Jing Ren

Jing Ren

Jing-Ren has extensive experience in currency and commodities trading. He began his career in metal sales and trading at Societe Generale in London. Later on he worked as a senior analyst within the FX brokerage industry where he developed strategies in trading and risk management. With solid understanding of market dynamics he founded Wensfer to offer research and asset management services.

27 January 2023	USD tries to stabilise

27 January 2023 USD tries to stabilise

Jing Ren Jing Ren 27.01.2023 08:54
USDCHF grinds supportThe US dollar builds a base ahead of the Fed rate decision next week. An initial pop above 0.9240 has prompted short-term sellers to cover some of their bets. Though 0.9280 along the 30-day moving average has proven to be a tough level to crack for the time being. 0.9140 at the base of the recent momentum is a key support to keep the rebound intact. Its breach could trigger a new round of sell-off and push the greenback below January 2022’s low (0.9100), confirming a bearish continuation in the process.EURJPY looks to breakoutThe Japanese yen strengthened after Tokyo CPI beat expectations. On the daily chart, the pair is in a horizontal range between 137.60 and 142.90 as it tries to keep the uptrend intact in the medium-term. Recent jitters have found support above 140.50, which is essential to keep intraday buyers committed. A break above the upper band at 142.90 would flush the remaining sellers out and propel the pair above 144.00, putting the euro on a bullish extension. A bearish breakout would send the pair to 139.00. SPX 500 breaks resistanceThe S&P 500 rallies as upbeat US GDP eases fears of an economic downturn. On the daily chart, a close above the psychological level of 4000 and a bullish MA cross suggest that sentiment could be turning around. A break above 4050 from the start of the mid-December liquidation indicates solid buying pressure. Its breach would carry the index to the recent spike at 4130, leaving 4015 as a fresh support. Further down, the confluence of the swing low 3950 and the 20-day moving average is a key level to maintain the recovery.
Poland: ING expect balance went up to ca. -3.4%

US dollar: judging from Jing Ren's words, 25bp Fed rate hike by is almost cemented

Jing Ren Jing Ren 26.01.2023 12:48
Amidst all the debate of whether the US is heading into a recession this year, we get the first look at last year's GDP figures. This could be the biggest market moving event of the week, especially if expectations are not met. And there is something of a wide range of forecasts. The Fed's GDPNow tool is saying it will be 3.5%, while the consensus among economists is that it will be 2.6%. That compares to the prior quarter's revised 3.2% result. But it's important to remember that just as a country can have a "technical recession", it can have "technical growth" as well. One of the main drivers for third quarter GDP growth was an unexpected decline in imports. Meaning that the trade calculation contributed to GDP, but only because Americans were buying less. It's all inflation's fault Given the context of high inflation at the time, it's logical Americans were buying less. At the time, the dollar was relatively strong, meaning that imports constituted deflationary pressures. Since then, the dollar has gotten weaker in anticipation that the Fed will stop raising rates. That means imported goods have increased in price, which could technically support a growing GDP figure. The other interesting factor is that a recent review of leading indicators by the Conference Board showed that all segments of the US economy were decreasing except for two. Those were employment and personal consumption. The unemployment rate remains remarkably low, just a couple decimals off a multi-decade low. But that is likely because it's still dislocated from covid. Where's the money coming from? Turning to address the personal consumption factor, Americans have been spending down their savings of late. More worrisome for the long-term resilience of the economy, they have been taking on increasing amounts of debt. Major US banks pointed this out in their latest earnings, as deposits have diminished. Concurrently, net charge-offs (a measure of distressed debt) have been creeping higher, as Americans struggle to pay for their credit cards. Read next: McDonald's earnings: Currently, it is anticipated by several analysts that the EPS forecast for the quarter ending December 2022 is $2.44 | FXMAG.COM The head of JPMorgan, who's rather pessimistic about the economic future of the US, pointed to the rate of savings among his bank's customers is dwindling and would run out by October of this year. If interest rates remain high, it would be much harder for people to take on debt to continue spending. The largest driver of the US economy, and one of only two positive sectors at the moment, is dwindling. Gauging the market reaction The market might not particularly like a good GDP figure, since that would imply the Fed could keep hiking in order to tame inflation. But, even if that hurts stocks, it could give the dollar a bit of a boost. Meanwhile, a disappointing figure could give the markets some relief over rate hikes, as it could be interpreted as a sign that the Fed's forecasts are a little too optimistic, and they might even have to cut rates in the near future. The Fed meets next week, and there is a pretty solid consensus that there will be just a 25bps hike. This is the last major data point before the meeting, because January NFP figures won't be released until the Friday after the FOMC. Therefore this data could be pivotal for expectations for the Fed.
Australian dollar gained on the back of higher-than-expected Q4 inflation

Australian dollar gained on the back of higher-than-expected Q4 inflation

Jing Ren Jing Ren 26.01.2023 08:54
USDCAD attempts to rebound The Canadian dollar slipped after the BoC signalled a pause in rate increases. On the daily chart, the pair is looking to hold above 1.3320 as a triangle consolidation pattern seems to be taking shape between 1.3230 and 1.3700. After hitting resistance at the former support at 1.3520 the short-term price action reversed and tested 1.3320 again. Its breach would send the greenback to the critical floor at 1.3230. On the upside, 1.3500 is the first hurdle and 1.3660 may cap any further advance in the short-term. EURAUD sinks further The Australian dollar climbed after Q4 inflation came in hotter-than-expected. On the daily chart, the euro turned south at the support-turned-resistance (1.5950) from a sell-off earlier last year. This suggests that the medium-term bias is still skewed to the downside. Zooming into the hourly chart, a break below 1.5400 has invalidated the latest bounce and confirmed the pessimism on the higher timeframe. The RSI’s oversold situation has gathered limited support over 1.5300, but stiff selling could be expected around 1.5470. Read next: McDonald's earnings: Currently, it is anticipated by several analysts that the EPS forecast for the quarter ending December 2022 is $2.44 | FXMAG.COM USOIL consolidates gains WTI crude treads water as US crude inventories show a smaller buildup. The price action is grinding last December’s high of 82.50 as its breach might trigger an extended rally in the medium-term. Instead, a drop below the immediate support at 80.30 has put the bulls on the defensive. The previous swing low at 78.10 sits on the 20-day moving average and is a key level to keep the price afloat. A bearish breakout would shake out recent buyers and send the price to the psychological level of 75.00.
The Canadian Dollar (CAD) Was The Clear Outperformer Across The G10 Board

Canadian dollar: What are possible effects of BOC Interest Rate Decision?

Jing Ren Jing Ren 25.01.2023 10:24
After its last meeting, the BOC Governor Macklem said that the likely course would be a pause, unless there was a major change in the data. Of course he said it with a lot more words and technical jargon, but that was the essence of the message. Naturally, the markets adjusted the expectation to the BOC holding rates steady. The latest inflation data pointed to a strong deceleration. Even though the rate remains well above target, there is always some delay between when rates are raised and when inflation comes down to an acceptable range. So, it's expected that the central bank will stop raising when inflation starts to show signs it's coming under control, and not necessarily has reduced all the way. What changed? Inflation figures were in line with expectations, confirming the view for the BOC. But, the unemployment rate showed a surprise build. Over 100K people found jobs in December, well above the 7K expected. It is true that Canada has some wildly fluctuating jobs numbers. But given the context of the BOC saying it was going to be data dependent for the next meeting, the consensus now shifted to expect a 25bps hike at the next meeting. The context has implications beyond Canada, since the US faces similar economic conditions, and often the two central banks move in tandem. Inflation in the US has been coming down, but the jobs market remains surprisingly resilient. The prior months had seen slow jobs growth in Canada, leaving the impression that Canada could exit the rate hiking cycle sooner than its southern neighbor. But, if the BOC raises rates, it could have a somewhat diminished impact on the USDCAD, as traders weigh whether the strong jobs numbers seen in the US would also imply the Fed will move higher as well. What about further down the road? The other aspect is the global economy. Most of the reduction in inflation came from lower fuel prices. Wholesale food prices diminished, but not what shoppers were paying at stores. Meaning that the average Canadian might not notice the improving price situation, and in turn that could continue to impact consumer demand. Read next: Despite The Challenges Starbucks Is Developing In Italy, Bank BNP Paribas In Frankfurt Have Been Raided| FXMAG.COM What is more directly correlated to the currency market, however, is the price of crude. As Canada's main export the drop in petroleum prices naturally affected the CAD. But, now that China is reopening faster than expected, there is renewed speculation that crude prices could continue to appreciate. Particularly in the context of the latest IEA report, which forecasts demand for crude to reach a historic peak in the next year, while supplies remain constrained. Potential market reaction It's expected that after this rate hike, the BOC will once again say that it expects a pause, depending on the data. The other option is that it could surprise the markets by not raising rates. That could be because it discounts the jobs data as a one-off, and heavily imply that it could rates rates at the next meeting. Both courses of action would likely leave the long-term outlook for the CAD in the same place, but could provide some short-term volatility.
25 January 2023	USD struggles to bounce

25 January 2023 USD struggles to bounce

Jing Ren Jing Ren 25.01.2023 09:27
EURUSD continues higherThe euro finds support from upbeat PMIs in the eurozone. On the daily chart, the close above last May’s high of 1.0770 continues to fuel the upward thrust. The price action has so far consolidated its gains above this resistance-turned-support, making it a major level to keep the single currency ahead. A hold above it would confirm that the uptrend is still intact, with the former support and psychological level of 1.1000 as the next target. However, its breach would send the pair to 1.0660 at the base of the January breakout rally. GBPUSD hits resistanceThe pound fell after Britain’s services PMI showed a bigger-than-expected contraction. A second attempt at December’s high of 1.2450 has failed to lift the ceiling. A bearish RSI divergence indicated a deceleration in the upward momentum, and a break below 1.2320 let a crack in the rally and suggests that the path of least resistance is down. Whether this will be a correction or a reversal will depend on the intensity of the sell-off. 1.2260 is the first support and 1.2160 over the 20-day moving average is the bulls’ second layer of defence.XAUUSD bounces off supportBullion whipsawed after an uptick in the US dollar amid rising bond yields. On the daily chart, the price is grinding last April’s sell-off zone around 1930, which extends all the way to 1995. This is a major bull-bear line as gold recouped losses from its six-month long downturn. Despite a choppy price action, the overall direction is skewed to the upside. This means that trend followers are likely to see any pullback as an opportunity to go long. 1915 is the closest support and a close above 1950 would open the door to 1975.
24 January 2023	AUD keeps high ground

24 January 2023 AUD keeps high ground

Jing Ren Jing Ren 24.01.2023 08:42
AUDUSD rallies backThe US dollar continues downward as the market rules out a 50 basis point hike next month. The pair has recouped most of the losses from last week’s sell-off after bouncing off 0.6870 which coincides with the 20-day moving average. This is a sign that the directional bias has remained upward despite a speed bump. Momentum buyers may double down if the aussie closes above 0.7060, putting the August high of 0.7130 in the crosshairs. As the RSI retraces into neutral territory, 0.6950 is a fresh level to expect follow-up bids.NZDUSD finds supportThe New Zealand dollar inched higher as risk appetite gained traction across the board. On the daily chart, a bullish MA cross following a brief consolidation suggests that the rally may have picked up speed again. The previous swing low was contained within the demand zone 0.6330-0.6370, helping the bulls retain control of the price action. A break above the recent high of 0.6520 could trigger a runaway rally above 0.6600. 0.6420 is the immediate support in case the kiwi needs to build a stronger base.US 30 tests resistanceThe Dow Jones 30 popped higher driven by hopes that US inflation has peaked. On the daily chart, the index is consolidating within 32500 and 34800 after clearing the mid-August high of 34200. This provides a wide swing range on the hourly chart as bulls and bears wrestle for control. The base of the January take-off 32900 is a key support and triggered traders’ ‘buy-the-dips’ instinct. 33300 is a fresh support and renewed buying interest would pave the way for a recovery to 34000 where selling pressure could start to reappear.
23 January 2023	USD heads lower

23 January 2023 USD heads lower

Jing Ren Jing Ren 23.01.2023 08:42
USDJPY struggles to reboundThe US dollar edges lower due to bearish inertia across the board. On the daily chart, the pair is still hovering above last May’s lows of 126.50 as the bulls strive to keep the outlook rosy in the medium-term. The price action has stabilised above 127.80 with the latest bounce above 128.90 suggesting an improved mood. Still, the bulls will need to clear the faded peak at 131.50 before they could regain the upper hand. Otherwise, a drop below 128.30 could make the greenback walk on thin ice above 126.50.EURGBP licks woundsSterling fell back over weak retail sales in December. A sharp fall below the previous swing low at 0.8770 has put the bulls on the defensive. The single currency is resting on 0.8720 at the base of the bullish breakout in late December. Sentiment has grown cautious and the sideways action may end soon in a breakout. A hold above this critical floor would challenge 0.8800 where a breakout could help the pair recover to 0.8880. Failing that, a bearish turn would trigger a new round of sell-off and send the pair to 0.8650. GER 40 holds on to gainsThe Dax 40 recouped losses as investors saw a bargain hunting opportunity. On the daily chart, the RSI’s double top in the overbought area suggests overextension after the index recovered to a 11-month high. A break below 15100 then the psychological level of 15000 has prompted complacent buyers to look for the exit. The bounce may come under pressure at 15130 and only a close above 15250 would resume the uptrend. 14950 is a fresh support and 14800 further down is the next level to gauge buyers’ interest.
23 January 2023	No free lunch	Earnings may reveal cost of high interest rates

23 January 2023 No free lunch Earnings may reveal cost of high interest rates

Jing Ren Jing Ren 23.01.2023 08:41
EURUSD steadies over inflation reliefThe euro holds steady as inflation slows down. With prices of oil and gas falling back, Europe could put the much-daunted winter behind. Inflation effectively decelerated in the Euro zone in December, which would give policymakers some relief. Easing pressures have triggered expectations that the ECB might reassess its tightening schedule. The prospect of a 25-bp increment in March following a 50-bp penciled in next month could drive the price action forward. The single currency has more upside should data suggest that economic fundamentals keep the recession at bay. The pair is to test 1.1100 with 1.0510 as a fresh support.USDCAD awaits another BoC hikeThe Canadian dollar steadies as the market wagers on a 25-bp hike by the BoC. Inflation eased more than expected in December thanks to lower oil prices. But core components excluding food and energy remained high which shows that pressures notably from a tight job market still linger. The range bound price action suggests that traders expect both central banks to be near their peak rates. As their interest rates seemingly move in tandem, there is little opportunity for carry trades. What might set the US apart could be its resilience in case of a mild recession. The pair is testing the floor at 1.3230 and 1.3680 is a key resistance.UKOIL struggles as global economy staggersBrent crude softens as weak economic data rattle the market. Lacklustre performance across the commodity spectrum shows that traders still worry about the economic cost of the widespread policy tightening. Weak data out of the top consumers keep a lid on market sentiment. Disappointing US manufacturing output raises concerns of a hard-pushed soft-landing. While China recorded its worst growth since 1976 with GDP expanding by a mere 3.0% last year. Meanwhile, a surprise surge in US oil inventories tips the balance in favour of supply. The price is hovering between 70.00 and 89.00.SPX 500 falls as earnings may disappointThe S&P 500 slips as the market braces for a downtrend in earnings with the full impact of higher rates. The macroenvironment does not help with weak economic data and hawkish Fed comments being a rather bearish mix. The tightening has surely left its mark with producer prices and retail sales falling along the CPI. A feeble GDP reading could further fuel recession worries. Meanwhile, some officials’ insistence on pushing rates beyond 5% raises concerns of overshooting. After all, they were judged to be too slow to take the ‘transitory’ label off the inflation problem. The index is falling towards 3770. 4100 remains a key resistance. Key data release (GMT time) Tuesday, 24 January 08:30 S&P Global/BME Composite PMI S&P Global/BME Manufacturing PMI 09:00 S&P Global Composite PMI 09:30 S&P Global/CIPS Services PM 21:45 Consumer Price Index Wednesday, 25 January 00:30 RBA Trimmed Mean CPI 15:00 BoC Interest Rate Decision 16:00 BoC Press Conference Thursday, 26 January 13:00 Harmonized Index of Consumer Prices 13:30 Durable Goods Orders Gross Domestic Product Annualized
Australia: It is better to be prepared for lower data and a slowdown in CPI to 7.2-7.3%

Jing Ren talks Australian dollar against greenback, crude oil and US 30

Jing Ren Jing Ren 20.01.2023 08:35
AUDUSD falls back The Australian dollar softened after an uptick in December’s unemployment rate. A cut through 0.6940 has invalidated this demand zone, elbowing the bulls to the side. This left a shooting star on the daily chart, which may foreshadow a U-turn. 0.6820 near the base of a previous bullish breakout momentum sits on the 30-day moving average, making it an area of confluence. A deeper correction would test the daily low at 0.6720. On the upside, the buy side will need to push back to 0.6950 to relieve their trapped fellows first. USOIL finds support WTI crude bounced back after data showed Chinese demand rose its highest since February. A close above the previous high of 81.30 has been short-lived with the rally hitting a roadblock at 82.20, right under December’s high of 83.00. A break below 79.00 has forced leveraged buyers to bail out. Not all is lost though, this might be a correction after a bearish RSI divergence showed exhaustion on its way up. 78.00 on the 20-day moving average saw renewed interest. 76.00 would be the bulls’ second layer of defence. US 30 breaks support The Dow Jones 30 weakens as fewer jobless claims point to a tight US labour market. The mid-December liquidation point at 34400 has proved to be a tough level to crack. The price’s sharp reversal suggests that the bears could still have the final word. A clean cut through 33700 then 33400 has put the bulls on the defensive, with the latter becoming a fresh resistance. The index is now probing bids at the lower band of a previous consolidation at 32850. The RSI’ oversold condition may attract some bargain hunters.
The price of crude has been on something of a roller-coaster since the start of the year. From a sudden drop in the first days of January, it climbed through the third week, only to have a hard drop a couple of days ago.

The price of crude has been on something of a roller-coaster since the start of the year. From a sudden drop in the first days of January, it climbed through the third week, only to have a hard drop a couple of days ago.

Jing Ren Jing Ren 19.01.2023 15:56
Naturally there have been news events that have driven these moves, which we'll get to in a moment. The underlying theme, however, is general uncertainty. Without a clear direction for the global economy, traders are swinging from optimism to pessimism rather quickly. This, in turn, leads to wider swings in commodities that are barometers for economic activity. Oil, naturally, is one of the top commodities that depend on expectations of economic performance. If the economy is doing good, then more energy is needed. If the economy is doing poorly, then demand for oil will drop. The driversChina's surprise GDP growth last quarter was something of a double-edged sword. On the one hand, it had a positive implication that the world's second largest economy had gone through the covid situation without being seriously affected. On the other, it meant that less of a bounce could be expected from China, since it hadn't gone down as much in the first place.The rally in oil prices, therefore, was a bit fragile. It might simply have been corrected as it reached a point that was good for profit taking. But there was a series of economic data that pointed to a potential bumpy road ahead for the US. The big one was that retail sales came in well below expectations. With the US being the largest consumer of fuel in the world, it wasn't a surprise that oil prices faltered.It's not just the USThe situation in Europe is complicated as well. In the last couple of weeks, Europe has had unseasonably warm weather. But a bout of cold is expected over the weekend, that could put a strain on energy. Weather perhaps is more difficult to predict than the markets; and the relative uncertainty could keep oil traders apprehensive.On top of that, workers at French refineries went on a one-day warning strike over salary as the country faces increasing cost of living pressure. Further industrial action could substantially curtail crude demand. If the workers' demands aren't met, they could opt for a longer strike, which could reduce European refinery capacity, and drive up prices. The US relies on imports of refined petroleum products to meet its own demand.The outlook smooths out laterThe latest IEA report coincides with the OPEC monthly report suggesting that there will be an abundance of supply in the short term. This in the context of the global economy expected to underperform under the weight of central bank tightening. But the IEA also warns that this oversupply situation could rebalance at any moment depending on how quickly China's economy rebounds. Or if there is another factor that helps OECD countries achieve a soft landing and avoid a recession. After that, global crude consumption is expected to hit another record high later this year.
US GDP: Growth slowed down slightly from 3.2% in Q3, but the data show that the US economy is still avoiding recession

US Data, and the Disinflation Narrative

Jing Ren Jing Ren 19.01.2023 15:16
After months of inflation coming in way above the Fed's target, the latest releases show a different trend. US monthly CPI figures for December showed a drop in prices, largely aided by energy prices. Yesterday, producer prices came in much more negative than expected. If inflation is bad, then the opposite would be good, right? Not so much. The opposite of inflation is deflation, and it can be just as bad for the economy as inflation. Particularly in the case of the US, where the Fed has never had to deal with runaway inflation. High inflation, yes; but hyperinflation like experienced in Europe in the last century, for example, has not happened. What the Fed did have to deal with up until the US left the gold standard, were bouts of deflation. And, as such, the Fed tends to be more worried about deflation than inflation. The warning signs More immediately for traders, however, deflation is an important warning sign. Increasing economic activity typically translates into growing prices; and the reverse, slowing economic activity typically translates into deflation. Looking at yesterday's data, the surprise deflationary PPI came along with a surprise drop in retail sales and industrial production. The data was expected to be negative, but it was a lot more negative than expected. A similar vein is expected in the coming data to be released later today and tomorrow relating to the largest component of the American economy: Housing. Home prices have been on the backfoot as rising interest rates have made buying houses much more expensive. But, over the last few weeks, interest rates have been coming down, including the average mortgage rate. What are the projections Despite the lower costs to buy, housing starts are expected to continue to fall, forecast at 1.36M compared to 1.43M in November. Typically in the winter, homes sell slower, but the expected slowdown is much faster than what is typical of the season. Existing home sales are also expected to continue its descent to 3.96M compared to 4.09M in November. In the wake of the latest data, the dollar slid compared to other pairs as the US benchmark bond rates slid, hitting the lowest level since last September. The greenback was at its worst level since May of last year. Which brings us back to the potential Fed reaction. Which way are we going? This shift in price trends is happening in the middle of a market debate over whether the Fed will raise rates and keep them high, or there will be a pivot and the Fed will cut rates. Traditionally, the Fed is much quicker to cut rates to head off potential deflation than it is to raise rates to counter inflation. In the end, the Fed does want there to be some (controlled) inflation. For now, the deflation has shown up in the headline CPI figure and PPI, which aren't the key metrics used by the Fed to determine rates. Some volatility in the headline inflation number is understandable, particularly when the Fed is trying to lower inflation. But if this is the first sign that negative inflation numbers will become the norm, then it could increase the chances of a Fed rate cut in the near future.
19 January 2023	USD still under pressure

19 January 2023 USD still under pressure

Jing Ren Jing Ren 19.01.2023 09:42
USDJPY gives up gainsThe Japanese yen tumbled after the BoJ shattered hopes that it would wind down its stimulus policy. Still the dollar’s short-lived surge turned south at a previous demand zone around 131.50 which coincides with the 20-day moving average. This is a sign that the mood has remained cautious for the time being and the bears saw in the rebound an opportunity to sell into strength. The recent low of 127.30 is a key support. A bearish breakout would expose the greenback to further downside below last May’s low at 126.50. GBPUSD tests major resistanceThe US dollar faltered over lacklustre retail sales in December. The pair continues to capitalise on its bounce from the daily low at 1.1840, recouping most of the losses from the December sell-off. A close above 1.2300 has attracted more momentum and is pushing the cable to its five-week high at 1.2450. A break of which would help the bullish reversal gain traction. As the RSI shows an overbought situation, a drop towards 1.2260 may meet support from short-term trend followers. 1.2160 would be a second level of support.XAUUSD grinds resistanceGold retreated after Fed officials echoed hawkish sentiments. On the daily chart, the price is grinding the major supply zone around 1930 from last April’s sell-off. The RSI has ventured again into the overbought area and may prompt buyers to start to take chips off the table. 1895 is the first support on the hourly chart and a bounce above 1930 would renew the bullish pressure and send bullion to 1975, which is only a step away from its 9-month high of 1995. 1870 would be another support in case the metal runs out of steam.
European Central Bank's President Christine Lagarde warns, but...

Is the ECB Done With the Hikes?

Jing Ren Jing Ren 18.01.2023 15:21
The Euro was underperforming yesterday after press reports that the ECB was planning to hike by 25bps in March. That's quite a long time away, and it's just a rumor. But it could have an outsized impact on the shared currency for a couple of reasons. We could see a shift in tone ahead of the next ECB meeting, as well. The first thing is that press reports like this are fairly common, and typically the ECB doesn't make a point of denying them. Without a formal dismissal by the Governing Council - which takes quite a bit of logistics - then the rumor will stay in the back of the mind of most traders. That could, by itself, incline the psychology towards a weaker Euro as well. It's good news The other aspect is the reasoning given: The recent improvements in the inflation have lowered the inflation outlook. That's a logical analysis, and is in line with previous comments by most members of the ECB. After all, the central bank is trying to get inflation down by raising rates, so a significant drop in inflation would imply the ECB won't have to hike as much. The problem is that the ECB was much slower to join the rate hiking club. The BOE was the first and has pushed rates up to 3.5%. The Fed has been even harsher, pushing rates up to 4.5%. Meanwhile, the ECB is less than half of that at 2.0%. And some officials are even calling that the "ballpark" of neutral rate. The drivers of the currency pair The gap in interest rates between the Eurozone and the US is what pushed the Euro below parity last year. It has subsequently climbed back up as traders figure the ECB will hike longer, catching up with the Fed through the course of this year. Inflation in the shared economy is higher than in the US, so it stands to reason that rates would continue to rise. As inflation came down in the US, the Fed has slowed the pace of its hiking. Current expectations are for a 50bps hike in February, followed by a 25bps in March. Which could be the last hike for the Fed this cycle. The latest press reports suggest that the ECB will do the same. In other words, the interest rate gap between the two economies would remain consistent through at least the first quarter. That doesn't allow much upside for the EURUSD. What about the downside? ECB policy matching the Fed's has a significant problem though. US core inflation has been declining for a few months now, while the same measure in the share economy has continued to rise. Energy prices have been the largest contributor to the lowering of headline inflation - but that's not thanks to ECB policy. The ECB cares much more about the core rate, and that is still, apparently, not under control. Which makes planning to halt hiking at this juncture a little premature. Of course there is one additional element, which is that the ECB plans to reduce its balance sheet in March, which counts as additional tightening. But it's a relatively small amount; just €15B/month, while the ECB averages maturities of about €30B a month. And the Fed is running off $95B a month. The press report for the moment remains a rumor, but if it turns out that's what the ECB will announce in due course, it could keep the Euro under pressure.
18 January 2023	CAD consolidates gains

18 January 2023 CAD consolidates gains

Jing Ren Jing Ren 18.01.2023 09:01
USDCAD builds baseThe Canadian dollar steadied after inflation eased more than expected in December. From the daily chart’s perspective, the pair is still in a prolonged consolidation between 1.3230 and 1.3800. A bounce off the daily support at 1.3320 may lead to a narrower range. A close above the immediate hurdle at 1.3450 would attract more intraday interests and carry the price to the support-turned-resistance at 1.3560. Stiff selling could be expected from there to the previous swing high of 1.3660 as range trading lives on.NZDUSD tests resistanceThe New Zealand dollar rallies as overall risk appetite grows. The pair has consolidated its recent gains above the former resistance at 0.6350. The choppy rise reveals a lack of momentum as the price inches towards the supply zone around 0.6460. Its breach could pave the way for a bullish continuation above 0.6510. Otherwise, the bears may take over in the near term. 0.6330 is an area of congestion and its break would shake some buyers out and send the kiwi to the latest daily low at 0.6190.UK 100 keeps high groundThe FTSE 100 pushes higher as financial stocks roar. On the daily chart, the index has gone parabolic after breaking last year’s top of 7670. The RSI’s double top in the overbought area may lead to a slowdown in the momentum. The bearish RSI divergence on the hourly chart corroborates the possibility of exhaustion. 7810 is the first support to see whether the bulls can sustain their bids at these fresh high levels and push to 7900. A bearish breakout could trigger broader profit-taking and possibly mean reversion towards 7730.
17 January 2023	USD struggles to find floor

17 January 2023 USD struggles to find floor

Jing Ren Jing Ren 17.01.2023 08:21
EURUSD keeps high groundThe US dollar struggles on speculation that the Fed is nearing the end of its tightening. The pair is holding on to its gains after breaking above May’s high of 1.0780. A bearish RSI divergence suggests a deceleration in the momentum and may foreshadow a potential pause in the rally. But as sentiment improves, the bulls may see a pullback as an opportunity to stake in with 1.0750 as the first support. 1.0660 at the origin of the latest breakout and on the 30-day moving average is a major level. 1.0950 is the target in case of a bounce.XAGUSD tests resistanceSilver steadies as traders continue to dump the US dollar. The price is testing the support-turned-resistance at 24.50 from last April’s sharp sell-off. The previous test caused a limited fallback, but a bounce off 23.20 indicated that the bulls are still in the game. A bullish breakout would trigger a runaway rally as sellers scramble to cover, opening the door to the psychological level of 26.00. In the meantime, after the RSI showed a double top in the overbought area, the metal may seek support above 23.55.NAS 100 grinds higherThe Nasdaq 100 rallies as improved US consumer sentiment showed a falling inflation outlook. The direction remains up as pullbacks have been met with enthusiasm so far. The index is pushing into the supply zone from the mid-December sell-off with 11580 as the first resistance. Its breach may gather more interests and send the price to 11900 right under last month’s spike (12200). A break above that area could turn the mood around in the medium-term. 11330 is the immediate support and 11100 a second line of defence.
adaad

US dollar decreased, British pound recovered, DAX gains on the back of risk-on

Jing Ren Jing Ren 16.01.2023 08:37
USDCHF hits resistance The US dollar softened after Fed policymakers cheered the news of easing inflation. On the daily chart, the pair has remained under pressure after a tentative break below last April’s low of 0.9200. The current rebound from this critical level has led to a consolidation. Though the greenback must clear the recent swing high and daily resistance at 0.9400 before it would attract buyers. A bullish reversal could take shape should this happen. Otherwise, renewed selling pressure would send the pair towards 0.9100. EURGBP tests support The pound recouped losses as the UK’s economy avoided a contraction in November. However, overall sentiment still favours the single currency. A break above the higher band (0.8870) of the consolidation range means that the bulls are still in charge of the price action. A pullback would be seen as an opportunity to stake in and join the trend. The previous low of 0.8830 is the first support and further down 0.8770 on the 20-day moving average is a critical floor. 0.8930 from last September’s sell-off is the target. GER 40 grinds higher The Dax 40 extends gains as markets go risk-on post-US inflation. A bullish MA cross on the daily chart confirms increased risk appetite after a rally above last June’s high of 14650. As the RSI repeatedly flirts with overbought territory, a pullback may catch the eye of bullish followers. Another sign of exhaustion comes from the hourly chart where a bearish RSI divergence shows a loss of momentum. 14960 is the immediate support in case the index takes a breather. 15400 at the start of a sharp sell-off in February is the target. Read next: McDonald's Will Be Replaced In Kazakhstan By The Russian Vkusno & Tochka| FXMAG.COM
The EUR/GBP Pair Is Likely To Witness Further Recovery

Japanese yen rose, Canadian dollar increases, Gold gained on the back of the US CPI print

Jing Ren Jing Ren 16.01.2023 08:05
USDJPY falters over Japan’s rising inflation The Japanese yen extended gains as accelerating inflation may pressure the BoJ to act soon. One of the major themes of 2023 could be Japan finally normalising its monetary policy. Consumer prices have been rising steadily nationwide, with the latest CPI in Tokyo reaching 4%, above the central bank's 2% target for seven months in a row. The US dollar’s reversal from its 32-year peak against the yen suggests that the market believes that inflation is not transitory and has shrugged off Governor Haruhiko Kuroda’s dovish statements. Last May’s lows around 126.50 is the next support and 134.50 is the immediate resistance. USDCAD struggles on improved risk sentiment The Canadian dollar recovers as markets go risk-off. Domestically, a strong December jobs report gives reason for another rate increase by the Bank of Canada, with a 25 bp hike priced in by the market. However, overall sentiment since the start of the year may carry the risk-sensitive loonie. Outflows from the safe haven US dollar means that higher beta counterparts can enjoy a sustained recovery. Meanwhile, the price of oil, one of Canada's major exports, has settled in the green for a few days in a row, offering an effective support to the currency. November’s low at 1.3230 is a key support and 1.3680 is the first resistance. Read next: Lowering The Price Of Electric Vehicles Is Supposed To Be Tesla's Unusual Strategy To Generate Demand In The US Market| FXMAG.COM XAUUSD outperforms softer dollar Bullion strengthened as the US dollar slipped post-CPI. Traders have been repositioning themselves for a more dovish Fed in the coming months, starting with a 25 basis points hike in February. A cool-off in US CPI at a steady pace would eventually make the central bank reconsider its policy stance. The only billion dollar question is when. The US dollar’s sluggish performance has put gold on a springboard. As the dollar bulls locked in profits, traders are wondering whether the current correction would slide into a reversal, which in turn would benefit the precious metal. The price is pointing towards 1930 with 1830 as a fresh support. US 30 bounces as falling CPI rekindles pivot hope The Dow Jones 30 rallies as the market raises its bet of a policy pivot soon amid softer inflation. Despite the Fed’s repeated insistence not to lift the tightening prematurely, investors wager on seeing the terminal rate soon, which says a lot about policymakers’ credibility. A steady fall in consumer prices in December further cemented hopes of a dovish turn by the central bank, possibly at its February meeting. The prospect of interest rates plateauing means that equity markets may see the light at the end of the tunnel, or at least that is what the bulls want to believe. 34800 is the next hurdle and 32800 the first support. Key data release (GMT time) Tuesday, 17 January 07:00 ILO Unemployment Rate Harmonized Index of Consumer Prices 13:30 BoC Consumer Price Index Core Wednesday, 18 January 03:00 BoJ Interest Rate Decision BoJ Press Conference 07:00 Consumer Price Index 13:30 Retail Sales     Thursday, 19 January 00:30 Unemployment Rate   Friday, 20 January 13:30 Retail Sales  
Forex: USDCNH may reach 7.37? What could be the alternative scenario?

