deflationary conditions in China. After a slight improvement in the two sub-components of August’s NBS Manufacturing PM where new orders and production rose to their highest level since March at 50.2 and 51.9 respectively coupled with an improvement in export growth for August that shrunk to a lesser magnitude of -8.8% y/y from -14.5% y/y in July, there are some signs of optimism that the recent eight months of deflationary pressures may have started to abate. The August CPI is expected to inch back up to 0.2% y/y from -0.3% y/y in July and the PPI is forecast to shrink at a lesser magnitude of -3% y/y in August versus -4.4% in July. If the PPI turns out as expected, it will be the second consecutive month of improvement from a persistent loop of deflationary pressure in factory gate prices since November 2022. Other key data to focus on will be new yuan loans and M2 money supply for August which will be released on Monday. It will provide a sense of whether China’s economy is slipping into a liquidity trap despite the current targeted monetary and fiscal stimulus measures enacted by policymakers. Lastly, the housing price index, industrial production, retail sales, and the unemployment rate for August will be released on Friday with both retail sales and industrial production expected to show slight improvement; 2.8% y/y for retail sales over 2.5% y/y recorded in July, 4% y/y for industrial production versus 3.7% in July. Market participants will be keeping a close eye on youth unemployment for August after July’s figure was temporarily suspended by the National Bureau of Statistics without any clear timeline for the suspension. The youth joblessness data in China is of key concern after the youth unemployment rate skyrocketed to a record high of 21.3% in June, around four times more than the national unemployment rate of 5.3%. Lastly, China’s central bank, the PBoC, will announce its decision on a key benchmark interest rate, the 1-year medium-term lending facility rate on Friday and the expectation is no change at 2.50% after a prior cut of 15 basis points.  India Inflation and balance of trade for August will be the focus for the coming week. Inflation data is released on Tuesday and is expected to dip slightly to 7% y/y from 7.44% in July, the highest since April 2022. Balance of trade will be released on Friday and the expectation is for the deficit to widen slightly to -$21 billion from -$20.67 billion in July.   Australia On Monday, the Westpac consumer confidence change for September is expected to improve to 0.6% m/m from a reading of -0.4% m/m in August, following three consecutive interest rate pauses from RBA. The key employment change data for August will be released on Thursday with 24,300 jobs expected to be created, an improvement on the 14,600 reduction in July. Meanwhile, the unemployment rate is expected to slip to 3.6% from 3.7% in July. New Zealand Electronic retail card spending for August is due on Tuesday and is forecast to dip to 1.4% y/y from 2.2% in July. That would represent a declining trend in growth in the past five months. Next up, food inflation for August will be released on Wednesday; its growth rate is expected to slow to 7.8% y/y from 9.6% in July. That would be the slowest growth in food inflation since June 2022. Japan A couple of key data points to note for the coming week. Firstly, the Reuters Tankan Index on manufacturers’ sentiment on Wednesday; after a big jump to +12 in August – its highest level recorded so far this year – sentiment is expected to taper off slightly to +10 for September. Producers’ price index for August will be released on Wednesday and a slight dip is expected to 3.2% y/y from 3.6% in July. Lastly, on Thursday, we will have data on machinery orders from July with the consensus expecting a further decline of 10.7% y/y from -5.8% in June. Singapore One key data to focus on is the balance of trade for August which will be out on Friday. The trade surplus is being expected to increase slightly to $7 billion from $6.49 billion in July. That would be the fourth consecutive month of expansion in the trade surplus.  

US This week is all about the US CPI report and retail sales data. If the US demand for goods didn’t weaken that much and if inflation heated up, rate hike expectations for the November meeting might become the consensus.  The inflation report might not be as clear as headline inflation will obviously rise given the surge in gasoline prices, but core might deliver another subdued reading.  Moderation with consumer spending will be the theme as Americans deal with higher energy prices, rising debt levels, and as confidence softens.   Investors will also pay close attention to the University of Michigan’s inflation expectations on Friday. The 1-year outlook for prices may drop from the 3.5% August reading.  Fed speak will be nonexistent as the blackout period begins for the September 20th policy meeting.   Eurozone The European Central Bank meets next week and it’s not clear at this stage what decision they will come to. Refinitiv is pricing in around a 65% chance of a hold, which may signal the end of the tightening cycle – not that the ECB would in any way suggest that at this stage – but expectations do differ. There’s every chance the committee will push through one more, at which point the data is expected to improve regardless making a Fed-style exit all the more difficult. Ultimately, it will likely come down to the projections which will be released alongside the decision. ZEW surveys aside, on Tuesday, the rest of the week is made up of tier-three data. UK  Potentially a big week for the UK ahead of the next monetary policy meeting on 21 September. Andrew Bailey and his colleagues this past week hinted that the decision is in the balance and not the foregone conclusion many expect. Markets are pricing in a more than 70% chance of a hike and more than 50% of another after that by February. If what they said is true, then the labor market report on Tuesday could be hugely significant as further slack could give those on the fence the reassurances they need that past measures, among other things, are working and more may not be needed. Huw Pill also speaks on Monday while Catherine Mann will make an appearance in Canada on Tuesday. GDP on Wednesday could also be interesting, with the rest of the week made up of less influential releases. Russia The CBR is expected to leave the key rate unchanged at 12% on Friday. It hiked very aggressively at the last meeting – from 8.5% – so there is scope for another surprise, with inflation having risen again last month to 5.1%. The rouble has also been in steady decline after rebounding following the last announcement, to trade not far from its recent lows against the dollar.  South Africa A relatively quiet week ahead, with manufacturing figures due on Monday and retail sales on Wednesday. Turkey The CBRT is desperately trying to get inflation under control again with successive large interest rate hikes. In response the currency has stopped making new lows but it has drifted lower again over the last couple of weeks since the surprisingly large last hike. It’s sitting not far from the pre-meeting lows now and inflation data this past week won’t have helped, rising to 58.94% annually. More rate hikes are likely on the way. Next week the focus is on unemployment and industrial production figures on Monday. Switzerland A very quiet week to come, with PPI inflation the only economic release. We’ve been seeing some deflation in recent months in the PPI data which will be giving the SNB some comfort that price pressures are back under control. Another rate hike is no longer viewed as guaranteed, with markets slightly favoring a hold over the coming meetings but it is tight.  China The much sought-after consumer and producers’ price inflation data for August will be released this Saturday where market participants will have a better gauge of the current deflationary conditions in China. After a slight improvement in the two sub-components of August’s NBS Manufacturing PM where new orders and production rose to their highest level since March at 50.2 and 51.9 respectively coupled with an improvement in export growth for August that shrunk to a lesser magnitude of -8.8% y/y from -14.5% y/y in July, there are some signs of optimism that the recent eight months of deflationary pressures may have started to abate. The August CPI is expected to inch back up to 0.2% y/y from -0.3% y/y in July and the PPI is forecast to shrink at a lesser magnitude of -3% y/y in August versus -4.4% in July. If the PPI turns out as expected, it will be the second consecutive month of improvement from a persistent loop of deflationary pressure in factory gate prices since November 2022. Other key data to focus on will be new yuan loans and M2 money supply for August which will be released on Monday. It will provide a sense of whether China’s economy is slipping into a liquidity trap despite the current targeted monetary and fiscal stimulus measures enacted by policymakers. Lastly, the housing price index, industrial production, retail sales, and the unemployment rate for August will be released on Friday with both retail sales and industrial production expected to show slight improvement; 2.8% y/y for retail sales over 2.5% y/y recorded in July, 4% y/y for industrial production versus 3.7% in July. Market participants will be keeping a close eye on youth unemployment for August after July’s figure was temporarily suspended by the National Bureau of Statistics without any clear timeline for the suspension. The youth joblessness data in China is of key concern after the youth unemployment rate skyrocketed to a record high of 21.3% in June, around four times more than the national unemployment rate of 5.3%. Lastly, China’s central bank, the PBoC, will announce its decision on a key benchmark interest rate, the 1-year medium-term lending facility rate on Friday and the expectation is no change at 2.50% after a prior cut of 15 basis points.  India Inflation and balance of trade for August will be the focus for the coming week. Inflation data is released on Tuesday and is expected to dip slightly to 7% y/y from 7.44% in July, the highest since April 2022. Balance of trade will be released on Friday and the expectation is for the deficit to widen slightly to -$21 billion from -$20.67 billion in July.   Australia On Monday, the Westpac consumer confidence change for September is expected to improve to 0.6% m/m from a reading of -0.4% m/m in August, following three consecutive interest rate pauses from RBA. The key employment change data for August will be released on Thursday with 24,300 jobs expected to be created, an improvement on the 14,600 reduction in July. Meanwhile, the unemployment rate is expected to slip to 3.6% from 3.7% in July. New Zealand Electronic retail card spending for August is due on Tuesday and is forecast to dip to 1.4% y/y from 2.2% in July. That would represent a declining trend in growth in the past five months. Next up, food inflation for August will be released on Wednesday; its growth rate is expected to slow to 7.8% y/y from 9.6% in July. That would be the slowest growth in food inflation since June 2022. Japan A couple of key data points to note for the coming week. Firstly, the Reuters Tankan Index on manufacturers’ sentiment on Wednesday; after a big jump to +12 in August – its highest level recorded so far this year – sentiment is expected to taper off slightly to +10 for September. Producers’ price index for August will be released on Wednesday and a slight dip is expected to 3.2% y/y from 3.6% in July. Lastly, on Thursday, we will have data on machinery orders from July with the consensus expecting a further decline of 10.7% y/y from -5.8% in June. Singapore One key data to focus on is the balance of trade for August which will be out on Friday. The trade surplus is being expected to increase slightly to $7 billion from $6.49 billion in July. That would be the fourth consecutive month of expansion in the trade surplus.  

BOC rate hike odds for the October 25th meeting rise from yesterday’s 23.9% to  28.8% Hours worked climbed to the highest level since February CAD futures open interest rise to best levels since mid-March Canada’s economy isn’t quite ready to cool.  The latest Canadian employment report showed hiring bounced back in August, doubling expectations. The near 40,000 added jobs exceeded the 17,500 consensus estimate and proved that the prior month’s unexpected shedding of jobs was not the beginning of a new trend.  The BOC will pay close attention to the wage growth acceleration of 5.2%, which was expected to soften to 4.7%. There is a lot of data before the October 25th BOC meeting, but it still seems like they’ve reached the terminal rate for this tightening cycle.   Open Interest in Canadian dollar futures The Canadian dollar is the top performing G10 currency and that could continue given how the futures market is positioned.  The last time open interest for Canadian dollar futures were at these levels was the middle of March, which was when USD/CAD started its decline from around the 1.37 level to the 1.3300 area.   Canada’s strong jobs report showed full-time employment rebounded from 1,700 to 32,200, while part-time work created 7,800 jobs, much better-than-the prior month’s decline of 8,100 positions.  The unemployment rate held steady at 5.5%, which was better than the expected increase of 5.6%.    The majority of the job gains stemmed from the professional and technical services, and construction.  The regions that benefited the most were Alberta, British Columbia and Prince Edward Island.  Nova Scotia was the only region that lost jobs.  While the job gains are a positive sign, when you figure in population growth, this pace won’t cut it for keeping the unemployment rate steady.  About 50,000 jobs per month would be needed to support a steady unemployment rate.   USD/CAD 60-minute chart After breaking down below the 1.3650 level, bearish momentum is slowing down ahead of the 1.3600 level.  If the start of next week does not include a risk averse start, the Canadian dollar could have a strong move here.  Unless the uptrend line (which started in July) is broken substantially to the downside, the prevailing bullish trend may remain in place.      

Fed expected to keep rates on hold on September 20th 10-year Treasury yield eases back to 4.248% as 4.36% remains key resistance US retail sales are expected to weaken and the US inflation report will be mixed (core steady, headline rises)   The US dollar rally may have to wait till next week’s inflation and retail sales data. The dollar is slightly softer across the board as Treasury yields soften. It was a rather quiet day in the US as most of the attention stayed on Apple shares and another earnings report that supported the resumption of the disinflation process.  Kroger’s earnings release stated, “we believe inflation will continue to decelerate and the environment will remain challenging for consumers.” Today, we didn’t learn anything new about the short-term direction of inflation and the US economy.  Next week, will either bolster up the Fed hawk argument that more tightening might be needed in November or show the consumer is finally feeling the impact of the Fed’s tightening cycle, as financing costs surge, student-loan repayments come due, and as households run out of excess savings.   USD/CHF Daily Chart       USD/CHF (a daily chart of which is shown) as of Friday (September 8th 2023) has shown the bullish move that started in the middle of July is running out of steam.  Price action in September recaptured both the 50- and 100-day SMAs.  The strong bearish trend that has been in place since last November is being tested and bullish momentum could thrive over the short-term if price is able to recapture the 200-day SMA, alongside making its first higher high since late last year. The bearish case for USD/CHF however could unfold over the coming months.  The cost of capital will clearly be much higher and that will take a major toll on just personal consumption but also corporate spending.  When risk aversion runs wild, USD/CHF may return quickly.  Right now the market is pricing in a soft landing that includes orderly weakness, but that could get rattled if geopolitics deliver a couple shocks to risk appetite.  

US weekly jobless claims drop to lowest levels since February Apple shares slide as China’s crackdown on iPhone use grows; Losing over $200 billion in market value BOJ’s Nakagawa reiterates stance that BOJ and gov’t are monitoring FX rates and impact on economy The US dollar index hit its highest level since March as risk aversion runs wild on higher interest rate fears and as global growth concerns spread to the US.  The dollar is poised to have an eight straight week of gains, but that is somewhat capped against the Japanese yen.  US stocks are falling on concerns that the Fed might not be done tightening and over uncertainty over how far China’s iPhone ban will extend into other parts of American technology.  Also weighing on sentiment is the global growth story that remains uninspiring following slightly better-than-expected China trade data and as fears grow for German industrial output.  For the US economy, the labor market is not softening quickly enough and that makes the Fed stick to the hawkish script that they might not be done raising rates.  The yen got a minor boost after BOJ Nakagawa stated that the central bank will closely coordinate with the government in monitoring foreign exchange rates and paying due attention to any impacts on the economy. Japanese officials will remain consistent with this messaging, but markets won’t react that much unless we significantly more yen weakness. Apple The Nasdaq is sinking as one bad Apple spoils a bunch of mega-cap tech stocks.  Apple’s growth story is heavily reliant on China and if the Beijing crackdown intensifies that could pose a big problem to the bunch of other mega-cap tech companies that rely on China.  The WSJ reported that China is banning iPhone use for government officials at work.  China is delivering some harsh restrictions on overseas technologies, and this could really hamper Apple’s revenue outlook as China is their largest foreign market.  The mega-cap tech trade appears ripe for pullback, but most investors will likely be eyeing the early AI winners and not so many companies that are still in the early stages of their investment.  Microsoft and Nvidia will likely outperform their peers.    USD/JPY Daily Chart     Earlier verbal intervention might have helped stall the dollar’s rally against the yen, but this latest pressure on tech stocks is significantly weighing on sentiment, which could help keep the yen supported. Japan officials are getting unexpected support from a bad Apple outlook, which help support a dollar-yen dip back to the lows seen earlier in the month.  The dollar temporarily surged after jobless claims fell to the lowest levels since February, but some are expecting that to influenced by the impact of Hurricane Idalia. The key levels for dollar-yen remain 145.80 and 148.00, with volatility expected to remain elevated given a breach of either the 145 or 150 levels.  If the broader dollar strengthening cycle remains that will eventually tip the scales of the massive divergence in central bank policy. One more Fed rate hike getting fully priced in might not be enough to get USD/JPY back to last October’s high, so you might start to see some bearish positioning.    

EU and China Service PMIs drive global growth concerns UK Final Services PMI revised higher but downward trend remains Fed’s Waller (hawk) says “There is nothing that is saying we need to do anything imminent anytime soon.” GBP/USD (daily chart) as of Tuesday (9/5/2023) has made a quick and strong breakdown below multiple support levels, indicating a potential bearish breakdown could target the 38.2% Fibonacci level, which resides at 1.2072.  A bearish near-term outlook has been in place over the past month on the decline of both the longstanding bullish support trendline that was in place since last October and below the 50-day SMA.  Price action is currently trading below the 100-day SMA and if downside continues, could target the 200-day SMA at 1.2421. Upward UK PMI revisions The British pound pared losses this morning after UK services data came in better-than expected, outperforming what came from the Eurozone and following the downbeat readings from China.  The UK service sector is still in contraction territory, standing at 49.5, but it did buck the trend we saw with the rest of Europe. While the service reading was revised higher from a preliminary reading of 48.7, the downward trend that started in April remains firmly in place. Central bank expectations Slowing global growth concerns are sending rate hike expectations lower across the board.  Fed fund futures now are only pricing in a 6.8% chance of a rate hike at the September 20th meeting and the November 1st odds are currently at 37.2%. The ECB rate hike odds for the September 14th meeting are now at 25.5% and the October 26th meeting has a 25.8% expectation for a rate increase. Both the BOE and Riksbank are the only central banks (advanced economies) that are close to fully pricing in rate increases at their respective September policy decisions.  The BOE appears poised to deliver two quarter-point rate increases as financial markets price a 97.6% chance of an increase at the September 21st meeting. Short-term drivers The GBP/USD pair reacted positively to Fed’s Waller’s comment that the data doesn’t say we need to do anything imminent.  Waller is considered one of the more hawkish Fed members, so this comment could help convince markets that the Fed is likely done raising rates. It appears that global sentiment will likely be the primary driver here for the British pound, but dollar weakness could emerge if more Fed officials signal the end of tightening has arrived.  If the UK labor market starts to loosen and household spending softens, BOE rate hike odds could come down and that could also fuel further downward pressure on sterling.  

US Now that we heard from Fed Chair Powell at the Kansas City Fed’s Jackson Hole Symposium, the focus shifts back to the data. This week is filled with data that will outline how quickly the economy is weakening. Consumer data will show personal income growth is not keeping up with spending, while confidence holds steady. The Fed’s favorite inflation reading is also expected to show subdued growth is holding steady on a monthly basis. Friday’s NFP report will show private sector hiring is cooling.    Over the weekend, the spotlight will be on US-China relations.  US Commerce Secretary Gina Raimondo will meet with Chinese officials, striving to lower tensions between the world’s two largest economies.  The week will also be filled with Fed speak.  On Monday and Tuesday, Barr speaks about banking services. On Thursday, we hear from both Bostic and Collins, while Friday contains appearances by Bostic, a couple of hours before the NFP report, and Mester on inflation later in the morning.   Eurozone Next week is data-heavy but there are a few releases that stand out. The most notable is the HICP flash estimate for the eurozone on Thursday which is expected to drop slightly at the headline and core levels. There will be individual country releases in the days running up to this which may signal whether Thursday’s data will likely beat or fall short of expectations. ECB accounts are also released on Thursday which will be of interest considering markets now view the rate decision at the next meeting as a coin toss between 25 basis points and no change.    UK  The week starts with a bank holiday and it doesn’t get much more exciting from there. There are a few tier-three data releases and Huw Pill from the Bank of England will make appearances on Thursday and Friday. Russia A selection of economic data is on offer next week including unemployment on Wednesday, GDP on Thursday, and the manufacturing PMI on Friday.  South Africa No major events next week with PPI on Thursday the only notable release. It follows CPI data this past week which fell to 4.8%, well within the SARB 3-6% target range, following a much lower 0.9% monthly reading in July.  Turkey The CBRT surprised markets last week by hiking rates far more aggressively than expected, taking the repo rate to 25%, up from 17.5%. The move may cost people at the central bank their jobs if history is anything to go by, with President Erdogan openly no fan of higher rates. That said, he did employ these people shortly after his election victory so perhaps with that behind him, he may be more open to it while remaining vocally against. This week offers very little, with GDP on Thursday the only release of note. Switzerland Inflation data on Friday is expected to show prices rising 1.5% on an annual basis, slightly lower than in July and well below the SNB 2% target. The central bank hasn’t appeared satisfied though and markets are fully pricing in a hike in September, with 32% chance of it being 50 basis points. The manufacturing PMI will also be released on Friday, with retail sales on Thursday, and the KoF economic barometer and economic expectations on Wednesday. China Only three key economic releases to monitor for the coming week. First up, the NBS manufacturing and services PMIs for August will be out on Thursday. Another contractionary print of 49.5 is expected for the manufacturing sector, almost unchanged from July’s reading of 49.5. If it turns out as expected, it will be the fifth consecutive month of negative growth for manufacturing activities as China grapples with a weak external environment and domestic financial contagion risk that has been triggered by debt-laden property developers. Secondly, the NBS services PMI for August is forecasted to remain surprisingly resilient at 51, almost unchanged from 51.5 in July. The services sector is still in an expansionary mode albeit at a slower pace that is likely being supported by domestic tourism. Thirdly, the private sector-focused Caixin manufacturing PMI for August which consists of small and medium enterprises will be released on Friday, 1 September. Consensus is still expecting a contractionary reading of 49.5, almost unchanged from July’s print of 49.2. If it turns out as expected, it will be the second consecutive month of negative growth. A slew of key earnings releases to take note of starting this Saturday, 26 August will be China Merchants Bank, and Bank of Communications followed by; BYD (Monday, 28 August), Ping An Insurance, NIO, Country Garden (Tuesday, 29 August), Agricultural Bank of China (Wednesday, 30 August), ICBC, Bank of China, China Minsheng Bank (Thursday, 31 August). Also, market participants will be on the lookout for fiscal stimulus measures to defuse the $23 trillion debt bomb owed by local governments, financial affiliates, and property developers. On Friday, 25 August, China policymakers unveiled a further easing of its home mortgage policies that scrap a rule that disqualifies first-time homebuyers who had a mortgage that is fully repaid from being considered a first-time buyer in major cities in an attempt to boost up residential property transactions.  India Two key data to focus on. Q2 GDP on Thursday where the consensus is expecting a further economic growth expansion to 7% y/y in Q2, a further acceleration from 6.1% y/y recorded in Q1. Lastly, the manufacturing PMI for August will be released on Friday where it is being forecasted to come in at 57, almost unchanged from the July reading of 57.7 which will indicate a 26th straight month of growth expansion for manufacturing activities. Australia Retail sales for July will be out on Monday, with a recovery to 0.3% m/m from -0.8% m/m in June. On Wednesday, the important monthly CPI indicator for July will be out and the consensus forecast is another month of cooling to 5.2% from 5.4% in June. If it turns out as expected, RBA may have more reasons to justify its current pause at 4.1% for two consecutive meetings. Its next monetary policy meeting will be on 5 September, and as of 24 August, the ASX 30-day interbank cash rate futures have priced in a 12% chance of a rate cut to 3.85% (25 bps cut).  New Zealand A quiet week with the only focus on the ANZ business confidence indicator for August on Thursday followed by ANZ consumer confidence for August on Friday. Japan The action comes mid-week. Consumer confidence for August is released on Wednesday and is expected to be almost the same at 37.2 versus July’s 37.1. On Thursday, we will have retail sales and industrial production for July. Growth in retail sales is expected to slip slightly to 5.4% y/y from 5.9% in June. Meanwhile, industrial production is expected to contract to -1.4% m/m from 2.4% m/m in June, and -0.7% y/y is forecasted from 0% y/y recorded in June. Singapore The sole key data to monitor will be the producer prices index for July out on Tuesday with another month of negative growth forecasted at -9% y/y, a slower pace of contraction from -14.3% recorded in June. It would be the 7th consecutive month of decline.

Governor Thedeen say krona is fundamentally undervalued Markets fulling pricing in September Riksbank quarter-point rate hike Sweden’s government expects economy shrink by -0.8% in 2023 (previously eyed -0.4%) Sweden’s krona has been punished as the economy appears to be headed for a tough recession. Core inflation is coming down too slowly and that will keep the Riksbank hiking even as expectations grow for a lengthy recession.  The krona has not been getting any relief as many Swedes have started to embrace holding euros given the krona’s record plunge this year. Riksbank Governor Thedeen Riksbank governor Thedeen said that “the krona is too weak and it is fundamentally undervalued.” He added that “it should strengthen and we think that it will, but we know that it is almost impossible to predict currency moves over the short and medium term.” It is tough to call for a reversal after watching the krona fall to a fresh all-time low against the euro.  The current market expectations for the September meeting is to see the Riksbank raise rates by 25bps to 4.00%.  A freefalling krona is complicating the inflation fight, but that could see some relief as the outlook for the eurozone deteriorates. Expectations for the Sweden’s GDP are not seeing a strong consensus emerge.  Given the currency and inflation situation, it seems that the economy could be entering a recession that last more than a handful of quarters. The Swedish government is expecting a 0.8% decline in 2023 and a 1.0% growth for 2024.  It seems hard to believe that households will be a better position anytime soon, so a recession extending beyond 2024 seems likely.   The EUR/SEK weekly chart     EUR/SEK (weekly chart) as of Thursday (8/24/2023) shows the uptrend to record high territory is showing overbought conditions have arrived.  If the krona is able to firm up here, a mass exodus of EUR/SEK bullish bets could see price action tumble towards the 11.7118 region. If the plunge deeper into record low territory continues, EUR/SEK could make an attempt at the 12.000 which is just below the 141.% Fibonnaci expansion level of the 2020 high to 2021 low move. Last week, the krona was the most volatile G10 currency, so we should not be surprised if that volatility extends further given the chaos in the bond markets.    

Australian dollar slides close to 1% The Australian dollar continues to show strong volatility for a second straight day. In the North American session, AUD/USD is trading at 0.6426, down 0.84%. After a sleepy start to the week, the Aussie is showing some life. AUD/USD jumped 0.90% on Wednesday but has pared practically all of those gains today. The pair’s upswing on Wednesday was more a case of US dollar weakness than Aussie strength, as US PMIs pointed to deceleration in the manufacturing and services sectors. The US Manufacturing PMI fell to 47.0 in August, down from 47.0 in July and well below the consensus estimate of 49.3. The manufacturing sector has been unable to find its footing, with declines in ten of the last eleven months. New orders are down and weaker demand has meant a decrease in output. The services sector in the US is in better shape and posted a seventh straight month of growth in August. However, the Services PMI slowed to 51.0 in August, weaker than the July reading of 52.3 and the estimate of 52.2. Business activity in services has been falling and the August read was the lowest in six months. Consumer spending is down due to the usual suspects – high interest rates and broad-based inflation. Interestingly, business confidence improved in August, likely due to expectations that US interest rates are close to their peak. Weakness in manufacturing and services is not unique to the US, as we saw this week in PMI reports from Europe, the UK and Australia. Manufacturing and services continued to contract in Australia, as the August PMIs remained below the 50.0 level, which separates contraction from expansion. The weak PMIs are further signs of weaker economic activity, and the alarming slowdown in China will make it even more challenging for the Reserve Bank of Australia to guide the economy to a soft landing and avoid a recession.   AUD/USD Technical AUD/USD is testing support at 0.6431. Next, there is support at 0.6339 There is resistance at 0.6588 and 0.6653

Atlanta Fed’s GDP estimate sees real Q3 GDP growth of 5.9%, up from last week’s 5.8% Fed Chair Powell’s Jackson Hole Speech is scheduled for tomorrow at 10:05 am EST Fed’s Harker (voter) says they’ve done enough with rates while Fed’s Collins (non-voter) more rate hikes may be needed   As Wall Street awaits Fed Chair Powell’s Jackson Hole speech, some traders shifted their focus to Federal Reserve Bank of Philadelphia Patrick Harker’s CNBC interview. When talking about interest Harker said, “Right now, I think that we’ve probably done enough.” Harker is a voting member of the FOMC and he appears to be positioning himself to turn dovish in the near future. He also noted that, “I’m in the camp of, let the restrictive stance work for a while, let’s just let this play out for a while, and that should bring inflation down.” He added that if inflation comes down quicker, they may cut rates sooner. A month ago, Harker was saying that they are making progress with inflation and that sometime next year the Fed will start cutting rates. Harker for most of this year has been viewed as a neutral FOMC voting member, one notch below Fed Chair Powell who has being leaning-hawkish.  Harker’s dovish comments don’t imply that is what we will get from Fed Chair Powell, but it does suggest the committee might be gaining confidence that they will be able to bring down inflation to the Fed’s 2% target. Fed’s Collins, a non-voter noted that “We may need additional increments, and we may be very near a place where we can hold for a substantial amount of time.”   Foreign Investment Flows US stocks initially rallied after Nvidia’s miraculous earnings reignited the AI trade.  If AI is the future, then Nvidia is the “fluxcapacitor” that will drive the biggest transformation in tech since the Back to the Future trilogy wrapped up in the 1990s.  With Europe looking more recession bound, foreign investment might steadily come to US equities and that should support US equities. It is clear that massive investments are coming AI’s way and that could keep stock market bulls very happy as long as we don’t have Fed Chair Powell spoil the party.  If the bond market selloff doesn’t resume after Powell’s speech, the stock market might have a bullish case to make a run at record highs, which should provide underlying support for the dollar.   US data keeps Fed rate hike expectations low for the September 20th This morning’s round of data didn’t really move the needle on Fed rate hike expectations.  Yesterday odds were at 12% and today they rose to 17% for the September 20th meeting. Filings for unemployment benefits came in less than expected, signaling that the labor market is slowly cooling.  Initial jobless claims fell by 10,000 to 230,000, while continuing claims dipped from 1.711 million to 1.702 million.  A surge in claims (+3.7K) came from Hawaii as they were heavily impacted by the devastating wildfires. Jobless claims will likely stabilize or rise going forward. Durable goods order data showed business spending activity barely increased as companies became more cautious with the budget. ​ Bookings for all durable goods tumbled ​ given softness with the volatile commercial aircraft orders. ​ Businesses are turning very cautious here given how high borrowing costs have gotten and over the deteriorating outlook for business equipment.   USD/JPY 60-minute chart   USD/JPY (60-minute chart) as of Thursday (8/24/2023) shows the bullish move that started yesterday has continued by respecting short-term trendline support(shown in purple).  If we see a substantial rally towards last October’s high, that could trigger intervention pressure from Japan.  If the surge in Treasury yields continues, that could provide some tactical bullish positioning between the 145.00-148.00 region. If risk aversion emerges post Jackson Hole, the 143.50  level provides major support and a possible re-entry for long-term bulls.  

Earnings and soft services PMIs sends yields and dollar lower Fed rate hike odds for September 20th meeting stand at 11% (down from yesterday’s 16%) Russian mercenary leader Prigozhin may have died in plane crash The US dollar remained near session lows against the Japanese yen after the Treasury’s mixed 20-year auction.  The bond market rally that started yesterday is holding up after decent demand saw a 4.499% yield, which was higher than the pre-sale yield of 4.490%, and obviously above the 3.954% prior 20-year bond auction.  Eventually the bond market will fixate over foreign demand, but for now the Treasury doesn’t seem to be seeing have any trouble with the extra issuance.   PMIs Both the dreadful eurozone PMIs and softening US ones helped keep the bond market rally going and that should help with the global disinflation process. Rates are coming down and so are Fed rate hiking expectations.   Earnings For a second consecutive quarter, Foot Locker significantly slashed their guidance.  Wall Street was already skeptical of how Foot Locker would finish the year, but the outlook just went from bad to abysmal.  Foot Locker suspended their dividend and cut their full-year sales and earnings guidance, noting softening trends in July. A tough consumer backdrop is only going to get worse, which could lead to a few ugly quarters for the footwear chain. Abercrombie & Fitch Co. earnings were the exact opposite to what came out of Foot Locker.  Abercrombie is raising their outlook as their customers appear to be bucking the trend we saw from Macy’s and Kohls.   All the signs are there for the outlook to get worse for the consumer. Mortgage rates are over 7% for the first time in nearly 2 decades.  Credit card debt just jumped over $1 trillion as Generation X has the highest balance.  The US job market is showing signs of cooling and that should continue as consumer spending softens.   USD/JPY daily chart     The USD/JPY chart is tentatively pulling back as global bond rates decline following weak global PMIs.  Despite the two-day slide, a bullish bias might remain if the long end of the curve sees rates remaining elevated.  If bearish momentum remains, the 142.75 will provide initial support.  To the upside the 147.50 provides key resistance, while the 150.00 level remains a key price barrier.

UK manufacturing and services PMIs decelerate The British pound has edged lower on Wednesday. In the North American session, GBP/USD is trading at 1.2720, down 0.09%.     UK PMIs head lower The UK economy continues to cool down, and today’s PMI readings showed deceleration in both the manufacturing and services sectors. The Manufacturing PMI eased to 42.5 in August, down from 45.3 and below the consensus estimate of 42.5. The Services PMI disappointed and fell into contraction territory, with a reading of 48.7. This was lower than the July reading of 51.5 and missed the estimate of 50.8. GBP/USD fell over 100 basis points earlier but has recovered these losses. The weak data might not be such bad news as far as the Bank of England is concerned. The battle to curb inflation has not gone all that well, as the UK has the dubious honour of having the highest inflation among G-7 countries. If weakness in the manufacturing and services sectors dampens hiring and weighs on the tight labour markets, inflationary pressures could ease. The Bank of England meets in September and the markets have fully priced in a rate hike, but it’s unclear what will happen after that, with the markets pricing in one more hike before the end of the year. The BoE’s rate path after September will depend heavily on upcoming inflation and employment reports. It has been a light week on the data calendar and investors will be hoping for some interesting comments at the Jackson Hole Symposium which begins on Thursday. The Fed and other major central banks are expected to wind up their rate-tightening cycles and Jackson Hole has often served as a venue for announcing shifts in policy. Fed Chair Powell has insisted that the fight against inflation is not done, with inflation still above the 2% target. There is talk in the markets of the Fed trimming rates next year, but I would be surprised if Powell mentions rate cuts in his speech on Friday.   GBP/USD Technical GBP/USD pushed below support at 1.2714 and 1.2641 before rebounding higher  There is resistance at 1.2812 and 1.2885    

Eurozone August Services PMI fell into contraction territory; dropping from 50.9 to 48.3 Treasuries extend gains after global PMIs disappoint; double digit declines across global 10-year bonds Yen rallies to a 1-week high against the dollar EUR/JPY (a daily char of which is show) as of Wednesday (8/23/2023) displays a noticeable pullback after the euro area’s service sector contraction worsened. The 20-nation bloc saw the service sector unexpectedly fell into contraction territory. This round of data does not support another round of ECB tightening. If bearishness resumes and prices fall below the 156.75 level, momentum selling could target the 154.75 region.  If the pullback is short-lived, the 158.50 zone will provide key resistance.     The eurozone is still battling elevated inflation and China’s weakness isn’t helping.  Considering how abysmal the flash PMIs were, it is surprising that inflation hasn’t significantly dropped.  After today’s poor eurozone services PMI reading, some traders are expecting the ECB might be ready to pause their tightening cycle in September.  Core inflation is still elevated, stuck at 5.5% in July, but that should drop over the next couple of reports.   ECB Rate Hike Expectations:     As ECB rate hike odds disappear, the euro looks like it could become a punching bag against the dollar.  The dollar gave back some gains after the US posted softer-than-expected PMI readings across the board.  The US service sector is barely hanging onto expansion territory and the employment component fell to 50.2, which was the lowest level since October 2022.   Jackson Hole Fed Chair Powell will try to outline the last part of their inflation fighting game plan.  The economy is weakening a little faster and that should help inflation pressures recede even further. Powell will try to balance the risks of brining inflation to target, while trying to deliver a soft landing.  He will likely try to push back rate cut bets deep into next year.    

Soft landing hopes fizzle as real yields hit highest levels in a decade China jitters remain as Evergrande files for US bankruptcy Dollar index posts best win streak since May 2022  The Japanese yen is no longer acting like a safe haven currency. With global stocks having the worst week since March, dollar-yen appears poised to finish the week higher.  Wall Street has had a major reset, and now believes that interest rates will stay higher for longer, and is fearful that the Fed might have to deliver more tightly given the strength of the US economy. The global bond market selloff as taken treasury yields two levels that are forcing portfolio managers to adjust accordingly. Short term rates are too attractive, and that should provide some underlying strengths for the US dollar. Today, the yen is on firming footing but some of that is on profit-taking given the big week the dollar has had. With tech and communication stocks getting hit the hardest, expectations for a safe-haven trade could keep the dollar supported. The wildcard for the dollar trade will be Fed Chair Powell’s Jackson Hole speech, which could remain hawkish or possibly contain a dovish twist     The USD/JPY daily chart has already tested key levels that are making Japanese officials uncomfortable, but given the potential FX flows following Jackson Hole, it seems Japan will wait before intervening. This combination of a return of the king dollar and lagging Japanese yen has served to boost USD/JPY beyond 145.00 and towards major psychological support around the 150.00 level. As long as markets continue to bet on an inflation-fighting Fed and patient BOJ, USD/JPY could target the 148.00 region next week.  With any dovish surprises from Powell, a breakdown could occur below the noted 145.00 psychological support level.

Bitcoin fell to a two-month low as $1billion of losses occurred over past 24 hours Elon Musk’s SpaceX reportedly sold all its Bitcoin, after writing down holdings in 2021 and 2022 Bitcoin under pressure as global risk aversion leads to de-risking moment Bitcoin’s plunge stemmed from nervousness about the looming US Bitcoin ETF decisions and on concerns that China’s property crisis could lead to further downward pressure for risky assets.  Now that Bitcoin fell below the key trading range of $28,500 to $30,500, all eyes will be on the $25,000 level.     Bitcoin ETF rulings will start to happen and some traders are nervous that might not go so well.  Grayscale might get a ruling next week, but expectations are for more rulings to happen in September.  The bullish case for Bitcoin is that positive developments with an US Bitcoin ETF breakthrough could help prices make a run back towards the $30,000 region.  Bitcoin’s current downtrend however could get uglier if some of these rulings suggest a US ETF still remains distant or if the bond market selloff continues.     Bitcoin is once again acting like a risky asset and next week should be critical for Bitcoin.  If monetary conditions continue to crush risky assets, Bitcoin selling could target the $21,500 region.    

Energy The oil price rally that has been in place since June has ended.  Energy traders will focus on the latest problems from China, the global flash PMIs, the Jackson Hole Symposium, and the BRICS summit.  After having an interrupted rally from $68 to $84, WTI crude looks poised to consolidate around the $80 region as traders grapple with a tight market that is facing headwinds from world’s two largest economies.  Following the Jackson Hole gathering, it will be clear if the bond market selloff continues or cools down.  If the global economic outlook become even more pessimistic, oil might give up a good portion of the recent rally. Natural gas prices remain fixated over strike action at an LNG facility in Australia. Fresh talks between Woodside Energy and union officials are expected to begin on August 23rd.  Natural gas will remain volatile until we have a handle on how gas availability will be for the winter.   Gold Gold traders will closely watch the annual Jackson Hole Symposium and how aggressive China becomes with providing support to the deepening property crisis. The global bond market selloff has sent gold prices sharply lower over the past month but that could stabilize if we get a dovish Fed Chair Powell and as long as China doesn’t disappoint with the next wave of stimulus. Spot gold has fallen below the $1900 level, but momentum selling has slowed. Gold traders are also fixating over the $1900 level for gold futures. Currently, gold futures are only $45 away from their March lows, while spot gold is around $80 away. For gold selling pressure to remain, global bond yields might need to surge higher.    

Energy The oil price rally that has been in place since June has ended.  Energy traders will focus on the latest problems from China, the global flash PMIs, the Jackson Hole Symposium, and the BRICS summit.  After having an interrupted rally from $68 to $84, WTI crude looks poised to consolidate around the $80 region as traders grapple with a tight market that is facing headwinds from world’s two largest economies.  Following the Jackson Hole gathering, it will be clear if the bond market selloff continues or cools down.  If the global economic outlook become even more pessimistic, oil might give up a good portion of the recent rally. Natural gas prices remain fixated over strike action at an LNG facility in Australia. Fresh talks between Woodside Energy and union officials are expected to begin on August 23rd.  Natural gas will remain volatile until we have a handle on how gas availability will be for the winter.   Gold Gold traders will closely watch the annual Jackson Hole Symposium and how aggressive China becomes with providing support to the deepening property crisis. The global bond market selloff has sent gold prices sharply lower over the past month but that could stabilize if we get a dovish Fed Chair Powell and as long as China doesn’t disappoint with the next wave of stimulus. Spot gold has fallen below the $1900 level, but momentum selling has slowed. Gold traders are also fixating over the $1900 level for gold futures. Currently, gold futures are only $45 away from their March lows, while spot gold is around $80 away. For gold selling pressure to remain, global bond yields might need to surge higher.    

US The main event for next week will be the Kansas City Fed’s Jackson Hole Symposium.  Fed Chair Powell’s speech will reiterate that more rate hikes might be needed and that rates should stay higher for longer.  With the recent surge with real yields, Fed Chair Powell can acknowledge that policy is restrictive and that future rate cuts could eventually be warranted as long as inflation has been defeated. The economic data starts on Tuesday with the July existing homes sales report, which should show signs of stabilizing.  Wednesday contains the flash PMIs, which could show manufacturing remains in contraction territory and softness with the service sector continues.  On Thursday, we will get both initial jobless claims and the preliminary look at durable goods, which is expected to show weakness in July. Friday contains the release of the final reading of the University of Michigan sentiment report, with most traders wanting to know if inflation expectations had any major revisions. Earnings for the week include results from Baidu, Lowe’s, Nvidia, and Snowflake,   Eurozone As the ECB is poised to continue delivering more rate hikes to combat inflation, the risks of a hard landing are growing.  There’s no shortage of economic releases next week but the one that stands out is the flash PMI readings. The manufacturing sector is clearly going to remain in contraction territory for all the key regions(Germany, France, eurozone), while the service sector steadily weakens, fighting to stay in expansion territory.  Traders will also pay attention to both the German IFO business climate report as that could show expectations might be stabilizing and what should be another soft consumer confidence report. Thin trading conditions in Europe could occur on Tuesday as some banks (France, Italy) are closed for Assumption Day.   UK Next week is mostly about the UK flash PMI survey, as the composite PMI collapse in July is expected to be followed by further weakness in August. The manufacturing PMI is expected to weaken further from 45.3 to 45.0, the service reading to drop from 51.5 to 50.8, while the composite drops from 50.8 to 50.3.   The UK economy is still expected to barely show growth in Q3, but the momentum is fading as the BOE’s rate hiking cycle starts to weigh on the economy.   Russia Following the plunge in the ruble and an emergency rate hike, the focus on Russia will shift back to the war in Ukraine and the BRICS summit.  Russia was having a growing influence in Africa, but that might get tested as President Putin will be absent given his indictment by the ICC. The economic calendar is light with two releases, industrial production data on Wednesday and money supply on Friday.   South Africa The one notable release will be the July inflation report.  Inflation is expected to stay in the SARB’s target range between 3-6%.  The annual headline reading is expected to drop from 5.4% to 4.9%, while the monthly reading rises from 0.2% to 1.0%.  The monthly core reading is also expected to see a rise from 0.4% to 0.6%.   Turkey With inflation out of control, the CBRT is expected to deliver its 3rd straight rise, bringing the 1-week report rate to 19.50%.  The consensus range is to see the rate rise from 17.5% to anywhere between 18.50% and 20.5%. The 19.0% level was a key level in the past as that triggered the sacking of Governor Agbal.   Switzerland Another quiet week with Money supply data released on Monday and export data on Tuesday.   China One sole key economic data to watch will be on Monday, the monetary policy decision on its one-year and five-year loan prime rates that commercial banks used as a benchmark to price corporate, household loans and housing mortgages respectively. After a surprise cut of 15 basis points (bps) on the one-year medium-term lending facility rate to 2.50% last Monday, its lowest level since late 2009 to defuse the potential contagion risk in China’s financial system triggered by a major trust fund that failed to make timely payments to holders of its wealth management products which are backed by unsold properties of indebted property developers; forecasts are now calling for a similar 15 bps cut on the one and five-year loan prime rates to bring it down to 3.4% and 4.05% respectively. Market participants will also be on the lookout for more detailed fiscal stimulus from China’s top policymakers after recent “morale-boosting piecemeal rhetoric measures” that have failed to break the negative feedback loop in the China stock market; the benchmark CSI 300 index has given up all its ex-post Politburo gains from 25 July after the top leadership group promised to implement “counter-cyclical” measures to defuse the deflationary risk spiral in China. For earnings report releases, a couple of major companies to take note of; Sunny Optical Technology (Tuesday), Country Garden Services (Tuesday), China Life Insurance (Thursday), NetEase (Thursday), Meituan (Friday).   India A quiet calendar with only foreign exchange reserves and fortnightly bank loan growth data out on Friday.   Australia Flash Manufacturing and Services PMIs for August will be out on Wednesday.   New Zealand Balance of Trade for July out on Monday is forecasted to shrink to a deficit of -NZ$0.4 billion from a surplus of NZ$9 million posted in June. If it turns out as expected, it will be its first trade deficit since March 2023 due to a weak external demand environment. Q2 retail sales will be out on Wednesday where its prior Q1 negative growth of -4.1% y/y is forecasted to narrow to -0.9% y/y.   Japan Two key data releases to monitor. Firstly, flash Manufacturing and Services PMIs for August out on Wednesday; manufacturing activities are forecasted to improve slightly to 49.9 from 49.6 printed in July while growth in the services sector is expected to come in almost unchanged at 53.6 versus 53.9 in July  Next up, the significant leading Tokyo area consumer inflation data for August out on Friday; both Tokyo core inflation (excluding fresh food) as well as its core-core inflation (excluding fresh food & energy) are forecasted to be unchanged at 3% y/y and 2.5% y/y respectively. Both inflation measures have remained elevated especially the core-core rate which has soared to a 31-year high. Market participants will be keeping a close watch on the USD/JPY as it rallied past a key resistance zone of 145.50/146.10 despite rising concerns on possible BoJ’s FX intervention to negate the current bout of JPY weakness.   Singapore Two key data to focus on. July’s consumer inflation out on Wednesday where the core inflation rate is expected to be almost unchanged at 4.1% y/y versus 4.2% y/y in June. On Friday, industrial production for July is forecasted to show an improvement; -2.5% y/y from -4/9% y/y printed in June. Despite this forecasted improvement, it is still ten consecutive months of negative growth which increases the risk of a recession for Singapore in Q3 due to a weak external demand environment.      

UK 10-year government bond yield surges to a 15-year high US 10-year real yields approach 14-year high Dollar also lower on rebounding yen and yuan The British pound is still rallying from the latest inflation that suggests sticky core inflation will keep the BOE in tightening mode.  With the global bond market selloff being the dominant theme on Wall Street, traders are noticing Gilt yields are standing out.  With FX traders pricing in three more rate hikes by the BOE, it seems that could be the trigger to allow the pound to continue its rebound. Today’s the UK benchmark 10-year bond yield rose 7.7 bps to 4.716%, the highest levels since August 2008.  If we see a further vicious cycle here with Gilt yields, this will suggest BOE rate hike wagers are not cooling.       The GBP/USD daily chart is displaying a Dragonfly doji pattern has identified a bullish reversal that is currently respecting the 50-day SMA.  Price action is also tentatively breaking above the downward sloping trendline that has been in place since mid-July.  If bullishness remains intact, further upside could target the  1.2825 level, followed by the 1.2920 region.  The psychological 1.30 level could remain an elusive target as expectations remain for the US economy to outperform most advanced economies.       Looking Ahead: The UK July retail sales report will show spending declined, impacted by the unseasonable wet weather.  If the mortgage crisis is hitting the economy more harder than expected, we will see that reflected in this report.  Any better-than-expected spending figures could send the pound surging higher.  An-line or worse-than-expected report might trigger some profit-taking from the pound bulls    

Walmart CEO is more optimistic about spending patterns  than he did 3 months ago Dollar’s five-day rally halted as yen and yuan rebound Fed could remain in hiking mode if economic resilience prevents inflation from coming down   Now that we heard from Walmart, it is clear that the US consumer is still willing to spend. Expectations for robust consumer spending in Q3 have been confirmed and that should keep growth estimates trending higher.  With COVID savings still expected to be used over the next couple of months and a lag with how student debt repayments go, confidence in continued business momentum should remain.  The Atlanta Fed’s estimate of 5.8% looks like it might actually happen, which should keep the Fed standing by its hawkish stance that they might need to do more tightening to combat inflation. The US dollar is seeing some profit-taking as the yen and yuan, each respectively stage a rebound.  It might be hard for risk appetite to remain in place if  the bond market selloff continues.  With global bond yields to a 15-year high, that surely will feel like restrictive territory for the world.  China remains in focus and the decision from authorities to tell state-owned banks to step up intervention efforts is providing some support to markets. It is clear that China is working on their response here and that more support is on its way. Walmart Walmart’s top and bottom earnings beats were accompanied with raised guidance, which made them have one of the top results from the retailers.  It seems that Walmart is taking away business from Target too, with grocery and ecommerce sales leading the way.  When the economy starts to cool in Q4, Walmart looks well positioned to be one of the top retailers. ​   FX Snapshot       Oil ​The Australian dollar declined after the unemployment rate rose more than expected. Labor market weakness should make the next RBA meeting easy as the economy is feeling the impacts of the RBA rate hiking cycle.  The RBA will hold rates steady for a third straight time at the September policy meeting. The Chinese yuan rallied against the dollar after the PBOC asked state banks to intervene. The yuan was depreciating too quickly and authorities needed to boost sentiment. ​ ​ ​ Some traders are not expecting BOJ intervention until we see excessive weakness that takes dollar-yen possibly beyond the 150 level. ​ ​ We also need to hear Japan officials state they are watching exchange rates with great interest. Japan will likely need to step into markets, but until we see further yen downside, traders might eye further dollar short-term strength. ​ ​   After falling nearly six dollars, it was only a matter of time before crude prices found support.  WTI crude is rebounding on expectations that Chinese officials will deliver meaningful stimulus and that the oil market will remain tight. Earnings are also providing optimism that the US consumer is still strong and willing to spend and travel at the end of the year. The dollar rally has stalled but if the bond market selloff falls to a new level, that could prevent commodities from rebounding further.  Oil looks like it will find a home around the $80 level as too many risks to the outlook still remain on the table; fears that the Fed will overtighten are back and uncertainty persists on how will the US consumer behave once all their COVID savings disappear and as student loan debt bills come due.   Gold Gold prices are trying to recover after some hawkish Fed Minutes kickstarted a global bond market selloff.  Bond yields are too high as more people become convinced inflation is not going away anytime soon.  After making a 5-month low, spot gold has fallen below the $1900 level.  For the spot market the $1870 level remains major support, as the $1900 level with the gold’s future contract appears to have solid support.   Bitcoin It looks like some leveraged funds are ramping up bearish bets that Bitcoin will drift lower.  The US Commodity and Futures Trading Commission’s (CFTC) report on commitment of traders (COT) showed that as of August 8th, two-thirds are bearish, most likely a result of disappointment with the delays in seeing a Bitcoin US ETF approved.  When you throw in what is happening in the bond market, it becomes easy for Bitcoin prices to soften.  If risk aversion becomes the dominant theme on Wall Street, Bitcoin’s bearish momentum could target the $27,200 level.      

Record UK wage growth keeps the pressure on the BOE to deliver more tightening PBOC rate cut surprise shows officials growing concern with the property crisis Fitch warns US banks could face downgrades Record wage growth will keep the pressure on the BOE to deliver more tightening. The economy still has a tight labor market as companies need to pay their employees more money.  The rise in the unemployment rate was due to more people returning to the workforce.  Average pay excluding bonuses easily exceeded the consensus estimate of 7.4%, rising 7.8% in the three months through June from a year ago.         This hot wage data is giving the BOE hawks a win as they were right in calling for a half-point rate increase last meeting.  The British pound is starting to look attractive again as it seems the BOE will easily be raising rates at both the September and November meetings.   GBP/USD  The British pound is rebounding against the dollar following some hot wage data that is leading to some profit-taking. The pound’s slide which has been in place from a month ago is showing signs of exhaustion.  This could be the early stages of a steep bullish correction if prices can recapture the 1.2800 handle.  Further bullishness target the 1.2880 level, which is the 50% Fibonacci retracement level of the July high to August low move. However, if dollar strength remains, bearish momentum could accelerate if price falls below the 1.2600 handle.     US stocks   US stocks remained heavy after a robust retail sales report sent yields higher and raised the odds that the Fed might not be done raising rates. A healthy consumer was supposed to drive soft landing calls, but too much consumer resilience will drive the Fed to keep rates higher for longer. This US retail sales report showed spending is picking up, especially given the upward revisions for June’s report. ​ Equities were heavy in early trade as concerns grow that China is in a lot worse shape than initially thought.  Ahead of some key data, the PBOC decided to be proactive and delivered a surprise rate cut.  China cut the 1-year medium term lending rate facility from 2.65% to 2.50%, which was the steepest reduction since 2020.  The data that followed the rate cut was uninspiring for the rest of the year and will force officials into delivering a lot more easing. Key Chinese industrial production, retail sales, and investment data all came in softer-than-expected. Also weighing on stocks was news that Fitch may be forced to downgrade dozens of banks.  Given we probably won’t have a catalyst to make a run at record highs, stocks are vulnerable to weakness throughout the rest of summer.   Stocks     Home Depot Home Depot delivered mostly in-line results, but they were able to hold onto their guidance.  Big ticket projects are under pressure, but small projects remain in demand.  Share prices rose given the lowered May outlook was reaffirmed and after they set a $15 billion buyback.

Headline Canadian inflation surges above BOC’s 1-3% target range Mixed report as core inflation falls to 9-month low European Natural Gas skyrockets on fears Aussie labor strikes could disrupt 10% of global LNG exports Canadian CPI The Canadian dollar initially rallied after the July inflation rose back the Bank of Canada’s inflation-control target range of 1% to 3%. ​ This was not entirely hot as both core readings remained subdued. This report means that the BOC will remain data-dependent and that the odds of one more rate hike might be growing. Global growth concerns appear to be dominating the macro theme here and that is why the Canadian dollar is softer. The USD/CAD weekly chart is showing price action is tentatively breaking out above key trendline resistance and the 50-week SMA.   If bullishness remains, upside targets include the 1.3675 region.  To the downside, the 1.3200 remains critical support.   ​​Gas Prices European natural gas futures are surging as the risk for Australian LNG workers to strike grow. ​ If talks collapse, the world could see about 10% of global LNG exports at risk. Europe has bolstered their inventories, but a hot end to summer could lead to a surge in cooling demand. ​ Inventories are not a concern right now, but if we get further disruptions and if weather trends in the summer and winter lead to many spikes in demand, we could see natural gas surge significantly higher. ​   Jackson Hole ​We are a week away from Jackson Hole and Wall Street is not expecting any major surprises. ​ Fed Chair Powell will remain upbeat regarding the progress with bringing inflation down. July PCE data to be sticky and keep risk of one more hike on the table. Given the US economic resilience backdrop, the Fed will want to keep optionality here, so an end of tightening will not be signaled. ​   Oil Crude prices continue to pullback after both disappointing Chinese industrial production data and the German ZEW survey that showed concerns with recovery are elevated. The oil market might remain tight, but most of the headlines are turning bearish for the demand side. ​ Oil’s pullback might need to continue a while longer before buyers emerge. ​   Gold Gold prices are falling as real yields continue to rise. ​ Gold could be stuck in the house of pain a little while longer if the bond market selloff does not ease. ​ The 30-year Treasury yield rising above 2% is a big red flag for some traders. ​ We haven’t seen yields on the 30-year at these levels since 2011, which is making non-interest bearing gold less attractive even as China’s property market rattle markets.      