Forex: USDCNH may reach 7.37? What could be the alternative scenario?

Jing Ren Jing Ren 13.01.2023 10:09
USDCNH: The Market Is Preparing For Bullish Growth In A New Wave. In the long term, the USDCNH pair is expected to form a large double zigzag consisting of three cycle sub-waves w-x-y. The actionary wave w took the form of a standard zigzag. The bearish intervening wave x may be fully constructed, since at the moment it is completed by a double zigzag of the primary degree â“Œ-Ⓧ-â“Ž. Thus, in the near future, market participants may expect bullish growth in the actionary wave y. Perhaps it will take the form of a standard zigzag â’¶-â’·-â’¸. Read next: Altcoins: Avalanche increased by over 20% as its developers partnered with Amazon| FXMAG.COM Most likely, we will see the end of the first primary wave â’¶ at the maximum of 7.00, or a little higher. Let's consider an alternative scenario in which the price will move in a downtrend. Perhaps the cycle intervening wave x is not yet complete, most likely, it will take the form of a triple zigzag â“Œ-Ⓧ-â“Ž-Ⓧ-Ⓩ, not a double one. If the actionary wave â“Ž is completed, then a slight increase in the second intervening wave Ⓧ is expected in the near future, after which the fall can be continued in the final primary wave Ⓩ. The approximate level to which the market may collapse is 6.591. It is determined using Fibonacci lines. At that level, wave x will be at 76.4% of wave w.
Intel, Mastercard and Visa are ones of the companies who take over stage today

Japanese yen gained on the back of rumours about Bank of Japan, USD affected by CPI

Jing Ren Jing Ren 13.01.2023 09:53
NZDUSD extends gains The US dollar struggles as a slowing CPI foreshadows a dovish Fed. On the daily chart, the upward bias has remained intact after the kiwi bounced off 0.6190. The price then consolidated its gains after clearing the major supply zone around 0.6400. The 38.2% Fibonacci retracement level at 0.6330 coincides with a former swing high, making it a key level to find follow-up interest. The 50% level (0.6300) is a second layer of support. A close back above 0.6410 would open the door to the previous high at 0.6500. EURJPY struggles for support The Japanese yen rallied on rumours that the BOJ would review the side effects of its monetary easing. The pair turned south after it failed to lift offers at the daily resistance 142.85. A drop below 141.80 prompted buyers to bail out, extending losses to previous swing lows around 140.00. A tentative break below this psychological level would indicate that the path of least resistance is down and cause a retest of 138.00. The RSI’s oversold condition may attract some buying interest, with 140.50 as the first resistance. NAS 100 bounces higher The Nasdaq 100 popped higher after data showed that US inflation might have reversed its course. A break above 11280 prompted sellers to cover their positions, easing the downward pressure. After the index had a secure footing over 11030, the subsequent rally suggests that the bulls have taken over. A whipsaw above 11230 indicates solid support as buyers were fast to keep the price action afloat. The start of the liquidation back in mid-December at 11830 could be the next target when momentum buyers get involved. Read next: Altcoins: Avalanche increased by over 20% as its developers partnered with Amazon| FXMAG.COM
Forex: US dollar against Japanese yen amid volatility and macroeconomics

Themes to Watch Out for in the Coming Earnings Season

Jing Ren Jing Ren 13.01.2023 07:57
Today is the unofficial start of the fourth quarter earnings season. Over the next month and a half, virtually all the listed companies in the world will issue their latest earnings reports. Not surprisingly, the markets tend to get quite a bit more volatile during this period. And not just the stock market, because the trends that major companies see can have important implications for the currency markets. Already analysts have calculated what to expect for a lot of the firms, and particularly the large capitalization ones that could move the currency market as well. There are already some expectations of how this earning season could affect the markets, and some things that could cause a sudden turn in the markets. Inflation vs growth One of the main themes of the last earnings season and could be repeated now is what could be called "ghost profits". That is when a company reports an increase in sales, but lower volumes. Which in turn translates to an increase in nominal profitability, but the company actually makes less. That's because when companies raise prices, their revenue goes up. But if it's part of inflation, then the actual sales volume might go down. Meaning that, without inflation, their sales actually dropped. That's a bad sign for a company, even if it looks good on paper. And if profits don't increase faster than inflation, then the actual value of the company has gone down. Thus, many companies could report higher earnings, but the stock underperforms, and the markets shift towards safe havens. The rise of zombie companies According to a recent study, the number of zombie companies has hit a record high. A zombie company is when the interest the company has to pay on its debt exceeds its profits. Which means it can't pay down its debt, and it might even have to take on more debt just to make payments on what it already owes. Naturally, as the cost of borrowing increased in the last year, the amount of interest companies had to pay on debt increased as well. This substantially eroded their profitability, and potentially put them on the road to bankruptcy. As these companies become increasingly more risky investments, they have to pay higher interest rates to attract investors, creating a vicious cycle. That also increases the risk of the market, motivating people to turn to safe havens, like gold, the yen and the swissie. Shifting consumer demand Major banks and retail outlets have a direct line to what consumers are buying, and how they are behaving. As inflation takes hold, people are expected to spend less. That will likely be expressed in credit card numbers reported by major banks. If the economy is slowing down, then major retailers will see slowing sales volumes (not to be confused with sales, as mentioned above, because of inflation). Logistics companies like FedEx could have an outsized impact on the market, as investors are looking to gauge supply chain problems as well as the resilience of demand. If UPS, Royal Mail, etc see solid organic growth and increased parcel volume, it could reassure investors that the economy might avoid a recession. But if logistics firms see sales dropping in the near term, it might be another indicator that a recession is coming.
Eurozone: Germany - annual GDP growth is forecasted to reach 1.8%

Eurozone: Germany - annual GDP growth is forecasted to reach 1.8%

Jing Ren Jing Ren 12.01.2023 14:53
Goldman Sachs has been one of the recent major banks to upgrade its expectations for the Euro Zone for the coming year. It had previously expected the shared economy to fall into a recession in the first half of the year. Now, the forecast shows an expectation that the Euro Area will just barely avoid a recession, growing at 0.1% for each of the first two quarters. The revision of expectations is based on the dramatic drop in natural gas prices through the fall, and China reopening sooner than expected. The bout of warm weather over the last couple of weeks has provided further optimism that Europe will avoid an energy crisis during the winter, as Germany was able to restock its natural gas supplies. Additionally, France brought back on line some of its nuclear power plants, allowing the country to become a net exporter once again. More room for the ECB? With inflation only just off double-digits, there is quite a bit of pressure on the ECB to get prices back in line. The ECB expects inflation to remain above target for the next three years. However, high inflation isn't a tenable situation, as seen in the UK. Inflation in Britain started to rise sooner than in the Euro Area, and has prompted a series of strikes across the country that threaten to either push the country further into recession or increase inflationary pressures. There has been some industrial action in Europe, with some firms offering concessions in wages. But as people see their purchasing power diminish for a protracted period of time, the labor upheaval seen in the UK (like the energy crisis before it), could be a preview of what could happen in Europe over the winter and into the spring. Read next: GM, Ford, Google And Solar Producers Would Work Together To Set Standards For Increasing The Use Of VPPs| FXMAG.COM It's not just Europe Meanwhile, the World Bank almost halved its projections for growth this year. It had previously forecasted that the global economy would grow by 3.0%, but now expects only 1.7%. An important part of the pessimism for the outlook is around China, which is expected to have a difficult start to the year. Europe is one of the major exporters to China, as well as relying on it for materials. The continued disruption as covid rampages through the world's second largest economy could be expected to have an effect on Europe as well. The US is also expected to have meager growth in the first half of the year. All of this combines to put the ECB in a difficult spot, not wanting to be responsible for Europe slipping into a recession, even if just technically. But something has to be done about inflation. The core that matters A large portion of the headline inflation can be attributed to the increased cost of energy. Now that natural gas prices are coming down, so should the headline CPI figure. But core inflation, the one that matters to the ECB, has actually continued to rise. That might pose additional headwinds for the economy, if the ECB has to raise rates even more to get it under control. German annual GDP growth is expected to come in at 1.8%, down from the 2.6% registered in 2021. Meanwhile, core Spanish annualized CPI for December is expected to be confirmed as growing to 6.9% from 6.3% reported in November.
cmc

Swiss franc (CHF) down, gold price fluctuates, crude oil gained

Jing Ren Jing Ren 12.01.2023 09:41
USDCHF claws back losses The Swiss franc plunged across the board after a pickup in risk sentiment. After a double top at 0.9400, a drop below 0.9260 had put the bulls in an awkward position. Last March’s lows around 0.9160 has attracted some bargain hunting. Then a close above 0.9270 revealed strong momentum, turning it into a support. Selling pressure could be expected at 0.9400 but a break above this major hurdle could trigger a recovery in the weeks to come. In the meantime, the RSI’s overbought situation may grant a limited pullback. XAUUSD to test key resistance Gold drifts sideways as traders reposition ahead of the US CPI. Following a brief fallback, a new high above 1860 indicates a strong bullish drive. The psychological level of 1900 sits with the start of a sell-off back in May and could act as a key obstacle ahead. The RSI’s repeatedly overbought condition on the daily chart may prompt short-term buyers to take profit, weakening the momentum. The resistance-turned-support at 1860 is the first level to expect follow-ups and 1833 on the 20-day moving average is a critical support. USOIL struggles for bids WTI crude jumped as the EU worked on more sanctions against Moscow. The price is consolidating above 70.00 as the bulls cling on the psychological level and 12-month low. The 70.00-81.10 range may be narrowing as traders probe levels back and forth. 74.30 is a fresh support to prevent the commodity from revisiting the critical floor right below. A close above the former support 78.30 may brighten up the mood and attract more buying interests. Only a rally above 81.00 would pave the way for a bullish reversal. Read next: The weaker pound has contributed to the UK100 trading at its highest since 2018 this week| FXMAG.COM
British pound to US dollar: UK Gross Domestic Product is released tomorrow

Forex: British pound up, Australian dollar helped by November retail sales

Jing Ren Jing Ren 11.01.2023 08:36
GBPUSD seeks support The high beta pound edges higher on improved market sentiment. A surge above 1.2080 has prompted short-term sellers to cover their positions. This could be the signal the bulls have been waiting for after the pair drifted lower in search of support. As the RSI returns to the neutrality area, the supply-turned-demand zone around 1.2050 is the first level to expect follow-up bids. 1.1900 is a critical support in case of a deeper pullback. On the upside, a close above 1.2300 could pave the way for a bullish reversal in the medium-term. AUDUSD breaks resistance The Australian dollar strengthened over better-than-expected retail sales in November. On the daily chart, the price has been grinding along the 30-day average (0.6720). A close above the double top (0.6890) is a sign that the bulls are strongly committed. The psychological level of 0.7000 coincides with the origin of a late August high, making it a key hurdle before the aussie could extend higher. On the downside, 0.6820 is the immediate support and 0.6720 the bulls’ second line of defence in case of hesitation. Read next: Euro: ECB's Schabel talks further rate hikes. Australian inflation hits 7.3% - Australian dollar can be supported by a 25bp rate hike| FXMAG.COM SPX 500 attempts to rebound The S&P 500 rallied after Fed Chair Powell avoided appearing hawkish in his latest remarks. The rally hit a bump in the former demand zone (3950) from December. Selling by previously trapped bulls weighs on the near term price action. If renewed buying could overpower this resistance, the index may progress towards 4050 which is just a springboard to the recent peak at 4120. In the meantime, the upper band (3850) of the previous consolidation range is the closest support, and 3800 a critical level to keep the recovery bias intact.
Intel, Mastercard and Visa are ones of the companies who take over stage today

China: inflation may hit 1.8%, US counterpart is expected to reach 6.5%

Jing Ren Jing Ren 10.01.2023 10:39
The two largest economies in the world are expected to report inflation figures later this week. But, by far, the US figure is expected to be the most important. The yuan trades within a bound set by the PBOC, which limits the impact that data can have. However, the broader implication of prices and China, as well as their causes, can have global implications. China formally lifted all restrictions related to covid over the weekend, which initially supported risk-on sentiment in the markets. But comments from Fed officials later in the day completely reversed that situation. It's just an example of where the balance of influence is, when it comes to the key data coming up this week. China inflation is more important than it appears Effectively, China is the world's manufacturing center. If production costs increase for Chinese firms, they will end up pushing through the supply chain to the rest of the world. With China under restrictions for the last several months, productivity has been constrained. Meanwhile, the government has been spending in order to prop up the economy. This puts China in a similar situation as the rest of the world that is experiencing high inflation. China's lifting of restrictions, on the other hand, could help stop inflation from getting off the ground. But that depends on whether global demand remains sufficiently resilient. Inflation is the product of an imbalance between the money supply and the amount of productivity. If the money supply is expanded, and productivity increases to match, then inflation could be stopped. But, if the world slips into an expected recession this year, then Chinese productivity could falter, creating inflationary pressures. Since firms buy products months in advance, the evolution of Chinese CPI over the coming months could give some insight into a pending recession, and how bad it could be. Read next: Damage to the crypto industry increased by almost a half in 2022 | FXMAG.COM What to look out for China's inflation rate is expected to accelerate to 1.8% from 1.6% prior. This is still below the PBOC's 2% target, which means the government could continue to provide stimulus for the domestic economy. Meanwhile, across the Pacific, US CPI is expected to continue its rapid deceleration, forecast at 6.5%, down from 7.1% prior. After being caught by surprise for two months in a row, it seems economists are being more aggressive in their forecasts for slowing inflation. Core inflation is also expected to come down, but not as fast: It is forecast at 5.7%, down from 6.0%, still almost triple the Fed's target. What it all means What matters more to the markets is the core figure because that's what matters more to the Fed. Initial optimism that the Fed might not raise rates as much because inflation has come down is now facing a dose of reality as core inflation remains 'sticky'. That was reflected in comments from Fed officials yesterday, who both insisted that the terminal rate will be higher than what the market expects. Even if headline inflation comes down substantially, unless core inflation surprises to the downside, investors could start to bet on further rate hikes from the Fed.
Fed's Harker, George, Brainard comments on monetary policy. Wall Street: Federal Reserve cutting rates next winter?

Pound sterling affected by BoE's speaker hinting at persistent recession. DAX gains on the back of industrial production edges higher

Jing Ren Jing Ren 10.01.2023 10:14
USDJPY seeks support The Japanese yen rallied over better-than-expected Tokyo CPI in December. On the daily chart, a break below August’s low (130.50) has put the buy side under pressure. The latest bounce hit resistance in the supply zone 134.70-135.00 which coincides with the 30-day moving average. The bulls will need to clear the support-turned-resistance of 133.30 before they could turn short-term sentiment around. The psychological level of 130.00 at the bottom of the bounce is a critical floor to keep the dollar steady. EURGBP attempts to recover The pound softens as the BoE's chief economist warns of persistent inflation. On the daily chart, the euro is in a consolidation after it lifted last October’s high of 0.8860. A slide below 0.8780 may have prompted intraday traders to take profit, which could cause a choppy price action in the near term. 0.8770 is a fresh support and 0.8720 at the base of the bullish breakout is confluent with the 30-day moving average. Selling pressure could be expected between 0.8830 then 0.8870, but a breakout may trigger a bullish continuation. GER 40 breaks daily resistance The Dax 40 climbs as upbeat industrial output in Germany eases fears of a deep recession. A close above December’s high of 14660, a major daily resistance may have put the index back on track. Zooming into the hourly chart, momentum from 14400 is a sign of strong conviction, prompting sellers to cover. In case of a pullback, the fresh support is a key level to keep the bullish bias intact. A brief consolidation could be in play after the RSI went overbought. The psychological level of 15000 might be next when volatility returns.
Intel, Mastercard and Visa are ones of the companies who take over stage today

If Fed go for balanced moves, stock market could get back to its "forecaster" role

Jing Ren Jing Ren 09.01.2023 20:33
We all know that the forex and stock markets are related, so it's of course a good idea for forex traders to keep an eye on what equities are doing. But there are a couple of circumstances that are coinciding this quarter that make this relationship especially pronounced. The stock market, particularly in the United States, could give us some insight into what to expect in the currency markets. What's going on? To get a better understanding of the situation, we have to remember that one of the key ways the stock and currency markets are connected is through bonds. When bond prices fall, for example, then investors pile into that currency to buy. This pushes up the price of the currency with respect to others. At the same time, investors leave the stock market to buy bonds as well. This means the stock market goes down. Hence, the standard inverse relationship between currencies and the stock market. Now, that doesn't always line up exactly, because it depends on why the price of bonds have gone down. The other main factor is risk sentiment. Stocks are higher risk, so investors will get out of the stock market and buy bonds when there is a risk-off market. What's driving the underlying market The issue is that the bond market right now is highly distorted, particularly in the US and Japan. This is because over the last couple of years, the regulators have been intervening in the market. Almost all central banks and governments have done this, but some more than others. Which is why there could be a discrepancy in the reaction from currencies. Read next: The Aussie Pair Is Trading Above 0.69$, The Euro Above 1.07, The British Pound Also Benefits From A Weak Dollar| FXMAG.COM During covid, governments issued massive amounts of debt in the form of bonds. That would normally force the interest rate higher, due to supply and demand. But central banks stepped in to buy bonds in order to force interest rates down. That creates an artificial situation in the bond market. Tracking the distortion The natural situation is that bond yields represent relative risk. That means the longer the bond term, the higher the interest rate. This is called the "bond yield curve". But central banks have stepped in to "control" the yield curve, such as the BOJ, or the BOE. The US bond curve is "inverted"; that is, short-term debt has a higher interest rate than long-term debt, which reflects expectations of central bank policy. Why it matters Investors are going to put their money where they believe there is the best risk-reward ratio. Bonds are low risk compared to stocks, so the higher the interest rate, the more interest there is in selling stocks. If the central bank is distorting the market, then investors have a different incentive structure. This can lead to a run-up in stocks, like in 2020-2021 when conditions aren't so good; and then a drop in the stock market when conditions are improving, like in 2022. So, central bank policy can outweigh economic data. The Fed is expected to slow or stop its rate hikes sometime this quarter. With the Fed keeping policy steady, then the natural dynamics of the market could return. Which means the stock market could return to its more usual role of forecasting sentiment. Which in turn provides insight into how much demand there is for bonds, and whether or not a currency in particular will appreciate or weaken.
China's inflation came at 1.8%, US crude oil (WTI) gained over 4% yesterday

US dollar weakens amid labour market data, Canadian dollar gains

Jing Ren Jing Ren 09.01.2023 09:10
EURUSD recoups losses The US dollar tanked after wage growth was slower than expected in December. The pair previously came under pressure near last June’s highs around 1.0750. A double top at 1.0710 capped the euro’s advance and led to a correction. A three-leg sell-off below 1.0520 prompted some buyers to bail out but strong support has been observed in the demand zone 1.0450-1.0480. A bounce above 1.0630 may help the bulls regain confidence, making 1.0600 a fresh support. A close above 1.0710 would extend the rally towards 1.0800. USDCAD tests major support The Canadian dollar surged after its labour market’s strong performance in December. Renewed selling pressure has driven the pair below the swing low at 1.3470 from the start of the year, which suggests a lack of support. The daily level and December’s low of 1.3390 is a critical floor and its breach could lead to a bearish reversal below 1.3300. As the RSI inches to the oversold area, the demand zone may trigger a ‘buy-the-dips’ behaviour. 1.3560 would be the first hurdle should the greenback manage to bounce back. Read next: Current market gains could be partly due to people returning from holiday breaks and reentering the market, leading to increased demand and trading activity| FXMAG.COM US 30 breaks higher The Dow Jones 30 bounces as mixed US job data may temper the Fed’s hawkishness. The swings between 32500 and 33500 along the 30-day moving average showed a temporary equilibrium between supply and demand. A bullish breakout means that the recovery bias is still intact and 32900 is now the immediate support. 34350 at the origin of the mid-December trough is an important resistance. The bulls would have the last laugh if they succeed in pushing past it, resuming the rally from last October.
9 January 2023	Stay focused	Fed may remain hawkish over solid job data

9 January 2023 Stay focused Fed may remain hawkish over solid job data

Jing Ren Jing Ren 09.01.2023 08:45
EURUSD consolidates as recession fears easeThe euro steadies as the eurozone economy could be more resilient than expected. A smaller-than-expected PMI contraction in December may ease concerns that the bloc is over the edge of a deep recession. This could give the ECB, which has been unusually hawkish, more leeway to tighten its policy. On the dollar side, traders have shifted their focus to the terminal rate, which means the Fed is nearing the end of the hike cycle. Meanwhile, with at least another 150 bp by the ECB on the table, the single currency may gain momentum as the rate gap narrows. The pair is testing 1.0750 with 1.0450 as the immediate support.AUDUSD rallies as market goes risk-onThe Australian dollar recovered over improved risk appetite. The new year kicked off on a risk-on note and an uptick in general sentiment set the bullish tone for assets from down under. As a proxy for the world's second largest economy, the aussie benefits from the optimism over China's reopening, with the market pricing in recovery beyond the immediate surge in Covid cases. As good things may also come in threes, reports that China is considering lifting its ban on Australia’s coal offer support to the commodity-linked currency. The pair is heading to August’s high of 0.7130 with 0.6650 as the closest support.UKOIL slides on prospect of weak demandBrent crude plunged over a gloomy demand outlook. The IMF has warned of a challenging year for major economies. Signs of economic slowdown in the world's two biggest oil consumers weigh on the commodity. In the US, the weakest manufacturing PMI reading since the pandemic reinforces the Fed’s willingness to induce a recession. In China, an increase of export quotas for refined products reflects a slump in domestic demand. Additional exports could mitigate supply constraints such as the ban of Russian oil. The supply and demand imbalance could continue to depress the price. 70.00 is the next support and 89.00 the first hurdle.NAS 100 struggles as Fed to stay assertiveThe Nasdaq 100 slips as resilient US job data would allow the Fed to stay hawkish. A main takeaway from the Fed minutes is that policymakers are not only striving to stop inflation from getting entrenched, but also to prevent the belief of rate cuts later this year from being ingrained. A still-tight US job market would nip in the bud any speculation of a dovish pivot. This means a grim outlook for the growth-focus index which has been underperforming compared to the S&P and Dow Jones, while its constituents’ higher betas would exacerbate moves in any direction. A fall below 10600 would expose 10000. 12100 is a key resistance. Key data release (GMT time) Wednesday, 11 January 00:30 Monthly Consumer Price Index Retail Sales Thursday, 12 January 00:30 Trade Balance 13:30 Consumer Price Index Friday, 13 January 15:00 Michigan Consumer Sentiment Index
6 January 2023	USD bounces back

6 January 2023 USD bounces back

Jing Ren Jing Ren 06.01.2023 08:18
NZDUSD tests key supportThe US dollar soared after jobless claims showed resilience of the labour market. On the daily chart, the directional bias remains up with the pair seeking to secure a foothold. A previous sharp drop found support over 0.6200, but its failure to reclaim 0.6360 could be detrimental to the market mood. Stiff selling pressure has led to a retest of 0.6200 and an oversold RSI attracted some bargain hunters in that demand zone. Its breach would reveal a lack of interest in the kiwi, reversing its trajectory for the next few days.EURJPY sees slower momentumThe Japanese yen bounced over concerns that the BOJ could shift away from its ultra loose policy. The pair bounced off last September’s low of 137.50 and a vertical rise above the psychological level of 140.00 prompted some sellers to cover their bets. The RSI’s overbought situation has caused a temporary pause in the rally as buyers became wary of chasing higher bids. More short-covering could ensue if the euro stays above 139.40, fuelling the recovery. Then the daily resistance at 142.90 would be the next stop.SPX 500 builds up breakout pressureThe S&P 500 goes sideways as investors await clues from the US nonfarm payrolls. On the daily chart, a bearish MA cross continues to weigh on sentiment. The horizontal consolidation indicates indecision and a breakout would release the tension like a spring, causing a potential spike in volatility. 3890 is confluent with the 3-day moving average and its breach could propel the index to 4020 at the origin of the previous liquidation. On the flip side, a drop below the lower band at 3780 would threaten the daily support at 3700.
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US NFP are expected to hit 200K, unemployment forecasted to reach 3.7%

Jing Ren Jing Ren 05.01.2023 17:26
The BLS has reported that NFP have been above expectations for five months in a row. The most dramatic were the July figures which came in twice the number expected. It seems economists have been consistently underestimating the number of jobs the American economy can make. Of course, that this is a net figure instead of a gross number has something to do with this. Each month, around 6 million people find new jobs. Of them, about 4 million are quitting a current job in favor of a different one (typically, one that pays more). What the NFP represents, more accurately, is whether more people found work than lost work. A quirk of the numbers that can have market implications Given the extraordinarily high "churn" (the number of quits and rehires within the same month) NFP represents dynamism in the labor market. Which isn't the same as the number of jobs created. Because there are two aspects of the labor market: the number of job offers, and the number of people taking up jobs. We've written extensively about how there are vastly more job offers than there are people seeking jobs. Which is why we have to be wary about the concept of "job creation". If we are talking about new jobs being put on offer, whether there are enough people taking them, counts as a job "created". Or we consider that when an open offer is filled, then a job was "created". The hidden numbers There is a practical implication here. Businesses could be shutting down jobs and laying off workers at an increasing rate, conditions that we would normally associate with harsh economic times and even a recession. But NFP could still come in above expectations and the unemployment rate remains steady. In part, this could be because a high number of people quitting leaves open jobs for other people to take. This would be reflected as a stable number of jobs, even though one person less is working. Read next: ADP deliver markets with the print of 235K jobs. Manufacturing sector lose 100 thousands, employment increases in small and medium-sized companies | FXMAG.COM As long as there is a large difference between the number of open jobs and the number of people seeking work, NFP could continue showing dynamism in the labor market. That is, despite a consistent rise in the number of people on unemployment and several high-profile firing sprees, particularly in the tech industry. What to look out for Analysts are once again forecasting 200K jobs created in December, a slowing pace from the 263K reported in November. This is what normally would be considered good jobs growth, if it weren't for the distortion of covid. Although the total number of employed has returned to above the number before early 2020, the labor force participation rate remains significantly lower. The unemployment rate is expected to once again stay at 3.7%. Note that this figure is seasonally adjusted, and takes into account the normal surge in retail for the holiday shopping period.
5 January 2023	USD fails to impress

5 January 2023 USD fails to impress

Jing Ren Jing Ren 05.01.2023 09:36
USDCHF retests supportThe US dollar struggles as the Fed minutes confirms a slower pace in its interest rate increases. Last April’s low of 0.9200 has offered some support and the surge above 0.9340 prompted sellers to trim their exposure. Follow-up bids above the fresh resistance 0.9400 will be needed to keep the momentum going and cement a reversal. The current pullback may attract bargain hunters, but a failure to contain it above 0.9200 would signal weakness, opening the door to a bearish drift in the weeks to come.XAUUSD to test resistanceGold stays high amid the US dollar’s softness across the board. On the daily chart, the precious metal has found solid demand along the 20-day moving average and is on its way to last June’s peak at 1880. A bullish breakout would lay the foundation for an extension to the support-turned-resistance of 1940 from last April’s sell-off. On the hourly time frame, an overbought RSI may cause a limited pullback, but the bullish drive would remain intact as long as the price is above 1840. 1815 on the MA would be another support.USOIL struggles for supportWTI crude falters over fears of a forced recession by central banks across the globe. The price hit resistance at last month’s swing high (82.00), suggesting that the pessimism still prevails. A combination of profit-taking and renewed selling has driven the commodity below 78.00 and 74.00, exacerbating the liquidation. The psychological level of 70.00 is the last level to gauge buying interest, and its breach may cause a bear market. 76.40 is the first hurdle and only a bounce above 79.90 may shore up confidence.
Intel, Mastercard and Visa are ones of the companies who take over stage today

US dollar rallies, Canadian dollar softens. FTSE 100 benefits from energy stocks

Jing Ren Jing Ren 04.01.2023 08:40
EURUSD on corrective path The US dollar jumped as traders made room for the Fed minutes later in the day. The euro’s consolidation at the end of December has failed to achieve a new high. A sharp drop below the demand zone 1.0580-1.0610 confirms exhaustion and is typical of a liquidation after the pair enjoyed a two-month long uninterrupted rally. The daily support at 1.0450 is the level to see if buyers start to come back. Otherwise, the correction could send the price to 1.0300. The support-turned-resistance at 1.0590 is the first hurdle to clear. USDCAD bounces back The Canadian dollar softens as risk-sensitive currencies take a backseat amid the greenback’s rally. From the daily chart’s perspective, the medium-term bias remains upward and the bulls have been waiting for an opportunity to stake in. A quick swing between 1.3510 and 1.3610 has narrowed the trading range, paving the way for the next one. A bullish breakout indicates that the path of least resistance is up and 1.3700 is a major obstacle ahead. Its breach would help the bulls regain control. 1.3600 is the closest support. UK 100 tests major ceiling The resources heavy FTSE 100 outperformed thanks to energy stocks. A pop above 7550 may have put the index back on track, sending sellers to cover their bets. 2022’s top around 7650 is the last obstacle and a bullish breakout could trigger a runaway rally with momentum buyers joining the party. Then a new high above 7800 could be in store. After the RSI shows an overbought situation, a limited pullback may attract buyers in the former supply zone near 7510. 7410 is a key level to keep the bounce intact. Read next: Investors should look for new stars in long-term portfolios, realising that the world began a new period in the long-term macro cycle last year says FxPro's analyst| FXMAG.COM
German December Inflation and Unemployment: Good News for the ECB Expected

German December Inflation and Unemployment: Good News for the ECB Expected

Jing Ren Jing Ren 03.01.2023 09:53
Through at least the early part of this year, the ECB is expected to go against the trend of most other major central banks. The BOE and Fed are expected to continue to slow the pace of rate hikes as inflation comes down, the economy comes under increased pressure, or (which is a likely scenario) both. Meanwhile, the ECB is expected to continue to hike rates at a relatively aggressive pace. That rates might rise at the same ratio as the Fed's did last year might be a bit of a stretch, though. The ECB has a different set of challenges, setting monetary policy for a series of countries with disparate fiscal policy. That might constrain the ECB's final rate. Where things are going The ECB was the last of the major central banks to start hiking, which means there is more "headroom" for it to continue to tighten. It is still 200bps behind the Fed, for example. Given that the US is the only other economy that is comparable in size, and that both economies are each other's largest trading partner, it's an important comparison. Not just for the EURUSD. The Euro was weakened substantially last year as the ECB hesitated to tighten and inflation moved above its peers. A large portion of that inflation was driven by an extraordinary event: the high prices in energy from the war in Ukraine. The hope is that winter will be less harsh than expected, leading to less demand for energy, and prices can come down. This would mean that inflation would start coming down, independent of the ECB's policy. There might be a problem The main counter to this, naturally, is that no one can predict the weather. But there is another issue which isn't garnering as much headlines: the "sticky-ness" of core inflation. "Sticky" is a growing concept in talking about inflation, referring to how CPI rates are not coming down as fast as hoped. They are "sticking" to the ceiling, as it were. This was the case with the results from Spain's prelim December CPI, released on Friday. Headline inflation came down, as expected; but core inflation remained elevated. At the end of the day, the ECB cares most about core rates, since that doesn't take into account the volatility of things like energy. But, if energy prices remain high, eventually they seep through to the rest of the economy, making a challenging situation for the central bank. This could mean that interest rates might go up more than currently expected, and the normally dovish and conservative ECB might have to take measures similar to what the Fed has done last year, and substantially propel the Euro. What data to look out for Tomorrow we get the release of Germany's latest inflation figures. The market can move around quite a bit as each German state reports, and sets up expectations for the main number. Overall, annual German December CPI is expected to decline sharply to 9.0% from 10.0% prior. Annual German Harmonized inflation is expected to slow, but not as dramatically, dropping to 10.7% from 11.3% prior. Meanwhile, German unemployment for December is expected to remain steady at 5.6%, after adding 15K jobs, slightly less than the 17K added in November.
The Fed has raised rates 7 times in a row, and the consensus among analysts is that it will do so again at the end of the month. At the moment, the majority of economics expect a 25bps hike, which would continue the "leveling off" trend from the Fed.

The Fed has raised rates 7 times in a row, and the consensus among analysts is that it will do so again at the end of the month. At the moment, the majority of economics expect a 25bps hike, which would continue the "leveling off" trend from the Fed.

Jing Ren Jing Ren 03.01.2023 09:42
But, after the last meeting, Fed Chair Powell was adamant that rates would keep going up, and that the market was misreading the Fed's attention. This hawkish tone didn't have as much impact on the markets after the Fed raised at a slower pace. And it's a scenario we've seen play out before, with Powell and the minutes of the meeting not exactly being in line. Which is why there could be some riling up in the markets tomorrow with the release of the minutes. Some analysts are wondering if there will be a repeat.What could happen again…Back in November, there was quite a bit of discussion about when the Fed would pivot. There was expectation that following that month's FOMC meeting, Powell would drop some hints that the next meeting would have a smaller rate hike. Instead, he came out quite adamant that rates would keep going up. But, two weeks later, the FOMC minutes came out, and were decidedly more dovish. And the Fed did ultimately make a smaller raise at the next meeting in December. Given the hawkish tone out of Powell following the last meeting, and the general market expecting the Fed to level off rates now, there is speculation that the minutes this time around could be more dovish.Market reaction and surprisesThe minutes could have an even bigger impact this time around, because FOMC members have been largely silent since the meeting. Of course, the last couple of weeks have been the year-end holidays, so it's expected that there wouldn't be much Fed commentary. Now, traders are looking to set up for the coming year, and the minutes are the first explanation of what the Fed is thinking about the current inflation trends.The thing is, Powell wasn't the only hawkish sign from the last meeting. We also got the quarterly update with the dot-plot matrix, which shows where members see policy rates in the coming months. And there, the median rate expectation was boosted from 4.5% to 5.0%, meaning that the consensus among Fed members is more hawkish than it was at the end of the third quarter.Figuring out where things are goingThe market is currently pricing in a terminal rate of under 5.0%, while the Fed is insisting that the terminal rate will be over 5.0%. Who turns out to be right will likely depend on the data, but it doesn't take much for the Fed to prove the market wrong. With rates at 4.5% at the moment, all the Fed would have to do is raise rates by 50bps at the next meeting, repeating what they did in December, and the market would have to adjust. Almost a third of economists are forecasting that, as a matter of fact.The takeaway from the minutes, therefore, is likely to be around how confident the members sound in their projection that rate hikes will keep coming. If they emphasize being more data dependent than anchoring expectations, then the market might believe them to be more dovish than Powell communicated most recently.
3 January 2023	USD keeps struggling

3 January 2023 USD keeps struggling

Jing Ren Jing Ren 03.01.2023 08:43
GBPUSD seeks supportThe pound underperforms as market participants remain worried about the UK’s economy in 2023. The pair continues to drift lower due to buyers taking profit after a two-month long rally and new sellers getting into the game. The psychological level of 1.2000 sits at the origin of last December’s rally and the sideways action is a sign of little buying. Though the price would remain depressed as long as it is under 1.2140, sentiment may only turn around if the bulls reclaim 1.2280. 1.1900 is a critical level to keep Sterling afloat.AUDUSD recoups lossesThe Australian dollar edges higher as traders shun safe haven assets like the greenback. The pair has clawed back a big chunk of its losses from the liquidation in mid-December. The bulls have shifted their focus to the previous peak at 0.6900. A bullish breakout would extend the aussie’s recovery in the medium-term. In the meantime, they may consolidate their holding above 0.6800 with 0.6760 as the closest support. That would attract more buying interest. 0.6710 is a second layer of defence in case of further hesitation.US 30 awaits breakoutThe Dow Jones ebbs and flows as investors probe risk appetite at the start of the year. The index has been struggling to hold onto the critical floor at 32500. The horizontal consolidation is a sign of a fragile balance and a breakout would heighten volatility due to increased pressure from both sides, shaping a new trading range for the days to come. A close above 33450 may carry the index back to 34100. However, a bearish breakout could trigger a new round of sell-off towards 31500 with more buyers abandoning ship.
Eurozone inflation may reach less than 10% for the first time since Summer

Japanese yen feels better amid raised Japan's inflation prediction, Euro gains on the back of Lagarde's suggestion

Jing Ren Jing Ren 02.01.2023 08:29
USDJPY tests critical floor The Japanese yen rallies as the BOJ considers raising its inflation forecast. The dollar’s rebound came to a halt at a previous low (134.50) from early December, which has turned into resistance. Sentiment remains downbeat after the greenback gave up all the gains. 130.50 is a major level to see whether the buy side will be strong enough to contain the fall. A bearish breakout would pave the way for a slide to 127.00. The RSI’s oversold condition may attract some bargain hunters and 133.00 would be the first hurdle to test. EURGBP breaks higher The euro strengthened after ECB President Lagarde hinted at more tightening to cap wage growth. A bullish MA cross on the daily chart confirms the pair's recovery. A break above October’s high of 0.8860 might have put the euro on a fast track towards this year’s high above 0.9100. 0.8900 is the next resistance and 0.8970 at the start of a sell-off in September the last obstacle. An overbought RSI may trigger a limited pullback which could attract bids from trend-followers. Between 0.8820 and 0.8790 lies an important demand zone. Read next: Croatia introduces Euro – what are experts' approaches?| FXMAG.COM GER 40 remains under pressure The Dax 40 drifts lower as investors dread more aggressive moves from central banks. On the daily chart, after hitting last June’s peak of 14700, a bearish MA cross could foreshadow a deeper correction. Zooming into the hourly chart, the horizontal consolidation is a sign of momentary hesitation. 14150 at the top of the latest bounce coincides with the 20-day moving average and a failure to break higher by the bulls would mean that the path of least resistance would be down. 13850 is the immediate support.
InstaForex expects risky assets to regain demand if the US CPI declines

2 January 2023 New year, old theme US jobs data to kick off volatility

Jing Ren Jing Ren 30.12.2022 15:18
EURUSD awaits new catalyst The euro finds support from an assertive ECB. For the most traded currency pair, the new year’s theme would be how fast the ECB will close the monetary policy gap. Traders have shrugged off concerns about soaring energy prices and borrowing costs. European policymakers’ shift to a tough line on inflation and raising rates quickly has led to a broad recovery of the single currency, compounding tempered expectations of the Fed’s hike intensity. The market is in need of a catalyst after the holiday lethargy, and the FOMC minutes and nonfarm payroll could cause a breakout. 1.0800 is a key resistance and 1.0450 a support. USDCAD steadies as market stays risk-off The Canadian dollar softens over a fragile market mood. The beleaguered loonie is not out of the woods yet as it continues to face several headwinds. Cautious sentiment keeps risk assets under pressure and sluggish oil prices fail to provide an effective floor. As investors brace for macroeconomic uncertainties in 2023, they may choose to stick with the greenback’s safer appeal at the expense of the risk-sensitive Canadian dollar, while the Fed’s relative hawkish stance could help the former prevail. The dual job data this week may stir up volatility and a break above 1.3800 could resume the uptrend. 1.3330 is the closest support. XAUUSD recovers with little conviction Gold rallies as the US dollar snaps back due to a lack of catalyst. The dollar’s softness amid expectations about slower interest rate hikes from the Fed has fuelled demand for the yellow metal. Meanwhile, China's decision to reopen its borders in January raises hopes that the top gold consumer would regain appetite in the physical market. Volatility may shoot up as liquidity flows back into the market in a data-intensive first week of the year. The downside risk would be an ever resilient US labour market lifting the greenback and trapping complacent gold bulls. 1875 is the next resistance and 1725 a fresh support. SPX 500 struggles as Fed may not blink The S&P 500 slides as investors worry about tightening for an extended period of time. The holiday offered market participants a little solace but the new year could come with challenges. As the Fed is determined to cool the labour market and ease the wage pressure, the nonfarm payrolls would be the main catalyst of the next direction. A solid reading may fan fears that it would take the central bank more to break a tight job market, which would prolong the bear market. Meanwhile, China’s struggle with reopening sows doubt about the recovery of the global supply chain. The index hit resistance at 4130 and may test 3700. Key data release (GMT time) Tuesday, 3 January 13:00 Harmonized Index of Consumer Prices Wednesday, 4 January 15:00 ISM Manufacturing PMI 19:00 FOMC Minutes   Thursday, 5 January 13:15 ADP Employment Change   Friday, 6 January 07:00 Retail Sales 10:00 Harmonized Index of Consumer Prices Retail Sales 13:30 Nonfarm Payrolls Unemployment Rate 15:00 ISM Services PMI  
Greenback softened while Nasdaq benefits from the US labour market data. Kiwi gains on the back of risk appetite

Greenback softened while Nasdaq benefits from the US labour market data. Kiwi gains on the back of risk appetite

Jing Ren Jing Ren 30.12.2022 08:09
USDCHF tests major support The US dollar slipped after data showed a rise in initial claims for unemployment benefits. The price is testing last April’s low near 0.9200 after giving up all the gains from the breakout rally eight months ago. This means that the greenback is at a critical level as a deeper fall would cause a bearish reversal in the medium-term. On the hourly chart, the latest rebounds hit resistance at 0.9345, forming a double top in the process. 0.9290 would be the first hurdle to lift before a recovery could materialise. NZDUSD bounces back The New Zealand dollar recovers thanks to an uptick in overall risk appetite. After the pair cleared the August high of 0.6460, sentiment favours the kiwi as it goes into a consolidation mode. A bounce off 0.6230 indicates that buyers have stepped in and a close above 0.6330 has prompted short-term sellers to cover their bets. 0.6300 has become a fresh support. The support-turned-resistance at 0.6400 is a major obstacle and its breach could help the bulls regain control and extend the rally beyond 0.6500 eventually. NAS 100 tests critical floor The Nasdaq 100 bounces as signs of a cooling US labour market eases concerns about a hawkish Fed. On the daily chart, a U-turn from mid-September’s sell-off point (12200) was disconcerting. With the price having retraced all the way back to the start (10620) of the November rally, the index could be vulnerable to renewed selling. A break below 10450 would confirm a dead cat bounce and cause a sustained bear market. 11130 is the first resistance and 11280 a key level to lift before buyers could turn the situation around. Read next: Apple rose 2.83%, Amazon.com gained 2.88%, Alphabet climbed 2.82%, Meta Platforms advanced 4.01%, and Netflix was up 5.14%| FXMAG.COM
FxPro analyst: We are likely seeing the first, most fragile phase of the Bitcoin price recovery and the crypto market

West Texas Intermediate crude oil treads water. Gold goes up and down amid greenback's efforts to recover

Jing Ren Jing Ren 29.12.2022 08:40
GBPUSD seeks support The pound struggles as market sentiment remains cautious with thin liquidity. The pair is still looking to hold onto its gains after clearing last August’s high of 1.2280. Even though short-term buyers have bailed out, the psychological level of 1.2000 has seen an inflow of buying interests. But only a close above 1.2140 would signal confidence in Sterling and help turn the market mood around. 1.1190 is a critical level to keep the directional bias upward in the weeks to come, and its break could trigger a deeper correction. XAUUSD grinds rising trend line Bullion remains sideways as the US dollar attempts to claw back losses near year’s end. On the daily chart, the price has been inching up along the 20-day moving average. A rising trend line from early November also offers support to the price action on the hourly time frame. A pop above the recent double top (1823) indicates a strong bullish pressure, but a bounce off the congestion area (1795) formed by the trend line and the base of the bullish breakout is key in keeping the rally going, with 1850 as the next target. USOIL tests key resistance WTI crude steadies as Russia bans countries that abide by the Western price cap. On the daily chart, the commodity would remain in a downtrend unless it manages to break free of 82.00. A bearish RSI divergence suggests slowing momentum as the price tests this major supply area. The resistance-turned-support at 77.00 is the level to assess the strength of follow-through. Its break would make the price vulnerable to a new round of sell-off, possibly towards the recent low and psychological level of 70.00. Read next: The US Will Require PCR Testing For Travelers From China, BRF Agree To Pay $111 Million To The Government| FXMAG.COM
Swissquote expect Euro against US dollar to recover along the year

Euro benefits from ECB hawkishness, Dow Jones steady as macroeconomics don't encourage to trade

Jing Ren Jing Ren 28.12.2022 08:31
EURUSD consolidates gains The euro keeps the high ground thanks to the ECB’s hawkish approach. The euro has retained its upward trajectory, and the RSI returning to the neutral area on the daily chart has taken some heat off the rally. The current consolidation may allow the bulls to accumulate above the 20-day moving average. The recent high of 1.0700 is the first resistance and its breach would lift the pair to last May’s high of 1.0780 which is a major obstacle in the medium-term. 1.0570 is an important support to keep intraday buyers interested. USDJPY recoups losses The US dollar regained some lost ground on the back of rising Treasury yields. The price action is seeking to hold above August’s low of 130.80 as a bearish breakout could pave the way for sustained weakness in the new year. The bounce could be driven by sellers’ profit-taking in this critical demand zone. 135.00 at the confluence of a support-turned-resistance and the 20-day moving average might make it a tough level to crack. Its breach, however, would turn the tide in the bulls’ favour. 132.70 is the closest support. Read next: Dallas Mavericks' (NBA) owner, Mark Cuban, praises Bitcoin, willing to buy more when it gets cheaper| FXMAG.COM US 30 stays in range The Dow Jones treads water as thinning liquidity and few economic data keep investors at bay. The sell-off in mid-December has prompted short-term buyers to bail out. Though the latest retracement secured bids in the critical demand zone around 32500. A rally back above 33450 would help the bulls regain confidence. 34400 near the recent top is a major resistance and the recovery could be back on track should buyers succeed in lifting the last offers over there. On the downside, 32850 is the first support.
Germany's January ZEW economic sentiment index is expected at -16.0, while final readings of December consumer price index is estimated to be up 8.6% on year.

Euro: Orbex’s Jing Ren points to high energy costs as the reason of a gap between core and headline inflation

Jing Ren Jing Ren 27.12.2022 14:46
Back in October, the Euro fell below parity with the US dollar. Since then, it has rebounded, but hasn't returned to the levels at the start of the year. Naturally, the question is whether the pair will continue the trend higher, or turn around for another run at parity. And what does this mean for the Euro crosses? One of the main drivers of the fluctuation in the shared currency last year is likely to be the theme for next year as well. At least through the first half. And that is the ECB's unique approach to a unique challenge facing the Euro. Other currencies operate within a single economic jurisdiction, but the ECB has to balance the fiscal policy of 19 different countries. (20, next year, with the inclusion of Croatia.) An uncertain path The Euro's underperformance this year was primarily driven by the ECB being slow to rate hike party. Even when it finally got around to raising rates, it was so far behind everyone else that the currency continued to be weaker until it became relatively clear that the Fed was getting ready to slow down its hiking. The Euro then appreciated, understanding that the ECB still has more room to keep tightening. The expectation is that the ECB will keep hiking through the first quarter, and then start selling bonds in March. Meanwhile, the Euro's main trading partners, the US and UK, are seen to be slowing down if not stopping rate hikes. The US is expected to slip into recession during the first half, with inflation coming down quicker than expected over the last couple of months. The UK's inflation remains high, but it already is in a recession. Meanwhile, the EU is expected to manage modest economic growth in the first quarter, assuming there is no major disruption with energy supplies over the winter. Beyond the uncertainty March could be an inflection point for the Euro. By then, the worst of the winter is over, and the risk from a major energy disruption will be significantly reduced. The war in Ukraine is expected to reach an inflection point as well, since the geostrategic situation would be expected to normalize after the winter. Additionally, the ECB is set to take stock of the situation and decide on whether to double down on quantitative tightening, which is expected to start with the March meeting. Read next: USA: The weakest year since 1990 - IPO market acquired "only" $7bn| FXMAG.COM The pending issue is inflation. Through most of 2022, there was a wide gap between headline and core inflation, as Europe was particularly affected by the high cost of energy. However, crude prices came down at the end of the year. That implies less Euros were being sold to buy energy. If that trend continues, the downward pressure on the shared currency could be somewhat alleviated. However, the higher costs have been filtering through to core inflation. While not as high as the headline number, it is still well over twice the ECB's target. The issue is that this measure might be more 'sticky' than the headline figure. Which could keep pressure on the ECB to keep tightening, even if the economy starts to suffer. That could put Europe in line to follow the US and the UK into a recession, just later in the year.
Swissquote expect Euro against US dollar to recover along the year

Australian dollar benefits from elevated risk appetite, US data help DAX

Jing Ren Jing Ren 27.12.2022 08:29
USDCAD seeks support The Canadian dollar edged higher after its economy grew by 0.1% in October. The US counterpart had recovered along a rising trendline from mid-November but hit resistance in the supply zone between 1.3700 and last month’s high of 1.3800. A drop below the trendline has weighed on short-term sentiment, making 1.3520 the key support where a breach could cause a correction to 1.3400. The bulls will need to reclaim 1.3700 before the uptrend could regain traction in the medium-term. AUDUSD bounces off key floor The Australian dollar recovers over a rebound in risk appetite. Stiff selling at September’s high of 0.6880 had put a dent to the market’s recovery mood. Short-term traders have taken some chips off the table after an initial fall below 0.6770 which has become a fresh resistance. The current bounce off 0.6630 will need to clear offers ahead before it could gain a solid foothold, then the previous high of 0.6880 would be next. A bearish breakout might put the aussie at the risk of a bearish continuation in the medium-term. GER 40 under pressure The Dax 40 steadied as US PCE and durable goods showed a slowdown in November. On the daily chart, after the index hit June’s high of 14650 - a boundary between bearish continuation and bullish reversal, a bearish MA cross indicates souring sentiment. The sell-off below 14300 has put the bulls on the defensive. While the RSI’s oversold condition has attracted bargain hunters, they may be wary of taking big positions during a week of thin liquidity. 14150 is resistance and 13700 support from the mid-November extension.
InstaForex expects risky assets to regain demand if the US CPI declines

US Dollar 2023 Outlook

Jing Ren Jing Ren 23.12.2022 14:30
Over the last year, the dollar saw an extended period of strength, but turned around in autumn. Although there were many events to influence that trajectory, the main overriding theme has been the Fed. And as we turn our attention to the new year, it appears that will be the main driver going forward, as well. And not just the dollar, as risk sentiment could have some significant fluctuations over the coming months. What's expected… There remains a discrepancy between what the market expects the Fed to do, and what the Fed says it will do. Fed officials have repeatedly said that rate hikes will continue. But the market is pricing in a terminal rate of under 5.0%. That implies at most two more hikes in the coming year, a significantly slower pace than what has been happening so far. The first quarter is the moment of truth, to find out whether the Fed stays true to its implication that rates will be higher than the markets are expecting. The economic situation might be significantly different in the coming months, which could change the Fed's position. It's not that the market thinks the Fed is being dishonest, it's that the market thinks the Fed is being too optimistic about the economy. Two roads diverged in a yellow wood… Everyone seems to agree that there will be some kind of slowdown in the US at the start of the next year. The issue is whether it will be severe enough to knock the Fed off its rate trajectory. Or, will the slower economic activity pull inflation down faster than expected. So far, headline inflation has come in below expectations by quite a lot over the last few months. But core inflation has been a little more "sticky". Slower economic activity would imply less demand for crude, and energy has been one of the leading factors pushing the difference between core and headline CPI. A more mild winter and a diffusion of geopolitical tensions could help reduce inflation faster than anticipated. Combined with an underperforming economy, the Fed could have every reason to not only stop hiking, but to retrace its steps. Less risk outlook and a dovishly inclined Fed could significantly weaken the dollar over time. The path less taken… The consensus among economists is that there will be a relatively mild and short recession in the early part of the year, followed by a slow recovery. That considers a Fed keeping rates tight, and aggressively winding off its balance sheet. That represents the scenario that could weaken the dollar initially, but generally remain strong through the year, thanks to higher interest rates. The divergent opinion is that there won't be a recession at all, and the US will power through on good employment figures and increased government spending. That means inflation could remain elevated, and the Fed might not be as aggressive in raising rates. This scenario implies that the dollar will weaken in the early part of the year and simply continue its trend. Check back in twelve months to see who was right.
British pound to US dollar - trend analysis and what can we expect this week

New doves coming to town? Federal Reserve is ahead of staff changes

Jing Ren Jing Ren 23.12.2022 14:29
A new year, and a new set of rotating Fed board members come in. Giving the varying opinions of the different main and alternate members, this annual transition can change the FOMC's bias and outlook. This could be a factor in the trajectory of the markets, because: There is extensive debate, still, on how high the Fed will go Once there, there are widely differing opinions on whether the Fed will hold fast or "pivot" Potential debate over whether the Fed will prioritize inflation or wages later in the year. The other factor is that Powell has managed to maintain a particularly tight ship, even during the extraordinary measures taken to fight inflation over the last year. In fact, there have only been two dissenting votes out of all the meetings since the bottom of the pandemic. Even if more doves do get on the FOMC, it's also a question of whether they will end up actually voting for a more restrictive policy. What's going on The FOMC has officially 12 members, 8 of whom are permanent. Well, technically 7 are permanent, but the president of the Reserve Bank of New York "rotates" in place. Often there are less than 12, as vacancies at the Fed tend to take a long time to fill. This means the changes from the four rotating members can have a bigger impact. The rotating members are the heads of the respective regional reserve banks. If the regional bank changes its president, and is rotated onto the board, then that will be a new member on the FOMC. That is the case this year with the arrival of the new president of the Chicago Fed, Austan Goolsbee, who's rumored to be dovish. However, it takes some time to assess the inclination of a board member's votes. What does the rotation look like The current holder of the Chicago chair is Evans, a noted hawk. But he will be stepping down early in the year. No hawks are slated to replace him, meaning that there will only be three board members inclined towards hawkishness next year. Centrists Collins and George will rotate out. But also no centrists are expected to rotate in. Instead Logan will rotate in, and he's generally considered a moderate dove. He will likely be joined by Goolsbee in this camp. Two doves will rotate out and be replaced by two other doves. That is, Kaskari and Harker will replace Mester and Bullard. Read next: Signals of softening inflation make US stocks come back from below-the-line levels | FXMAG.COM In summary, one less hawk, one less centrist; replaced by two moderate doves. The dovish end of the board remains unchanged. It's not a big shift, but it does incline the bias a little. The immediate impact of the shift might not be noticeable, as there seems to be pretty broad agreement among members on the near-term policy. The dot-plot shows unanimity in projections in the short term. But getting towards the end of next year shows a widening split. And now there could be two more votes added to the bottom half of the average, implying a softer rate path after summer.
As more central banks continue to catch up with the FED's policy, we could be seeing a shift in the balance of power in the currency market says XTB's Walid Koudmani

US Durable Goods and Recession Outlook

Jing Ren Jing Ren 23.12.2022 09:42
Tomorrow has the last bit of potentially major market moving data as trading winds down for the holidays. Which means the figures could have implications for how the new year starts, as attention will come back to the economic outlook for the US in particular. There is still a strong majority of economists who expect the US to fall into a recession next year. That appears to also be the assessment of many CEOs, as the theme from last quarter's earnings was of cutting guidance and cautionary outlook. But where there is substantial disagreement is just how much of a recession there will be. Many couch those expectations around how the Fed will react to the data as it comes out. Charting the trend If businesses expect there to be a recession, they will hold back on investments and try to build up cash to weather the uncertainty. Which means they spend less, contributing to a slowing economy. A market downturn can be something of a self-fulfilling prophecy. Comments from the Fed that interest rates will keep rising also contribute to the general gloom. While expectations of slower growth can lead to slower growth, that usually doesn't tip over to be a full-blown recession. A so-called "hard landing" implies that the conditions expose an underlying issue that needs a market readjustment. Typically, recessions happen because of an excess of inventories. That can be because businesses got too overconfident and overproduced, or demand has been destroyed (for example, by a prolonged period of high inflation). Some important indicators Yesterday's consumer confidence figures helped boost optimism as they were trending in the right direction to avoid a hard landing. They were for the crucial period leading up to the holidays, in which there is an increase in spending. Consumer confidence hit an eight-month high. Additionally, inflation outlook fell to the lowest level seen in over a year. Both are seen as a sign that the US consumer is still healthy. The other side of the equation is how much money Americans are actually making and spending. Tomorrow is the release of November Personal Income, which is expected to continue to grow but slow the pace to 0.3%, down from 0.7% prior. Not surprising, personal spending is expected to follow a similar pattern, slowing to 0.2% compared to 0.8% prior. Slow growth is better than no growth Also tomorrow is the release of durable goods orders, which shows how confident businesses are in medium-term growth as they invest money on goods that take a long time to give a return on investment. Here things are a little less optimistic, as durable goods orders are expected to turn to negative -0.6% compared to 1.0% growth in the prior month. However, that is expected to be due to factors outside of the economy, as the core figure which excluded defense spending is expected to remain positive, though grow slower at 0.2% compared to 0.8% prior.
23 December 2022	USD bounces higher

23 December 2022 USD bounces higher

Jing Ren Jing Ren 23.12.2022 08:38
GBPUSD seeks supportThe pound continued lower as Britain’s Q3 GDP failed to impress. A bearish MA cross was a sign that the buying pressure was wearing off. The confirmation came in the shape of subsequent breaks below 1.2200 and 1.2100 which sits on the 20-day moving average. The daily support at 1.1900 is the closest level to see whether buyers would return to the market. Its breach could trigger a new round of sell-off towards 1.1700. The bulls will need to reclaim the former support at 1.2200 before they could regain control.USDNOK attempts to bounce backThe US dollar jumped over upbeat GDP and PCE readings in Q3. From the daily chart’s perspective, the pair is still holding onto its gains from the August rally, but the 30-day moving average has acted as a strong cap. Short-term sentiment has been muted after a series of faded bounces, but a close above 9.8600 could be an encouraging sign. A rally above 9.9600 may open the door for a sustained recovery above 10.0700. On the downside, the double bottom at 9.7000 is a key support and a breakout would send the pair to 9.5000.SPX 500 tests key demand zoneThe S&P 500 fell as strong US economic activity fanned fears of restrictive rates for a longer period of time. On the daily chart, the index is drifting towards the daily support of 3700 after coming off November’s high of 4130. This means that the price action is at a crossroads and could stay in this range before a breakout dictates the next direction. In the short-term, a brief bounce came to a halt at 3890, leading to a test of the critical demand zone above 3700. Limited buying may emerge as the RSI returns to the neutral area.
Fed's Nael Kashkari called the deliberation of a pivot "premature". Eurodollar trading close to 1.00.

If rental prices keep falling that fast, core inflation will decline allowing Fed to calm down

Jing Ren Jing Ren 22.12.2022 12:18
The last couple of US inflation readings came in well below expectations, showing a dramatic acceleration to the downside in the inflation rate. In fact, inflation for November was recorded as lower than in January. December might prove to be a bit of an exception because of the demand distortion around the holidays. But, the value of the dollar is tied to the expectation of the Fed's rate policy in the months ahead. Which in turn is largely predicated on where inflation is headed. One of the main questions is whether the Fed will keep rates high as the economy slows. If inflation remains high, the chances of a Fed "pivot" fade. However, there is an indicator here which could show increasing downward pressure on inflation, which could allow the Fed a little more room for dovishness. What happened? First, we need to distinguish between core and headline inflation. The latter is driven in large part by increasing energy costs, which tend to be more volatile. Headline inflation has been coming down in line with fuel prices. But the Fed generally ignores this indicator, and focuses more on the core rate, which doesn't account for energy or food costs. Diving a little deeper into the core inflation data from the last couple of months, we can see that the largest contributor to the drop was a cooling real estate market. CPI figures don't take into account the cost of houses, but do consider rent. And rent prices have been slowing down dramatically in line with slower home sales, as interest rates push up the cost of mortgages. The new data The presumption is that core inflation will continue its slide if rent prices continue their current trend. And a new gauge developed by the Federal Reserve Bank of Cleveland points in that direction. This indicator looks at the change in the amount of rent paid by new tenants and compares it to existing tenants. Essentially, it measures how much people are paying to rent a new place compared to their current rent prices. Rent prices rise slowly, as it takes time for landlords and tenants to negotiate new contracts. But prices of rent coming on the market can fluctuate quite quickly. If there is demand, then the price of new contracts will rise quickly. If there is less demand, then the price of new contracted rents will drop. That's even if landlords raise asking rent; it won't be reflected in the data unless a contract is actually signed. Read next: Netflix Wants You To Pay For Sharing Your Password With Others| FXMAG.COM The trends and the future What the indicator shows is that new rental contracts spiked through 2021 and early 2022, showing that people were renting at as much as 13% higher prices than the prior year. But, since September, those price increases have started to come down dramatically. People are still paying significantly higher rental prices, at a growth rate of 5% compared to the prior year in November. But the trend is showing an even faster fall than the rise in prior years. In fact, it's the fastest drop on record. If the trend maintains, it could contribute to core inflation coming in below expectations once again. That, in turn, could give the Fed more reason to keep rates from rising as high, and potentially allow room for a pivot to the downside at some point.
Canadian dollar becomes weaker in the wake of inflation print, consumer confidence supports greenback

Canadian dollar becomes weaker in the wake of inflation print, consumer confidence supports greenback

Jing Ren Jing Ren 22.12.2022 08:40
USDCAD hits resistance The Canadian dollar softened as November’s inflation reading showed signs of slowing down. On the daily chart, the uptrend remains intact and a bullish MA cross indicates solid support and a potential acceleration to the upside. However, the pair is still grinding the supply area around 1.3700 as the pressure builds up. A breakout would lead to a test of November’s peak at 1.3800, which would be a step closer to a bullish continuation. On the downside, 1.3530 next to the 30-day moving average is the first support. USDCHF tests critical floor The US dollar steadies as consumer confidence climbed to an eight-month high in December. Still, the pair has given up all the gains from its rally earlier this year, which shows a lack of commitment to keep the dollar rolling. The mood is still downbeat as the pair drifts lower and is capped by a series of lower highs, the latest being at 0.9370 right under the 20-day moving average. Last April’s low of 0.9210 has attracted some bargain hunters but its breach could trigger a new round of sell-off to 0.9100. USOIL grinds higher WTI crude edges higher over a larger-than-expected draw in US inventories. The commodity has so far found support at a 12-month low also the psychological handle of 70.00. Then a brief retracement saw follow-up bids over 73.50, suggesting solid interest from the buy side. A break above the recent high of 77.70 would open the path towards the daily resistance at 82.50 where renewed selling could be expected. Its breach, however, would put the oil price back on track. 75.80 is a fresh support in case of weakness. Read next: Netflix Wants You To Pay For Sharing Your Password With Others| FXMAG.COM
USD/JPY Pair Remains Priced As One Of The Most Volatile Currencies

Japanese yen gained, New Zealand dollar decreases because of larger-than-expected trade deficit

Jing Ren Jing Ren 21.12.2022 08:35
USDJPY breaks major support The Japanese yen soared after the BoJ unexpectedly relaxed its yield cap. The previous rebound quickly had turned into a bull trap at 137.80 under the 20-day moving average. The sharp fall below 134.50 is a sign of liquidation, invalidating the recovery attempt. The August low of 130.50 is a critical floor to test the bulls’ resolve and its breach may pave the way for a bearish reversal in the new year. As the RSI sank into oversold territory, the former demand zone next to 135.00 has turned into a supply one. NZDUSD struggles for support The New Zealand dollar edges lower over a larger-than-expected trade deficit in November. The bears have faded last week’s bullish momentum and pushed the kiwi back below 0.6400. This level has since become a fresh resistance which suggests strong pressure ahead. Previous lows around 0.6300 coincide with the 20-day moving average and an attempt to break below puts the pair at the risk of a deeper correction, with 0.6200 as a possible target. A close back above 0.6400 would keep buyers in the game. XAUUSD grinds resistance A retreating US dollar boosted the appeal of bullion. Despite the metal’s choppy price action, the bulls have been looking to consolidate their gains above August’s high of 1805. With sentiment shifting to a brighter side, more buyers may place follow-up bids as the RSI drops back to the neutral area on the daily chart. This could be confirmed by the price bouncing off the 20-day moving average (1775) then the psychological tag of 1800. A close above the recent high of 1823 could attract momentum buyers and trigger a rally to 1860. Read next: Indonesia Has Potential In The Development Of Solar Energy| FXMAG.COM
Australian dollar declines as RBA minutes suggest a pause in rate hikes may happen

Australian dollar declines as RBA minutes suggest a pause in rate hikes may happen

Jing Ren Jing Ren 20.12.2022 08:19
EURUSD consolidates gains The euro found support after ECB officials pledged to keep raising interest rates. The pair came under pressure near last June’s high of 1.0780. A RSI divergence shows a deceleration in the upward momentum and could be significant in this supply zone. After traders took some chips off the table, new buying interests will need to follow through to maintain the single currency’s edge. 1.0530 is a key level to make that happen or the price could tumble below 1.0440. A rally back above 1.0700 would keep the bulls in play. AUDUSD tests major support The Australian dollar slips as the RBA minutes hints at a possible pause in rate hikes. The pair has so far struggled to clear 0.6900 at the origin of the September sell-off. A combination of profit-taking and fresh selling has weighed on the aussie. A push under 0.6750 may have dampened the enthusiasm, putting the recent lows around 0.6670 at test. The bulls must lift offers in the newly formed supply zone around 0.6790 before they could regain control. Otherwise, a fall below said support could trigger a broader liquidation. US 30 seeks support The Dow Jones 30 falls as investors offload risk assets over the prospect of further rate hikes. Last week’s reversal has dented the short-term mood, forcing leverage positions to abandon 33400 and lifting volatility. The index is looking to secure a foothold at 32500 which is a 38.2% Fibonacci retracement of the rally from October. The 50% level and daily low at 31800 is critical in keeping the recovery intact in the medium-term. On the upside, 33500 then 34100 are two obstacles to clear before the uptrend could resume. Read next: The FCC Seeks More Than $200 Million From Four Cellphone Carriers| FXMAG.COM
The Tokyo Core CPI Reading Is Adding Pressure On The Bank Of Japan

Japan: Former Finance Ministry official has came up with the idea of a "slow shift" in monetary policy