Dollar falls as Fed rate hike odds soften to 10% for September and 20.2% in November US Annual CPI rose from 3.0% in June to 3.2% in July, snapping a streak of 12 consecutive declines Core CPI (ex-food/energy) fell to 4.7% year-over-year, lowest reading since October 2021   No surprises from the July CPI report After a roughly in-line inflation report, Wall Street remained optimistic that the Fed won’t need to raise rates in September.  Headline inflation rose but that was mainly due to the large drop we saw last month from the base effects.  Traders focused on the monthly readings and both headline and core saw gains held steady at 0.2%.  Markets are growing confident that the Fed is done raising rates as risk appetite remains intact as stocks rally and the dollar drops. It doesn’t seem likely that we will see a reacceleration with prices given the weakening labor market and as lending takes a hit.  The so-called super core services inflation gauge posted a 0.19% rise from a flat reading in June, but still well below last year’s half-percentage point pace.     Weekly jobless claims also came in higher than expected, which clearly supports the idea that the labor slowdown continues. The weekly first-time filings for unemployment reading rose from 227,000 to 248,000, while continuing claims edged lower from 1.692 million to 1.684 million. The Fed will have an easy time at Jackson Hole as there wasn’t anything from both the NFP and CPI report that would move members to tightening in September. The focus for the market will shift to rate cuts becoming aggressively priced in for next year, something the Fed will try to push against.     A Bank of America report showed household credit and debit card spending turned positive for the first time since March. They now expect a soft landing with no US recession.  The big question for markets is what will be the state of the economy in the fall, and whether resilience could drive a reacceleration with pricing pressures. EUR/USD The euro pullback might be over as the risk of more Fed tightening will get pushed back a couple of months.  The recent EUR/USD slide is hovering around a confluence of support that includes the 50- and -100 day SMAs and an uptrend support line that extends back to September 2022.  If bullish momentum emerges, upside targets include the 1.1250 region.  To the downside, 1.0928 provides initial support.      

Japan last intervened in October when dollar-yen prices were at 150 Fed rate hike odds fall to 10% for the September 20th meeting Japan’s material inflation data continues fell to 3.6% from a year earlier, lowest reading since March 2021 The dollar weakened against most of its major trading partners after soft inflation data supported the Fed’s case to keep rates on hold in September.  Yen traders watched global stocks surge, which put a dent in demand for safe-havens.  Dollar-yen is now rallying above the 144 level as Japanese officials grow nervous that they may need to intervene.  We should start getting some verbal intervention now that we are getting closed to levels that triggered action last fall.     EUR/JPY approaches overbought territory The euro has had quite the run against the yen.  The bullish channel that has largely held up over the last couple of years is showing prices have exceeded the upper boundaries and it might be difficult for the rally to extend.  So far tweaks by the BOJ have had no impact in providing support for the yen, so pressure should build for bolder action.       Oil After an impressive couple of days of gains, crude prices are softening as energy traders await to see what happens with some of the supply side risks.  The monthly OPEC report delivered another reminder that the oil market will remain tight throughout the rest of the year.  With OPEC+ doing whatever it takes to keep crude prices supported, the oil market might see a 2-million barrel supply deficit this quarter. Oil has had a nice run up, but some of that was the Russian-Ukraine conflict which has yet to lead to a meaningful disruption of Russian oil shipments.  Oil prices are likely to head higher, so any dips will likely be bought into. Gold Gold prices initially surged after soft inflation data, but those gains withered away as investors decided stocks would outperform.  A peak in the dollar might be in place, but gold won’t be surging if Wall Street continues to buy up stocks.  Sentiment has been softening for gold as ETF holdings have dropped to the lowest levels since March. If the market becomes even more convinced that a soft landing is in place, gold will probably struggle.      

US inflation expected to rise to 3.3% UK GDP projected to fall to 0% Fed member Harker says rates may have peaked The British pound has had a relatively quiet week. In the North American session, GBP/USD is trading at 1.2731, down 0.13%. Markets eye US inflation, British GDP It has been a quiet week on the data calendar, with no tier-1 events out of the UK or the US. The rest of the week will be busier, with the US inflation report on Thursday and UK GDP on Friday. That could mean some volatility for the sleepy British pound. US inflation expected to rise The Federal Reserve’s aggressive tightening campaign has made its impact felt, as inflation has been falling and dropped to 3.0% in June. Headline CPI is expected to rise to 3.3% in July, while the core rate is expected to remain steady at 4.8%. Will an uptick in inflation change the Fed’s rate path? Probably not, especially if Jerome Powell follows the view that he has often stated, which is that a rate policy is not based on one or two inflation reports. The money markets are confident that the Fed will take a pause at the September 20th meeting, with an 86% probability according to the FedWatch tool. Another pause in November is likely (71% probability), but a higher-than-expected inflation report on Thursday would likely raise the odds of a rate hike in November.   Fed member Harker said on Tuesday that the Fed might be done raising rates, “absent any alarming new data”. Harker said that rates would need to stay at the current high levels “for a while” and went as far as to say that the Fed would likely cut rates at some point in 2024. The UK economy is not in good shape and the possibility of a recession is very real. GDP is expected to flatline in Q2 (0.0%) after a weak gain of 0.1% in the first quarter. A weaker-than-expected GDP reading could spook investors and send the British pound lower.     GBP/USD Technical GBP/USD is testing support at 1.2747. The next support level is 1.2622  1.2874 and 1.2999 are the next resistance lines

Italy cushions windfall tax blow China deflation to spark stimulus efforts US five-year inflation breakeven nears peak set in April 2022 Yesterday, the euro took a big hit after Italian Premier Meloni’s cabinet approved a 40% levy on lenders’ extra profits.  Today was all about damage control as the Italian government had to tweak and ease up this crushing windfall tax on banks. The initial tax plan crushed the European banking sector, but that might see some relief now that the finance ministry clarified that the levy won’t surpass 0.1% of a firm’s assets and that banks who have delivered increased interest rates to depositors won’t be greatly impacted. The euro was steadying earlier, but a recovery of yesterday’s losses seems unlikely. The FX market appears to be struggling for major moves ahead of the US inflation report and that is somewhat surprising considering the deflationary numbers that came from China last night.  China saw both consumer and producer prices decline together for the first time since early in the pandemic.  China’s producer prices have been steadily dropping for 10th consecutive months, which should support disinflation hopes from most of the advanced economies.  China’s core CPI is still in positive territory, but that shouldn’t prevent officials from being a little bit more aggressive with stimulus. Even with China’s falling prices, some investors are still not yet confident that US inflation will come all the way down to the Fed’s target.  One of the long-term inflation gauges, the US five-year inflation breakeven remains elevated and close to the high made in April 2022.  Tomorrow’s inflation report could send this long-term measure above 2.5% or cool the steady rally that took hold since June.       Leading up to the US CPI report, EUR/USD has been consolidating between the 1.0920 and 1.1040 levels. Any significant upside surprises could support a stronger dollar, which could trigger a tentative break down below 1.0940 short-term support level.  An in-line inflation report could see the current trading range hold up, while a cooler-than-expected might support a rally towards the 1.1100 handle.      

BoJ Summary of Opinions takes note of higher inflation US job report a mixed bag The Japanese yen has started the week in negative territory. In the European session, USD/JPY is trading at 142.36, up 0.42%. BoJ says monetary easing to continue Inflation continues to be a key issue for the Bank of Japan, although it is much lower than in other major economies, at around 3%. Still, inflation is above the Bank’s 2% target and this continues to raise speculation that the BoJ will have to tighten policy sooner or later. The BoJ has pushed back against talk that it will tighten, and when the central bank recently made its yield curve control (YCC) more flexible, Governor Ueda was careful to stress that the step did not represent a move towards normalization. Against this backdrop, the BoJ released its Summary of Opinions earlier today. The members reiterated the necessity to keep an ultra-easy monetary policy in place, but some members noted that inflation and wages could continue to increase. One opinion went as far as to state that 2% inflation “in a sustainable and stable manner seems to have clearly come in sight” and urged the BoJ to make YCC more flexible. This BoJ internal conversation could be a signal that policy makers are slowly acknowledging that inflation, which has been above the 2% target for months, may be sustainable. That would mark a sea change in the BoJ’s thinking and could have major ramifications on the exchange rate. The US employment report for July was a mix. Nonfarm payrolls were soft at 187,000, despite a banner ADP release which fuelled expectations of a breakout nonfarm payrolls release. Job growth is slowing, but the unemployment rate ticked lower to 3.5% down from 3.6%, and wage growth stayed steady at 4.4%.  

German Factory Orders jump 7.0% US nonfarm payrolls expected to dip to 200,000 The euro is almost unchanged on Friday, trading at 1.0952. We could see some movement in the North American session, with the release of US nonfarm payrolls. The euro has shown sharp swings lately.  EUR/USD climbed to 1.1275 on July 18th, its highest level since February 2022. It has been all downhill since then, with the euro tumbling over 300 basis points.   Soft German PMIs reflective of weak eurozone economy It hasn’t been the best week for Germany, the largest economy in the eurozone and the bellwether of the bloc. The July PMIs pointed to deceleration in both services and manufacturing. The Services PMI remained in expansion territory but slipped from 54.1 to 52.3, its lowest level since February. Manufacturing is in terrible shape, with the PMI falling from 40.6 to 38.8, its weakest reading since May 2020. German retail sales declined 0.8% in June, down from 1.9% in May. The week did end with some good news, as German Factory Orders jumped 7.0% m/m in June, up from 6.2% in May and blowing past the consensus estimate of -2.0%. We’ll get a look at German Industrial Production on Monday and CPI on Tuesday. For the ECB, the weak numbers out of Germany are an indication that the central bank’s tightening cycle is working, but what comes next is a tricky question. Inflation has slowed to 5.5%, but that is much higher than the 2% target. The ECB hasn’t paused its rate hikes since the tightening cycle began in July 2022 but there is some pressure on the ECB to take a break at the September meeting in order to avoid a recession. ECB President Lagarde is keeping mum, saying that a pause or a hike are both on the table. With no guidance from the ECB, about all investors can do is keep an eye on inflation and employment releases, which will be crucial to the ECB’s decision at the next meeting.   Markets expect soft US nonfarm payrolls All eyes are on nonfarm payrolls, one of the most important US releases. In June, a massive ADP employment report fuelled expectations that nonfarm payrolls would also soar. In the end, nonfarm payrolls fell to 209,000, down sharply from a downwardly revised 306,000. ADP again soared this week with a reading of 324,000. We’ll have to wait and see if nonfarm payrolls come in around the consensus estimate of 200,000 or follow ADP and move sharply higher. . EUR/USD Technical 1.0924 remains under pressure in support. Below, there is support at 1.0831 There is resistance at 1.1037 and 1.1130  

Canada lost 6,400 jobs in July as the unemployment rate rose for a third straight month Canadian wage pressures jump to 5.0%, which might not let policymakers signal that the peak in rates is in place Crude prices rally for a sixth straight week on OPEC+ determination to keep oil market tight   USD/CAD The past few weeks have not been kind to the Canadian dollar, but that could be changing.  The general rise in the dollar has stemmed from concerns over the US debt situation.  With both the Fed and BOC in similar positions when it comes to their respective tightening cycles, the Canadian dollar seems like it might be better positioned over the short-term as traders unwind their US dollar bets.  The USD/CAD shows the correlation with rising oil prices has not provided much support to the loonie, but that could be changing here.  If bearish momentum accelerates, further downside could target the 1.3300 handle.  The Canadian dollar could remain in oversold territory a while longer, which could support a further decline towards the 1.3250 region.  To the upside, the 1.3400 level provides major resistance.   Oil Crude prices are rising as the dollar drops following a mixed NFP report and as OPEC+ remains committed to keeping the oil market tight.  Saudi Arabia’s decision to extend a unilateral 1-million barrel oil cut did not surprise anyone. Energy traders however wanted to see if Russia would extend their export cut pledge and they did. Oil is at a 3-month high and starting to attract more buyers.  The crude price rally could continue since the US economy remains resilient and if China’s data next week confirms that part of the world’s crude demand is growing. The $85 level should provide key resistance for WTI crude, but if that doesn’t slow the rally, every trader will have their eyes on the $90 level.   Gold Gold prices are rallying as the bond market selloff ends following a mixed NFP report that did not derail some expectations that the Fed is still probably done raising rates.  This jobs day still suggests a soft landing is obtainable but if wage growth remains strong over the next couple of months that could create some problems.  Higher rates for longer is still an environment that gold can thrive in, especially if Wall Street becomes fixated over the deficit

USD/JPY declines on expectations BOJ will let rates rise quickly Fed rate cut bets fully priced in by March meeting; implied rate stands at 5.123% Fed’s Bostic noted US employment gains are slowing in an orderly manner, no need for tightening   NFP Day  The US economy should continue to gradually weaken as the labor market softens.  This labor market report showed 187,000 jobs were added to the economy, while wage pressures heated up, and as the unemployment rate dipped to 3.5%.  This NFP report should support the argument that the Fed is done raising rates.  Fed speak post payrolls poured cold water over the hot bond market selloff.  Fed’s Bostic said that the job gains are slowing orderly  and that they have no reason to hike again. Fed’s Goolsbee added that they are getting positive numbers with inflation and that the job market is cooling a little bit.  The risks for more Fed tightening are going away, but that could change with next Thursday’s inflation report.   USD/JPY     Price action on the USD/JPY daily chart show that the potential bearish ABCD pattern that formed a couple days ago is tentatively respecting trendline support at the 141.50 region.  If bearish momentum remains in place downside could target the 140.00 zone.  With the BOJ’s minor tweak to YCC in place and steady US data that supports the economy is weakening, the dollar-yen could see bearishness remain intact.  To the upside, 144.00 remains key resistance     Apple disappoints and Amazon Delivers The last two major tech giant earnings delivered diverging stories.  Amazon crushed it in the second quarter, while delivering financial discipline with lower spending.  The outlook impressed for both ecommerce and their cloud services, while the lower headcount made this a perfect earnings report. Apple told a different story than Amazon as their outlook devices weakened, which is prompting concerns that this might be as good as it gets over the short-term for share prices.  A weakening consumer and a similar fourth quarter is not inspiring investors.  

RBA policy statement says inflation high but declining Money markets betting on a pause in September US nonfarm payrolls expected at 200,000 The Australian dollar has stabilized but it has been a rough week, with losses of 1.37%. In Friday’s European session, AUD/USD is trading at 0.6558, down 0.04%. RBA says inflation high but moving in right direction The Reserve Bank of Australia released its quarterly policy statement earlier today. Investors looking for clues as to the RBA’s next steps may be disappointed as there were no interesting disclosures. Still, the statement provides a useful summary of the RBA’s thoughts on inflation, which remains its primary focus. The statement noted that inflation remains “high and broadly based” and voiced concern over high wage growth and strong services and core inflation. The statement added that inflation is moving in the right direction and is consistent with the RBA’s forecast that the 2% target will be achieved in 2025. RBA Governor Lowe said at this week’s meeting that future rate decisions will “depend on the data” and the statement reinforced this stance. The RBA’s message to the markets is that a rate hike remains on the table, but the money markets are more dovish and have priced in another pause at 95%, according to the ASX RBA Rate Tracker. If the RBA decides to pause for a third straight time at the September meeting, I would expect to see increased speculation about rate cuts.   The US releases nonfarm payrolls, one of the most important US releases, later today. In June, a massive ADP employment report fuelled expectations that nonfarm payrolls would also soar. In the end, nonfarm payrolls fell to 209,000, down sharply from a downwardly revised 306,000. ADP sparkled again this week with a reading of 324,000. We’ll have to wait and see if nonfarm payrolls come in around the consensus estimate of 200,000 or follow ADP and move sharply higher. . AUD/USD Technical AUD/USD tested resistance at 0.6573 earlier in the day. Above, there is resistance at 0.6697 There is support at 0.6449 and 0.6375    

If you're an ardent follower of cryptocurrency trends, you'll probably have heard of Peter Brandt. Brandt, a famed commodity trader, etched his name in the annals of crypto history when he predicted the Bitcoin crash of 2018. His uncanny foresight was validated when Bitcoin's value plummeted from a high of nearly $20,000 to below $4,000 that year. Now - Brandt has sent out a new warning about investing in Bitcoin, sparking a ripple of concern among investors.   Who is Peter Brandt?   Peter Brandt is more than a celebrated commodities trader; he's an esteemed personality in the world of finance with a successful trading career spanning over forty years. He made his mark in the late 1970s by demonstrating an exceptional knack for anticipating market trends and movements. Brandt expanded his professional reach by becoming an author, imparting his deep understanding to a broader audience. His seminal work, "Diary of a Professional Commodity Trader," brought to light by Wiley in 2011, is considered a must-have resource for those interested in delving into the complexities of commodity trading. The book serves as a journey through Brandt's personal trading history, providing a candid peek into the high-risk world of trading. Beyond trading and authorship, Brandt is the founding head of Factor LLC, his proprietary trading company, where he disseminates his market assessments and potential trading strategies. His followers highly regard his technical analysis charts, which have garnered a significant audience on social platforms, solidifying his status as a reliable voice in the industry.   The 2018 Prediction and Its Realisation   When Brandt predicted Bitcoin's 2018 crash, he cited key market patterns and trends that seemed to suggest an impending downturn. One pattern was a 'parabolic advance' - a steep, curved upward trend that Bitcoin exhibited leading up to the 2018 crash. Parabolic advances have historically been associated with unsustainable market bubbles, so spotting this pattern was a key reason behind Brandt's forecast.   Brandt also noted the euphoric sentiment surrounding Bitcoin, which was reminiscent of other historic market bubbles. The rampant speculation, combined with the lack of a tangible underlying asset, were strong indicators of an unsustainable price level.   His prediction was shockingly accurate. Bitcoin's value dropped by more than 80% in a year, falling from nearly $20,000 in December 2017 to below $4,000 by December 2018. This crash validated Brandt's forecast, proving his proficiency in understanding and predicting market trends.   The Aftermath and Recovery   Despite the severe crash, Bitcoin showed its resilience and rebounded in the subsequent years. In 2019, Bitcoin embarked on a recovery path, closing the year at around $7,200, a significant increase from its low point the previous year.   The year 2020 brought further growth, with Bitcoin's value more than tripling. The global pandemic played a role in this surge, as economic uncertainties and inflationary fears drove many investors towards Bitcoin as a 'digital gold' and hedge against traditional market instabilities.   In 2021, Bitcoin reached unprecedented heights, crossing the $60,000 mark, propelled by institutional acceptance, technological advancements, and an increasingly digital global economy. The Bitcoin boom highlighted its inherent volatility but also demonstrated its potential for high returns.   This recovery provides a valuable lesson to investors: while cryptocurrencies can experience significant drops, they also have the potential to rebound strongly, reflecting their volatile yet potentially rewarding nature.   Brandt's Current Warning and Why He's Concerned   Brandt's recent warning concerning Bitcoin signals his belief that history may repeat itself. He has noted the possibility of another 'parabolic advance' similar to the one seen before the 2018 crash. As we know, parabolic advances often precede significant market corrections. However, this time around, things are different. Bitcoin and the overall crypto market have matured significantly, with institutional acceptance, regulatory developments, and technical advancements.   Bitcoin has shown resilience despite previous market crashes and regulatory challenges, suggesting a robust underlying strength. It continues to evolve, adapting to changing market conditions and regulations and constantly improving its technology and network.   Nonetheless, Brandt's prediction serves as a reminder of Bitcoin's inherent volatility, whereas the price of Solana and other coins seems more stable. It should be seen as a word of caution for investors, reminding them to do their due diligence and consider risk management strategies when investing. The potential for high returns in Bitcoin comes with equally high risks.   Furthermore, a potential downturn in Bitcoin doesn't necessarily equate to a lack of faith in the technology behind it. Blockchain, the underlying technology of Bitcoin, has far-reaching potential beyond just cryptocurrency. It's set to revolutionize various industries, from finance and supply chain to healthcare and education, indicating a promising and enduring future regardless of Bitcoin's price volatility.   The Future of Bitcoin: A Word of Caution   While the cautionary advice of Peter Brandt carries weight, it isn't an indisputable indicator of an impending market crash. Like all financial spheres, Bitcoin's future is marked by unpredictability and uncertainties. Nevertheless, his alert serves as a pertinent reminder of the inherent risks associated with investing in cryptocurrencies.   Brandt's perspectives underscore the importance of investor education and exercising caution when dealing with Bitcoin and other cryptocurrencies. Given the potential for abrupt price swings in the market, investors are urged to conduct comprehensive research and assess their risk appetite before venturing into cryptocurrency investment.   Peter Brandt's story and his knack for accurate forecasts offer an essential lesson in prudence and rigorous examination in the unpredictable realm of crypto investing. While the potential for massive gains can be compelling, it's paramount to keep in mind the intrinsic risks tied to a market known for its swift fluctuations. As we navigate the future, Brandt's admonitions serve as a potent reminder to prospective investors: tread carefully, invest wisely, and always brace for unforeseen circumstances.

Dollar rises to three-week high (low for euro) as labor market cools Atlanta’s GDPNow index rises to 3.87%, up from 3.55% Manufacturing contracts for a ninth straight month The US dollar pared some its earlier gains after the JOLTS and ISM manufacturing employment component supported a Fed skip in September, possibly confirming hopes that they could be done tightening.  The dollar was rallying against the euro as equities tumbled over mixed earnings and over concerns the US soft landing needs to be confirmed before we return to record levels.   US Data The ISM Manufacturing reported contracted for a ninth straight month, as demand remains weak, but could be showing signs it is bottoming out.  The headline ISM index report came in at 46.4, higher than the 46.0 prior reading, but a miss of the 46.9 consensus estimate.  The prices paid component rose from 41.8 to 42.6, but was below the eyed 44.0 expectation.  New orders improved from 45.6 to 47.3, while employment dropped from 48.1 to 44.4. US job openings declined from 9.616 million openings to 9.582 million, which is the lowest levels since February 2021.  JOLTS data also showed hiring decreased and the quit rate declined.  The quit rate hit fell to 2.4%, the lowest level since February 2021.  The ratio of job openings still makes it a job searcher market as there still remains more than 1.6 jobs for unemployed job seekers .     The labor market is clearly weakening and that is good news for the Fed.  Post ISM Manufacturing and JOLTS, Treasury yields at the short end of the curve gave up some of their earlier gains. The dollar index chart is showing that the dollar rebound over the past few weeks is facing massive resistance at around the 102.50 region.  If the NFP report at the end of the week confirms that the labor market is weakening, the dollar rebound might be over. A dollar floor could be in place as Fed rate hike odds decline and rate cut odds move forward. Fed swaps will likely show  the market is pricing in a coin-flip chance of a rate hike over the next two FOMC meetings or if the market grows more confident that the Fed is done.  

Traders push back RBA rate hike bets until November WTI and Brent crude implied volatility falls to lowest since 2020 Turkey unloads significant portion of gold holdings The Australian dollar tumbled after the RBA kept rates on hold again and signaled they might be done tightening.  Given most economists expected a hike, aussie-dollar was ripe for a plunge.  US dollar strength also supported the decline after the Treasury increased their net borrowing estimate.     Oil The oil price rally is ready for a break as US stocks soften and the dollar firms up.  August is off to a slow start for energy traders as the outlook on demand could face rising prices.  The oil market will likely remain tight even if the oil giants, like BP start delivering large price increases.  Oil remains one of the most attractive trades and buyers will likely emerge on every dip.   Gold Gold prices are not seeing safe-haven flows as US equities tumble, because the US dollar is catching a bid as yields rise higher.  Gold is going to need to see Treasury yields come down, but that might not happen until the market fully prices all the longer-dated issuance that is coming from the Treasury.  Gold’s moment in the sun is coming, but first markets need to see the bond market selloff end. If bearish momentum remains in place, gold could find major support at the $1940 level. Until we get beyond Apple earnings and the NFP report, positioning might be limited.  

Eurozone core inflation surprises on the upside Eurozone GDP accelerates to 0.3% The euro is showing little movement on Monday. In the North American session, EUR/USD is trading at 1.1023, up 0.06%. It has been a wild ride for the euro over the past two weeks. On July 18th, EUR/USD hit its highest level since February 2022, but the same day, the euro began a slide which saw it drop almost 300 points. Interestingly, the euro had a muted reaction to Monday’s eurozone inflation and GDP reports. Eurozone inflation for June was within expectations. Headline CPI dropped from 5.5% to 5.3% y/y, matching the consensus estimate. Core CPI remained steady at 5.5%, a notch higher than the consensus of 5.4%. Core CPI, which is closely watched by the ECB, hasn’t improved much from the 5.7% gain in March, which marked a record high. The inflation report shows that inflation remains stubbornly high, and will provide support to ECB members who favor a rate hike at the September meeting. The ECB raised interest rates last week, which came as no surprise as the ECB had signalled that it would do so. What happens next is anyone’s guess. ECB Lagarde said at last week’s meeting that “the September meeting will be deliberately data-dependent”. This didn’t clear up any uncertainty or really say anything, as the ECB has abandoned forward guidance and made rate decisions based on key data, especially inflation and employment reports. The ECB could go either way in September – inflation remains well above the 2% target, which would support a hike, but the eurozone economy remains weak and some members may wish to pause in order to avoid a recession. There was a bright spot in Monday’s releases as eurozone GDP rose to 0.3% in the second quarter, up from 0.0% in Q1. We’ll get a look at German and eurozone Manufacturing PMIs on Tuesday. EUR/USD Technical EUR/USD is testing resistance at 1.1037. The next resistance line is 1.1130 There is support at 1.0924 and 1.0831    

Eurozone Q2 GDP returned to growth with a 0.3% advance reading (prior revised higher to 0.0%). Eurozone core inflation held steady at 5.3% Stocks have a flat session as traders await NFP Friday US stocks are wavering ahead of a key Fed survey that should show loan growth is weakening and that the economy should steadily weaken.  The Senior Loan Officer Opinion Survey (SLOOS) will tell us how top lending officers feel about the credit outlook. The US dollar isn’t making any major moves as Wall Street grows more confident that a soft landing is very much obtainable.  Many traders won’t do much positioning until Friday’s NFP report, which should show the labor market remains tight.  The key for the payroll report might be what is happening with wages, as it seems fears of an acceleration of inflation have been downsized.  This week also includes the ISM reports which should show manufacturing activity is picking up and the service sector is cooling.  Weakening growth prospects is not the takeaway from this earnings season, but that could change if Apple and Amazon’s results tell a different story.      The euro remains heavy as concerns grow for Germany’s outlook.  German economy minister warned of five tough years and that bleak outlook could weigh on the euro.  EUR/USD might start to form a narrow trading range but that could change once we get beyond the NFP report.  It seems everyone is in wait-and-see mode and right now the US jobs report will steal the spotlight. The 1.0950 to 1.1050 could emerge as the key trading range until this week’s fireworks. US Data Both the ISM Chicago PMI and Dallas Manufacturing survey showed activity improved for a second consecutive month.  The Chicago PMI was softer-than-expected but has yet to benefit from increasing aircraft orders.  The Dallas Fed did not provide an inspiring outlook as activity remains sluggish, while prices paid and received rose.  The manufacturing part of the economy is still in contraction territory and the recovery will likely be unbalanced.   

Oil poised for best monthly performance since early 2022 Net-long positions in WTI  rise to highest levels in 3 months Goldman says global oil demand has surpassed peak set just before COVID-19 USD/CAD   Canadian dollar Oil and the loonie are flying high again as global growth prospects improve and on optimism the Fed is done tightening.  The Canadian dollar was weakening last week on fears that the BOC’s tightening cycle is starting to weigh on the economy.   That outlook might change if China delivers massive stimulus and if global disinflation trends remain in place.  The 1.3100 level remains key support for USD/CAD, while 1.3250 provides resistance. Oil Crude prices are finishing a solid month on a high note as demand prospects remain impressive and no one doubts that OPEC+ will keep this market tight.  The oil market is seeing the best month since early 2022 as most of the major central banks appear at the tail end of their tightening cycles.  Also supporting oil was the Goldman Sachs note that suggested we are not at peak demand.  The crude demand outlook is getting a boost on soft landing hopes for the US and Europe.  The ace up the sleeve of oil bulls is that the energy market is still awaiting massive stimulus from China that should boost global growth prospects.  WTI crude has rallied above the $80 level and is trying to make a run towards the $84.50 level.  Exhaustion might settle in until we get beyond Friday’s NFP report.    Gold Gold prices are attempting a bullish break out as optimism grows that the major central banks are all approaching the end of their tightening cycles.  The RBA might be one-and-done this week and the BOE might be done after a couple more.  The Fed is clearly waiting on the data, but they might be done if inflation plays nice.    Gold’s rally could extend if growth prospects turn sour.  If Wall Street starts aggressively in rate cuts by the first quarter of 2024, gold could easily find a home above the $2000 level.  It seems gold will need to wait for Apple’s earnings and the NFP report, before it delivers its next big move.  Bitcoin Bitcoin prices softened after Curve Finance announced they suffered a breach.  $50 million have been drained, which led to the over 10% drop with the Curve stablecoin.  This is a blow for Ethereum’s DeFi ecosystem, but not likely to trigger a massive selloff for Bitcoin.      

4.8% of Large & Mid-market firms in July say conditions tightened considerably, up from 3.2% in April. Commercial and Industrial loans for medium and large firms saw an increase in tightening terms (50.8% vs 46% prior) Fed rate cut odds for the December 13th meeting remained around 17.5% The Fed July Senior Loan Officer Survey (SLOOS) on Bank Lending Practices highlighted a that tightening lending standards occurred across all categories.  The impact from the Fed’s tightening cycle is clearly impacting the economy as weaker demand was noticeable for commercial and industrial loans, and CRE loans. Wall Street was not really surprised as the lag from Fed tightening is supposed to take several months before business notice significant tightening of credit conditions.  The dollar softened following the release as the survey supports the narrative that the economy will steadily and weaken and that should support rate cut bets for early next year.      

Australia’s central bank, RBA has kept its policy cash rate unchanged at 4.1% for the second consecutive month. The tonality of the latest monetary policy implies that RBA is now data-dependent, and indirectly acknowledged the negative adverse lagged effects of higher interest rates towards economic growth. Overall, RBA may continue to remain on hold on its policy cash rate at 4.1% for the rest of 2023 which in turn negates any potential major bullish movement of the AUD/USD.   Expectations of interest rates traders were right in line with the Australian central bank, RBA’s latest monetary policy decision (no interest rate hike today) that was in contrast to the 25-basis points hike consensus from the majority of the economists surveyed. RBA has decided to hold on to its official policy cash rate at 4.1% for the second consecutive month; data from the ASX 30-day interbank cash rate futures as of 31 July 2023 has indicated a patty pricing of only a 14% chance of a 25-bps hike, down significantly from a 41% chance being priced a week ago. These are the key takeaways from today’s RBA monetary policy statement;   The Board has decided to hold the interest rate steady this month to access the impact of the prior rate increases and monitor the economic outlook. Risk of below-trend growth for the Australian economy due to weak household consumption growth and dwelling investment. The labour market has remained tight, with job vacancies and postings at high levels, though labour shortages have lessened. But the unemployment rate is expected to rise gradually from 3.5% to around 4.5% in late 2024. Even though wage growth has picked up due to the tight labour market and high inflation but wage growth, together with productivity growth remains consistent with the inflation target.   The current growth rate of 6% inflation in Australia is still considered too high. The central forecast expects CPI inflation will decline to around 3.5% by the end of 2024 and revert to the target range of 2% to 3% by late 2025. The Board may consider further tightening of monetary policy to ensure inflation returns to the target range of 2% to 3% depending on data and evolving risk assessments.   Switched to being “data-dependent” suggests RBA may stand pat on interest rates till end of 2023 The last point as mentioned above stood up starkly, in the previous July’s monetary policy statement, it was noted as “some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon how the economy and inflation evolve”. In today’s monetary policy, it has been stated as “that will depend upon the data and the evolving assessment of risks”. Hence, this latest framing of being data-dependent, and acknowledging the implied negative adverse lagged effects of a higher interest rate environment towards economic growth (risk assessment) seems to portray that if the recent trend of key economic indicators continues their respective trajectories, it is likely the RBA may continue to remain on hold on its policy cash rate at 4.1% for the rest of 2023 while monitoring the global inflationary environment.     Lacklustre sentiment for AUD/USD AUD/USD minor short-term trend as of 1 Aug 2023 (Source: TradingView, click to enlarge chart)  A “data-dependent” RBA has knocked out the bullish tone of AUD/USD after a reprieve rebound seen yesterday, 31 July where the pair staged a minor rebound of 117 pips from its last Friday, 28 July intraday low of 0.6622 to an intraday high of 0.6739 during yesterday’s US session. Right now, it has shed -81 pips to print a current intraday low of 0.6657 at this time of the writing, and the Aussie is the worst performer intraday today, 1 Aug (-0.65%) among the major currencies against the US dollar; EUR (-0.03%), CHF (-0.03%), GBP (-0.07%), CAD (-0.22%), and JPY, (-0.34%). The Aussie has resumed its underperformance against the US dollar seen in the last two trading days of last week where the AUD/USD recorded an accumulated loss of -1.68% from 27 July to 28 July versus EUR/USD (-0.63%), GBP/USD (-0.71%), and JPY/USD (-0.65%) over the same period ex-post FOMC, ECB, and BoJ. From a technical analysis standpoint, short-term bearish momentum remains intact as yesterday’s rebound has failed to surpass the 200-day moving average after a re-test on it, now acting as a key short-term pivotal resistance at around 0.6740 with the next major support coming in at 0.6600/6580.  

Fed swaps show only an 18% chance of a hike in September (under 50% for November) FOMC to take data-dependent approach on future hikes Fed no longer forecasting a recession   The dollar declined as US stocks embraced a patient Fed Chair Powell that will remain dependent with the next two inflation reports before committing to what they will do in September.  The Fed is probably done raising rates and that is keeping soft landing hopes alive. Fed Decision The Fed raised rates by a quarter-percentage point, bringing the target range to 5.25% to 5.50%, a 22-year high.  This was an easy FOMC decision as economic growth remains impressive, which is why the Fed will try to keep the door open for one last hike. The US economy is starting to feel the impact of the Fed’s rate hiking campaign and unless the housing market continues to heat up, the disinflation process should help bring rates back to target.   FOMC Statement The statement did not deliver any surprises as the Fed emphasized that inflation remains elevated and they will continue to assess additional information and its implications for monetary policy.  Economic growth is softening as the June statement said economic activity is expanding at a modest pace, while now it is at a moderate one.  The Fed is keeping optionality for future rate increases but it probably won’t need them.  The disinflation process will remain as the economy is weakening and the corporate world should start feeling the impact of tighter credit conditions.    FOMC press conference Powell noted that the FOMC will take a data-dependent approach on future hikes.  He acknowledged the rebound with housing and highlighted that they are waiting for the full effects of their tightening.  Powell clearly stated that it is possible that they’d raise or hold in September if data warranted it.  The Fed is going to be locked in with all the key inflation data points.  The June CPI report was cooler-than-expected, so if that trend continues, the Fed will probably skip in September.  The Fed will have two inflation reports before it meets again, with the core remaining quite elevated.  The Fed clearly believes a soft landing is achievable as the staff no longer is forecasting a recession.   FX The dollar softened as the Fed signaled they will be patient with future rate hikes, which suggests if they deliver one more hike that will most likely be in November. The economy should weaken going forward and that should support a shifting of the focus from just inflation to also including recessionary fears.  Both the euro and pound rallied against the dollar as their respective central banks have clearly signaled more tightening will occur beyond the summer.  EUR/USD has clearly found support ahead of the 1.10 handle, which suggests prices could stabilize until we get to the ECB meeting.  The 1.1150 remains key short-term resistance.      

EIA Report: stockpiles  dropped 600K vs -2.12M eyed Crude production falls to 12.2 million bpd (lower boundaries of this year’s range) Gold struggles as Fed leaves door open for more hikes Oil Crude prices softened after the EIA crude oil inventory report stockpiles fell less-than-expected as surging gasoline prices weighed on demand.  Gas is almost over 10 cents a gallon according to AAA and that rising trend might continue going to the end of summer.  Crude exports also rose above the 4 million barrel a day threshold, which shows overseas demand is growing as OPEC+ tightens the oil market.  Gold Gold prices remained heavy after the FOMC statement as Fed swaps continue to price in small chances of an additional rate hike.  The Fed will probably see no change with rates in September and when the market is confident that November will be a pause, then gold might break out higher.   Gold is now in wait-and-see mode for the rest of the big earnings releases and if the ECB and BOJ can surprise markets.   Bitcoin Bitcoin caught a modest bid after the Fed decision triggered a modest risk-on rally.  The Fed is most likely done raising rates and that should provide some relief to the interest rate sensitive sectors in the cryptoverse.    

NZD/USD     The New Zealand dollar got a boost after Chinese leaders signal more support is coming to the economy at this week’s Politburo meeting.  Commodity prices across the board got a boost and that helped the kiwi-dollar end its six-day decline.  The New Zealand might start looking attractive again as long as the Fed does not signal a hawkish skip and trigger a massive move back into the greenback.  Major support lies at the 0.6150 region, but if bearish selling accelerates, prices might not find support until the 0.5900 level, which could potentially form a bullish Gartley pattern. If bullishness returns to the kiwi, further upside could eye a return towards the 0.6400 area. Major resistance would like at the 0.6550 level.

Oil Crude prices are rising after the IMF raised their World GDP forecast from 2.8% to 3%.  The outlook for global growth is the key for the crude demand outlook and right now it seems that might only get better as we get more stimulus out of China and as soft landing hopes grow for the US.  WTI crude will likely face key resistance from the $80 level, which means the recent rally might consolidate until we get beyond the FOMC decision. Gold Gold prices are wavering ahead of the FOMC decision, slightly higher on the day as the $1950 level provides key support.  Gold is going to wander around for the next 24 hours as nothing else really matters except the Fed.  Massive earnings might provide a key catalyst for risk-appetite, so bullion traders might want to pay attention to what happens to Microsoft and Alphabet earnings.

Canadian dollar was fourth-worst performer in the Group-of-10 currencies. Oil rallies on improved global outlook and Chinese stimulus Gold awaits the Fed decision       Commodities and some commodity currencies caught a bid after China policymakers signaled more stimulus would soon help their struggling recovery, but that didn’t help the Canadian dollar.  Canada’s largest export has seen oil prices catch a bid over the past month, while the loonie has appreciated but mainly been rangebound over the past week.  It looks like FX traders are locked in with the Fed day.  USD/CAD has been consolidating between the 1.3150 to 1.3250 range over the past week.  If risk appetite remains in place post-FOMC decision, the Canadian dollar could make a run towards the 1.3000 level.  A hawkish surprise by the Fed could support an initial above 1.3250 , with 1.34 providing short-term resistance.

British pound extends losses UK manufacturing and services PMIs decline in July The British pound continues to lose ground. In the North American session, GBP/USD is trading at 1.2822, down 0.23%. The pound has been on a nasty slide, losing over 300 points since July 14th.   UK manufacturing and services PMIs ease in July The week started on a sour note, as the UK manufacturing and services PMIs both slowed in July. Manufacturing fell to 45.0, below the June reading of 46.5 and the consensus estimate of 46.1 points. The manufacturing sector has now declined for 12 straight months and today’s release marked the PMI’s lowest level this year. Services slipped to 51.5, down from 53.7 and shy of the consensus of 52.4 points. This marked a 6-month low and pointed to weaker growth in business activity, which has been a key driver of the economy. It’s a very light data calendar in the UK, with no other tier-1 releases this week. Still, it could be a busy week for GBP/USD, with the Federal Reserve decision on Wednesday and US GDP on Thursday.   Fed expected to hike on Wednesday The Federal Reserve meets on Wednesday and the money markets have priced in a 0.25% hike as a near certainty and are heavily leaning towards a pause in September. This stance may be out of sync with the Fed, as Jerome Powell and other members have voiced concern that inflation isn’t falling fast enough and that could be a hint at further rate hikes after July. With the economy performing well and the labour market remaining tight, an argument can be made that the Fed has a golden opportunity to keep tightening in order to push inflation back to the 2% target. There have been concerns about whether the Fed can guide the economy to a soft landing, but the economic data is looking good and the chances of a major recession are low.   GBP/USD Technical GBP/USD tested resistance at 1.2858 earlier. Next, there is resistance at 1.2932  There is support at 1.2757 and 1.2637  

Crypto Bitcoin’s consolidating trading has seen price action reside closer to the lower boundaries as volatility disappears. Short-term support from the $29,500 level broke this early this morning and if bearish momentum builds, key support could target the $27,500 region.  The crypto news flow has been uninspiring, with many traders focusing on OPENAI’s Sam Altman’s Worldcoin crypto project. It will take a fresh catalyst to excite Bitcoin traders and right now it seems the price action is destined for a broadening formation, potentially targeting the $27,500 and $31,500 zone.  

Gold Gold is softening as the dollar catches a small bid following a slight US PMI outperformance to what we saw in Europe.  Gold isn’t going to have a major move until we either get a major earnings update that moves sentiment or until we get to the FOMC decision.  Gold looks like it might be poised to consolidate between the $1950 and $1970 zone.      

Oil Crude prices are tentatively breaking out as expectations remain for the oil market to remain tight despite all global weakness that is emerging.  The rally in crude oil is impressive as it occurs as Europe is looking very weak right now, the US is slowing down, and China’s Politburo isn’t expected to unveil major stimulus this week. Oil is also getting a boost from Wall Street as optimism grows the end of the Fed’s rate hiking campaign appears it could be here.  With Europe lagging by a couple months, we could start seeing all the major economies eyeing easing as the next move. Market positioning probably has the oil trade look a lot more attractive than US stocks, so if bullish momentum takes WTI crude to $80, it could have decent momentum behind that move.  

Gold prices are softening as the dollar firms up after reports that the BOJ is leaning towards leaving yield curve control strategy unchanged. ​   The dollar is riding a small wave here and that is putting gold’s third weekly gain at risk. ​ Gold traders have a lot of news to follow next week and that could support a deeper pullback if the Fed keeps optionality for more tightening on the table and if earnings continue to mostly suggest the resilience of the US economy remains. Before the central bank fireworks ignite next week, gold seems like it will consolidate between the $1940 and $1980 range. ​ ​ ​      

Commodities are starting to post some diverging trends as US soft landing hopes improve.  Oil has benefited from a resilient US economy, but gold has struggled as a tight labor market suggests the Fed may need to keep interest rates higher for longer.  A recent Bloomberg survey noted that firmer growth prospects are expected through Q3, potentially rising 0.5%.  The outlook for Q4 is GDP to contract 0.4%.   Oil Oil prices are rising on optimism that the outlooks for China and India should keep the global crude demand outlook intact, while OPEC+ will make sure the market remains tight. ​ UAE Energy Minister al-Mazrouei noted actions by OPEC+ to support the oil market were sufficient for now and the group is “only a phone call away” if any further steps are needed. He told Reuters that “But we are constantly meeting and if there is a requirement to do anything else then during those meetings, we will pick it up. We are always a phone call away from each other.” WTI crude has been rising since the end of June but has clearly found resistance just above the $77 level. ​ Next week, energy traders will have to pay attention to global flash PMI readings, a handful of major energy companies earnings, the standard weekly stockpile data points and some energy conferences which could provide some insight for the future shifts with supply and demand. WTI crude might continue its consolidation pattern between the $74 to $77 level.    

Crypto Bitcoin remains anchored around the $30,000 level as no major developments have so far occurred with government action or regulation.  The past week saw the SEC acknowledge ETF filings from BlackRock,  Wise Origin Bitcoin Trust, WisdomTree Bitcoin Trust, VanEck Bitcoin Trust and Invesco Galaxy Bitcoin ETF. The cryptoverse is still celebrating a partial victory after a federal judge said Ripple’s XRP token wasn’t a security when sold to retail investors on exchanges. The ruling is potentially paving the way for the House Republicans’ bill for a US crypto market overhaul.  The Bitcoin consolidation seems like it isn’t going away just yet but it could if the House’s bill advances or if the Fed delivers a hawkish surprise.

Gold Gold’s is poised for a third straight weekly advance as Wall Street anticipates the Fed could be done with their rate hiking cycle after next week.  A strong labor market however keeps the risk for more tightening to occur in the fall, so gold isn’t quite ready to make a move back above the $2000 level.  The FOMC decision will be key for gold and could trigger a corrective move below the $1,960 level if the Fed decides to keep optionality on the table for September.  If Powell is able to signal that it seems they are done tightening, gold may attempt to capture the $1980 level, with $2,000 being a major psychological barrier.  

Energy The oil market looks like it is going to continue to tighten as OPEC+ delivers on their pledges and as China improves business conditions. Energy traders will have a lot to stay on top of this week.  In addition to the global flash PMI readings, a handful of major energy companies earnings, and the standard weekly stockpile data points, there will be a few energy conferences which could provide some insight for the future shifts with supply and demand. Key earnings from Shell, TotalEnergies, Exxon and Chevron will provide key insights on capex spending and expectations for future drilling.  The G20 Energy Transitions Ministerial meeting will focus on clean initiatives.  The 5th International Conference on Power and Energy Technology will provide insights on Chinese crude demand outlooks.  

Russia No major economic releases or events next week. Industrial output and central bank reserves are the only items on the agenda. South Africa The SARB paused its tightening cycle in July while stressing it is not the end – although it likely is as both headline and core inflation are now comfortably within its 3-6% target range – and that future decisions will be driven by the data. With that in mind, next week is looking a little quiet with the leading indicator on Tuesday and PPI figures on Thursday. Turkey Next week offers mostly tier three data, with the only release of note being the quarterly inflation report. Against the backdrop of a plunging currency and a central bank that finally accepts it needs to raise rates but refuses to do so at the pace required, it should make for interesting reading. Though it likely won’t do anything to restore trust and confidence in policymakers to fix the problems. Switzerland Next week consists of just a couple of surveys, the KOF indicator and investor sentiment. China No key economic data but keep a lookout for a possible announcement of more detailed fiscal stimulus measures in terms of monetary amount, and scope of coverage. Last week, China’s top policymakers announced a slew of broad-based plans to boost consumer spending and support for private companies in share listings, bond sales, and overseas expansion but lacking in detail. India No major key data releases. Australia Several pieces of data to digest. Firstly, flash Manufacturing and Services PMIs for July out on Monday. Forecasts are expecting a further deterioration for both; a decline in Manufacturing PMI to 47.6 from 48.2 in June, and Services PMI slip to contraction mode at 49.2 from June’s reading of 50.3. Secondly, the all-important Q2 inflation data out on Wednesday where the consensus is expecting a slow down to 6.2% year-on-year from 7% y/y printed in Q1. Even the expectation for the less volatile RBA-trimmed median CPI released on the same day is being lowered to 6% y/y for Q2 from 6.6% y/y in Q1. These latest inflationary data will play a significant contribution in shaping the expectations of the monetary policy decision outlook for the next RBA meeting on 1 August. Based on the RBA Rate Indicator as of 21st July, the ASX 30-day interbank cash rate futures for the August 2023 contract have priced in a 48% probability of a 25-bps hike to bring the cash rate to 4.35%, that’s an increase in odds from 29% seen in a week ago. Lastly, retail sales for June out on Friday where the forecast is expected a decline to -0.3% month-on-month from 0.7% m/m in May. New Zealand One key data to note will be the Balance of Trade for June out on Monday where May’s trade surplus is being forecasted to reverse to a deficit of -NZ$1 billion from NZ$ 46 million. Japan On Monday, we will have the flash Manufacturing and Services PMI for July. The growth in the manufacturing sector is expected to improve slightly to 50 from 49.8 in June while growth in the services sector is forecasted to slip slightly to 53.4 from 54.0 in June. Next up, on Friday, the leading Tokyo CPI data for July will be released. Consensus for the core Tokyo inflation (excluding fresh food) is expected to slip to 2.9% year-on-year from 3.2% y/y in June, and Core-Core Tokyo inflation (excluding fresh food & energy) is forecasted to dip slightly to 2.2% y/y from 2.3% y/y in June. Also, BoJ’s monetary policy decision and latest economic quarterly outlook will be out on Friday as well. The consensus is an upgrade of the FY 2023 inflation outlook to be above 2% and a Reuters report out on Friday, 21 July stated that it is likely no change to the current band limits of the “Yield Curve Control” (YCC) programme on the 10-year JGB yield based on five sources familiar with the BoJ’s thinking. Prior to this Reuters news flow, there is a certain degree of speculation in the market place the BoJ may increase the upper limit of the YCC to 0.75% from 0.50%. Singapore Two key data to watch out for. Firstly, inflation for June is out on Monday. Consensus is expecting core inflation to cool down to 4.2% year-on-year from 4.7% y/y in May. If it turns out as expected, it will be the second consecutive month of a slowdown in inflationary pressure. Next up, industrial production for June out on Wednesday, another month of negative growth is expected at -7.5% year-on-year but at a slower magnitude than -10.8% y/y recorded in May.  

Eurozone A 25 basis point rate hike from the ECB is almost entirely priced in ahead of the meeting on Thursday but what comes after is up for much more debate. Recent commentary from policymakers suggests a pause may very much be on the cards in September, on the back of some progress in the inflation data recently. The ECB has taken a hawkish stance after meetings until now but next week could see President Lagarde and her colleagues tweak the communication and leave the door open to a pause at the following meeting. The following day we’ll get some flash inflation data from member states including Germany, France and Spain while the week will start with flash PMIs from Germany, France and the eurozone. Finally, Spain goes to the polls this weekend in a highly unusual late summer snap election in which a party from the far left or right will probably be kingmaker. It promises to be an eventful week.   UK A very quiet week for the UK following one in which inflation was shown to be finally falling and interest rate expectations have been pared back. The focus this week will be on the PMI surveys and whether we can get any further signs of disinflationary pressures building and the economy cooling.  

US The Fed is expected to resume raising rates at the July 26th FOMC meeting.  Fed funds futures see a 96% chance that the central bank will deliver a quarter-point rate rise, bringin the  target range to between 5.25% and 5.50%, almost a 22-year high. The Fed delivered 10 straight rate increases and then paused at the June FOMC meeting.  The Fed is going to raise rates on Wednesday and seems poised to be noncommittal with what they will do in September.  The economic data has been mixed (strong labor data/cooling pricing pressures) and that should support Powell’s case that they still could deliver a soft landing, a slowdown that avoids a recession.  This seems like it will be the last rate hike in the Fed’s tightening cycle, but we will have two more inflation reports before the Fed will need to commit that more rate hikes are no longer necessary. The Fed will steal the spotlight but there are several other important economic indicators and earnings that could move markets.  Monday’s flash PMI report should show both the manufacturing and service sectors continue to soften, with services still remaining in expansion territory. Tuesday’s Conference Board’s consumer confidence report could fuel expectations of a soft landing. Thursday’s first look at Q2 GDP is expected to show growth cooled from 2.0% to 1.8% (0.9%-2.1% consensus range) as consumer spending moderated.  Friday contains the release of personal income and spending data alongside the Fed’s preferred inflation and wage gauges. The Q2 Employment Cost Index (ECI) is expected to dip from 1.2% to 1.1%. The personal consumption expenditures price index is expected to cool both on a monthly and annual basis (M/M: 0.2%e v 0.3% prior;Y/Y: 4.2%e v 4.6% prior). Earnings will be massive this week as we get updates from 3M, AbbVie, Alphabet, Airbus, AstraZeneca, AT&T, Barclays, BASF, Biogen, BNP Paribas, Boeing, Boston Scientific, Bristol-Myers Squibb, Chevron, Chipotle Mexican Grill, Comcast, Exxon, Ford Motor, General Electric, General Motors, GSK, Hermes International, Honeywell International, Intel, Mastercard, McDonald’s, Meta Platforms, Microsoft, Nestle, PG&E, Procter & Gamble, Raytheon Technologies, Samsung Electronics, STMicroelectronics, Texas Instruments, Thermo Fisher Scientific, UniCredit, Unilever, Union Pacific, Verizon Communications, Visa, and Volkswagen

USD/JPY  Yen dives on reports BOJ sees little need to adjust YCC   Central bank-a-palooza was supposed to start next week, but traders got a head start after reports surfaced that the BOJ saw little urgency to adjust their yield curve control program (YCC).  It looks like FX traders are expecting the BOJ to maintain their ultra-loose monetary policy and for the Fed to deliver a quarter-point rate rise and to have a wait-and-see approach about the September meeting.  The Japanese yen is the weakest major currency and that could remain the case if risk appetite remains healthy.  It seems that while the BOJ stands pat, the other major central banks are tightening and that should continue to drive that interest rate differential trade. Soft landing hopes are not getting derailed by earnings season so far, in fact market breadth in the stock market continues to improve which could help keep the rally going strong.   Initial Rate Decision Expectations The Fed will raise rates by 25bps and likely signal a wait-and-see approach for the September meeting (saving that decision for the end of August at Jackson Hole). Analysts are unanimously expecting the ECB to raise all three key rates by 25bps but are unsure what will happen in September The BOJ is expected to keep rates steady, no change to YCC, and revise up its inflation forecasts for this year alone.     Soft stochastics suggest euro pullback       The EUR/USD weekly chart shows a bearish bias could be emerging as the slow stochastics overbought conditions is seeing a tentative drop below the 200-week SMA.  If bearish momentum accelerates key support will come from the 1.1080 level, with major support eyeing the heavily tested 1.1030 price level.  Intraday resistance resides at the 1.1150 level, with major resistance be provided by the psychological 1.1200 handle.   Nasdaq Friday Volatility The Nasdaq could see excessive volatility at the close as a special rebalancing will address overconcentration in the index by redistributing the weights.  In addition to this special rebalancing, traders will have to deal with options expiration. Three mega-cap tech giants (Apple, Nvidia and Microsoft) make up almost 30% of the weight in the fund, which is not diverse enough for a key index.  Some profit-taking might occur ahead of busy next week that contains handful of market moving events that include three big rate decision, several key earnings, and key GDP, ECI , and PCE data.  