Jing Ren Jing Ren 19.12.2022 10:22
Japan's inflation rate is finally starting to tick up. It's expected that the country will report a further increase in inflation in November to 3.9% from 3.7% prior. But, before that information is made available, the BOJ is expected to meet to decide its monetary policy stance. Normally this would be an issue for a central bank, having to make a rate decision without the latest inflation figures. But the long-standing consensus is that the BOJ won't change policy, at all, and keep its now decades-long extreme easing policy. So, if the interest rate isn't going to be a surprise, what could move the markets? Well, that's preparing for what's coming next year. A change in leadership Kuroda, known as an ultradove, will step down at the end of his term in April. The consensus is that since rates have been negative for the entirety of his mandate, it's unlikely he will change the situation just as he's about to go out the door. But, that doesn't mean he won't help set things up for whomever replaces him. And that could start coming out as soon as the next meeting. Read next: Netflix (NFLX) slumped 8.63%, as a media report said the video streaming firm is refunding advertisers after missing views targets| FXMAG.COM For a long time, it's been rumored that the most likely replacement for Kuroda would be Hiroshi Nakaso. He's a former Finance Ministry official, and is seen as a lot more hawkish than the current governor. In the past, he's already issued proposals on how the BOJ could exit its extraordinary easing policy. A change in outlook Nakaso has proposed a slow shift in policy, with small steps to bring inflation down. That could be something of a challenge, since many other central banks have raised dramatically to head off skyrocketing inflation. Japan has managed to avoid that situation, so far, but inflation is near double the target rate and keeps rising. Which has been increasing pressure on the BOJ to do something. One of the ways that the BOJ could relieve that pressure is to let it be known that it is considering some of the "soft" measures to lift rates, but not actually do any changes. Given how long the BOJ has been stuck in one policy, it could be enough to "re-anchor" inflation expectations. What about the weaker yen? One of the things that was driving inflation was the weakening yen earlier in the year. It got so bad that the Japanese government had to step in a couple of times. But since expectations that the Fed was about to level off in its rates started to cement in the mind of the markets, the yen has recovered a little. This has given the BOJ - and particularly Kuroda - more room to keep rates low at least for a while. But, if the trend with the currency could reverse, that could cause complications for the BOJ. One of the ways to deal with that would be to suggest the BOJ was looking at easing off on yield curve control. That's a policy that would be expected to be enacted if Nakaso were to become governor. But, whether the BOJ judges it an opportune moment to let that slip now or safe that card to play in the new year, is still an open question. That could be the determinant of whether the yen continues to drift in it's current direction, or starts to recover against the dollar on expectation of the new policy.
19 December 2022	GBP under pressure

19 December 2022 GBP under pressure

Jing Ren Jing Ren 19.12.2022 07:39
EURGBP tests resistanceThe pound tumbled after the BoE expressed concerns of a prolonged recession. On the daily chart, the near 3-month long consolidation might have come to an end after a bullish candle above 0.8650. The surge is likely to be caused by short-covering from traders on the wrong side. The price has hit resistance at 0.8770 which lies in the supply zone extending to last month’s peak at 0.8830. A bullish breakout would resume the rally in the medium-term. In the meantime, 0.8620 is a key support to keep the bounce intact.XAGUSD struggles for supportSilver falls back as the dollar extends sharp gains across the board. A bearish RSI divergence showed a slowdown in the rally. After a double top at the psychological level of 24.00, the first wave of profit-taking took the price below 23.20, putting the bulls on the defensive. The next round number 22.00 coincides with the base of a previous breakout and the 30-day moving average, making it an area of particular interest. Its breach could trigger a deeper correction to 21.00. 23.50 has become a fresh hurdle.GER 40 in liquidation modeThe Dax 40 slumps over risk-off sentiment into the holiday season. The rally came to a halt near last June’s high of 14700. Then a break under the lower end (14150) of the previous consolidation forced leveraged positions to close out, sparking volatility in the process. The psychological level of 14000 has failed to contain the sell-off and turned into a fresh resistance. 13600 is the next support. As the RSI sunk into oversold territory, those looking to buy the dip may want to wait for the liquidation to settle down.
Gold plunged as dollar strengthened. Loonie weakens, yen does the opposite amid chances of a policy shift

Gold plunged as dollar strengthened. Loonie weakens, yen does the opposite amid chances of a policy shift

Jing Ren Jing Ren 16.12.2022 15:43
USDJPY softens on potential BOJ shift next year The Japanese yen recovers as the market raises their expectations of a policy shift next year. The BOJ’s last meeting of the year is unlikely to be eventful as Governor Kuroda has repeatedly dismissed the chance of a near-term rate hike. But traders are now looking beyond his term which will end next April. As Japan’s consumer prices surged to 3.6% in October, at the fastest pace in 40 years, the market is betting that a more hawkish successor would shift the monetary policy and trim the stimulus. Meanwhile, the dollar’s weakness offers some tailwinds. The pair is heading to August’s low at 131.00 with 142.30 as the closest resistance. USDCAD rallies as BoC turns dovish The Canadian dollar slips as the BoC may pause its tightening. Policymakers are at a crossroads after the BoC lifted interest rates back to its peak level in 2008 at 4.25%. Governor Macklem said that too much rate hiking would tip the economy into a recession, but not tightening enough would leave prices continuing to spiral. Thus this week’s Canadian CPI may offer significant guidance. With inflation reaching 6.9% in October, a lower reading in November would allow the central bank to ease its stance, though at the expense of the loonie in terms of the rate differential. 1.3320 is the first support and 1.3770 remains a major cap ahead. XAUUSD slides over renewed interest in dollar Gold dipped as the US dollar firmed up over an assertive Federal Reserve. While the US central bank raised interest rates by 50 basis points in line with expectations, Chair Jerome Powell’s insistence on more hikes next year has dissipated the market’s enthusiasm. Despite signs of slowing inflation, policymakers definitely do not want to get wrongfooted this time, even if it means to press harder, which in turn drives expected peak rates above 5% in 2023. As Treasury yields and the dollar found renewed demand, the precious metal could start to lose its momentum. The price hit resistance at 1820 and 1730 is the first support. SPX 500 struggles as tightening to continue The S&P 500 slumps as the Fed cautions about pivot wishes. Investors may start to wonder whether they have got ahead of themselves after a cheerful slowdown in US inflation last month. The Fed’s emphasis on restrictive rates for a longer period of time is a reminder that the tightening cycle could still be in full swing. Practically speaking, besides the much talked-about recession, high borrowing costs mean less leverage in the market which is a prerequisite for a bull run and investors would rather sit on cash that could return 5% next year. The index turned south from September’s high of 4130 and may test 3700. Key data release (GMT time) Tuesday, 20 December 00:30 RBA Meeting Minutes 03:00 BoJ Interest Rate Decision 06:00 BoJ Press Conference 13:30 Retail Sales Wednesday, 21 December 13:30 BoC Consumer Price Index Core   Thursday, 22 December 07:00 Gross Domestic Product 13:30 Gross Domestic Product Annualized 23:50 BoJ Monetary Policy Meeting Minutes   Friday, 23 December 13:30 Durable Goods Orders
At The Close On The New York Stock Exchange All Indices Fell

Even if Santa Rally delivers us with ca. 1% gains, remember we're about 17% below-the-line so far this year

Jing Ren Jing Ren 16.12.2022 14:49
Stocks are down substantially this year, even including indices which had a bit of a rally through the last month or so. There has been a split in trend, which is worthy of note. The DJIA moved higher, while the Nasdaq remained relatively steady. In Europe, indices don't concentrate in certain sectors like they do in the US, but a similar trend has emerged when considering certain types of firms. The Dow Jones consists mostly of lower valuation, so called "value stocks", which have been outperforming. Tech stocks have continued to underperform, even in periods of recovery. This is often attributed to their relatively high valuations, meaning that they are more speculative. The Fed's tightening contributes to reducing interest in higher valuation stocks, and now the Fed is expected to slow its rate hikes. This could be an indication of which sectors/stocks could benefit the most from a Santa Rally. What are the chances this time? In order to make an educated guess about whether we can expect a rally this year or not, we need to have a better understanding of why it happens. Which is a bit of a problem, because there isn't much agreement on the causes of the rally. Not only that, but there also isn’t even an agreement on when it happens. Some say it's in the week before Christmans, others say it's the week between Christmas and New Year, and still others say it's both. So far this month, stocks have been trending higher thanks to an expectation that the Fed won't keep hiking rates so much. Now that they have delivered, the expectation is that US stocks can continue to rise. Across the Atlantic, the situation is a little more complicated, as the UK is expected to fall further into recession. Even if the BOE slowed the pace of hiking, there might not be as much room for optimism. Meanwhile, the ECB threatened to keep raising rates. That is expected, however, since the shared central bank was one of the last to join the hiking movement, so would likely be one of the last to end its tightening cycle. Read next: In December, the Fed maintained a tougher rhetoric than the market consensus, playing on the bears' side| FXMAG.COM What can we expect? Santa rallies happen about 2 out of 3 years, on average gaining about 1.3% over the period from Christmas to the Jan 2 of the next year. It's positive, sure, but not a blow-out growth. Particularly not in the context of the market losing around 17% since the start of the year. Another difficulty is that the final two weeks of trading for the year see dwindling liquidity as major traders go on holiday. Usually, starting with the final meeting of the Fed, activity starts to drop off, reaching a minimum between Christmas and New Years. That means that volatility tends to increase, with more erratic moves in the markets as relatively small trades can cause bigger moves. Other factors In general, markets tend to average higher through December. But in the case of the US in particular, they tend to do even better in an election year. 2018 was a notable exception, as the Fed was tightening though that period. After stocks performed better in the run-up to the Fed, investors might have some time to digest the results. They could pay more attention to how the market is currently pricing in a terminal rate of 4.85%, but the average of forecasts from the Fed is 5.1%. That could lead to a revaluation of where the Fed could go in the first quarter of next year and let the Grinch into steak the Christmas cheer.
US stocks gain on hopes of a softer inflation print released later today

Nasdaq decreased thanks to central banks hawkishness, so does Kiwi

Jing Ren Jing Ren 16.12.2022 08:31
USDCHF attempts to bottom out The Swiss franc retreated after the SNB raised its policy interest rate by 50 basis points as expected. On the daily chart, the US counterpart is testing last April’s lows near 0.9220 after giving up all gains from the most part of this year. As the RSI shows a bullish divergence in this demand zone, bargain hunters have scooped the bottom but the mood is too cautious to warrant a reversal yet. 0.9380 is the first hurdle ahead and its breach would ease the downward pressure. Failing that, the dollar could tank below 0.9220. NZDUSD drifts lower The New Zealand dollar slipped after the Fed stressed on keeping the interest rates high for longer. The kiwi’s break above the August high of 0.6460 has helped improve sentiment. Now the bulls will need to consolidate their foothold before they could push higher. A fall below the origin of the latest bullish candle suggests a lack of follow-through, and in conjunction with signs of overextension from the overbought RSI, may prompt buyers to take profit. 0.6300 is the closest support and 0.6460 a fresh resistance. NAS 100 breaks major support The Nasdaq 100 plunged as global central banks' hawkishness rattled investors. The choppy price action was due to multiple catalysts this week and layers of resistance from last September’s sell-off. The most recent rally reversed its course at 12200, a support-turned-resistance from mid-September. A breach of the lower end (11500) of the consolidation confirmed a lack of buying interest and might cause a test of the origin of a previous bullish breakout at 11150. As the RSI goes oversold, 11800 is a fresh hurdle in case of a bounce.
EUR/USD Pair May Have A Potential For The Further Rally

Forex: Euro and Sterling stay quite calm ahead of meetings, dollar decreased as Fed hikes in-line with expectations

Jing Ren Jing Ren 15.12.2022 08:43
EURUSD rallies along trend line The euro steadies ahead of the ECB interest decision today. On the daily chart, the pair is heading to last May’s high of 1.0800 after bouncing off 1.0300 on the 20-day moving average. Zooming into the hourly time frame, the euro has been climbing along a rising trend line, with a fresh support at the base (1.0530) of the latest momentum. The bullish mood may continue to carry the price action, but selling pressure could grow as the pair approaches the supply zone where short-term buyers might start to take profit. GBPUSD to test resistance The pound holds firm as the BoE meets amid softer CPI from last month. Sterling is grinding its way up along a rising trend line and past last summer’s high of 1.2250 which has turned into a support. A break above 1.2340 indicates that the bulls are still in control. A pullback could be absorbed by eager trend followers. The psychological level of 1.2500 is the next step and its breach would open the door to last May’s high around 1.2660. On the downside, 1.2110 is the bulls’ second layer of defence in case of a correction. Read next: Given the peculiarities of the US labor market and the high labor mobility, the acceptable unemployment rate is considered to be 5.0%| FXMAG.COM AUDUSD tests major resistance The US dollar softened after the Fed raised interest rates by 50 basis points as expected. The bulls have been probing resistance under September’s high of 0.6900 for a couple of weeks. Profit-taking was not enough to trigger a broader sell-off, which suggests that sentiment has stayed rather upbeat. The latest surge shows strong commitment from the long side and a bullish breakout could extend gains above the psychological level of 0.7000. The demand zone around 0.6780 is key in keeping the momentum in play. Read next: From the fundamental point of view, these facts may become a game changer, sending the EUR/USD pair to the parity level | FXMAG.COM
The EUR/USD Pair Continues To Rise In The Positive Area

Euro: 50bp rate hike is on the cards, but ECB decides shortly after Fed...

Jing Ren Jing Ren 14.12.2022 14:27
The consensus among economists is that the ECB will hike by another 50bps. But there is this unusual situation where the ECB has its rate decision right after the Fed (and members will be meeting at the same time as the BOE). As the US is the largest trade partner, it's understandable that the ECB will consider what the Fed does when it decides policy. The main driver of the EURUSD, naturally, is the interest rate spread between the Euro and the Dollar. But not just the interest rate, the inflation rate has to be taken into account, because it's an important factor for investors. Particularly now with interest rates so high, and varied across geographies. What's the real return on investment? Currently, the ECB's interest rate is 2.0% and the Fed is double that at 4.0%. But we have to factor in inflation. Here we don't use core inflation, even though that's the preferred measure by central banks. Investors care how much their money is actually worth, taking into account as many factors as possible. November inflation in the Eurozone was reported at 10% (preliminary, but the final usually doesn't vary much); while in the US it was at 7.1%. So, there is a 2.0% (or 200 basis point) spread in favor of the dollar, given the interest rates. But, on top of that, there is a 2.8% difference in inflation. Meaning that holding Euro debt will lead you to a bigger loss than holding dollar debt. Hence, the strong preference for the dollar. It's about the future, too But, investors aren't investing in the past; they want to know where things will be in the future. If the central bank is aggressively raising rates, then it means they will bring inflation down. That's what the Fed has been doing lately, and inflation in the US is trending downward. But the ECB has been much slower to raise rates, so inflation has been trending higher, with only November's figure (as yet unconfirmed) turning the trend. Read next: Elon Musk is not the richest man in the world anymore| FXMAG.COM The thing is, since the Fed has already pushed rates higher, there is less hiking in the future for the dollar. While the ECB still has over 200bps to catch up, meaning they could keep hiking for longer. Particularly if we consider that inflation is higher now, than the peak for the cycle in the US. Meaning that the Euro could be undervalued for now, and if the Fed signals that it will start slowing rates, while the ECB signals that it will keep aggressively tightening, the EURUSD could catch some tailwinds. There are other factors Europe has managed to reduce energy consumption by around 20%. Energy being the largest driver of inflation in the shared economy. So far, industrial production hasn't faltered, leaving the Euro Area with a still positive GDP, and expectations that Q4 will also show growth. This gives the ECB more room to keep hiking, unlike other central banks. That's why there is a chance of a surprise 75bps hike from the ECB, which could narrow the interest rate gap and give the EURUSD a push. On the other hand, if the ECB matches the Fed's 50bps, there is also a good change that Lagarde will be quite hawkish, which could also support the Euro. Dovish commentary from the ECB at this point would be quite a surprise for the markets.
Gold benefits from inflation slowdown, crude gains on the back of OPEC expectations

Gold benefits from inflation slowdown, crude gains on the back of OPEC expectations

Jing Ren Jing Ren 14.12.2022 08:52
XAUUSD breaks to higher range Gold popped higher following a deceleration in US CPI last month. After a rally above the August high of 1805, a brief consolidation saw support at 1765 right over the 20-day moving average. As the trading range compressed, the pressure was building up ahead of a breakout. This came in the shape of a strong impetus above 1810 which could lead to a runaway rally above 1850. As the RSI shot into the overbought area a pullback could ensue and the base of the breakout at 1790 is a key level to maintain the upward bias. USOIL sees timid rebound WTI crude bounced after OPEC said it expected demand growth from relaxed COVID policies in China. The price took off at its 12-month low and the psychological level of 70.00. But the bulls will need strong and convincing momentum above this month’s high at 82.00 before they could turn the pessimistic mood around. Before that, the support-turned-resistance at 77.00 is the first hurdle where renewed selling could be expected while the RSI shows an overbought situation. 73.30 is a fresh support and 70.00 a critical floor. Read next: John Hardy (Saxo Bank): I don’t think any single inflation print will unsettle the BoE here, just look at the huge recovery in sterling from the lows | FXMAG.COM UK 100 finds support Equities soared as cooling US inflation spurred hopes of a dovish Fed stance. On the daily chart, the FTSE 100 is holding onto its gains after a break above August’s high of 7560, while still remaining under pressure from this year’s highs around 7640. Support has been found at 7420, the junction between the base of a previous bullish breakout and the 30-day moving average. 7550 is the first resistance and a close above 7615 would resume the uptrend. A bearish breakout, however, would cause a correction to 7290.
On Friday, When NFP Were Released, S&P 500 Lost Almost 3%, Nasdaq Decreased By 3.8%

According to Orbex's analyst the US inflation is expected to reach 7.7%, declining from 7.7%

Jing Ren Jing Ren 13.12.2022 11:29
Usually, we have all the key data points ahead of an FOMC decision to make a better evaluation of what could happen. But this time, the most important data for the Fed will be released during the first day of their meeting, later today. Then tomorrow the FOMC releases its decision. Depending on what the data says, there might be a significant reevaluation of what the Fed will do tomorrow, and what it might signal for the start of the new year. Both factors are expected to be determinate for the market's reaction, as it prices in expectations for where the rates will be in the coming months. Another CPI surprise? We should remember that last time around, the US CPI (for October) came in well below expectations. A look at the components showed that economists hadn't considered just how much the price of housing had fallen that month. Since then, there hasn't been a recovery in this item. Even the largest element to drive inflation, energy costs, has been sliding downward in the meantime, as crude prices come down over fears of a recession. Read next: What’s more worrisome is the fact that we will continue to learn of all of the contagion and aftereffects of the FTX collapse in the coming weeks and months. | FXMAG.COM But, no one can say what the future will hold. Inflation coming in lower than expected is unlikely to change what the markets are expecting of the Fed. Even if there were a major miss on expectations (similar to last time), inflation would still be way above target. What kind of surprises? On the other hand, if inflation were to come in hotter than expected, but below the prior level, then the downward trend would still be intact. The Fed would still need to hike, because inflation is still too high, but slowing down the pace is understandable. Where things could get interesting is if inflation were to come in above the prior level. The headline number doesn't matter so much as the core figure. That would imply another break in the downward trajectory, and could lead to a reevaluation of Fed expectations. Both in terms of what the Fed could decide tomorrow, and what could come after that. What to expect Annualized headline inflation is expected to keep falling to 7.3% from 7.7% prior, aided by growth of 0.3% in monthly inflation. The key core inflation rate is expected to fall to 6.1% from 6.3% prior, and a beat by 3 decimals here could be what shakes up expectations. 75% of economists think the Fed will raise rates by 50bps at the next meeting. The remainder are betting on 75bps. But, Powell pretty much foreshadowed that it would be the smaller number - unless there is surprise in the data. The key issue for the markets is where the Fed sees the "terminal rate" going. That is the maximum rate they will raise to during this cycle. Currently the market is expecting it to reach 5.0% sometime early next year. If the Fed implies the rate will be higher than that, it could lead to the dollar getting stronger. Read next: Cathie Wood's ARK Innovation (ARKK) Exchange-Traded Fund Loses Investor Confidence| FXMAG.COM
InstaForex expects risky assets to regain demand if the US CPI declines

Tough time for Canadian dollar, stronger British pound, consolidating S&P 500

Jing Ren Jing Ren 13.12.2022 08:27
USDCAD tests key resistance The Canadian dollar struggles over plunging oil prices amid demand concerns. On the daily chart, the outlook remains positive and crossing moving averages may suggest a potential acceleration to the upside. The pair hit resistance at the former support at 1.3700 and led some intraday traders to take profit. A bullish breakout would extend gains to November’s high of 1.3800, which could foreshadow a recovery to the previous peak of 1.3970. 1.3560 is the first support in case of prolonged hesitation. EURGBP struggles for support The pound strengthened after the UK’s GDP beat expectations in October. The pair has failed to build a support base after it dropped below the major bottom (0.8570) that has been valid since last September. The RSI’s oversold condition led to a limited bounce but might not be enough to save the day as more traders may have switched to the short side. Only a close above 0.8640 would keep the euro bulls in play. Otherwise, a fall below 0.8560 would attract momentum sellers and send the exchange rate to 0.8500. Read next: Euro Holds Above $1.05, USD/JPY Pair Rose Above 136| FXMAG.COM SPX 500 grinds key support The S&P 500 consolidates as investors await US inflation data later today. After turning south at 4100 near September’s high, the index has struggled to find follow-up bids. A fall through the base of the previous bullish momentum prompted buyers to exit and reassess the mixed mood. The latest rebound to the psychological level of 4000 is an important test and a breakout would open the path to the recent peak at 4100. 3910 is a key level to keep the index afloat as its breach could trigger a liquidation towards 3820.
Orbex's Jing Ren talks US dollar versus Japanese yen, EURCHF and DAX - December, 12 2022

Orbex's Jing Ren talks US dollar versus Japanese yen, EURCHF and DAX - December, 12 2022

Jing Ren Jing Ren 12.12.2022 08:34
USDJPY holds steady The US dollar edged higher after November’s PPI beat estimates. Sentiment remains fragile after the price made a U-turn at 137.80, which was a brief support in the previous consolidation. Some buying interest has emerged from 135.40 with the RSI returning to the neutral area. A break above 137.80 would extend gains to the top of a faded rebound at 139.70. Only its breach could lighten up the mood and attract more buyers. On the downside, 133.70 would be a critical floor to keep the current bounce valid. EURCHF pulls back The euro retreats ahead of the ECB interest rate decision. On the daily chart, the single currency is still consolidating its gains after breaking above September’s high of 0.9850. The supply zone near the recent peak (0.9940) seems to be a hard hurdle to clear. The choppy price action is a sign of hesitation due to a lack of catalyst. 0.9820 is the closest support and the RSI’s oversold condition may attract some bargain hunters. A bounce above the psychological level of 0.9900 could trigger a sustained recovery. Read next: What’s more worrisome is the fact that we will continue to learn of all of the contagion and aftereffects of the FTX collapse in the coming weeks and months. | FXMAG.COM GER 40 struggles for support The Dax 40 fell back as traders took profit ahead of a data-intensive week. The bulls have struggled to lift offers around June’s peak of 14650. Instead, a fall below 14350 prompted short-term buyers to take some chips off the table. The former demand zone around 14400 has become a supply one, and more sellers would join the rank if the buy side fails to reclaim it. The recent low of 14150 sits on the 30-day moving average and is a major support. The index could be vulnerable to a deep retracement should it be pierced.
12 December 2022	One for the road	Heavyweight data and central bank decisions before year’s end

12 December 2022 One for the road Heavyweight data and central bank decisions before year’s end

Jing Ren Jing Ren 12.12.2022 07:59
EURUSD awaits double catalystThe euro consolidates as both central banks will fire their last salvos of the year. Inflation expectations remain high in the eurozone and bolster the likelihood of a 50 bp hike by the ECB. But market dynamics are driven by the greenback. Despite the euphoria from Powell’s hint of slower tightening, robust jobs and services data have sowed doubt about the terminal rate, which may end up above 5% if the Fed vows to keep interest rates restrictive for a prolonged period of time. Only a soft US CPI reading could keep the pivot hope alive and by extension the dollar in check. 1.0900 is the hurdle ahead and 1.0300 the first support.GBPUSD braces for volatile weekThe pound steadies ahead of key economic data and the BoE’s policy meeting. Sterling continues to recover after the previous administration's mini-budget fiasco, which suggests that traders have regained faith in the UK’s policymaking. Both employment and inflation could build up volatility leading up to the BoE rate decision on Thursday. Governor Andrew Bailey has been striving to balance market expectations by saying that the peak rate could be less than currently priced in. The market is betting on a 50 bp rate rise, but a dovish forward guidance could weigh on the currency. 1.1900 is the first support and 1.2660 the next stop.UKOIL falls as demand outlook worsensOil prices slump over growing recession concerns. As the price cap on Russian crude may have marginal impact on production, traders have shifted their attention to the demand side. The prospect of more interest rate hikes is a reminder that the world has entered a cyclical downturn. In China, despite relaxed restrictions, surging infections could hamper economic activities in the coming months as the country learns to live with the virus. The market mood is extremely pessimistic as even the gradual reopening has failed to support the price. Brent crude is reaching a 12-month low at 70.00, and 87.00 is the closest resistance.NAS 100 hesitates over policy uncertaintyThe Nasdaq 100 softens as the Fed policy remains uncertain. Investors struggle to grasp a clear direction as strong US economic data contradict the Fed’s moderate tone. The market is also contemplating the possibility and timing of a downturn as a steep rise in borrowing costs stretches corporate America, and growth sectors in particular. Inverted yield curve, a market indicator of a looming recession may keep investors on their toes. Blue chip indices S&P 500 and Dow Jones 30 have outperformed the Nasdaq in the recent rebound, a sign that risk appetite is still lacking. 12800 is the first hurdle and 10600 a critical support. Key data release (GMT time) Monday, 12 December 20:25 BoC's Governor Macklem speech Tuesday, 13 December 07:00 ILO Unemployment Rate Harmonized Index of Consumer Prices 13:30 Consumer Price Index ex Food & Energy 22:30 RBA's Governor Lowe speech 23:50 Tankan Large Manufacturing Index Wednesday, 14 December 07:00 Consumer Price Index 19:00 Fed Interest Rate Decision 19:30 FOMC Press Conference 21:45 Gross Domestic Product Thursday, 15 December 00:30 Unemployment Rate 08:30 SNB Interest Rate Decision 09:00 SNB Press Conference 12:00 BoE Interest Rate Decision 13:15 ECB Monetary Policy Decision Statement 13:30 Retail Sales 13:45 ECB Press Conference Friday, 16 December08:30 S&P Global/BME Composite PMI S&P Global/BME Manufacturing PMI09:00 S&P Global Composite PMI09:30 S&P Global/CIPS Services PMI
UK GDP: Cable Headed for Choppy Waters

UK GDP: Cable Headed for Choppy Waters

Jing Ren Jing Ren 09.12.2022 15:02
PM Sunak is facing increasing challenges as the country wraps up the year. Strikes have been going on for months in different sectors, but they are getting particularly intense of late, as workers struggle with higher cost of living. But, this opens up another problem that could be a headache for the BOE: a cost-wage spiral. Which could be made worse as the UK moves from stagflation into a full-blown recession. A wage-price spiral can lead to hyperinflation and destabilize the economy, and is feared by central bankers. That's when prices rise, prompting workers to demand higher pay, which means goods and services cost more to produce, pushing up inflation, and the cycle repeats. Unions striking so far have managed to reach agreements on pay rises that at least match or are more than the annual inflation rate. While this helps the workers deal with the cost of living crisis, it puts additional strain on the country's finances. Something's got to give According to the most recent CBI report, UK business investment is still down 9% when compared to pre-pandemic levels. The report also predicted that productivity would remain below 2019 levels well into 2024. Inflation is the mismatch between too much money and/or too little production. While the BOE can deal with inflation by reducing the money supply with higher rates and QT, that inflation could remain persistent if productivity doesn't kick into gear. Read next: Major Currency Pairs Have Recently Shown A Slowdown In Their Growth (EUR/USD, GBP/USD, AUD/USD)| FXMAG.COM But, given the macro uncertainty (BOE policy, government's finances, disputes with the EU, energy costs) businesses are hesitant to invest. And those who do invest, are finding it increasingly more expensive to get funding as the BOE raises interest rates. If the strikes succeed, and wages increase leading to even more price increases, then the BOE might have to be even more aggressive in tightening. Which in turn makes businesses less willing to invest. A bright spot in the gloom The scenario is of stagflation, according to the CBI, which was a little more optimistic than the BOE which said the UK was in recession. To meet the technical definition of a recession, two quarters of negative growth are required. So far, Q3 has been negative, meaning that if Q4 is negative, then the UK would meet the technical definition. The UK will report its rolling three month to October GDP figures which are expected at 0.4%, substantially better than the -0.6% prior. This would be the first positive reading in two months, suggesting that at least the first of the three months of the fourth quarter is doing relatively better. The underlying data However, the growth in GDP is expected to be driven by a drop in imports, which means a smaller trade deficit. And the bulk of that is likely due to lower cost to import fuel, since October started to see Brent prices come down. Meaning that even though there is an improvement, it isn't in any of the underlying factors that are troubling the economy and giving reason to forecast gloom for the pound. With inflation still in the double digits (and rising), spread in real interest rates in cable is likely to keep widening, putting downward pressure on the charts.
Euro to Japanese yen - still dovish Bank of Japan

Euro to Japanese yen - still dovish Bank of Japan

Jing Ren Jing Ren 09.12.2022 08:19
NZDUSD seeks support The New Zealand dollar treads water ahead of the Fed's policy meeting. The pair hit resistance right under August’s high of 0.6460. Profit-taking from short-term buyers compounds selling from those who believe in a bear market in the medium-term in this area of confluence. The bearish RSI divergence was already a giveaway of a slowdown in the rally. 0.6250 near the previous highs is the first level to assess buying interest. 0.6160 is the bulls’ second layer of defence in case of a deeper correction. EURJPY tests resistance The Japanese yen weakens as the BoJ remains resolutely dovish. The pair has seen increasing pressure after it broke below October’s low of 141.00. 144.70 at the start of the previous bearish push is a major obstacle. A bullish breakout may propel the pair above 146.00, putting the uptrend back on track for the weeks to come. However, if buyers fail to clear it the single currency could head back south. A drop below 143.20 would trigger renewed selling towards 142.00 which is a critical level to keep the current rebound valid. SPX 500 breaks support The S&P 500 edged higher after US jobless claims rose moderately last week . The index has struggled in the supply zone (4130) from last September. The tumble below the base of the previous bullish momentum at 3950 has thrown the bulls into disarray. This lack of follow-through might lead to a bearish reversal as the buy side may choose to bail out. Only a climb back above the psychological level of 4000 would attract more interest and signal a recovery. Below 3905, the bears would take over and press towards 3840.
Surprising Japan GDP let yen rally, Bank of Canada doesn't help Loonie, hints at hiking slowdown

Surprising Japan GDP let yen rally, Bank of Canada doesn't help Loonie, hints at hiking slowdown

Jing Ren Jing Ren 08.12.2022 08:37
In today's Orbex Analysis Jing Ren talks Forex pairs - greenback versus yen, Loonie and WTI crude oil. USDJPY recoups some losses The Japanese yen rallies over better-than-expected GDP in Q3. The pair has found solid support at 134.20 near August’s lows. The latest rally is likely to be driven by sellers’ profit-taking, which means that it would be too soon to talk about a full-fledged recovery. 138.80 on the 20-day moving average is the first obstacle, and the bulls will need to clear the daily resistance at 141.50 before they could turn sentiment around. 136.00 is the first level to gauge the strength of buying interest in case of a pullback. USDCAD tests resistance The Canadian dollar struggles as the lack of forward guidance by the BoC hints at slower tightening. A break above the previous peak at 1.3640 has put the bears on the defensive. The RSI’s multiple entries in the overbought area showed exhaustion and led to a pullback as the price tested the support-turned-resistance of 1.3700. A breakout could pave the way for a bullish continuation above the November high of 1.3800. On the downside, 1.3580 is the closest support and 1.3400 a critical level to keep the recovery intact. Read next: BMW Was Fined 30,000 Pounds By CMA, Google Wants To Become More Productive| FXMAG.COM USOIL sees limited bounce WTI crude dips on an unexpected rise of US fuel stocks. A close below the previous low of 73.70 shows that the path of least resistance remains down. More traders may look to sell into strength as the commodity struggles to claw back losses. The RSI’s oversold condition may cause a limited rebound. Offers could be expected around the former support of 78.00. 82.50 is a major cap that is likely to keep the price under. A new round of selling would send the price to a 12-month low and at the psychological level of 70.00.
Oanda's Kenny Fisher talks US dollar against Canadian dollar

BOC Interest Rate Decision: Foreshadowing the Fed?