Canada’s inflation expected to ease US retail sales projected to improve The Canadian dollar is almost unchanged on Tuesday, trading at 1.3204. USD/CAD should show some life in the North American session, with the release of Canadian inflation and US retail sales.     Will Canada’s core inflation fall? Canada releases the June inflation report later today, and the Bank of Canada will be hoping for good news. On an annualized basis, headline inflation is expected to drop to 3.0%, down from 3.4% in June, while the core rate is projected to fall from 3.7% to 3.5%. On a monthly basis, the markets are expecting mixed news. CPI is expected to tick lower to 0.3%, down from 0.4% but core CPI is projected to rise from 0.4% to 0.5%. The Bank of Canada raised rates by 0.25% last week, which brought the benchmark cash rate to 5.0%. The BoC will have some time to monitor the economy, with the next rate meeting on September 6th. The BoC would like to take a pause in September but may have to wait until later in the year if the economy does not show further signs of cooling before the September meeting.   US retail sales expected to climb The US economy is by and large in good shape, despite aggressive tightening by the Federal Reserve in order to curb high inflation. A key driver behind the economy’s strong performance has been consumer spending, which accounts for two-thirds of economic activity. The US releases the June retail sales report later today, with expectations that consumers remain in a spending mood. The consensus estimate for headline retail sales is 0.5% m/m, up from 0.3%, and the core rate is expected to rise 0.3%, up from 0.1%. The retail sales release is unlikely to change expectations that the Fed will raise rates at the July 27th meeting, with a 96% chance of a hike, according to the CME Tool Watch. However, an unexpected reading could lead to a repricing of a September rate hike, which has just a 14% probability. . USD/CAD Technical There is resistance at 1.3205 and 1.3318 1.3106 and 1.3049 are providing support    

Both the advance and core (ex-auto) retail sales monthly reading post third straight gain Fed rate hike odds stand at 93.6% for July 26th meeting ECB odds for a July rate hike stand at 93.2%. while September falls to 60.1% US stocks are lower after a retail sales report confirmed the US economy is still healthy and ready for another quarter-point rate rise by the Fed.     It was a busy morning as Morgan Stanley posted mixed results, while Bank of America impressed.  We are done with the majority of the big banks and the overall takeaway is that they did ok despite all the turmoil that stemmed from the regional banking crisis last quarter.  Wall Street knows this earnings season will have everyone calling this a challenging market environment, but optimism might remain that a resilient US economy should translate into decent spending despite all the headwinds.       US Data Last major data check paves the way for one more quarter-point rate rise by the Fed.  The June retail sales report was mixed, but overall painted a picture of a resilient US consumer.  Headline retail sales gain of 0.2%, was less than both the 0.5% consensus estimate and upwardly revised prior reading.  This was the third straight monthly increase, which was bolstered by online sales.  The headline was dragged down by gasoline and building material demand weakness, but clear signs are emerging that the economy is slowing down.     Industrial production tumbled in June as auto production slumped for a second month as the economy weakens.  Demands for goods are weakening and the strong auto production numbers are coming back down. Fed swaps initially were fully pricing in a quarter-point rate rise by the Fed.  If inflation continues to come down, labor market resilience should drive expectations that Americans will still consume, albeit at a slower pace.      

Bitcoin Bitcoin continues to waver, tentatively falling below the $30,000 level, which is just the June low. ​ As the cryptoverse awaits a pivotal Bitcoin ETF update, flows remain dormant. ​ The institutional money is not buying right now and retail is struggling with the current macro backdrop. ​ Bitcoin seems poised to be stuck in a range, which could warrant a slightly further dip towards the $29,500 level. ​

Gold Gold traders have their rally caps on after ECB’s Knot signaled they could be ready to pause in September and after Canadian inflation dropped to the BOC’s control range for the first time since March 2021. ​ Global bond yields are falling and that is good news for bullion investors. ​     So far this earnings season, the big banks have outlined a vision that includes slowing growth in the US, which should allow the Fed to be one and done with rate hikes. ​ Unless core inflation proves to be a lot stickier than Wall Street fears, the peak in global rates should be in place by the fall. ​ Gold might struggle to make a run at the $2000 level, but that could change if bond yields continue to come down and the Fed signals they are likely done hiking next week after delivering one last quarter-point rate rise. ​ ​ ​ ​    

ECB’s Knot (hawk) noted that for July I think it is a necessity, for anything beyond July it would at most be a possibility but by no means a certainty Canadian headline CPI was 2.8%, versus 3% expected, which should allow the BOC to keep rates on hold Global crypto market cap hovers around $1.2 trillion   Oil Crude prices are steadying here on expectations that the oil market will remain tight as Russian shipments drop and as China prepares to provide more support to households. With Russian flows falling to a six-month low, expectations are growing that OPEC+ will keep this market tight throughout the summer. ​ China Commerce Ministry (MOFCOM) is pressuring financial companies to improve support on household spending. ​ Further speculation of a Q3 RRR cut from China should also keep the oil market supported as that should imply China’s economy will only get better, which should be good news for the crude demand outlook going forward. ​ Brent crude looks like it wants to find a home above the $80 level and that shouldn’t be too hard as long as the crude demand outlook doesn’t get blindsided. ​

USD/CAD approaches key support The Canadian dollar initially weakened after headline inflation fell to a 27-month low, dropping from 3.4% to 2.8%, more than the eyed 3.0% consensus estimate.  The rates that the BOC focuses on, the so-called trim and median core rates, were a little sticky, which could suggest underlying price pressures are still too high.  The Canadian dollar has been rallying but if global slowdown fears increase, that could keep the Loonie locked in its longer-term consolidating range. The Canadian dollar has major support from the trendline beginning last June.  If price breaks below the upward sloping trendline, bearish momentum could target the 1.3020 level.  A daily close below 1.2950 could open the door for selling momentum to target the 1.2750 area. Inflation is making its way towards the BOC’s 2% inflation target, but it seems more tightening might not be needed to get inflation there. If Friday’s retail sales report shows the consumer remains resilient, that could trigger further Canadian dollar strength.  

EUR/USD excessively overbought? The euro-dollar ascent was mostly a one-way move for most of July.  After inflation eased to the slowest pace in more than two years, the dollar tumbled.  With the Fed entering their blackout period before the July 26th FOMC meeting, the lack of hawkish pushback has allowed the dollar to remain vulnerable to further pain just ahead of the 1.1300 handle.  Bullish momentum has cleared multiple hurdles but the 1.1350 level should prove to be rather strong. While the end of the Fed’s tightening cycle appears to be in place, expectations are shifting that the ECB might not be that far from pausing their rate hiking cycle.  Today’s comment from ECB’s Knot, a well-known hawk, suggested that they could be ready to pause in September and that it might hinge on the inflation data going forward. All eyes will be on the Wednesday’s second reading of euro-area inflation. The EUR/USD daily chart displays a potential bearish butterfly pattern. Point D is targeted with the 1.414 1.414% Fibonacci expansion level of the X to A move and the B to C leg.  If dollar strength emerges here, downside could target the 1.1050 level. If invalidated, bullish momentum could surge above the 1.1300 region, potentially targeting the 1.1450 resistance zone.     USD/JPY dead-cat-bounce or sustainable rally? The plunge for dollar-yen accelerated after last week’s cooler-than-expected inflation report shifted Fed rate hike expectations. The macro backdrop has mostly seen investors calling for pain for the Japanese yen since 2021.  Hedge funds ramped up bearish yen bets(according to the COT report for the week through July 11th), taking their net short positions to the largest level since last May. Now the focus also includes the BOJ, which includes some disappointment with keeping the BOJ keeping Yield Curve Control intact. Yen volatility could remain excessive if the Fed signals more tightening might need to be done after the July 26th FOMC meeting and if BOJ doesn’t tweak their policy. Over the next couple of weeks, it seems that the yen rally will either cool towards 141.50 (a temporary recovery) or we will see it surge below 136.00 (the downtrend remains in place).        

The euro is showing little movement on Monday. In the North American session, EUR/USD is unchanged at 1.1226. The US dollar was broadly lower against the majors last week and on Friday the euro hit its highest level since February 28th.   Will ECB continue hiking after July? The ECB holds its next meeting on July 27th, a day after the Federal Reserve meeting. Similar to the Fed, a rate hike is widely expected in July but there is uncertainty about what happens after that. Eurozone inflation is not expected to fall as quickly as expected, which would support the ECB continuing to deliver more rate hikes. The ECB has signalled that it will hike in July but hasn’t said much about September, other than the decision will be data-dependent. ECB Governing Council member Boris Vujcic, head of the Croatian central bank, said that the September decision remains “very open”, a nod towards a divergence of opinion at the Bank. The hawkish members want to see a rate hike in September while the doves are worried about the damage to the fragile eurozone economy, which tipped into recession in the winter. The US dollar’s downturn last week against the major currencies was intensified by the US inflation report, which was softer than expected. The headline and core rates both eased in June, raising market speculation that the Fed may finally wrap up its rate-tightening cycle after the July 26th meeting. The markets have priced in a July hike at 98% and a pause in September at 85%, according to the CME tool. Once again, the money markets are marching to their own tune. Fed members have sounded hawkish, saying that inflation remains too high and Fed Chair Powell has hinted at further tightening after the July meeting.   EUR/USD Technical EUR/USD tested support at 1.1210 earlier. The next support level is 1.1139 1.1289 and 1.1335 are the next resistance line  

Rate cut not coming yet from PBOC FTSE 100 nearing some key levels   It’s been a disappointing start to the week in Europe but I’m not sure investors will be too downbeat as a result given the strong gains recorded over the last five sessions. The Chinese data didn’t help kick things off in a more positive manner, with GDP figures for the second quarter falling well short of expectations as retail sales also decelerated sharply, recording their lowest increase since late last year. Of course, the data remains noisy due to varying base effects but the overall theme is clear, domestic demand is underwhelming and external demand isn’t inspiring either. Stimulus is likely going to be needed in the second half of the year backed up by some monetary support but we may have to wait a little longer for that to be announced. The MLF was left unchanged today at 2.65% which means the same will probably be true of the one and five-year LPRs later in the week. A cut could have helped offset some of the data disappointment although, in the absence of targeted fiscal measures, it may have ultimately been akin to pushing on a piece of string so waiting probably makes more sense.   Is a significant breakout coming? The small declines in the FTSE at the start of the week come on the back of Friday’s reversal which produced a shooting star candlestick around the two lows from last month. Whether that is a bearish signal, a confirmation of sorts, or simply a sign of some profit-taking isn’t yet clear. But it clearly hasn’t built on that negative momentum today.     If it does turn higher again then the area around 7,550 could be interesting from the perspective of it being roughly the high from earlier this month and the area of the 200/233-day simple moving average band. It’s worth noting that these MA bands haven’t been great as areas of support and resistance over the last year or so, which is normal when the price is ultimately trending sideways, but if we do eventually see it trend higher or lower, it may react to them more. Below, the rising trend line – from March 2020 lows – could be interesting as the price appeared to respond to it last week. A break below here may be significant, especially if followed by a move below 7,200. Ultimately, a lot of this could depend on the economic data, the most notable of which this week comes Wednesday in the form of the UK CPI data.  

Dollar wavers post Chinese data 10-year Treasury yield down 2.3 points to 3.809% JPMorgan extends gains post Friday’s earnings US stocks are slightly higher after some disappointing Chinese GDP data raised concerns about the global economy but supported the argument that disinflation pressures are firmly in place.  The disinflation story won’t be going away after Ford announced some big cuts with their electric F-150 truck prices.  The disinflation process should remain intact and that should support calls that the Fed will be done after one more rate hike at the end of this month.  Wall Street is bracing for some big bank earnings that might not mirror what JPMorgan said last week. The key to the stock market remains the mega-cap tech trade and many traders won’t do any major positioning until we hear from Netflix and Tesla.     China’s slowdown dragged European stocks.  Another record high for China’s youth unemployment won’t do any favors for demand for European goods in the coming months.  China still expects growth around 5% to be reached but that will be hard unless the PBOC delivers more stimulus.    US Data The first Fed regional survey showed that NY state factory activity managed to stay in expansion territory, while prices paid fell to the lowest levels since August 2020.  The headline general business conditions index dropped 6 points to 1.1. The manufacturing sector is expected to rebound here despite a slight rise with new orders and as shipments expanded.  The report noted that optimism remained subdued and that capital spending will remain soft.      The rest of the Fed regional surveys will likely show overall weakness in the manufacturing sector, along with optimism that pricing pressures are easing.    

More hints pointing towards the end of regulatory crackdowns for China’s Big Tech In addition, Chinese Premier Li Qiang held a meeting yesterday, 12 July with senior management executives from China’s leading technology companies such as Alibaba Group, Meituan, ByteDance, and Xiaohongshu Technology to discuss how the business operations of the technology sector can help to promote growth in the current lacklustre internal demand environment seen in China. During the meeting, Premier Li urged local governments to provide more support to these technology firms, labelling them as the “trailblazers of the era” and in turn, urged these technology firms to support the real economy through innovation. He added that the government will create a fair environment and reduce compliance costs in order to promote the sound development of the platform economy. Hence, yesterday’s Premier Li meeting has solidified China’s top policymakers’ current stance since last Friday of a more hands-off approach towards China’s Big Tech especially in the e-commerce, fintech, and platform sectors, and an indication the prior three-year of stringent regulatory crackdowns on their business operations have ended.   A weak external environment may still put downside pressure on China’s growth This latest rhetoric from the top man of China’s State Council is likely to boost positive animal spirits in the short-term at least. From a medium-term perspective, the external environment also needs to be taken into consideration when global interest rates are likely to stay at a higher level for at least till the second half of 2024 given the latest hawkish monetary policy guidance from major developed countries’ central banks, the Fed, ECB, and BoE. Therefore, a higher cost of global funding environment is likely to be persistent throughout 2023 and stretch into early 2024 which may continue to put downside pressure on China’s economic growth which is evident in the latest exports data for June which has continued to contract deeper to -12.4% year-on-year from -7.5% recorded in May, its steepest drop since February 2020 and came in below expectations of -9.5%. Hence, the current momentum-driven rally seen in the China Big Tech equities and Hang Seng benchmark stock indices may not oscillate in a smooth trajectory path.  

USD/MXN The Mexican peso is one of top-performing currencies of the year and that trade is starting to lose momentum.  The interest rate differential (Banxico overnight rate stands at 11.25%) and robust economic growth prospects have made the peso a very attractive trade this year. A weakening global growth outlook however will start to dampen prospects for EM currencies.  Emerging markets need their key trading partners to thrive and China’s disappointing economic recovery is triggering some profit-taking. USD/MXN has major support at the 17.00 level and if a rebound emerges, upside could target the 50-day SMA around the 17.45 level.  Given the softening outlook for the next year, peso weakness to the dollar could eventually target the 20.00 level.    

GBP/JPY The British pound has appreciated over 18% to the Japanese yen this year as stubborn inflation has bolstered the odds of aggressive central bank tightening by the BOE.  Pound-yen has steadily gathered strength in the first half of the year but exhaustion could be settling in.  The pound initially rallied earlier in London after weekly hourly earnings came in scorching hot, which should raise the prospects of a half-point rate hike at the August 3rd BOE meeting. The pound may get a major boost against the dollar if it can extend above the 1.30 level, but for some traders it is looking toppish against the yen. GBP/JPY may have a decent pullback if continued bearishness takes price below the bullish trendline that has been in place since March.  Pound downside momentum could target 176.50 against the yen if the bullish trend line (around the 179.75 ) is invalidated. Key resistance currently resides around the 184.20 level.  

GBP/USD GBP/USD (4-hour chat) has been in a general rally for the past two days, but that could be coming to an end if a bearish butterfly pattern forms. The headlines have been mostly bullish for the pound, but that could be reaching an inflection point. Inflation is forcing the BOE to be extremely hawkish and that could soon lead to a significant economic downturn.  Many traders are focusing on today’s UK wage growth, as it posted the biggest rise outside the pandemic period, but jumps in jobless claims suggest the labor market is cooling. If the pound-dollar bullish trend respects the psychological 1.3000 resistance, some bullish bets might get taken down.  The four-hour GBP/USD is displaying a potential bearish butterfly pattern.  If this technical reversal pattern holds, a moderate decline could see downward momentum target the 1.2800 region. If a dramatic move triggers a rally above the 1.3000 level, the bearish reversal pattern could be invalidated.  Further upside targets include the 1.3250 region.  

FX volatility might be returning given Wall Street is seeing some exhaustion with several key currency trades.  The end of tightening for the advance economies keeps getting delayed and sooner than later it will deliver a major blow to growth.  FX volatility should pick up as diverging policies from the Fed, BOE, and PBOC could trigger some significant moves in H2.   USD/JPY A lot of macro traders were expecting dollar strength to intensify against the Japanese yen as interest rate differentials appear likely to widen further over the next few months.  The carry trade isn’t making a comeback given the rising prospects of a recession coming to the US.  Everyone also remains on intervention watch from Japan’s Ministry of Finance, but expectations are for action if dollar-yen tests the 150 region.  The consensus on Wall Street is that Japan will probably act, but it might not happen until after the summer.  A tweak to yield curve control could trigger yen strength but that won’t happen until the BOJ’s price goal is achieved.  BOJ Governor Ueda has been clear that no tweaks will occur until the prospects heighten for inflation to sustainably reach its 2% target. USD/JPY weakness towards 140 has triggered some buyers and that might gain momentum if risk appetite can remain throughout tomorrow’s US inflation report (Wednesday 830am est).  Further upside could eye a return to the 145 zone if risk aversion does not run wild post both Wednesday’s CPI reading and Friday’s bank earnings.        

US June CPI M/M: 0.3%e v 0.1% prior; Y/Y: 3.1%e v 4.0% prior; Core CPI (ex food and energy)M/M: 0.3%e v 0.4% prior; Y/Y: 5.0%e v 5.3% prior Microsoft gets go-ahead to buy Activision; prompts excitement for further deal making. Impressive demand for 3-year note auction US stocks rose as bond yields remained capped as Wall Street looks like it is ready to move beyond a pivotal inflation report that should suggest interest rates will stay higher for longer. ​ Headline CPI might fall to 2.9% and core could see the lowest reading since 2021, but sticky inflation signs will likely remain. ​ Stock market sentiment also got a boost as profit estimates for JPMorgan eye another strong quarter. ​ Citigroup and Wells Fargo are expected to post weaker profits. ​ Broadening strength is also exciting the stock market bulls as cyclicals performed well. ​ In order for stocks to continue on rising, Wall Street just can’t rely on the AI trade.   UK Wages are too hot ​The BOE is going to have a tough decision with the August 3rd policy meeting as hot wages should keep the bets going for further tightening. ​ Weekly earnings at 7.3% matched last month’s, which was also the record high seen in mid-2021. ​ The case for the BOE to hike by 50bps got a lot stronger and that has helped take the British pound to a 15-month high against the dollar. ​   Oil market to remain tight Crude prices are getting a boost as expectations grow for the oil market to remain tight despite all lingering growth concerns. ​ The IEA expects strong demand from China and developing nations. The short-term crude demand outlook shouldn’t be that bad as everyone is taking a vacation that requires some travel this summer. WTI crude has a solid floor in place and it will take a lot to go wrong for oil prices to lose its footing. ​   Gold tries to shine Gold hit a 3-week high but traders won’t see an extension of this rally until we get beyond the inflation report and possibly some bank earnings. ​ Gold bulls want to see inflation expectations to continue to tumble. ​ Tomorrow’s inflation report if cooler than expected could help gold find a home above the $1950 level. ​ ​ ​ What might prove troubling for gold is what is shelter disinflation. ​ Shelter prices are coming down, but not quickly enough and in several cities, rents are still increasing. ​ Gold will have to fight more hawkish Fed speak, but for now it seems the $1900 level could hold. ​  

Wednesday’s inflation report expected to show CPI m/m: 0.3%e  v 0.1% prior; y/y: 3.1%e v 4.0% prior; Core CPI m/m: 0.3%e v 0.4% prior; Core CPI y/y: :5.0%e v 5.3% prior Fed’s Barr on banks: These changes would increase capital requirements overall Fed Mester noted that the funds rate will need to move up somewhat further from its current level and then hold there for a while   US stocks are wavering ahead of both a key inflation report that should core CPI remain sticky and what should be a rough earnings season. Friday’s employment report showed a hiring slowdown but also strong wage gains.  What will make this inflation report exciting is that we could see annual headline inflation fall to 2.8%, while core inflation remains hot, bolstered by housing inflation.  The steep decline in annual CPI won’t remain a recurring theme and pricing pressures might remain throughout the summer.  The big banks will kickoff earnings season and expectations are for the largest loan losses since the pandemic. Considering how high stocks have rushed higher, it will be difficult for this earnings season to deliver strong enough results for fresh highs.  China’s growth story remains a drag on the global economy.  Perhaps more important for markets was last night’s Chinese prices data.  China saw CPI post the lowest reading in 2 years, with a 0% year-over-year reading, while producer prices plunged 5.4% from a year earlier, the worst decline since December 2015.  It is getting uglier in China and that is why officials are scrambling to deliver more support to real estate developers.  The real estate crisis has been lingering for a couple of years and it is messing up their COVID reopening.  The PBOC is going to do more, but this piecemeal policy support strategy is not working.  Treasury Secretary Yellen’s trip to Beijing was positive but nothing meaningful was expected to be achieved. Yellen assuaged concerns that harsh restrictions might not get imposed by both countries.  The US needs China’s rare minerals and China needs foreign chips.    

Bitcoin Bitcoin remains stuck around the $30,000 level as Wall Street awaits any US Bitcoin ETF update and as market expectations for a 25 basis point hike at the next Fed meeting seems very likely. Stocks are looking a little toppy ahead of earnings and that might mean risk aversion might be ready to make a return.  Bitcoin got a strong vote of confidence from Standard Chartered, with a price target of $50,000 this year and $120,000 for 2024.  Miner profitability was one of the key reasons for the elevated price targets, but that might not be as easy as electricity costs grow and over surging debt payments Bitcoin appears locked in a range, but that might continue as we may have to wait months before getting any concrete ETF updates.  

Commodities get little support from a weaker dollar Demand destruction likely to force Saudis to extend cuts Bitcoin holds onto the $30,000 level Oil Crude prices are weakening as concerns mount that the global growth outlook is getting uglier by the day.  China is rushing to deliver more support to their real estate crisis, while the US starts to grow more nervous about a potential recession. Oil will struggle this week if inflation readings in the US support the hawkish case for a couple more rate hikes, while Euro-area industrial production remains lackluster. A bullish backwardation structure should help WTI crude find a home above the $70 level, but it seems unlikely that the demand outlook will get any good news this week.  Recession risks might rise, but it seems energy traders are confident OPEC+ will keep supplies tight.     Gold Gold prices are hovering last week’s low as traders await a pivotal inflation report that seal the deal for a couple more Fed rate hikes.  Bullion traders want to know if core CPI will show persistence and raise the odds that the Fed will not just go in July but more likely also in September.  Even if we get a hot report, the Fed is locked into delivering a quarter-point rate rise.  Following last month’s pause, the Fed seems positioned to remain aggressive with signaling tightening until we see a much more meaningful slowdown. Gold might end up trading rangebound this week, but the $1900 level should hold as long Wednesday’s inflation report is not scorching hot.  

EIA Crude Oil Inventory Report expected at 11am EST. **Note API reported 4.4million draw last night. Fed’s rate path remains key for gold traders Bitcoin momentum capped on rising expectations BlackRock will get a US Bitcoin ETF approved Oil  Crude prices got a boost after the API report showed stockpiles declined by 4.4 million barrels per day. Energy traders are watching a tug-of-war between bullish bets that stem from expectations that OPEC+ will keep this market tight and as global recession fears grow.  Oil will struggle here if global economies continue to drag here. It seems the news flow is steadily turning to sluggish economic growth and that is bad news for the crude demand outlook. If the next week of economic data suggests the US economy is quickly slowing down, that might trigger a weaker dollar but also calls for a much weaker consumer.   WTI crude looks like it might be stuck in a range a little longer until inventory trends become a little bit clearer.       Gold Gold prices are wavering as global central bank tightening is dragging down stocks.  Gold is starting to see some safe-haven flows despite a global bond market selloff as investors start to plan for medium term dollar weakness.  Gold looks like it might be able to stabilize above the $1900 level even if Wall Street starts to think that the September FOMC will be a live meeting.  Bearish dollar views are growing and that should become stronger once we next week’s inflation report.      Bitcoin  Bitcoin hovers around the $31,000 level as optimism grows that BlackRock will get their Bitcoin ETF done.  BlackRock CEO Larry Fink told Fox Business that “We do believe that if we can create more tokenization of assets and securities – that’s what bitcoin is – it could revolutionize finance.”  This is a major pivot from Fink and provides optimism that other crypto skeptics could change their tune in the near future.   Bitcoin appears to be facing some price barriers ahead of the $32,000 level.  Bitcoin’s performance is gaining attention given some of the weakness that is emerging with global equities.  For the Bitcoin rally to continue, we will need to get a confirmation that the SEC will grant permission for a spot-Bitcoin ETF in the US. Bitcoin remains stuck in a range again, trading between $28,000 and $31,500.       

We’re seeing some more risk aversion on Wednesday ahead of the release of the June FOMC minutes, with PMI data throughout the day painting a slightly more gloomy picture for the economy. Revisions in Europe were very modest, in the cases where we actually saw them, but they were to the downside and from already relatively depressed numbers. It’s clear that they point to a deceleration in the all-important services sector but that isn’t necessarily a bad thing if we ever want to see interest rates falling again. Nor is it a bad thing that there appear to be signs of cost pressures slightly softening in the surveys which will be encouraging for central banks, albeit not nearly enough to tempt them into pausing just yet. But it could suggest we’ll see more concrete signs of progress over the coming months. The data from China was no more encouraging, with the Caixin Services PMI falling quite markedly, further highlighting the challenging headwinds the economy is facing during its recovery from zero-Covid restrictions late last year.

AUD/USD The RBA rate pause and softer Chinese services data sent the Aussie-dollar lower. Expectations for the Australian dollar to weaken further could grow if they see a much worse slowdown in the economy.  Rate hike odds for the RBA are just over a coin flip for the August 1st meeting, so if the outlook deteriorates further, that could pave the way for more AUD downside.   Potential Trigger: Friday’s expiration of A$1.5 billion of options at a strike price of 0.6700 could lead to some big moves.  

EUR/CHF The Swiss franc might start looking more bullish if the SNB keeps up the hawkish rhetoric. SNB President Jordan is suggesting monetary policy is not tight enough.  Many traders, like ANZ are eying strategies that short EUR/CHF on any spike towards the 0.99 level.   Potential trigger: Friday’s German industrial production and if economic gloom becomes the dominant theme for the eurozone.  

EUR/USD Euro dollar bears have been increasing their exposure to options, with some eyeing some protection to euro weakness in Q3.  Last week, the Depository Trust & Clearing Corporation saw strongest demand in over two months, with put volumes gaining more attention with a 3:2 margin. The euro-dollar has been triangulating and appears poised for a breakout soon.   Potential trigger: Everyone has their eye on the NFP report, but next week’s CPI report could be more impactful.  Wall Street might become more confident after the July 12th inflation report that the Fed will be done after delivering one more rate hike.  

The first half of the year was rather choppy for the US dollar as massive bets of weakness were scaled down.  Many on Wall Street expected the dollar to weaken as most of the other major currencies were about to deliver significantly more tightening.  Regional growth rotations on an improving outlook from a roaring Chinese economy were also supposed to support the case for strengthening commodity demand. The dollar might be positioned for a little more short-term strength here as the odds for more rate hikes have steadily increased while rate cut bets get pushed into next year.  The Fed’s higher for longer stance on rates seems to slowly be winning over some traders. Macro traders will undoubtedly be following the NFP report, but may fixate over next week’s inflation report.  We could actually get a soft report that gives us a  headline 2.9% year over year reading.  The June inflation report might be a short-term bottom for the disinflation process as the base effects will be responsible for a large part of the decline.  By the end of summer, inflation might prove to be sticky given the current drivers, which includes economic resilience, a strong labor market, and decent spending.   USD/JPY Sell signals are emerging and intervention talk is brewing given we are at levels that triggered Japanese intervention last year.  Many yen traders are focused on the 145.50 region and the 143.75 level.  Technical traders that follow DeMark indicators are eyeing a potential sell countdown, which would require a drop below the 143.90 level.  If prices closed above the 145.51 level, further upside could target the 150 zone.  Last year, the Demark countdown finished in mid-July and it soon saw an over 6% drop.    

The Fed minutes showed that policymakers were divided and that the hawks will still want to deliver more tightening.  Fed Officials are concerned a tight labor market will make inflation tight throughout the rest of the year.  If inflation remains persistent, that could be a gamechanger for inflation expectations.  Wall Street was getting comfortable with higher for a little bit longer, but they are not ready to price in more than a half-point in rate hikes.  In order to conquer inflation the Fed seems set on forecasting a mild recession, which is very much different than Powell’s slower growth call.   In the end, the fate of these Fed policy decisions will depend on the data and right now both the labor market and inflation readings are expected to soften over the next week.  Friday’s NFP report is expected to show job growth cooled from 339,000 to 225,000, while the unemployment rate ticks lower to 3.6%.  The June inflation report is going to show the base effects help the disinflation process as the headline year over year reading falls from 4.0% to 3.0%.  Some analysts are making the case for a 2.8% reading, which seems relatively close to the Fed’s target.  The problem for the Fed is that inflation will likely rise over the coming months.   The dollar will play tug-of-war with the majors as the risk of more Fed tightening is debated, while the Europeans struggle to bring inflation down.   Fed’s Williams spoke after the close and his comments support the case for more rate hikes.  Williams noted that the data supports more action and that the Fed’s work is not done.   Fed rate hike expectations have edged a little higher for the July 26th meeting, but the peak rate remains steady. The yield on the 10-year Treasury yield rose 7.7 bps to 3.932%.  

Gold Gold prices are steadying following disappointing global PMI data and on expectations the US economic outlook could start to deteriorate more quickly.  Gold should find a home above the $1900 level on  weaker growth expectations following the headlines on student loan debt, tougher times for small and medium size businesses, and potentially a stop and go Fed rate hiking cycle.   Bitcoin Bitcoin hovers above the $30,000 as traders sift through a plethora of fake news and await a meaningful update on the regulatory front.  Over the weekend, false reports circulated that SEC Chair Gensler was going to resign after an internal investigation.  Crypto traders are growing impatient, but it might be a while before we get some meaningful news regarding Grayscale’s lawsuit or further Bitcoin ETF clarity.  Bitcoin appears to be stuck in a range again, trading between $28,000 and $31,500.     

Saudi Arabia commits to extending voluntary cut of 1 million bpd Russia to reduce oil exports by 500K bpd US Manufacturing Activity drops the most in 3 years Oil The bottom is in place for oil after the Saudis and Russians play nice.  The oil market got a boost after the Saudis extended their production cuts and Russia surprised everyone with an export cut announcement of 500,000 bpd.  The Saudi extension should have been expected by everyone, but the Russian export cut news did surprise many energy traders.  Russian oil exports hit pre-war levels in April and Asian demand kept on taking advantage of the Russian discounts.  Russia has hardly been crippled by Western sanctions as they have been able to sell its crude to India, China, and Turkey.  WTI crude seems poised to make some higher lows here even if a stronger dollar emerges on fears the Fed will be taking rates much higher.  OPEC+ is saying what it needs to keep supplies tight, whether they, the Russians follow on those pledges is another story. The global growth outlook won’t be improving anytime soon given the latest global PMIs, but the US and China outlooks should remain upbeat for the next few months.  US economic resilience will likely remain before we see the slowdown and China will steadily provide more support to their economy.  Given the shortened trading day, oil price gains might be limited until after the July 4th holiday. WTI crude pared back some gains following a softer ISM manufacturing report.        

US stock market closes at 1 p.m. and the bond market closes at 2 p.m. EST  and will stay closed for the Fourth of July. US ISM Manufacturing index contracts for an eight straight month Tesla shares pop on robust Q2 delivery data The start of the second half of the year is not doing much for US stocks as most of Wall Street is in holiday mode for the Fourth of July.  Today’s shortened trading session saw traders focus on strong electric vehicle data from Tesla and a weak ISM Manufacturing report.      ISM The headline manufacturing reading fell to 46.1, the eight straight contraction and weakest reading since May 2020.  The ISM manufacturing report showed a large price drop with prices paid and the employment component fell into contraction territory.  Prices paid fell from 44.2 to 41.8, the lowest levels in a year.  The news was not all bad as new orders rose from 42.6 to 45.6.  The dollar tumbled following the ISM report that might suggest manufacturing activity is getting close to finding a bottom.  Fed swaps saw a lower peak rate following the softer manufacturing report.  Student Loan Debt The Supreme Court delivered a big blow to millions of students that were hoping to have up to $20,000 of loan debt wiped away.  The Biden administration was hoping to get a major win with the $1.8 trillion student loan crisis. They will now scramble to formulate a new plan that will give students a break before the federal student loan payments are due in October.  This could be a noticeable hit to the economy as these students haven’t had to make payments since the pandemic began.  Biden announced a one-year ramp on loan repayments, which is probably just the beginning of pledged efforts to help students.  This will likely become a campaign issue for Biden.    Tesla It shouldn’t come as a surprise that Tesla posted a record number of deliveries in the second quarter after all the price cuts, a resilient US consumer and a decent performance in China. Tesla delivered 466,140 vehicles in Q2, much better than Wall Street’s expectation of 448,350 cars.  When it comes to analysts ratings, Tesla mostly has buy and hold ratings, but that might improve following these results.  BYD also posted robust sales in China, topping Volkswagen for the first time.  Volkswagen was king in China for the past 15 years, so this overtaking is a key changing of the guard moment for BYD.  China has gone all-in with electric vehicles and that is benefitting Tesla and BYD.     

Canada’s GDP surprises to the upside US PCE Price Index eases in June ISM Manufacturing PMI expected to contract The Canadian dollar is trading at 1.3259, up 0.07%. Canadian markets are closed for a holiday and I expect USD/CAD movement to be limited. On the economic front, the US releases ISM Manufacturing PMI. The index is projected to tick lower to 46.9 in June, down from 47.0 in May.   Canada’s GDP climbs in May Canada wrapped up the week with a strong GDP report. The economy is estimated to have gained 0.4% in May, after flatlining in April. The Canadian economy continues to surprise with its resilience despite rising interest rates. The Bank of Canada raised rates to 4.75% earlier this month after a five-month pause, arguing that monetary policy was not restrictive enough. The BoC statement pointed at strong consumer spending and higher-than-expected growth as factors in the decision to raise rates. The BoC also expressed concerns that inflation could remain entrenched above the 2% target. The strong GDP report has added fuel to speculation that the BoC will raise rates again on July 12th but there is also concern that higher rates will lead to a recession. Canadian 10-year bonds have fallen further below the 2-year bonds, as the yield curve inversion, a predictor of recession, has become even more pronounced. Inflation has been falling and headline inflation eased to 3.4% in May, down from 4.4% in April. Core inflation also declined to 3.8%, down from 4.2%. The question remains whether inflation, still well above the 2% target, is falling fast enough to prevent another rate hike in July. In the US, there were more signs that inflation is weakening. On Friday, the PCE Price Index, which is the Fed’s favourite inflation gauge, declined from 0.4% to 0.1% in June. As well, UoM Inflation Expectations dropped to 3.3% in June, down from 4.2% in May and the lowest since March 2021. Despite these signals that inflation is decelerating, the Fed is widely expected to raise rates at the July meeting.   Canada’s GDP surprises to the upside US PCE Price Index eases in June ISM Manufacturing PMI expected to contract The Canadian dollar is trading at 1.3259, up 0.07%. Canadian markets are closed for a holiday and I expect USD/CAD movement to be limited. On the economic front, the US releases ISM Manufacturing PMI. The index is projected to tick lower to 46.9 in June, down from 47.0 in May. Canada’s GDP climbs in May Canada wrapped up the week with a strong GDP report. The economy is estimated to have gained 0.4% in May, after flatlining in April. The Canadian economy continues to surprise with its resilience despite rising interest rates. The Bank of Canada raised rates to 4.75% earlier this month after a five-month pause, arguing that monetary policy was not restrictive enough. The BoC statement pointed at strong consumer spending and higher-than-expected growth as factors in the decision to raise rates. The BoC also expressed concerns that inflation could remain entrenched above the 2% target. The strong GDP report has added fuel to speculation that the BoC will raise rates again on July 12th but there is also concern that higher rates will lead to a recession. Canadian 10-year bonds have fallen further below the 2-year bonds, as the yield curve inversion, a predictor of recession, has become even more pronounced. Inflation has been falling and headline inflation eased to 3.4% in May, down from 4.4% in April. Core inflation also declined to 3.8%, down from 4.2%. The question remains whether inflation, still well above the 2% target, is falling fast enough to prevent another rate hike in July. In the US, there were more signs that inflation is weakening. On Friday, the PCE Price Index, which is the Fed’s favourite inflation gauge, declined from 0.4% to 0.1% in June. As well, UoM Inflation Expectations dropped to 3.3% in June, down from 4.2% in May and the lowest since March 2021. Despite these signals that inflation is decelerating, the Fed is widely expected to raise rates at the July meeting.   USD/CAD Technical USD/CAD is putting pressure on resistance at 1.3254. Next, there is resistance at 1.3328 1.3175 and 1.3066 are providing support  

European stocks are ending the week on a high, buoyed by another encouraging inflation report that will soon support the end of the ECBs tightening cycle. Not only did the headline HICP rate fall further than expected, but the slight rebound at the core level – driven largely by unfavourable base effects, largely attributed to German transport subsidies last year – was lower than expected.   ECB policymakers will not get complacent on the back of today’s data but with inflation expected to fall further in the months ahead, core included later in the third quarter, we could well see a pause in rate hikes before the fourth quarter. This may enable the soft landing policymakers have been hoping for, with very shallow recessions a small cost to pay for price stability. ​ The unemployment rate staying at 6.5% as the number of unemployed fell slightly will keep ECB hawks on edge for signs of labour market tightness driving sustained excessive wage growth, but those fears should also subside over the coming months. A rate hike in July looks highly likely on the back of recent ECB comments, particularly those after the meeting this month, but beyond that investors aren’t convinced thinking another is more likely than not but by no means guaranteed.   Bitcoin steady after ETF surge Bitcoin is back in the green today but remains in the $30,000-$31,000 range it’s traded largely within over the last week. The ETF filings have given it some very positive momentum even with SEC lawsuits hanging over the industry. A break above $31,000 could see it accelerate higher once more with $32,500 potentially offering the next test.  

Japan A slew of key sentiment data to keep a lookout for this week. On Monday, big manufacturers, and non-manufacturers sentiment gauges for Q2; the Tankan Large Manufacturers Index is expected to improve to 3 from 1 recorded in Q1. Likewise, a similar improvement is expected on the Tankan Large Non-Manufacturing Index to 22 from 20 in Q1. On Friday, the attention turns to consumers; household spending for May is expected to see an improvement, a jump to a growth of 0.5% month-on-month from -1.3% recorded in April. On a year-on-year basis, a narrower contraction is expected at -2.4% for May from -4.4% in April, its steepest decrease since June 2021.    Singapore Several key data to focus on. On Monday, the preliminary URA property index for Q2 where its red-hot growth is expected to dip slightly to 2.9% quarter-on-quarter from 3.3% in Q1. The manufacturing PMI for June is released on Monday as well and is forecasted to improve slightly to 50 from 49.5 in May. If it turns out as expected it put a halt to its prior three months of contraction. Lastly, growth in retail sales for May is expected to slow to 2.8% year-on-year from 3.6% recorded in April; a potential three consecutive months of growth slowdown.

Switzerland CPI inflation data on Monday is expected to show the headline rate falling back below 2% to 1.8% in June. Markets are still pricing in a 25 basis point hike in September at the moment but that may change if the data matches expectations and, importantly, remains below 2%. Unemployment is also released on Friday.   China Another set of lackluster data seen on the official NBS manufacturing and non-manufacturing PMIs for June released on Friday. Manufacturing activities continued to contract for the third consecutive month at 49 and growth in the services sector decelerated to a 5-month low at 53.2 from 54.5 in May. The focus will now turn to the Caixin manufacturing PMI which consists of small and medium enterprises out on Monday. Markets are expecting almost an unchanged condition of 50.2 for June versus 50.9 recorded in May. The Caixin services PMI will be released on Wednesday with a forecasted slowdown in growth to 56.5 for June from 57.1 in May. Time is running out for the implementation of fresh fiscal stimulus measures.   India The manufacturing PMI is released on Monday, where the consensus is expecting a slight growth slowdown to 58 for June from 58.7 in May, its strongest reading since October 2020. A similar trajectory is anticipated for the services PMI on Wednesday where growth is expected to dip to 60.2 in June from 61.2 recorded in May, a continuation of consolidation from April’s near 13-year high of 62.   Australia The key highlight for this week will be RBA’s monetary policy decision on Tuesday. The consensus is calling for another 25 basis points hike on the cash rate, bringing it to 4.35% after recent hawkish guidance inferred from the minutes of the prior meeting. However, the interest rates futures market has implied a reduction in the odds of a 25 bps hike due to the recent softer-than-expected annualized monthly CPI data for May; 5.6% from 6.8% in April and below expectations of 6.1%. As of 29 June, the ASX 30-day interbank cash rate futures has priced in a 28% chance of 25 basis points (bps) hike on the cash rate, down from a 53% chance priced two weeks ago on 16 June. On Thursday, we will have the balance of trade for May where April’s surplus of A$11.16 billion is expected to narrow to A$10.5 billion. If it turns out as expected, it will be the narrowest trade surplus since August 2022.   New Zealand No key data.  

US It will be an eventful week, the ISM manufacturing report, the fourth of July Holiday, the Fed Minutes, and the nonfarm payroll report.  Wall Street is starting to believe in those Fed dot plots and this week’s economic data points may provide more evidence for the hawks.  The ISM manufacturing report is expected to show activity is stabilizing.  The Fed minutes will emphasize the fear that core inflation is proving to be stickier.  The June US jobs report is expected to show hiring cooled from the 339,000 pace to 200,000 jobs. The unemployment rate however is expected to improve from 3.7% to 3.6%.  Wage pressure is also expected to remain steady with a 0.3% increase from a month ago.    We will hear from a couple of Fed speakers this week. Williams participates in a moderated discussion at the 2023 annual meeting of the Central Bank Research Association at the New York Fed. Logan speaks on a panel about the policy challenges for central banks at the Central Bank Research Association annual meeting at Columbia University.     Eurozone Eurozone inflation data on Friday was very promising and while it likely won’t influence whether the ECB hikes or not in July – Lagarde previously strongly hinted they will – if followed by further signs of disinflation over the summer, it could see the central bank consider a pause in September.  Next week is a little short of tier-one releases but final PMIs on Monday and Wednesday will be of interest, as will another appearance by ECB President Christine Lagarde on Friday.   UK  Very little data of note next week with final PMIs the only highlight. That aside, central bank speak will be followed closely although in the absence of better inflation data, their hands are seemingly tied. The real question ahead of the next meeting is whether they’ll hike by 25 basis points or 50 again.   Russia A relatively quiet week with PMIs on Monday and Wednesday as the only notable releases. That aside there’s the Russian central bank financial congress on Thursday and Friday so we may hear from Governor Elvira Nabiullina.   South Africa The whole economy PMI is the only notable economic release or event next week.   Turkey With the CBRT pivoting toward more conventional monetary policy in the aftermath of the election, the economic data becomes increasingly relevant and next week we’ll get June inflation numbers on Wednesday. The CPI is expected to remain close to 40% but with the currency in freefall, the inflation outlook is likely to get worse before it gets sustainably better. The central bank has stepped back from burning through reserves to support the lira and effectively pay for bad policy choices and that has sent the lira to record lows, falling more than 20% in the last month, alone.

US Core PCE Price Index ticks lower Eurozone headline CPI eases but core CPI rises German headline and core inflation accelerate EUR/USD is trading at 1.0898 in the North American session, up 0.32%.   Eurozone inflation falls but core rate rises Inflation in the eurozone continues to fall. Eurozone CPI is expected to fall to 5.5% in June, down from 6.1% in May and a notch below the consensus of 5.6%. Headline inflation has fallen to its lowest level since January 2022. The problem for the ECB is that Core CPI, which is a more reliable gauge of inflation trends, moved the wrong way. Core CPI ticked higher to 5.4%, up from 5.3% and below the consensus of 5.5%. These levels of core inflation are incompatible with a 2% inflation target and today’s inflation report won’t prevent the ECB from delivering a rate hike in July. The ECB may be forced to increase rates beyond the July meeting until there is evidence that core inflation has turned the corner and shows clear signs of deceleration in the second half of the year. Germany’s inflation report was worse, as both headline and core inflation moved higher, as expected. Headline inflation rose to 6.4% in June, up from 6.1% in May, while the core rate climbed from 5.4% to 5.8%. Inflation had fallen over six straight months and the June numbers could be an anomaly, but as ECB President Lagarde stated earlier this week, the battle against inflation isn’t over yet. US Core PCE Price Index, the Fed’s favourite inflation gauge, eased lower in May and the euro has gained ground. The index dipped to 4.6% y/y, down from 4.7% in April, which was also the consensus. On a monthly basis, the index fell to 0.1%, down from 0.4%. The decline in inflation hasn’t had much effect on market rate pricing, with an 86% probability of a 25-bp rate hike, according to the CME FedWatch tool. The week wraps up with UoM Consumer Sentiment, which is expected to rise to 63.9 in June, up from 59.2 in May.   EUR/USD Technical EUR/USD continues to put pressure on resistance at 1.0916. This is followed by resistance at 1.0988 1.0822 and 1.0750 are providing support      

Dollar weakens as inflation cools Apple reaches historic $3 trillion market cap Fed rate hike bets eye a peak at 5.410%   US stocks are rallying after the Fed’s favorite inflation gauge showed the disinflation process remains intact and the consumer is showing signs of weakness. A hot inflation report and Fed swaps might have been convinced that a second-rate hike by year end was likely.  Treasury yields edged lower after the PCE report was a little dovish. US Data The core personal consumption expenditure index, a key reading followed by the Fed rose 0.3% in May, matching the consensus estimate.  On annual basis, the PCE reading dropped from 4.7% to 4.6%.  Personal spending came in softer at 0.1%, while the prior reading was revised lower from 0.8% to 0.6%.  The consumer is starting to look a lot weaker and that should support inflation to drop even further over the coming months.   Apple Apple is attempting to become the first $3 trillion company as Wall Street remains all-in on mega-cap tech stocks.  Last month, Apple’s capitalization became more valuable than the entire Russell 2000 and it seems like that could widen further.  Apple got a boost after Citi raised their price target to a Street-high price of $240.  Apple’s outlook remains solid given their balance sheet and future revenue projects, but these latest gains might be more of a defensive switch for traders who see a US economy that is recession bound.    

Oil Oil’s fourth straight quarterly decline should be its last one. WTI crude is trying to stabilize above the $70 level as the oil market is destined for a deficit in the second half of the year.  The crude demand outlook has too much doom and gloom priced in as the US and China outlooks should remain upbeat.  China might be buying cheaper discounted Russian crude, but soon they will require more and those purchases could broaden as they slowly deliver more economic stimulus. The key for oil will be if the Saudis remain aggressive in getting this market tighter with an extension or slightly deeper output cuts.  The peak summer driving season is here in the US, but some travel plans might be impacted as more than a third of the US population are under air quality alerts.  The Canadian wildfire smoke is having the biggest impact from the Midwest to the East Coast. Next week, the focus will be on the OPEC seminar, which will likely contain an update on what the Saudis are thinking for next month.  Saudi Aramco will also set prices for August, which will let us know how bad the demand situation has become or if they are going to get closer to competing with Russian prices.    Gold Gold is holding onto the $1900 level as inflation eases. This was another bad week for gold as risk appetite remained healthy as the big-tech trade won’t go away.  The Nasdaq has seen its value increase almost $5 trillion in the first half of the year.  Gold had its hands full with both a record first half for the Nasdaq and aggressive central bank tightening globally.  Some investors are turning cautious stocks as we are approaching what will be a very busy summer vacationing season. It appears that gold might be able to hold onto the $1900 level if those odds for a second Fed rate hike by year end continue to come down.  Gold’s tentative rebound might face resistance from the $1900 level.      Bitcoin Bitcoin is having a strong finish to the quarter as optimism grows that crypto won’t be regulated out of existence and as financial giants remain committed to the space.  The focus has been on a Bitcoin ETF approval in the US, but it is unclear how long it will take to get that update, with end of summer being most likely.  Bitcoin plunged from the $31,000 level after the WSJ reported that the SEC said spot Bitcoin ETF filings are inadequate.  The regulator was commenting on BlackRock and Fidelity’s filings.   Bitcoin trades around the $30,000 level, but a fresh catalyst is needed to spark bullish momentum above the $34,000 level.    

Ueda, Powell participating in panel at ECB Bank Forum Japanese yen slips below 144 US consumer confidence surges higher USD/JPY continues to push higher and is closing in on the 145 line. In the North American session, the yen is trading at 144.60, up 0.37%.   Will Ueda provide any clues at ECB Bank Forum? It’s a quiet day on the data calendar, with no important US releases. In Japan, retail sales are expected to improve to 5.4%, up from 5.0%. Today’s highlight is the ECB Bank Forum in Sintra, with the heads of the major central banks taking part in a panel on policy. Bank of Japan Governor Ueda and Fed Chair Powell will participate and any hints about rate policy could move USD/JPY. The Fed and the BoJ are in very different situations, which could make the ECB event all the more interesting. The Fed is close to its tightening cycle, in which it has raised rates by some 500 points. Fed Chair Powell has hinted at a couple of more rates this year, but if inflation continues to fall, the Fed could start chopping rates early in 2023. The BoJ has maintained its ultra-loose policy, even as all the other major banks have raised rates in order to curb inflation. The BoJ has insisted that inflation is temporary, even though it remains above the Bank’s target of 2%. The BoJ isn’t looking at raising interest rates anytime soon, although it could tweak its yield curve control policy in order to prop up the ailing Japanese yen, which has plunged 3.7% in the month of June.  

Commodities were tested after Fed Chair Powell triple downed on the Fed’s dot plots.  The dollar initially caught a bid but that was short-lived.  At the end of the forum, traders really didn’t learn anything new.   Oil Before the EIA report, crude prices were wavering after a larger than expected drop in inventories, countered fears that several banks will be sending the global economy into recession. Yesterday, the API report showed crude stocks declined by 2.4m bpd. Energy traders however turned bullish quickly the EIA energy report showed a 9.6 million bpd draw and robust demand signs everywhere.  US crude exports rose above the 5 million bpd level, jet demand rose to highest level since 2019, and the 4-week average gasoline demand surged to the best levels since December 2021.  The oil outlook was too pessimistic and this report reset the market.   Gold Gold remains in the house of pain, falling to a 3-month low as investors grapple with FOMO and as central banks send global bond yields higher. The peak of tightening cycles keeps getting pushed higher and that has been bad news for gold. Gold did not get any favors from Fed Chair Powell as the pushback of more tightening saw rate cut bets pushed deeper into next year.  The precious metal also got some hawkish signals from the ECB and BOE, while the BOJ noted that there are signs inflation will pick up next year and that the BOJ is ready to shift policy, potentially even as soon as this year. All eyes are on gold’s $1900 level, as a breach could trigger some technical selling.  Gold is above where it was trading before the ECB forum, so it might continue to stabilize here.  

Wall Street awaits Fed Chair Powell and counterparts at ECB forum Mortgage demand rises for a 3rd straight week 10-year Treasury yield down 1.9 bps to 3.745%   The artificial intelligence trade had a major setback after the Wall Street Journal reported that the Biden administration could unveil new restrictions on the exports of AI chips to China. Nvidia, a pivotal mega cap tech trade, gets about 20% of its revenue from China. In Asia, AI related stocks were under significant selling pressure.   Despite a potential headwind for the AI trade, the NASDAQ 100 will likely have a record first half. BlackRock, the world’s largest asset manager is also betting big on AI, coming out with a new overweight call. BlackRock sees a mild recession happening later this year but anticipates a mega force like AI could still help equities outperform, given a weakening macroenvironment.   We should get some volatility going into quarter close as so many traders are starting to become bullish stocks and as so many stocks are near critical option levels. The FOMO trade might be here, but the economy is clearly feeling the effects of the Fed’s tightening cycle and the consumer is weakening but has no trouble getting a job, so it will be interesting how the stock market’s back gets broken.    

Global bond yields rise; 10-year Treasury rises 4.1bps to 3.762% Consumer Confidence hits highest levels since January 2022 Dow eyes first gain in 7 trading days   US stocks are bouncing back after some strong US economic data gave a boost to consumer discretionary stocks and as investors piled back into AI trades. The losing streak had to end, but that doesn’t mean the market will resume.     US data There was a lot of US economic data released today and the key takeaway was that the economy is not breaking just yet. The first key reading was durable goods and that surged, but the reason behind that was due to strong aircraft orders. The overall trend is expected to be softer, going forward as higher, borrowing costs and tighter lending from banks, will dampen demand. We also got a couple housing reports, the case Shiller report showed home prices are stabilizing as prices recover, mainly because there’s just not enough supply. New home sales impressed with a buying spree that hit the highest levels in more than a year. The main event was the Conference Board’s consumer confidence report which surged 7.2 points to 109.7, the best reading since January 2022. The strong consumer confidence report will likely suggest expectations are not for the labor market to deteriorate quickly, which should confirm expectations that a recession will not happen this year, but most likely next.     We also saw a couple fed regional surveys, the Richmond Fed manufacturing index remained in negative territory, and so did the Dallas Fed’s services activity report, which is in line with the other federal regional surveys. Overall the US economy is still chugging along, and that will complicate the disinflation process for the Fed. ​ Swap futures are still expecting one more rate hike by the Fed.  

Bitcoin Bitcoin momentum remains intact as Fidelity joins the quest for the elusive bitcoin etf with BlackRock, Invesco, WisdomTree, and Invesco. It has been about five years of steady denials of every crypto ETF filing, but now optimism is here that one of these financial giants will get one done before summer’s end. In addition to fresh ETF filings, the crypto market is focused on Grayscale‘s lawsuit against the SEC over, trying to convert its GBTC to a bitcoin ETF. Optimism is growing that Grayscale might have a chance to win this legal battle before the end of summer. Bitcoin trades above the 30,000 level investors are waiting to see if the rally can continue. Initial resistance comes from the 34,000 level and if we do see a bitcoin ETF approval institutional momentum could take the rally as high as the $40,000 level. Any major setbacks with a BlackRock ETF rejection and a Grayscale defeat could temporarily kill the rally, but optimism will still remain that and the ETF will eventually get done.

Oil It’s going to take a lot to change the minds of energy traders. Fears of a weaker global growth outlook are not going away anytime soon. In the US, good news is bad news as that will suggest the Fed might have to do more tightening. ​ Inflation is stubbornly high in Europe that could trigger a lot more rate hikes and a harsher recession. ​ Even comments from Delta CEO about demand outpacing expectations was unable to provide a boost for oil prices. ​ Oil is looking very vulnerable here as it is getting close again to the spring lows near the upper mid- $60s. One more plunge and that should make OPEC+ very nervous. A drop below the $67.50 level could ​ trigger momentum selling that won’t stop until the $62.50 region.   Gold Gold remains under pressure as the US consumer still looks strong. Today’s economic data in the US painted a picture of a resilient economy that could be subject to further Fed tightening. The ECB also signaled there is no end in sight for their rate hiking cycle and that has also helped send Global Bond yields higher. It has been pretty ugly for gold since early May and if expectations grow for further Fed tightening, that could send gold tentatively below the $1900 level.      

Potential Trigger On Wednesday, starting around 930am est, BOJ Governor Ueda will speak on an ECB forum panel with BOE Gov Bailey, ECB President Lagarde, and Fed Chair Powell.  Yen watchers are awaiting any sign that BOJ is getting ready to tweak its control of the yield curve. Quarter-end could also spark a reversal for the steadily weakening yen (132 to 144). Traders will also pay close attention to Friday’s US PCE data as softer inflation data could cement the market’s expectation that the Fed will be done after one more hike.   Key Levels Intraday moves have supported a steadily weakening yen, but it may have a neutral bias until we hear from BOJ Gov Ueda on Wednesday morning.  Upside resistance  may come from 144.70, which is the 70.7% Fibonacci retracement of the October high to January low move.  If a daily close occurs above the 145 level, further bullish momentum could target 146.11.  To the downside, 143.10 provides initial support.  Any hawkish fireworks from Ueda could support the case for a test of the 142.50 region. If Ueda stays the course, the yen could continue to weaken.  Japan intervened last fall when the yen weakened towards 145 and after prices breached 150.  Sustained weakness won’t be tolerated and expectations for action will grow if yen weakens beyond 145.  Everyone has their eye on the 150 level, so it will be interesting to see if that makes that barrier to hard to reach.      

USDJPY Yen sellers remain in control as traders become skeptical that Japan officials follow through on intervention threats. The yen has steadily weakened this quarter on US economic resilience and as the BOJ vowed to keep rates low for now along with a weak signal for a chance of future hike.   Dollar Technicals The dollar index could be flashing an oversold signal and that could lead to further bets against the yen and not necessarily with European currencies that might see much more tightening.  

Australia Two key data to focus on to gauge the next move on RBA’s monetary policy stance where it has reiterated its current tightening mode on last week’s release of RBA June meeting minutes. On Wednesday, the monthly CPI Indicator for May is expected to come in at a slower growth rate of 6.1% year-on-year from 6.8% in April. If it turns out as expected, it will be the lowest level of inflation growth since March 2023. On Thursday, preliminary retail sales for May is expected to show a growth of 0.1% month-on-month after zero growth recorded in April. As of 23 June, the pricing on the ASX 30-day Interbank Cash Rate futures July contract has indicated a 32% chance of a 25-bps hike in the next RBA monetary policy meeting on 4th July 2023 to bring the cash rate up to 4.35%.   New Zealand 2 key data to focus on; Business Confidence for June out on Thursday where the forecast is calling for a slight improvement to -28 from -31.1 in May. On Friday, Consumer Confidence for June is forecasted to dip to 77 from 79.2 recorded in May, if it turns out as expected, it will be the lowest level since December 2022.   Japan Several key data to pay attention to. On Monday, the Bank of Japan (BoJ)’s Summary of Opinions. Retail sales for May will be released on Thursday where the consensus estimates are calling for a rebound to 5.4% year-on-year from 5% in April. Consumer confidence for June will also be released on the same day with an improvement to 38 being forecasted from 36 recorded in May. If it turns out as forecasted, it will be the 5th consecutive month of improvement in Japanese consumer sentiment. Lastly, on Friday, we will have the all-important leading Tokyo area inflation data for June. Pay close attention to Tokyo’s core-core inflation rate (excluding fresh food & energy) that accelerated in May to 2.4% year-on-year, close to a 31-year high. If it continues to surge higher in June, it will run counter to BoJ’s latest guidance that has indicated that Japan’s inflation growth is at risk of a slowdown in the second half of the current fiscal year.   Singapore Industrial production for May will be released on Monday, a further deceleration is expected to -7.2% year-on-year from -6.9% printed in April. If it turns out as expected, it will mark eight consecutive months of contraction of industrial production given the slowing external demand environment. On Thursday, we will have PPI for May for a further deflationary spiral in producers’ prices is being forecasted at -12.4% year-on-year from -11.4% in April.  

Bitcoin The crypto market is still buzzing over the potential launch of a US Bitcoin exchange-traded funds.  First it was BlackRock and now WisdomTree and Invesco are filing their ETF applications.  As the economic resilience of the US ends, it will be interesting to see how Bitcoin and all the other top cryptos perform. The use case for cryptos is slowly making progress as JPMorgan has expanded their blockchain-based token to euro payments. Bitcoin is hovering around the $30,000 region and traders are becoming optimistic that a path to $40,000 is forming.  With a de-risking moment occurring on Wall Street    

Recession risks drive safe-haven flows gold’s way Oil has worst weekly decline since May Bitcoin tests highest level in a year   Oil Oil prices are declining on fears that a European recession and delayed stimulus from China will spell trouble for the global growth outlook.  Next week, the heads of the major central banks will gather in Portugal and likely signal a commitment to tackle inflation with aggressive rate hikes. Energy traders are worried that the Fed and friends might cripple economic growth in the second half of the year. The upcoming week contains Energy Institute global energy outlook that could become a lot more pessimistic and the World Economic Forum’s New Champions meeting, which will focus on energy transition.     NatGas There was a brief relief with European natural gas prices this week.  The current pullback could easily be disrupted as the supply situation remains very tight.  The risk of outages and increased demand could be triggered by a hot summer, which could send supplies much lower ahead of next heating season.be triggered by a hot summer, which could send supplies much lower ahead of next heating season.     Gold Gold has had a couple of rough months as Wall Street started to price in much more aggressive central bank tightening across Europe. The dollar has been rallying on strong demand for Treasuries as investors worry about the global growth outlook.  After tumbling to the $1920 level, gold is starting to attract safe-haven flows as the stock market selloff intensifies. Gold got an added boost after the Fed’s Bostic said he favors no more rate hikes for the rest of the year. The rebound however lost some steam after the latest PMI data isn’t showing enough weakness in the service sector to warrant a pause. Next week, will be key for Fed rate hike expectations as we get the PCE readings and hear from Fed Chair Powell again.  If swap futures start to believe the Fed will likely deliver two more rate increases, gold could remain vulnerable. However, if risk aversion runs wild, gold could see some flight to safety flows. Gold has key support at the $1900 level and resistance at the $1960 region.  

Stocks tumble on fears monetary tightening will trigger a recession Fed rate hike bets still only pricing in one last rate increase European bond yields plunge on downbeat global sentiment   US stocks are sliding as the global growth outlook continues to deteriorate following soft global PMI readings.  The risk of a sharper economic downturn is greater for Europe than it is for the US, so that could keep the dollar supported over the short-term.  This has been an ugly week for stocks and that is starting to unravel a lot of the mega-cap tech trades. The Nasdaq is getting pummeled as the AI trade is seeing significant profit taking.      Europe Brief: European stocks got rattled after France posted a surprise contraction with their Services PMI.  Almost all the European PMI readings disappointed and that is bursting the euro trade. Stubborn UK inflation is forcing the BOE to become a lot more aggressive with their rate hiking campaign, which will pile on significantly more pain on people with mortgages. UK Chancellor Hunt needed to do something for homeowners and this year-long break before repossessions is a step in the right direction. Over 2 million UK mortgage holders are going to see skyrocketing monthly mortgage bills and right now it seems it will steadily get worse.     Bostic The Fed’s Bostic delivered a dovish message today after favoring no more rate hikes for the rest of the year. Bostic is optimistic that the Fed will bring down inflation without tanking the job market.  Bostic is in the minority as other members will need to see a significant deterioration in the data.  Today, the service sector PMI declined not as much as expected and is still trading near pre-pandemic levels. The June preliminary Services PMI fell from 54.9 to 54.1, a tick higher that 54.0 consensus estimate. The economic resilience for the US will likely keep the majority of Fed officials with a hawkish stance.       

South Africa A very quiet week with PPI the only notable release. Inflation is falling back towards target and the PPI may offer insight into whether those pressures are continuing to head in the right direction.   Turkey Thursday’s 6.5% rate hike suggests Turkey is on the path back to a conventional monetary policy approach. Markets were pricing in a lot more but with President Erdogan openly against hiking rates – despite replacing the Governor who was happy to cut on his behalf – the CBRT may be treading a little carefully. As we’ve seen before, Erdogan will not hesitate to sack a Governor so perhaps his new appointment simply has ambitions to still be employed in September. No major economic releases next week.   Switzerland There are a few data releases next week, but SNB Chair Thomas Jordan’s appearance will probably be the highlight. The SNB hiked rates by 25 basis point this past week and markets believe there’s another in the pipeline. Jordan previously hinted at the neutral rate being 2% and the SNB indicated on Thursday that another hike may follow. With inflation forecast to stay above 2% for the next couple of years, only a drop in it over the next couple of months may change the SNBs mind.   China Not much action on the economic data front with the only key data on manufacturing and services activities to digest. On Friday, we will have the release of the NBS Manufacturing and Non-Manufacturing PMIs for June. Manufacturing PMI is forecasted to rebound slightly to 49.0 after it contracted to a five-month low of 48.8 in May. In contrast, the growth trajectory of Non-Manufacturing PMI is forecasted to dip to 53.7 in June from 54.5 in May. If it turns out as expected, it will be the third consecutive month of a growth slowdown in services activities. These data will be closely watched to determine and gauge the next move from China’s top policymakers as market participants wait eagerly for the amount and scope of an impending new fiscal stimulus measure that the State Council stopped short of giving out any details about it last week. India A couple of key data to take note of on Friday; bank loan growth, Q1 current account where its deficit is forecasted to narrow to -$16 billion from $-18.2 billion recorded in Q4 2022, and Q1 external debt that is forecasted to edge lower to US$602 billion from $613.1 billion recorded in Q4 2022.

US While Europe appears at great risk for a recession as traders bet on aggressive rate rises by all the European central banks, the Fed is still expected to be nearing the end of their respective rate hiking campaign.  The focus in the US will fall on the PCE readings. If inflation comes down as expected, the swap futures might grow even more confident that the Fed will only deliver one more rate hike.  Wall Street will also pay close attention to the Conference Board’s consumer confidence reading, which is expected to show a modest rebound.  Friday’s Personal income and spending data will also be closely watched as incomes continue to grow, while spending softens. Fed’s Williams speaks at the Bank for International Settlements on Sunday.  Fed Chair Powell heads to Europe and speaks at the ECB’s global banking forum in Portugal.  The Fed will also release the results of their annual banking stress tests.   Eurozone There’ll be a lot of attention on ECB President Christine Lagarde’s appearances early in the week, particularly in light of what we’ve seen recently with central banks continuing to raise interest rates amid stubborn inflation. But it’s the flash HICP data on Friday that investors will be most interested in. The ECB recently warned that it will take a significant improvement in the data to avoid another rate hike next month and another repeat performance of the May report could be just that. Instead, we’re expected to see a small move in the other direction as base effects become less favourable for a couple of months, enabling the ECB to hike again in July before reassessing the situation in September. Inflation data from individual countries earlier in the week may offer some insight into what we can expect on Friday.   UK In light of the Bank of England decision to hike interest rates by 50 basis points last week, focus will be on what MPC members have to say. There’s been a lack of unity for months but that was increasingly evident at the June meeting. Going forward, the decisions aren’t going to get easier which means there’s likely to be less unity, rather than more. It won’t take many votes to pause the tightening cycle and so, despite the clear inflation problem, comments from MPC members will become increasingly scrutinized.   Russia A few data releases on the agenda next week including unemployment, retail sales, industrial output and monthly GDP.  

Gold Gold remains under pressure as Fed Chair Powell stuck to the hawkish script.  It is not just the Fed, but also the BOE and the risk of many more rate hikes that are making non-interest bearing gold less attractive.  If the BOE ends up needing to do supersized hikes, that could suggest more aggressive tightening could be seen with all the other major central banks.  Gold tentatively breached the $1930 region and remains vulnerable to a plunge towards $1900 level. If the BOE decision ends up being more hawkish than expected, momentum gold selling might get ugly.         Bitcoin The cryptoverse is alive.  Bitcoin is surging after a few financial giants have made commitments to crypto. It started with BlackRock’s Bitcoin ETF filing and now others are following.  Who needs regulatory clarity if you see BlackRock making a move. Bitcoin rose 6.8% to above the $30,000 level.  The SEC has been playing hardball with a Bitcoin ETF and crypto watchers are speculating that BlackRock knows something.  Bitcoin momentum may last a little longer, but it will need to hear good news from the SEC to see a sustained rally target in the mid-$30,000 region.        

Dollar drops after 3-day rally Powell remains hawkish; bringing down inflation has a long way to go Fed swaps price in a 69.2% chance of a hike at the July 26th FOMC meeting   US stocks declined as Fed Chair Powell’s testimony to the House affirmed the Fed’s threat of higher rates to combat inflation.  Wall Street should not have been surprised by Fed Chair Powell’s commitment to vanquish inflation, but swap futures are still only pricing in one more rate hike.  Powell reiterated that the economy is strong but that inflation remains elevated.  The Fed is clearly not nearing the end of its tightening cycle and if other central banks seem poised to deliver more than a couple rate hikes, that might make it easier for the Fed to remain aggressive with tightening.  Powell said lowering inflation has a long way to go and that could very well mean that they won’t stop until the fall.    Oil WTI crude prices are finally stabilizing above the $70 level as energy traders anticipate the start of summer should keep demand steady over the next few months. Oil got a boost from a weaker dollar and optimism that the economy will remain strong throughout the summer. Oil was getting near the bottom of its recent trading range and it could continue rebounding if the headlines for China remain upbeat.  The oil market is going to remain tight thanks to OPEC, so that should make trading a little easier for energy traders.  Most energy analysts envision $80 oil at some point this year, so any bullish headline could get us there.  Hurricane season is also here, and we might be getting our first taste of it with Tropical Storm Bret.

Wall Street awaits a week full of hawkish Fed speak Global risk aversion settles in as PBOC stimulus disappoints US-China relations improve but no significant breakthroughs are expected   US stocks are starting on softer footing on disappointment from the PBOC’s stimulus efforts for the struggling property market and on expectations Fed Chair Powell will defend the FOMC’s dot plots. ​ Improving sentiment with US-China relations was somewhat faded as the yuan was fixed at the lowest levels since November. ​ China has a habit of playing nice when they let the yuan weaken. ​ Secretary of State Blinken’s trip was constructive enough that he was able to meet with Chinese President Xi Jinping. ​ This was the first visit by a US Secretary of State to China since 2018, which was initially going to happen earlier in February, but was called off due to a suspected spy balloon. Any momentum from Blinken’s trip was expected to be short-lived as China’s not budging on Taiwan, and they will continue to trade with Russia, despite pressures from Washington DC. ​   US data Housing data for the month of May showed the best rebound since 2016 as inventories for homes remain at low levels. ​ Housing starts surged 21.7%, much higher than the expected 0.1% dip, and huge improvement from the revised -2.9% prior reading. ​ Building permits rose from -1.4% to 5.2%. ​ Demand for houses appears to be strong and that should help that part of the economy get out of a recession. ​ The problem for the Fed is that the inflation fight was so used to a weakening housing market but that appears to be bottoming out. ​   S&P 500 Index  

Bitcoin is slightly higher as the cryptoverse embraces BlackRock’s ETF filing and as EDX crypto exchange goes live. ​ Given the risk-off start to the trading week, Bitcoin’s slight gain is a positive sign. ​   Bitcoin still seems poised to consolidate here but it could start to muster up a rally if gold remains under pressure and if investors grow cautious with the potential headwinds for the stock market. ​ ​    

Crude prices are lower on disappointment with the size of cuts with China’s key lending rates. ​ Oil seems locked in on anything and everything that has to do with China. ​ Last week, oil was supported by improving Chinese refiner quotas. ​ This week, energy traders are seeing oil weakness emerge on disappointing stimulus efforts. ​   WTI crude looks like it is starting to find some decent support at the $68 region and that should hold as long the Fed does spook markets that they might be ready to deliver more than two additional rate hikes. ​     Gold The gold bears are in control and momentum selling doesn’t seem to care that stocks are softer and as Treasury yields come down. ​ Wall Street is still thinking that the Fed will only deliver one more quarter-point rate rise but no one wants to be long gold before what will likely be a shortened week of hawkish Fed speak. ​ Fed Chair Powell will defend his FOMC performance. Fed’s Waller will stick to his stance of supporting further hikes. ​ Fed’s Goolsbee might be closer to supporting a pause. ​ A temporary rebound in housing data might push Fed’s Bowman might wait to see if that impacts the trend of lower rents. ​ ​ Fed’s Mester has been a true hawk and probably won’t say she sees a reason to pause rate hikes. ​ Fed’s Bullard will likely confirm he still supports two more rate hikes. ​ If gold selling accelerates, it could get ugly as major support won’t appear until the $1900 region. ​  

ECB will ensure that the policy rates will be brought to levels sufficiently restrictive ECB expects to discontinue the reinvestments under the APP as of July ECB slows rate hiking pace to 25bps (as expected), bringing key rate to 3.75% The ECB kept the door open for more hikes but it looks like they are positioning for the June or July meeting that takes rates to a restrictive level.  They will be data-dependant as they are aware that the lags and strength of transmission to the real economy remain uncertain. Inflation is too high so they had to say that they will ensure that the policy rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to the 2% medium-term target. The ECB slowed their rate hiking pace to a quarter-point, bringing the Main Refinancing Rate to 3.75%, one of the lowest rates against the other major central banks.  These last few meetings were supposed to be the time when the ECB plays catch up with their rate hikes, but it is starting to look like they might be done tightening soon. Read next: Earnings season: Shell profits hit $39.87bn beating 2008 record of $28.4bn| FXMAG.COM The euro tumbled alongside European bond yields after the ECB statement.  US jobless claims posted the biggest rise in six weeks and a hot unit labor cost report for the first quarter also gave the dollar some support.  Jobless claims rose 242,000, slightly above the 240,000 consensus estimate and an increase from the prior 230,000 reading.  The US labor market is softening, albeit not quickly enough to justify rate cuts. Sticky US inflation should keep the Fed on hold until year end. All eyes will be on ECB’s Lagarde press conference as she will have a lot to clarify from the statement. 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. Euro craters after the ECB signaled they are almost done tightening - MarketPulseMarketPulse

Mega Cap Tech Earnings Week: Tuesday – Alphabet and Microsoft, Wednesday – Meta, Thursday – Amazon and Intel Thursday’s first look at GDP is expected to show economy grew at 2.0% Fed speaker black out window begins Wall Street wavers as investors await mega-cap tech earnings, looming debt ceiling drama, and a few key US data points that will influence Fed officals. ​ Over the past month stocks have rallied on expectations that any of the big risks on the table will force the Fed’s rate cutting hand. Big tech has been outperforming this year as Wall Street expects rate cuts to provide relief to the battered sector. ​ Speculation on rate cuts has fueled bets that sent the multiple for the S&P 500 tech index to trade at almost 25X future earnings. For the rally to continue we need to see a few hundred basis points in rate cuts, which is not necessarily going to happen if the Fed chooses inflation over financial stability over the next year. ​ ​ In an overall slowdown you may see a difficult environment for some of these mega-cap tech giants to catch up to their multiples. ​ ​ US Data A couple of Fed regional surveys also told a similar story of weakness as the Dallas Fed survey dropped to multi-month lows and the Chicago Fed showed that region is performing well below trend.  No one is doubting manufacturing activity is in a recession, the question is if the service sector can weaken fast enough to keep the disinflationary process going.  The Texas report highlighted that prices and wages continued to increase in April.  If manufacturing prices are rising that should prove disruptive in the event that things are bottoming out there and perhaps could be countering some of the disinflation relief we see when service prices start to come down. Earnings Coca-Cola delivered an impressive earnings report as they were able to deliver strong beats with both top and bottom lines despite raising prices. ​ The soft-drink giant is able to pass along these inflationary pressures with no issue and that is helping with their organic revenue. ​ Despite a deteriorating outlook that most of Wall Street has priced in, Coca-Cola was able to maintain their organic revenue growth target of 7-8%. ​ ​ 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. Stocks waver ahead of big-tech earnings and US data, Coca-Cola impresses - MarketPulseMarketPulse

Wall Street’s initial take on the Fed was that they delivered a dovish hike and that banking turmoil will finish the job of bringing inflation back to target.  Fed Chair Powell started the press conference by noting that the banking system is sound, but Treasury Secretary Yellen put a wrench in that idea.  Yellen noted that regulators are not considering a broad increase in deposit insurance.  Yellen said she is not considering a broad increase in deposit insurance despite all the discussion around blanket deposit insurance.  It sounds like we are nowhere near having a debate on whether to raise FDIC limit above $250,000.  Stocks were initially rallying on optimism that the Fed is done with raising rates, but Yellen’s comment on deposit insurance unnerved investors as the banking turmoil will not be going away anytime soon. The Fed The FOMC decision went mostly as expected, policymakers unanimously agreed to raise rates by 25 bps and the forecasts showed growth weakened as inflation and the unemployment outlook both rose.  If the Fed met earlier in the week, policymakers might have opted for a hold.  The Fed is confident that banking stress is being handled accordingly, but a tremendous amount of uncertainty persists and that could justify rate cut expectations later this year.     No one believed Powell’s comment that “If we need to raise rates higher we will.” The outlook is not looking good as credit is tightening, banks are going to be hesitant to lend, and banking stress won’t be easily solved.  Oil Crude prices are rallying as the end of the Fed’s tightening cycle is likely here and as oil exports surged to a record high, alleviating global growth slowdown concerns.  The oil market was oversold and now we are starting to get some signs that demand is stabilizing.  March mayhem with WTI crude appears to be over and now price appears poised to recapture the $70 level.  The EIA crude oil inventory was a tad bullish as demand across crude oil, gasoline, and distillates rebounded.  US stockpiles are now at the highest since May 2021 after a small inventory rise of 1.12 million, which was more than the expected draw of 1.5 million.  US crude production rose by 100,000 bpd to 12.3 million barrels per day, a post-pandemic high.  Gold Gold is rallying after investors got rattled by Treasury Secretary Yellen’s comment that she is not considering a broad increase in deposit insurance and on rising Fed rate cut bets for later this year.  Wall Street will have to deal with further banking turmoil and that should keep safe-haven flows coming to gold.  Credit conditions are tightening and more parts of the economy are about to break and that should spell trouble for stocks. Gold’s on a mission to recapture the $2000 level and shortly after that a possible run to record territory. Crypto Risk aversion was able to drag down Bitcoin as market jitters returned on banking worries and over a quickly weakening economy. The Fed might be done tightening, but the risk of something else breaking in the financial sector remains elevated.    A crackdown on Crypto influencers was widely expected and appears to finally be here.  While the violations against Lindsay Lohan, Soulja Boy and Jake Paul won’t draw serious attention, the alleged fraud and unregistered securities by Tron found Justin Sun is newsworthy. Market manipulation is one part of the crypto world that still has yet to be cleaned up or even close to fully being addressed.    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 Close - Fed’s dovish hike trumped by Yellen not considering broad increase in deposit insurance, Oil rallies, Gold gets groove back, Bitcoin softens - MarketPulseMarketPulse

OANDA Senior Market Analyst Ed Moya reviews the latest market news with Jonny Hart. They discussed the market reaction after this week’s banking turmoil, the University of Michigan sentiment report, Fed expectations for next week, recap the ECB decision, cryptos, and the week ahead. Read next: Next week begins with Nike earnings - profits expected to hit $0.53c per share| FXMAG.COM 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. Market Insights Podcast (Episode 445) - MarketPulseMarketPulse

US stocks are weakening on fears that this week’s banking turmoil will lead to tighter lending standards that will cripple small businesses and eventually send this economy into a recession. The Fed’s rate hiking cycle was already feeling restrictive, so now that we have rising risks of more bank bailouts and even tighter credit standards, the growth outlook for the economy is rather bleak. Next week will be huge as markets are unsure if the Fed will continue to tighten or given this week’s banking turmoil decide to hold. ​ Wall Street wants to know if the risk of a Fed policy mistake is growing and next week’s rate hiking decision and forecasts should signal if that risk is growing. US Data The University of Michigan Sentiment report did not deliver any surprises, with the exception of a sharper drop for the 12-month inflation outlook.  Sentiment fell from 67.0 to 63.4 in early March, while current conditions tumbled from 70.7 to 66.4.  Inflation expectations for the next 12 months fell to the lowest level since 2021. The consumer is getting nervous here. ​ ​ ​ Oil Crude prices remain heavy as banking turmoil won’t be going away anytime soon and over fears that the Fed’s rate hiking cycle is starting to take down the economy. It seems that the oil bump that we got earlier in the month from China’s reopening was premature. Clearly China’s recovery still needs more support as the PBOC cut the RRR for all banks in a move to stimulate the economy. Special Presidential Coordinator for Global Infrastructure and Energy Security Hochstein is determined to assess what happens with oil markets before rushing to fill up the strategic petroleum reserve (SPR).  Energy traders were waiting for some announcements about refilling the SPR once WTI broke below the $70 level, but that is not happening because a severe recession could send oil closer to the $60 level. Energy traders are not sure what could be the catalyst to send oil prices higher given all the doom and gloom happening with short-term crude demand outlooks.  The Fed’s forecasts will closely be watched as that will signal if we are at a greater risk of a policy mistake.  For now oil will remain heavy as traders try to figure out what type of recession policymakers will trigger in the US. Gold The return of bank angst is sending gold prices sharply higher.  Many gold investors are looking at the short-term macro risks and it seems that a wide range of expectations should mostly be positive for bullion.  If the Fed is one and done with rate hikes, that should be bullish for gold as it puts a short-term cap on the dollar.  If inflation proves to be stickier and the Fed has to resume tightening that would deliver a major blow to the economy and trigger many safe-haven flows for gold. Gold may hover around the $1950 leading up to the Fed, but after next week’s FOMC decision and updated forecasts, Wall Street might have a better handle of how bad of a recession this rate hiking cycle will trigger.  Safe-haven flows into gold should be steady as the economy enters a recession. Bitcoin Bitcoin is rallying on optimism that regulators are open to a big bank taking over the crypto parts of Signature Bank.  Cointelegraph reported that an FDIC spokesperson denied suggestions that any potential buyer of Signature Bank must agree to give up all cryptocurrency business as part of the sale. Signature Bank was a key crypto bank in the US and the survival of that business is key for long-term growth prospects for a good part of the cryptoverse. Bitcoin is trying to breakout here and make a move to the $30,000 level.  A potentially failed triple-top pattern is helping drive the growing bullish macro argument for Bitcoin.  ​   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 Open: Stocks still jittery on banking woes, Inflation expectation fall to lowest levels in nearly 2 years, Crude struggles, Gold shines, Bitcoin eyes $30k - MarketPulseMarketPulse

US stocks are rallying as Wall Street worries over the banking sector are easing after the big banks offer support to First Republic and as the SNB gave Credit Suisse a lifeline.  Banking jitters are fading quickly for now and that has everyone scrambling back into risky assets.  Yellen Treasury Secretary Janet Yellen’s testimony to the Senate did not yield any surprises.  She defended the proposed budget and reiterated that there will be a careful look at what happened with SVB. Yellen noted that the US cannot pick and choose which bills to pay on time and that the debt ceiling must be raised.  She emphasized that the US has always paid their bills and made her case on why the US must not default.  ECB This was obviously not an easy decision for the ECB. Reuters reported that policymakers were debating either to keep rates on hold or follow through on the half-point rate hike that they were signaling last week.  After seeing a lifeline given to Credit Suisse, policymakers felt comfortable with raising rates by a half-point.  The ECB refrained from offering any rate guidance as they continue to monitor the health of the banking sector.  Lagarde discussed how the risks for growth are tilted to the downside as further turmoil could hit credit conditions and dampen confidence. The euro settled slightly higher on the day against the dollar.  Oil Crude prices turned positive as risk appetite returned to Wall Street after reports of efforts to help the troubled banking stocks.  Earlier oil was sharply lower after the ECB decided to stick with their pre-committed hike.  Monetary policy continues to get more restrictive as central banks continue to deliver more rate hikes.  Global recession risks have never been greater and that is bad news for the crude demand outlook.  The initial move lower for crude however might not last as traders might grow confident this will be the last rate hike for the ECB and that next week the Fed will stop after delivering one more.  Read next: We may say that Bitcoin's rally sustainability is questionable| FXMAG.COM Gold Profit-taking kicked in for gold as banking turmoil eased after JPMorgan, Morgan Stanley and other big banks reportedly are considering a potential deal with First Republic Bank.  Gold traders quickly realized that the path towards $1950 was not happening and locked in profits.  Gold’s rally over the past week was rather impressive but might be out of steam.  Wall Street is going to keep its eye on the banking sector but for this news cycle it appears optimism is growing that this banking crisis will be contained.  If the news flow is more about efforts to support Credit Suisse and First Republic , then we might see risk appetite attempt a comeback here and that could have gold give up some of the recent rally.  Cryptos Bitcoin is higher as Wall Street grows confident that efforts are being made to contain this banking turmoil and as central banks globally are continuing with their respective tightening cycles. The ECB went ahead with their half-point rate rise and expectations are improving for the Fed to deliver one more hike. If the Fed might is done tightening after the March 22nd meeting, that will keep the economy in slowdown mode and support expectations that we should start seeing labor market weakness in the Spring. Despite losing a couple important crypto banks, the plunge in yields is welcome news for many crypto startups.   As the economy heads towards a recession, the cryptoverse could look more attractive than equities. It appears the downside risks are greater for the S&P 500 than they are for Bitcoin.  Ethereum got a little boost after news that developers have agreed upon a target date for Shanghai hard fork update that will allow staked Ethereum withdrawals.  The long-awaited merge was done in September, so this target date has been in the making for quite some 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. US Close: Stocks rally as bank jitters ease, No surprises from Yellen, ECB hikes, Oil rebounds, profit-taking time for gold, Bitcoin edges higher - MarketPulseMarketPulse

US stocks settled lower in a volatile session as traders digested a cooling wage/ robust job growth report and SVB contagion risks. This was supposed to be an easy Friday with one massive jobs report, but SVB, a large bank with exposure across a range of sectors failed and triggered distress for several other smaller banks.  At the end of the day, traders are seeing this cooling/hot payroll report as confirmation that Fed policy is restrictive and that the their tightening work is almost done.  If we didn’t have SVB’s failure and contagion risk the case for a half-point rate hike would be valid. The focus will fall on SVB contagion risks and Tuesday’s inflation report.  As long as we don’t see a scorching hot inflation report, the Fed should continue with its quarter rate point hiking pace.   US data The US economy added 311, 000 jobs in February, more than both the consensus estimate of 225,000 and the whisper number of 250,000.  The NFP report had a strong headline beat, but the rest of the report supported the idea that the labor market is ready to cool.  Wage pressures came in much softer than forecasts and the unemployment rate rose from 3.4% to 3.6%.  Fed rate hike odds went on a rollercoaster ride post NFP as traders now have the March 22nd meeting as a coin flip between a 25bp rise or half-point increase and are also pricing in a rate cut by the end of the year.  The peak is in place and it seems traders got a preview about how this tightening cycle will start to drag down economic growth.  SVB SVB Financial Capital’s demise is bad news for many small tech companies as they were a go-to lender in silicon valley.  After Venture Capitalists decided to pull their money, SVB ended up losing ~$2 billion from selling securities as they rushed to secure funds, which is what triggered this bank run.     Startups and debt refinancing are some of the biggest financial risks that traders are analyzing, but this pressure on small banks appears it should remain contained and not weigh on the big banks. The KBW bank index had its worst drop since early in the pandemic and the contagion fears dragged down Comerica, Keycorp, and US Bancorp.  Signature Bank Investors are skeptical to hold anything crypto related in this market environment.  Banks vulnerable to financial instability risk and crypto exposure are easy targets and that has some traders eyeing Signature Bank. There are not a lot of publicly trade banks with significant crypto exposure, so the ones that have some are seeing selling pressure.  Oil Crude prices are rallying after a mixed jobs report sent the dollar lower as optimism grew that the Fed won’t have to be as aggressive with the end of its rate hiking campaign. Oil is quietly rallying as parts of Wall Street enter panic mode following small banking contagion risks.  It appears that parts of the economy are breaking and that is good news for bets that the Fed won’t have to accelerate their tightening pace.   Gold Gold is surging as Fed rate hike bets get scaled down and as SVB contagion risks trigger some safe-haven buying. The bond market is now starting to price in rate cuts by the end of the year and that is triggering a major collapse with yields.  The two-year yield posted its biggest two day decline since 2008.  Gold is becoming everyone’s favorite trade again and that could continue as liquidity risk concerns won’t be quickly answered for that corner on Wall Street.    Bitcoin All the headlines just turned bearish for Bitcoin.  The list of bearish crypto drivers are plentiful: Fallout from SVB as many crypto companies depend on small banks, mining might be harder if the White House pushes through a new 30% tax, NY crypto crackdown now covers KuCoin and after Huobi token’s flash crash.  Bitcoin was in a comfortable trading range and that just broke, which has many investors nervous that we could see a retest of the October lows. Bitcoin fell below the $20,000 level and has many traders nervous over what might happen over the weekend.  Crypto volatility appears to be back as Bitcoin’s range has been breached.  The $18,400 level is key support, but if that breaks momentum selling could look to target a retest of the October lows.   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.  

Fed Chair Powell killed risk appetite with a hawkish first day on Capitol Hill. Powell said that the Fed will likely need to raise interest rates more than expected due to the recent strong data and is prepared to move in larger steps if the “totality” of incoming information suggests more needs to be done to bring down inflation.  US stocks did not stand a chance after Fed Chair Powell convinced markets that policymakers are comfortable taking this rate hiking campaign much higher. Powell is not taking any chances and wants to send home a clear message that the Fed will do whatever it takes to bring down inflation.  FX King dollar has returned as Wall Street scrambles to price in more Fed rate hikes and possibly larger ones.  We saw major moves in fixed income as the 2-year finally broke above 5.0%, the highest level since 2007. Hedge funds were aggressively short Treasuries and rejoiced today.  The bond market also saw the 2-year/10-year curve inversion reach 1 percentage point (~103bps), the most inverted in over 40-years.  Dollar dominance won’t likely remain the dominant throughout the rest of the year, but positioning suggests it could thrive in the short-term.  Oil Crude prices got hit with a one-two punch as a hawkish Powell raised concerns that the economy would see a harder recession and sent the dollar skyrocketing.  This short-term pain for oil however shouldn’t last a while longer given how tight supplies remain.  WTI crude wasn’t going to make a big move above this year’s high, so abandoning the breakout above the $80 a barrel level was easily faded.  Gold Gold is getting crushed as the soft landing trade blew up today and sent the dollar higher.  Gold is in the danger zone once again and could see major bearish momentum on the break of the $1800 level.  The Fed is locked into a much more aggressive tightening stance and that could keep the short-end of the curve heading higher.  Gold might struggle here as bond bears completely ride this move higher in yields.  Non-interest bearing gold should have some support at the $1800 level but that could be tested if the next jobs and inflation report support the case for more aggressive rate hikes.  Read next: Turkey: For now, inflation could be said to have dropped because of the high base in 2022| FXMAG.COM Bitcoin Every major risky asset class was under pressure following Fed Chair Powell’s first day of testimony.  Bitcoin was down but able to hold onto the lower boundaries of its key trading range.  Risk appetite is very vulnerable here and if this wave of risk aversion does not pass, cryptos may struggle to make fresh 2023 lows.  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 stocks are slightly higher ahead of Fed Chair Powell’s Congressional testimony.  Everyone is expecting Fed Chair Powell to deliver his best hits of ‘we have more work to do’ and ‘higher for longer’.  Powell might not commit how much higher rates will go, but he will keep the door open for the Fed’s dot plots to move higher.  Lawmakers will argue that we don’t need to see a recession to bring inflation back to target.  Powell will likely signal that Americans could see economic pain later this year. Powell will most likely stay hawkish given how high inflation remains and the strength of the labor market.    Biden This week, Wall Street is expecting to get President Biden’s budget proposal for fiscal 2024. This morning, President Biden’s op-ed in the NY Times gave a sample of what he will be proposing.  He noted that, “my budget proposes to increase the Medicare tax rate on earned and unearned income above $400,000 to 5% from 3.8%.” He is aiming to keep the Medicare trust fund solvent beyond 2050.  This is just the beginning of budget negotiations as House Republicans will not get on board with this first pitch.  RBA The RBA did not surprise after raising its cash rate target by 25bps to 3.60%.  The RBA is nearing the end of its tightening cycle as they removed the language about hikes in the coming months. Australia doesn’t have the same wage pressures that the US has and that is why they believe inflation has peaked and that further hikes will be data dependent.  The RBA’s dovish hike sent the Australian dollar lower by 0.9% against the US dollar.  EUR After a day to digest ECB’s Holzmann case for four half-point rises, ECB hike odds continue to rise. It looks like no one wants to listen to doves, especially considering we keep seeing core CPI make fresh record highs.  Holzmann argued for 50bps point rises in March, May, June and July, with restrictive policy starting at 4.00%.  Nomura bumped up their ECB forecast from 3.50% to 4.25%.  Earlier in the week, Morgan Stanley increased their ECB forecast to 4.00%.  Dovish ECB member Lane argued against having policy on ‘autopilot’, emphasizing that it should not be on autopilot, but stay data dependent.     The euro could see some support once we get beyond Fed Chair Powell’s testimony and Friday’s nonfarm payroll report.  Oil Crude prices are wavering ahead of Fed Chair Powell’s testimony to the US Senate. Oil has had a nice start to the month, but lingering demand concerns and further oil inventory increases should cap this rebound.  Oil looks like it might need to trade in a range a little longer until we have a clearer outlook for the US economy.  The debate over what type of recession will hit the US economy will not be answered in a couple of months time, so we might see conservative calls for demand to remain healthy over the short-term.  In the event, risk appetite runs wild following Fed Chair Powell’s Senate appearance, WTI crude should find major resistance at the $84.80 region.  Gold Ahead of Fed Chair Powell’s testimony to the Senate, gold is consolidating as investors await any signs over how much more restrictive Fed policy will become.  A strong bullish argument for holding bullion could be made as global central banks are growing confident peak tightening will soon be in place.  The RBA rate decision provided optimism that inflation may have peaked and that further tightening might not be needed if disinflation trends remain firmly in place.  Gold might benefit if the rest of the major central banks start delivering dovish hikes. Also providing a boost for gold is the steady demand it is seeing from China.  This current macro environment should lead to stronger central bank buying.  The focus for many is the steady buying by the PBOC and if the weaker dollar trade unfolds later this year, gold could shine.  Bitcoin Bitcoin remains anchored despite a potential weekly death cross pattern.  Bitcoin had a great start to the year, but since the middle of February prices have gradually softened.  Contagion risks from Silvergate Capital and hard landing fears are keeping cryptos heavy, but the key trading range of $21,000 to $25,500 continues to hold up.  Crypto traders are closely watching the bond market and if yields refuse to breakout higher, Bitcoin may remain in this trading 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.  

OANDA Senior Market Analyst Ed Moya reviews the latest market news with Jonny Hart. They discussed the market reaction after the Fed’s preferred inflation index accelerated, incoming BOJ Governor Ueda’s testimony, cryptos, Coinbase earnings and the week ahead.     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 watchers knew it would be a surprise if BOJ governor nominee Kazuo Ueda gave any substantial hints about how he will consider policy normalization.  Ueda reiterated that the BOJ’s current policy is appropriate. He noted that “Japan’s trend inflation is likely to rise gradually. But it will take some time for inflation to sustainably and stably achieve the BOJ’s 2% target. FX traders were not surprised that Ueda did not signal he was in a rush to tweak Yield Curve Control (YCC). Ueda has not made a decision at a policy meeting since 2005, so he will likely refrain from providing any hints that lock him into any monetary policy stances. The Japanese yen has rallied quite a bit on expectations that Governor Kuroda’s replacement would likely be quicker in abandoning YCC and eventually ending negative rates. Every BOJ watcher read Ueda’s opinion piece that said the BOJ must consider an exit strategy from its ultra-loose monetary policy and review its extraordinary stimulus.  Traders are now realizing that Ueda is unlikely to provide any tightening of monetary policy signs anytime soon, especially before a policy review. The yen won’t be rallying on tightening bets ahead of Kuroda’s last dance (March 10th meeting) and with incoming Governor Ueda’s first policy meeting in April. 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 stocks are declining after retail earnings suggest margin worries are here and it will only get worse as the Fed is likely to deliver more tightening into early summer. Treasury yields are surging here as a tight labor market will force the Fed to do more tightening.  Retailer earnings are suggesting it is going to be a tough year ahead and that should keep the pressure on stocks.  Geopolitics Russia’s Vladimir Putin’s State of the Union speech suspended participation in a key nuclear arms pact with the US.  Putin said, Russia will suspend participation with the new START treaty and that they would test nuclear weapons if the US does it first. Putin’s speech comes three days before the one-year mark of the Russian invasion of Ukraine. He added that Russia will push farther if longer-range arms are supplied. Ukrainian officials have voiced their concerns that they expect the Russians to increase their offensive.  China China is also pushing back against calls that say Taiwan is next.  China Foreign Minister Qin Gang said, “We urge certain countries to immediately stop fueling the fire, stop shifting blame to China and stop touting Ukraine today, Taiwan tomorrow.” China’s economic outlook if fragile right now and they are trying to avoid any major obstacles as their reopening from COVID continues. Home Depot Home Depot shares tumbled after a tight labor market is making them invest an additional ~$1 billion in annualized compensation for frontline, hourly associates. Wall Street initially could only focus on the added expenses and not the mixed earnings and dividend boost.  While most companies are announcing cost-saving measures, Home Depot is in position that will require them to spend more.  The EPS beat of 3 cents and slight revenue miss of $35.83 billion was accompanied by comparable sales of -0.3%, not as bad as the consensus estimate of -0.87%.  The world’s largest home improvement retailer is going to have a margin problem over the couple of quarters and that could get uglier if the housing market does not bottom out soon.  Walmart Walmart shares tumbled despite a top and bottom line beat as their EPS guidance fell short of the analyst estimates.  Walmart’s earnings slides noted that “general merchandise sales reflected softness in discretionary categories including toys, electronics, home, and apparel.” Walmart’s poor outlook after a strong holiday season is having many investors abandon ship here as rough waters are clearly ahead.  Walmart had the largest sales volume in its history in December. Oil Crude prices are struggling as global growth concerns return after soft European manufacturing activity data is accompanied with a surge in global bond yields. Central banks globally are about to take policy into even more restrictive levels and that is countering China’s reopening momentum. WTI crude is finding a home between the mid-$70s and the $80 a barrel level.      Read next: The Pound Gained After The Publication Of PMI Reports, Euro Is Below 1.07, USD/JPY Pair Is Above 134.50| FXMAG.COM Gold/FX Gold prices are weakening as investors await the Fed Minutes that could confirm the bank has more work to do. The dollar is getting a bid here as more traders start to price in 75 basis points in more tightening by the Fed. If the bond market selloff gets uglier, gold might soften more, but it probably won’t drop as much as equities.  Rising geopolitical risks will likely drive some flows towards bullion and Wall Street is getting close to pricing in peak Fed tightening.  Bitcoin Bitcoin traders appear to be ignoring a laundry list of bearish macro drivers that include; a return of the stronger dollar as the bond market rally returns, downward pressure on stocks as investors price in more Fed rate hikes, and on worries that stablecoin regulation could put further pressure on cryptos.  It appears that Bitcoin’s correlation with most risky assets is changing.  The crypto winter that saw prices collapse from $68,911 to $15,485 appears to have priced in enough of the bad news.  Bitcoin is still respecting the key $25,500 level, but a break could open the door for momentum traders to target a bigger move higher. Initial resistance would come from the $28,000 level, but most traders may have their eyes for the psychological $30,000 level.  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.  

OANDA Senior Market Analyst Ed Moya reviews the latest market news with Jonny Hart. They discussed the return of the bond bears following a wave of hawkish Fed speak, oil’s weekly loss, crypto markets, and the week ahead. 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.

Wall Street appears to be closing out the week on a down note as investors become rattled over the prospect of more tightening by the Fed. It isn’t just Fed expectations that are rising, traders are also expecting the ECB to send rates much higher. It looks like global growth will definitely take a harder hit as monetary policy gets even more restrictive over the next few months. More from the Fed Fed’s Bowman reiterated inflation is still too high and that they need to continue hikes until we see more progress. She did note the Fed is seeing a lot of inconsistent data in economic conditions. It doesn’t look there is a chance that the Fed will be holding anytime soon, which should keep sending yields higher at the short-end of the curve. Fed’s Barkin however wants to remain flexible and favors a 25 basis point increase. He acknowledges that he is not ready to declare victory on inflation. FX Friday’s sell everything trade initially sent the dollar higher as risk aversion appears to be running wild as Fed tightening jitters make it more likely the US economy is recession bound. The latest round of hawkish Fed speak from Bullard, Mester, and Bowman have swaps pricing rate hikes at the March and May meetings. The dollar pared earlier gains as yields came in around the European close and after Fed Barkin’s comment that he favors 25bp rate hikes for flexibility. Oil Crude prices are falling as supplies are plentiful and as global growth concerns return as the Fed and ECB seem poised to take interest rates even further into restrictive territory. The belief that OPEC+ can keep prices supported wherever they want is waning as global growth outlooks take a turn for the worse. As long as supplies seem ample, OPEC+ will be playing catchup to keep the market tight. Oil is seeing steady selling pressure and the true test will be if prices can break below the $72.00 a barrel level. Gold Gold prices got crushed this week as the bond bears are fully in control now that the market is pricing in more Fed rate hikes. Gold’s vulnerability to further downside however should be limited as central banks appear poised to increase their bullion holdings. Global recession risks are returning and that should lead to some safe-haven flows for gold. Gold should have major support ahead of the $1800 level, which means we might be stuck in a range until we have clearer signs if inflation is going to continue to accelerate here. Crypto Bitcoin is lower on the day as every risky asset sold off on fears of more aggressive Fed tightening and rising recession risks. After Bitcoin tested the $25,000 level and failed to extend higher, many active traders locked in profits. Appetite for risky assets might struggle over the short-term, which could support a Bitcoin consolidation as long as a regulatory crackdown does not take down a key stablecoin or crypto company. Many crypto traders are paying close attention to the reports that Binance might exit relationships with US companies as pressure from regulators intensifies. Binance CEO Changpeng Zhao (CZ) tweeted, “Given the ongoing regulatory uncertainty in certain markets, we will be reviewing other projects in those jurisdictions to ensure our users are insulated from any undue harm.” Binance is the world’s largest exchange and if it abandons key US relationships, that is a major setback for the cryptoverse. 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 It doesn’t get any busier than this week. Traders will focus on the FOMC decision, but they should also closely watch mega-cap tech earnings, and the nonfarm payroll report. The Fed is expected to continue slowing their rate hiking pace with a small 25 basis point rate rise.  Disinflation trends are clearly here, but Core PCE suggest price pressures are coming and the labor market refuses to break and could prompt the Fed to remain vigilant with its inflation fight. The nonfarm payroll report is still expected to show job growth of 175K, even as we hear of multiple reports of layoffs announcements across tech, finance, and real estate. Most of the layoffs will happen throughout the next couple of quarters, so we still could see another better-than-expected jobs number. Earnings season gets chaotic as Wall Street will get results from Advanced Micro Devices, Alphabet, Amazon, Amgen, Apple, Canadian Pacific Railway, Cigna, ConocoPhillips, Deutsche Bank, Exxon Mobil, Ferrari, Ford Motor, General Motors, Gilead Sciences, GSK, Hershey, Honeywell International, Humana, McDonald’s, McKesson, Merck, Meta Platforms, Novartis, Qualcomm, Samsung SDI, Sanofi, Shell, SoftBank, Sony Group, Starbucks, T-Mobile, Thermo Fisher Scientific, and United Parcel Service EU Three events stand out next week, the most obvious being the ECB meeting on Thursday. While the rate decision is what everyone will be waiting for, the flash inflation data on Wednesday and GDP on Tuesday could have some influence on whether the central bank will seek to soften its hawkish message. A 50 basis point hike is mostly priced in but what comes next is less certain at this point. UK The Bank of England has a particularly tough decision over the coming months. On the one hand, inflation is above 10% and the economy likely didn’t fall into recession in the second half of last year, to the surprise of many. On the other, inflation has decelerated in the last two months and the November GDP data probably delayed the inevitable rather than making it less likely. The outlook remains bleak, how the BoE navigates is still highly uncertain. And next week brings the monetary policy report containing the latest forecasts from the central bank. The majority of analysts expect them to raise rates by 50bp to 4.00%, while a minority are eyeing a 25bp hike. Russia Unemployment on Monday and a couple of PMI reports are the only highlights next week. That aside, focus will remain on events in Ukraine. South Africa The whole economy’s PMI is the only highlight next week. Turkey Official inflation data is the main release next week but this has become more of a political focus in recent years than an economic one, as the central bank pays very little attention to it.  Inflation is expected to slow towards low-50s, potentially making it to the 30s by the end of the year. Switzerland A few notable pieces of economic data next week including the leading indicator, retail sales and PMI survey. China China markets reopen after the Lunar Year Holiday and traders await to see how much economic activity improved last month after they began rolling back some COVID restrictions. Traders will pay close attention to the official government manufacturing PMI reading which could come close to returning to expansion territory.  The services PMI is expected to post a strong rebound from 41.6 to 51.5. India The focus will fall on the Indian government’s budget which should focus on deficit reduction.  Economic data releases include India’s fiscal deficit, eight infrastructure industries and both manufacturing and services PMIs. Australia & New Zealand China’s COVID reopening has supported both Australian and New Zealand dollars significantly. Much attention will go towards China’s PMI data readings. For Australia, the economic calendar contains the December retail sales report that should show spending is cooling, building approvals are expected to rebound, and the NAB business confidence report. The New Zealand economic calendar contains the fourth quarter employment report, the December building permits, and ANZ consumer confidence. Japan The pressure of the sharp depreciation of the yen in the past has eased somewhat and the reopening of China should support the start of a recovery in the Japan economy in the first half of this year. The next BoJ meeting in March will be the last meeting of Governor Haruhiko Kuroda’s term of office. Bank of Japan governor candidate Takatoshi Ito recently said that if the BoJ abandons yield curve control, it will need to conduct a comprehensive review of its policy framework. Next week will focus on the jobless rate, retail sales, industrial production, housing starts data, and PMI readings. Singapore It will be a busy week of data for Singapore. Economic releases include money supply data, unemployment rate, PMI data, and retail sales. Markets Energy Crude prices are poised to finish the week on a strong note as global recession fears are countered by optimism that China’s reopening momentum will continue and over economic data that suggests large parts of the US economy remains strong.  The upcoming week has two massive events; the OPEC+ virtual meeting on output and the FOMC decision. The OPEC+ meeting might be easy with a decision to keep output steady as they await what happens with the short-term global demand outlook. Traders will also pay close attention to earnings from both Exxon and Shell. Gold Gold prices are consolidating leading up to the FOMC decision. Next week, the Fed is likely to shift from a 50bp hike pace to just a quarter point rate rise, but still will say that more could come.  Gold’s outlook for the rest of the year is turning rather bullish for some investors, but a lot of that hinges inflation steadily falling back below 3.0%. Cryptos Cryptos continue to benefit from the broad risk rebound across Wall Street.  The Fed is nearing the end of its rate hiking cycle and that has helped all interest rate sensitive assets to start the New Year.  The headlines across the crypto space have not all been doom gloom as Moody’s works on a scoring system for stablecoins, Amazon has a NFT initiative, and as some firms successfully raise money.  Bitcoin has major resistance at the $24,000 level, so momentum traders will closely watch to see how prices behave post-FOMC decision.  Given where inflation stands, the Fed will likely remain hesitant that a pause is imminent and lean more towards staying hawkish. If the Fed follows the lead from the BOC and signals they are almost done with rate rises, Bitcoin could tentatively break past $24,000. 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 stocks are rallying as tech stages a comeback following Google parent Alphabet’s announcement that they will cut its global workforce by more than 6%. The reduction of 12,000 jobs globally for Google confirms a clear trend of mega-cap cost-cutting measures. ​ First it was Amazon and Microsoft with major job cut announcements and now it is Google. ​ We should see this theme spread across other sectors throughout the year and that should help keep disinflation trends intact. Massive layoff announcements will stop wage pressures from rising, which should get inflation back towards target by the end of the year. ​ Fed The economic data is not quite in unison for another downshift in Fed tightening. ​ The labor market remains too hot even despite all the layoff announcements that seem to be happening this earnings season. ​ The Fed seems poised for a 25-basis point rate hike at the February 1st meeting, but one last half-point rise that is followed by a downshift in March might do the trick to keep disinflation trends going strong throughout the summer. Fed’s Harker reiterated his support for a 25 basis point pace going forward. ​ Fed’s George, a non-voter, noted that the economy is responding to the work the Fed is doing. Fed’s Brainard provided comments yesterday that support a long hold once the Fed is done tightening. ​ She refrained from giving any guidance as to what she supports for the next meeting or even how high rates should go. ​ Fed’s Williams sees US GDP growth around 1% this year. He added that there are still ways to go until sufficiently restrictive rates. Wall Street seems confident that this recession bound economy will bring inflation all the way down and that the Fed will be cutting rates next winter. ​ The Fed’s messaging about higher for longer is completely getting ignored and will likely get tested throughout the year. Oil Crude prices had a good week as Chinese reopening optimism spearheaded this bullish move higher. Will global oil demand continue to grow as recession risks rise? It seems many energy traders are betting on that. The start of the Chinese New Year holiday will be closely watched to see if travel is as robust as many are thinking. Gold Gold’s bullish rally has run out of steam after making a nine-month high. ​ Financial markets are pricing Fed’s dovishness for next winter, completely shrugging off a steady flow of higher for longer Fed speak. Gold is getting some support from Fed Harker’s reiteration that they should downshift their rate tightening pace again. Gold’s facing some strong resistance ahead of the $1950 level and that might hold until we get to the FOMC decision at the start of next month. ​ If bullish momentum remains in place, the $2,000 level will remain massive resistance. Crypto Bitcoin is off to a great start this year. ​ A prolonged crypto winter or ice age does not seem to be happening as the crypto space gets cleaned up. ​ The bond market is not in agreement with Fed speak, so if we see more tightening beyond the March meeting, risky assets broadly, including crypto, could be vulnerable to major selling pressure. ​ 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. Stocks rally as Google job cuts support disinflation trends, Fed speak, Oil’s good week, Gold hovers near 9-month highs, Bitcoin above $21k - MarketPulseMarketPulse