Jing Ren Jing Ren 07.12.2022 15:27
Analysts are coalescing around the idea that the BOC will hike by a quarter percentage point (or "one hike" as it used to be) at the next meeting. But given the connection between Canada and the US in economic terms, some traders might be looking at this for some insight into the Fed. After all, both countries are dealing with a similar major problem: high inflation. In the case of the Fed, however, we get the first report of November CPI the day before the meeting, and that could really change expectations. Since the BOC and the Fed have similar economic outlooks, the reasoning the Macklem could use might give some insight into what Powell might say. Canada took an even more aggressive stance than the Fed, raising by a full percentage point back in July. Canada has also experienced inflation retreating faster than in the US. Since that percentage point hike, the BOC has been slowly curving back its tightening, hiking 50bps at the last meeting. That would put it on track to hike by 25bpts now, and then pause when it meets again in January. Read next: Unconventional Measures Taken By Musk In Managing Twitter| FXMAG.COM The deteriorating situation The economy grew by a surprising 2.9% in the summer, which was well above the BOC's estimate of 1.5%. It helped justify the harsher rate hikes. But, since then, monthly GDP reports have been disappointing, and are on track to match expectations that growth will turn negative in the first half of next year. Just yesterday, the Ivey PMI came in at 50.1, just barely in growth, and well below the 59.5 prior. Although also above expectations, it does show that Canadian businesses are worried about the economic outlook. That helps justify the idea that the BOC will have a lighter touch. On the other hand, the latest trimmed mean inflation ticked higher for the first time since the summer. That's the preferred measure of inflation for the BOC, and it moved up to 5.3% from 5.2% prior. Following the last meeting, governor Macklem conveyed a somewhat neutral stance, saying he didn't want to undershoot or overshoot with policy. Consequently, given the consensus of a "single" rate hike expected, what the governor implies about the rates after is likely to have a bigger impact on the market. If he implies a pause, it likely would be in line with market expectations. But if he were to imply that a hike is probable at the next meeting, it could give a boost to the Loonie. The widening gap A 25bps hike would bring Canada's interest rate to 4.0%, and could be the terminal rate if the pause becomes effective. That would put it on par with the US - for the next week. The Fed is expected to hike by another 50bps, and reach a terminal rate of 5.0% sometime early next year. This would imply that the interest rate gap between the countries would start widening again, and put downward pressure on the Loonie. The way to avoid this would be if the BOC signals more rate hikes. The other factor to put pressure on the Canadian dollar is that oil prices have also been dropping even after the Russian oil price cap agreed on by the G7, and expectations of China reopening. A weaker CAD would raise inflation concerns for the BOC, and could give them reason to keep hiking beyond 4.0%.
Walmart CEO raised the issue of switched consumers' buying habits

Walmart CEO raised the issue of switched consumers' buying habits

Jing Ren Jing Ren 07.12.2022 14:53
Yesterday, several major CEOs gave interviews to financial media in the context of a couple of major investor conferences. Their comments left a sour note for the markets, and tech stocks led a move lower in US equities which fed over into the Asian and European stocks. Aside from the less than optimistic outlook, it underscored a brewing debate about the Fed. The results of that debate could be the difference between a mild (or no) recession, and an economic "hurricane". First, the disappointing news What captured most of the attention were comments from Walmart's CEO and the CEO of JPMorgan. The latter has been quite a bit more outspoken about worries of a pending recession. In fact, the "economic hurricane" phrasing was his invention. The issue is that several CEOs echoed a sentiment: that consumer demand was slowing. Read next: The Australian Dollar Failed To Hold Its Gains, The Pound Strengthened Against The US Dollar| FXMAG.COM Walmart was seeing a trend where consumers were being more conservative in their buying habits, focusing on household essentials and holding back from things like electronics. This dovetailed with the CEO of Union Pacific, who said that shipping volumes were down.   Still good, but for how long? Jamie Dimon, as the CEO of one of the largest consumer banks in the US, would have some insight into how his customers were spending their money. He pointed to spending this year being 10% higher than last year. Which sounds good, but inflation has to be factored into that. He also pointed out that savings that people had accumulated during the pandemic and thanks to the stimulus were running out, and that might mean further credit crunch in the first half of next year. Read next: Unconventional Measures Taken By Musk In Managing Twitter| FXMAG.COM This is where the discrepancy starts to show: What will the Fed do. For now, the Fed is raising rates to stave off inflation, and are expected to level out at around 5.0%. This makes borrowing costs significantly higher, which would make buying things with credit cards, or taking out loans, much more difficult.   History won't repeat itself? In the past, the Fed has hiked rates right up until there was an economic downturn, and then quickly cut in order to support the economy. Particularly to support the jobs market, which is their second mandate. But Dimon is warning this might not be the case this time, as inflation remains elevated, the Fed might be much more concerned with restoring monetary stability. This would make the recession harder, since there wouldn't be the sudden influx of cheaper credit that happened with previous recessions. The relative strength in the jobs market contributes to that view. Even if the economy slips into contraction, with over 10 million job openings, it could be some time before the unemployment rate starts to tick up. Unemployment is a lagging indicator, and that lag might be even more extended this time around. Which could mean that the more rosy expectations of a quick "pivot" by the Fed next year might not play out.
Silver Is Currently Placed Near The Daily High

XAGUSD: Bulls Are Targeting 24.788 On A Double ZigZag Pattern

Jing Ren Jing Ren 07.12.2022 13:35
Looking at the 1H timeframe, we see the development of the corrective wave b, which is part of the global zigzag. Correction b most likely takes the form of a triple zigzag â“Œ-Ⓧ-â“Ž-Ⓧ-Ⓩ. The first four primary waves are completed, and the last wave Ⓩ is still under construction. It is assumed that the primary wave Ⓩ will be a double zigzag of the intermediate degree (W)-(X)-(Y). After the end of the actionary wave (W), the price began an upward movement in the intervening wave (X). Like wave (W), intervening wave (X) may end in the form of a minor double zigzag W-X-Y. The end of the bullish trend is expected near 24.788. At that level, wave (X) will be at 76.4% of wave (W). According to an alternative scenario, the XAGUSD pair has completed the construction of an ascending intervening wave (X) of the intermediate degree. As in the main version, it has the form of a double zigzag W-X-Y. Read next: The Australian Dollar Failed To Hold Its Gains, The Pound Strengthened Against The US Dollar| FXMAG.COM Thus, in the next coming trading days, we can expect a fall in the XAGUSD rate and the formation of a bearish actionary wave (Y). Perhaps this wave will have a standard zigzag shape A-B-C, as shown in the chart. The first target, where the bears are aimed, is located at the previous minimum of 17.538, which was marked by the actionary intermediate wave (W).
US stocks gain on hopes of a softer inflation print released later today

US dollar benefits from the strong data. Aussie weakens amid small RBA rate hike

Jing Ren Jing Ren 07.12.2022 08:42
EURUSD hits resistance The US dollar edges higher as dovish incentives for the Fed fade amid robust data. The pair came under pressure at 1.0600 which is a supply zone from last June’s sell-off. The directional bias remains up in the short-term and the bulls may see a pullback as an opportunity to stake in. 1.0440 near the previous top is the first support. Further down, the previous daily lows of 1.0300 and 1.0220 on the 30-day moving average might counteract a deeper correction. A close back above 1.0600 could lift the euro towards 1.0800. AUDUSD struggles for support The Australian dollar softened after the RBA lifted its cash rate by 25bp as expected. On the daily chart, the pair has been grinding up along the 20-day moving average. September’s high of 0.6900 may prove to be a tough level to crack. A bearish RSI divergence indicates a slowdown in the upward momentum. An initial break below 0.6800 triggered the first round of profit-taking, turning it into a fresh resistance. 0.6670 is the immediate level to gauge follow-up interests and its breach would send the aussie to 0.6580. Read next: Nigeria Bans Cash Withdrawal Higher Than 225$ To Encourage CBDC Use | FXMAG.COM UK 100 consolidates gains The FTSE 100 falters as traders ponder the Fed’s potential stance next week. The bulls are testing the major supply zone from this year’s highs around 7630 where strong downward pressure could be expected. As the daily RSI shot into the overbought area, a combination of profit-taking and fresh selling could weigh on the short-term price action. 7510 is the first support then 7440 next to the moving averages is an important area of confluence. A rally above the psychological level of 7600 could extend gains above 7700.
6 December 2022	USD tries to recoup losses

6 December 2022 USD tries to recoup losses

Jing Ren Jing Ren 07.12.2022 07:53
GBPUSD pulls backThe US dollar held its ground after service PMI remained resilient. The pair is striving to hold onto its gains after breaking above August’s high of 1.2300. As more bears cover their positions, they may switch sides and help push towards 1.2600. The RSI’s overbought condition on the hourly chart has temporarily limited the upside and intraday buyers’ profit-taking could offer Sterling some breathing room. 1.2110 over the top of the previous range is the first support and 1.1900 on the 20-day moving average is a critical level. XAUUSD struggles for supportGold fell back after strong US economic data boosted the dollar. A tentative close above last summer’s peak of 1803 is a sign of improved sentiment. This has put the bears on the defensive and eased the downward pressure in the medium-term. However, the price needs to consolidate its range after a break above the previous high of 1783. The rally would remain intact as long as bullion stays above the floor at 1750. A bounce would need to lift offers at 1783 then 1810 before the precious metal could regain traction.GER 40 tests major resistanceEquities hesitate as robust US economic activity fans fears of more rate hikes. The Dax 40 is testing last June’s peak of 14650, a liquidation point from a botched rebound last summer. This is a major ceiling which means that index is at a crossroads between a bullish recovery and a bearish reversal. A breakout could pave the way for a rally towards 15500, reinforcing hopes of a continuation of the uptrend. An overbought RSI on the daily chart shows exhaustion and 14330 on the 20-day moving average is the first support.
The Price Of Gold Is Rising And Could Retake $1,920

How Far Can Gold Rally?

Jing Ren Jing Ren 05.12.2022 15:05
For over a month now, gold prices have been trending higher, gaining over 10% since the start of November. Naturally this poses the question of whether a new peak is coming, or will the precious metal keep moving up through next year. The prospect of inflation in the early part of 2023 might keep investors on the lookout for a place to store wealth. But there are things that central banks can do that might disrupt trends. In order to guess whether gold prices will continue their current trend, it's important to get a good idea of why they have performed like this so far. While a diverse range of factors can be pointed to, the depreciation of the dollar has the largest contribution. In fact, since the start of November, the dollar has lost 8.5% against its basket of currencies. Suggesting that if we want to know whether the current trend in gold will continue, we have to see if the dollar is likely to keep weakening while going into the end of the year. Read next: Gas: Volatility still remains high and colder weather over January and February could see the natural gas bulls come back into town says Luke Suddards| FXMAG.COM What's going on? The dollar has been losing ground chiefly because investors are coming to believe that the Fed's extraordinary tightening is coming to an end. The dollar has been more attractive than other currencies over the past year, because the Fed was the most aggressive of the central banks in trying to curb inflation. Meaning that holding debt in dollars was more profitable than in other currencies. But, with the Fed starting to "pivot" away from an aggressive stance, other central banks are expected to slowly catch up. The dollar's main advantage is expected to dwindle over the coming months. Then there is the question of what's going to happen in the first half of next year, when most economists believe the US will fall into a recession. And not one of those technically, debate on the definition, ones like the start of this year. Will the Fed hold firm with higher interest rates through the recession in order to bring inflation down? Or will they cave to political pressure and start easing to prop up the economy? The China factor Adding to the weakness of the dollar is a resurgence in risk appetite, thanks to China apparently moving away from its strict zero-covid policy to a more economically friendly zero-covid policy. This could help global outlook as China could return to buying more raw materials, and supply chains could be eased in the coming months. Increased productivity in the world's industrial base along with a weaker yuan could help reduce inflation, and ease some of the worries about a recession. Read next: The latest dollar selloff is a hint that the US dollar has certainly peaked this year, and next year will be, (...) , a year of softening for the greenback| FXMAG.COM The markets are pricing in a 50bps hike by the Fed in December, a reduction of the pace recently. That would put it on track for a 25bps hike at the end of January. Then there is the option of one more hike sometime in the first half of the year, leaving the terminal rate at no more than 5.0%. So, if the Fed delivers next week, and there is a year-end rally in the markets, gold could continue to trend higher in the short term. But if the Fed were to double down on the hiking rhetoric, particularly in light of the stellar jobs numbers from Friday, the dollar might find some footing. And gold could falter a bit.
ADP Non-farm payrolls jobs market data show a growth of 127K, much less than the previous print

Greenback gains from the November wage growth, US 30 changed direction as traders benefit from the NFP

Jing Ren Jing Ren 05.12.2022 08:40
USDCHF remains under pressure The US dollar jumped over strong wage growth in November. A drop below the recent low of 0.9370 further weighed on sentiment by invalidating the double bottom between August and November. As the latest buyers are forced to bail out, the directional bias remains down. The pair is setting sail for last April’s low of 0.9200. The RSI’s oversold condition led to a bounce which might be capped by strong selling interest. 0.9460 is the first hurdle and the bulls will need to clear 0.9550 before they could press for a recovery. EURGBP struggles for support The higher-beta pound outperforms across the board thanks to improved risk sentiment. The recent rebound came to a halt at 0.8670 and a subsequent fall below the critical floor at 0.8570 indicates that the path of least resistance is down. This is an invalidation of the rally from early September after a two-month long consolidation. As buying interest becomes scarce, the bears may see a rebound as an opportunity to sell into strength. 0.8500 would be the next target should the sell-off regains momentum. US 30 bounces off support The Dow Jones 30 whipsawed as traders took profit post-NFP. The index has been looking to hold onto its recent gains after a rally above August’s high of 34300. A bounce off the previous consolidation range near 33600 and over the 20-day moving average suggests that the uptrend is still intact. The demand zone between 33600 and 33900 is key in keeping the current bullish framework valid. A close above 34700 could trigger a new round of momentum buying and send the price to last April’s high of 35500.
Central banks are who print money in an economy. So, they can't run out of money, right? They just print more. If only central banking were that simple.

Central banks are who print money in an economy. So, they can't run out of money, right? They just print more. If only central banking were that simple.

Jing Ren Jing Ren 02.12.2022 11:15
So, this is a little excursion into an obscure part of quantitative easing and interest rates that might show where the limits are for central banks to raise rates. And when they could start easing. Or, why what happened to the BOE back in September could happen to the rest of the world. What's the problem?Central banks are, as the name implies, banks. They make money doing bank stuff, like loaning money, charging transactions and such. Not for common citizens, but for banks. That's why central banks are often called "the bank of the banks". The profits from central banks are then given to the respective Treasury of their country. But, if central banks lose money, then that goes in reverse: ie, the government has to step in and "pay back" some of the profits. Why don't they just print money?Because of asset segregation. What's that? It's when banks keep their own assets separate from the assets of their customers. Banks have things that they own, like their buildings, and their own money; and they keep stuff or clients. Central banks do the same thing, except that their "clients" are banks. Central banks can't just take money that belongs to their clients, but they also can't just give themselves money.Why not?Because it affects the credibility of the system, and their books won't balance. But, more importantly, they don't have to. If a central bank needs to spend money, it can do so with a promise to pay it back later. Since central banks are the lender of last resort, then their debt is as good as money. No need to print money, just issue debt. This is called "quantitative easing".Normally, everything goes fine. Except for one tiny detail: when issuing debt, you have to pay interest on it. Up until quite recently, central banks issued very little debt like this. And when they went on their buying spree after the subprime crisis, interest rates were really, really low. So, no need to worry.But, they've been raising rates quite aggressively lately, meaning the amount of interest they have to pay is increasing. Particularly the Fed. The Fed bought a bunch of bonds, on which it receives profit in the form of interest payments. They also issued a bunch of debt, on which they make interest payments. The kicker is that the bonds have a fixed rate, while the Fed's debt is variable rate. With a normal yield curve, the short-term, variable rate the Fed pays is less than the long-term fixed rate paid by the bonds. But now the yield curve is inverted, meaning that the Fed is losing money. $170B in losses so far.Now what?Well, that's the problem. The Dutch Central bank recently sent a letter to the Dutch Treasury warning that they might need to get some cash from the government to cover those losses. If the central bank tries to pay debt with more debt, then interest rates go even higher. Which is a problem for the central bank trying to set interest rates at a certain rate in order to fix policy.So, yes, central banks could print money to solve this problem, but it would create another, worse problem. Governments are struggling to meet their payments as it is. With a recession, government income decreases, making finances even more tight. Especially in Europe, where governments have high levels of debt. If central banks then turn up needing billions to balance their books, and prevent a runaway spiral in interest rates like what happened in the UK last September, it could make the financial situation for governments extra difficult in the coming months.
Rising U.S. Treasury Bond Yields Have Helped The USD/JPY Bulls

US dollar softens as PCE deflator decelerates, Japanese yen gains from Bank of Japan which suggests end of QE

Jing Ren Jing Ren 02.12.2022 08:55
NZDUSD makes higher high The US dollar continues to soften after October’s PCE showed a deceleration. The pop above the high of 0.6290 is a confirmation that the bulls are still in control after a short-lived correction. Strong momentum may send the pair to August’s high at 0.6460 which is a major ceiling from the medium-term perspective. Its breach could force the last selling interests to cover and trigger a bullish reversal in the weeks to come. As the RSI surged into the overbought area, 0.6270 is the closest support in case of a pullback. Read next: Orbex's Jing Ren looks into Aussie against greenback - December 2nd | FXMAG.COM CADJPY struggles for bids The Japanese yen rallied after BoJ officials hinted at a potential exit of QE. On the daily chart, a fall below the double bottom by the June and August lows around 102.00 may cause a bearish reversal. A bearish MA cross shows an acceleration to the south. The latest rebound came to a halt at 103.40, which suggests that the path of least resistance is down. The psychological level of 100.00 could be next. The RSI’s overextension may attract some buying but the bears may see a bounce as an opportunity to sell into strength. NAS 100 awaits more catalyst The Nasdaq 100 steadies as traders await November’s reading on the US labour market. On the daily chart, the index has found solid support over the 20-day moving average (11500) next to the previous double top from October. The surge in conjunction with a bullish MA cross shows that the recovery could be speeding up towards 12300. But before that, the RSI’s overbought situation means that the price could use some breathing room after a vertical ascent. 11850 is the immediate support and 11650 a key demand zone.
USA: Jerome Powell steals the show ahead of the release of labor market data

USA: Jerome Powell steals the show ahead of the release of labor market data

Jing Ren Jing Ren 01.12.2022 16:34
Tomorrow has the all-important release of US labor market numbers. But the Fed's Powell kind of already robbed the thunder from the release during his speech at the Brookings Institute yesterday. He basically implied that the Fed would start slowing down its tightening at the next meeting. Naturally the market jumped and the dollar weakened in response. Now the question is whether there will be follow-through on the optimism with the jobs numbers. November's NFP is expected to come in lighter compared to the prior month, but it should be noted that the data has been markedly outperforming expectations lately. Taken in context of the latest BLS report showing that the labor market remained tight, the consensus for what to expect out of NFP has drifted up, slightly. A week ago, analysts were forecasting 200K jobs added, but that has now moved up to 210K jobs, compared to 261K in October. The trends remain favorable Prior to covid, a 210K jobs report would be considered relatively good. But referring back to the BLS report that came out yesterday, there are some worrying signs. As mentioned, in October there were 261K jobs created, but 353K jobs went off the market. Meaning that companies are closing down job offers faster than people are being hired. The largest drop in job offers occurred in state and local governments, followed by manufacturing. Combined, that represented the bulk of the reduction in job openings. For now, the market remains tight, mostly because the extraordinarily large gap between job openings and jobseekers that occurred from the pandemic is still there. There were 6.1 million people looking for work last month, but there were 10.3 million jobs for them. Despite this mismatch, wages have failed to keep up with inflation. Current expectations are that average hourly earnings will slow to 0.3% from 0.4% reported in October. Putting the pieces together The Fed's main worry though this cycle has been that higher inflation combined with an extremely tight labor market would lead to a wage-price spiral. However, that hasn't happened, giving the Fed plenty of space to raise rates to combat inflation. Recently, inflation has been starting to come down, from a combination of higher borrowing costs and worries about an impending recession. The prolonged loss of purchasing power among American workers as their salaries fail to keep up with prices would be expected to lead to demand destruction. Which would also contribute to reducing inflation, as Americans see their pocketbooks being pinched and refuse to pay higher prices. As retailers across the country report rising inventories and some are suspending buying new inventory for the start of next year, the natural expectation is that the economy will slow down. Which in turn also contributes to lower inflation. The unemployment rate is expected to remain steady at 3.7%, and so is the participation rate. This is reflected in the BLS data showing the number of people quitting to find better pay far outweighed the number of people being fired.
Fed's Nael Kashkari called the deliberation of a pivot "premature". Eurodollar trading close to 1.00.

Jing Ren talks macroeconomic indicators across the globe

Jing Ren Jing Ren 01.12.2022 09:54
Risk appetite got a bit of a boost overnight despite disappointing Chinese NBS PMI figures. Health authorities in the world's second largest economy promised to revise the way in which zero-covid policies would be enacted, and touted progress in vaccinations for the elderly. The latter is seen as a key point in finally getting China in a position where restrictions can be lifted. Chinese factory orders hit the lowest level in seven months. But that was for the larger, government-run companies that are surveyed by the National Bureau of Statistics. The private measure of smaller, more export-oriented business is carried out by Caixin, which could moderate the current outlook What could move the markets Meanwhile, focus is on the rest of the world as PMIs are expected to repeat the upbeat tone seen during the preliminary results published two weeks. Here are some of the major factors to watch out for: China: China Caixin Manufacturing PMI is forecast to come in at 48.9, down from 49.2 previously. But given the result out of the official survey, the market is likely to be not surprised if the measure is closer to 48. On the other hand, a smaller drop than expected could add to the current positive momentum and buoy commodity currencies. Europe: German flash PMI was the standout, coming in well above expectations and breaking a multi-month slide. It stayed well into contraction, but could be shining a light at the end of the tunnel. Particularly when taken in combination with the surprise drop in inflation in the largest economy in Europe. Although it doesn't appear to be enough to shake the perception that the ECB will act quite aggressively at their final meeting for the year. Eurozone PMI is expected to repeat the flash reading of 47.3, which was a substantial improvement over the 46.4 of October. But, it's still below the 50 level, which separates contraction from expansion. Europe continues to contract, but not as much as expected. This also can be seen in the context of Eurozone inflation also coming in below expectations, just like with Germany. But, it should be pointed out that core CPI stayed steady, suggesting the improvement in inflation reading is due more to easing energy prices than a structural change in the shared economy. United States The final reading for S&P Manufacturing PMI is expected to be the same as the flash reading at 47.6, which was significantly down compared to 50.4 in the prior month, and well below the technical contraction of 49.9 expected. But this could be due to methodological differences. This is because the ISM Manufacturing PMI for November came in broadly speaking within expectations, at 50.2 compared to 50.0 expected. A couple of decimal points isn't a major difference this close to the line between contraction and expansion. But, it's expected that ISM will revise their measure down to 49.8, meaning both PMI measures will move into contraction, if expectations are met.
1 December 2022	USD loses support

1 December 2022 USD loses support

Jing Ren Jing Ren 01.12.2022 08:31
EURUSD regains tractionThe US dollar plunged after Fed Chairman Powell signalled a slowdown in rate hikes. A close above the recent high of 1.0450 was an encouraging sign that the optimism is still prevailing. But the psychological level of 1.0500 has caused some profit-taking, weighing on the rebound. After a bounce off 1.0300 and above 1.0390, a retest of 1.0500 and a bullish breakout would carry the single currency to its 5-month high (1.0600) against the US dollar. Further down, 1.0220 near the 30-day moving average is a critical floor.USOIL tests resistanceOil prices find support from a large drawdown in US inventories. Sentiment remains cautious at best after WTI broke below September’s low of 76.60. The RSI’s repeatedly oversold condition attracted some bargain hunters. 81.70 from a previously faded rebound is the first key resistance. Then the area of confluence at 84.50, a support-turned-resistance which coincides with the 30-day moving average, may see offers from medium-term bears. A drop below 77.00 could renew the selling pressure.UK 100 breaks major resistanceEquities take off as investors price in lower peak US funds rates. The FTSE 100 broke above last August’s high of 7575, which may lay the foundation for an extension in the weeks to come. On the daily chart, the triple top around 7650 is sellers’ last stronghold and a breakout would be significant after a near nine-month long consolidation. The bears may look to switch sides and offer support for a bullish continuation. As the RSI ventures into overbought territory, 7550 is the first level to expect follow-up interests in case of a pullback.
At The Close Of The New York Stock Exchange 728 Securities Closed In The Red

AMZN: Market Nears The End Of The Primary Wave Ⓐ

Jing Ren Jing Ren 30.11.2022 13:05
The internal structure of AMZN hints at the development of a corrective trend. It is assumed that a zigzag is formed, which consists of sub-waves a-b-c of the cycle degree. Perhaps at the end of last year, the market completed the formation of the first major wave a, it is a bullish 5-wave impulse. After the end of the impulse growth, the price began to decline, which may indicate the beginning of the construction of a bearish correction b. It may take the form of a zigzag â’¶-â’·-â’¸ of the primary degree. Most likely, in the near future we will see a continuation of the depreciation of stocks in the final intermediate wave (5) of the leading diagonal â’¶ to 77.07. At that level, wave (5) will be at 100% of previous impulse (3). After the end of the wave â’¶, we expect the growth of stocks in the primary correction â’·. Let's consider the second option, when the market has completed the formation of the primary wave â’¶, where, as in the first option, it has the form of a leading diagonal (1)-(2)-(3)-(4)-(5). In this case, in the last section of the chart, we see a price increase within the sideways correction â’·. It is assumed that the correction wave â’· will take the form of an intermediate double three (W)-(X)-(Y), where the actionary wave (W) is also a double zigzag W-X-Y of a lesser degree. Perhaps the second intervening wave (X) has also come to an end, so an upward movement in the final wave (Y) to a maximum of 146.85 is expected in the near future.
30 November 2022	USD sees some support

30 November 2022 USD sees some support

Jing Ren Jing Ren 30.11.2022 08:39
USDCHF attempts to bounce backThe Swiss franc weakened after the Q3 GDP fell short of expectations. A tentative break below last August’s low of 0.9380 further put the bulls on the defensive. Multiple tests at this level show strong interest in keeping the greenback steady. The recent high at 0.9600 is a key resistance which coincides with the 20-day moving average, making it a congestion area. A bullish breakout would send the pair to 0.9750. 0.9460 is a fresh support and the price could be vulnerable to a new round of sell-off if it falls through 0.9380.USDCAD breaks resistanceThe Canadian dollar tumbled over a deceleration in the Q3 GDP. A series of higher lows had already shown growing buying pressure. A break above 1.3570, a support-turned-resistance from a sell-off earlier this month may help the pair regain traction and extend to November’s peak of 1.3800. A close above this hurdle could pave the way for a bullish continuation above 1.4000. 1.3500 has become a fresh support in case the momentum fades. 1.3400 is the bulls’ second line of defence in case of a deeper correction. XAUUSD consolidates gainsGold struggles as the US dollar bounces due to repositioning ahead of the job report. The price has been consolidating above the previous double top formed by September’s and October’s highs near 1725, which sits over the 20-day moving average. Sentiment has turned upbeat following the breakout and a bullish MA cross on the daily chart. 1767 is the closest resistance and its breach would extend the rally to August’s peak at 1805. A drop below 1725, however, could trigger a liquidation below the psychological level of 1700.
Japanese yen loses as jobless rate go up. Australian dollar down, Dow Jones 30 decreases amid China-COVID realties

Japanese yen loses as jobless rate go up. Australian dollar down, Dow Jones 30 decreases amid China-COVID realties

Jing Ren Jing Ren 29.11.2022 08:20
USDJPY remains under pressure The Japanese yen fell after an uptick in October’s jobless rate. The rebound has met stiff selling pressure in the former demand zone around 142.40. A break below the recent low of 138.00 suggests that the path of least resistance remains down. As more buyers switch sides, increased volatility may drive the pair even lower. 135.90 is the next level to see if buyers would make their way back. Otherwise, the greenback could drift towards 132.00. The psychological level of 140.00 is the first hurdle in case of a bounce. Read next: Meta fined by Irish regulators amidst privacy concerns| FXMAG.COM AUDUSD seeks support The Australian dollar retreats after a lacklustre retail sales reading in October. The pair is looking to hold onto its gains above 0.6700 following a rally earlier this month. A bounce off 0.6580 next to the 20-day moving average indicates interest in safeguarding the aussie’s recovery. 0.6720 is a fresh resistance and a close above 0.6800 would open the door for an extension to September’s peak of 0.6910. On the downside, a dip below said support would put the bulls on the defensive with 0.6400 as a second line of defence. US 30 shows overextension The Dow Jones 30 slips as protests in China against Covid curbs raise concerns about growth. While a rally above August’s high of 34200 is an encouraging sign, the bulls would need to secure their foothold before pushing towards 34700. A bearish RSI divergence indicates a deceleration in the upward momentum and the index could use some breathing room. A slide below 34000 has led some buyers to take profit and 33650 is the next level to gauge their interest. Only a bounce above 34300 would resume the uptrend.
The EUR/USD Market Did Not React To Economic Indicators From The Eurozone

British pound down amid revised PPI print. Euro decreased as ECB "played down wage pressure"

Jing Ren Jing Ren 28.11.2022 08:44
GBPUSD to test major ceiling The pound holds onto its gains after the PPI for October was revised upwards. As the pair approaches the August high of 1.2270, a bearish RSI divergence is a warning sign that the rally may be running out of juice. Profit-taking could be expected in this major supply area while those who hold a bearish view in the medium-term may look to sell. However, a bullish breakout could pave the way for a reversal. 1.2020 is the first support should Sterling start to drift lower and 1.1900 another level to gauge followers’ interest. EURCHF awaits breakout The euro softened after ECB officials played down wage pressure. Following a break above September’s high of 0.9830, the euro has found robust support over 0.9720. Then higher lows show rising interest in keeping the pair afloat. 0.9890 is a major resistance to clear before the rebound could break free. A rally above the recent peak of 0.9950 would put the single currency on a bullish trajectory in the weeks to come. On the downside, 0.9760 is the support to monitor in case hesitation leads to a prolonged sideways action. Read next: For Europe, The Outlook Is Even Bleaker – EU CPI Can Reach 10.7%| FXMAG.COM GER 40 hits critical resistance The Dax 40 steadies over upbeat German Q3 GDP. The RSI’s overbought condition is a sign of overextension. As the index tests June’s high of 14700, short-term traders may look to trim their exposure. 14370 is the first support and its breach might give buyers an excuse to bail out. Then 14150 at the confluence of a recent daily low and the 20-day moving average would be a key level to prevent broader liquidation. On the upside, a break above the ceiling could lay the groundwork for a bullish reversal in the medium-term.  
The South America Are Looking For Alternatives To The US Currency

USA: Housing market data can also affect Greenback

Jing Ren Jing Ren 17.11.2022 15:23
Over the next couple of days, we will be getting a series of monthly data from the US housing market. This data comes back into focus after the latest CPI reading, which is why it could have some influence on the dollar. Remember that the next CPI data release is the day before the FOMC announces its policy decision. That means the markets will have little time to adjust expectations based on the data. So, any components that can give some insight into what will happen with prices could have an outsized impact on the markets. Why it matters now The last CPI figure came in well below expectations, both on the headline and core reading. The latter is the most important for the markets, because that's what's tracked by the Fed. The thing is most of that surprise was due to a drop in cost of shelter, which basically means lower rental prices. Rent costs are part of the core inflation rate; since that only excludes food and energy costs. Apparently, analysts haven't been paying enough attention to what's been going on in the US housing industry to adequately forecast what would happen with CPI. This could be an issue beyond inflation, since housing is the largest single industry in the US, consuming the most raw materials. A slump in the housing industry, and the potential effects on the broader economy are illustrated by the 2008 subprime crisis. What happened and where are we going? As we talked about back in June, rising interest rates make it harder for people to afford to buy a house, which in turn puts downward pressure on house prices. Major housing firms have already reported that completions are down, and they expect to sell less in the coming months. Lower housing costs translates into lower rental prices. This is on top of a loss in disposable income keeping people from moving into higher cost rent, or looking for ways to lower their out of pocket expenses by, for example, sharing an apartment. The latest data on the housing market is expected to show a continuation of the trend. October US housing starts are expected to slip to 1.41M from 1.44M prior. Building permits are expected to fall -6.3% compared to the prior month. What this means is fewer new houses are coming on to the market to replace houses that have gotten too old. In the short term, this is bad for homebuilders; but the growing home deficit could imply a boom for the industry after rates come down in the long term. The more worrying sign More concerning is tomorrow's data of existing home sales, which represents a much larger number of buildings. New home building is more adjustable to market trends, and targets areas of growth. It doesn't necessarily represent trends in rent, for example, which is important for monetary policy projections. Existing home sales are expected to come in negative for the 9th consecutive month, showing a decrease of 8%. That would put home sales at 4.4M last month, compared to 4.7M in August.
Over the next couple of days, we will be getting a series of monthly data from the US housing market. This data comes back into focus after the latest CPI reading, which is why it could have some influence on the dollar.

Over the next couple of days, we will be getting a series of monthly data from the US housing market. This data comes back into focus after the latest CPI reading, which is why it could have some influence on the dollar.

Jing Ren Jing Ren 17.11.2022 14:10
Remember that the next CPI data release is the day before the FOMC announces its policy decision. That means the markets will have little time to adjust expectations based on the data. So, any components that can give some insight into what will happen with prices could have an outsized impact on the markets.Why it matters nowThe last CPI figure came in well below expectations, both on the headline and core reading. The latter is the most important for the markets, because that's what's tracked by the Fed. The thing is most of that surprise was due to a drop in cost of shelter, which basically means lower rental prices. Rent costs are part of the core inflation rate; since that only excludes food and energy costs.Apparently, analysts haven't been paying enough attention to what's been going on in the US housing industry to adequately forecast what would happen with CPI. This could be an issue beyond inflation, since housing is the largest single industry in the US, consuming the most raw materials. A slump in the housing industry, and the potential effects on the broader economy are illustrated by the 2008 subprime crisis.What happened and where are we going?As we talked about back in June, rising interest rates make it harder for people to afford to buy a house, which in turn puts downward pressure on house prices. Major housing firms have already reported that completions are down, and they expect to sell less in the coming months. Lower housing costs translates into lower rental prices. This is on top of a loss in disposable income keeping people from moving into higher cost rent, or looking for ways to lower their out of pocket expenses by, for example, sharing an apartment.The latest data on the housing market is expected to show a continuation of the trend. October US housing starts are expected to slip to 1.41M from 1.44M prior. Building permits are expected to fall -6.3% compared to the prior month. What this means is fewer new houses are coming on to the market to replace houses that have gotten too old. In the short term, this is bad for homebuilders; but the growing home deficit could imply a boom for the industry after rates come down in the long term.The more worrying signMore concerning is tomorrow's data of existing home sales, which represents a much larger number of buildings. New home building is more adjustable to market trends, and targets areas of growth. It doesn't necessarily represent trends in rent, for example, which is important for monetary policy projections.Existing home sales are expected to come in negative for the 9th consecutive month, showing a decrease of 8%. That would put home sales at 4.4M last month, compared to 4.7M in August.
The USD/CAD Pair Has The Strong Downside Momentum

Pound sterling gains on the back of soaring UK inflation rate which teases next BoE rate hikes

Jing Ren Jing Ren 17.11.2022 08:26
GBPUSD keeps high ground Sterling rallies as red hot inflation in the UK calls for more interest rate hikes by the BoE. A break above September’s high of 1.1740 has prompted some bears to cover their positions, easing the downward pressure from the daily chart’s perspective. A brief pause above this resistance-turned-support suggests that there is still juice in the recovery. August’s double top at 1.2250 would be next should the rebound pick up speed past 1.2000. 1.1500 near the origin of a bullish breakout is a key demand zone. USDCAD attempts to rebound The Canadian dollar slid as October’s inflation fell short of expectations. A dip below 1.3240 indicates a lack of demand for the US counterpart. The greenback may continue to lose ground as traders stay on the sidelines for fear of catching a falling knife. 1.3150 is the immediate level to see whether it could trigger a buy-the-dips behaviour. Failing that, the psychological level of 1.3000 would be on the line. For those looking to buy, 1.3440 is the first hurdle to clear and the pair may only regain a foothold once above 1.3640. USOIL falls lower WTI crude remains feeble amid rising COVID-19 cases in China. The price is in a horizontal consolidation between 82.00 and 93.50, but the downward pressure is still omnipresent following a double top at the upper band. Two consecutive falls below 88.00 and 85.00 have put the bulls on the defensive. As the latest rebound stalled at the psychological level of 90.00, the commodity could be vulnerable to a new round of sell-off. A drop below 82.00 might attract momentum sellers and push the price towards 77.00.
Australia October Unemployment and Stronger Aussie?