US stocks were initially softer after the banks delivered a disappointing start to earnings season along with a downbeat outlook for the economy.  Stocks are heading lower as Wall Street anticipates earnings will decline significantly and margins will be tested. This is the quarter that companies will announce layoffs and cost-cutting measures as the economy still appears to be recession-bound.     Stocks pared losses after consumer sentiment rose to a 9-month high.  Plunging gas prices were a key catalyst but that might not last much longer if oil continues to rally.    Sentiment The Michigan consumer sentiment reading surged to 64.6, well above all 52 estimates and a significant improvement from the prior reading of 59.7.  Current economic conditions also improved even as recession risks clearly remain in place.  Inflation expectations improved for the year ahead, while long-term expectations ticked higher.  JPMorgan JPMorgan delivered disappointing results as revenues came in lower than analysts’ estimates across equity, fixed income, currency, commodities (FCCC), and investment banking. JPMorgan’s net income for the quarter surged to $11.0 billion or $3.57 per share. Net income was supported by surging rates and on loan growth.  Managed revenue rose 17% to $35.6 million above the consensus estimate of $34.3 billion estimate, but that did benefit from a $914 million sale of Visa B shares and $874 million of securities losses.  Many traders focused on provision for credit losses, which surged 49% quarter over quarter to $2.29 billion, well above the estimate of $1.96 billion.  CEO Dimon’s earnings release comments said, “The U.S. economy currently remains strong with consumers still spending excess cash and businesses healthy. However, we still do not know the ultimate effect of the headwinds coming from geopolitical tensions including the war in Ukraine, the vulnerable state of energy and food supplies, persistent inflation that is eroding purchasing power and has pushed interest rates higher, and the unprecedented quantitative tightening.”  During the Q/A, Dimon added that, “It may be a mild recession, it may not.”  Other Banks Wells Fargo earnings were slashed in half as they build-up reserves and had massive settlement costs. It is no surprise that the mortgage dependent bank struggled as refinancing activity struggled as mortgage rates surged.  Citigroup shares were dragged down after profit dropped 21% and as the bank prepares for credit losses.  The overall takeaway from the banks is that recession fears are warranted and that earnings will disappoint this quarter. Tesla Tesla appears to be getting desperate as it cuts prices across models sold in the US.  The goal is to allow car buyers to take advantage of a $7500 EV tax credit, but it will eat at margins and raise questions about how confident they are with their outlook.  Discounts to the US and major European markets for some is a sign that demand is falling off a cliff.  Tesla shares are holding onto the $100 level, but if risk aversion remains in place, that could be tested. Oil Crude prices are poised for a weekly gain as the global economic outlook improves following China’s reopening. Energy traders are starting to price in a little bit more crude demand coming out of Europe and not just China.  The oil market is looking like it will remain tight as the world’s two largest economies respective outlooks have dramatically improved over the past couple of weeks; The US might have a shallow recession and China’s reopening is gaining momentum.  Gold Gold prices are rising as Wall Street grows confident that the Fed is almost done with raising rates.  The University of Michigan sentiment report showed one year inflation expectations fell to the lowest levels since April 2021.  Non-interest bearing gold is loving the slide in bond yields and that could continue as earnings come in softer-than-expected.  If gold can comfortably close above the $1900 level, that could be a very bullish signal for the rest of the month. Gold should have strong resistance at the $1950 region.  Crypto Guess who’s back? Back again Bitcoin’s back Tell a friend Wall Street is very confident that the end of the Fed’s tightening cycle is upon us and that is providing some underlying support for crypto. Stocks are a bit under pressure as earnings risks remain front-and-center, but that shouldn’t have much of an impact on crypto.  Unless we hear some strong hawkish pushback from the Fed or if commodity prices surge, crypto traders should not be surprised if Bitcoin is able to extend its recent gains.  The $18,500 level was critical resistance for Bitcoin and if it can stay above that level over the next few sessions, that could awaken some dormant long-term bulls.     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: A busy earnings start, Sentiment Rebounds, Tesla woes remain, Oil’s good week, Gold shines, Crypto breakout? - MarketPulseMarketPulse

US stocks initially rallied as inflation continues to ease and as Fed members are clearly signaling a smaller tightening pace going forward.  The dollar also headed lower as a subdued inflation report should let the Fed slow their hiking pace again. It became clear fairly quickly that stocks would not hold onto initial gains as we will likely remain being data-dependent going forward. The labor market is still hot and much of the relief we saw with energy prices appears to be going away this month. CPI Wall Street is feeling more confident about another downshift in tightening by the Fed after a pivotal inflation report showed pricing pressures continue to cool. Disinflation trends are clearly intact as cheaper energy costs helped deliver the first month-over-month decline in 2 ½ years.  The headline CPI index cooled from 7.1% to 6.5% as gasoline prices tumbled. Gasoline prices fell 9.4% on a monthly basis and declined 1.5% from a year ago. New and used vehicles also posted declines from a month ago, while shelter and apparel posted strong gains. Shelter prices take the longest to cool, so many traders are not too worried about the 0.8% monthly gain. As expected, core CPI on a monthly basis edged higher for a modest 0.3% gain. Inflation isn’t broadly coming down, but it is cooling as the economy starts to feel the impact of the Fed’s earlier rate hikes. Claims The Fed almost had a perfect economic day, but weekly jobless claims continues to support the idea that labor market will keep wage pressures alive. Initial jobless claims were little changed after the prior week saw a modest revision lower. Claims fell 1,000 to 205,000, verse an expected increase to 215,000. Everyone is expecting claims to rise but seasonality typically distorts this data set in January. Until we see strong signs the labor market is cooling, the Fed will keep suggesting a rate hike could be coming. Read next: At the moment, we see numerous factors that have a negative impact on S&P 500 and Nasdaq Composite – lowering money supply in the US and increasing interest rate environment to name a few| FXMAG.COM Fed Yesterday’s Fed comment by Collins that she’s leaning toward supporting a quarter-point interest rate hike is looking like it could become the consensus view. Fed’s Harker also joined the 25 bp pace camp and signaled that they could raise rates a few more times this year.  Harker’s comments are what moved the market as it clearly outlines what the Fed’s path playbook will be for the rest of the year.  The Fed appears poised to deliver a 25 bp rate hike at the February 1st meeting, then be data-dependent for the February and March meetings.  Oil Crude prices extended gains after the dollar weakened as inflation slowed for a sixth straight month.  This inflation report supports the idea that the Fed could be close to done with raising rates soon and that the US economy might avoid or see only a shallow recession.  Oil has been rallying on China’s reopening momentum and now that they stopped reporting COVID tally data, traders are focusing on satellite images. China could face a difficult surge over the Lunar New Year holiday period, but for now energy traders are locked into the potential upside risks to demand.  WTI crude has initial resistance at the $80 a barrel level and that could hold as the weaker dollar trade might have been exhausted.  Gold Gold prices tested the $1900 level after inflation cooled again and confirmed what everyone was already thinking the Fed would do going forward.  Gold has been steadily climbing since November, but it could be running out of momentum right now.  The dollar might be poised for a short-term rebound that could weigh gold down.  Gold needs to have a daily close above the $1900 level to pave the way for another move higher.  Bitcoin Bitcoin made a run towards the $18,500 level after inflation slowed for a sixth straight month.  The nearing of the end of Fed tightening gave risky assets an initial boost, but that is quickly fading away.  Bitcoin was unable to break the $18,500 barrier, which suggests price might remain trapped in the trading range that has been in place over the past couple of months.   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. Volatile session after another cool CPI report, Fed’s Harker/Collins support another downshift, Claims suggest labor still too strong, Oil rallies on weaker dollar, Gold tests $1900, Bitcoin nears $18,500 - MarketPulseMarketPulse

OANDA Senior Market Analyst Ed Moya reviews the latest market news with Jonny Hart. They discussed what the latest ISM says about both manufacturing activity and the labor market, why oil prices are struggling to start the New Year, and the latest news with cryptos. 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. Market Insights Podcast (Episode 415) - MarketPulseMarketPulse

Oil Oil is extending declines on concerns that China’s struggles with COVID are not going away anytime soon and as the global economic worries persist as central banks take rates into very restrictive territory. ​ Crude is not getting extra demand this winter as warm weather spans across the US and Europe. ​ ​ Despite all this oil price weakness, the technicals, specifically driven by the Biden administration’s intention to buy up crude at around the $70 level to refill the strategic petroleum reserve (SPR) should provide some key support. The demand outlook might be near rock bottom, which could suggest a strong reversal for oil could be right around the corner. ​ ​ Gold Gold is having a great start to the New Year. ​ Wall Street continues to pile into gold as global bond yields continue to slide and recessionary risks remain elevated. Many traders are growing confident that the end of the Fed’s tightening cycle is nearing and that rate cuts could happen at the end of the year. ​ Read next: Oil slides again, gold grooves on - MarketPulseMarketPulse Gold is eyeing the $1900 level, but for that to happen we’ll need to see the bond market rally remain in place a while longer. 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 slides again, gold grooves on - MarketPulseMarketPulse

US stocks were unable to hold onto earlier gains as restrictive policy and recession fears remained front and center for investors. Discount buying triggered another bear market rebound that didn’t last long at all. It is too early to start betting on a Fed pivot this year and that should make this a difficult environment for stocks. China China’s reopening and bets that PBOC will cut rates in the first half of the year should help keep Chinese stocks supported. ​ After a couple of bad years, Wall Street is wondering if Chinese stocks could outperform if their Covid reopening continues without any major disruptions. ​ China still has to deal with a struggling property market, but hopefully, it will show signs of improving on more support measures. Tesla Demand woes are killing Tesla shares. ​ The fourth quarter update was very disappointing as they are struggling to deliver cars. ​ Tesla is battling rising competition, a weakening consumer, and lower gas prices. ​ Tesla might be a long-term hold for many investors, but right now it seems the path of least resistance is lower for Tesla’s stock price. Bitcoin Happy Birthday, Bitcoin! It should come as no surprise that this teenager of an asset class has constant mood swings. ​ Much attention is going to Sam Bankman-Fried’s day in court which is expected to have him plead not guilty to an eight-count fraud and conspiracy indictment. Read next: 2023 Predictions: Peter Garnry - Our target for S&P 500 is still around the 3,200 level sometime during the year leading to an overall drawdown of around 33% from the peak in early 2022 | FXMAG.COM This is still a difficult time for crypto as everyone waits to see which will be the next crypto company to fail. ​ Regulation is taking its time but guidelines should start to take hold this year. ​ A top US regulator delivered a joint warning on crypto activities, which did not contain any new risks. ​ Bitcoin appears anchored but it is still not clear when we will test and possibly make a new bottom. 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 Oil prices are tumbling as risk aversion sends the dollar higher and dampens expectations that the crude demand outlook will improve anytime soon. ​ China’s reopening has too many question marks as hospitals are overwhelmed and medical supplies run low. Crude prices could struggle here as a strong dollar could be here to stay as investors can’t pass up the yield they are getting in fixed income. ​ Manufacturing activity globally mostly appears to be stuck in contraction territory and that might not improve until the end of the quarter. Gold Gold is riding a nice wave of falling Treasury yields, safe-haven flows as recession risks rise, and an improving outlook for jewelry demand across China and India. ​ Gold should have a strong start to the New Year as much of Wall Street goes defensive. ​ The precious metal should see strong inflows as stock market sellers appear to be clearly in control. Read next: 2023 Predictions: Peter Garnry - Our target for S&P 500 is still around the 3,200 level sometime during the year leading to an overall drawdown of around 33% from the peak in early 2022 | FXMAG.COM Inflation might prove to be harder to bring down and that should keep the risks elevated that the recession that hits the US economy could be harsher than what most are anticipating. ​ The Fed will remain loud and clear that a lot of work remains to bring down inflation. Gold has massive resistance at the $1900 level, but it could be tested by the end of the quarter. ​ 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 struggles, gold’s great start - MarketPulseMarketPulse

US Thin trading conditions could persist as much of Wall Street will be taking off this week. While trading volumes might be lower it will be a week filled with lots of economic readings.  There will be no earnings and no Fed speak. On Monday, US markets will be closed to observe the Christmas holiday.  Tuesday contains several economic releases that are expected to show the economy is weakening.  Wholesale inventories in November are expected to increase at a slower pace, both the October readings for the FHFA house price index and S&P Corelogic Case-Shiller releases will show the housing market continues to weaken.  The Dallas Fed Manufacturing Activity report could show business activity remains depressed.  On Wednesday, the December Richmond Fed Manufacturing index is expected to continue its downtrend, while November pending home sales weaken.  Thursday contains both weekly initial jobless claims and the MNI Chicago PMI reading that might show a rebound. EU There are no releases out of Germany. Spain will release retail sales and CPI. UK Strike action continues to dominate UK headlines over the festive period. On Friday, the Nationwide House Price Survey should show the housing market is in bad shape. Russia There are a host of events from Russia next week. With the Ukraine war and Western sanctions draining the Russian economy, the CPI and GDP releases will be of particular interest. Russia will also release industrial production and unemployment. South Africa Money supply and trade data will be released. China The focus will remain on China’s reopening and over how this COVID surge tests their health systems.  In addition to China’s reopening, traders will pay close attention to how much further China’s PMIs drop into contraction territory. A significant drop with these upcoming economic readings will bolster the case for the PBOC to cut rates next quarter. India India will release the November fiscal deficit data and the eight core industries overall growth rate. Australia & New Zealand It is expected to be a quiet week for both Australia and New Zealand. Japan The Bank of Japan stole the show last week, as it widened the yield curve from 25 to 50 basis point and sent the yen soaring. The move was completely unexpected as the markets hadn’t anticipated any major policy moves before Governor Kuroda ends his term in April. The BoJ will release the Summary of Opinions from the meeting during the week, which will give investors the opportunity to read the details of the dramatic meeting. Japan will also release unemployment and retail sales and industrial production. Singapore On Friday, the release of Singapore’s money supply data will be released. Markets Energy Energy traders will pay close attention to the arctic blast that could impact US refineries. Crude flows could see significant disruptions as Lyondell Houston Refinery and Exxon Beaumont reportedly are having issues. A close eye will be kept on Russia now that they have signaled they could cut oil output by 5-7%. Lower production from Russia and if US supplies go offline, oil could continue to rise. Gold Gold hovers around the $1800 as Wall Street becomes more confident that disinflation trends will continue.  Another round of economic data is painting a picture that consumers and businesses are weakening and that should help keep pricing pressures coming down.  The economy is still recession bound and if inflation continues to cool, gold demand should improve in the New Year. Cryptos Bitcoin looks like it might be finding a home between the $16,000 and $17,000 zone. The Crypto industry has been rather constructive over Core Scientific’s bankruptcy, but investors still remain stuck in wait-and-see mode to see if any other major collapses occur. Monday, Dec. 26 Economic Events: BOJ Governor Kuroda speaks at the Keidanren Councillors meeting. Christmas Day holidays are observed in the US and Europe (no stock or bond trading).   Tuesday, Dec. 27 Economic Data/Events: China industrial profits Japan unemployment, retail sales Mexico international reserves US wholesale inventories Norway retail sales Finland confidence UK markets closed Wednesday, Dec. 28 Economic Data/Events: Japan industrial production Mexico unemployment Russia industrial production, unemployment Switzerland Credit Suisse survey expectations Sweden trade, household lending BOJ Summary of Opinions Thursday, Dec. 29 Economic Data/Events: US initial jobless claims Hong Kong trade Thailand trade South Korea industrial production Spain retail sales Finland house prices ECB publishes Economic Bulletin. US Census Bureau releases annual projection of the nation’s population. Italian PM Meloni expected to speak Bank of Portugal releases data on banking system Friday, Dec. 30 Economic Data/Events: US bond market closes early at 2pm EST Russia CPI, GDP Spain CPI Spain inflation preliminary Portugal inflation preliminary 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 - Happy Holidays! - MarketPulseMarketPulse

US stocks pared earlier losses as traders digest a wide range of mixed economic data that overall supports the story that inflation is coming down.  Wall Street had a tale of two rounds of economic readings.  The first wave, before the opening bell showed CAPEX is weakening and softer consumer demand.  The second round of data was rather upbeat as consumer sentiment improved and inflation expectations dropped even further.  New Home Sales also unexpectedly improved, but no one is betting that the bottom is in place.  US Data Disinflation trends are firmly in place after durable goods orders slumped and as personal spending softened.  Demand destruction should only continue and that will be well received by the inflation fighting Fed.  The preliminary November look at durable goods orders fell 2.1%, a bigger decline than the eyed 1% drop, and much worse than the downwardly revised 0.7% prior reading.  Core capital goods still have plenty of room to soften and that should be more noticeable in the coming months. Last month’s personal income rose by 0.4% and spending softened to 0.1%.  The Final look at the University Michigan sentiment showed inflation expectations were revised lower.  The 1-year inflation expectations fell from 3.0% to 2.9%, reaching the lowest levels since June 2021. The Fed’s tightening path is getting vindicated here as the narrative that personal and business spending will continue to slow appears to be firmly in place. Oil Crude prices are rallying after Russia threatened to cut oil output up to 7% over the price cap that has been put in place.  Thin trading conditions are quickly approaching but some traders are giving the oil market a lot of attention.  The oil market is vulnerable to a couple of shocks that could keep the recent rebound going into the New Year.  China’s Covid reopening is a big question mark, but it seems they will keep moving forward with it despite the estimate that 37 million a day could get infected with this current surge.  Read next: Canadian inflation report was mixed but there is a strong likelihood that the BoC will raise rates by 25bp| FXMAG.COM Gold Gold hovers around the $1800 as Wall Street becomes more confident that disinflation trends will continue.  Another round of economic data is painting a picture that consumers and businesses are weakening and that should help keep pricing pressures coming down.  The economy is still recession bound and if inflation continues to cool, gold demand should improve in the New Year.  Crypto A positive story in the crypto space is the court approval of a $37.5 million bankruptcy loan for Bitcoin miner Core Scientific.  The crypto miner shares are poised to rally which shows you that investors believe in the restructuring support agreement and are still willing to invest in some of the distressed parts of the cryptoverse.    Bitcoin looks like it might be finding a home between the $16,000 and $17,000 zone.  Stocks are heading lower and Bitcoin is somewhat stable today.  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: Mixed Economic Data keeps stocks volatile, Oil rallies as Russia hints at output cut, Gold rallies, Cryptos edge higher - MarketPulseMarketPulse

The Grinch selloff is firmly in place after Micron delivered a gloomy outlook and as better-than-expected US economic data supported the Fed’s case for more ongoing rate increases. Global coordinated central bank tightening has yet to fully impact most of the economic readings for the major economies and that should have investors nervous over ​ earnings downgrades and credit risks. US data Following another round of economic data, the US economy doesn’t look like it wants to head into a recession anytime soon. Jobless claims did not rise as much economists were expecting. Initial jobless claims rose slightly to 216,000, a beat of the 222,000 estimate.  Continuing claims remain anchored around 1.67 million.  This round of readings have a heavy seasonal impact so post holidays, claims should start to rise. The final Q3 GDP readings were rather surprisingly strong.  Q3 GDP finished at 3.2%, while personal consumption improved to 2.3%, core PCE ticked higher. Wall Street still is pricing in one more rate hike at the February FOMC meeting, but if the data does not break, a March hike should start to get priced in. Earnings Micron’s earnings did not provide any optimism for the chip sector as they struggle with an inventory glut that will make it difficult for them to be profitable.  Micron’s results were soft and the guidance was not impressive.  The largest US maker of memory chips posted revenue in Q1 at $4.09 billion, a miss from the $4.13 billion consensus estimate.  Micron struggles and outlook forced them to make the announcement that they will lower headcount by about 10% next year. Oil Crude prices are wavering as it’s been quiet on the macro front.  Energy traders seem to be ready for the holidays as we are not really seeing any exciting moves.  Since easing lockdown restrictions, China’s COVID cases and deaths are not significantly rising but many are questioning the reporting.  The oil market’s biggest wildcard is China and optimism is still strong that the reopening will continue and eventually lead to more demand for crude. OPEC+ should have an easy job over the next couple of months as they remain nimble and ready to adapt to whatever the trajectory appears to be for crude demand. Read next: The GBP/USD Pair Is Trading Just Above 1.20, The Australian Dollar Is The Strongest Today| FXMAG.COM WTI crude appears to have a floor at the $70 level and initial resistance at the $80 level, with major resistance at the $83.50 region. Gold Gold prices are tumbling as the dollar catches a bid after better-than-expected US economic data.  The risks of more Fed rate hikes remain on the table as it seems the US economy  was a little stronger in Q3 and as the labor market remains very tight. Gold’s rally was already running on fumes so this selloff today kickstarted on profit taking and momentum took care of the rest. Gold is vulnerable to further downward pressure but the $1780 level should provide some support if the $1800 level breaks. Cryptos The SEC continues to expand their investigation into the collapse of FTX.  Last night, charges were filed against Caroline Ellison, the former CEO of Alameda Research, and Zixiao Gary Wang, the former Chief Technology Officer of FTX Trading.  This is just the beginning of charges that will be filed to anyone that contributed to defrauding investors in FTX. Bitcoin and Ethereum are lower today as risk aversion runs wild across Wall Street.  Tech stocks are getting hit the hardest, thank you Micron, and that seems like it keeps pressure on all the interest-rate sensitive sectors. 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 Close: Bye-Bye Santa Rally, Grinch Selloff is here to stay, US Data, Micron Gloom, Oil wavers, Gold drops, Cryptos lower - MarketPulseMarketPulse

OANDA Senior Market Analyst Ed Moya reviews the latest market news with Jonny Hart. They discussed the surprisingly good earnings and reactions from Nike and FedEx, energy markets, and the latest news with cryptos.   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.

OANDA Senior Market Analyst Ed Moya reviews the latest market news with Jonny Hart. They discussed the Elon Musk’s Twitter poll, energy markets, and the latest news with cryptos.   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 stocks were unable to hold onto gains as recession worries run wild and as global bond yields surge higher after former Fed’s Dudley pushed back on expectations that the Fed will blink once the unemployment rate ​ starts to climb higher. Also supporting the move higher in yields was the surge with gilt yields as investors unload the holdings of UK debt ahead of the BOE’s January bond sales. ​ We might not get much of a Santa Claus stock market rally as Wall Street rushes to price in credit and earnings risks. ​ ​ Twitter Poll Tesla shares rallied after a Twitter Poll paved the way for Elon Musk to focus on what he does best, which is to dominate the Electric Vehicle space. Musk tweeted that he would abide by the results of his Twitter poll, which has many believing that he probably has a candidate in mind to run the troubled social media giant. ​ Overnight, Musk also tweeted, “No one wants the job who can actually keep Twitter alive. There is no successor.” ​ Tesla shareholders and probably Musk himself want someone new to deal with the running of Twitter. ​ IFO The German IFO survey provided optimism that the business climate is rebounding across almost all areas of both manufacturing and the service sector. ​ Trade improved significantly which is helping alleviate concerns that the eurozone’s largest economy was going to have a bad recession. ​ The headline IFO business climate improved to 88.6, stronger than the consensus estimate of 87.5 and the upwardly revised 86.4. ​ Expectations posted the biggest beat, rising from 80.2 to 83.2 and 1.2 points above forecasts. ​ ​ US Data The NAHB homebuilder sentiment extended its record decline as the housing market clearly remains stuck in recession territory. ​ The key housing gauge fell 2 points to 31, which when you avoid the pandemic low seen a couple of years ago, it was the lowest level seen since the summer of 2012. Expectations for the next six months showed their first improvement since April. High rates are only going to get higher and the consumer will weaken as we head towards a recession, but a bottom will likely get put in at some point next year. Oil Energy traders might be stuck in wait-and-see mode as there might not be a clear catalyst for the next major move with crude prices. ​ The oil demand outlook will be key for how high crude prices can go and that might struggle for clarity as we see mixed signals with China’s reopening. Earlier oil rose after the German IFO report showed the eurozone’s largest economy might not have that bad of a recession. ​ Gold Gold prices edged lower as global bond yields surged after former Fed’s Dudley told investors not to fight the Fed. Dudley sees the Fed firmly locked in a very hawkish stance and is pushing back on the idea that policymakers could cut rates at the end of next year. ​ Gold is still holding up relatively well this month and that could gain traction as investors position their portfolios a little more on the defensive side. ​ ​ ​ ​ Crypto It is no surprise that today’s big news involves Binance and what might be the end of a long journey for Voyager. Months ago, Voyager’s distressed assets were supposed to be bought by FTX, but then the collapse occurred. ​ Binance, who is still under tremendous scrutiny over how its operations are being run, reached a deal to buy Voyager Digital’s assets out of bankruptcy in a deal worth $1.022 billion. Binance might still be in the market to buy more distressed assets, which could also be viewed as an attempt to show some strength in their health given the massive redemptions that have been occurring. Bitcoin is following the broader markets and is down on the day. ​ 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. Musk out, German IFO survey, homebuilder sentiment, oil edges higher, gold wavers, cryptos lower - MarketPulseMarketPulse

US stocks are declining as investors can’t shake off all the hawkish rhetoric that came from central bankers this week and as the private sector clearly entered a strong downturn.  Monetary policy has quickly gotten restrictive now that the Fed has raised rates by 400 basis points in 9 months.  Recession risks will only grow now that Powell has signaled that we should expect ‘ongoing increases’. Global bond yields are rising after central banks delivered another round of tightening and mostly signaled that more rate increases were coming.  The European flash PMIs showed the eurozone is stuck in contraction territory but the readings came in better-than-expected which could allow the ECB to remain aggressive with its rate hiking campaign.  US data The flash PMIs confirmed Wall Street’s fears that the economy is quickly headed towards a recession.  The S&P Global Flash Composite PMI report noted that “US private sector ends year in stronger downturn as demand weakness and price pressures bite.”   The services business activity index fell to a four-month low at 44.4.  The headline composite PMI reading fell more than expected to 44.6, matching the August reading. Manufacturing activity tumbled to 46.2 and made a 31-month low.  The slowdown is clearly in place and with rates now in restrictive territory, the data should continue to deteriorate early next year.  Goldman Goldman Sachs is considering cutting as many as 4,000 jobs, which would be 8% of its employees, as they struggle to hit profitability goals.  This is big news as Goldman is one of the first big companies to consider layoffs that are not in the tech, real estate, or interest rate sensitive sectors.  Goldman has been on a hiring spree, so this announcement should be taken with a grain of salt. If we continue to see other companies in other industries announce job cuts, that could provide some relief with wage pressures.  Read next: Adobe Earnings For The Fiscal Fourth Quarter Was Strong, Changes In Loyalty Programs Of American Airlines| FXMAG.COM Oil Crude prices are declining as recession fears grow and over uncertainty on how smooth China’s reopening will be given the surge in COVID cases they are experiencing. The short-term crude demand outlook is a big question mark as China might struggle to ease covid curbs all the way and as global manufacturing activity widely remains in contraction territory.  Oil might struggle to rally unless we see a disruption with crude supplies as energy traders fixate over deteriorating growth outlooks globally.      Gold Gold prices are poised to finish this week lower after central banks showed they plan on remaining aggressive with combating inflation.  Recession fears are only growing from here on out and right now that is not triggering ETF purchases.  It seems bullion traders won’t have the greenlight to buy gold until they are confident that the peak in yields is in place. Eventually, Wall Street will feel confident that the Fed is ready to hold and that might be when gold will be able to resume its role as a safe-haven.  As trading volumes ease into year end, gold might find itself stuck in a range that could see $1750 as support and $1830 as major resistance.  Cryptos Cryptos are broadly lower as the bullseye gets bigger on Binance’s back.  The big news in the cryptoverse is that Mazars Group has ended all work with crypto clients that include Binance, KuCoin and Crypto.com.  Mazars Group was supposed to show the audits for these major exchanges and provide clarity if all their proof or reserves are in order and backed 1:1. Now they’ve removed all the documents, but this may just be a decision to distance themselves if anything happens to any of those exchanges.  Bitcoin is declining as risk aversion runs wild on recession fears and on growing concerns that another crypto exchange could be at risk of massive withdrawals.     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 Open: Stocks lower as economy weakens, US data, Goldman layoffs, Oil slumps, Gold’s bad week, Crypto audits - MarketPulseMarketPulse

US stocks tumbled after the Fed downshifted to a half-point rate hike pace but signaled ‘ongoing increases’ will be appropriate to combat inflation. Risk aversion roared back and that helped the dollar pare earlier losses. FOMC The Fed delivered a well-telegraphed half-point rate rise to its short-term borrowing rate, bringing the target range to 4.25%-4.50%.  The Fed’s statement and projections was hawkish as the Federal funds rate was seen reaching 5.1%, which was a half-point higher than the September forecast.  The dot plot has shifted higher as the Fed appears to be pushing back on the market’s expectation that they will eventually cut rates at the end of next year.  The Fed’s GDP forecast shows they are committed to lifting rates to combat inflation, which will make policy very restrictive.  The Fed did not welcome the disinflation trends that have just started to emerge and focused on robust job gains and elevated inflation. Any hopes of a soft landing disappeared as the Fed seems like they are committed to taking rates much higher. Airlines Delta remains confident that despite higher fares, demand should hold up next year.  CEO Bastian said, “Demand for air travel remains robust as we exit the year and Delta’s momentum is building.” Delta’s fourth quarter EPS guidance was $3.07-3.12, which was higher than the $2.89 consensus estimate. Revenue for the quarter was expected to come in between $45.5-45.6 billion, lower than the forecast of $45.94 billion.  Delta’s had two consecutive robust quarters but that won’t continue this quarter.  Bastian noted that December business travel is ‘off trend’ and other carriers have been more cautious with their respective outlooks.  Earlier this week, JetBlue noted holiday travel is shaping up worse than expected.   If oil prices surge here, airliners’ struggles could get much worse.  Oil Crude prices initially tumbled after a surprisingly massive headline draw.  The EIA crude oil report  showed stockpiles surged to the highest levels seen since March 2021.  The headline weekly number jumped to a 10.2 million barrels build, the consensus estimate was for a 3.4 million barrels to be withdrawn.  Energy traders will expect the next report to better reflect the impact of the Keystone Pipeline outage.  The Strategic Petroleum Reserve saw another 4.75 million barrels taken away, which was the biggest amount taken in nine weeks.  Both crude exports and imports were rather impressive. Crude exports rose by 25.8% to 4.3 million barrels, while imports increased by 14.2% to 6.9 million barrels. Despite the massive build, energy traders focuses EIA market forecast and potential bullish catalysts that include China’s reopening and possibly reduced output from Russia. Crude prices pared gains after a hawkish FOMC decision sent the dollar skyrocketing higher. The Fed’s dot plot suggests they are forecasting a mild recession which will weigh on crude demand over the next two years.  Gold Gold prices declined after the Fed signaled they plan to continue to raise rates next year.  Gold’s recent gains were mainly driven on hope that the Fed could be done with a last rate rise in February, but this FOMC decision shows that is not the case.  Gold is vulnerable to a tumble below the $1800 level because the Fed looks like it is set on taking policy to a very restrictive level.  Crypto Democratic Senator Warren is teaming up Republican Senator Marshall with the Digital Asset Anti-Money Laundering Act. This legislation doesn’t seem like it will get done with this Congress, but it gives everyone time to review it and form a strong consensus for getting more regulation done.  This Act will address some of the national security concerns as it requires crypto firms to play by the same rules that apply to banks and traditional firms.  Bitcoin pared gains after the Fed delivered a smaller rate rise than recent meetings but signaled that ‘ongoing increases’ are likely appropriate.  Cryptos are getting dragged down as the dollar rallies with the return of risk aversion.   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. Fed React: Stocks slump on Hawkish FOMC statement, Dollar pares losses, Delta, Oil rises, Gold down post-Fed, Cryptos pare gains - MarketPulseMarketPulse

US stocks embraced a very cool inflation report that supports the idea that the Fed could be done with hiking rates after the February FOMC meeting. ​ The Fed might not have to take rates to 5.00% or higher and that is surprising news for stock traders. ​ Fed tightening is looking like it will just need a half-point increase tomorrow and a 25bp increase in February. ​ The November inflation report showed inflation continues to ease. Core CPI had the smallest monthly increase in over a year, while food and energy prices cool quickly. ​ The big question remains wages and if the labor market will not weaken quickly enough. ​ If job gains soften towards the 50,000 level, that might be enough to get wage pressures under control. ​ CPI rose 7.1% in November compared to a year ago, which was lower than the 7.3% consensus estimate. ​ Core CPI improved from 6.3% to 6.0%, a tick better than forecasts. ​ On a monthly basis, CPI eased from 0.4% to 0.1%. ​ Inflation slowed across the board with the exception of the CPI core index. ​ Crypto To the amazement of many crypto watchers, Bitcoin continues to hold the $17,000 region. ​ Today, the focus was going to be on the House Panel probe on the FTX collapse, with Sam Bankman-Fried’s testimony. ​ Traders woke up to news that Sam Bankman-Fried was arrested in the Bahamas after U.S. files criminal charges. SBF is expected to be extradited to the US. The founder collapsed crypto exchange FTX is being charged with defrauding customers of $1.8 billion, concealing the relationship of FTX and Alameda Research and of using commingled customer funds. ​ Bitcoin extended its rally after a key pricing report showed the disinflation trend continues. ​ Treasury yields tumbled alongside the dollar, which is great news for cryptos. ​ Bitcoin is getting close to the $18,000 level and that rally could continue if risk appetite remains strong post-Fed. 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. CPI React: Stocks surge on cool inflation report, bitcoin nears $18k - MarketPulseMarketPulse

Oil Crude prices spiked higher after the Keystone Pipeline was shut after a leak in Nebraska. ​ Earlier, Tribeca Shipping Agency reported 19 oil tankers are still awaiting passage through Turkey’s Bosphorus Strait. ​ Today’s headlines appear to be only short-term negative for supplies but don’t change anything with the deteriorating crude demand outlook. ​ Read next: BMW Was Fined 30,000 Pounds By CMA, Google Wants To Become More Productive| FXMAG.COM The initial spike following the Keystone Pipeline leak news was short-lived but with prices so close to the $70 level, we might not see much more weakness. ​ The $70 level remains key for oil as that is where the Biden administration is expected to start to consider refilling the strategic petroleum reserve. ​ Gold Gold prices are flirting at the $1800 level as the dollar softens ahead of a key round of inflation data. ​ It starts on Friday with an expected deceleration with wholesale price gains and later that morning the University of Michigan inflation expectations that are expected to remain steady. ​ On Tuesday, we will get the November Inflation report that should indicate that price pressures continue to ease and on Wednesday we get the Fed. ​ The FOMC is expected to downshift to a half-point pace but traders will care to see what members have to say about the trend of inflation and where rates could peak. Gold looks like it will find a home around the $1800 level until we have better indications of the path of prices. Key resistance remains the $1830 level with decent support at the $1750 region. 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 pops on Keystone Pipeline leak, gold edges higher - MarketPulseMarketPulse

Oil Oil prices are rallying as OPEC+ has shown it is committed to keeping prices supported and on optimism China will continue to loosen Covid controls. ​ Risk appetite on Wall Street is fading away and that might prevent crude prices from pushing much higher right now. The fear that the US economy is headed towards a recession will be a drag on all the pent-up demand that will be released on the China reopening. ​ OPEC+ decided to keep their production cut target unchanged despite the Russian oil price cap. ​ Energy traders are waiting to see how Russia responds. ​ One official noted that Russia would supply crude oil to Pakistan at a discount. ​ The crude demand outlook will remain volatile, and concerns are growing that the economic downturn across Europe is about to get worst. ​ Saudi Aramco decreases its January oil prices for most of Europe. ​ WTI crude could be trying to form a trading range around the $80 to $85 barrel levels. ​ Gold Gold is weakening alongside surging Treasury yields as the service part of the US economy remains robust. The risk of more Fed tightening due to strong wage pressures is clearly not going away. ​ Gold has a nice run and investors will be quick to lock in profits if the bond market selloff accelerates. ​ What should help gold this week is that it is mostly a quiet week until PPI and University of Michigan inflation expectations. ​ Gold looks like it will consolidate below the $1800 level but a sustained move lower could require a fresh inflationary catalyst. ​ 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 post OPEC+/Russian price cap, gold tumbles - MarketPulseMarketPulse

Oil Crude prices rallied as hopes grow that China will continue to loosen their COVID rules and on expectations that OPEC+ will do whatever it takes to keep oil prices supported. ​ Energy traders are eagerly awaiting an OPEC+ decision that could see them keep output steady or deliver a small cut. If China didn’t signal a slight covid easy shift, the probability of a production cut would have been much greater. ​ Oil should find a range as we await the OPEC+ decision. ​ Key levels for WTI crude include major resistance at $84.55 and key support at the $81.20 level. ​ Read next: There Is A Chance That The RBA Will Again Raise Rates By 25bp| FXMAG.COM Gold Gold prices catapulted above the $1,800 level as inflation cooled and on hopes that the Fed could soon be done tightening. ​ Tactical traders continue to send the dollar lower and that is good news for bullion. Gold had strong resistance at $1800 and if it can hold that post-NFP, bullish momentum could be strong. ​ Leading labor indicators have been mixed but overall support a weaker pace of hiring. ​ Unless the nonfarm payroll report shows companies are clearly still in hiring mode, gold could remain in rally mode. ​ 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 as China eases covid rules, gold shines - MarketPulseMarketPulse

US stocks were unable to hold onto earlier gains as Wall Street digested a swathe of economic data that showed inflation is easing and the labor market is cooling. ​ It’s been a nice rally but no one wants to be aggressively bullish heading into the NFP report. Yesterday’s Fed Chair Powell speech was good news for risky assets as he focused on inflation coming down and that the economy is doing well. ​ The risks of overtightening have many expecting the Fed to end its tightening cycle early next year and that will continue if the labor market softens quickly. ​ Earlier, investors were looking for any signs to buy stocks after reports that China was getting ready to release new Covid guidelines. China is far from willing to completely relax its guidelines, but these next steps could help end protests. ​ ​ ​ ​ US data The Fed’s preferred inflation gauge grew 5% from a year ago, confirming the recent trend of falling pricing data points. ​ The closely watched ISM report fell into contraction territory, reaching the lowest levels since the pandemic recovery began. The ISM’s prices paid also dropped to the lowest levels since May 2020. ​ October personal income and spending data were rather strong but no one expects that to continue going forward. ​ The initial jobless claims headline reading showed the labor market is still strong. ​ First-time claims fell by 16,000 to 225,000, which was lower than expected and well below the highs seen in the summer. ​ Continuing claims was interesting as it jumped to 1.61 million, which is getting closer to the pre-pandemic average of 1.7 million. ​ The trends are clear for inflation, but the big question mark is if the labor market is going to have a broader slowdown. ​ Tomorrow’s NFP report will be important as it could move forward bets that inflation will continue to decline. ​ FX The BOJ’s Tamura made quite a first impression to fx traders. ​ Tamura helped send the yen lower after he noted, “It would be appropriate to conduct a review at the right time, including the monetary policy framework and inflation target.” ​ Currency traders are used to Japan always having ultra-loose policy but that seems like it will have to change in the new year. ​ Cryptos Cryptos are struggling today as the earlier rally faded ahead of NFPs and as concerns brew that Tether loans could be the next big risk for the cryptoverse. ​ Stablecoins are an important part of the crypto world and if one of the major ones break, that will send bitcoin and ethereum to new lows. ​ 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. Stocks volatile ahead of NFP, US Data, BOJ Tamura’s first impression, Tether loan concerns - MarketPulseMarketPulse

OANDA Senior Market Analyst Ed Moya reviews the latest market news with Jonny Hart. They discuss the upward revision for US Q3 GDP, crude’s rally that stemmed from China opening optimism, and crypto regulation expectations.   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. Market Insights Podcast (Episode 405) - MarketPulseMarketPulse

US stocks are entering a holding pattern ahead of Fed Chair Powell’s speech as some investors look for him to somewhat ease up on the hawkish rhetoric. ​ The economy is weakening and traders want to see the Fed Chair deliver a clear message that they will downshift their pace of tightening and are close to hitting the breaks. ​ No one wants to put on a major position before Powell and they probably won’t if he sticks to his script that the pace of hikes will slow but they still have more to do to bring inflation down. Wall Street is still rather pessimistic on stocks and many traders might focus on going defensive. ​ US Data Private payrolls showed job growth is slowing. ​ The November ADP payrolls report showed an increase of 127,000 jobs, down from the 239,000 prior reading and well below the 200,000 consensus estimate. ​ ADP Chief Economist Richardson noted, “our data suggest that Federal Reserve tightening is having an impact on job creation and pay gains.” Manufacturing jobs declined by 100,000, while leisure and hospitality jobs rose by 224,000.  ​The holiday factor could be driving some of these service sector jobs so the January report could be when we see a significant slowdown with hiring. ​ The second look at Q3 GDP showed upward revisions, but core growth is slowing and supporting the idea that inflation is weighing on both business and consumer spending. ​ The economy is still expected to have weakening economic data points going forward as the impact of Fed rate hikes starts to be felt. ​ A soft landing or a short and shallow recession still seems to be the favorite scenarios for how 2023 will be. ​ Bitcoin Bitcoin is higher as Wall Street enters a holding pattern ahead of Fed Chair Powell. ​ The news flow has been plentiful, mostly downbeat for cryptos but the focus is shifting on the future of crypto legislation. ​ Pressure is growing for some clear direction on how to put guidelines to avoid another FTX moment. ​ There will still be a lot more pain that comes from the FTX collapse but for now, that seems to be mostly priced in. Over the next couple of weeks, we should start to get an idea of how crypto legislation will look and that should ultimately be long-term positive for the cryptoverse, but it could put added strain on some struggling crypto companies or stablecoins. ​ 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. Stocks await Powell, US data, crypto focus shifts to legislation - MarketPulseMarketPulse

Oil Oil prices are rallying on China’s opening optimism and after another round of US economic data showed the economy is weakening but still far from a recession. ​ Energy traders are looking at the next week and see two potential bullish catalysts for oil prices; an OPEC+ decision that could easily justify lower output targets given China’s demand outlook and a Russian crude price cap that needs to be put in place; otherwise, a ban on Russian imports takes effect on December 5th. Read next: EU works on a price cap on Russian oil. According to Craig Erlam (Oanda) OPEC+ think of a production cut| FXMAG.COM US energy security advisor Hochstein reiterated that the US is considering increasing purchases once oil prices are consistently at the $70 range. He emphasized that the next week will be big for oil prices and that the US will closely be watching the OPEC+ meeting and what happens with the Russian crude price cap. ​ Oil is starting to get its groove back and it looks like both supply and demand drivers could turn bullish for crude here. ​ If China’s Covid rules are slowly eased and OPEC stays the course, crude prices could rally another 5-10% here. Gold Gold traders only care about one thing today and that is Fed Chair Powell’s speech. ​ This is a pivotal moment for gold as it is poised to have its best month since May 2021. ​ If China lifts more lockdowns, a risk rally should help keep gold prices supported, but first we need to see Fed Chair Powell allow markets to continue to expect a downshift in rate hikes next month and that they could pause their tightening soon after. ​ Gold should find strong resistance at the $1800 level but if Fed Chair Powell eases up on the hawkish rhetoric, it could make a run for the $1825 level. ​ If Powell sticks to the script and risk appetite stalls, gold could soften towards the $1750 level. 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

US stocks are rallying as Wall Street continues to expect the Fed to downshift their tightening pace next month and on optimism that the risk of a railroad strike fueling inflation is low. ​ The latest round of Fed speak did not teach us anything new. ​ The Fed’s Mester noted that long-term inflation expectations are reasonably anchored. ​ The labor market is a key concern for the Fed, and Mester also pointed out that labor demand is still outpacing supply. Recent trends however are showing the labor market is showing signs of cooling. ​ ​ Some investors are growing confident that the potential railroad strike might not be as troubling for inflation as the Railway Labor Act will prevent key interruptions. ​ ​ Some traders are looking ahead to the upcoming Minutes, but they are dated (before the cool October inflation report) and will likely show many Fed members have an unclear rate path as inflation is a tricky beast to slay. Read next: Gold could be in some way prevented from rallying by unstable COVID outlook| FXMAG.COM FX/Fixed income Risk appetite is making an appearance today and that is helping send the Treasury yields and the dollar lower. ​ The 10-year Treasury yield fell 4.3 basis points to 3.784%. ​ Cooling inflation drivers, mainly an overpriced weakening of China and the railroad strike impact, are helping drive the dollar down today. The dollar’s weakness might be limited as options markets are showing too many excessive bearish bets being placed by hedge funds and money managers. Best Buy Best Buy shares are rallying after they raised their holiday outlook. ​ This was a welcomed surprise from the retailer that many feared was going to see a weaker consumer refrain from purchasing new TVs, appliances, and other gadgets. It looks like Best Buy is not expecting a disappointing holiday season and that is positive news for other retailers. US Data The Richmond Fed’s regional surveys of business activity showed manufacturing activity continued to soften in November. The composite manufacturing index remained negative and shipment and employment deteriorated slightly. ​ The economy is clearly weakening here and inflation should continue to come down as wages and employment decline. ​ Price trends data was mixed as prices paid declined and prices received rose higher, but that was somewhat expected given the return of supply chain issues. China’s reopening will be key for inflation heading lower next year. Crypto Wall Street is mostly green today and that has provided a little boost for cryptos. ​ Bitcoin is back above the $16,000 level but still remains in the danger zone as everyone waits for the next crypto domino to fall. ​ It seems crypto traders are already pricing in a bankruptcy for crypto lender Genesis. ​ Contagion for FTX will impact many but it seems a fresh catalyst is needed for sellers to take control. Bitcoin could continue to stabilize here if Wall Street rebounds, but that seems unlikely as this bear market for stocks has yet to bottom out. ​ Bitcoin has support ahead of the $15,500 level but if that does not hold, technical selling could send prices toward the $13,500 region. ​ ​ 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. Stocks rise on downshift hopes, Dollar lower for now, Best Buy brings holiday cheer, US data, Gold rebound faded, Crypto benefits from Wall Street rally - MarketPulseMarketPulse

Oil Crude prices are still rebounding from yesterday’s Saudi denial that OPEC+ was considering an output increase. Oil is having a tug-of-war with China’s Covid demand concerns getting countered with what appears to be a motivated Saudi Arabia to keep the oil market tight. White House official Hochstein said that the US can still manage any energy emergency with the SPR. ​ He also noted that it will be opportunistic about refilling the SPR and that they could look to immediately repurchase oil when prices are in the $70 per barrel range. The recent oil price slide was overdone and given global economic activity excluding China won’t completely fall off a cliff, prices should continue to stabilize here. Read next: Craig Erlam calls effects of the FTX crash "uncovered". Saudi Arabia confirms OPEC+ won't increase output in December| FXMAG.COM Gold Gold got a little boost from the weaker dollar but that appears to be fading quickly. Gold should have a hard time rallying here as the dollar seems poised to find some support here. ​ The Fed is likely to stick to the hawkish script for a while and unless we see a major improvement in China’s COVID situation, gold should struggle to muster up a meaningful rally. 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 rebound, gold - MarketPulseMarketPulse

OANDA Senior Market Analyst Ed Moya reviews the latest market news with Jonny Hart. They discuss the trading conditions during World Cup games, China’s COVID situation, a potential rail strike in the US, and cryptos.   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 stocks are lower as the global growth picture takes a hit following key China Covid lockdowns and as the US economy could have to deal with a massive rail worker strike before the holidays. ​ Adding to the risk aversion tone are rising concerns that future Russian attacks on Ukraine’s nuclear power supply could be catastrophic. Wall Street is hesitant to buy up risk assets on this World Cup-filled and shortened holiday trading week as the first wave of headlines from Beijing to a rail union vote seem likely to further fuel inflationary pressures. ​ Trading activity could take a hit as many traders will enjoy focussing on the first round of games, but for now, it seems the pulse of Wall Street seems rather downbeat. Rail/Shipping The US economy is also in jeopardy of an unwanted supply-chain hit as rail workers appear poised to strike just before the holidays. After a key vote, it is looking less likely that we won’t see some possible work stoppages, which could prove to be terrible for economic activity and prove to be inflationary. If a deal is not reached early next month the hit to the economy could be over $2 billion a day. ​ China Risk appetite vanished after deputy director of Beijing’s municipal Centre for Disease Control and Prevention Xiaofeng said, “The city is facing its most complex and severe prevention and control situation since the outbreak of the coronavirus.” This Covid wave is troubling as it nears some of the more populous districts and that is forcing Beijing to tighten its rules. ​ China also reported three Covid deaths over the weekend, which are the first deaths reported since May. It seems the zero-COVID policy is not going away anytime soon and that will definitely weigh on global growth. ​ FX​The dollar’s rally ran out of steam just as England’s World Cup campaign kicked off with a great start. ​ The forex capital of the world, London, basically shut down for England’s impressive win against Iran. ​ China’s Covid struggles are driving strong safe-haven flows into the dollar. ​ The risks to the global outlook might not be as bad as they were a few months ago, but that doesn’t mean this dollar rebound can’t go on for a little longer. ​ The dollar might be able to remain strong here heading into the holiday weekend. Crypto The FTX aftermath continues and now everyone wants to know who are the unlucky creditors that will suffer big losses. According to court documents, it seems about $3.1 billion collectively is owed to one million creditors. Bankrupt Voyager Digital is also desperately trying to find a buyer and there is a lot of skepticism that Binance will not be able to get beyond all the hurdles that also include national security concerns. Given the downbeat mood on Wall Street it comes as no surprise Bitcoin is lower. ​ Bitcoin continues to stabilize above the $16,000 level despite a plethora of negative headlines. ​ It seems something major needs to break for the sellers to take out the November lows. ​ If the $15,500 level breaks for Bitcoin, there is not much support until the $13,500 level, followed by the psychological $10,000 level. ​ 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. Stocks lower on China and rail strike concerns, King dollar returns, bitcoin tries to hold onto $16k - MarketPulseMarketPulse

Oil Crude prices remain heavy as China continues to have setbacks with its COVID fight. The warnings from key Chinese officials are the primary driver behind oil’s current slump. ​ As we near the European Russian crude ban, it seems the physical markets are already showing most of the effects of those sanctions. ​ Europe has been quickly erasing its dependence on Russian crude and that will continue as we approach the oil price cap deadline. A potential rail strike could end up being very troubling for the weakening US economy. ​ Rail workers have till early December to reach a new contract agreement (or extend it again as they did for the midterm elections), but until they do this could weigh on the crude demand outlook as supply chain problems will lead to many delays. Oil is going to have trouble finding a floor with a deteriorating crude demand outlook for both world’s largest economies. ​ Until we get some positive news from either China or the US, the dollar will continue to rebound and crude’s path appears to be headed lower. Brent crude fell below the $85 level after reports that the Saudis were debating an OPEC+ increase in production as the Russian oil price cap nears. ​ Oil didn’t stand a chance today as both the supply and demand side headlines turned bearish. Gold Gold is heading lower this short Thanksgiving week as the king dollar trade makes a comeback. ​ Gold will only be a safe-haven trade if the dollar is in a defensive mode and that is not happening here. ​ Gold needs China’s Covid situation to improve before it can start to look attractive again for investors. ​ If the dollar rally turns excessive, gold could be vulnerable to a plunge towards the $1700 level. 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 crushed, gold stumbles - MarketPulseMarketPulse

US stocks are declining as the Fed sticks to the hawkish script that supports the idea that this economy is quickly heading towards a recession. ​ Equities extended declines after the latest round of Fed speak reminded us that policymakers could remain very hawkish, despite a downshift to a half-point pace in December. ​Fed’s Bullard noted that the policy rate is not yet ‘sufficiently restrictive’. ​ He also highlighted a dovish scenario that could take the funds rate to 5% and a hawkish rate at 7%. Bullard said, he’s targeting a minimum of another 125 basis points in rate hikes, which would bring the target range to 5.00-5.25%. ​ Fed’s George said, “I’m looking at a labor market that is so tight, I don’t know how you continue to bring this level of inflation down without having some real slowing, and maybe we even have contraction in the economy to get there.” If we still have millions of job openings and inflation above rates, the Fed may need to continue hiking beyond February. ​ ​ This bear market rally is coming to an end as this economy is about to feel the real impact of restrictive territory. The latest round of economic data complicates the Fed’s tightening path as the labor market is slowly softening and as the housing market is in a recession. ​ US data Weekly jobless claims edged lower despite what feels like a couple of weeks of significant job loss announcements. ​ Initial jobless claims fell from a revised 226,000 to 222,000 in the week ending November 12th. ​ Continuing claims rose to 1.507 million but is still below the pre-pandemic average of 1.7 million. The job market is going to weaken, but the longer it takes, the greater the risks that we might see more Fed tightening. ​ The Philadelphia Fed business outlook crumbled in November. ​ The headline manufacturing activity reading plunged to -19.4, worse than the estimate of a decline of 6. ​ The employment component showed a significant drop from 28.5 to 7.1. ​ This part of the economy is clearly weakening, but firms continue to report overall price increases. ​ ​ The housing market correction continues and is approaching a bottom. ​ Both starts and permits continue to decline as borrowing costs skyrocket, inventory levels are growing, and the typical single-family home purchaser is much weaker as inflation runs wild. ​ Crypto Cryptos are weakening as risk appetite just left the building. ​ Today’s weakness is mainly attributed to exhaustion with the bear market rally that has powered stocks. ​ There is no shortage of news across crypto markets and a lot of it is speculative. We will be talking a lot about FTX for months to come but what will drive the cryptos is if Binance, Coinbase, Lbank, or Consbit have any liquidity crunches. A lot of bad news has been priced in so it might take another downfall of a major crypto company or a de-risking movement on Wall Street to take bitcoin below its recent low. ​ 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. Fed speak kills risk appetite, stocks decline, US data, cryptos weaken - MarketPulseMarketPulse

Oil Oil prices are getting punished as crude demand concerns show no signs of easing. ​ The world’s two largest economies are struggling here as China battles COVID and the US is seeing a significant drop in manufacturing activity.  China’s new case total rose above 23,000, which is the highest level since April and is approaching its record high. ​ Fears are growing that the spread won’t ease soon as cases have spread across populous regions of Guangzhou and Chongqing. ​ Some of the geopolitical risk that sent oil higher earlier this week is coming off the table. With no immediate escalation in the war in Ukraine, we could see energy traders fixate on the Russian crude price cap that takes hold early next month. Read next: NVIDIA (NVDA) Q3 earnings results outperformed part of the markets forecasts| FXMAG.COM ​ ​ ​ Inventory levels remain a key concern for the oil market so we might see limited downside from here. Gold Gold prices got beat up after a round of hawkish Fed speak reminded investors that the risks of the Fed taking rates above 5% are clearly there. ​ Fed’s Bullard’s comment that the policy rate is not yet ‘sufficiently restrictive’ is a big reminder that we need to see the labor market weaken significantly before we can price in the end of its tightening cycle. ​ A top has been put in place with gold and prices could soften towards the $1750 level. ​ ​ ​ 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 lower on demand woes, gold slumps - MarketPulseMarketPulse

Bond yields marched higher after Fed’s Waller said the Fed has ‘a ways to go’ before pausing their rate hiking cycle. ​ US stocks are declining after the latest Fed speak pushes back on the idea that the Fed is almost done hiking and after President Biden and Xi’s first in-person meeting delivered the standard rhetoric about avoiding a cold war. Obviously, this is just the beginning and the restart of talks between the world’s two largest economies, but it seems unlikely that we will see both sides cooperating anytime soon. ​ Whether or not things take a turn for the better or worse will hinge on Secretary of State Blinken’s trip to China. ​ Fed Fed’s Waller did his best to convince markets that rates will ‘keep going up’ despite prices cooling a lot faster than expected. The Fed’s mission is to push back on the market’s expectations that rates will get cut at the end of next year. ​ They want this round of hikes to not lose any effectiveness and we should anticipate that most Fed members will stick to the hawkish script this week. ​ Fed’s Brainard, who is clearly not on the hawkish side, noted that the Fed will probably ‘soon’ slow the pace of rate hikes. â€‹ Brainard noted that the inflation data was reassuring preliminary. â€‹ The Fed can’t afford to deliver any strong dovish hints as that will make their tightening of rates less effective with their battle against inflation. â€‹ Crypto Cryptocurrency traders are still saying What-the-FTX is happening? ​ Bitcoin and ethereum are hanging onto any broader risk appetite for dear life. A decent crypto rebound was forming but the rise in bond yields is seeing that earlier rally fade. ​ Much of the attention remains on FTX and Binance. â€‹ Binance is trying to create some buffers to help the industry in case it gets ugly again. â€‹ Binance CEO Zhao tweeted, “Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis.” Cryptos rallied on Zhao’s tweet but it seems like an uphill battle on getting this fund up, especially considering all the scrutiny and eventual regulatory gauntlets that are coming to every major crypto exchange. ​ Fed’s Waller reminded traders that the United States is nowhere near developing an official digital version of the dollar. Waller’s pessimistic outlook for the digital dollar suggests cryptos should still have years before the government can reach agreement on how to turn their fiat digital. The rebound in crypto is looking as strong as the recent push higher with stocks. â€‹ Too much of Wall Street is turning defensive and that might make it difficult for some traders to test the crypto waters just yet. â€‹ 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. Yields rise on Fed speak, stocks edge lower, what-the-FTX is happening with cryptos? - MarketPulseMarketPulse

Oil Crude prices softened but didn’t break as energy traders await how supplies will be disrupted when the Russian crude price cap begins early next month. ​ Today’s oil price weakness was mainly attributed to a weakening short-term demand outlook by OPEC and nervousness that the Fed could still remain aggressive with raising rates. Warmer weather across Europe has been good news for natural gas prices and that has removed some of the extra demand that was expected to come crude oil’s way. ​ The warm weather however is about to go away and that could keep energy prices rising going forward. ​ ​ ​ Gold Gold’s rally appears to be running out of steam. ​ The Fed remains the key driver for gold prices and this week could see a strong round of hawkish pushback from the policymakers. The Fed’s Waller kicked off the week with some hawkish talk that reminded traders we need to see a couple of more strong drops with inflation to say policymakers can pause. ​ Gold appears to have strong resistance at the $1800 level, with decent support at the $1750 region. ​ 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 weakens, gold rally losing steam - MarketPulseMarketPulse

This inflation report was a nice surprise. ​ Inflation has been very slow to come down, but this report gives up hope that this deceleration with pricing pressures might bring back hopes of a soft landing. The headline reading came in lower-than-expected, but most traders were focused with the month-over-month decline with core prices. ​ If this downward trajectory for inflation holds, then you can make a strong case that the bottom is in place for US equities. US stocks are rallying as Wall Street finally sees light at the end of the Fed’s tightening cycle tunnel. ​ This cool inflation report helped stocks post their best trading day in two years. ​ Treasury yields are in freefall, the dollar is tanking, and practically every risky asset is rejoicing over this inflation report. ​ ​ Inflation ​ ​ ​  Inflation has peaked but don’t hold your breath waiting for it to get to target. Inflation is cooling after the core reading only posted a 0.3% monthly increase. ​ The headline reading dropped more than expected to 7.7% from a year ago, which is noticeably better than the peak reading from June of 9.1%. Inflation almost always proves to be stickier, so traders should not be surprised if the descent in pricing pressures takes a little while longer. Good prices have been coming down and that was supported by lower readings from cars, apparel, and energy services. ​ Wall Street is closely watching shelter prices, which rose 0.8%, the most since 1990. ​ There was some optimism with housing affordability as the monthly gains slowed for rents. ​ Shelter prices always take the longest to come down, so investors will expect this key contributor to core PCE to remain hot for another quarter. ​ This inflation was a good sign that the Fed is on the right path to winning this war with inflation, but there will still be a lot of variables thrown its way over the next couple of quarters. ​ The Fed could easily bring rates to 5.00% and if inflation proves to be stickier, it could be as high as 5.50%. ​ FX King dollar has left the building after a soft inflation report cemented the Fed’s downshift to a slower pace of tightening and revived hopes of a soft landing. The price reaction to this inflation report was a bit excessive but could be justified if the next couple of inflation reports are just as cool. ​ ​ ​ ​ Cryptos A dark crypto period was supposed to begin following the FTX debacle, but a cooler-than-expected inflation report gave every risky asset a massive boost. ​ FTX contagion risks remain elevated and while today’s broad-based crypto rally is rather impressive with bitcoin rising over 10% and ethereum surging by 16%, investment into cryptocurrencies will likely struggle here as too many key institutional investors and crypto companies have money tied up with the bankruptcy bound exchange. ​ Until we see which players were impacted by FTX and if we see other exchanges vulnerable to a liquidity crunch, any crypto rebound might be faded. More details about the actions of FTX will lead to harsher regulatory guidelines for all crypto exchanges. ​ Reportedly FTX used customer assets for risky trades, which means it seems unlikely anyone will want to rescue this company. ​ ​ ​ 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 cools, stocks post best day in two years, bye-bye king dollar, FTX debacle, cryptos rally on soft CPI - MarketPulseMarketPulse

Oil Crude prices were heavy early as concerns grew over China’s COVID situation. ​ Energy traders were quick to jump back on the oil trade after a cool inflation report brought hopes back to life that the US economy could still have a soft landing. ​ The inflation report showed fuel oil prices surged 19.8% before the cold weather arrives. ​ The oil market is going to remain very tight this winter and that should keep oil prices heading higher. ​ Gold surges as US inflation dips Gold prices are surging after a cool inflation report has made markets confident that the Fed can downshift to a  half-point-rate-hiking pace and possibly be done with tightening after the March FOMC meeting. ​ It looks like the dollar died today and chaos in crypto has made good ol’ gold very attractive again. ​ Gold is breaking out here and it could have a steady path towards the $1800 level if dollar weakness remains. 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 higher, gold skyrockets - MarketPulseMarketPulse

Oil edges lower  Crude prices edged lower after as China continues to struggle with COVID. Bets that China will reopen soon are losing momentum as cases jumped in Guangzhou and other key Chinese cities. ​ Brent crude is still close to the $100 a barrel level for now and it seems short-term risks to supplies have traders looking for a bullish move higher. ​ Gold powers higher Gold had a great day as the dollar tumbled ahead of the midterm elections and a pivotal inflation report. ​ The weakness in the dollar was more of a short-covering move and potentially on hopes that later this week we will have confirmation that inflation is headed lower. ​ Gold looks like it could be breaking out now and it will just need the macro backdrop to support the move higher. ​ Gold’s rally above the $1700 was impressive as it comes before any exit polling data and well ahead of Thursday’s inflation report. ​ Gold should find major resistance ahead of the $1750 level and that might prove to be difficult to reach before this week’s CPI 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 lower on China concerns, gold pops - MarketPulseMarketPulse

US stocks rallied as Americans head to the polls in what is expected to be an election that gives Republicans control of the House. ​ It might take longer than election night to get a final conclusion on the Senate. ​ The Senate is up for grabs as there are five races (Georgia, Pennsylvania, Wisconsin, Nevada, and Arizona) that polls suggest are a toss-up. There is a chance that we won’t find out the Senate result for weeks if the Georgia seat requires a runoff election. ​ ​ ​ 43 million Americans voted early and today’s turnout is expected to be strong as a plethora of issues are motivating Americans to cast their ballot. We might not get all the results tonight but it seems Republicans have a very good shot at gaining control of the House and that could be confirmed early tomorrow morning. At the Save America rally in Vandalia, Ohio, former President Trump announced he will be making a “big announcement” on November 15th. â€‹ It is widely expected that he will launch his 2024 presidential campaign. â€‹ A number of prominent Republicans do not support another Trump ticket, with many preferring Florida Governor Ron DeSantis. ​ It is a long time before Republicans have their candidate but regardless if it is Trump or Desantis, it seems they have a good chance in 2024. ​ ​ FX The dollar got crushed today as a short-covering move accelerated as investors embraced risk appetite ahead of the midterm elections and Thursday’s pivotal inflation report. â€‹ ​ The dollar fell to a six-week low as Treasury yields declined. â€‹ Cryptos take a tumble Cryptos are tumbling after a liquidity crunch for FTX led to their sale to a top competitor. ​ Today is a bad day in crypto. ​ Binance had to step in to save Sam Bankman-Fried’s FTX crypto exchange. ​ SBF has been the white night during this crypto winter and a liquidity crunch for him has triggered a wave of uneasiness across the cryptoverse. ​ Binance will buy FTX.com, which is the non-US unit that generates the lion’s share of revenue. ​ Financial terms were not disclosed. ​ This is a major setback for many investors in cryptos who viewed SBF as a white knight and one of the leaders in the space that was supposed to thrive once we got beyond this crypto winter. ​ Many crypto companies will likely be vulnerable to further selling pressure here given the current macro backdrop but that probably won’t deter a lot of the institutional money that is still coming in or is locked into 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. Election Day, stocks rally, dollar short-covering, cryptos down on Binance rescue of FTX - MarketPulseMarketPulse

US stocks edged higher as Wall Street awaits both the midterm elections which could bring an end to President Biden’s blue wave and a pivotal inflation report. Tuesday’s US midterm elections could be market-moving if we see a Democratic surprise or if Republicans dominate the polls, but most traders are zeroing in on Thursday’s inflation report. ​ It is still all about inflation and while this report might not be as hot as the last few, it still should show that rents and the core-service sector part of the economy are still hot. Inflation might not fall as quickly as some Fed members are expecting and that could support the idea that rates will stay higher for longer. ​ ​ ​ ​ All eyes on midterms  The Democratic lock on Congress is likely coming to an end. ​ A divided government means we won’t be seeing a big fiscal stimulus response next year when the economy is in a recession. The official results might take a little while longer to come in but we should have a good picture on election night. ​ Republicans need just five seats to take back that House and most polls suggest that should not be difficult. ​ ​ The Senate is where it gets interesting. ​ A close election in Georgia could end up triggering a runoff election, while Nevada’s election is viewed as a tossup. ​ The Democrats are trying to defend Senate seats in Arizona, and New Hampshire, while Republicans want to keep their seat in Pennsylvania. The reason investors are so fixated with this week’s inflation data instead of the midterm election is that it seems highly likely the Republicans will win one of the chambers this week. Even if the Republicans win both the House and Senate, the bullish reaction for risky assets might be short-lived. ​ ​ A Republican sweep this week would confirm that won’t see a major fiscal response from the Biden administration once the economy falls into a recession. What will also weigh on markets is that a Republican sweep increases the odds that next year’s debt ceiling talks could get ugly very quickly. Crypto Bitcoin was unable to push higher as risk appetite quickly faded this morning. ​ It seems bitcoin is still set on being a risky asset and that means it might struggle to do anything before we get past both the midterm elections and inflation report. ​ Bitcoin should still find a home above the $20,000 level post-midterms as long as we don’t get a Democratic surprise. A Republican sweep could support a push above the $21,000 level for bitcoin but that might not last until the latest inflation 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. Midterms matter; all about CPI, bitcoin rally stalls - MarketPulseMarketPulse

It’s been a relatively lackluster start to the trading week, following the one previous that was anything but. There’s no doubt that the last seven days have left investors with plenty to work out and the jobs report on Friday yielded a response in the markets which probably sums up how confused investors appear right now. It was another hot report with little in it to suggest we’re seeing cracks appearing that will deliver the slack that the Fed thinks it needs. Trade around the report was volatile, clearly, with the final view seeming very positive. I’m not sure how sustainable that is under the circumstances, especially considering the response to the Fed two days earlier. But again, perhaps that’s a sign of where things stand. After the Fed, I thought the markets were too negative. The focus on where rates could rise to overshadowed the fact that the pace is likely to slow, buying time for the data to deliver what the Fed needs to warrant doing so more. But that jobs report on Friday does not fall into that category so I think confused probably sums up where markets stand now and how today has started. Read next: Facebook’s plan for large scale layoffs, the US dollar rally halted on Monday, Corporate America under investigation| FXMAG.COM Which brings us to the inflation report on Thursday and what that could do for sentiment as we move toward the end of the year. It is one of two inflation reports before the next meeting but you have to think we need two good readings for the Fed to scale back its expectations and give markets the festive cheer they so clearly want. Until then, more choppy and confused trade may be what we get. Bitcoin rally stalls Bitcoin did well following Friday’s jobs report but it has stalled since, even gone into reverse today after struggling around $21,500 over the weekend. If sentiment can hold up in broader financial markets, that should be a big positive for bitcoin which could be eyeing up a run toward the September highs, maybe even the August peak. As ever, there’s a lot of uncertainty around this, perhaps more so now. The inflation report on Thursday could lay the foundation for the next big move in financial markets, with a lower reading potentially boosting sentiment in the weeks that 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. A choppy start to the week - MarketPulseMarketPulse

Jonny Hart looks back on the week’s business and markets news with OANDA Senior Market Analyst Ed Moya in New York.  This week they talk about another hot jobs report, the FOMC decision, and crypto resilience.  They also discuss what the week ahead has in store for financial markets. 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. Market Insights Podcast (Episode 394) - MarketPulseMarketPulse

US stocks went on a rollercoaster ride after another strong labor report. Stocks are rallying as Wall Street believes the Fed is on the right to bring inflation down. This nonfarm payrolls report was mostly hot; a strong headline number, upward revisions, and further wage growth. ​ What was surprising was the jump higher with the unemployment rate, but when you factor in we had a surprise drop in September, it doesn’t look so significant. There are a lot of signs that support the labor market will continue to soften here. ​ Service sector hiring has some cracks and that should weaken going forward. This labor report allows Fed Chair Powell to stick to the hawkish script for a while and still support the idea of a downshift in tightening for the next policy meeting. Unless next week’s inflation report is a scorcher, the Fed will opt for a slower rate pace of rate increases. ​ ​ ​ ​ NFP The labor market is slowly weakening here. ​ An impressive NFP headline of 261,000 jobs created in October was also accompanied by an increase in the unemployment rate from 3.5% to 3.7%. ​ Wage growth did not ease up at all and that should keep the Fed rhetoric remaining hawkish. The economy is just starting to feel the Fed’s first round of rate hikes which means they might have to remain hawkish going into the spring. Fed swaps are expecting the policy rate to rise to 5.25% in June and that is the line in the sand for risk appetite. ​ If the next couple of inflation reports are surprisingly hot, risk appetite could see a violent selloff. FX The dollar is getting crushed here as Wall Street is growing confident they finally identified the peak in the terminal rate. ​ It seems markets are pricing in a Fed that will slowly take rates to 5.25% and that has put a key top in the dollar. ​ The dollar is having its worst day since March 2020 and that could continue if next week’s inflation report does not come in scorching hot. ​ Oil The oil market shouldn’t expect a lot of new wells as oil and gas extraction jobs only rose by 400 in October. ​ $100 oil is coming as the US service sector labor market remains robust and on expectations supplies will remain tight. Oil rallied earlier on further speculation that China is about to tweak their pandemic rules. Chinese crude demand has been capped and if that roars back, that alone could send oil prices 5% regardless of global economic slowdown fears. ​ There are too many geopolitical risks on the table that should keep oil’s trajectory higher. ​ If the dollar continues to slide here, oil’s strength could be relentless. Gold Gold prices are pushing higher despite a strong labor market report. Gold’s initial NFP reaction was a spike lower as the two-year Treasury surged to a multi-year high. ​ The initial glance of the NFP report was that both hiring and wages remain hot and that could have the Fed take rates to 5.25%. ​ After Wall Street digested the NFP report, yields and the dollar reversed. ​ The Fed appears to be on the right path for fighting inflation and that will lead to a weaker economy early next year. The long variable lags of Fed tightening has traders convinced they opt for a slower pace of hikes and decide later on when to stop. If next week’s inflation report contains a downward surprise, gold might be able to make a run towards the $1700 level. Crypto Range traders must love crypto. ​ Bitcoin remains anchored above the $20,000 level. ​ Today’s employment report triggered a wave of volatility that ended up being positive for risky assets, which has helped Bitcoin rally above the $21,000 level. ​ A downshift to a slower pace of tightening still seems in the cards for the Fed and that should provide some short-term support for cryptos. ​ ​ 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. NFP React: Stocks higher, Dollar crushed, Oil eyes $100, Gold surges, Bitcoin above $21k - MarketPulseMarketPulse

Central bank paths are diverging and that suggests the recessions are here and that FX volatility will remain elevated. The post-Fed hangover continues to keep pressure on US stocks as the impact from the first round of hikes is finally being felt. Stocks aren’t going to have a painful death here, but they will soften until markets price in a little more Fed hawkishness. ​ Labor data The focus in the US shifts back to any data about the labor market and especially inflation. ​ This morning, weekly jobless claims edged lower as it remains stuck near historic lows. ​ Everyone is expecting the economy to quickly weaken, but the labor market has other plans. ​ Jobless claims dipped to 217,000 last week, a little better than the 220,000 estimate. ​ Continuing claims climbed to 1.49 million, which is the highest level since March. The Challenger, Gray & Christmas, Inc. report showed job cut announcements increased 48% from a year ago. Challenger’s Senior VP noted, “We are beginning to see more job cut activity in the fourth quarter, historically when the bulk of cuts occur, as companies finalize budgets and plans.” It appears that we are finally starting to see more signs of labor market weakness, which means we might be a couple of months away from seeing job losses with the nonfarm payroll report. If the labor market can cool quickly, the Fed might be done tightening in February, which means rates might ultimately stop at 5%. BOE/Norges European central banks are nearing the end of their tightening cycles. The BOE delivered a dovish hike as they clearly signaled they shouldn’t raise rates too far. ​ The BOE’s 75 basis point rate increase was the largest hike in 33 years. ​ The rate hike decision was not unanimous as Swati Dhingra voted for a half-point rise, and Silvana Tenreyro supported a quarter-point increase. The BOE’s outlook was the polar opposite from what we got from the Fed. ​ The BOE said that we could see a two-year recession if the market follows the market curve. ​ The BOE believes that markets are being a bit aggressive in pricing their rate path. The Norges Bank downshifted their rate hiking cycle to a 25 bp pace. ​ They highlighted that there are signs that some areas of the economy are cooling down, and prospects for lower-than-expected freight and energy prices may curb inflation ahead. It looks like they are getting close to pausing which could suggest the krone might be vulnerable to further selling pressure. ​ Crypto Bitcoin traders are saying “What, me worry?” A hawkish Fed is triggering a de-risking moment on Wall Street, yet bitcoin refuses to give up the $20,00 level. ​ Stocks are down significantly post-Fed yet bitcoin continues to hover above the $20,000 level. ​ Bitcoin might eventually break here, but this resilience that is being displayed should show markets how confident long-term hodlers remain. 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, dovish BOE and Norges, signs of labor weakness, bitcoin resilience - MarketPulseMarketPulse

Oil Crude prices are struggling as China stands by its zero-COVID policy and as global central bank tightening is crushing economic activity. ​ Central banks are signaling that tightening is quickly cooling their respective economies, which means the short-term crude demand outlook will probably get slashed. ​ ​ Oil is battling both a weakening global economic outlook and a surging dollar. ​ It seems these bearish drivers won’t be easing up anytime soon and that could mean WTI crude could be vulnerable to last week’s low. Gold Everything seems to be going against gold right now. ​ The Fed aftermath is leading to pain for bullion as Fed Chair Powell has signaled rates will be much higher. The peak in the dollar was potentially going to be put in place but Fed Chair Powell said they are worried more about doing too little on inflation than too much. Gold could be in trouble here as the dollar could outperform for the next month. ​ Gold is hovering right around key support which means if prices break momentum selling could be intense. ​ The $1600 level might not provide that much support, which means bullion prices could weaken towards the $1575 area. 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 slumps on demand outlook, gold hurt - MarketPulseMarketPulse

US stocks are finishing October on a down note as Wall Street braces for any signs from the Fed that they are near the end of their tightening cycle. ​ All the major global manufacturing readings show the economic slowdown is getting uglier. ​ The appetite for risk is struggling today as China’s manufacturing data was ugly and surging European inflation basically guarantees a recession. Russia’s suspension of the grain deal also raises fears that the war in Ukraine could lead to further disruptions in wheat shipments. ​ ​Contraction territory It started in China and then it continued in Chicago. ​ A global manufacturing contraction is here. ​ Factory activity is taking a big hit as China struggles with COVID, Europe is headed towards a recession, and as the US economy finally feels the impact of inflation and Fed tightening. ​ China’s October PMIs were very disappointing and it suggests that given the current COVID struggles that November won’t be providing much relief. ​ The official Chinese manufacturing reading declined from 50.1 to 49.2. ​ The Chicago PMI report dipped in October, which for some could support calls for an even greater drop with the ISM manufacturing reading tomorrow. Chicago’s business activity fell from 45.7 to 45.2, while prices paid jumped. ​ Factory activity in the US is clearly hitting a rough patch and that should be confirmed with tomorrow’s ISM manufacturing report that could fall into contraction territory. ​ If the key ISM reading does fall into contraction territory, it would be the first time since June 2020. ​ GameStop A potential bottom for stocks on hopes that the Fed would provide more clues to the end of their tightening cycle provided a small window for a pump-and-dump move with GameStop. The rally for the video gamer quickly faded after a trading halt. There doesn’t seem like a lot of support for continued support higher, so the parabolic trap might have a lot of retail traders on the wrong side of this trade. ​ ​ ​ ​ Bitcoin Bitcoin continues to hover around the $20,000 level as Wall Street hopes for the Fed to provide clues that we are much closer to the end of tightening. ​ Some traders are growing confident that a bottom is in place, options market activity is showing the need for downside protection is easing. ​ This will be a pivotal last two months of the year that should trigger a move outside of the $17,500 and $25,000 trading range. ​ It seems the bearish argument for crypto is stagflation and right now that is not the base case for Wall Street. ​ The crypto stabilization seems likely to persist as the recent wave of deteriorating economic data eases concerns that we will see 70s-style stagflation. ​ Demand destruction from a weakening economy should continue to help provide inflation relief and that will be positive for risky assets. 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. Global contraction, Fed in focus, GameStop Mania returned, bitcoin steady above $20k - MarketPulseMarketPulse

Oil Crude prices pared losses after energy traders were reminded that while the market might flip to a surplus next quarter, OPEC will keep prices supported. ​ The release of the OPEC 2022 world oil outlook still supports both medium and long-term cases for higher prices. ​ OPEC Secretary General Al Ghais noted that the surplus was the main reason for the cut in OPEC production.  OPEC still runs the show that is the oil market and it will take necessary action to keep oil prices supported. ​ Gold Gold was unable to snap a losing streak that will now reach seven months. ​ Gold has been picked on ever since the war in Ukraine started and inflation ran wild. ​ Gold is starting to show some signs of life, but it will be hard for it to gain momentum until inflation is declining. ​ Eurozone inflation hitting a record high is troubling news for the euro, but eventually, a recession will force prices to go down. ​ Gold’s make-or-break moment will be this week’s Fed decision that should show policymakers are getting close to pausing their tightening cycle. ​ The US economy is slowing down and if we start to see signs that the labor market is cooling, that could be the trigger to get the gold bugs going. ​ The Fed will likely lean on their data dependency and that might make this NFP Friday extra special. ​ 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 lower on demand fears, gold hurt by strong dollar - MarketPulseMarketPulse

Jonny Hart looks back on last week’s business and markets news with OANDA Senior Market Analyst Ed Moya in New York.  This week they talk about Brazil’s presidential election, global manufacturing weakness, and crypto resilience.  They also discuss what the week ahead has in store for financial markets. 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. Market Insights Podcast (Episode 392) - MarketPulseMarketPulse

Oil eases Oil prices are a little lower today although nothing has dramatically changed in recent weeks as far as the outlook is concerned. The global economy is facing major challenges, even recession, OPEC+ is prepared to make unpopular cuts alongside member Russia, whose war in Ukraine has been a dominant driver of market volatility. China’s economic stumble driven partly by its commitment to zero-Covid also continues to dampen the outlook for demand. Brent continues to settle in the $90-100 range which all parties may just about accept for now. Well, after the midterms for a little while perhaps. Make or break week for gold? Gold continues to be choppy but its outlook hasn’t improved at all, with rallies continuing to face significant resistance and $1,600-1,620 looking very vulnerable. Its resilience will certainly be put to the test this week though, given the Fed meeting on Wednesday and US jobs report on Friday. Not to mention the scattering of data around those events. Time will tell whether it proves to be the week that starts the resurgence or the straw that breaks the camel’s back. 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 eases, gold choppy - MarketPulseMarketPulse

US Will the fourth 75 basis-point rate hike be the last major rise before the Fed downshifts in December?  Next week’s FOMC decision is widely expecting a unanimous vote for one last major rate increase. With the Fed’s preferred price measure still showing inflation is running hot, that might make it harder for them to set up a possible downshift in its rate-hike pace for the December meeting. Despite an acceleration with inflation, strong consumer spending data, and a robust labor market, much of Wall Street is growing confident that the Fed will pause tightening once they take the funds rate to 4.50-4.75% next quarter. In addition to the FOMC decision, traders will also closely monitor the nonfarm payroll report.  The strong labor market is still expected to show job growth with 200,000 jobs created in October, down from the 263,000 created in the prior month. The unemployment rate is expected to tick higher and wage gains are expected to slow. It will be another busy week filled with earnings that will likely confirm the slowdown being seen across the economy.  Healthcare, consumer discretionary, energy, and car manufacturer stocks will report next week. EU Inflation has hit double-digits and remains the ECB’s number one priority. The Eurozone releases its inflation report on Monday. Inflation rose to 10.0% in September, and it is expected to surge to 10.3% in October. Some analysts are expecting a possible surge to 11.0%.  Core inflation is projected to tick higher to 4.9%. The Eurozone will release the October Final PMIs, which are projected to indicate contraction, with readings below the 50.0 level. Manufacturing will be released on Wednesday and Services on Friday. Manufacturing is expected at 46.6 and Services at 48.2, confirming the initial estimates. UK The UK releases Final PMIs for October, with Manufacturing on Tuesday, Services on Thursday and Construction on Friday. The 50.0 line separates contraction from expansion. The initial readings were 45.8 for manufacturing and 47.5 for services, indicative of weak economic activity in the UK. Construction may provide a silver lining, with an initial reading of 52.3, pointing to slight expansion. The highlight of the week will be the Bank of England’s rate decision on Thursday. The BoE raised rates by 0.50% in September and is expected to go all in with a jumbo 0.75% hike, which would bring the cash rate to 3.0%. The vote could have two dissenters, which is why markets are expecting a downshift to a half-point pace in December.  The UK may already be in a recession and higher rates will hurt households and businesses, but the BoE has little choice but to continue tightening if it hopes to curb red-hot inflation, which is at 10.1%. Russia The war in Ukraine and the severe Western sanctions have taken a steep toll on consumer spending. In August, real retail sales plunged by 8.8% and September is supposed to be just as bad with an 8.6% decline. South Africa South Africa’s recovery from Covid-19 has been slow and a weak global economy is not helping matters. The October PMI will be released on Thursday. The PMI is expected to rise slightly to 49.7, following a 49.2 read in September. A reading below 50.0 indicates contraction. Turkey Turkey will release the October inflation report on Wednesday. The Turkish central bank continues to slash interest rates, with a 150 basis point cut earlier in October. This policy has seen inflation soar to staggering levels that is more than 17 times the CBRT’s target rate.  CPI rose to a 24-year high of 83.4% in September, and the consensus for October stands at 85.6%. Switzerland Switzerland releases the October inflation report on Thursday. Inflation has been rising in Switzerland, which forced the central bank to raise interest rates by a massive 0.75% in September. Still, inflation is much lower than in the Eurozone or the UK. Headline CPI is expected to tick lower to 3.2%, down from 3.3% in September. China Strict anti-COVID measures are about to send China’s factory activity back  into contraction territory. The global growth outlook will struggle as China’s economy shows their recovery is struggling. Both services and manufacturing data are expected to weaken in October. Currency traders will pay close attention to the PBOC as they have set the yuan reference rate at the weakest levels since 2008. Authorities want a strong yuan, but defending it could prove costly.  They might need to consider narrowing the band. India India’s economy is losing momentum and the latest PMI readings might confirm that trend.  The growth outlook continues to get slashed and the current rate hiking cycle is starting to weigh much more on the economy. The RBI will have an an out-of-cycle meeting next week as the government urges them to get inflation back under 6%.  Traders should not be surprised if some RBI action occurs before the December 5-7th policy decision. Australia & New Zealand The focus is on the RBA policy decision. This meeting could have some added volatility as the general consensus leans towards a 25bp rate rise, but a half-point increase should not be ruled out.  Inflation remains hot and with the cash rate nowhere near inflation, the bank might feel more pressure to act aggressively. New Zealand’s third quarter Employment Change and Unemployment Rate data, due out next Wednesday (2 November), as an increase in employment and a decrease in unemployment will be beneficial to New Zealand’s economic growth. As the overall inflation level in New Zealand remains high, the money markets are pricing in either a half-point rise or 75- basis point rate hike at the RBNZ’s next interest rate meeting on November 23rd. Japan The Bank of Japan did not deliver any surprises. Both rates and the 10-year yield target did not have any changes. The yen remains a volatile trade and now the ball is in the Ministry of Finance hands. With momentum growing for the Fed to shift to a slower pace of tightening in December, Japan may try to be aggressive in defending the dollar-yen 150 level. Traders will also pay close attention to the minutes of the last BOJ decision. Singapore Singapore’s economy is weakening and the October PMI reading should show that the weakening trend continues. Traders will also pay close attention to the retail sales report for the month of September. Markets Energy Oil markets remain volatile as China ramps up COVID restrictions, some US oil giants signal modest commitments to boost production, and the global economic outlook continues to dim.  Next week, energy traders will get a better sense of how China’s economy is performing despite the COVID lockdowns that happened in October. OPEC will also announce their World Oil Outlook on Monday. Commodities broadly will also have a reaction to the FOMC policy decision and nonfarm payroll report. A dovish rate rise could allow for dollar weakness which could keep oil prices supported here.  If risk appetite remains healthy, WTI crude could continue to consolidate above the mid-$80s. Gold The bullish case for gold is improving as financial markets begin to grow optimistic that the Fed will begin the deliberation of a slower pace of tightening.  Gold could be on the verge of a major breakout if the FOMC decision is supported by the nonfarm payroll report at the end of the week.  Gold has initial support at $1640, with the line in the sand being $1,620.  The $1680 provides major resistance for gold, followed by the $1700 level. Cryptos Bitcoin is forming a trading around the $20,000 level as many investors await to see what happens with next week’s market reaction to the FOMC decision. What will also draw extra attention is the Hong Kong Fintech Week, that includes appearances from FTX’s Sam Bankman-Fried, but could contain more insight on how Hong Kong will provide guidelines on how retail crypto trading could be allowed. Binance CEO Zhao and Ark’s Cathy Wood will speak at the Web Summit in Lisbon. Economic Calendar Sunday, Oct. 30 Economic Data/Events: Brazilians vote in a presidential runoff election between Luiz Inacio Lula da Silva and incumbent Jair Bolsonaro. Daylight savings time ends in the UK EU trade ministers informal meeting in Prague Monday, Oct. 31 Economic Data/Events: Eurozone CPI, GDP Poland CPI Mexico GDP Australia retail sales China manufacturing and non-manufacturing PMI Japan industrial production, retail sales, housing starts South Africa trade balance Thailand trade UK mortgage approvals Danmarks Nationalbank conference, speakers include ECB Chief Economist Lane, Riksbank Governor Ingves, and Norges Bank Governor Wolden Bache Bank of Italy Governor Visco and Italian Finance Minister Giorgetti speak at a World Savings Day event. Nordic prime ministers meet in Helsinki for a Nordic Council meeting. Hong Kong Fintech Week: Speakers include FTX’s Sam Bankman-Fried, China Banking and Insurance Regulatory Commission’s Yuanqi and the Securities and Futures Commission’s Leung as speakers. OPEC launches its 2022 World Oil Outlook at the Abu Dhabi International Petroleum Exhibition and Conference. Russian President Putin meets the leaders of Armenia and Azerbaijan in the southern Russian city of Sochi. Tuesday, Nov. 1 Economic Data/Events: US construction spending, ISM manufacturing index, light vehicle sales RBA rate decision: Expected to raise rates by 15bp to 2.85% China Caixin Manufacturing PMI Canada Manufacturing PMI Czech Republic Manufacturing PMI India Manufacturing PMI Japan Manufacturing PMI, Vehicle Sales Mexico Manufacturing PMI Norway Manufacturing PMI Russia Manufacturing PMI South Africa Manufacturing PMI UK Manufacturing PMI Czech Republic GDP Macau casino revenue Mexico international reserves New Zealand building permits Denmark’s general election Riksbank Governor Ingves gives a speech on the economy and monetary policy, in Helsingborg. Web Summit conference; Speakers include Binance CEO Zhao and ARK Investment Management’s Wood Wednesday, Nov. 2 Economic Data/Events: FOMC Decision: Expected to raise rates by 75bps US MBA mortgage applications, ADP employment European Manufacturing PMI: Eurozone, France, Germany, Italy, Poland, Spain Australia building approvals Germany unemployment Japan BOJ minutes of Sept. meeting New Zealand unemployment, central bank Financial Stability Report Russia unemployment, retail sales EIA Crude Oil Inventory Report Bank of Ireland’s Financial System Conference: Speakers include Irish Central Bank Governor Makhlouf, Finance Minister Donohoe and Bank of France Governor Villeroy In Dublin. Thursday, Nov. 3 Economic Data/Events: US factory orders, durable goods, trade, initial jobless claims, ISM services index Bank of England Rate Decision: Expected to raise rates by 75bps to 3.00% UK services PMI Australia trade balance China Caixin services PMI Eurozone unemployment India S&P Global services PMI Italy unemployment Norway rate decision: Expected to raise rates by 25bps to 2.50% Russia services PMI Spain unemployment G-7 foreign ministers to meet in Munster, Germany German Chancellor Olaf Scholz visits China RBA’s Kearns speaks at the ASIC Annual Forum in Sydney. ECB’s President Lagarde and Elderson speak at Latvijas Banka Economic Conference 2022. ECB’s Panetta gives a keynote speech at ECB money market conference. BOE’s Mann speaks on a panel about inflation at an American Enterprise Institute web event. Friday, Nov. 4 Economic Data/Events: US October Change in nonfarm payrolls: 200Ke v 263K prior, unemployment Rate to tick higher to 3.6%, Average Hourly Wages European Services PMI: Eurozone, France, Germany, Italy, Spain Japan Services PMI Canada unemployment Eurozone PPI France industrial production Germany factory orders Singapore retail sales Spain industrial production Thailand CPI The UN’s Food and Agricultural Organization releases its monthly index of world food prices. ECB’s VP de Guindos gives a keynote speech at the Energy Prospectives session ECB President Lagarde gives a lecture on monetary policy in the euro area organized by Estonia’s central bank. Fed’s Collins speaks on macroeconomic conditions at a Brookings Institution virtual event. Sovereign Rating Updates: France (Fitch) Ireland (Moody’s) Norway (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.

Mixed mega-cap tech earnings won’t provide Asia with a boost. A lot went wrong for big-tech today; Apple’s holiday outlook underwhelmed, inflation pain is more noticeable, and unfavorable exchange rates will hurt future sales.  The news was not all terrible for Intel shares after posting solid results alongside the announcement of a cost-cutting plan that will save $10 billion by the end of 2028.  The key theme across this round of mega-cap results is that an earnings slump is here as inflation cripples an already weak consumer.     Apple Apple shares pared losses after CFO Maestri’s optimistic comments about seeing strong demand for products.  Apple’s earnings weren’t terrible like Amazon or Meta’s results.  Apple did post record revenue and delivered a three-cent EPS beat.  Service revenue, iPad revenue, and sales in China disappointed. Macro headwinds are not killing iPhone sales just yet, but the outlook is clearly deteriorating.  Strong Mac sales as kids returned to school helped compensate for soft iPhone sales.  Amazon Amazon shares plunged after their outlook showed that households and corporations are watching their budgets.  Poor sales guidance of revenue between $140 billion to $148 billion was much lower than the $155.5 billion analysts were expecting.  The macro backdrop appears a lot worse than what we were hearing from companies that reported at the start of earnings season.    Commodities Brief: Crude prices are softening ahead of massive oil giant earnings reports.  Right now, energy traders want to see if Exxon and Chevron are going to show they are willing to commit more money into new wells.  The Biden administration is hoping big oil can provide a boost to the economy by increasing production and sending prices down.  The oil market has benefited from a weaker dollar and hope for a strong Chinese economic rebound, but now the focus is shifting towards recession risks that are dragging down the crude demand outlook forecasts for the rest of the year.    Gold prices continue to consolidate as exhaustion after what looks like could be another solid week of gains.  A short-term peak for the dollar appears to be in place for the dollar and that is good news for gold.  Cryptos Bitcoin softens towards the $20,000 level as risk appetite struggles to find its footing.  The macro backdrop got a lot worse this week after a wild week of earnings and economic data. Cryptos will likely consolidate further until next week’s FOMC meeting, which means Bitcoin might give back the key $20,000 level.      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. Asia Open: Mega-Cap Disappointment, Apple/Amazon Results, Commodities Brief, Cryptos edge lower - MarketPulseMarketPulse

US stocks are struggling for direction after a mixed bag of earnings was accompanied by economic data that supports the idea that the economy is weakening. It looks like the economy is still headed for a recession, but that might reinforce Fed pivot calls which still seems to be driving some inflows back into equities. ​ ​ ​ Super Thursday will resume after the close when Apple and Amazon report after the bell. ​ ​ This is peak earnings season and at the end of the day, we will know if investors are going to shun tech stocks for a little while longer. ​ Facebook takes a hit Mark Zuckerberg is looking reckless here. Meta shares plunged after revenue collapsed and they decided to nearly double their CAPEX. ​ It looks like Sheryl Sandberg’s departure was well-timed as this ship is clearly sinking. ​ Artificial Intelligence (AI) investment was boosted and now everyone is expecting Meta to have a free cash flow problem. Caterpillar Caterpillar did not disappoint this earnings season. ​ The heavy-equipment maker did everything right last quarter. ​ Caterpillar posted a strong earnings beat, trimmed their CAPEX budget a little, signaled demand is strong and that highlighted that margins momentum will continue next quarter. ​ Caterpillar also noted ‘some pockets’ of supply chain improvement. What was also very positive is that Asia/Pacific sales were little changed despite the slowdowns that have hit that part of the world. ECB The ECB delivered a third major consecutive rate increase across all three key rates. ​ The 75-basis point hike was well-telegraphed and the comment that “inflation remains far too high” indicates more massive rate increases could be warranted. They signaled they expect to raise rates further and markets are still convinced that they could raise rates by 75bp again in December. It seems the market is convinced that the ECB’s hiking cycle won’t have to be as aggressive next year and traders are now expecting rates to peak at around the 2.75% level. TLTRO changes signals they are going to remove some of the excess liquidity and incentivize the banks to pay back cheap loans before rates go up. US GDP and more The US economy appears to have bounced back from those two negative GDP readings with a solid 2.6% improvement in economic activity. The strong headline number is welcome news, but when you dig into the numbers it is clear that an economic slowdown is here. The international trade component helped this quarter and that obviously won’t continue going forward. ​ Consumer spending is softening and prices are coming down quickly. ​ Business investment is clearly weakening. ​ ​ The labor market remains tight as jobless claims edged slightly higher. Hiring freezes will become a growing trend across corporate America, but layoffs still seem distant as job openings still remain healthy. FX Fed expectations still widely expect a 75 basis point rate increase next week and for a downshift to a half-point in December. ​ The Fed won’t want to lock itself into softening its stance against fighting inflation before the data confirms pricing relief. ​ The economy is slowing and that is sending Treasury yields lower as recession bets grow. ​ Safe-haven flows are powering both the yen and dollar today as global recession risks grow. Oil Crude prices are rallying after the US economy bounced back last quarter. ​ Oil’s gains are capped as the key takeaway from this morning’s swathe of economic readings is that an economic slowdown is here. ​ The dollar remains volatile but safe-haven flows should keep it supported over the short-term and possibly leading up to next week’s FOMC decision. Gold Gold prices aren’t doing much today after the ECB rate decision and a swathe of US data confirmed a global economic slowdown is here. ​ Global bond yields are heading lower and that is good news for bullion, but a major move seems like it might have to wait until next week’s FOMC decision. Cryptos Bitcoin’s rally has run out of steam. ​ Momentum from the rally above the $20,000 level has stalled out as risk appetite struggles to find solid footing post earnings and US economic data. The global crypto market cap is flirting with the $1 trillion level and that might remain a hard barrier to break away from. Bitcoin seems likely to consolidate leading up to the FOMC decision, but it could see further strength if the dollar continues to soften. ​ If Wall Street grows more concerned with the economic outlook, rates could slide even further, which is great news for crypto. ​ 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. OANDA - Super Thursday! Massive earnings day, US GDP, ECB raises rates, FX, crypto momentum stalls - MarketPulseMarketPulse

This bear market rally was about to run out of steam, but the Bank of Canada had other plans. ​ A Canadian dovish surprise gave risky assets an unexpected boost. ​ This bear market might last a little while longer, but traders can’t forget about what will drive the data-dependent Fed. ​ Big-tech earnings are showing a lot; margins are pressures have arrived. Cracks in the economy are here. Tighter financial conditions are not going away. Meanwhile, inflation and labor stats are not declining fast enough to support a Fed downshift just yet. ​ The Fed won’t have clear signals that they can downshift tightening until next year, which means the risks of overtightening are still on the table. ​ The soft landing playbook just got thrown out the window and now Wall Street needs to gauge how bad of a recession will hit the economy next year. ​ ​ Financial markets closely watched the Bank of Canada decision that delivered a clear message that they are getting close to being done with tightening. Wall Street is hoping the Fed will follow the Bank of Canada’s lead in expecting inflation to ease further by year-end. ​ The Fed won’t blink next week and the risk of a 75 basis point hike in December should still remain on the table. ​ ​ ​ BOC delivers 0.50% hike The Bank of Canada has tried to get ahead of the pack when it comes to monetary decisions. ​ They hiked by a full point in July, while others opted for 75bp and now they have downshifted their tightening pace to a half-point rate rise. ​ BOC Gov Macklem said, “This tightening phase will draw to a close. We are getting closer, but we aren’t there yet.” The bank’s outlook is not optimistic at all and it seems demand destruction will help bring down inflation. ​ The bank noted that the global outlook is grim and that growth is close to zero. ​ The Canadian dollar initially tumbled on the smaller-than-expected half-point rate hike but did pare losses as investors still like the Canadian economic outlook much better than most of the other advanced economies. ​ Big-Tech Disappointment Both Microsoft and Alphabet earnings results killed what was becoming a not-too-bad outlook for the economy. ​ Alphabet had a poor earnings report that emphasized a weakening client base, a slump with ad spend, slower hiring, and currency headwinds. ​ Microsoft saw the worst first-quarter revenue growth in five years and had a rather bleak outlook for Azure-cloud sales. Microsoft is noticing softer corporate demand and that theme is becoming the consensus across big-tech. ​ Another key bearish driver for the tech space was the update from Seagate that included a 7.5% reduction in its workforce. ​ Cryptos Bitcoin is back above the $20,000 level as Wall Street grows optimistic that we are about to be done with financial tightening. ​ The dovish surprise from the Bank of Canada is a game-changer for central bank tightening expectations. ​ Crypto will struggle with a deteriorating global growth outlook, but extensive pain as a result of the bond market selloff could be ending soon. ​ Bitcoin is now comfortably above the $20,000 level and now it will try to stabilize here until the FOMC meeting. If risk appetite remains healthy, bitcoin could grind higher towards $22,500 level. ​ 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. Thank you Canada, BOC's dovish surprise, big-tech disappointments, bitcoin above $20k - MarketPulseMarketPulse

Oil Oil is mustering up a nice rally as energy traders try to price in a China recovery that will unfold over the next few months. ​ WTI crude has strong support in the mid-$80s as the oil market still remains tight and now that a short-term peak with the dollar is in place. ​ Crude prices extended gains after the EIA crude oil inventory report showed exports surged to a record high and gasoline demand bounced back. ​ Crude production is anchored and that probably will remain the case unless the oil giants signal major investments in CAPEX. ​ The next big move in oil might come from oil earnings later this week that will tell us if we are going to see any investments in new wells. ​ Gold Gold is ready to form its pre-Fed trading range. ​ A weaker dollar has been good news for bullion investors, but gains should be capped well ahead of the $1700 level. ​ Treasury yields have been steadily declining and that has helped make non-interest-bearing gold look more attractive. The Bank of Canada’s dovish surprise was good news for gold as it shows a major economy is already downshifting its tightening pace. ​ Expectations are growing for the Fed to shift to a half-point pace in December and if that seems more likely after next week, gold could have a nice breakout above the $1700 level. ​ 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, gold loves falling yields - MarketPulseMarketPulse

US stocks got a boost from another round of decent earnings and as softening economic data that supports the argument for the Fed to downshift its tightening pace after next week’s policy meeting. ​ Earnings from UPS, General Motors and General Electric did not unravel the optimistic outlook corporate America has been providing this earnings season. Wall Street is locked into mega-cap tech earnings this week, so the current rally will likely lose steam until we hear from both Alphabet and Microsoft after the close. US Data A few economic reports all told a similar story today that the economy is weakening. ​ The FHFA and S&P core logic housing reports both showed house prices fell in August. ​ The Conference Board’s consumer confidence index declined to a 3-month low as a weakening labor market weighed on the present situation. ​ The Richmond manufacturing index also showed weakness that included decent declines with both prices paid and received. A weakening economy will bring down inflation and that is good news for long-term investors looking to get back into equities. Crypto rebounds Cryptos are rebounding nicely as rates slide and the dollar weakens. ​ Both bitcoin and ethereum are gaining momentum as Wall Street musters up a few strong sessions. ​ The economy is showing further signs of weakening and that is helping investors grow confident that the Fed will be in a better position to downshift its tightening pace after next week’s FOMC meeting. This week is filled with a handful of major risk events that could help keep this week’s broader market risk-on rally going. ​ Massive tech earnings, a couple major central bank decisions, and the first look at Q3 GDP will all weigh on risk appetite this week. ​ To the upside, bitcoin should find resistance at around $20,500, while $18,500 provides strong support. ​ 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. Stocks rally as yields fall, softening US data, cryptos impress - MarketPulseMarketPulse

Oil ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Crude prices rose after constant reminders that the oil market is still tight. ​ Saudi energy minister Abdulaziz noted that they need to retain spare oil capacity. On Halliburton’s earnings conference call they stated that oil and gas supply is tight for the foreseeable future. ​ Earlier Valero said that US fuel demand has surpassed 2019 levels. Risk appetite was somewhat healthy and that helped keep oil prices positive this morning. ​ The dollar rally hit a wall and that should provide a boost for all commodities. Gold higher as Treasury yields fall Gold prices got a boost as Treasuries kept the rally going on strong. US economic data is deteriorating and that is helping push down Treasury yields. ​ If the data keeps on getting uglier, the December FOMC meeting debate might not be between a half-point increase and 75 basis-point hike, but with a quarter-point rise and 50 basis-point boost. Gold’s rebound is gaining momentum as the 10-year Treasury yield continues to drop further away from last Friday’s high. ​ Gold’s bearish trend has firmly been in place after prices could not hold the $2000 level in the spring. ​ We’ve seen some bullion rallies stall around the 50-day SMA, which means this current rebound could target the $1700 level. 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 rise - MarketPulseMarketPulse

US stocks rallied as momentum builds on calls that the Fed will be tapping the tightening brakes after next week’s policy meeting and ahead of mega-cap tech earnings. No one wants to aggressively buy big tech stocks until we hear this week’s big earnings from Apple, Alphabet, and Amazon.  Investors are getting more confident that inflation will soften as the consumer rethinks massive purchases.  Fed rate hike expectations will remain volatile, but expectations are growing that a weaker economy will let the Fed pause their tightening after the February policy meeting.  Flash PMIs The flash PMIs showed significant weakness across both the service and manufacturing parts of the economy, which is good news for investors expecting the Fed to pause early next year. The flash manufacturing PMI dropped to the weakest levels since mid-2020. Barely testing contraction territory is still a big deal as demand softens and further pain is widely expected.  The US economy is making its way to a recession, but it won’t be a steady decline as large parts of the economy still have strength.  Oil remains volatile Crude prices remained volatile as energy traders digested a steady stream of flash PMIs that showed global manufacturing is contracting. The short-term crude outlook has been heavy mostly on European weakness and China’s COVID woes, but now the US outlook is softening very quickly.  Oil might struggle over the short-term as Europe enjoys warm weather, the strong dollar trade that is not going away anytime soon, and as the global outlook quickly deteriorates. Gold Gold is off to a slow start to the trading week as the dollar remains supported abroad after mixed data from China painted a picture of an economy that was not on solid footing. Despite today’s weakness, gold has dodged a bullet as the $1620 level held as Wall Street starts to lean towards pricing in a downshift in Fed tightening at the December policy meeting.  Gold traders are buckling in for a bumpy ride as this week’s risk flows will be determined by some heavyweight earnings and from a couple massive rate decisions from the ECB and BOJ.      China The conclusion of China’s Party Congress and release of economic data did not bolster confidence in Asia.  It was heavily expected for this Congress to deliver economic and political stability for the next five years, but it hardly impressed financial markets.  Now that the Congress is over, it is time for the delayed economic data.  The key takeaway from Q3 GDP and a swathe of factory, retail, and trade data, was that the recovery is not yet on solid footing.  It seems China is going to struggle with COVID a little longer and the strong rebound might not take hold until another couple quarters.  BOJ The Bank of Japan (BOJ) policy meeting is a do or die moment for the Japanese yen.  With the Fed policy meeting happening next week, they might have some reservations going all in.  If Japan wants to defend the yen, they might need to continue to intervene in the FX market and to adjust their yield curve control.  The start of the trading week was filled with excitement as Japan appears to have again entered the FX market.  Officials are remaining quiet, but it seems clear they are trying to defend the yen before both the BOJ meeting later this week and ahead of next week’s FOMC decision.  UK The second time was the charm for Sunak as he is now set to become the next prime minister.  There was no need for votes after his sole competitor, Penny Mordaunt dropped out. Sunak now has a very short period of time to survive the global energy crisis, avoid fiscal chaos, and outline a credible growth plan.  Crypto Cryptos traded mixed as Bitcoin softened towards the $19,000 level, while ethereum gained more buzz as their supply seems to finally be decreasing since the Merge.  Bitcoin remains stuck around the $19,000 level and that will probably remain the case until we get beyond next week’s FOMC 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. US Close- stock rally continues, US manufacturing activity contracts, oil lower, gold steady, Asia in focus, PM Sunak, ethereum gains - MarketPulseMarketPulse