Australia October Unemployment and Stronger Aussie?

Jing Ren Jing Ren 16.11.2022 16:59
The AUDUSD has been trending higher for about a month at this point, but a substantial amount of that could be attributed to events outside of Australia. The latest data releases give reasons to expect a stronger Aussie, but the actions from the RBA in the recent past give reasons for a weaker currency. How to match these differences? Rewinding a bit A couple of days ago, the RBA released its minutes from the last meeting. This was when it caught the market by surprise by raising rates less than expected. What got a lot of attention was the reason: Worries about liquidity. This happened in the wake of the BOE having to step in to support the bond market after the disastrous mini-budget. Australian inflation has been climbing over the last year, but not at the same rate as in other major economies. Granted, Australia only keeps track of inflation on a quarterly basis, but the rate isn't really near the double digits of the UK and the EU. Nor has the RBA been as aggressive as the Fed in getting inflation to come back down. Where policy is heading The concerns about liquidity stem from real yields being really low, particularly in the UK. Subtracting the loss of value due to inflation from the interest paid on debt, investors end up fairly in the negative. Meaning there is little interest to buy into debt, particularly longer term debt when there is uncertainty about how the government will make its payments. Australia, as a commodity currency, usually attracts investor interest with relatively high interest rates. But real rates are substantially negative for the moment. Interest rates in the most recent bond auctions have actually come down, likely as a result of expecting inflation to be controlled in the future. This causes a particular problem for the RBA, because it means that people might be looking to stay out of the market for a short period of time, pending inflation coming under control. But if the RBA raises rates aggressively, they could face a liquidity problem in the short term, similar to the UK. Threading the needle Yesterday's wage price index came in above expectations, showing that inflationary pressures have started to filter through to wages. That is something concerning for the central bank as that can keep pushing prices higher despite monetary policy. From the minutes of the RBA meeting, it shows that the board considered both 25bps and 50bps options, and that there is no pause. 50bps is still on the table. In other words, the final rate is likely to be unchanged, just the pace at which the RBA gets there. This helps alleviate some of the liquidity pressure in the short term, but helps anchor expectations that inflation will come down. What to look out for Tomorrow's employment figures are likely to be important in the context of labor tightness. If there is sufficient room to keep hiring employees, then wage pressure on inflation is likely to be less. Which could give the RBA more room to go for 50bps at their next meeting. Australia's October unemployment rate is expected to remain steady at 3.5%, after adding 15K jobs, up from 0.9K in September.
16 November 2022	USD tries to bottom out

16 November 2022 USD tries to bottom out

Jing Ren Jing Ren 16.11.2022 08:55
EURUSD hits resistanceThe euro slipped after ECB policymakers cautioned about fast rate hikes. The vertical ascent is a sign of a short-squeeze against medium-term positions as the pair approaches the July high of 1.0480. Its breach would lift offers to another daily resistance at 1.0600. However, the RSI’s overbought situation combined with a mean reversion pressure could trigger a retracement. 1.0280 is the first support and its invalidation could give an excuse for profit-taking. Then 1.0160 would be a second level to expect follow-ups.GBPJPY attempts to bounceThe pound struggles over a rise in the UK’s unemployment rate. The pair has been hovering above 163.50 at the base of a bullish breakout in mid-October. This suggests that the bulls are still in the game and are probing for the bottom. After all, on the daily chart, the directional bias remains up despite a choppy price action. The area between the round numbers 166.00 and 167.00 is the first hurdle. Its break could pave the way for a rally above 169.00. On the downside, 162.00 is another support in case of further hesitation. XAUUSD hits major resistanceGold stays muted as rising bond yields accompany the US dollar’s comeback. Momentum buying has pushed the precious metal near August’s high of 1803. The RSI’s multiple tops in the overbought zone and a bearish divergence indicate exhaustion and the rally may lose steam around the major supply zone. 1754 is the closest support and its breach would lead to further weakness. Then the precious metal could be vulnerable to both profit-taking and renewed selling. 1713 would be the bulls’ second line of defence.
For British pound and the UK itself, this week is simply action-packed

For British pound and the UK itself, this week is simply action-packed

Jing Ren Jing Ren 14.11.2022 15:19
This week, Cable traders will have a lot to look at. Of course the big event later in the week is the long anticipated Autumn Budget that is expected to be released on Thursday. It's not expected to be such a controversial affair this time around, but there are still some pending issues that could shake up the markets. And pending nervousness after what happened last time a new Chancellor announced a spending plan. The main issue is how will Chancellor Hunt balance the books over an expected shortfall of £60B due to slower economic outlook and increasing costs. What has been leaked so far suggests that it will be a combination of higher taxes and spending cuts. While these measures are generally understood to weigh on economic growth, they are also expected to help with the inflation situation. It's stagflation now What happens with the budget is particularly relevant for the BOE, since it is facing something of a crossroads. After UK GDP came in negative for the third quarter, it's expected to show the beginning of the prolonged recession the BOE anticipated. The BOE is also forecasting that inflation will remain in the double digits for a couple of months, and won't start trending lower definitively until the middle of next year. In other words, stagflation. The question is how will the BOE choose to deal with this situation. One way is to raise rates aggressively to kill off inflation, provoking a hard landing for the economy. Another is to try to rescue the economy and let inflation run hot until productivity can increase and stabilize the currency. Both are politically difficult solutions. Since the BOE and the new Chancellor are on the same wavelength, that could work with the Autumn Budget. An "austerity" budget would work with crushing inflation sooner, and shoring up the government's finances for an expected growth strategy later. Though, all of that is in theory; practice might be an entirely different matter. But it's useful to have some insight into how officials are thinking. The data that could shake things up The first bit of important information comes out tomorrow, which are labor figures. Here the market's focus is likely to be on the claimant count numbers, since the employment change and unemployment rates are from previous months. October claimant count is expected to continue its rise and reach 27K, up from 25.5K previously. That would be the largest number of people going on unemployment since March of last year. Wednesday has what could be the market mover in cable this week, which is the release of October inflation, which is expected to move up to 10.6%, and another multi-decade high. That's above the previous 10.1%. The BOE doesn't expect inflation to peak until next year. To tighten or not to tighten Where the BOE could see some relief is in the core inflation rate, which is expected to tick lower to 6.4% from 6.5% prior, the first drop in months. This is likely to have more of an impact on monetary policy, since the BOE appears to be worried about tightening too much, which could impact liquidity in the financial sector. With the government looking to cut spending, liquidity could be even tighter. So, if core inflation starts to move lower (or moves down faster than the market anticipates, like it did in the US), then that opens the very real possibility the BOE could let up on the tightening. That would weaken the pound, and push cable lower.
Orbex's Jing Ren talks macroeconomic events of the week 14/11-18/11

Orbex's Jing Ren talks macroeconomic events of the week 14/11-18/11

Jing Ren Jing Ren 14.11.2022 14:40
14 November 2022 Are we there yet? Falling inflation pops up risk assets GBPUSD awaits budget catalystThe pound edges higher as Britain may look to restore markets’ confidence with a new budget. Sterling has recouped losses from the September budget firesale. Traders are awaiting a new announcement while riding on the dollar’s softness. Heightened volatility could be expected this week as British finance minister Jeremy Hunt presents his plan to fill a £50 billion fiscal hole. After the market sanctioned Mr Kwarteng’s unfunded tax cuts, fiscal discipline with a mix of public spending cuts and tax rises would alleviate worries about Britain’s finances. 1.2300 is the next hurdle as the recovery goes on. 1.1150 is the closest support. USDJPY tumbles on lower inflationThe Japanese yen soared over the prospect of a narrowing interest differential with the US counterpart. Following months of parabolic ride, a weaker US CPI finally gave traders an excuse to exit an overcrowded trade. The market has been watching Japan's falling foreign reserves and pondering whether Tokyo would commit more of its war chest to prop up its currency. But now a greater fall than the one from Japanese authorities’ intervention indicates that prolonged weakness has released the reversal tension, making the yen the main beneficiary of the dollar’s retreat. 137.00 is the first support and 144.00 a fresh resistance. UKOIL struggles as China’s demand worriesOil markets cheered after China announced an easing of some of its COVID curbs. Brent crude has been going sideways over demand concerns. China’s zero-COVID policy and a resurgence in infections in major cities remain a thorny problem. Now that the manufacturing centre of Guangzhou has become ground zero, expectations of a slowdown in China’s activities and its appetite for the commodity put the buy side on the defensive. Meanwhile, global supply has kept up with US crude stocks surprisingly rising to a 16-month high. The supply demand imbalance may cap the price under 105.00. 84.00 is a key support to monitor. NAS 100 recovers on renewed Fed pivot hopesThe Nasdaq 100 bounced back as hopes of peaking inflation took a foothold. With US CPI coming in below 8% for the first time in eight months, investors have regained faith in a policy U-turn by the Fed sooner than later. Plunging Treasury yields suggests that the central bank could live with a 50bp rate hike in December, rather than a 75bp one. However, the bounce could be opportunistic as it might take multiple sets of data over the next few months to make the Fed change its mind. The pivot may only happen when there is a consistent deceleration in inflation. The index is heading towards 12800 with 10500 as a fresh support. Key data release (GMT time) Monday, 14 November BoE Monetary Policy Report Hearings 23:50 Gross Domestic Product Tuesday, 15 November 00:30 RBA Meeting Minutes 07:00 ILO Unemployment Rate 10:00 Gross Domestic Product       Wednesday, 16 November 07:00 Consumer Price Index 13:30 Retail Sales BoC Consumer Price Index Core Thursday, 17 November 00:30 Unemployment Rate
14 November 2022	USD struggles for bottom

14 November 2022 USD struggles for bottom

Jing Ren Jing Ren 14.11.2022 08:52
USDCHF probes August’s lowThe US dollar sank as traders reassessed the Fed’s stance in light of cooling inflation. A sharp fall below the daily support at 0.9740 prompted more buyers to bail out. Then strong momentum below 0.9500 was a sign that the reversal has caught the bulls off-guard, causing a mass liquidation. August’s low of 0.9370 is the next support but buyers could be wary of catching a falling knife. A bearish breakout would pave the way for a slide towards 0.9300. The support-turned-resistance 0.9500 is the first hurdle when the dust settles.EURGBP meets supportThe pound found support from upbeat GDP in Q3. The pair has been looking to hold onto its recent gains above 0.8780, which is a prerequisite before a sustained recovery could materialise. The latest retracement came to a rest over the previous low at 0.8700, a sign of robust interest in keeping the single currency’s edge. A close above 0.8820 could attract momentum and trigger a runaway rally above 0.8900, confirming a bullish reversal in the process. On the downside, 0.8650 is a second line of defence in case of hesitation. SPX 500 tests resistanceThe S&P 500 flies high fuelled by the Fed pivot optimism. The vertical rise above 3900 confirms the bullish MA cross on the daily chart, suggesting an acceleration to the upside. The index is testing the psychological level of 4000, which is also a former support from a mid-September sell-off. A breakout would put the September peak of 4150 within reach. The RSI shows an overextension and may prompt intraday buyers to take profit in the supply zone. The resistance-turn-support at 3900 would be the first level to monitor.
14 November 2022	Are we there yet?	Falling inflation pops up risk assets

14 November 2022 Are we there yet? Falling inflation pops up risk assets

Jing Ren Jing Ren 11.11.2022 16:28
GBPUSD awaits budget catalystThe pound edges higher as Britain may look to restore markets’ confidence with a new budget. Sterling has recouped losses from the September budget firesale. Traders are awaiting a new announcement while riding on the dollar’s softness. Heightened volatility could be expected this week as British finance minister Jeremy Hunt presents his plan to fill a £50 billion fiscal hole. After the market sanctioned Mr Kwarteng’s unfunded tax cuts, fiscal discipline with a mix of public spending cuts and tax rises would alleviate worries about Britain’s finances. 1.2300 is the next hurdle as the recovery goes on. 1.1150 is the closest support.USDJPY tumbles on lower inflationThe Japanese yen soared over the prospect of a narrowing interest differential with the US counterpart. Following months of parabolic ride, a weaker US CPI finally gave traders an excuse to exit an overcrowded trade. The market has been watching Japan's falling foreign reserves and pondering whether Tokyo would commit more of its war chest to prop up its currency. But now a greater fall than the one from Japanese authorities’ intervention indicates that prolonged weakness has released the reversal tension, making the yen the main beneficiary of the dollar’s retreat. 137.00 is the first support and 144.00 a fresh resistance.UKOIL struggles as China’s demand worriesOil markets cheered after China announced an easing of some of its COVID curbs. Brent crude has been going sideways over demand concerns. China’s zero-COVID policy and a resurgence in infections in major cities remain a thorny problem. Now that the manufacturing centre of Guangzhou has become ground zero, expectations of a slowdown in China’s activities and its appetite for the commodity put the buy side on the defensive. Meanwhile, global supply has kept up with US crude stocks surprisingly rising to a 16-month high. The supply demand imbalance may cap the price under 105.00. 84.00 is a key support to monitor.NAS 100 recovers on renewed Fed pivot hopesThe Nasdaq 100 bounced back as hopes of peaking inflation took a foothold. With US CPI coming in below 8% for the first time in eight months, investors have regained faith in a policy U-turn by the Fed sooner than later. Plunging Treasury yields suggests that the central bank could live with a 50bp rate hike in December, rather than a 75bp one. However, the bounce could be opportunistic as it might take multiple sets of data over the next few months to make the Fed change its mind. The pivot may only happen when there is a consistent deceleration in inflation. The index is heading towards 12800 with 10500 as a fresh support. Key data release (GMT time) Monday, 14 November BoE Monetary Policy Report Hearings 23:50 Gross Domestic Product Tuesday, 15 November 00:30 RBA Meeting Minutes 07:00 ILO Unemployment Rate 10:00 Gross Domestic Product Wednesday, 16 November 07:00 Consumer Price Index 13:30 Retail Sales BoC Consumer Price Index Core Thursday, 17 November00:30 Unemployment Rate
11 November 2022	USD turns south

11 November 2022 USD turns south

Jing Ren Jing Ren 11.11.2022 08:31
USDJPY breaks key supportThe US dollar crumbled after data showed a deceleration in last month’s inflation. Its recent vertical ascent might just need more breathing room. After hovering above 145.10, a sharp fall suggests a mass liquidation from a crowded long trade. As the RSI sank deeply into oversold territory, the price is testing the trough at 140.50 from late September. A valid breakout would put the greenback on a correction course in the medium-term with 138.00 as the target. 144.00 is the first resistance should the price action stabilises.EURAUD capped by recent highThe Australian dollar rallied as risk appetite made its way back. The pair has been looking to consolidate its gains after it broke July’s high at 1.5400. The new demand zone above 1.5280 and over the 30-day moving average has seen a resurgence of buying interests. However, a bounce above 1.5520 was short-lived and now the ball is in the buyers’ court. 1.5400 is an important line to keep the current rebound valid. Its breach would lead to a retest of 1.5280. 1.5500 is a fresh hurdle before the single currency could bounce back.XAGUSD tests major resistanceSilver climbs as the US dollar retreats across the board. A rally above October’s high of 21.20 may have put the precious metal back on track. The psychological level of 22.00 at the start of a sell-off last summer is a major hurdle ahead. A bullish breakout could lay the groundwork for a reversal in the medium-term. However, a bearish RSI divergence indicates a potential loss of momentum as the price grinds the supply zone, where profit-taking could weigh on short-term direction. 20.50 would be the first support.
10 November 2022	XAU awaits catalyst

10 November 2022 XAU awaits catalyst

Jing Ren Jing Ren 10.11.2022 08:35
AUDUSD consolidates gainsThe Australian dollar steadies as inflation expectations beat estimates. After the pair found support over 0.6270, a lack of new lows suggests the sell-off has lost steam. Then a close above the major supply area 0.6520 may have reversed the situation by putting the bears on the defensive. The RSI’s double top may cause a pullback as momentum buyers take profit. 0.6400 is the first support and 0.6340 a key level to keep buyers interested. A bounce back above 0.6520 would extend the recovery towards 0.6650.XAUUSD tests key resistanceBullion pulls lower as traders reposition ahead of US inflation data. The price has recouped losses from the October sell-off and is now retesting the daily resistance at 1730. A break above this ceiling could relieve the bearish pressure in the weeks to come and send gold to 1800. Until then, a strong cap could be expected from a mix of profit-taking and fresh selling. The RSI’s overbought condition might temper the enthusiasm and 1680 is the closest support in case the precious metal starts to take a breather.USOIL struggles for supportWTI crude plunges over a buildup in US storage. The price turned south after it met stiff selling at the October high of 93.50. A fall below the psychological level of 90.00 has forced some leveraged positions to liquidate. An invalidation of 88.00 is more worrisome as it indicates a lack of follow-up bids. 84.50 is the last support to gauge the bulls’ commitment. A bearish breakout would deepen the correction towards 81.00. 88.50 is a fresh resistance and the bulls will need to reclaim 91.50 before they could turn things around.
9 November 2022	EUR may break higher

9 November 2022 EUR may break higher

Jing Ren Jing Ren 09.11.2022 08:31
EURUSD tests resistanceThe euro rallies as September’s retail sales in the eurozone beat expectations. A close above 0.9950 has prompted some sellers to cover their positions. Then a tentative break above 1.0090 shows strong buying interest which could dictate the market’s next move. A valid breakout would propel the single currency to September’s high at 1.0190, a supply area from a previous sell-off, shifting sentiment to the optimistic side. As the RSI goes overheated, the demand zone near 0.9980 is the level to monitor in case of a pullback.CADJPY awaits breakoutThe Canadian dollar drifts lower as oil prices hit resistance. The latest rally came to a halt in the sell zone around 109.00. Still, on the daily chart, sentiment is extremely bullish after the loonie hit a 8-year high (106.50). The bulls may look at the recent consolidation as an opportunity to accumulate. 108.00 is the immediate support and 107.20 is the lower band of the range and a critical floor to keep the price afloat. A rally above the psychological level of 109.00 may resume the uptrend above 110s.UK 100 holds onto gainsThe FTSE 100 treads water over sluggish prospects for the housing sector. A bullish MA cross on the daily chart suggests an acceleration of the rally. The index is consolidating its gains after lifting offers around 7330 at the origin of a sell-off in mid-September. 7200 is the first level to gauge the strength of buying interest with 7080 as a second line of defence. A bounce back above 7340 is likely to carry the price action to the previous peak at 7500, which could be a step closer to reverse the bearish course in the medium-term.
8 November 2022	USD continues to retreat

8 November 2022 USD continues to retreat

Jing Ren Jing Ren 08.11.2022 08:41
NZDUSD pushes higherThe New Zealand dollar inches higher over rising inflation expectations. The latest pullback has found solid support over 0.5740, near the base of a bullish breakout. A higher high above 0.5900 indicates that the bulls have retained control of the direction. A bullish MA cross on the daily chart foreshadows an acceleration to the upside. The psychological level of 0.6000 is a key hurdle ahead. Its breach could trigger an extended rally towards 0.6160. 0.5820 is the first support in case the kiwi needs some breathing room.EURGBP consolidates gainsThe euro steadies as a survey showed that investor morale in the euro zone improved. A sharp rise is a sign of short-covering and a close above the supply zone around 0.8760 may have eased the pressure on the single currency. This might offer the bulls hopes that the uptrend is still intact in the medium-term. The RSI’s double top in the overbought area caused a pullback as intraday buyers took profit. 0.8650 is an important level to expect follow-up interests. A rally back above 0.8780 would confirm a bullish continuation.US 30 grinds higherThe Dow Jones 30 rallies as Republicans are favoured to win the midterm elections. The index slowed down near 33000, at the start of a sell-off in late August. Profit-taking was not enough to drive the price south, which suggests robust pressure from the buy side. A close above 33000 would shake out remaining selling interests and pave the way for a rally to August’s peak at 34200, which is the boundary between a bear and a bull market. In the meantime, an overbought RSI may limit the upside with 32400 as the closest support.
Oanda's Kenny Fisher talks US dollar against Canadian dollar

Greenback went down as the US unemployment rate goes higher, loonie got stronger

Jing Ren Jing Ren 07.11.2022 08:33
USDCHF struggles for support The US dollar plunged after data showed a higher US unemployment rate in October. A break below 1.0000 could prolong the consolidation as the parity level has been acting like a magnet, pulling the price back and forth. With the RSI deeply in the oversold area. Trend followers may see the pullback as an opportunity to stake in. 0.9920 is the first support and 0.9840 a critical level to keep the price afloat. 1.0020 is a fresh resistance and a bounce above 1.0140 could pave the way for a rally to a six-year high at 1.0350. USDCAD breaks critical support The Canadian dollar soared after solid jobs data raised bets for a large-sized rate hike by the BoC. The pair has been struggling to hold onto its gains above October’s lows (1.3500), which was a critical level to keep the rally relevant in the short-term. A previous rally came under pressure in the supply zone around 1.3800, then a fall below 1.3600 revealed that the bears have regained control. A dip below 1.3500 would extend losses towards 1.3400. An oversold RSI may cause a limited rebound with 1.3600 as the first hurdle. GER 40 breaks major ceiling The Dax 40 rallies as mixed US jobs data lift risk appetite across asset classes. The index previously met stiff selling pressure near September’s high around 13450. A combination of profit-taking and fresh selling in this supply zone has weighed on the short-term price action. But the fallback has only shaken out weak hands and the swift recovery with a higher high indicates that the bulls are still in play. The bullish breakout could lift offers to the August high (13950). 13100 is the support should the Dax need some breathing room.
The China’s Covid Containment Continued To Negatively Impact The Output At The End Of 2022

Is China "Reopening"? The Forex Impact

Jing Ren Jing Ren 04.11.2022 16:19
China's covid policy hasn't led to a nation-wide lockdown, so it's more of a metaphor to talk about "reopening". However, the economic impact from a shift in the current zero-covid policy could be seen as a parallel to when other countries "reopened" in 2021 (and then were subject to renewed restrictions with the omicron variant). More importantly, the change in policy in China is expected to have global implications. So far, changes haven't been officially confirmed, so here are some things to keep in mind ahead of any possible changes. The latest Overnight, there were unverified twitter reports that the Chief Scientist at China's CDC Zeng Guang had said that economic development would be prioritized over covid prevention. This followed prior speculation about when China would pivot away from zero-Covid policy. Reports circulated earlier in the week that China had formed a commission to revise policy related to coronavirus, but that policy wouldn't change until March. Note that in March is when the new leaders appointed following the last CCP Congress take office. It was also reported yesterday that Chinese officials were modifying how covid restrictions were communicated in order to reduce the impact. Reportedly, officials were privately talking to certain businesses and locations to curb covid spread, instead of making broad public announcements. But they are still rumors… Chinese health authorities are scheduled to hold a press conference on "targeted covid prevention" tomorrow. Many speculate this could be an opportunity to announce either a new policy, or to tweak existing policy in a way that would substantially reduce the economic impact. There had been rumors for a while that China could start relaxing covid measures after the CCP Congress, but that didn't materialize. As of yet, there hasn't been any confirmation that a change in policy is imminent, though that might come as soon as over the weekend. The implications China's economy has been significantly impacted by a combination of the zero covid policies and the near collapse of the housing market (which is also attributed to issues around covid). The mere rumor that restrictions could be lifted in a few months' time sent markets in China shooting higher. The rolling lockdowns created uncertainty around which industries and areas might suddenly be affected, slowing investment. A formal acknowledgement that zero-covid would be replaced with a policy that did not include lockdowns would likely substantially support the Chinese economy - and increase demand for imported goods, particularly from Japan, New Zealand and Australia. The outlook Slowing growth in China is one of the factors contributing to an expected global recession in the coming months. That contributed to lower oil prices, as well as other commodities. But a return of consumer demand could give China similar headaches as other countries: rising inflation and the need for the PBOC to start tightening policy. With the housing market already in trouble, higher interest rates could make the internal economy a little shakier. But increases in productivity could help global supplies. And the stronger yuan could support increased imports of raw materials.
4 November 2022	GBP under pressure

4 November 2022 GBP under pressure

Jing Ren Jing Ren 04.11.2022 08:39
GBPUSD turns lowerThe pound tumbled after the BoE warned of a protracted downturn. The price lost steam near September’s high (1.1700) and a break below 1.1440 sent buyers packing, turning it into a resistance. A lack of bids at the base (1.1300) of a recent bullish breakout is a warning sign that sentiment has gone cautious. 1.1100 is an important support and after the RSI sank to the oversold area, a ‘buying-the-dips’ behaviour could be expected. However, its breach could make Sterling vulnerable to renewed selling pressure.USDNOK lifts resistanceThe US dollar retains the momentum from the hawkish Fed meeting. The pair has been in a flag-shaped consolidation after it broke above April 2020’s high at 10.8000. The optimism remains intact in the medium-term and the latest catalyst rally could be a signal for a bullish continuation. A surge above 10.5500 has flushed out short interests. 10.7000 is a key resistance and a breakout would cause a runaway rally above 11.0000. 10.4000 is the immediate support on a pullback after the RSI showed overextension. NAS 100 tests critical floorThe Nasdaq 100 slumps as fewer US jobless claims reinforces the tightening agenda. Previously, a tentative break below 10900 weakened the bulls’ position. A failure to achieve a new high above 11650 shows that the path of least resistance would be down. A sharp drop below the said support has definitely knocked out the buy side. A rebound is likely to be capped by 11060. 10450 would be the last level to salvage the situation. A bearish breakout could trigger a new round of sell-off and effectively resume the bear market.
Lawsuit against Alphabet isn't that crucial right now. Investors are worried by something else

The US labour market data may play a vital role again. What do we learn from ADP?

Jing Ren Jing Ren 03.11.2022 14:24
The US labor market has taken a bit of a back seat as the Fed focuses everything on getting inflation down. But, that might be about to change. There are some signs that traders need to be aware of for when the Fed might suddenly return to worrying about its second mandate. This is particularly relevant in the context where there is increasing speculation around when the Fed will start slowing its rate hikes.   As inflation was rising, the concern was that a price-wage spiral would develop. But for over a year now, wages have not even kept up with inflation, let alone pushing it forward. As higher interest rates bite, and more and more companies report that they will slow hiring, the next concern is when will the labor market flip. That is, more people seeking work than there are jobs for them.   Looking into the details The latest BLS survey shows that there were 10.7M job openings in September. But there were only 6.1M seeking work. Despite there being over 4.6M jobs than there are jobseekers, there still hasn't been a major increase in average wages. But, over the last couple of months, that gap has started to close. The ratio, on the other hand, has not, with the number of jobseekers to offers matching multi-decade lows. This reflects a trend where the number of job offers has been falling, and so has the number of people looking for work. One of the assumptions over the last few months has been that as inflation rises, more people would be prompted to seek work. But the participation rate has remained stubbornly just above 62%, and is forecast to remain there in the latest data release. As long as the number of job openings remains above the number of unemployed, and the participation rate remains low, the jobs market is likely to remain off the Fed's radar. What to look out for Before the pandemic started, an NFP number of around 200K job adds was considered normal, and would be expected to keep the Fed happy. This time around, NFP are forecast to come in at 200K, down from 288K as last reported. The unemployment rate is expected to tick up to 3.6% from 3.5%, which could give some people deja vu from 2019. But a deeper dive into the figures shows some worrying signs. The ADP jobs survey was released yesterday, and is still not considered predictive of NFP despite the new methodology. However, it does prove some interesting understanding of the jobs market, and what we might see in some of this month's NFP components. The bottom line ADP showed that the bulk of job creation was in the leisure and hospitality sectors, which is to be expected in the middle of summer. However, those jobs tend to be lower paid, and that likely contributes to the expected slowing growth in average hourly wages. That was also reflected in BLS data, showing that job openings increased in accommodation and food services, but declined in manufacturing. In other words, the jobs market continues to be tight in the areas of lower skilled, lower pay. But people who wish to switch to higher paying jobs are starting to struggle. That doesn't mean the labor market is loose, but it could be soon.
US dollar recoups losses as Fed warns of the higher-than-expected "ultimate" interest rate target

US dollar recoups losses as Fed warns of the higher-than-expected "ultimate" interest rate target

Jing Ren Jing Ren 03.11.2022 08:33
USDCAD finds strong support The US dollar recovered after the Fed cautioned that rates could go higher than expectations. The rally has come to a halt in May 2020’s consolidation area. A combination of profit-taking and fresh selling has weighed on short-term sentiment. A tentative break below the daily support 1.3500 has put the bulls under pressure. A bearish breakout would force them to bail out and trigger a deeper correction below 1.3300. 1.3750 is the first resistance and the bulls will need to clear 1.3850 before the uptrend could resume. XAUUSD hits resistance Gold softened after the US dollar regained strength post-FOMC. After the price gave up all the gains from its rally in early October, the latest rebound met stiff selling pressure near the support-turned-resistance 1670. A long bearish wick suggests a rejection of this level. As wrong-footed traders scramble for the exit, 1618 is key in keeping the precious metal afloat. Its break would signal a bearish continuation in the days to come. 1645 is a fresh obstacle where the bears could be looking to double down on the prevailing pessimism. UK 100 struggles for support Equities turned south after the Fed sees a pause in tightening as premature. The FTSE reversed its course at a former support (7200) on the daily chart. The recent rally could use some breathing room after it broke above the daily resistance at 7100. After the RSI swung back into oversold territory, 7080 is the first level to gauge the strength of follow-up interests. The psychological level of 7000 would be an important support to keep the bulls interested. 7200 is a fresh peak and a bullish breakout would carry the index to 7330.
Inflation slowdown may let Reserve Bank of Australia go for 50bp or inaction

Jing Ren talks strengthening USD to Japanese yen, tempered AUD to US dollar and NZD/USD

Jing Ren Jing Ren 02.11.2022 08:41
USDJPY seeks to recoverThe US dollar consolidates over growing expectations of a slower pace of tightening by the Fed. On the daily chart, the greenback is above the 30-day moving average and may continue to attract trend followers. The latest bounce came under pressure in the supply zone around 149.00, which means that the price action is still in a consolidation mode. 146.00 is the first support as the RSI ventures into oversold territory. Further down, 145.00 is an important level and its breach could trigger a deeper correction towards 143.00. AUDUSD hits resistanceThe Australian dollar softened after the RBA stuck with a mere 25 basis point rate hike. The pair has found strong support over 0.6200. Three consecutive failures to break lower by the bears indicate that the path of least resistance could be up. A series of higher lows contributes to the mounting buying pressure. 0.6370 is a fresh support and 0.6300 the bulls’ second layer of defence. October’s high and daily resistance 0.6530 is a key hurdle. Its breach would cause the short side to cover and trigger an extended rally towards 0.6660. NZDUSD follows rising trend lineThe New Zealand dollar slid after the Q3 unemployment rate fell short of expectations. A rising trend line indicates a strong bullish bias as the kiwi continues to recover. A break above the double top and daily resistance at 0.5790 prompted sellers to cover, easing the downward pressure. The rally then accelerated above 0.5880 after a brief consolidation with 0.5970 as the next target. The RSI’s overbought condition may cause a limited pullback. Buying interests could be expected near 0.5800 over the trend line.
1 November 2022	EUR seeks support

1 November 2022 EUR seeks support

Jing Ren Jing Ren 01.11.2022 08:24
EURUSD falls backThe euro retreats over muted GDP growth in the eurozone. The price action is hovering around parity in an attempt to hold onto its recent gains, a sign of the bulls’ strong attachment to this symbolic level. The selling pressure has waned after the pair closed above 0.9990, which could shift short-term bias to the upside. 0.9850 next to the MA cross on the daily chart is an area of congestion. A bounce above 1.0010 might resume the recovery towards September’s high at 1.0180. 0.9710 is the bulls’ second line of defence.XAGUSD grinds supportSilver slips as the dollar index recoups recent losses. The price has stabilised over the daily support and psychological level of 18.00. A series of higher highs led sellers to cover their positions. The market is in a post-swing consolidation until a breakout on either side lifts momentum once again. 19.60 is the immediate resistance and its breach could carry the precious metal to the previous peak around 20.80. 18.80 is a fresh support and the zone between 18.00 and 18.30 is a critical floor to keep the current rebound intact.US 30 tests resistanceThe Dow Jones 30 inches higher as investors await the Fed's policy meeting. A short squeeze above the September high at 32600 has put the bears on the defensive. Heightened volatility shows that wrong-footed traders were looking to bail out. As the index climbs back towards August’s high, 33100 at the origin of a previous sell-off is the next hurdle. The RSI’s overbought condition may trigger profit-taking and a pullback from this demand-turned-supply area. 31900 is the first level to gauge the strength of follow-up bids.
31 October 2022	Dax nears inflection point