Wall Street smashed the buy button after reports that the Fed would soon be ready to debate on how to slow the pace of tightening after the November FOMC meeting. A major reversal with Treasury yields occurred after the Wall Street Journal article signaled that after the Fed delivered one last 75 basis-point rate hike, it will consider smaller increases. The 10-year Treasury yield looked like it had a clear path towards 4.40%, but that quickly changed and now it seems like the October bond market selloff is ready for a break. Policymakers still need to look at the data and right now the risks of overtightening should still remain on the table. The S&P 500 has stabilized this week on strong earnings and hopes that a Fed downshift is coming and now technical buying could return since the 3,600 level has held up. Intervention Japan’s intervention in the FX market happened during the perfect time as the dollar was in retreat following reports the Fed is getting close to a downshift in tightening. The Nikkei broke the news about Japan’s efforts to support the yen after it fell to a fresh 32-year low. Japan’s top currency official refused to comment, but given the spike in yen futures contracts, it was most likely an intervention. Bullish dollar-yen bets quickly ran to the sidelines after reports of the massive intervention. Despite the major reversal, further yen strength will be limited until Wall Street is confident that the peak in Treasury yields is in place. Oil Crude prices are finishing the week on a high note as risk appetite returns on hopes the Fed won’t be sending the economy into a severe recession. The oil market is still looking tight and that should support crude prices staying above the $80 level. As the war in Ukraine persists, it looks like we might see escalating sanctions on not just Russia but also Iran. The risks of supply disruptions remain elevated and that should keep prices trending higher as long China’s outlook doesn’t take a turn for the worse. Gold Gold could slowly be getting its groove back as expectations grow that the Fed is getting close to a downshift in tightening. According to the Wall Street Journal, this next 75 basis-point hike could be the last major one. The peak if Fed tightening appears to be right around the corner and that is good news for bullion. Gold’s line in the sand was the $1620 level and it seems prices are getting safely further away. Gold’s outlook could turn bullish if Treasury yields become anchored. Crypto Bitcoin looked like it was in danger earlier in New York, but a massive bond market reversal prevented a massive wave of technical selling. After the 10-year Treasury yield rallied to the highest level since 2007, Bitcoin was in trouble. If risk appetite can stay healthy, Bitcoin should continue to consolidate above the $19,000 level. 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 Close – Japan Intervenes, Stocks rally on Fed pivot hopes, Oil edges higher, Gold pops after WSJ article on Fed, Crypto steady at $19k - MarketPulseMarketPulse

Despite political tumult in the UK and growing pressure on Japan to defend the yen, risk appetite is running wild as US stocks rally as some investors become more upbeat about this earnings season. ​ Mega-cap tech is starting to look attractive again after IBM posted robust sales results despite the currency headwinds. If IBM was able to have a good quarter and raise their outlook, a lot of investors are hopeful that Apple, Amazon, Alphabet, and Microsoft should be able to do the same. ​ UK  The British pound rallied after UK PM Truss announced her resignation. ​ Truss ran on a campaign that had a vision for a low-tax, high-growth economy that would take advantage of the freedoms of Brexit. That plan backfired on her, and she will go down in the history books as the UK’s shortest-ruling premier. ​ Betting markets are already pricing in former chancellor of the exchequer, Rishi Sunak as the frontrunner. ​ Finance Minister Jeremy Hunt is a key figure that has signaled he won’t stand in the UK leadership contest, but he might just be waiting until he can find the right partner to ensure his ticket has a chance of surviving. ​ Britain’s political scene is looking more like what we see over in Italy. ​ The political tumult in the UK is not going away anytime soon until we have a clear understanding of who will lead and what will be their agenda. Other questions will now surface and that includes how Scotland will proceed in attempting another referendum. ​ US data mixed The labor market is still strong after jobless claims came in better-than-expected at 214,000, which suggests corporate America is not having a lot of layoff announcements yet. ​ Labor market strength supports the idea that the Fed can remain in aggressive tightening mode beyond the winter. ​ The Philly Fed business outlook was soft but not as bad as the Empire survey we saw at the beginning of the week. ​ Manufacturing activity is weakening and that trend should continue as the economy weakens. ​ The housing market continues to cool. ​ Existing home sales have declined for eight consecutive months and a weaker consumer and surging mortgage rates suggest that trend will continue. ​ Sales of previously owned homes dropped 1.5% to an annualized pace of 4.71 million in September, roughly in line with the 4.70 million consensus estimate. The housing market still looks vulnerable to further downside and that should eventually at some point next year provide some relief with shelter prices. ​ ​ ​ Cryptos After tentatively breaching below the $19,000 level, bitcoin is bouncing back as Wall Street decides to go back into mega-cap tech stocks. ​ Bitcoin has been stuck in a consolidation pattern since the summer and that seems like it will continue until investors can confidently believe the Fed will stop hiking once rates get to 5%. ​ ​ 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. Truss Resigns, Stocks rally on earnings, US Data, NatGas declines, Bitcoin rebounds but still locked into range - MarketPulseMarketPulse

Energy US natural gas declined to the lowest levels since March as supply concerns have slightly improved. ​ Over the past week, energy traders have digested a few winter weather forecasts and it seems many are thinking the south will be drier and warmer than usual, while the northern tier, Midwest and Ohio valley could have a colder winter. Oil prices rallied on hopes that China is starting to pivot with their COVID quarantine guidelines and as energy traders start to price in a hard floor for WTI crude after yesterday’s White House announcement on how they will restock the SPR. ​ The Biden administration intends to buy WTI crude ahead of the $67-72 a barrel range, which means oil should remain supported if China doesn’t suffer a major COVID setback. ​ The latest round of US economic data suggests the economy is still in good shape and any immediate hits to the short-term crude demand outlook are premature. ​ WTI crude should start to form a range slightly above the $90 level, with the upside tentatively capped at the $100 level. ​ Gold bounces back Gold prices are rebounding as the dollar softens slightly after political turmoil in the UK drove the British pound higher and as BOJ was forced into action. ​ The BOJ had no other option but to do an additional unscheduled purchasing of JGBs. The dollar-yen testing the 150 level in New York is putting more pressure on Japan to intervene. ​ Gold is still battling steady outflows from gold-backed ETFs and that trend should limit any rebounds we see over the short term. ​ Another round of US economic data and earnings still supports the argument that the labor market is strong and that the economy is slowly weakening. ​ It looks like the Fed might be in a position to tighten aggressively beyond the winter and that could drive further weakness for gold. ​ It looks like a matter of when will gold break the September lows but for now it is stabilizing as it seems it will need a fresh catalyst to send prices below the psychological $1600 level. ​ 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 higher on possible Chinese COVID pivot, gold rebounds - MarketPulseMarketPulse

Jonny Hart discusses what is driving markets today with OANDA Senior Market Analyst Ed Moya in New York.  This week they talk about earnings results from Netflix and Procter & Gamble, what is driving oil markets, and crypto resilience. 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. Market Insights Podcast (Episode 389) - MarketPulseMarketPulse

Jonny Hart looks back on the week’s business and markets news with OANDA Senior Market Analyst Ed Moya in New York.  This week they talk about another hot inflation report, JPMorgan Earnings, University of Michigan inflation expectations, crude’s bad week, and crypto resilience.  They also discuss what the week ahead has in store for financial markets. 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 stocks got a little boost after the FOMC minutes provided a sprinkle of dovish hints. The word of the week is ‘calibrate’. Officials are already talking about a calibration to the pace of tightening which means we are getting closer to that Fed pivot. Earlier, Pepsico quarterly results provided some optimism that this earnings season wasn’t going to be all doom and gloom.  Pepsi delivered a strong earnings beat and raised their guidance.  Minutes The Fed Minutes showed tightening will continue even as the labor market slows.  The key takeaway from the minutes was that several participants noted that it would be important to calibrate the pace of further policy tightening with the aim of mitigating the risk of significant adverse effects on the economic outlook. We’ve heard from Fed’s Daly and Brainard and they have voiced support for remaining data-dependent when it comes to future hikes and right now it looks the data is about to get ugly.  It will be hard for the Fed to remain aggressive with tightening as the economic deteriorates quickly. The Fed is giving us subtle dovish hints here and that is good news for risky assets.  Officials saw slowing the pace of hiking at some point and that could easily happen after the November FOMC meeting.  Investors should continue to expect a 75bp rate hike at the November 2nd FOMC decision, but a downshift in December would be likely if the global growth outlook continues to deteriorate and if the US economy softens.   Oil Crude prices tumbled after reports that Russia was willing to sell oil at a discount.  Russian seaborne oil deliveries are about to have a price cap put in place and it looks like Russia is getting desperate for revenues.  Last month, Russia was threatening they would stop selling oil to countries that would agree to use a price cap, but now it seems like that was just a bluff.  Oil was heavy all day as today’s news cycle was rather bleak for the crude demand outlook. A hot US PPI report suggests inflation is proving to be sticky and will keep the risk elevated that the Fed will send the economy into a recession.  The German government anticipates a recession is coming next year as inflation runs wild alongside the global energy crisis.  China is also having trouble with COVID again as Shanghai and Shenzhen see infections rise after the holiday.  Selling pressure on WTI crude has been strong all week and prices could continue to slide towards the $85 region.  The oil market is still tight despite significant downgrades to the outlook by OPEC has put a tentative end to calls that oil was easily heading towards the $100 level.  Post Fed-minutes all risky assets, including oil pared losses after several policy makers signaled they are getting ready to calibrate their pace of tightening. Gold Gold remains in choppy waters ahead of a pivotal inflation report that could raise the risk of even more Fed tightening.  The latest producer prices report showed inflation is not easing at all and that has some traders expecting more pain to hit the bond market, which will drive the dollar to new heights.  Gold won’t do much of anything until the inflation report and that means prices should bounce between the $1670 and $1690 levels. Gold prices popped after the FOMC minutes signaled some policymakers are getting ready to calibrate their tightening path.  Crypto Bitcoin continues to hover around the $19,000 level as traders await tomorrow’s inflation report that could make or break risk appetite. Crypto news today focused on a Congressional probe on miners and the strain they are putting on the state’s power grid. Bitcoin could breakout after the inflation report as Wall Street will have a better idea if the Fed needs to maintain an aggressive tightening stance beyond the November FOMC meeting. If inflation stays hot, Bitcoin could be vulnerable to test last month’s lows just ahead of the $18,000 level. 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. FOMC Minutes React: Calibration means Pivot can’t be too far, Pepsico impresses, Oil tumbles, Gold pares losses, Crypto hovers around $19k - MarketPulseMarketPulse

Oil higher despite weak Chinese PMI Oil prices are continuing to edge higher at the start of the week, albeit at a much slower pace with Brent now not far from $100 a barrel. OPEC+ may be comfortable with that after slashing output targets by two million barrels per day but I’m not sure anyone else will be. The Chinese PMI data overnight highlighted the challenges facing the world’s largest crude importer as it tries to balance its zero-Covid policy with economic growth. That may have helped take some steam out of the rally today but it didn’t last. Gold tumbles below $1,700 Gold prices have slipped by more than 1%, far outweighing the modest rally in the dollar at the start of the week. The yellow metal is on course for the fourth day of losses amid a resurgent greenback and dwindling faith in slower monetary tightening. Yields are up around the world today and that’s going to be further pressuring gold. A move back below $1,700 on Friday is another worrying move which could wipe out any enthusiasm generated during the late-September, early-October rally. Back below $20,000 Bitcoin is also struggling at the start of the week after breaking back below $20,000 on Friday and failing to recapture those losses over the weekend. Ultimately, little has changed though. The cryptocurrency has been fluctuating around $20,000 for months and that remains the case now. 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 It is getting hard to bet against higher crude prices. ​ This week’s OPEC+ decision was a game changer for the oil market, as it signals tight conditions will remain throughout this winter. ​ Energy traders are not really believing that the Biden administration will be able to do anything quickly to stop the rally in oil prices. The NOPEC bill seems like it has a lot of barriers and won’t be an immediate course of action. The SPR has been tapped already and the US is dangerously depleting inventories which could make them more dependent on OPEC in the future. Sanction relief for Venezuela won’t come easy and does not seem like a viable option right now. ​ ​ A strong dollar is capping crude’s gains today and it looks like we could see crude continue to consolidate until tomorrow’s NFP report. ​ Gold dips on hawkish Fed Gold prices softened after another round of hawkish Fed speak. ​ Gold is entering consolidation mode as traders await nonfarm payrolls. ​ The lead up to NFP Friday saw a mixed round of employment readings that has many bullion investors on standby. A hot labor market and strong wages could keep the bond market selloff going and should decide what will be gold’s next major move. If nonfarm payrolls does not deliver any major surprises, gold may still be stuck in a trading range between $1700 and $1740 as traders will wait for next week’s inflation report. ​ 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 keeps rising, Gold awaits NFP - MarketPulseMarketPulse

The economy is too strong for the Fed to pivot. ​ The strong start to October is over after both a private payroll report and service sector data reminded investors how strong some parts of the economy remain. Deteriorating economic data is needed to drive down inflation and for the Fed to consider a slower pace of tightening. ​ If we continue to see resilience in the service sector, the Fed may have to remain aggressive with its rate hiking cycle. ​ ​ ​ Before the end of the year, but definitely not this month, the Fed will temper its hawkish stance. Inflation is still the driving focus and that data is not softening quickly enough. ADP/ISM Services A private payrolls report showed 208,000 jobs were created in September, roughly in line with the 200,000 consensus estimate. ​ After a couple of downbeat labor data readings, the ISM manufacturing employment component fell into contraction and JOLTS data lost over a million job openings, Wall Street was starting to grow confident that a labor market slowdown had arrived. ​ Hiring is slowing, but it seems the service sector is still holding up. ​ The ADP report showed the goods-producing sector lost 29,000 jobs, while service-providing jobs showed a gain of 237,000 positions. The ISM Services employment index rose sharply to the highest levels since March. ​ ​ ​ Traders might be disappointed if they were hoping for a sharp deterioration in hiring with the nonfarm payroll report. The early October rally might completely fade if the nonfarm payroll shows steady hiring and continued wage pressures. Crypto Reversal Wednesday is here and risk aversion has taken bitcoin tentatively below the $20,000 level. ​ The strong start to October is over and markets were quickly reminded that Fed pivot calls were premature once again. ​ After an ADP employment change report and ISM Services Index, traders were quickly reminded that the economy isn’t falling off a cliff and that the Fed might have to remain aggressive with its rate hiking cycle next year. Bitcoin’s fundamentals still support a healthy consolidation here and that should remain the case as long as we don’t see a double dose of robust hiring on Friday and much hotter-than-expected inflation next week. ​ 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: October rally over, robust service sector hiring, bitcoin drifts below $20k - MarketPulseMarketPulse

OPEC+ agrees to cut production OPEC+ agreed to cut their production target by 2 million barrels a day. OPEC+ is keeping the oil market tight with the biggest output cut since 2020. ​ The production cut was driven by uncertainty that surrounds the global economic and oil market outlooks. The OPEC+ target is now 10.5 million bpd, which according to the Saudis is a real cut between 1 to 1.1 million bpd. ​ The next ministerial meeting will be on December 4th. ​ The plan is now for them to have ministerial meetings every six months and the monthly JMMC meetings will now happen every two months. The EIA crude oil inventory showed crude, gasoline, and distillate inventories continue to fall. ​ This report was mostly bullish given a headline draw, rebound in gasoline demand, steady production, and steady exports above 4 million barrels a day. Oil should remain supported here following the OPEC+ decision and the EIA report, but the upside will be capped well in advance of the $100 a barrel level. ​ After the OPEC+ meeting, Russia’s Novak said it could cut output if an oil price cap is put in place. Novak is signaling that Russia is not desperate for revenues and if this cap moves forward, we could see oil prices extend gains. ​ ​ Gold Gold prices edged lower after the bond market said not so fast with the collapse of global bond rates. ​ A strong private payrolls report reminded investors that there is still strength in the labor market that could allow the Fed to remain aggressive beyond the next two FOMC meetings. Gold needs to see a sharper slowdown in the US and cooler prices for a bullish breakout to form. Gold seems poised to consolidate between $1680 and $1740 until we get both the NFP report and the latest inflation readings. 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+ delivers, gold pares this week’s gains - MarketPulseMarketPulse

Unsettling market volatility is going to be here for a while as Wall Street broadly downgrades their end of year S&P 500 targets. The bond market is telling us they firmly believe Fed Chair Powell has rolled up his sleeves and is ready for this fight with inflation to get ugly. It appears that a hard landing is becoming more likely and that is driving this current round of risk aversion. Every time we get a better-than-expected economic reading, traders are anticipating that will allow the Fed to be even more aggressive with tightening of policy.  Today’s US flash PMIs showed business activity improved and while input-cost inflation cooled.  The rest of the world is seeing strong contraction readings and that will keep the stock market selling pressure widespread.  With one week left in the quarter, Goldman Sachs had to admit they were wrong with their optimistic stock market outlook and sliced their end of year S&P 500 target from 4,300 points to 3,600, which would be below the June low. A lot of traders expected hints of a Fed pivot at Jackson Hole or at the September FOMC policy, but that never happened. A hard landing is becoming the base case scenario for many and that means more economic pain along with a much weaker stock market is coming. How far we go below the summer lows is anyone’s guess.  Over the next couple of weeks, long-term investors may hesitate buying into weakness because it doesn’t seem like any economic data release or Fed speak will convince markets that a downshift from this aggressive tightening campaign will be happening anytime soon.  Downside targets for the S&P 500 include the 3,470 level, which might look attractive for some long-term investors.  FX The British pound collapsed after Chancellor of the Exchequer Kwarteng’s fiscal statement.  Financial markets abandoned bets on the British pound and UK bonds as foreign investors doubt the government will be able to fund this new round of debt.  The British pound is sharply lower on the markets rejection of this fiscal handout that includes both the biggest tax cut in half a century and investment incentives. Oil Oil tanks as global growth concerns hit panic mode given a chorus of central bank commitments to fight inflation.  It seems central banks are poised to remain aggressive with rate hikes and that will weaken both economic activity and the short-term crude demand outlook. The dollar rally is about to enter another level that could keep the pressure on commodities, especially oil prices.  Rig counts continue their steady rise, climbing by 3 and bringing the total to 602. The steady climb in rigs however has not led to any significant increases with US production.  Once WTI crude broke below the $80 level, technical selling was persistent. Despite all the bearishness that is hitting oil prices, economic activity isn’t falling off a cliff. Next week, energy traders will pay close attention to a tropical depression that could become a hurricane that is headed towards Florida.  If the selling remains strong at the start of next week, major support now resides at the $74 level.  Gold Gold continues to get picked on as global bond yields at the short-end of the curve skyrocket.  Everything is going wrong for gold; Strong dollar, weakening jewelry demand as China’s outlook continues to deteriorate, central banks are not focusing on buying bullion, and the bond market remains its worst enemy. If gold’s selling pressure remains, prices could tumble towards the psychological $1600 level. Crypto It is an ugly day on Wall Street and no one is surprised Bitcoin is lower.  Risky assets are getting hit hard as a wrath of global central bank tightening is leading many to think hard economic times are upon us.  Despite today’s crypto weakness, Bitcoin selling has not made a clear attempt at the summer lows. Bitcoin is only $1000 away from June low, so traders will pay close to attention to what happens over the weekend.  Weekend volatility could be interesting here and if a breach of the summer low occurs, don’t be surprised if that does not last until Asia opens on Sunday night. On a day when stocks are down over 2%, you would expect Bitcoin to be down double or triple that and not just around 3% weaker, which could mean many long-term holders remain unfazed.  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. Bio Twitter Latest Posts  

Stocks initially tumbled after the Fed remained very much committed to winning the war against inflation. The Fed is not taking any chances with inflation and they are prepared to send this economy into a recession. Goodbye soft landing, Wall Street prepares for a hard landing. The Fed delivered a third straight 75bp rate hike and signaled they expect the Federal funds rate to rise to 4.6% this cycle. ​ The updated staff projections were a bit more hawkish than many expected. ​ The Fed expects unemployment to rise to 4.4% next year and that they will keep rates elevated and eventually bring them down to 3.9% in 2024. Stocks rebounded during Powell’s press conference as the economic pain threshold for the Fed seems somewhat limited. Softer labor conditions are going to happen, but it seems a pause will happen fairly quickly at some point in the middle of next year. ​ Powell noted that FOMC is split between 100 and 125 bp in rate hikes for the rest of the year. ​ Peak tightening is almost here and that should be good news for risky assets. ​ Housing  US existing home sales edged lower in August, but further weakness is coming as mortgage rates continue to soar, a weakening consumer, and on a growing likelihood the economy is recession bound. Home sales declined to 4.80 million, the seventh straight monthly decline. ​ The housing market will continue to cool especially considering yesterday’s plunging building permit data and with the 30-year fixed mortgage rate surging to 6.25%. ​ Putin raises the ante Russian President Putin’s latest escalation sent a shock through financial markets. ​ Putin announced the immediate “partial mobilization” of Russian citizens and noted they would use “all the means at our disposal” which raises the risk that nuclear weapons could be used. Putin is obviously frustrated with Ukraine’s counter-offensive and recapturing of territory. ​ Investors are worried that a major escalation could be near and that is weighing on European assets. ​ Crypto The post-Fed crypto reaction was initially weakness as the hawkish stance was affirmed by Fed Chair Powell. Bitcoin found support at the $18,800 level as Wall Street gains confidence they have a handle on how high the Fed will take rates. Wall Street also saw Nomura, Japan’s largest broker, continue to make the push into crypto. Steven Ashley is switching roles from Nomura’s Head of Wholesale Division and Executive Officer to Chairman of Laser Digital Holdings AG1, Nomura’s new digital asset company. ​ Nomura was expected to make a big splash into the digital asset industry and insiders are not surprised Ashley will lead the charge. ​ 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. FOMC React: Hard landing will lead to a pause, housing market cools, Putin’s escalation, bitcoin stabilizes - MarketPulseMarketPulse

This week is not just about the Fed, but about a wrath of central banks that are mostly considering super-sized rate hikes. It is difficult to be buying up stocks with this lousy macro backdrop, persistent inflation pressures, global growth weakness, and slashed earnings outlooks. Pessimism for equities remains elevated as the US economy appears to have a one-way ticket towards a recession as the Fed is poised to remain aggressive. ​ The risks for a retest of the summer lows could easily happen if the Fed remains fully committed to its inflation fight. ​ Data US homebuilder sentiment continues its record downward trajectory. ​ The National Association of Home Builders/Wells Fargo Housing Market Index fell three points to 46, a ninth straight monthly decline. Almost a quarter of builders noted that they are lowering prices as rates have jumped. ​ Despite rising costs for land, labor, and materials builders are lowering prices. ​ The housing market is cooling but it still has a long way to go. Cryptos pummelled as yields soar Cryptos are getting crushed as yields skyrocket and as pessimism grows for a sharper global slowdown. ​ The entire cryptoverse is vulnerable to surging borrowing costs and that risk remains front and center. ​ This week could be the catalyst that sends the market to pricing in peak Fed tightening. This could be the ripping the band-aid off moment for bitcoin as selling pressure could get ugly here but that might be what is needed to form a bottom. ​ ​ Ethereum’s post Merge hangover also continues after SEC’s Gensler suggests Ethereum could now mean the crypto becomes regulated as a security. ​ Ethereum was close to forming a bottom but Gensler’s warning unleashed another wave of selling. ​ 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. Extreme hawkishness, risky assets broadly head lower, Housing cools, UAE plans on more output, gold slides, cryptos crushed - MarketPulseMarketPulse

Oil Crude prices were under pressure as fears of an aggressive central bank tightening are driving concerns for a quickly weakening global economy and as the UAE plans to increase oil output. ​ The global economy is slowing and that has been troubling for the crude demand outlook. ​ Oil pared losses as Wall Street saw a broad reversal at the NY open. While pessimism remains elevated for global growth, extreme positioning before the Fed seems unlikely. ​ Gold Gold is breaking as surging real rates show no signs of easing and as it fails to act like a safe-haven. ​ This is a brutally tough weak for bullion as so many central banks this week are contemplating jumbo-sized interest rate hikes. It is hard to get a handle on what will be the peak for the Fed and until that happens, gold will remain vulnerable. ​ Gold will eventually resume its role as a safe-haven, but the peak in the dollar needs to be put in place and that won’t happen for a couple of meetings. ​ What is driving the hesitation for scaling into a long-term position with gold is that investors are not convinced that even when the Fed pauses, that might not guarantee they are done hiking. ​ The risk that the Fed will pause and then have to restart raising rates is elevated and that has completely upended the gold trade. ​ Gold is due for a bounce and even if that happens post-Fed this week, a sustained rebound will only occur if more signs emerge that inflation is easing. ​ 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. - MarketPulseMarketPulse

US stocks were dealt another blow after FedEx warned that the economy was about to enter a ‘worldwide recession.’ Wall Street was already nervous that the Fed’s inflation fighting mission was going to trigger a recession, but now it seems corporate America is already showing signs that the economy is slowing. FedEx FedEx shares plunged the most in forty years after they had withdrawn their guidance.  A weakening economy and rising competition from Amazon complicate how FedEx will perform this holiday season.  FedEx might have a couple tough quarters ahead of it, but this should not be the story that indicates doom and gloom times are here to stay. Oil This was a bad week for oil prices as global growth fears appear they won’t be going away anytime soon.  It is just bad news on the crude demand side from both the US and Europe, while skepticism remains elevated that China will have a smooth reopening. Baker Hughes reported that the oil rig count rose 8 to 599 rigs, but that is still shy of pre-pandemic levels. The oil market is losing its tightness and that will likely continue if central banks worldwide remain aggressive with fighting inflation. Next week, energy traders will pay close attention to both the FOMC decision and China’s detailed trade data that might show demand for energy is weakening. Gold The lead up to the FOMC meeting has been very bearish for gold.  Gold is stabilizing here as selling pressure has exhausted itself and will likely need to wait for the FOMC decision. The bond market selloff might be showing signs of slowing down, but expectations are growing for the Fed and all the other major central banks to remain aggressive with fighting inflation.  Gold’s fate will likely be determined by the FOMC decision, which means if the Fed signals they are stepping up their fight against inflation further pain could be ahead for the precious metal. Cryptos Bitcoin is lower following the selloff in equities as risk appetite remains in hiding.  Adding to crypto jitters was the release from the White House that tried to outline a framework on regulating cryptos.  It’s been six months since President Biden’s executive on cryptocurrencies, but this framework hardly puts anything major in motion.  New goals for the SEC and CFTC were expected, while the proposed regulation on eliminating illegal activity fell short of complete guidelines on how that will be achieved.  The Treasury Department will lead the charge in finding a justification for a digital dollar, but that still seems like it is many years away from seriously happening. 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 Close: Stocks remain in doom and gloom mode after FedEx Warning, Oil's bad week, Gold steadies, Bitcoin follows equities lower - MarketPulseMarketPulse

Oil falls as US economy slows Crude prices got knocked again as demand fears intensified after a wrath of economic data shows the US economy is slowing down. ​ Oil fundamentals are still mostly bearish as China’s demand outlook remains a big question mark and as the inflation fighting Fed seems poised to weaken the US economy. ​ The US Department of Energy also clarified that the restocking of the Strategic Petroleum Reserve (SPR) won’t happen due to prices falling at a certain level and that they won’t take action until after fiscal 2023. ​ This clarification from the DOE tentatively removed any support crude had just ahead of the $80 a barrel level. ​ Despite all the doom and gloom across the world, the oil market remains tight and prices should outperform all the other commodities. Gold Gold got pummeled ruthlessly after another round of economic data supported the Fed’s case to remain very aggressive with fighting inflation. While both Fed regional surveys offered some relief that price increases are slowing, the rest of the data paints a picture of a very strong labor market that is still seeing decent spending and production activity. Until the bond market selloff eases, gold is in trouble. ​ Once gold fell below the prior summer low of $1690, momentum selling took over. ​ If Treasury yields keep going up that will keep the selling pressure on bullion. Gold should find support soon as investors will refrain from any overweight positions until they hear directly from the Fed. ​ The last hurdle for gold is in the University of Michigan inflation expectations. ​ Unless markets are surprised with an increase in inflation expectations, gold should stabilize above the $1650 region. ​ ​ 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 lower, gold pummeled - MarketPulseMarketPulse

US stocks edged lower as investors stare at a weakening economy that will get tested by an inflation-fighting Fed. ​ The latest round of data suggests the Fed can stick to aggressive rate hikes as the labor market remains strong and as the economy slowly softens. ​ The risks of the Fed sending the economy into a severe recession are growing but right now the data doesn’t support that argument. ​ The consumer is still spending and apparently is not having any trouble finding work. The Nasdaq was led lower by Adobe shares, which were under pressure after announcing a deal to acquire software company Figma in a deal worth around $20 billion. ​ Another severe market rout was avoided after railroad companies and unions reached a tentative deal to avoid a strike. ​ This agreement saved the economy from further intensifying inflationary pressures and avoided the US economy a daily economic hit of about $2 billion. US Data The US retail sales report was not as good as the headline number might indicate. The headline advance reading posted a 0.3% gain in August, much higher than the consensus estimate for a decline of 0.1%. The control group which feeds into GDP was flat. Overall, the sales report suggests the consumer is doing just fine. Auto sales climbed 2.8%, while retail and food services rose 0.3%. ​ Furniture sales dropped 1.3%, while gasoline stations saw sales drop 4.2%. ​ The two Fed regional surveys posted significant declines with both prices paid and received, which is welcome news for the economy. ​ The Empire manufacturing survey delivered another decline but was much better-than-expected, while the Philly Fed business outlook returned to negative territory. ​ Cryptos Today is all about ethereum and its historic merge. The Merge paves the way for the world’s second-largest cryptocurrency to become more energy-efficient and to operate on a ‘proof-of-stake’ network. ​ Crypto traders are often used to ‘sell the event’ reactions in the cryptoverse and this merge proved to be another example of just that. ​ Ethereum is down significantly and volatility should remain elevated into the weekend. ​ The update went as planned and did not lead to any major outages. ​ Despite today’s Merge success, ethereum still remains vulnerable in the short-term to further momentum selling, especially as traders await next week’s FOMC decision. Significant weakness with tech stocks is also weighing on cryptos in general as bitcoin has fallen below the $20,000 level. ​ ​ 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. Stocks lower on Fed fears, mixed US data, ethereum merge Success - MarketPulseMarketPulse

This week suddenly ends on a positive note as the S&P 500 broad market index, which started to climb on Wednesday, has lead the major stock market indicator to 4032 points, the highest since August 30. This is very strange considering all the negative news that could have affected the stock market this week. The European Central Bank (ECB) raised all interest rates by 75 basis points. This is the second time in the history of the single currency that such a move has been performed. The Federal Reserve’s (Fed) Chairman Jerome Powell confirmed the central bank will continue to do everything needed to bring inflation down to the 2.0% target. This kind of rhetoric is also being echoes by ECB President Christine Lagarde who has assured markets that the Bank is likely to take further bold steps to raise interest rates over the coming months. The message from these two bank leaders may enforce stocks to continue to move down.  However, investors found a reason to pull on the breaks and stop markets from another sell-off. Chicago Fed Bank President Charles Evans supported investors by saying that the next inflation report next week may point to how much the Fed could raise its interest rates this month. "If I saw inflation maybe cooling a little bit that's not going to change the fact that I still think we are going to need to top out at something like 3.5% to 4%, it's just that maybe we don't have to do it that soon," Evans said. Some investors were flooded with euphoria after crude prices fell by 16% over the last two month. It is clear that inflation may slow down significantly in August and perhaps prompt a less-than-expected Fed interest rate move.  It sounds more like wishful thinking as inflation is considerably above the existing level of interest rates for the Fed to pull the breaks on, even if prices slowed down in August. However, many investors are seen to support the idea and hope for stocks to recover. Even though some investors are holding onto hope, we should not exclude the possibility that a downside path of stock indexes could be a bit bumpy. The technical picture for the S&P 500 index is still negative as it is moving within an aggressive downside formation after it failed to climb above 4020 points on Thursday. This has now become a strong resistance level that may send the index back to the downside targets at 3850-3950 points. More negative drivers may send the index further down to the extreme secondary targets at 3600-3700 points, and even further down to heartbreaking 3000-3100 points.  In recent weeks, short positions at 70% of the targeted volume were opened at the average price of 4285-4290 points. The rest of the 30% could be opened once strong reliable downside signals emerge. The final downside target in the long-term is located at 2100-2300 points that could be reached by the end of 2022. The oil market made a huge step to the downside towards $75-85 per barrel of the Brent crude benchmark. Crude prices dipped down amid new anti-covid measures in China, unwinding global recession fears and a sharp rise of oil inventories in the United States. Brent prices slipped down to $87-88 per barrel, the lowest since January 2022, and are likely to continue down to the extreme targets at $50-65 per barrel that could be hit by November. In the short-term crude prices are less predictable making any entry points unreliable at the moment.  Gold prices are on a downside slide and they may last until the end of October. The primary scenario suggests prices may reach $1350-1450 per ounce by November. So, it would be reasonable to open short or small-short positions considering the current price movement at $1730 per ounce. The Euro was cheered on by the ECB’s decision to sharpen its interest rates hike, changing its formation to the aggressive upside with a primary target at 1.02500-1.03500. A reasonable correction to 1.00500-1.00800 is needed to open long positions. Once this correction is made the EURUSD could be interesting for long trades. GBPUSD also changed its formation to the aggressive upside with a target at 1.18000-1.18500. The pair needs to step back to 1.15300-1.15800 to be interesting to open long positions.

US stocks are rebounding as the global bond market selloff takes a break. ​ Economic momentum remains for the US economy and that could only improve if inflation continues to soften. Investors seem poised to enter a holding pattern until the September 13th inflation report. FX Dollar domination may have one last major rally in it before the market can start placing some long-term bets with some of the European currencies.  It has been one helluva ride for the dollar riding flows from the global energy crisis, a widening interest rate differential, and fears of a severe European recession are close to getting fully priced in. The upcoming ECB rate decision will be a make-or-break moment in FX that will either trigger a bounce towards parity or provide a clear passage towards 0.9750. BOC The Bank of Canada policy decision went as expected with a downshift to a 75 basis point rate hike.  The benchmark interest rate stands at 3.25% and will probably peak at 4% with the December policy meeting.  Canada has been aggressive with the fight against inflation and that should easily suggest a couple more meetings of rate hikes, but the end of their tightening cycle is nearing. Crypto It was inevitable that the cryptoverse would see more insolvencies and it appears the next one could be a significant crypto mining pool that is responsible for roughly 10% of bitcoin’s computing power. Poolin announced that ,”We are here to let you know the withdrawal options of Pool Account and Poolin Wallet are deactivated while setting payout wallet addresses.”  ​ Poolin does not appear to be casualty from the Terra/Luna stablecoin collapse, but this obviously means they are having liquidity problems.  Poolin isn’t a lender, so this is troubling for the crypto space that is trying to stabilize. Bitcoin is now below the $19,000 level and if the mood remains that it will be a bad September swoon on Wall Street, a retest of the summer lows seems inevitable. 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. Stocks rebound as yields drop, dollar domination trade, BOC downshifts hikes, crypto insolvencies - MarketPulseMarketPulse

The September swoon is in play as a resilient economy paves the way for more Fed tightening. Stocks are going to struggle because too much of the economy is doing well and that leaves Wall Street vulnerable to an extended period of rising interest rates. The dovish pivot and the end of interest rate hikes with the December FOMC is not how this will play out. After the ISM Services index rose to a four-month high, Treasuries extended their losses.  Demand is improving and that is good news for the economy.  The services ISM index improved to 56.9, a nice beat of the consensus estimate of 55.3.  Oil Energy traders are going to be quick to fade any oil rally that emerges as the short-term crude demand outlook appears to be poised for another wave of China COVID-related lockdowns.  Despite some better-than-expected US services data, global growth isn’t looking good at all and that is trouble for crude prices. Fading the OPEC+ production cut bounce wasn’t that hard to do given a laundry list of global economic challenges.  Gold Gold is back in the danger zone as global bond yields are skyrocketing.  The US economy is looking pretty good and that has many traders starting to doubt that we’ve seen the peak in yields.  Gold is in trouble here if the bond market selloff is the dominant theme of the trading week. Fixed income markets are getting flooded with corporate debt offerings and central banks seem like they will be aggressive with front loading rate hikes right now.  It could get ugly quickly if gold breaks below $1690 level as there isn’t much support until $1650.  Bitcoin The retail trader is starting to panic again as meme stocks and cryptos fall under pressure. Bitcoin is breaking below the key technical levels.  Bitcoin’s correlation with tech stocks continues and the surge with Treasury yields is a troubling sign. Many are starting to doubt that the peak in yields is in place and that could spell trouble for Bitcoin.  Bitcoin selling pressure will next eye the summer lows just ahead of the $17,500 level. Memes So many Meme stock traders got hooked after early success beating Wall Street with GameStop and AMC, but meme mania will struggle given the current market environment.  The underlying fundamentals for so many stocks that went viral remains rather bleak. Companies from GameStop, AMC, Bed Bath & Beyond, and many more are still overvalued companies that continue to see hype from the WallStreetBets crowd.  Meme stock trading is evolving and will likely end up just being good for very short-term coordinated rallies, but right now looks it is time for some froth to go. Some diamond hands will be tested and it could get uglier a lot sooner if Wall Street starts believing the Fed will be much more aggressive than what the market has priced in for rate hikes.    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 Close – September Swoon, OPEC+ bounce faded, Gold back in danger zone, Bitcoin jitters, Memes under pressure - MarketPulseMarketPulse

Oil Oil prices declined as the global growth outlook continues to deteriorate and as geopolitical risks have yet to lead to any disruptions for crude exports. ​ To start the trading week, it seemed energy traders were anticipating some disruptions from either Iraq or Libya and so far that doesn’t seem to be the case. ​ Today, everything seems to be turning bearish for oil: First, global markets still have a Fed headache that has everyone bracing for further pain for households and businesses. ​ Today’s wrath of EU inflation data supports aggressive tightening that could send Europe into a severe recession. Best Buy’s earnings showed consumers are pulling back on spending, confirming the trend of a much weaker US consumer and raising fears of much weaker growth by the end of the year. Lastly, Taiwan’s military reportedly fired warning shots at a Chinese drone, reminding traders how the tensions between the two world’s largest economies might not see a de-escalation anytime soon, which would weigh on demand for Chinese goods. The oil market is still tight, so this downward move should not last much longer. If WTI crude easily breaks below the $90 level, bearish momentum could make this interesting and make a run for the August lows. ​ ​ ​ Gold declines as inflation accelerates Gold prices are declining as investors continue to see a wrath of elevated inflation data that supports the argument for further global central bank tightening. ​ Gold’s rough patch seems like it will continue a little while longer as gold-backed ETFs continue to see outflows. A weaker dollar and a flight-to-safety might be what is needed for gold to stabilize and that could be happening. ​ If the ECB doesn’t disappoint and delivers a massive 75 basis-point rate increase and if equities tumble as earnings expectations crumble, gold’s bleeding could stop. ​ Geopolitical risks and the global energy crisis impact to growth should eventually lead to safe-haven flows for the yellow metal. ​ ​ 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 slumps, gold slides as risk aversion firmly in place - MarketPulseMarketPulse

Turnaround Tuesday disappeared faster than dessert does at the Moya household. US stocks turned negative after confidence and job opening data supported the argument for the Fed to stick to an aggressive stance in fighting inflation. ​ The S&P 500 index fell below the 4,000 level as more Fed speakers stood by Chairman Powell’s strong hawkish position. ​ Fed’s Bostic reiterated it is too early to declare victory in the inflation fight and Barkin stated that policy needs to be restrictive. ​ It seems like traders are leaning towards a 75 bp hike in September, a half-point in November and a 25bp increase in December. ​ Over the next few months, if the labor market doesn’t break and the consumer remains resilient, Wall Street might start pricing in rate hikes for February and March. US data shines US consumer confidence roared back as Americans started to believe the peak with inflation is in place. ​ The headline confidence reading rose to 103.2, well above the highest estimate and best level since May. Everything improved with the Conference Board’s August report as both the present situation and expectations survey posted hefty gains. ​ Job openings rebounded in July as 11.2 million jobs as employers continue to struggle attracting and retaining workers. ​ This is one critical component of the labor market that will help the Fed justify aggressive rate hikes. ​ If Americans have options to get employed, the Fed can ignore the rapid deterioration with the other economic releases. ​ FX Hungary raised the benchmark interest rate by a full percentage point to 11.75%, the highest key rate in the EU. While their neighbors appear to be opting for a slower pace of tightening, Hungary’s economy is bracing for surging borrowing costs that will weaken their economy. The central bank is sending a clear message that a “decisive continuation” of its monetary tightening cycle is needed to battle persistent inflation. ​ The Hungarian forint rallied against the euro but is still within shooting distance of the record lows set in early July. ​ The forint might have further room to go against the dollar as peak tightening by the Fed is almost in place, while the ECB might be forced to deliver a couple of massive rate hikes in September and October. ​ Bitcoin Risk aversion is firmly back in place and that sent Bitcoin below the $20,000 level. ​ If the broad selloff on Wall Street intensifies, bitcoin is looking very vulnerable here. ​ If the S&P declines by 3% over the next few days, that could be the catalyst to send bitcoin back towards the June lows. ​ ​ ​ 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. Stocks turn negative, US data supports further large rate hikes, Hungary hikes, bitcoin declines as risk aversion firmly in place - MarketPulseMarketPulse

US stocks are declining after a weekend filled with global central bank hawkishness reinforced the message that global central bank tightening will deliver pain to households and businesses. ​ Friday’s sharp selloff is continuing as expectations for the global energy crisis persist, which will keep inflation risks elevated and lead to a rapid deterioration of economic data. Powell sent a short and direct message that there won’t be a Fed pivot anytime soon and that has markets positioned for further equity weakness. ​ Investors were expecting that once the US got some ugly data, perhaps a couple of negative NFP reports, that the Fed would come to the rescue, but that might not be the case. ​ Premature loosening won’t be happening on the first signs that the economy is slowing down quickly and that raises doubts for anyone who bought stocks earlier this month. ​ ​ All about Europe this week The ECB rate decision will show that the current inflation narrative will force them to deliver massive rate hikes that will kill growth. ​ Over the weekend, ECB’s Rehn said their next step is a significant rate move in September and that it should be by at least 50 basis points. The latest round of ECB talk has been hawkish and that should have markets leaning towards expecting a 75 basis point rate hike. ​ ​ The European Union Commissioner Ursula von der Leyen is preparing an emergency intervention and structural reform of the electricity market. ​ Drastic measures are needed to salvage the European economy as the risks of extremely higher energy costs could trigger a severe recession. ​ Czech officials have suggested capping natural gas used for power generation. ​ The EU is expected to meet on September 9th and is expected to show some plan for tackling the energy crisis. Bitcoin ​ Over the weekend, Bitcoin dipped below the coveted $20,000 price point as risk aversions grew following more global central bank hawkish talk from Jackson Hole. ​ Bitcoin is showing some resilience here as it has clawed back above the $20,000 level, despite widespread stock market weakness. ​ Crypto traders are not used to seeing bitcoin withstand a rout on Wall Street, so this could be a promising sign. ​ Crypto bulls will be tested here as the risk for further risk aversion is high given the trajectory of the global economy. ​ ​ 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 selling continues, Europe in focus, bitcoin back above $20k for now - MarketPulseMarketPulse

Gold edges higher as dollar rally halts Non-interest-bearing gold got crushed early as more global central bank rate hikes are getting priced in. ​ Gold is edging higher as the dollar rally halted as the euro rises on expectations the ECB will deliver more rate hikes than investors initially thought. ​ If the dollar does not rally here, that could provide some relief for gold. ​ If equities remain in risk aversion mode as the speculative money that bought risky assets this month grows nervous that economic growth is about to collapse, gold might be able to stabilize here. ​ Gold was vulnerable to a plunge towards $1700 but it is starting to show some resilience. â€‹ With the UK on holiday, today’s moves might be meaningless. â€‹ The true test for gold will come tomorrow. â€‹ Oil The one trade that everyone can agree upon is that the oil market will likely remain tight. â€‹ Oil rallied on rising risks of a potential civil war that could put Libyan output at risk and over growing expectations that OPEC+ is positioning themselves to cut production. â€‹ What is also helping oil today is that despite risk aversion running wild, the dollar rally is on hold. â€‹ Oil has been trending lower but the supply side risks are too great and prices need to find a home above the $100 a barrel level. â€‹ 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 benefits on dollar rally break, oil rises - MarketPulseMarketPulse

US stocks declined after Fed Chair Powell delivered a short and clear message that they will continue to raise rates and hold them at a higher level until they are confident inflation is under control. The market reaction was for rate cuts to get priced further out and a minimal boost for additional pricing to get done before the end of the year.  Powell is not budging on having restrictive policy and that should mean the economy will steadily weaken going forward.  Powell drove home the point that when they are done raising rates that we should expect them to stay there for a long period of time.  The terminal rate may need to be higher, but for now it seems we might not need to worry about rates rising into the 5% range. There was no dovish pivot, but it seems financial markets are getting close to fully pricing in the remaining Fed rate hikes. Downside for equities may remain limited if inflation pressures continue to ease sharply.        Pre-Powell Speech There was no calm before the Jackson Hole speech storm.  The euro surged after reports that some ECB officials want to discuss a 75 basis-point rate increase in September.  A wrath of Fed speak also confirmed the data-dependency stance for determining the magnitude of rate hikes. Fed’s Bullard, one of the more hawkish members, noted that pulling rate hikes forward is appropriate and that the pace of rate increases matters. Fed’s Bostic stated that if the data is strong, they could lean towards a 75 basis-point hike next month and that if data is softer like the PCE today, he will lean towards a half-point increase.  Bostic added that we are not in a restrictive range yet which is probably 3.5-3.75%, but that they hope to get there by year end. Fed’s Harker said that the Fed must move ‘methodically’ to a restrictive stance.  Powell’s Jackson Hole Speech This was an easy Jackson Hole speech.  Fed Chair Powell clearly explained in order to bring down inflation, we should expect higher rates, slower growth, and a softening labor market.  Powell did not say anything to change the data-dependency over what will lead to shifts in the pace of tightening but he did warn against premature loosening.  Powell noted it will be appropriate at some point to slow the pace of tightening, but that doesn’t seem like it will happen anytime soon.  The 2-year note yield rose 4.1 basis points to 3.407% and will probably have another 30 basis points to go over the next couple FOMC decisions.  US Data The US consumer is weakening and hopes for a robust third quarter rebound might be overdone.  Personal income rose 0.2%, much less than the 0.6%, while spending increased by 0.1%, well below the expected 0.5% consensus estimate.  July headline inflation came in at -0.1%, while the year-over-year fell from 6.8% to 6.3%.  The August University of Michigan final readings also showed inflation expectations fell more than expected, with the 1-year outlook dropping to 4.8% and the 5-10year expectations ticking lower to 2.9% This round of economic data along with all the Fed fireworks still suggests it will come down to the September 13th inflation report to determine if they will deliver another 75-basis point rate increase or only a half-point one.    Energy Crude prices went on a kiddie roller coaster after softening US economic data, a Jackson Hole speech that has the Fed committed to restrictive policy that will eventually get this economy into a recession. Despite today’s weakness, the oil market is still tight and a break below the $90 level is not warranted.   The next big in crude will likely be determined by the demand side and that will draw extra attention to China’s factory activity data.    It is important to pay close attention to the political pressure growing in Europe to do something about the global energy crisis.  The Czech Republic is expected to call an extraordinary meeting of energy ministers to combat the surge in power prices.  The pressure is on for decisive action and that could lead to emergency measures that might cap the move higher with energy prices.  Gold Gold prices declined as Treasury yields rose after Fed Chair Powell stuck to the hawkish script.  The short-end of the Treasury curve rose as investors anticipate no dovish pivots for the rest of the year.  Gold is vulnerable here as the Treasury yields could gain further momentum next week if the labor market remains healthy.  The risks of one last major move lower remains for gold, but then prices should stabilize quickly as financial markets will be more confident in pricing in the remaining Fed rate hikes.  Bitcoin Bitcoin weakened after Fed Chair Powell didn’t blink with his reiteration that the Fed will tighten policy to bring down inflation.  Risky assets are struggling as Powell’s fight against inflation will remain aggressive even as it will trigger an economic slowdown. Bitcoin is tentatively breaking below $21,000 and momentum traders will wait to see if the risk aversion sends prices towards the $20,000 level.   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. Jackson Hole Reaction: No doves allowed, ECB hike expectations rise, Oil slumps, Gold lower, Bitcoin dips below $21k - MarketPulseMarketPulse

OANDA Senior Market Analyst Craig Erlam discusses the latest developments in the oil market and the impact they’ve had on the price.   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. Brent Crude - Bounces back after Saudi warning - MarketPulseMarketPulse

Oil Crude prices initially edged higher as we get further reports that OPEC+ is seriously considering lowering production and after the latest round of US economic data and Fed speak suggests the economy is still in a good position to handle more rate increases. Oil will start to form a key trading range until Fed Chair Powell’s speech at Jackson Hole. We could get a major move in the dollar post-Powell and that could trigger a major one-way move for commodities. ​ The oil fundamentals still support crude prices to make a move above the $100 a barrel level, but first, we will have to wait-and-see if the dollar cooperates. Oil is seesawing ahead of Jackson Hole and that will probably continue until we hear from Fed Chair Powell. ​ Gold Gold got a limited boost as the dollar softened ahead of Fed Chair Powell’s speech at Jackson Hole. ​ Another round of US economic data and Fed speak supported the idea that the Fed will remain aggressive tightening policy until inflation is under control. ​ Investors want to see if Fed Chair Powell locks the Fed in for another massive 75 basis point rate increase in September, but he will likely stick to the data-dependency script and leave it up to the September 13th inflation report. Gold will likely consolidate between the $1750 to $1780 zone leading up to Fed Chair Powell’s speech. 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 seesaws, gold edges higher - MarketPulseMarketPulse

‘Twas the night before Jackson Hole, when all through the house not a creature was trading, not even a mouse Some stocks were rallying but with cautious care In hopes a dovish hint from Fed Powell would be there’ US stocks are rising ahead of Fed Chair Powell’s Jackson hole speech as investor worries ease that the Fed will make a policy mistake with their battle with inflation. Everyone remembers Powell’s mistake about sticking to the inflation is transitory at last year’s Jackson Hole Symposium, so he will be extra motivated to make sure his message is clear and aggressive about fighting inflation. ​ The latest Fed speak supports the hawkish narrative after both the Fed’s Bostick reminds us that strong economic data could tip the Fed to deliver another 75-basis point rate increase and after Fed’s George noted they have more room to go with raising rates. The Fed is ready to be locked in tightening mode until inflation eases and the latest inflation pretty much confirms that won’t happen until next year. The labor market is still too strong and that will continue to feed into rising wages and drive home the point that the Fed can remain aggressive with raising rates. US data This morning’s economic data is the perfect appetizer for Friday’s hawkish Fed Chair Powell speech. It is not surprising to see jobless claims fall again and for a slight revision higher with both headline GDP reading and personal consumption. ​ Two consecutive quarters of contraction should be followed by a robust rebound in the third quarter. ​ Given how strong the labor market remains, wage pressures will not be easing anytime soon and that should keep inflation very sticky. The second look at Q2 GDP was revised slightly higher, while personal consumption confirms the spending remained healthy. ​ The Core PCE reading stayed steady at 4.4% and that should support the Fed remaining aggressive with tightening going forward. There is still a chance that this unbalanced economy will get a soft landing and that should prevent stocks from seeing severe downward pressure. ​ Chinese ADRs Chinese ADRs popped higher after reports that the US and China are nearing a deal that would appease American accounting regulators. A couple of hundred US-listed Chinese companies were at risk of getting the boot from US stock exchanges and that could have been disastrous for both the US and China. An official confirmation is expected as both countries are motivated to avoid any unnecessary economic hardships. ​ Bitcoin Bitcoin is consolidating ahead of Jackson Hole but still remains comfortably above the $20,000 level. ​ The correlation with Bitcoin and equities is not holding up today, but that is mainly because the move higher in equities is a story about Chinese ADRs and not a broader move for tech stocks. ​ ​ 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. Jackson Hole Eve, US data, Chinese ADRs rally, Bitcoin above $21k - MarketPulseMarketPulse

Oil poised to rise Despite global recession fears, oil prices are poised to be supported as energy investments have been depressed. â€‹ The tug-of-war between crude demand destruction and a plethora of drivers on why the oil market will remain tight should still suggest prices won’t fall much lower. Oil’s outlook still looks positive here as shale is not taking off, ESG constraints remain, and strong demand for refined product exports. ​ US stockpiles will likely continue to decline over the coming weeks over strong export demand. â€‹ Oil prices could surge over the next few weeks if OPEC+ is forced to cut output and if Iran nuclear deal talks falter again. â€‹ The Saudis don’t want to see oil prices disconnected from market fundamentals and that should suggest this oil market will remain very tight. â€‹ Crude prices dipped after the EIA crude oil inventory report showed a dip with exports and as gasoline demand reversed. â€‹ Optimism for an Iran nuclear deal revival is growing and that is also weighing on prices today. The longer-term outlook for oil is still much higher as the writing is on the wall for energy costs to be very high this winter especially as the risk for further disruptions remains elevated. â€‹ Energy traders saw prices get a boost after cracks were found with the key route for exporting crude from Kazakhstan to international markets. â€‹ It will take a month to replace the broken parts and they still have to find a contractor. Gold Gold firmed up after the dollar softened in what is a very low volume trading session. ​ Gold’s slide might not be over, but no one wants to aggressively be short right now. ​ Gold is forming its pre-Jackson Hole range and it looks like it could be in the $1740 to $1780 zone. Post Jackson Hole, traders should know enough as to whether the rise in yields continues and that will dictate what happens with gold. 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's outlook, gold steadies - MarketPulseMarketPulse

US stocks are rising as Wall Street tries to end a three-day slide by buying up big-tech stocks. ​ We are at an inflection point for the mega-cap trade as hedge funds position themselves for further weakness in bonds and a much weaker consumer as the economy slows. ​ Today’s rebound is small and on light volume, which means most traders are playing the waiting game until Fed Chair Powell’s Jackson Hole Symposium speech. ​ ​ All eyes on Powell​ ​ It is hard to be aggressive with any positioning until we hear from Powell on Friday. ​ A slower global growth environment is not going away anytime soon and now we are clearly seeing broader signs of weakness for the US economy. ​ The Fed still has a lot of tightening to do and that won’t change during the winter. ​ Powell’s fight against inflation might send the US economy into a recession late next year, but for now, he needs to stick to the hawkish script and leave all options of tightening on the table. What Powell needs to do is signal that rates will probably stay higher than what markets are thinking. FX The dollar has too much going its way and that won’t change anytime soon. ​ It seems a major move in the dollar may have to wait until Jackson Hole. Even if Powell caves into his true dovish self, whatever dollar rally that comes out of that will mostly likely be faded. ​ Until the energy crisis is stable and markets have an idea on when the EU will exit the upcoming recession, the euro will remain heavy. Bitcoin Bitcoin is benefiting with the broad return for risk appetite. ​ Albeit a small rally on low volumes, it is welcome news that could keep Bitcoin comfortably above the $20,000 level. ​ Jackson Hole will be massive for Bitcoin and if it paves the way for the Fed to remain aggressive with inflation, we will quickly see if the institutional money remains patient with their crypto bet. ​ The correlation with bitcoin and equities remains, but that may soon weaken if investors grow confident that the US may avoid a deep and painful recession. ​ 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. Waiting game ahead of Jackson Hole, King Dollar, bitcoin edges higher - MarketPulseMarketPulse