31 October 2022 Dax nears inflection point

Jing Ren Jing Ren 31.10.2022 09:16
USDCHF bounces backThe US dollar rose after stronger-than-expected consumer spending in September. Its retreat came to a halt at 0.9840 near the 30-day moving average. A bullish RSI divergence showed a deceleration on the way down. Such an indication in a demand zone carries significance. With overall sentiment still pointing to the upside, the bulls’ may have been eager to load on the pullback. A close above the previous supply area (0.9950) could attract more buying interests. The rally may resume should the greenback reclaim 1.0050.EURJPY edges higherThe Japanese yen continues to struggle as the BOJ maintains its yield cap. A sharp fallback has given the euro some respite after it pushed past September’s high at 145.50, now a fresh support. 143.80 at the base of a previous breakout so far has proved to be a solid support, suggesting strong interest in keeping the yen in check. The current consolidation may have only shaken out weaker hands. The bulls might have the last word if they manage to lift 147.70. A runaway rally would send the single currency towards 150.00. GER 40 tests key resistanceThe Dax 40 rallied after data showed the German economy avoided a contraction in Q3. The index has been climbing a rising trendline, a sign of risk appetite in the short-term. After a series of higher lows, a close above 13100 further cemented the upward bias and may attract more followers. The start of the September sell-off (13500) is a major obstacle, where profit-taking and fresh selling could be expected. However, its breach could extend the reversal in the weeks to come. 13050 next to the trendline is the first support.
31 October 2022	Benefit of the doubt 	Market gives financially savvy UK PM respite

31 October 2022 Benefit of the doubt Market gives financially savvy UK PM respite

Jing Ren Jing Ren 31.10.2022 08:29
GBPUSD rebounds as UK budget delayedThe pound bounces as the new premiership instils a sense of stability. Former Chancellor Sunak becomes Britain’s Prime Minister as Sterling recovers from the budget disaster. The new finance-relevant leadership gives investors hopes of better plans to tackle the mounting economic crisis. Volatility is likely to rise leading up to the new budget in mid-November. As for now, all eyes are on the BoE to deliver a 75bp hike which may add further stress to the economy. How far the rally may go would depend on how fiscal and monetary policies play out in these turbulent times. 1.1700 is the first resistance and 1.0950 a fresh support.AUDUSD weakens on dovish RBAThe Australian dollar slips as the RBA may continue to reduce the pace of monetary normalisation. The recent bounce has more to do with a pullback in the US dollar rather than a shift in sentiment. The RBA is expected to lift its feet off the pedal with another 25 basis points hike this week. However, as inflation reaches a 32-year high, policymakers are under pressure to stay assertive. The upside risk would be a 50bp hike. Still, the contrast with the US Fed, which might deliver a fourth consecutive 75 bp rate hike in November, could keep the aussie subdued and under 0.6530. A fall below 0.6200 would lead to 0.6000.UKOIL steadies on solid demandBrent crude bounces higher as demand remains strong despite economic worries. There is definitely some optimism in the air. Recession concerns have abated with traders hoping for a less aggressive stance from the Fed amid weaker US data. Record US crude exports indicate that global demand has kept up. Meanwhile, Western allies’ price cap on Russian oil may have limited impact as it would be designed to keep the supply flowing. However, feeble growth in China, the world's biggest energy consumer, could be a major headwind in the medium-term. The price is consolidating between 84.00 and 105.00.NAS 100 struggles as risk mood ebbsThe Nasdaq recouped some losses in hope of a turnaround in the Fed’s tightening cycle. Bad news is good news these days. Signs of a slowdown in the world's largest economy would cool expectations of sustained rate hikes by the central bank. A dovish hike from the Bank of Canada may feed hopes that the Fed could be nearing the pivot point. A retreat in Treasury yields could divert more liquidity into riskier assets. Should investors’ risk mood make its way back, growth-sensitive tech names would be the first beneficiaries. Until then, 12000 is a key hurdle and caution could drive the index to the psychological level of 10000. Key data release (GMT time) Monday, 31 October 00:30 Retail Sales 07:00 Retail Sales 10:00 Gross Domestic Product HICP Tuesday, 1 November 03:30 RBA Interest Rate Decision 14:00 ISM Manufacturing PMI 21:45 Unemployment Rate 23:50 BoJ Monetary Policy Meeting Minutes Wednesday, 2 November 12:15 ADP Employment Change 18:00 Fed Interest Rate Decision 18:30 FOMC Press Conference Thursday, 3 November 00:30 Trade Balance 12:00 BoE Interest Rate Decision 14:00 ISM Services PMI Friday, 4 November00:30 RBA Monetary Policy Statement12:30 Nonfarm Payrolls Unemployment Rate
28 October 2022	S&P 500 struggles for support

28 October 2022 S&P 500 struggles for support

Jing Ren Jing Ren 28.10.2022 08:41
EURUSD takes a breatherTraders took profit in the euro after the ECB raised its interest rates by 75 basis points as expected. A rally back to parity indicates strong interest in defending the historical exchange level. The price hit resistance at 1.0090 near September’s high (1.0200) and the current drawdown would allow the bulls to take a breather. 0.9940 from a previous breakout is the closest area to expect renewed buying as the RSI swung into the oversold area. A bullish breakout could lead to an extended recovery in the days to come. USDJPY seeks supportThe Japanese yen weakens as the BoJ maintains its ultra low rates. The RSI’s double top in the overbought area on the daily chart was a strong sign of overextension. A sharp fall below 150.00 has triggered a wave of liquidation. Now that short-term leveraged buyers are out of the picture, the pair is looking for an area of accumulation as medium-term sentiment remains bullish. 145.00 near the consolidation back in early October is a key support. 147.30 is the first resistance and its breach could help the greenback recover. US 500 hits resistanceThe S&P 500 softened as the US GDP beat expectations in Q3. A close above October’s high at 3800 prompted sellers to cover, easing the pressure on the index. The support-turned-resistance at 3900 is a major hurdle and its breach could trigger a bounce back to 4100. However, the RSI’s repeatedly overbought condition caused a pullback as buyers started to take some chips off the table. 3730 is a key area to expect follow-up interests. Otherwise, the index could be vulnerable to a correction towards 3640.
It's not clear we find out the results of mid-term elections immediately. Binance to buy FTX

US crude oil exports up, New Zealand dollar supported by risk appetite, Canadian dollar "softened"

Jing Ren Jing Ren 27.10.2022 08:41
USDCAD tests key support The Canadian dollar softened after the BoC surprised the market with a smaller-than-expected rate hike. On the daily chart, the rally came to a halt in the supply zone from May 2020 under 1.4000. The greenback is testing the recent low at 1.3500, a key level to keep short-term buyers interested. A lack of bids suggests that traders could be wary of chasing after an already high exchange rate. A breakout would force the bulls to bail out and trigger a deeper correction with 1.3360 as the next target. 1.3640 is the closest resistance. NZDUSD bounces higher The New Zealand dollar climbs as soft US data raises risk appetite. The daily resistance at 0.5810 has been capping the recent price action. But a ‘buy-the-dips’ behaviour off March 2020’s low (0.5500) has offered the kiwi effective support. A series of higher lows indicates growing buying pressure. A bullish breakout would prompt sellers to cover their bets, paving the way for an extended rally should momentum pick up. 0.5880 would be the next stop and 0.5730 at the base of the breakout the first support in case of a pullback. USOIL finds support WTI crude rallied after data showed a rise in US crude exports. The price has stabilised near a 3-week low (82.00). A bullish MA cross on the daily chart suggests a potential acceleration to the upside. Cautious traders may wait for a bullish breakout as a form of confirmation. After a break above 87.00, sentiment would only start to shift in the bulls’ favour if they succeed in pushing past the support-turned-resistance at 89.80. 85.00 is a fresh support and 82.00 an important floor to keep the current bounce valid.
The EUR/USD Market Did Not React To Economic Indicators From The Eurozone

It seems that European Central Bank will hike the interest rate by 75bp

Jing Ren Jing Ren 26.10.2022 09:05
Tomorrow the ECB meets for its latest policy assessment. The consensus among economists is that there will be a hike of 75bps, and the market appears to be pricing it in. Therefore, the reaction in the currency pairs might be minimal, since over two-thirds of the surveyed economists agreed. Those who didn't were split between 50bps and 100bps, with the midpoint at 75. That means markets are likely to be looking beyond the current meeting, with expectations around what happens in December likely the key to how the pairs perform. The Euro has fallen respect to the dollar for two major reasons: The ECB has been much slower to raise rates, and inflation has gone higher in the shared economy. That means the real interest rate spread has continued to grow. With the Fed expected to raise rates another 75bps as well, the ECB has to keep pace in order to keep the Euro from falling. It would have to do something more than that to lift the shared currency. What can make a stronger Euro? The thing is, a stronger Euro would help the ECB reach its targets in the current circumstances. Almost half of the inflation experienced in Europe is because of the high price of fuel - which is priced in dollars. A stronger Euro would help reduce the impact of inflation from that source. It would also help reduce the cost of other imports. Of course, on the other hand, it would make exports more difficult, but the Euro is near lows it hasn't seen for more than a couple of decades. However, that's unlikely to be a consideration for policy; merely a potential beneficial side effect. The ECB is dealing with another problem, and that is so called "excess liquidity". Investors have been staying on the sidelines given the uncertainty in Europe. And considering how little bonds pay, they aren't rushing to buy up debt. With inflation expected to remain high for an extended period of time, but interest rates not forecast to rise to compensate, it's just not a sound investment to buy Eurobonds (compared to other currencies). What to look out for The ECB is expected to address this issue during the meeting, and look for another mechanism to mop up this "extra cash" that's contributing to higher inflation. One of them is quantitative tightening, which is to sell bonds that the ECB has bought up. This would be expected to force up market interest rates, and encourage investors to take on more debt. However, Lagarde has insisted this won't happen until the ECB has reached its neutral rate, meaning it's unlikely to be implemented just yet. However, a change in rhetoric around the possibility of QT - for example, that it's not necessary to reach the neutral rate - might change the calculus of the market. It's not likely to be enough to push the Euro substantially higher, but it could set the groundwork for that to happen later in the year. The other option is to take a more definitive stance on what's called the "terminal rate" or the rate at which the ECB will taper off hikes. So far, officials have talked about reaching 2.0% by the end of the year. With 75bps expected tomorrow, that means just 50bps in December. But if members were to talk about a higher terminal rate, it could get bond yields to rise as well. But, again, that would be more setting the groundwork for future actions, in a very uncertain environment.
The Market May Continue To Buy The Pound (GBP) This Week

Australian dollar supported by CPI, gold up. In the UK FTSE 100 seems to feel better as BoE is predicted to take its foot off the gas

Jing Ren Jing Ren 26.10.2022 08:45
AUDUSD grinds higher The Australian dollar finds support from strong CPI in Q3. From the daily chart’s perspective, sentiment remains extremely bearish and the latest rebound could be a mere flag-shaped consolidation near moving averages. The pair has met stiff selling pressure at the support-turned-resistance (0.6400). Its breach on a second attempt means that the bulls will be challenging 0.6540 before they could turn the mood around. Or a dip below 0.6300 could trigger a new round of sell-off below the critical floor at 0.6210.   XAUUSD attempts to bounce Bullion strengthens as a decline in US home prices weighs on Treasury yields. Gold saw bids at the previous low (1615) and a surge above 1660 may have prompted some short interests to cover. A rally fueled by profit-taking will not be enough to reverse the price action unless the precious metal secures follow-up buying. 1670 used to be a demand zone from a rally earlier this month and has become a key resistance. Its breach would carry the price to the previous high at 1730. A break below 1615 would push gold to 1570.   UK 100 tests resistance The FTSE 100 bounces as traders bet on a slowdown in the hiking cycle. The index has clawed back losses from previous sessions but the bias remains down. The price action is testing the supply zone between the 30-day moving average and the daily resistance at 7100 where strong pressure could be expected after the market edged into bearish territory. 6880 is a fresh support and 6820 the short-term bulls’ second line of defence. Their breach would invalidate the latest rebound and send the index below 6700.
The Loonie Pair (USD/CAD) Takes Clues From The Downbeat Oil Prices

BOC, BOJ Rate Decisions This Week

Jing Ren Jing Ren 25.10.2022 18:03
The consensus among analysts is that the BOC will raise rates another 75bps, leaving the target rate at 4.0%. Lately, Canada has been "leading" the Fed since its meetings are scheduled before its southern neighbor's. Since both countries are facing similar situations, what the BOC does is often interpreted as a little foreshadowing of what to expect out of the Fed. Therefore, if the BOC doesn't deliver on expectations, it could shake confidence in the consensus that the Fed will also raise rates by 75bps. Canadian economic data has been doing relatively well over the last couple of weeks, which is seen supporting a strong move by the BOC. But there just recently was a fly in the ointment: US flash manufacturing PMIs fell into technical contraction this month. Canada doesn't have a comparable flash reading, meaning that the situation there could be similar, but it just isn't known. Canada first to pivot? Another difference is that Canada has had core inflation slowly falling unlike the US, but still above expectations. That has raised expectations that even though the BOC is expected to hike, it will do so "dovishly". That is, after the rate hike, Governor Macklem will tone down expectations of further aggressive hikes during his post-rate decision. The BOC releases the monetary policy report (MPR) at the same time as the rate decision, and that's likely to be poured over to find any clues about when the "pivot" will happen. If the bank lowers its economic projections, then that is likely to be taken as a sign that the next rate hike won't be as aggressive. Or that the BOC might even pause in December. How long can the BOJ stay put? Despite all that's been happening with the yen lately, the BOJ is expected to keep monetary policy unchanged when it meets later in the week. Inflation has been rising in Japan, but not enough to shake the banks' extreme easing position. But that doesn't mean that Kuroda couldn't influence the market in his extensive press conference following the meeting. As the yen has weakened over the last several months, calls have risen for the BOJ to do something. There have been at least two interventions so far to stop the slide in the currency. Although it's the BOJ who does the intervention, it's at the direction of the Ministry of Finance, which has allowed the central bank to remain aloof from the currency situation. What can be done The BOJ is currently applying a series of easing tools, from negative rates, to yield curve control to buying bonds. Although it could reverse course on any of those, should the BOJ decide to take measures, it most likely would come with first removing yield curve controls, since they are the least orthodox policy and would likely be interpreted as the least change in policy. However, it's not likely that will be decided at this meeting. But it could be something that Kuroda hints at during the press conference that could finally move the yen in a more permanent direction. Otherwise, smaller interventions might be the course, which would only increase speculation of coordinated action in the future.
Investors' Concerns About The Coming Recession In The UK, Will GBP/USD Pair Reach Its Lowest Level In History?

Jing Ren (Orbex) comments on USD/CHF, euro to British pound and Dow Jones

Jing Ren Jing Ren 25.10.2022 08:42
USDCHF in consolidation The US dollar stays muted over lacklustre manufacturing and services PMI. The bullish bias remains intact as the greenback consolidates its gains around parity. Buyers may see the sideways action as an opportunity to accumulate at a better price. 0.9930 at the base of the previous breakout coincides with the 20-day moving average, making it a congestion area. Further down, the daily support at 0.9790 would be the bulls’ second level of defence. A close above 1.0140 may attract momentum buying and send the pair towards 1.0300. EURGBP heads lower The pound weakens as traders stay wary of political and economic uncertainties in Britain. The rebound came under pressure at 0.8780 at the origin of a mid-August sell-off. A bearish MA cross on the daily chart suggests a shift in sentiment, and the euro could be vulnerable unless it clears the said resistance. A bullish breakout may trigger an extended rally above 0.8850. The demand zone between 0.8580 and 0.8650 is a major level to keep the single currency afloat, or a deeper correction might send it below 0.8450. US 30 gains momentum The Dow Jones 30 rallies as weaker US business activity in October rekindles hopes of a dovish Fed. From the daily chart’s perspective, a pop above the support-turned-resistance at 31000 is a sign of strong buying interest in the short-term. A series of higher lows may encourage the bulls to extend upwards, further squeezing the short side. After clearing 31300, the index is heading to September’s high at 32600. The RSI’s overbought condition may cause a limited retracement with 30900 as the first support.
Bank's of Japan intervention effect seen on EURJPY price line. Picture of DAX ahead of ECB decision

Bank's of Japan intervention effect seen on EURJPY price line. Picture of DAX ahead of ECB decision

Jing Ren Jing Ren 24.10.2022 08:41
GBPUSD finds bids The US dollar softened after Treasury Secretary Yellen said inflation was not entrenched. After receding from the previous high at 1.1500, the pound found support at the base (1.1100) of the current rebound. This is a sign of solid interest in keeping Sterling afloat. An oversold RSI has attracted some bargain hunters. A break above 1.1500 would cause a short squeeze and raise short-term volatility. Then September’s high and a major daily resistance at 1.1710 could be in sight. A fall below 1.1100 may resume the downtrend. EURJPY seeks support The yen surged after Japan intervened for the second time in a month. A fall below 146.70 forced some buyers to bail out but has barely dented the bullish bias. The overall rally had accelerated after it broke above September’s high at 145.00. A bullish MA cross on the daily chart is a sign of increasing momentum and buyers would rather see the pullback as an opportunity. 143.50 next to the 20-day moving average is a fresh support, and a close above 148.30 would carry the pair to December 2014’s high at 149.70. GER 40 bounces higher The Dax 40 bounces back as traders take profits ahead of another rate hike by the ECB. Sentiment has improved a bit after the bulls managed to push past 12670, prompting the opposite side to cover. The current phase of recovery will see whether there is enough follow-up interest in a sustained reversal. 12550 at the base of the breakout is a key support. A close above 12930 could pave the way for a rally back to 13200 then September’s high at 13500. A bearish breakout, however, would send the index back to 12320.
24 October 2022	Time to blink? 	Yen's decline reflects BoJ’s dilemma

24 October 2022 Time to blink? Yen's decline reflects BoJ’s dilemma

Jing Ren Jing Ren 21.10.2022 16:02
USDJPY rallies as BoJ might stay dovishThe Japanese yen weakens as quantitative tightening remains a remote prospect. As its currency sank to a 32-year low, the Bank of Japan’s ultra-loose monetary policy has become increasingly at odds with the finance ministry’s view. The central bank may still deem it premature to shift away from the status quo given heightened global uncertainties. The latter, however, concerned by the yen’s unidirectional slide and its negative impacts on corporations, may choose to intervene in the market again, popping up short-term market moves. The greenback is heading towards 155.00 with 144.00 as the closest support.EURUSD slips as energy crisis hinders inflation fightThe euro remains under pressure as the ECB is expected to raise rates by 75bp. The energy price pressure in the euro zone has been a significant headache for policymakers. With inflation reaching five times the ECB’s target last month, the central bank may have little choice but to go down the path of rapid rate increases. However, unlike other major peers, the ECB will need to keep bond spreads in check or risk another debt crisis in peripheral countries. Needless to say, such a rock and hard place situation makes the euro hardly an attractive asset to hold onto. 0.9540 is a fresh support and parity (1.0000) is a psychological hurdle.USDCAD steadies ahead of BoC hikeThe Canadian dollar struggles as the risk appetite ebbs and flows. Consumer price pressures in Canada remain high and above forecasts despite a slight deceleration in September, which would call for another large-sized rate hike by the BoC this week. A 50-basis point hike would be the bare minimum while markets are leaning towards a 75bp move. Still the central bank’s hawkish stance might not be enough to shift overall sentiment. A recovery in oil prices temporarily offers the commodity-linked currency a little edge against the greenback. 1.3500 is the first support and 1.4300 could be the next target. SPX 500 falls as Fed remains hawkishThe S&P 500 slides as investors refrain from adding risk. Upbeat quarterly earnings offer stocks limited support as bearish sentiment continues to drive the price action. Hawkish comments from Fed officials mirror strong US job data and high inflation, reinforcing expectations the central bank will not divert from its aggressive path. With cash offering historic risk-free returns these days, most investors would like to see signs inflation is slowing down before jumping in with both feet. Until then, sporadic rallies would only feed the bears. The index may tank to a two-year low at 3280 with 3800 as the immediate resistance. Key data release (GMT time) Monday, 24 October 07:30 S&P Global/BME Composite PMI S&P Global/BME Manufacturing PMI 08:00 S&P Global Composite PMI 08:30 S&P Global/CIPS Services PMI Wednesday, 26 October 00:30 Consumer Price Index 14:00 BoC Interest Rate Decision 15:00 BoC Press Conference Thursday, 27 October 12:15 ECB Monetary Policy Decision 12:30 Durable Goods Orders Gross Domestic Product Annualized 12:45 ECB Press Conference Friday, 28 October03:00 BoJ Interest Rate Decision06:00 BoJ Press Conference Gross Domestic Product 12:00 Harmonized Index of Consumer Prices
21 October 2022	JPY keeps falling

21 October 2022 JPY keeps falling

Jing Ren Jing Ren 21.10.2022 09:29
USDJPY grinds rising trendlineThe Japanese yen slips over rumours of an intervention once again by the authorities. The pair has been climbing along a rising trendline after it broke above the previous high at 145.80. As the price clears the psychological level of 150.00, the bullish continuation could carry the greenback to August 1990’s high at 151.20. Though the overextension may have prompted some buyers to take chips off the table. 149.50 on the trendline is the first level to gauge buyers’ interest in case of a pullback. EURGBP tests resistanceThe pound whipsawed after Truss announced her resignation as Britain’s prime minister. The euro has found support at the base (0.8580) of a bullish breakout in early September. The support-turned-resistance at 0.8760 is the first obstacle and its breach would lift offers to 0.8850, a major resistance before a full-blown recovery could materialise. The RSI’s overbought condition has limited the buying pressure, and 0.8650 is a fresh zone for accumulation. Further down, a fall below 0.8580 would invalidate the month-long rally NAS 100 seeks supportThe Nasdaq 100 softened after Fed officials said the central bank would keep raising rates. The price action is struggling to claw back its previous losses. The latest bounce has met stiff selling pressure in the supply zone around 11350 next to the 30-day moving average. 10730 is an important support to keep the current rebounce relevant. 11650 would be the target should the bulls manage to hold onto their gains, putting an extended recovery within reach. However, a bearish breakout could trigger a sell-off below 10450.
The Bank Of Canada Raised Interest Rates By 25bps, The EIA Data Showed An Unexpected Rise In US Crude Inventories

Canadian Retail Sales and Future of Commodity Currencies

Jing Ren Jing Ren 20.10.2022 14:15
As fears of a recession start to settle in, commodity currencies have been on the backfoot despite offering comparably better real rates. Canada has been a particular example of this phenomenon, with its dollar weakening despite a more aggressive rate hiking path than the Fed. The most recent survey of businesses showed further deterioration in optimism, with the majority expecting and preparing for a recession in the coming quarters. Industrial production prices and in particular raw material prices have been declining, a sign that inflation might be on the way down. At least, some time in the future. The most recent CPI unexpected increased, and the annual rate was above expectations. Nevertheless, the consensus among economists is that the BOC will be looking to slow down its rate hikes. There is a generalized problem The shift in expectations from the BOC comes fast on the heels of a similar shift in another commodity Commonwealth country: Australia. The RBA's softening move at the last meeting caught investors by surprise, and they seem determined to not be surprised by the BOC this time. Investors are concerned about rising interest rates causing tightness in money markets, as market makers are unwilling to borrow in order to finance investments in falling stock markets. This is forcing central banks, particularly in commodity currencies, to reevaluate their stance on tightening. Prices are slipping Australia's exports have remained steady all year, but the price of commodities have been coming down. Canada is experiencing a similar situation, with the US buying as much crude as possible to make up for Russia being excluded from the market. But, despite OPEC+ cutting production targets a couple of weeks ago, crude prices have been falling. With less remittances to Canada to pay for exports, the Canadian dollar is less attractive when compared to its neighbor's currency. Add to that the possibility the BOC might be pulling back on the tightening, there is reason to expect that the loonie will be weaker going forward. Making things difficult The problem is that a weaker currency means that imported products become more expensive and increase inflationary pressures. This is particularly relevant for countries like Canada and Australia, because they don't have the economies of scale to domestically produce a significant amount of consumer goods. It's even more relevant for smaller countries, such as New Zealand. Higher inflation coupled with increased borrowing costs would be expected to undermine consumers, which would put the economy more at risk, further weakening the currency. Commodity currency traders, therefore, would do well to be particularly interested in retail sales figures from their respective countries. Canada reports September retail sales tomorrow which are expected to drop to 6.5% growth compared to 8.0% prior. Reminder, Canada's annualized inflation in that period was 6.9%.
20 October 2022	GBP remains under pressure - 20.10.2022

20 October 2022 GBP remains under pressure - 20.10.2022

Jing Ren Jing Ren 20.10.2022 09:24
GBPUSD seeks supportThe pound holds steady as Britain’s inflation rose to 10.1% in September. From the daily chart’s perspective, the pair is forming a flag-shaped pattern after its recent sharp slide. While Sterling clawed back some losses, the directional bias remains bearish in the medium-term which may attract more trend followers. 1.1500 is an important ceiling and its breach could lift offers to September’s high at 1.1700. 1.1070 at the base of the latest rally is a key support. A bearish breakout would send the price back to 1.0760.USDCAD consolidates gainsThe Canadian dollar softened after the annual CPI eased to 6.9% in September. The price action is consolidating its latest gains after making a new high above 1.3840. A drop below 1.3700 has shaken out some weak hands but overall sentiment still points to the upside. The bulls may see the current pause as an opportunity to join the rally. 1.3660 is the first support while 1.3500 on the 30-day moving average is a key level to see follow-up interests. On the upside, a close above 1.3900 would resume the uptrend.USOIL attempts to bounce backWTI rallied after US inventories showed a surprise drawdown. While the rally above 86.00 and 90.00 has eased some pressure, the price hit resistance at the origin (93.50) of the late August sell-off and struggled to secure bids. This suggests that the bears may have doubled down. 81.50 is the immediate support and its breach would cause a retest of 77.00 where the crude could be vulnerable to a new round of liquidation. 87.00 is the first hurdle in case of a rebound and only a rally above 90.00 may turn the mood around.
The World's Leading Economies Not Doing Well And This Is Keeping High Demand For USD

What May Earnings Of e.g. Amazon (AMZN), Tesco And Walmart Mean To Inflation And, In Consequence, To Forex Market?

Jing Ren Jing Ren 19.10.2022 14:22
Last Friday saw the unofficial start of Q3 earnings season. Over the next month, most major corporations around the world will provide updates to investors on profits and give an outlook for the rest of the year. CEO's will comment on the state of their business, and what of particular interest to forex traders, the general economic environment. Forex, of course, depends on the underlying economic situation. But multinational corporations are also the main drivers of cash flows between different currencies as they pay for products, make investments and repatriate profits. Central banks and governments respond to economic conditions faced by businesses, which also impacts the value of their respective currencies. "Headwinds" is the term of the season Many US firms have pre-announced results, in an unusual move. Virtually all of them have warned of negative results for the quarter. This is one of the factors driving US stocks lower. Among the reasons cited are "currency headwinds". That is, the US dollar has been strengthening over the last several months, and profits generated overseas are worth less in dollar terms. The Fed's policy of pushing rates higher to fight inflation has outstripped most other currencies, making it difficult for US exporters. Importers, on the other hand, are seeing increased profits thanks to relatively cheaper imported goods. The result is that the trade balance will likely be increasingly negative, contributing to outflows of US currency. As long as the economic uncertainty persists, this is unlikely to affect the dollar. But, downward pressure is building on the dollar, which could be released at any moment when the Fed's policy starts to soften. Sequential over comparable Traditionally, companies compare current earnings to the same period in the prior year. This helps avoid seasonality effects. However, last year was the middle of the delta covid wave, which would likely distort the "comparable" earnings. "Sequential" earnings are the difference between the current quarter and the previous one, which could take priority. Given the unusual situation, companies can be reporting knock-out comparable earnings, but disappointing sequential ones. Particularly travel and leisure stocks, given the shutdown of air travel last year. European firms in particular were facing an increasingly challenging environment because of energy prices, which peaked at record highs over the last three months. However, since then, energy prices have cratered. They are still well above pre-war and pre-pandemic levels, but substantially lower. Therefore, the reports for European firms could be extraordinarily negative, and not represent the current (or future) situation. This could lead to further "paradoxical" behavior in the market, as traders’ price in the effects of energy prices into earnings. The focus is still on retail With monetary policy focusing on inflation, consumer behavior is likely to have the biggest impact on forex. Big retail firms like Walmart in the US, Casino in Europe, Tesco in the UK can give some critical insight into consumer behavior. Amazon and Alibaba can do so globally. Companies being able to pass on higher costs to consumers implies inflation can continue. As companies are starting to see margin compression as consumers refuse higher prices, it could mean that inflation is near its peak due to demand destruction. Speaking of demand destruction, recession concerns can be read into earnings reports. Particularly in regards to the item of inventories. If companies are seeing their stock build up, they will be less likely to buy replacements. That in turn means inventory building up in other companies, who will buy less raw materials. In general, it implies slowing economic activity, and could be the precursor to layoffs. Company comments on inventories could be market moving this season.
Analysis Of USD/CHF Pair: The Swiss Currency Pair Rebounds

US Dollar (USD): Unsupportive Risk Appetite. Jing Ren (Orbex) Comments On USDCHF, XAUUSD And UK100

Jing Ren Jing Ren 19.10.2022 11:18
In this article: USD/CHF Gold Price UK 100 USDCHF takes breather A regain in risk appetite keeps the US dollar in check. A drop below 0.9960 led intraday buyers to take profit. The price is taking a breather after it broke above the double top at 1.0040, a key resistance on the daily chart. The bullish breakout may have paved the way for an extended rally in the medium-term. The current pullback might be an opportunity for the bulls to stake in. 0.9880 over the 20-day moving average is the first support and the RSI’s oversold condition may attract bids. A close above 1.0030 would resume the uptrend. XAUUSD seeks support Bullions steadies as the US dollar softens across the board. After meeting stiff selling pressure in the supply zone (1730), the precious metal has been struggling to hold onto its recent gains. The trend remains bearish and may bring in more followers to depress the price action. 1615 is a critical level to keep the rebound relevant and its breach would trigger a new round of sell-off to April 2020’s low at 1570. The support-turned-resistance 1670 is the first level to crack then the real challenge would be to lift 1730. UK 100 tests resistance The FTSE 100 inches higher on improved risk sentiment. A break above 6900 prompted some short interests to cover, easing the downward pressure. A series of higher lows would further boost buyers’ confidence and send the index to the daily resistance at 7100 where a breakout could extend the recovery towards 7300. In the meantime, an overbought RSI may cause a limited pullback with 6912 as the closest support. Further down, 6820 is the bulls’ second line of defence to keep the price action afloat. Our comment on today's UK Inflation Print:  
The CNY Is Expected To Strengthen Against The Dollar As The Economy Picks Up And The US Enters A Recession

China GDP and Industrial production

Jing Ren Jing Ren 18.10.2022 23:17
The recent slide in the yuan currency with respect to the dollar has slowed. The official rate is being set lower (implies stronger yuan), and it emerged earlier today that major state banks have been buying their currency (and selling dollars) on the spot market. This is seen as an attempt to shore up the currency, which has lost substantial ground through October as the dollar strengthened in the face of economic uncertainty. It's also notable that this move comes ahead of the release of key economic data from China, expected tomorrow. China is the first major economy to report quarterly GDP figures, and there is likely to be a lot of attention on it. Q2 was significantly adversely impacted by rolling lockdowns, but those pressures are supposed to have eased in the third quarter. Even though some cities have had lockdowns, they haven't been in the same length or impacted major industries like the ones in the first half of the year. And the presumption is that companies have adjusted to work around some of the restrictions. Supporting growth Additionally, the Chinese government took a series of measures to boost access to capital and to support the domestic market. Therefore, if GDP figures come in below expectations, it could have a larger impact. That's because it would imply the underlying economy without the support from the government is worse, and that support measures aren't having as much effect as expected. Chinese Q3 quarterly growth is expected to accelerate to 3.5% compared to -2.6% prior. This would push the annual GDP growth rate up to 3.4% from 0.4%. That's below the semi-official target of 5.0% for this year, but still a substantial improvement. Global implications China as the world's largest manufacturing economy is a barometer for economic performance, particularly in the third quarter. Consumer demand around the world increases during the final quarter of the year, which means that Chinese firms ramp up production in the third quarter to fulfill orders. This is necessary to sustain commodity prices. Chinese September Industrial Production is expected to accelerate to 4.5% annualized growth from 4.2% prior. If the growth comes in line, it likely will support current views of the global economy. But underperformance in this indicator opens up a worrying question: Would slowing Chinese production be due to internal issues, or due to lack of global demand? Other indications Chinese September retail sales are expected to drop substantially to an annualized growth of 3.3% compared to 5.4% in August. This despite the expected increase in retail buying ahead of the week-long natural holiday. China's September unemployment rate is also expected to tick up to 5.4% from 5.3% in August. That would imply a reversal of the trend seen since the peak of the lockdowns in April, and before the employment situation has returned to prior year levels.
AMZN: Is The Primary Wave Ⓐ An Impulse Or A Leading Diagonal?

AMZN: Is The Primary Wave Ⓐ An Impulse Or A Leading Diagonal?