Oil Oil bulls thought they were in the clear, but ‘just when they thought they were out, they pull me back in.’ ​ Oil’s true enemy is global growth fears and they are not going away anytime soon. ​ In addition to a weakening crude demand outlook, Iran reportedly gave into a ‘red line demand’ that might be a gamechanger in reviving the elusive nuclear deal. ​ The crude demand outlook is taking a big hit from elevated risks that Europe’s recession will be severe and as several Chinese companies are following the government’s advice to conserve energy.  King Dollar is also making a return so that could contribute to further momentum selling across all commodities, especially oil. ​ Gold nervously eyes Jackson Hole Gold prices are weakening as King Dollar returns as investors brace for a potentially hawkish speech by Fed Chair Powell at the Jackson Hole Symposium on Friday. Gold will eventually settle on a trading range, but it seems the floor might be a little lower as the risks of energy and food inflation could keep the Fed remaining aggressive with rate hikes into the new 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. Crude demand outlook takes a hit, gold stumbles on strong dollar - MarketPulseMarketPulse

Oil rallies after strong US numbers Oil prices rallied after another round of impressive US economic data boosted optimism for an improving crude demand outlook. The US economy still looks good and China’s economy could be ready to bounce back fairly soon.  Momentum from yesterday’s bullish EIA crude oil inventory still lingers, but technical resistance at the $90 a barrel level is capping WTI’s rally for now. OPEC Secretary General Al Ghais reminded energy traders that OPEC could be in a position to cut production if needed.  OPEC is not going to let this pullback with oil prices continue much further. Gold Gold is locked up in battle with King Dollar. The US dollar might continue to strengthen if US economic data continues to surpass expectations.  After breaking below $1800, gold has been struggling to regain its footing.  Aggressive rate hikes globally, today from the Philippines and Norway, are keeping the pressure on non-interest-bearing gold. Gold looks like it could be forming a trading range between $1750 and $1800 as investors will slowly refrain from massive positioning until we get beyond the Jackson Hole Symposium.  Jackson Hole might not trigger any major surprises as the Fed seems locked into its data-dependency mode. 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, gold struggling - MarketPulseMarketPulse

US stocks traded mixed as investors grappled with relatively strong US economic data that might keep the door open for aggressive Fed tightening for the rest of the year.  The economy still looks good as the housing market continues to cool.  Initial jobless claims dipped, easing concerns a little bit that the labor market was starting to head in the wrong direction.  The Philly Fed Business Outlook was a nice surprise given the disastrous Empire manufacturing survey from the beginning of the week. Stocks will most likely struggle for direction for the rest of the summer as Wall Street is still uncertain how aggressive the Fed will be in September.  Traders, however, will continue to pay close attention to developments with the war in Ukraine. ​ Turkish President Erdogan noted that he discussed ways on ending the war with President Zelensky. ​ An imminent end to the war seems unlikely, but any de-escalations or improved passages for Ukraine grain exports would be welcome news for risk appetite. ​ Bed Bath & Beyond mania Meme stock mania is making a comeback and the volatility seems like it won’t be going away anytime soon.  After a skyrocketing WallStreetBets infused move, Bed Bath & Beyond is getting crushed after activist shareholder Ryan Cohen’s filing said they might sell up to 7.78 million shares and additional call options that would represent 1.67 million shares. Cohen’s investment vehicle RC Ventures is the second largest holder of the home-goods retailer. Investor Jake Freeman is becoming a Bed Bath & Beyond legend after selling over $130 million worth of stock after buying 5 million shares in July.  Freeman initially invested $25 million after raising money from family and friends. More stories of Meme stocks wins will keep making believers of the Redditt army. Meme stock mania has evolved into an aggressive pump-and-dump trade, which will spell trouble for the casual investor hoping for some stock to go to the moon.  Arguments to hold stocks like GameStop and AMC for the long-term will not hold water.  Meme stocks will struggle for substantial trends as most of the fundamentals remain weak for these companies and the retail trader is weakening as the economy crawls towards a recession. Bitcoin Bitcoin is officially on vacation.  Despite decent moves with the dollar and Treasury yields, Bitcoin remains anchored between $20,000 and $25,000.  The correlation with equities is coming and going for Bitcoin, but it seems a major move might have to wait until we have a firm handle on market expectations for the September FOMC meeting. If stocks continue to trade rangebound, it seems bitcoin could do the same for the lead-up to the Jackson Hole Symposium. Bitcoin’s fundamentals haven’t changed much and that should keep it as the ultimate risky asset. 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. Mixed session for stocks, Bed Bath & Beyond mania, bitcoin in vacation mode - MarketPulseMarketPulse

Oil Oil prices rallied after another round of impressive US economic data boosted optimism for an improving crude demand outlook. The US economy still looks good and China’s economy could be ready to bounce back fairly soon.  Momentum from yesterday’s bullish EIA crude oil inventory still lingers, but technical resistance at the $90 a barrel level is capping WTI’s rally for now.   OPEC Secretary General Al Ghais reminded energy traders that OPEC could be in a position to cut production if needed.  OPEC is not going to let this pullback with oil prices continue much further.   Gold Gold is locked up in battle with King Dollar. The US dollar might continue to strengthen if US economic data continues to surpass expectations.  After breaking below $1800, gold has been struggling to regain its footing.  Aggressive rate hikes globally, today from the Philippines and Norway, are keeping the pressure on non-interest-bearing gold.   Gold looks like it could be forming a trading range between $1750 and $1800 as investors will slowly refrain from massive positioning until we get beyond the Jackson Hole Symposium.  Jackson Hole might not trigger any major surprises as the Fed seems locked into its data-dependency mode. 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 tries to form a range - MarketPulseMarketPulse

If it looks like a bottom, acts like a bottom, and trades like a bottom, then it probably is a bottom. ​ Bear market rally calls are suddenly becoming quiet these days. ​ The risks of the Fed sending the economy into a recession are easing as inflation is slowly coming down. ​ The Fed’s soft landing seems achievable and that has allowed this rally to continue. The Fed’s minutes will confirm the Fed’s dependency on the next round of inflation data, which should suggest that another massive 75-basis point rate hike is very much still on the table. ​ US stocks rose after decent retail earnings as a mixed round of economic data still supports the Fed to go big with tightening in September. ​ Walmart did better than many feared as that profit warning earlier this month set the bar low for them. ​ Home Depot impressed and raised some questions whether the housing market is really cooling as quickly as many were expecting. ​ Tech is getting hit hard as chipmakers are facing a much weaker consumer that might not be buying expensive goods over the next few quarters. ​ Semiconductor growth is moderating and that is why Wall Street is seeing the unwinding of the overcrowded tech rebound. Crypto hits a wall The recent crypto rebound has hit a wall as retail traders continue to lick their wounds and institutions respect key technical levels. ​ Bitcoin can’t yet break above the $25,000 level, but it seems to be maintaining a bullish trajectory here. Pretty much everyone on Wall Street thought that the mid-June lows would get retested for bitcoin, but now it seems this dead-cat-bounce just doesn’t want to stop. ​ It appears the institutional money is mostly behind this recent rebound, which suggests it could have a better chance of lasting. ​   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. Maybe it is a bottom, retail earnings impress, crypto rally stalls - MarketPulseMarketPulse

Oil eyes Iran nuclear talks After 18 months of negotiations, progress has been made in reviving the Iran nuclear deal. ​ We’ve been here before and have seen talks fall apart. ​ What is a little different this time is that it seems the Iranians are willing to discuss the terms. If the Iran nuclear deal is revived, that could send oil prices down to the low $80s. ​ Crude prices are declining over fears China’s growth could slow much more and on improving odds that the Iranian crude could flood the market as negotiators near a potential revival of the Iran nuclear deal. The crude demand outlook is taking a big hit after a wrath of disappointing Chinese economic activity readings and as Germany struggles. ​ Oil won’t catch a bid here as China’s recovery is weakening and Germany continues to underperform in the EU. ​ Gold Gold prices are struggling as global bond yields surge across the board. ​ Treasury yields jumped after the latest housing starts data disappointed. ​ The housing market is cooling as the starts data falls to a new 17-month low, which will be well received by the Fed. The Fed can continue with its aggressive rate tightening schedule as it is working. The economic data has been mixed today as housing starts dropped more than expected and manufacturing activity posted a solid rebound as vehicle production returned. All eyes will be on the Fed’s Minutes which will likely confirm we need to see the next labor and inflation data before making the call that the Fed can go at a slower pace of tightening. ​ Gold will probably remain rangebound until it is clear which way market expectations lean towards, either a half-point increase or another 75-basis point raise. ​ 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 stumbles, gold edges lower - MarketPulseMarketPulse

Oil Crude prices surged after Russian oil supplies were halted to Eastern Europe. A simple disruption that stemmed from Western sanctions that do not allow accepting transit fees from Moscow reminded us of how quick the oil market can tighten. Whatever crude demand destruction that occurs from a weakening global economy, won’t be able to drag down oil prices much lower given how low the supply outlook remains. Much attention is falling on Iran nuclear deal talks and that could be a wildcard in providing much-needed supplies. ​ Iran is also looking at the US political situation and might not be confident that even if a deal is revived that it will hold up if a Republican wins the 2024 presidential election, especially if it is former President Trump. ​ ​ Crude prices should eventually find a home above the $100 level, especially in the winter when the SPR release stops and if China demand roars back. Gold prices rise ahead of inflation report Gold prices are firming up ahead of a pivotal inflation report that could tilt the Fed rate hike expectations scales. ​ Gold is getting a boost today from both safe-haven flows as stocks weaken and as the dollar softens. ​ If inflation eases a little more than expected, gold could make a run towards the $1850 region. ​ Geopolitical risks remain elevated and that could keep gold supported above $1800 going into year-end. 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 pops, gold strong heading into inflation report - MarketPulseMarketPulse

US stocks edged lower after a round of economic data reminded Wall Street that stagflation is here. Stocks won’t be able to do much as summer trading volumes are here and ahead of a pivotal inflation report. ​ Tech stocks continue to weaken after another semiconductor maker delivered a revenue warning. It appears it is a challenging market for everyone after both Nvidia and Micron had to slash their outlooks. Micron’s business update blamed the disappointing outlook as macroeconomic factors and supply chain constraints persist. Micron noted they have seen a broadening of customer inventory adjustments. After falling the most in the first half of the year, it seems Big Tech’s recent rebound might be overdone. ​ ​ Micron Wall Street read Micron’s filing and highlighted, “we expect significant sequential declines in revenue and margins.” Micron shares have already been beaten up for most of the year, so this might not be that bad of a rough patch for Micron investors. ​ The news wasn’t all negative for Micron as they also announced they will be taking advantage of grants and have the biggest investment in US memory manufacturing. ​ The $40 billion investment is expected to create around 40,000 jobs. Too much attention is going to the FBI search of former President Trump’s Florida resort. The investigation into the handling of presidential documents, some being classified, is setting off a political uproar that could help spark Trump’s presidential run if he decides to run again in 2024. ​ US Data The NFIB small business report did not paint an optimistic picture as businesses struggle to navigate through historic inflation, labor shortages, and supply chain disruptions. The headline reading unexpectedly rose 0.4 points in July to 89.9, which is really a miniscule improvement when you consider how far it has plunged. Some business owners are expecting better business conditions, but that is only happening after last month’s record low. ​ Selling prices eased somewhat, but the net percent still raising prices is inflationary. Housing Market A big uptick in Redfin’s records showed the housing market is starting to cool. ​ For the month of July, homes that were on the market for 30 days or longer without going under contract rose 12.5% from a year ago. This was the first year-over-year increase since the beginning of the pandemic and almost the biggest increase on record, for this decade-old report. The brightest spot in the economy during the pandemic is feeling both the impact of the Fed rate increases and a weakening consumer. Bitcoin Bitcoin’s rally is stalling as crypto traders need to see what happens with tomorrow’s inflation report. Inflation is what killed Bitcoin late last year and if pricing pressures are showing significant signs of easing, Bitcoin might be able to burst above its recent trading 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. Tech stocks lower after Micron's warning, NFIB all about inflation, Housing Market cools, Oil pops,Bitcoin stuck in range - MarketPulseMarketPulse

With persistent inflation and a strong labor market, the Fed is on a clear path to raise rates. This week is all about inflation and many traders are expecting to see the inflation to decelerate. Headline inflation is widely expected to decrease on a month-over-month over basis.  The focus will probably fall on core and those prices will remain elevated.  Much of Wall Street was stunned that the Biden administration was able to pass something before the midterm elections.  The Senate was able to pass a $430 billion landmark tax, climate, and health-care bill. Investor appetite for risk was healthy early from the news on American clean power jobs and on a new EV tax credit. A small future tax on buybacks did not spoil the initial stock market rally, but may make some companies run up their repurchases before the end of the year.  US stocks were unable to hold onto the early euphoria after Nvidia reminded us of the troubling macro environment as supply chain issues persist.  Nvidia Tech stocks were dragged down after Nvidia was the bearer of bad news and highlighted a significant slowdown was happening in gaming. Nvidia is going to have disappointing revenue numbers and they expect challenging market conditions to persist in the third quarter.  Nvidia is one of those companies that does things right and has the majority of analysts backing their stock(37 buys, 11 holds, and 1 sell). Nvidia’s warning is reminding traders of how severe the macro impacts might be on tech for the rest of the year.    FX The dollar rally is on hold, but it is far from over. Falling Treasury yields as some investors scramble to the sidelines should remind investors demand for safe-havens won’t be fading away anytime soon.  Corporate America gloom will remain the dominant theme for the third quarter and that should keep the dollar supported despite the current exhaustion with its rally. The interest rate differential has mostly been priced in for the dollar’s advantage and that could get even wider if Wednesday delivers a hotter-than-expected inflation report.  Oil Oil prices are rebounding as the recession riddled outlook and crude demand destruction calls were overdone. A slightly weaker dollar also provided a boost for commodities, but that might not last.  Energy traders digested a Goldman Sachs note that made a case for higher oil prices.  Goldman emphasized that the oil market is stuck in a larger deficit and you can’t argue against that. Much attention remains with Iran nuclear deal talks, but it seems unlikely a breakthrough will happen anytime soon.  Tehran seems like they are willing to negotiate, but an imminent decision to agree to the EU’s proposal seems unlikely.     Gold Gold prices are trying to get its groove back as Treasury yields drop and risk appetite struggles to reassert itself. Gold might struggle to rally much further until we get beyond this massive inflation report. It seems Wall Street is expecting pricing pressures to moderate here and that has been good news for bullion.  While headline inflation might ease, the focus should be on core and that probably will remain hot. Crypto Bitcoin remains near its recent highs as crypto traders are looking to see if the crypto winter is over. The return of some meme stock mania is taking away some attention from cryptos, but that might not matter.  The selling pressure has significantly eased and momentum traders could pounce on the break of the $25,000 level.  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 Close - Stock rally faded, Nvidia's warning, Oil rebounds, Gold above $1800, and Bitcoin eyes breakout - MarketPulseMarketPulse

Oil The oil market is a mixed bag as demand destruction is met with limited spare capacity. ​ Ongoing weakness should be unlikely since the oil market remains tight, but the break of the key technical USD 90 level could unleash some momentum selling. ​ WTI crude should have seen massive support at the USD 90 a barrel level, but an intensifying global economic slowdown is changing that oil market is tight trade. WTI crude should see some support at the USD 88.75 if this breach of the USD 90 level holds. Weakening economic data from the UK and Germany kept oil heavy early, but buyers clearly emerged. Oil price weakness should be limited from here as energy traders know that China’s demand for crude could bounce back anytime soon and that the SPR release will end in the fall. If the energy markets remain in doom and gloom demand mode, oil could fall another 5 dollars, but that should not be the base case. ​ Earlier, the Saudis raised September prices to record levels for Asia. The increase of Arab light crude was 50 cents, which was less than the USD 1.50 increase some energy analysts were expecting. ​ The Saudis are keeping the oil market tight and that should eventually provide some support for crude prices. ​ ​ The resumption of Iran nuclear deal talks will closely be watched to see if negotiators can break the impasse. Energy traders have watched this movie before, and no one will start pricing extra barrels of Iranian crude to hit the market before the end of the year. Gold moves higher Gold continues to rally as geopolitical tensions won’t be going away anytime soon and as central bankers worldwide brace for recessions. ​ The BOE had a rather gloomy outlook and the Czech central bank (CNB) surprised markets by halting their rate hiking cycle. Gold’s rallying as Wall Street becomes fixated with a global economic slowdown that will get much worse by year-end. 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. WTI breaks below USD 90, gold shining brightly - MarketPulseMarketPulse

Stocks continue to ignore the deepest yield curve inversion since the early 2000s. ​ The S&P 500 index has rebounded over 13% from the June lows as many on Wall Street anticipate that the Fed will stop quantitative tightening next year and begin cutting interest rates. If the next couple of inflation and nonfarm payroll reports support the Fed pivot argument, we might stop hearing these bear market calls. ​ ​ Equities might struggle to keep the rally going as investors continue to see economic data that suggests the economy is still holding up and as US-China tensions simmer. ​ Wall Street has heard enough from the Fed to know that we are stuck in wait-and-see mode for the next 48 days. ​ The September 21st FOMC decision will have a clear trajectory from both labor market and inflation data points. ​ I Jobless claims rise Application for US unemployment insurance continues to rise, an expected sign that the labor market continues to cool. Initial jobless claims rose by 6,000 to 260,000, in line with expectations, while continuing claims rose more than expected to 1.416 million. ​ The Fed might pay closer attention to continuing claims, which could refute the argument that the labor market is still very strong as people should be able to easily find jobs. Walmart’s news of the reduction of hundreds of corporate roles did not come as a big surprise given the pessimistic profit outlook. Layoff announcements seem to be a growing theme across corporate America but as long as the number of job openings remains roughly 50% above pre-pandemic levels, the Fed’s fight against inflation won’t ease up. BOE With inflation nearly 5X their target rate, the BOE needed to deliver a half-point rate increase today. ​ With a tight labor market, the BOE should be positioned to continue to deliver massive rate increases even as growth slows. ​ The UK economy does not look like it is positioned for a prolonged downturn, so that should allow the mostly hawkish BOE to be aggressive with tightening. The biggest rate hike in 27 years was supported by eight MPC members, one voted for only a quarter-point increase. ​ The BOE’s outlook stole the spotlight as they see the economy falling into a recession from the fourth quarter of this year. ​ The warning of a long recession will complicate policy over the next year. ​ The bank also sees an inflation peak above 13% later this year and for it to stay around 9.5% in the Q3. ​ The most noticeable reaction was with the 2s-10s yield curve inversion, which was the first time that happened since 2019. With the latest polls showing Liz Truss widening her lead, expectations for some higher inflation will go up as some tax relief will prove to be inflationary. Crypto Bitcoin has been consolidating below the USD 24,000 level over the past week as crypto volatility remains depressed. Bitcoin’s correlation with equities remains, but over the past few sessions it has underperformed. ​ An increase with Fed rate hike expectations has capped how high bitcoin can go for now, but as long as traders remain confident that the peak in Treasury yields remains in place, bitcoin may have bottomed already. ​ A choppy consolidation might be in bitcoin’s future until we see a couple more inflation and nonfarm payroll reports. ​ Calls that crypto is dead have been overdone. In fact, crypto is alive and well. ​ BlackRock has partnered with CoinBase to make crypto available to institutional investors. ​ This is much-needed positive news for crypto traders and should provide some optimism for the longer-term health of the cryptoverse. 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. Stocks trade mix, BOE fearful of long recession, continuing claims rise, bitcoin stuck - MarketPulseMarketPulse

Jonny Hart discusses what is driving markets today with OANDA Senior Market Analyst Ed Moya in New York.  This week they talk about the impact of House Speaker Pelosi’s trip to Taiwan, Fed speak, the OPEC+ meeting and EIA crude oil inventory report, and MicroStrategy.  They also discuss what to expect from the BOE rate decision and nonfarm payroll report. 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. Market Insights Podcast (Episode 360) - MarketPulseMarketPulse

Oil slides after OPEC+ meeting Crude prices tumbled after energy traders saw both the smallest increase in OPEC+ history and as gasoline demand plunged in the US. ​ It looks like OPEC+ is resisting calls to boost output because the crude demand outlook continues to get slashed. ​ The world is battling the ongoing global energy crisis and it won’t be getting any help from OPEC+. ​ The weekly EIA crude oil inventory was very bearish. ​ A headline build of 4.46 million bpd and plunging gasoline demand sent oil prices sharply lower. ​ The demand outlook might be much worse than everyone was thinking as US gasoline demand fell 7.1%, despite lower prices and this still being peak summer vacationing time. ​ The oil market will remain tight over the short-term and that means we should still have limited downside here. ​ Crude prices should find strong support around the USD 90 level and eventually will rebound towards the USD 100 barrel level even as the global economic slowdown accelerates. Gold Gold prices are softening as risk appetite returns after strong US economic data and earnings. ​ The primary driver for gold will be Wall Street’s assessment of how many more massive rate hikes that Fed has left until they enter a period of keeping policy steady. ​ It looks like the chances of a 75 basis-point rate increase at the September FOMC meeting are very much on the table and that might keep the dollar supported, which should make it hard for gold to rally above the USD 1800 level for now. ​   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 lower post OPEC+ and EIA report, gold rally stalls - MarketPulseMarketPulse

US stocks rallied after a steady dose of impressive earnings and economic data. ​ The economy doesn’t look bad at all after strong earnings from Moderna, Gilead Science, CVS, Electronic Arts, Starbucks, and SoFi. The economic data broadly came in higher than expected as the service part of the economy seems to be stabilizing and price pressures are improving. ​ ​ ​ ​ US Data The ISM services index surged to 56.7, much better than the consensus estimate of 53.5. ​ The ISM report clearly shows an improvement with both business activity and new orders. What is confusing about the report is that prices paid plunged almost 8 points, while 16 industries reported higher prices paid. ​ Inflation is cooling, but if several industries are still reporting rises, further declines may not be happening anytime soon. ​ US factory orders also impressed, another sign the economy keeps chugging along. ​ The June factory order data rose 2.0%, while the prior month was upwardly revised to 1.8%. ​ Expectations will grow for an improvement with the second reading of Q2 GDP. ​ The debate over what the Fed will do in September won’t be answered until we get closer to the Jackson Hole Symposium, possibly the August NFP and inflation reports, but right now it seems way too early to say that a 75 basis point increase is off the table. ​ ​ ​ AMTD A Hong Kong-based fintech company just brought Meme stock mania back and put it on steroids. AMTD Digital, a subsidiary of investment holding company AMTD Idea Group saw its share prices skyrocket sending its market cap higher than many big-name stocks. ​ AMTD does not deserve to be bigger than GE, Coca-Cola, Goldman Sachs, or Bank of America, so this latest fad will likely see a quick regulatory gauntlet thrown its way. ​ ​ Bitcoin Bitcoin is hovering around the USD 23,500 region as risk appetite returns to Wall Street. ​ Bitcoin needs a crypto specific catalyst to trigger a meaningful move above the USD 24,700 level. ​ The news has not been positive for crypto as wallets with Solana have been hacked and Nomad, a key bridge protocol, suffered a security exploit and lost almost USD 200 million. 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. Stocks bolstered by earnings and data, ISM impresses, Meme stock mania on steroids, Bitcoin nears top of range - MarketPulseMarketPulse

Stocks rallied after robust mega-cap tech earnings, hopium that the Fed will pivot soon, and economic data that suggests the consumer is doing just fine. ​ Apple Investors embraced Apple’s slight earnings beat with both the top and bottom line. ​ The standout miss was Mac revenue which was the first decline of the pandemic, which was due to supply constraints and FX headwinds. ​ The iPhone and services numbers were solid and will lead many to believe the consumer is still fine. ​ The numbers out of China were surprisingly good too, despite major COVID restrictions. ​ CEO Cook acknowledged that supply constraints came in slightly less than the low end of the range that they gave during the last call. ​ Apple refrained from giving guidance but said they believe year-over-year revenue growth will accelerate in the next quarter. ​ Data Inflation is still running hot and that should delay the Fed delivering the dovish pivot that so many on Wall Street are expecting. ​ There was a lot of data and reminded us that the economy should prepare for an aggressive Fed. ​ The closely watched Fed’s favorite wage gauge came in a little hotter-than-expected and personal income & spending data remained strong. ​ The Fed has a clear path to continue with aggressive hikes, but many are still thinking they’ll be inclined to go at only a half point in September. ​ A couple more inflation and employment reports will dictate how the data-dependant Fed will behave after the summer. ​ ​ ​ Oil Oil prices rallied after both Exxon and Chevron were optimistic about the crude demand outlook and on expectations that OPEC+ would not raise production in September. ​ The oil market will remain tight going forward as OPEC+ underproduction levels stood at 320%. ​ ​ With no major signs of fuel demand destruction, oil seems like it will soon find a home above the $100 a barrel mark. ​ US oil rig counts posted a gain of six, bringing the total to 605 rigs, but that should do little to think this market will find balance anytime soon. ​ ​ WTI was unable to hold onto the $100 level as profit-taking kicked in. Gold Gold appears to be back in fashion. ETF data might not be suggesting investors are turning bullish on the precious metal, but the bond market is providing some promising signs. ​ The peak in yields is in place and that will do wonders for non-interest bearing gold. Strong economic data will support maybe tilt the expectations to price in slightly larger rate increases, but fears of the Fed over aggressively hiking are long gone. ​ Gold might have a date with the $1800 level soon, but it might take a fresh catalyst for that to happen. Next week will be key for bullion and the focus will fall on Fed speak. ​ Bitcoin Bitcoin is finishing the week near the highs, just shy of the $24,000 level as the cryptoverse breathes a sigh of relief. ​ The ‘crypto winter’ might be over and that is what is needed to allow flows back into 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. US Close: Earnings and pivot hopium boost stocks, US data impresses, Oil rallies, Gold shines, Bitcoin nears $24k - MarketPulseMarketPulse

Oil Mounting recession worries are currently trumping how tight the physical crude market remains. ​ Crude prices tumbled after countless warnings from corporate America and after consumer confidence tumbled to the lowest levels since February 2021. It seems some of the earnings optimism we had early is quickly fading and everyone is focusing on how hard of a recession will the economy have and what will that do to the crude demand outlook. ​ Congo is expected to be auctioning off lots of oil and gas blocks that could threaten endangered gorilla habitats, which might lead to some resistance to participate. The oil market will remain tight as we will not see any immediate new sources of output. ​ Even as oil giants reap in record profits, they will hesitate to invest significantly in new oil wells. Many energy traders are focusing on the widening difference in prices between WTI and Brent crude. ​ Russia’s handling of energy to Europe will likely lead to shortages that should keep that premium wide. ​ Gold eyes FOMC rate decision  Gold prices are consolidating ahead of another pivotal FOMC decision. ​ This is the moment for gold that will break the precious metal’s back or offer hope that peak tightening has been priced in. ​ Investors are growing optimistic that the economic slowdown will contribute to a quicker decline with pricing pressures, which suggests the Fed’s tightening job might be done by the end of the year. ​ The Fed won’t lock themselves into any strong stances on the trajectory of future rate hikes, but it seems they won’t be in a position to say even more aggressive rate hikes are on the table. ​ A 75 basis-point rate increase seems like a done deal for tomorrow and gold could continue to stabilize above the USD 1700 level as long Powell does not signal a 75 basis point increase could happen again in September. ​ ​ ​ 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 stumbles on recession worries, gold awaits FOMC decision - MarketPulseMarketPulse

US stocks declined after a wrath of gloomy corporate outlooks made it seem like this current wave of growth concerns would send this economy quickly into a recession. Risk appetite is struggling here as European gas prices are skyrocketing, multinationals are complaining of a troubling macro environment, and consumer confidence plunges. ​ Earnings Walmart cut its outlook as inflation killed its profit outlook for the year. ​ Walmart is going to have some big discounts as they try to improve their inventory levels. ​ Shopify is feeling the weakening harder than most and it was forced to announce a 10% reduction of its workforce. 3M cut its outlook over a strong dollar along with the current troubling macroeconomic environment. ​ With a lot of massive earnings due after the bell and later this week, Wall Street is bracing for softer outlooks and intensifying recession pressures. ​ Consumer Confidence dips The Conference Board’s consumer confidence report signaled the outlook for the consumer is uninspiring. Consumer confidence fell 2.7 points in July to 95.7, the lowest level since February 2021, which was much worse than the consensus estimate of 97.0. ​ Current conditions tumbled 5.9 points to 141.3, while the outlook deteriorated from 65.8 to 65.3. ​ The job market showed some weakness and income expectations declined. ​ FX The strong dollar is having a major impact on earnings as many companies anticipate a noticeable drag on earnings for the rest of the year. ​ Coca-Cola CEO Quincy noted, “I hope it’s peak foreign exchange… the dollar cannot strengthen in an unlimited fashion without exporting.” Despite another wave of global recessionary fears, the dollar’s gains have been somewhat limited. ​ Some aggressive calls for significantly more pain for the euro are growing, but we first need to see how hard a recession hits the eurozone. ​ Crypto The crypto spotlight was on Coinbase and the reported SEC investigation. ​ Coinbase was considered one of the better-run crypto companies that tried to obey the rules and work with the regulatory bodies. ​ The risk of tougher regulation has been a constant headache for crypto and it seems a couple of tough rulings could cripple a good portion of the cryptoverse. ​ If some cryptos are deemed securities that would make the lives of so many brokerages so much harder. ​ The potential SEC probe on Coinbase and rising recession risks took the life out of cryptocurrencies. ​ Bitcoin is still comfortably above the USD 20,000 level and ethereum is above USD 1300. ​   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. Stocks drop on soft data and string of cautious earnings outlooks, downbeat earnings, potential SEC probe on Coinbase sinks crypto - MarketPulseMarketPulse

Oil After a rough few weeks, crude prices are showing signs of stabilization around the mid-USD 90s as the oil market still remains tight despite another wave of weakening economic data in the US and Europe. ​ This week is all about geopolitics and the Fed for oil prices and that means, oil might struggle to make fresh lows. Global recession calls were supported by economic data from Germany that showed business confidence plunged to the lowest levels since early in the pandemic and after a wrath of Fed regional surveys (Philly, Dallas, and Chicago) which were far from inspiring. Despite the growing risks of a severe recession, oil should see strong support at the USD 90 level over the short-term. Gold falls ahead of Fed Gold prices are declining as investors brace for a Fed that remains committed to fighting inflation and as Chinese demand for gold remains uncertain. â€‹ As the Fed rushes to get policy to neutral, that has been keeping gold vulnerable ahead of each FOMC decision. â€‹ The economic data is showing weakness which will eventually complicate the Fed’s tightening plans, but for now it seems rate hikes at each meeting for the rest of the year seems like a safe bet. Gold is still looking vulnerable here as it struggles to find buyers; ETF purchases have disappeared, China’s Covid situation should keep the precious metal purchases depressed, and the strong dollar trade does not want to go away. If gold tentatively breaches the USD 1700 level before the FOMC decision, the USD 1675 will prove to be massive support. 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 finds support, gold looks vulnerable - MarketPulseMarketPulse

US stocks traded mixed ahead of both a pivotal week for corporate earnings and a Fed policy decision that will confirm its aggressive inflation-fighting stance. ​ Investors won’t want to touch Nasdaq stocks until we hear from Alphabet tomorrow and if they don’t like what they hear they may wait to see Thursday’s massive results from Apple and Amazon provide any reasons to be optimistic with tech stocks. The S&P 500 index is in for a choppy period leading up to the Fed. ​ It will be hard for investors to aggressively buy stocks until they become confident that the Fed might pivot to a slower pace of tightening. Right now investors are confident the Fed could tighten at each meeting for the rest of the year, but what they want to see is that they could be open to only a half-point increase in September. ​ Fed The Fed is still in a very good position to deliver another 75 basis-point hike as inflation stays around a four-decade high and as the economy is still adding jobs at a healthy clip. The Fed’s Bostic, Waller, Daly, Mester, and Bullard all have voiced support for a 75bp rate increase this week. â€‹ Since the Fed was late to fight inflation, it should not come as a surprise that they will try to remain aggressive with tightening as the outlook dims. â€‹ An economic downturn is coming as the debate on how soon remains intense. â€‹ Many parts of the economy are weakening and that is why many are expecting the full impact of inflation to trigger a recession by the middle of next year. â€‹ The risks are there for a recession later this year, but that should not be the base case. â€‹ Too much of the economy is still in decent shape and some inflation has been easing over the past several weeks. Risky assets will start to look more attractive once Wall Street is convinced they have a strong handle on when interest rates will peak. â€‹ Rate hikes at each meeting for the rest of the year is an easy call, but a rate hike at the May meeting still needs compelling evidence. US data weakens US economic data continues to crumble. â€‹ The Chicago Fed was unchanged after the prior month’s reading was drastically lowered. â€‹ Production-related indicators worsened to -0.20 in June from -0.17 in the prior month. â€‹ Industrial production softened and the employment component cooled. The Dallas Fed Manufacturing came in softer-than-expected, but it could have been worse. ​ The July headline reading dropped to -22.6, the weakest level since May 2020. ​ The six-month outlook improved from -26.0 to -17.7, which still shows manufacturers expect worsening activity. Prices and wages didn’t ease, which continues to support the Fed’s aggressive tightening stance. ​ ​ ​ ​ ​ ​ Nord Stream The eurozone economy was dealt a major blow after Russia’s Gazprom PJSC announced the Nord Stream pipeline would pump at 20% of capacity. ​ Last month Nord Stream flows were slashed to 40% of capacity, so this latest move will intensify the European energy crisis. Earlier reports suggested Russia was going to need to repair several more turbines at Gazprom’s Portovaya station, which could mean three months of downtime. ​ ​ Cryptos Cryptocurrencies are broadly weaker as investors await an FOMC decision that will likely conclude with a 75 basis-point rate increase and reaffirm a commitment to fighting inflation. â€‹ Rising geopolitical tensions might provide some underlying support for the dollar, which could drag down risk appetite, which would weigh on cryptos. 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. Operation Hike to a hopefully a mild recession, Nord Stream flows to drop, cryptos drop - MarketPulseMarketPulse

US stocks are under pressure as recession fears run wild as business activity contracts and the labor market shows signs of weakness. Wall Street is seeing mixed earnings as social media companies are seeing softer advertising revenues, the US consumer is struggling to pay their phone bills, while American Express says their premium customers are more resilient to inflation. â€‹ The US consumer is quickly weakening and if the job market cools quickly, the market will start to fear a recession could happen as soon as the end of the year. Corporate America showed a major pivot this earnings season and that is to spend less on and to ease up on hiring. â€‹ With Wall Street remaining so pessimistic that we will retest the summer lows, it will be hard to see stocks muster up a meaningful rally until investors become confident they can see the end of the Fed’s tightening cycle. â€‹ ​ PMI The S&P 500 got whipsawed after an abysmal flash PMI report. Business activity fell to contraction territory, a clear sign the economy is weakening faster than economists were expecting. â€‹ The composite managers output reading plunged to 47.5, much worse than what the slight gain traders were expecting. â€‹ The service sector is in freefall and manufacturing activity has lost its mojo. Stocks initially rallied following the first contraction in two years with business activity. â€‹ The US PMIs mirrored what we saw in Europe and raised the prospect that central banks might have been too slow to tighten aggressively and that we might not see much more tightening before the winter. Earnings AT&T shares plunged to the lowest levels in 20 years as some of their customers hold off paying on their phone bills. American Express posted record revenue as high-income households continue to spend and remain resilient to inflation. â€‹ The credit card giant did see a drop in profit as they had to add $410 million in provisions for credit losses. â€‹ Twitter posted surprisingly stronger than expected monetized daily active users, but revenues disappointed, which was somewhat expected following Snapchat’s disastrous results. Next week is going to be massive for earnings as quarterly updates come from Apple, Amazon, GM, GE, and 3M. After next week, traders will be able to have a better idea on how soon this economy will fall into a recession, which could signal peak Fed tightening expectations. â€‹ ​ â€‹ â€‹ â€‹ FX The euro tumbled after a wrath of manufacturing PMI data collapsed to contraction territory, the lowest levels in about two years. â€‹ It looks like the eurozone economy is rushing towards a recession and that will disrupt how aggressive the ECB will be going forward. â€‹ ​ Oil Crude prices are holding up despite intensifying global recession worries. Manufacturing activity in Europe was awful and business activity contracted for the first time in two for the US. â€‹ Despite troubling signs for crude demand across China, Europe and the US, the oil market remains very tight and is not allowing WTI crude to break below the mid-$90s. Today’s headlines are plentiful and mostly bearish: global PMIs drive recession worries, Libya production is rising and earnings point to a weakening consumer. â€‹ Oil might stabilize around the mid-$90s, but this deterioration with the crude demand outlook should prevent a sustained move above the $100 level. Gold Gold prices are rising as global recession fears are resetting rate hiking expectations for all the major central banks. Gold is starting to act like a safe-haven as weakening economic growth will force many central banks to abandon their aggressive tightening plans. â€‹ Demand destruction is what will send inflation lower and a weakening global economy should do that. â€‹ Right now, Wall Street is still convinced the recent lows will be tested and that means gold could outperform as global economic data deteriorates. â€‹ Gold might find resistance at the $1750 level, but if it doesn’t, not much will get in the way until the $1800 level. Bitcoin Bitcoin traders are paying close attention to mining power as the global energy crisis could weigh on prices. â€‹ Bitcoin is starting to look attractive for some traders, but the majority of crypto watchers are still awaiting further weakness and possible retest of the June lows. As global recession calls grow, the focus will switch to how soon the Fed will be cutting rates and that should be good news for the beaten up crypto sector. â€‹ ​ 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: Global PMIs collapse, Relief Rally will be tested next week, Mixed Earnings, Oil finds support, Gold shines, Bitcoin steadies - MarketPulseMarketPulse

Oil Crude prices are tumbling as energy traders reassess the short-term demand outlook given the disappointing summer driving season and as the US economy starts to show further signs it is quickly weakening. This morning’s data did not do any favors for crude after jobless claims data hit an eight-month high and the Philly Fed index showed a massive slowdown. The oil market is starting to see more supplies from Libya and with the pace of weakening global economic data suggesting, we might not need to see a whole lot more production. ​ Oil is starting to find a home in the mid-USD 90s and that could last given the aggressive pace of tightening central banks are taking with fighting inflation, which will bring forward recessions calls. ​ Gold higher after ECB, South African hikes Gold prices got a boost after both the ECB and South African central bank surprised markets with larger-than-expected rate hikes. ​ It looks like everyone is taking the Fed’s lead in delivering large rate hikes, which is taking some of the oomph out of the dollar rally. Right now, gold is not acting like a safe-haven so the restart of the Nord Stream 1 pipeline is good news. ​ Tensions among the US and China continue to simmer and that could get interesting when President Biden meets President Xi in less than two weeks. China continues to object to Nancy Pelosi’s visit to Taiwan, which would be the first time the House Speaker has traveled there in 25 years. ​ ​ ​ Gold may be stuck around the USD 1700 level until we get past next week’s Fed 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. Oil weaker on demand outlook, gold steadies - MarketPulseMarketPulse

Wall Street is struggling to find reasons to be optimistic as investors digest a wrath of mixed corporate earnings, Russia resumes Nord Stream 1 gas flows, and the ECB acts aggressively with its first rate hike in 11 years. ​ The earnings standout was Tesla, which posted strong earnings and kept its production forecast. The focus this week was always on EU energy supplies and the ECB rate decision. ​ Nord Stream 1 did not see any delays in getting restarted on schedule, but the gas supplies are coming in low at around 30-40%. ​ This is nowhere near the end of the EU gas problem as President Putin warned of another potential maintenance period on July 26th. ​ Stocks returned to session lows after news that President Biden has tested positive for COVID. ​ Investors are still waiting to hear from the White House if Biden will run for re-election in 2024. Press secretary Karine Jean-Pierre said that the President, who is fully vaccinated and has received two COVID booster shots, is experiencing mild symptoms. ​ ​ ​ ​ ECB lifts off with 0.50% hike The ECB delivered its first rates in 11 years, bringing an end to negative rates, and approved its plan of buying the debt of vulnerable economies. ​ The ECB also signaled that the further normalization of interest rates will be appropriate. Forward guidance has been useless and given the uncertainty with European energy supplies throughout the winter, they will have to change their strategy, and make a meeting-by-meeting approach to interest rates. ​ ​ ​ The approval of the Transmission Protection Instrument (TPI) is another crisis tool for the ECB. There are lots of requirements for the fragmentation tool and the hesitancy to say Italy could benefit from it is why the euro does not have a clear path higher. ​ Rate hike expectations for the September policy decision jumped to 60bps after the policy decision. ​ Bitcoin Bitcoin was showing signs of a potentially meaningful breakout, but that quickly came to an end after Tesla reported earnings. ​ Tesla’s quarterly update noted that as of the end of Q2, we have converted approximately 75% of our Bitcoin purchases into fiat currency. Et tu, Musk? Traders should not be surprised that Musk supported Tesla’s selling of bitcoin, as the crypto winter was clearly in place and as the balance sheet needed to be strengthened. About a month ago at the Qatar Economic Forum Musk said that he had never suggested people invest in crypto. Tesla dumping a good portion of their bitcoin holding news caught many off guard and helped end the rally above USD 24,000. ​ This is not a game changer for bitcoin, but it unsettled a good portion of the avid social media followers. ​ Tesla does not have diamond hands, but that shouldn’t surprise people as they are a publicly traded company. ​ Bitcoin could be in for a choppy period until we get beyond next week’s FOMC decision. ​ 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.

No one expected Netflix to trigger a decent risk-on rally for the other mega-cap tech stocks, but that is exactly what is happening.  Stocks are rising as Wall Street grows confident that corporate earnings might not fall off a cliff.  Pessimism won’t be completely going away as two major risk events are in the next 24 hours; the ECB rate hiking decision and the Russian decision on how much gas to let flow through the Nord Stream 1 pipeline. Italian politics are dampening the mood too, as the government is on the verge of collapse as support for Mario Draghi runs low. ​   Netflix Netflix earnings results were better than expected. The streaming giant only lost 970,000 accounts subscribers for the quarter, much less than the 2 million analysts were expecting. The company confirmed they will launch a new ad-supported tier around the beginning of next year. The company still will struggle with spending as content will cost them around USD 17 billion a year.   After the report that Apple was planning on slowing hiring and spending, tech stocks needed some good news and they kind of got it from Netflix.  Tremendous growth across the Asia Pacific was also a good sign for Netflix as they continue to attract subscribers globally.  ​   Home sales cool off The housing market is clearly cooling. The June existing home sales report posted the slowest pace of sales in two years and a separate report showed mortgage applications fell to the lowest levels in 22 years. Sales of previously owned homes fell 5.4% steeper decline in the -1.1% eyed by analysts. Expectations are for home sales to get much worse as these contract closings reflect where the mortgage rates were in April and May which is well in advance the one to 30-year fixed mortgage rate rose above 6%.   The median price of an existing home posted another record high at USD 416,000, a 13.4% jump from a year ago.  Both prices of homes and borrowing costs are surging and that will undoubtedly lead to even softer prints for the rest of the year.   Bitcoin Bitcoin continues to grind higher alongside equities. The macro backdrop remains troubling, but the way some investors are positioned, we could still see further bullish momentum as price breaks above key trading ranges.   Peak pessimism is close to getting priced in and crypto was the punching bag for that trade. The risks remain elevated but now Bitcoin is at the USD 24,000 level and selling pressure seems to be throwing in the towel for now. 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. Netflix earnings spark a rally, Housing Market Cools, Bitcoin higher - MarketPulseMarketPulse

Oil Crude prices pared losses after the EIA crude oil inventory report posted a surprise draw as exports came in impressively strong.  So much to take from this mixed EIA oil inventory report. Gasoline demand was surprisingly much softer-than-expected, which helped send futures lower.  Gasoline inventories rose 3.5 million barrels, much more than the expected 961,000 consensus estimate. US production dipped 100,000 bpd, which brought the output total to 11.9 million bpd. Despite tremendous demand and political pressure for more barrels of crude, production appears like it can’t break past the 12 million bpd mark. What will also catch a lot of attention is that the Strategic Petroleum Reserve drew 5 million bpd, sending holdings to the lowest levels since July 1985.  The oil market just doesn’t have enough spare capacity (thank you Saudi Arabia for revealing your ceiling) that even with whatever demand destruction we are seeing, oil prices should find a home above the USD 100 a barrel level. Important to note was the beginning of actions from the White House on wind and heat.  Aggressive action to tackle climate change should lead to more investment in clean energy, which further cements how tight the oil market will remain over the next decade.  President Biden won’t cripple the oil industry as the global energy crisis has become desperate for crude oil. Gold edges lower Gold prices resumed their bearish trend as ETF holdings continue their steady decline.  The risks to global growth outlook remain elevated and that should keep the dollar supported over the short-term, which is a troubling environment for gold. Gold is slightly down as the dollar’s short slump might be over.  If king dollar heats up again, the USD 1650 level might not provide much support.  If redemptions remain elevated for gold, further short-term pressure could remain. 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 choppy, gold slides - MarketPulseMarketPulse

US stocks are rallying as corporate earnings haven’t been terrible and on optimism that Russia won’t delay the restart of gas flows on Nord Stream 1 pipeline. ​ Earnings have been coming in mixed but nothing too terrible that is unnerving investors. ​ Even reports that Apple is slowing hiring is not enough to sink risk appetite. ​ Stocks are already down significantly this year and disastrous outlooks are what was needed to send the major indexes to fresh lows. ​ Two big risk events on this week’s calendar are the ECB decision and the potential restart of the Nord Stream 1 pipeline. ​ Reports have been circulating that Russia will not play games and delay the restart of the key pipeline, but they might reduce the levels given to Europe, which should keep supporting natural gas prices. ​ ​ ​ Housing market cooling down Building permits are dropping which confirms the cooling of the housing market. The weakening trend in the housing market will continue as the Fed won’t be easing up with its aggressive tightening schedule. ​ New home construction in June fell to the weakest levels since September, while residential starts posted a surprising decline. Single-family construction is obviously weakening as the consumer struggles with widespread inflation and that sends permits to a 2-year low. ​ The housing market is cooling quickly and that should continue as inventories build up. ​ Tomorrow’s existing home sale data could show sales of previously owned US homes plunged to two-year lows and more than halfway towards the pandemic lows. ​ Bitcoin Bitcoin is holding above the USD 22,000 level as the cryptoverse awaits any major announcements or financial commitments from Bloomberg’s crypto summit. Galaxy Digital CEO Mike Novogratz noted that more crypto hedge funds will fail, but did hold out optimism that Bitcoin can still get to $500,000 in five years. ​ Novogratz acknowledged he was ‘darn wrong’ about how much leverage was in the cryptoverse. US Senators’ Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY) pre-recorded interview was played at the key summit and highlighted that they expect their crypto legislation to be deferred until next year. ​ The dollar has been in freefall for a few days and that has provided some underlying support here for crypto. ​ This is a massive week for bitcoin and if prices can continue to grind higher, more investors might start to believe the bottom is in place. ​ Earlier in the week, reports that crypto miners are abandoning their bitcoin positions was not enough of a bearish catalyst to send prices back to the recent lows. ​ 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. Earnings push stocks higher, building permits decline, euro rallies as markets expect half-point ECB hike, bitcoin tries to hold USD 22k - MarketPulseMarketPulse

Oil Crude prices tentatively breached the USD 100 level after the Bank of America fund manager survey showed global growth optimism was at an all-time low. ​ Earlier in London, oil was declining after reports Congo was looking to bolster up its oil sector by offering 30 oil and gas exploration blocks for licensing. ​ ​ The oil market is swinging all over the place as the volatility with the global crude demand outlook has been head-spinning. ​ Crude prices pared losses after reports that Chinese demand for Saudi oil was improving. ​ The oil market is still very tight but energy traders are unconvinced how the demand outlook will hold up over the next few months. ​ The US dollar has been declining over the past few days and that has been welcome news for oil, but another major move for the greenback might not happen until we see what happens with the Nord Stream 1 pipeline restart and the ECB policy decision. ​ WTI crude seems poised to seesaw around the USD 100 a barrel level. ​ Gold Gold prices continue to hover above the USD 1700 level despite a weakening US dollar. ​ After three days of dollar weakness, gold still can’t make a meaningful move higher, which means sellers are still in control. ​ Gold needs China’s outlook to improve before it can muster up a meaningful rally and that might take time. ​ Too much uncertainty remains with China’s COVID situation, rising property risks, and lack of urgency from the PBOC to ease. 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 hovers above USD 100, gold struggles - MarketPulseMarketPulse

Oil higher after Biden’s trip disappoints Crude prices are back where they belong, over the USD 100 a barrel level, after President Biden’s trip to the Mideast did not yield any oil commitments by the Saudis. ​ Boosting oil was also a weaker dollar that stemmed from a broad rebound for risky assets. The oil market will remain tight as the latest earnings updates reinforced how strong the US economy remains. The short-term crude demand outlook should stabilize here as the US consumer is still spending and as airlines still see demand despite higher prices. Gold Gold prices are rebounding as the dollar softens alongside easing Fed rate hike expectations. ​ For a brief period, it seemed like the Fed might need to justify a 100-basis-point rate hike this month, but that risk has eased. ​ The Fed might not need to tighten policy as aggressively as markets were initially thinking, but the rate hiking cycle could last into early next year. The dollar is weakening to start the trading week, but this might not be the top, which means gold might struggle to make a move above anywhere close to the USD 1750 level. The dollar might take a bigger cue from the ECB rate decision and if Russia delays in restart of the Nord Stream 1 pipeline. ​ 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 rises above USD 100, gold rebounds - MarketPulseMarketPulse

Wall Street is starting to find its footing as investor Fed tightening fears eased and after both strong banking earnings from Goldman Sachs and Bank of America. It is the blackout period for the Fed and it seems last week’s comments from Bostic and Bullard were enough to convince markets a 100 basis-point hike is not justified right now. Bank Earnings Shares for both Goldman Sachs and Bank of America are off to a good start after strong results and no immediate announcements on curtailing their respective share buyback programs. ​ Goldman Sachs fixed income operations crushed it, posting a USD 3.61 billion in revenue, which was much higher than the USD 3.11 billion consensus estimate. Goldman’s wealth and consumer net revenue was key to saving this quarter. ​ ​ Bank of America posted solid net interest income results and that could continue if the Fed remains committed to fighting inflation. BofA had more costs than expected as they had to deal with multiple regulatory probes. ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer BofA CEO Moynihan said, “Consumers continue to spend at a healthy pace even as time has passed since they received stimulus.” He added that spending is up 10% and transactions increased 6% in the first two weeks of July. Goldman Sachs announced they will put USD 667 million away for loan-loss provisions, which is much higher than JPMorgan’s USD 428 million. ​ A weakening economy is having all the big banks build up their reserves for bad loans. Housing The latest NAHB home builder survey shows the outlook for the housing market is for it to cool quickly. ​ Builder sentiment collapsed to 55 in July, much worse than the most pessimistic estimate. ​ This was the biggest drop since the COVID shock drop of 42 points in April 2020. Surging borrowing costs led to the drop in mortgage applications and inventories are starting to increase. ​ The housing market is cooling faster than homebuilders expected and that should weigh on D.R. Horton, Toll Bros. and Lennar. Crypto Bitcoin haters have been quiet for a few days. ​ Bitcoin has recaptured the USD 22,000 level as some short-sellers need to call it quits. ​ Wall Street is enjoying a positive risk-on mood that is good news for cryptos. ​ Cryptos are starting to look attractive now that the economy is looking a little better as expectations for Fed tightening eased. So much of Wall Street was expecting one last major plunge, with some eyeing USD 14,000 area, others the psychological USD 10,000 level, with the more pessimistic targeting the USD 7,500 level. If Bitcoin continues to stabilize here over the next two weeks, the crypto winter could be over. ​ Market positioning became extreme and that could allow for the bottom to have been made if the institutional money buys in. 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 earnings keep rally mode going, homebuilder sentiment plunges, bitcoin bottom - MarketPulseMarketPulse

Recession jitters boost US dollar Currency markets had a roller-coaster session with European and US investors piling into haven US dollars from the get-go on recession fears. Weak bank earnings were another headwind and at one stage EUR/USD had fallen nearly 100 points to 0.9950. Only soothing comments from two Fed officials placing their markers in team 0.75% allowed some calm to return. The US dollar gave back some of its gains but still finished broadly higher. Asian markets are notable for the complete lack of volatility today, and seem content to ride out the week ahead of US retail sales data this evening. The dollar index finished 0.57% higher at 108.55, where it remains in Asia today. Resistance is at 109.30, the overnight highs, and 110.00. Support is at 107.50 and then the 1.0585 breakout point, followed by 1.0500. ​ The relative strength index indicator (RSI) is overbought, signalling a potential correction lower by the US dollar. EUR/USD collapsed to near 0.9950 overnight, with stop-losses kicking in after a clean break of 1.0000. However, rate hike comments from Fed officials allowed the single currency to claw back most of those losses, finishing 0.37% lower for the session at 1.0020, an impressive result. ​ It has managed to edge higher to 1.0030 in Asia. The oversold RSI and underwhelming post-inflation performance by the US dollar suggests the euro could be tracing out a low for now and a correction back towards 1.0200 is possible. EUR/USD has support at 0.9900/25. It has resistance at 1.1020, the overnight high, and then 1.0200. GBP/USD followed the euro overnight, finishing 0.55% lower at 1.1830, where it remains in Asia. It has support at 1.1760 and resistance is at 1.1965, followed by 1.2060 and 1.2200. USD/JPY continued rallying overnight as US short-dated yields rose, finishing 1.40% higher at 138.95, where it remains in Asia. Having traded as high as 139.30 overnight the yen is the most obvious loser in the forex space of the combination of recession fears and interest rate differentials. USD/JPY’s next resistance