Jing Ren Jing Ren 18.10.2022 23:16
The structure of AMZN shares shows the development of a corrective trend. It is assumed that a zigzag is formed, which consists of sub-waves a-b-c of the cycle degree. Perhaps at the end of last year, the market completed the formation of the first major wave a, it is a bullish 5-wave impulse. After the end of the impulse growth, the price began to decline, which may indicate the beginning of a bearish correction b. It may take the form of a zigzag â’¶-â’·-â’¸ of the primary degree. Most likely, in the near future we will see a continuation of the depreciation of stocks in the final intermediate wave (5), which may end the primary impulse wave â’¶ near 92.78. At that level, wave (5) will be at 76.4% of previous impulse (3). After the end of the impulse wave â’¶, we expect the stock to grow in the primary correction â’·. An alternative scenario is possible, where the market has completed the formation of the primary wave â’¶. According to this markup, the wave â’¶ has the form of a leading diagonal (1)-(2)-(3)-(4)-(5). In this case, in the last section of the chart, we see the price increase in a bullish correction â’·. It is assumed that the correction wave â’· will take the form of an intermediate double zigzag (W)-(X)-(Y), where the actionary wave (W) is also a double zigzag W-X-Y of a lesser degree. It is possible that the correction â’· will be at 61.8% of wave â’¶. Thus, its completion is expected to reach the level of 154.93.
EuroZone and UK September Inflation Figures

EuroZone and UK September Inflation Figures

Jing Ren Jing Ren 18.10.2022 23:15
Despite all the attention on the mini-budget and the political fallout, the BOE still has to fight rising inflation. It will meet two weeks from now to decide on the next course of action. With the release of the data tomorrow, markets can get back to considering concrete data points and the evolution of monetary policy. More immediately is the release of EuroZone inflation data because the ECB meets next week. There has been a flurry of commentary from MPC members ahead of the blackout period, with somewhat contradictory statements about just how far the central bank will raise rates. Hawks have moderated their positions, while doves have said that the rate hiking is far from over. Inflation data could be the deciding factor here. What to look out for First to announce is the UK, which comes out with a barrage of data just before the market open, as usual. Headline UK inflation is expected to tick back up to 10.0% from 9.9%, which would be just one decimal away from the recent high of 10.1% in July. Given the tight range of recent results, a relatively small miss from expectations could have an outside impact. That's aside from the psychological effect of the inflation rate returning to double-digits. Naturally if inflation comes in just two decimals above expectations, it would beat the prior high. That could affirm worries that the peak hasn't been reached yet (something the BOE has already warned about). On the other hand, a miss of two decimals would show a continuation of the downward trend over the last three months and provide some relief to the markets. The underlying figures that matter The BOE focuses more on the Core inflation rate for policy decisions, and that is expected to continue its recent trend higher at 6.4% compared to 6.3% in August. Expectations that the UK is not out of the woods in terms of price increases is expected to be affirmed with PPI output remaining at 13.7%. Across the channel, the situation in the EuroZone is expected to show increased justification for tighter policy. The annual inflation rate is expected to be confirmed at double digits for the first time since the currency was adopted, at 10.0%, up from 9.1%. That is driven by an acceleration of the monthly rate to 1.2% compared to 0.6% in august. The outlook hasn't changed much EuroZone core inflation rate is expected to be confirmed at 4.8% compared to 4.3% prior. The rise in prices is seen primarily as a product of higher energy costs filtering through the economy. If prices aren't rising primarily because of monetary policy, it's hard for monetary policy to control the increase and stabilize prices. Earlier today it was reported that the BOE would delay the implementation of QT (selling gilts) due to market conditions. The low interest rates in the Eurozone are creating a similar problem, where investors are keeping to the sidelines ahead of expected economic turmoil. This makes policy tightening even more challenging, even as inflation continues to rise. Therefore, it's likely that a consensus ahead of the ECB's decision might not solidify.
18 October 2022	AUD bounces back

18 October 2022 AUD bounces back

Jing Ren Jing Ren 18.10.2022 08:27
AUDUSD attempts to recoverThe Australian dollar finds support as the RBA minutes suggest more rate hikes to come. An oversold RSI on the daily chart shows exhaustion in the sell-off. A tentative break above 0.6340 has prompted some sellers to cover their positions, easing pressure on the aussie. Though the bears may be eager to fade rebounds. Short-term sentiment would remain downbeat unless the bulls manage to lift 0.6430 on the 20-day moving average. A fall below 0.6200 would extend the downtrend towards the psychological level of 0.6000.NZDUSD finds some respiteThe New Zealand dollar claws back losses on upbeat Q3 CPI. The pair is hovering above March 2020’s low at 0.5500 which has triggered a ‘buying-the-dips’ behaviour. The support-turned-resistance 0.5700 from a previous rebound is the first hurdle. The daily resistance at 0.5810 coincides with the 30-day moving average, making it an area of interest where stiff selling pressure from trend followers could be expected. A break below the critical floor at 0.5500 would signal a bearish continuation towards 0.53s.US 30 breaks resistanceThe Dow Jones 30 rallies over the optimism about Q3 corporate earnings. The double bottom at 28700 is a sign of solid buying to keep the index afloat. A close above 30400 next to the 30-day moving average would flush out selling interests and possibly attract momentum buyers. As the bulls regain confidence, 31300 would be the next target with 29650 as a fresh support. However, this could be a mere flag-shaped consolidation from the daily chart’s perspective as the index is in bear market territory.
17 October 2022	USD attempts to bounce

17 October 2022 USD attempts to bounce

Jing Ren Jing Ren 17.10.2022 08:33
EURUSD in brief consolidationThe US dollar consolidated over flat retail sales in September. The euro has struggled to secure bids after it turned lower from the daily resistance and parity level. Sentiment would remain bearish unless the buy side manages to push past this ceiling. In the meantime, the pair is testing the demand zone between 0.9540 and 0.9650. A close above the recent support-turned-resistance 0.9810 would lift the price to 0.9900. On the downside, a bearish breakout would renew the selling pressure and send the single currency to 0.9450.GBPJPY tests major resistanceThe pound steadied after the firing of the UK’s finance minister. A rally above the previous high at 165.50 has prompted sellers to cover their positions. Improved sentiment leans towards a bullish continuation. September’s high at 167.80 is the last hurdle and a breakout would pave the way for an extended rally above 170.00 in the days to come. The RSI’s overbought situation may cause a temporary pullback to test the bulls’ commitment. 164.50 and 162.30 are the two levels to expect accumulation.GER 40 struggles to bounceEquities slide as global uncertainties keep investors on their toes. The Dax 40 found support at the base of the bullish breakout (12000) from earlier this month. 12600 near the top of a previous rebound is a key resistance. Its breach would signal strong buying interest and trigger a bounce in the short-term. Otherwise, the market would remain cautious and the bears may double down for lack of opposition. A revisit of 12000 could put the current rebound at risk and extend losses to a two-year low at 11400.
17 October 2022	Buyer of last resort	BoE to contain gilt crash and save Sterling

17 October 2022 Buyer of last resort BoE to contain gilt crash and save Sterling

Jing Ren Jing Ren 14.10.2022 15:39
GBPUSD slides amid gilts firesaleSterling drifts lower amid a liquidity crunch in the UK’s gilt market. In an attempt to prevent the market’s collapse, the Bank of England has been forced to step in to buy back bonds owned by the country's major pension funds. The systemic risk is yet to dissipate and investors would rather cut their pound exposure. Reduced liquidity and headline catalysts mean that extreme volatility could be expected ahead. Governor Andrew Bailey has called for an end to the emergency support. But traders hope the central bank will extend the lifeline or another market rout may push the pound below 1.0500. 1.1700 is the first resistance.USDCAD rises on safe-haven demandThe Canadian dollar slips as markets’ pessimism takes a toll on risk-sensitive currencies. Canada's falling unemployment rate would encourage the BoC to ramp up interest rate increases. Another hot inflation reading this week may offer some support to the loonie. However, Canada is a major producer of oil, and its currency highly depends on the global economic outlook. Worries of a widespread recession engineered by central banks would dampen the prospect of a swift recovery. The risk-off environment would continue to favour the safe-haven greenback which is heading towards 1.4200. 1.3500 is a fresh support.XAUUSD weakens as cash yield soarsBullion struggles as the US dollar hits a 20-year high. The precious metal has definitely failed its traditional role as an inflation hedge which ironically has been fulfilled by cash these days. Investors have rotated into cash to capture soaring interest rates. As US inflation remained near 40-year highs, there is no sign of a slowdown in the tightening. Calling a top in the dollar would be tantamount to standing in front of a train. Repeated statements from Fed officials to maintain the course of action would keep casting a cloud over anything commodity-related. The bounce off 1615 might be short-lived and 1730 is the closest resistance.NAS 100 slips as uncertainties compoundThe Nasdaq 100 stays under pressure as the Fed would not yield. In a textbook ‘buy the rumour, sell the news' equity markets clawed back some losses following higher-than-expected US CPI. Another 75bp rate hike seems to be a done deal. The negativity already had been priced in, triggering short-covering instead. More volatility could be expected ahead as the market's grim fundamentals remain unchanged. The IMF has warned that compounding pressures from inflation, geopolitical instability and high interest rates could cause a global recession. Uncertainties may drive the index to 10000 and 11700 is the first resistance. Key data release (GMT time) Tuesday, 18 October 00:30 RBA Meeting Minutes Wednesday, 19 October 06:00 Consumer Price Index 14:30 BoC Consumer Price Index Core Thursday, 20 October 00:30 Unemployment Rate Friday, 21 October08:30 S&P Global/CIPS Services PMI12:30 Retail Sales
Why UK Bond Crisis Spooked Other Central Bankers

Why UK Bond Crisis Spooked Other Central Bankers

Jing Ren Jing Ren 14.10.2022 14:59
The sudden drop in the pound and the emergency intervention by the BOE is largely attributed to the release of Chancellor Kwarteng's "mini-budget", at least in the media. That gives the impression that the issue is exclusively a UK problem, derived from fiscal policy. But, that doesn't explain why other central banks, such as the RBA and, most recently, members of the ECB's governing council, would consider modifying their policy because of what is going on in the UK. Although the precipitating event was the uncertainty in UK finances brought to light by the "mini-budget", it brought to light another significant problem: Lack of liquidity. And that goes beyond the UK. With the BOE facing down hedge funds backed up by the Chancellor, the risk of a "black swan" event that could trigger a broader global financial crisis has become elevated. The surprising remarks At its last meeting, the RBA didn't raise rates as much as expected, citing several reasons. Among them was the situation in the UK bond market. It didn't really cause much alteration in the market, as the consensus at the time was that the BOE would handle the situation. Earlier today, however, a prominent ECB hawk came out to downplay the aggressiveness of future rate hikes in the EuroZone. He suggested that a neutral rate could be around 2.0% for the ECB, well below rates already achieved by the peers. Although he didn't comment on the UK situation directly, he echoed words by Spain's de Cos yesterday, who warned that shocks for the downside scenario had materialized. What are those? Where's the money European financial markets have already been facing a major issue that has necessitated bailouts: The energy crisis. Energy firms had hedged future contracts to maintain steady supply by collateralizing their holdings. The sudden spike in energy prices drained substantial amounts of liquidity as energy firms were forced to increase collateral to avoid margin calls. A similar situation happened with the pension funds, which were forced to put up more liquidity to defend their hedges that were collateralized by UK debt. However, the sudden spike in interest rates suggested that there was very little interest in buying bonds. The combination of global uncertainty and high inflation makes holding debt paying relatively low rates for extended periods of time a bad investment. The potential crisis "Liquidity" is what keeps the markets going. It means that if someone needs to sell an asset, there is someone who wants to buy it. That maintains stability. Because, if there isn't anyone to buy an asset that's for sale, then the price gets lowered until someone is willing to buy. Rising interest rates drain liquidity, because it encourages people to not hold cash. If there is a crisis of liquidity, it means that markets could suddenly fall, as the lack of buyers triggers stops, forcing the market down. Typically, talk of lack of liquidity precedes a major market collapse, and the need for central banks to step in. That might not be the situation at the moment, but given concerns over liquidity, central bankers might be more hesitant to continue tightening. Even if the data (such as inflation) indicate that rates should keep rising.
14 October 2022	USD in temporary retreat

14 October 2022 USD in temporary retreat

Jing Ren Jing Ren 14.10.2022 08:37
NZDUSD tests resistanceThe US dollar whipsawed as high inflation persisted in September. On the daily chart, the pair has taken a breather after the RSI went deeply into the oversold area. Sellers’ profit-taking would not be enough to lift the kiwi in a meaningful manner. Stiff pressure could be expected near the support-turned-resistance at 0.5700 which sits on the 20-day moving average, making it a congestion area. Sentiment would turn around only if 0.5810 is out of the way. On the downside, March 2020’s low at 0.5500 is a critical floor.XAGUSD seeks supportSilver steadies as the greenback consolidates across the board. The price has been struggling to consolidate its latest gains after meeting strong selling interest in the supply zone around 21.00. The precious metal is at a crossroads as it falls back to the origin of the rally at 18.50. The bulls may find relief in a bounce above 19.60. That would bring back the fading optimism and pave the way for a recovery to 20.50. A bearish breakout, however, would invalidate the rally and extend losses below the daily support at 18.00.SPX 500 recoups lossesThe S&P 500 shot up as a hot CPI reading had previously been priced in. The index has given up all previous gains after it came to a halt at 3800. The supply area may have been the last chance to get out for those who bought the dips last summer. This also means that there could be more room on the downside. In the meantime, 3500 at the base of a bullish breakout in November 2020 saw an inflow of buying interests. A pop above 3630 may prompt more intraday sellers to cover and 3730 is the next resistance.
13 October 2022	USD awaits further catalyst

13 October 2022 USD awaits further catalyst

Jing Ren Jing Ren 13.10.2022 08:34
AUDUSD struggles to bounceThe Australian dollar struggles over downbeat inflation expectations. The downtrend accelerated after the aussie cut through the demand area around 0.6400. An oversold RSI caused a rebound as intraday traders started to take profit. Still, the directional bias remains down and the bears could be waiting to double down at a better price. 0.6340 is the first hurdle and 0.6430 a congestion area from the previous brief consolidation. On the downside, a fall below 0.6200 would open the door to April 2020’s low at 0.6000.USDJPY climbs along trendlineThe US dollar steadied after the Fed minutes showed some consideration to the recession risk. The rally gained momentum after the greenback cleared the peak at 145.80. The rising trendline confirms that the uptrend has resumed. A lack of selling would carry the pair to its 24-year high at 147.50. As the RSI shot into the overbought zone, the dollar could use some breathing room. The psychological level of 146.00 on the trendline is the first support and 145.40 at the base of the breakout the bulls’ second line of defence.UK 100 tests critical floorThe FTSE 100 fell due to the spillover of the UK gilt market’s liquidity crisis. The index came under pressure at 7100 on the 20-day moving average. A lack of follow-up support indicates that the bearish mood still prevails and the bulls are wary of a dead cat bounce. They will need to lift 7000 to retain some foothold. On the downside, 6800 is a critical bottom not only from the latest bounce but also last March’s lows. A breakout could trigger momentum selling to 6620 and signal a bearish market in the medium-term.
12 October 2022	USD inches higher

12 October 2022 USD inches higher

Jing Ren Jing Ren 12.10.2022 08:22
USDCHF grinds major resistanceThe Swiss franc bounced after SNB Chairman Thomas Jordan insisted on pursuing the tightening. Following a break above the double top at 0.9870, a bullish MA cross on the daily chart indicates an acceleration to the upside. Strong buying interest has pushed the greenback back to parity. Last June’s high at 1.0040 is sellers’ last stronghold and its breach could resume the uptrend towards 1.0200. The RSI’s overbought condition caused a pullback and the former resistance at 0.9870 is the first level for accumulation.GBPUSD seeks supportThe pound slips as Britain’s pension funds scramble to meet margin calls amid bond firesale. Breaks below 1.1300 and 1.1100 prompted short-term buyers to take profit. As overall sentiment remains downbeat, the lack of support suggests that the bulls might be wary of catching a falling knife. 1.0770 is the next level to see if new buyers would emerge, or Sterling could drift to the base of the recent rebound at 1.0550. 1.1180 is the first hurdle and the bulls will need to clear 1.1380 before a recovery could gain traction.USOIL consolidates gainsWTI softens as China ramps up Covid control in major cities. The rally above the psychological level of 90.00 has briefly lifted the optimism. But the origin (93.50) of the late August sell-off is a tough level to crack. The bulls are looking to consolidate their gains and 87.00 off the recent bullish breakout is the first area to gauge the strength of follow-up demand. If the bid gets hit, more profit-taking would follow and a correction may push the price towards 84.00 in the congestion area that sits over the 30-day moving average.
11 October 2022	USD aims higher

11 October 2022 USD aims higher

Jing Ren Jing Ren 11.10.2022 08:24
EURUSD struggles for bidsThe US dollar keeps advancing thanks to the Fed policy momentum. The latest rally came to a halt at the parity level, a sign that the bears were eager to sell into strength. A fall below 0.9790 further weighs on the mood as buyers rush to the exit. 0.9650 is the next support as the RSI inches into the oversold area. The bulls will need to clear the fresh supply zone around 0.9790 before a rebound could materialise. Otherwise, its breach would indicate a lack of interest in the single currency and put 0.9540 at risk.EURGBP tests resistanceThe pound slips after a loss of confidence in Britain’s government. The euro is still consolidating following a spike above 0.9200. A bounce off 0.8660 at the base of a rally in mid-September suggests a return of buyers after massive profit-taking. 0.8830 is a key hurdle ahead and the sideways action foreshadows an imminent breakout. Its breach could improve short-term sentiment. Then a break above 0.8970 may resume the uptrend in the weeks to come. A bearish breakout however, would deepen the correction towards 0.8500.GER 40 turns southThe Dax 40 struggles as tensions escalate in Ukraine. The index has met stiff selling pressure in the former demand zone (12690) from the daily chart, which also coincides with the 30-day moving average. A combination of profit-taking and fresh selling has triggered a liquidation of short-term long positions. 12100 at the origin of the previous bullish breakout is an important support. Only a rally back above 12500 may turn the situation around or the index could be vulnerable to a new round of sell-off below 11800.
Slowdown In Inflation Is Likely To Produce A Rise In The British Pound (GBP)

Critical Week For British Pound (GBP) - UK GDP And Employment Data

Jing Ren Jing Ren 10.10.2022 15:22
Markets are still digesting the repercussions of the Chancellor's "mini-budget". In the latest move, the BOE increased the amount of authorized buybacks through TECRF facility. That's the intervention launched to shore up the pound in the wake of the announcement of financial reforms. Despite a rebound in the later part of September, cable has resumed its longer-term downward trend against the dollar. However, that has been aided in large part by the unexpected drop in the US unemployment rate, which increased the bets that the Fed would raise rates by 75bps at its next meeting. Now, the main concern surrounding the budget appears to be the uncertainty. In that situation, the market often assumes the worst. As presented, the budget appears to increase spending (which is pro-inflationary), while reducing taxes (which questions the financial stability of the government). The combined response is to expect the BOE to hike rates more aggressively to fend off the expected increase in inflation. Bringing things back to reality Depending on how the "mini-budget" is financed, however, it could allay many of those concerns. The problem is that the key "detail" won't be available until the end of November, and the BOE will have to decide at their next meeting before that. It also opens questions of just how well planned this plan was, since the long wait is ostensibly to figure out where to get the financing for the spending. It doesn't inspire confidence that the government is issuing a plan to increase spending and cut taxes without having first ironed out where the financing for that will come from. In the meantime, there is rampant speculation that the government will cut government expenditures on a wide range of services, from pensions to government employment. That makes investors nervous, and likely would lead to even less popularity of an already unpopular government. The Labour Party, already leading in the polls, would be expected to radically change the financial situation. Getting the data in hand Government spending is included in GDP measures, meaning that if one of the ways to balance the budget is to reduce government outlays, it would put downward pressure on the leading measure of economic growth. Last quarter GDP was revised in the final reading to be barely positive at 0.2%, from a flash reading of -0.1%. On Wednesday, the UK reports August GDP, which is expected to come in at -0.1% compared to +0.2% in July. The BOE has warned that a recession is coming, and now traders are focused on the September data to see if Q3 will be the start of that. Employment figures On Tuesday, the UK will release September Claimant Count numbers, which are expected to show a relatively modest increase to 10K from 6.6K. Remember that the higher the number, the more negative it is for the markets, since it accounts for the number of people seeing unemployment assistance. The total employed figure from the rolling three months to July is also released at the same time, but is unlikely to move the markets despite a surprising forecast. The expected significant drop in employment is due to a technicality, of the unusually high number in April rolling off.
10 October 2022	USD bounces back

10 October 2022 USD bounces back

Jing Ren Jing Ren 10.10.2022 08:33
USDCAD awaits breakoutThe US dollar finds support from a stronger-than-expected jobs report in September. The pair has been consolidating its gains after a vertical ascent lately. An overbought RSI on the daily chart calls for a limited pullback as the bulls might be reluctant to chase after high bids. The price has bounced off 1.3500 and made its way back to the key resistance at 1.3780, where a breakout would signal a bullish continuation. Then the psychological level of 1.4000 could be within reach. On the downside, 1.3650 is the closest support.XAUUSD pulls backGold slipped after the US dollar regained strength over upbeat nonfarm payrolls. The precious metal came under pressure near September’s high at 1730. As the RSI showed exhaustion, a combination of short-term profit-taking and fresh selling has kept the rally in check. A bullish breakout would force sellers out and attract momentum buyers instead, turning sentiment around. But for now, a drop below the round number at 1700 may send bullion to 1660 which is a critical support in keeping the rebound valid.NAS 100 tests supportThe Nasdaq 100 tumbles as the Fed is likely to stick to its aggressive hike policy. The index has previously bounced off its two-year low at 10840 and a break above 11500 temporarily eased the selling pressure. However, a swift U-turn near 11700 might have shattered hopes of a sustained recovery. A fall below 11300 has forced bulls to bail out. The new supply area around 11400 may attract stiff selling from trend followers. A break below 10840 would resume the downtrend and send the index towards 10400.
10 October 2022	UK policy roller coaster	Pound licks wounds as uncertainty persists - 07.10.2022

10 October 2022 UK policy roller coaster Pound licks wounds as uncertainty persists - 07.10.2022

Jing Ren Jing Ren 07.10.2022 16:30
GBPUSD bounces after government U-turnSterling recouped losses after investors found relief in Britain’s reversal on tax cuts. The original plan of a largely unfunded fiscal package had triggered a flight to safety. But buyers of Sterling-denominated assets were quick to return to the table after the government was forced into an awkward U-turn. Meanwhile, the BoE’s emergency intervention in the bond market offered some support. Temporary weakness in the US dollar also helped the pound regain all the lost ground. Still, few would bet on a sustained recovery of the pound as its fundamentals remain fragile. 1.1700 is a fresh resistance and 1.0400 a new low.USDJPY rallies over policy divergenceThe Japanese yen softens as the intervention effect wears off. Its fall is yet to end against the backdrop of monetary normalisation on a global scale. Japanese authorities have signalled more willingness to defend their currencies. However, such measures may only have limited effect. Artificially popping up the yen would not be a game changer as long as the differentials in inflation and interest rates keep widening, and to the extent that US yields outperform Japanese ones. Instead, heightened volatility could further fuel speculative moves. The pair is still on its way to a 24-year high at 147.50. 140.50 is the closest support.USOIL recovers on OPEC supply cutWTI crude rose to a three-week high after OPEC+ agreed the largest output reduction since 2020. A cut of 2 million barrels per day just ahead of peak winter season may put a brake on the downtrend. The surprise decision comes at odds with major economies’ efforts to contain soaring energy costs. The White House may respond by releasing further strategic oil stocks ahead of the midterm elections in November. One major repercussion is that a resurgence in oil prices could dim chances of the US Fed pivoting to a slower pace in rate hikes. The commodity would climb towards 100.00 past 90.00. 76.00 is a fresh support.US 30 weakens as Fed committedThe Dow Jones 30 struggles as a strong US labour market would support the Fed’s hawkish stance. A drop in US yields following a slowdown in the US manufacturing sector in September briefly eased the downward pressure on risk assets. However, the central bank is widely expected to raise rates and keep them in restrictive territory for a while. Portfolio rebalancing in a high interest rate environment is likely to weigh on equities. After all, why would investors risk their skins for stock alphas when the bond market can return 4% a year? The index bounced off 28700 and is testing the former support at 31100. Key data release (GMT time) Tuesday, 11 October 06:00 ILO Unemployment Rate 16:00 SNB's Chairman Jordan speech Wednesday, 12 October 18:00 FOMC Minutes Thursday, 13 October 06:00 Harmonized Index of Consumer Prices 12:30 Consumer Price Index Friday, 14 October12:30 Retail Sales14:00 Michigan Consumer Sentiment Index
7 October 2022	USD bounces back

7 October 2022 USD bounces back

Jing Ren Jing Ren 07.10.2022 09:21
USDCHF awaits breakoutThe US dollar bounces higher as traders bet on the Fed to stay on an aggressive tightening course. With the double top (0.9860) now out of the picture, the directional bias remains up as the greenback consolidates its gains over the 20-day moving average. The narrowing range between 0.9740 and 0.9950 could be a sign of accumulation. A bullish breakout would lift offers back to June’s high at 1.0040, a step closer to resume the uptrend in the medium-term. However, a deeper correction would bring the pair to 0.9620.EURJPY seeks supportThe euro weakened after the ECB minutes showed that a recession was "increasingly likely". A break above 143.50 the origin of a previous liquidation has prompted sellers to cover their bets. This is an indication of strong interest in maintaining the euro’s lead. As the RSI drops back to the neutral area, the former supply zone around 141.40 is the first level to gauge follow-up bids. A bounce would carry the single currency to the recent peak at 145.50. Otherwise, the pair may drift towards 139.30.SPX 500 attempts to bounceThe S&P 500 treads water ahead of the nonfarm payrolls report in September. The index has been looking to claw back some losses after its drop below the critical floor at 3750. Sentiment remains downbeat though there could be short-term opportunities in the current recovery. A rally above 3670 has eased the selling pressure, turning it into a fresh support. 3900 is a major hurdle where the bears could be expected to double down. The bulls will need to clear this supply area before a rebound could gain traction.
Non-farm Payrolls in the US are expected to come in above “normal” once again. That would affirm the notion that the US employment situation remains "hot", and that the Fed can focus on getting inflation down.

Non-farm Payrolls in the US are expected to come in above “normal” once again. That would affirm the notion that the US employment situation remains "hot", and that the Fed can focus on getting inflation down.

Jing Ren Jing Ren 06.10.2022 14:42
The total number of people employed in the US is higher now than it was before the pandemic, suggesting that the jobs market has at least nominally recovered. However, the participation rate, and the share of the population holding down a full time job is less than it was at the start of 2020.The main driversAccording to the latest BLS report, there were over 10.1M job openings, but just 6.0M people looking for a job. The labor market remains extremely tight, but the gap continues to narrow. The implication is that the labor market is heading towards being balanced, though there is still some time to go. The Fed, therefore, has room to keep raising rates, but that room isn't unlimited.Crucially, in August there were 344K jobs created, but the number of open jobs dropped by 1.1M. Meaning that demand destruction is the larger component of the labor market rebalancing. Translated to non-economic speak, that means that more job openings are being closed because businesses are no longer seeking, than because they've hired someone.What it means for the marketsA tight labor market is generally understood to push wages higher, as employers try to attract talent. However, so far this cycle, wage increases have been slower than inflation. Which means that the average real wage has been falling for several months. This could contribute to demand destruction as the average American has less purchasing power. According to the most common economic theory among central bankers and the government, this implies an increased risk of a recession.In fact, because wages aren't growing as fast as inflation, this could motivate the Fed to be even more aggressive in tightening. As long as wages aren't significantly outpacing inflation, then the Fed actually likes labor market tightness, because it supports economic growth, according to them. What to look out forSeptember US NFP are forecast at 250K compared to 344K in August. As usual, the prior month could be revised, and also affect market outlook. Since a "normal" NFP is around 200K, any figure above that is likely to support further Fed tightening and weigh on the stock market.The unemployment rate is expected to remain stable at 3.7%. But, that was also the case last month, when analysts were surprised with an increase in the unemployment rate driven by increased labor force participation. With pocketbooks coming under pressure from inflation, it's not surprising that more people would be out looking for work, which could once again distort the projections.
The USD/CAD Pair Has The Strong Downside Momentum

USD/CAD May Not Feel That Fine After The Release Of Exports, Gold Price May Be Doing The Same As US Dollar Index Has Been Up In The Morning

Jing Ren Jing Ren 06.10.2022 14:42
In this article: USDCAD Gold Price US Crude Oil Price Check out our video comment on RBA decision:   USDCAD consolidates The Canadian dollar struggles over lacklustre August export data. A bearish RSI divergence showed a slowdown in the upward momentum while a double top at 1.3830 further suggested exhaustion in the current rally. The pair is prone to a correction after it fell below 1.3600. The uptrend remains intact but the recent parabolic rise could use some breathing room to let the bulls accumulate again. 1.3420 on the 20-day moving average is an area of interest. The support-turned-resistance at 1.3700 is the first hurdle. XAUUSD hits resistance Gold clawed back losses as the dollar index bounces higher. A sharp recovery has lifted bullion back to September’s high at 1730 which is an important level on the daily chart. As the RSI soared into the overbought area, fresh selling from trend followers in conjunction with profit-taking has kept the rally in check. A bullish breakout would force the short side to cover, stirring up volatility in the process. The psychological level of 1700 is a fresh support and its breach may extend losses to 1660. USOIL tests key resistance WTI crude bounced higher after OPEC+ agreed to cut output. The rebound has gained a foothold after it cleared the supply zone around 83.00. The price is testing the daily resistance and psychological level of 90.00 and stiff pressure could be expected from the sell side. However, sentiment may brighten up in the short-term if the bulls manage to push past this ceiling, clearing the path towards 97.00. As the RSI inches back into overbought territory, 86.00 has turned into a support in case of a pullback.
Euro to US dollar - Ichimoku cloud analysis - 21/11/22

Euro Outlook: Why Price Caps Don't Matter

Jing Ren Jing Ren 05.10.2022 15:08
In the last couple of days, the Euro has been drifting higher, back towards parity. It comes at a somewhat curious juncture, considering the context in the UK. Though, it should be pointed out that yesterday markets jumped higher on expectations that the Fed would pivot sooner than previously expected. This isn't an unusual phenomenon for the markets, to get a dose of optimism after trending downward for over a month. US stocks hit a new low for the year, and bounced back. The dollar weakness would naturally help the Euro. But there's more going on here. Not all spending is the same Last week, the pound took a dive after the Chancellor announced plans for a fuel price cap that could cost up to £200B, and tax incentives that would potentially reduce the UK's tax revenue by £45B. This sent shockwaves through the market, affecting even the rate decision by the RBA, citing turmoil in the UK as one of the reasons for its surprise move to raise rates lower than anticipated. Yet at the end of the week, Germany announced an energy price cap in the order of €200B, while the EU struggles to deal with surging prices. Yet there was no proportional reaction in the markets. Germany reaffirmed its commitment to the debt brake, suggesting possible austerity measures next year. In fact, the Euro got stronger, and there was no hint that the ECB would have to step in. Germany can spend more The debt-to-GDP ratio is an important aspect in how inflationary government spending is likely to be. Germany has a ratio just below the Maastricht guidelines of 59.8% (that's before the pandemic). The UK was much higher at 85.4%. This puts a limit on how high the central bank can raise rates without the cost to service the government's debt significantly impacting the budget. Thus, traders aren't as worried about German government spending. The issue for the Euro, however, is the latest round of negotiations about expanding the capacity of other countries to maintain debt. Most EU countries are not only far from complying with Maastricht rules, but some are also over twice the allowed debt-to-GDP rate, such as Italy. When taken together, the Eurozone’s debt-to-GDP is higher than the UK's. The future trends While the ECB maintains a lower interest rate than the BOE, the debt issue isn't as noticeable. However, there are several indicators that rates will continue to rise, potentially more than in the UK. Inflation is still on the rise, the ECB is worried about "de-anchoring" expectations, and the Euro Zone's GDP grew by a healthy 4.1% last quarter, giving the central bank more headroom. In other words, depending on how the economy evolves, the Euro is not immune from a market reaction similar to what happened to the cable. Probably not in the near term. But, if through the winter the economic situation worsens, governments could seek to increase spending to support consumers and businesses. The EU likely won't have the same chaotic announcement with lack of details that drove a sudden drop in confidence, such as what happened in the UK. In other words, the move might not be as sudden, but it could be as large, and require intervention from the ECB.
5 October 2022	AUD finds respite

5 October 2022 AUD finds respite

Jing Ren Jing Ren 05.10.2022 08:20
AUDUSD bounces backThe Australian dollar struggled as the RBA slowed the pace of tightening with a mere 25bp hike. A previous break above 0.6500 flushed out some selling interests and gave the aussie a little breathing room. The price action has since secured a footing over 0.6390. The current consolidation may lift offers to 0.6600 next to the 20-day moving average. But sentiment remains cautious and trend followers may look to sell into strength. However, a bullish breakout could open the door for an extended recovery towards 0.6800. NZDUSD finds supportThe New Zealand dollar rallied as the RBNZ raised its cash rate by 50bp. As the pair hovers above March 2020’s lows around 0.5500, the RSI’s oversold condition triggered a ‘buy-the-dips’ behaviour. Recent highs are a sign of waning selling pressure as the bears start to take profit. 0.5830 on the 20-day moving average is the resistance and its breach may put the psychological level of 0.6000 in sight. The recovery could gain traction from higher lows with the closest one being 0.5690, or a revisit of 0.5590 would reveal weakness.NAS 100 breaks resistanceThe Nasdaq 100 climbed after a decline in US job openings in August. The index bounced off a two-year low (10800) and a close above 11300 prompted short-term sellers to cover their positions. A rally above 11500 would further squeeze the short side and amplify the volatility. The support-turned-resistance 12010 near the 30-day moving average is a major congestion area where stiff selling could be expected. A failure to break free would indicate that the path of least resistance is still down with 11220 as a fresh support.
4 October 2022	USD rally on pause

4 October 2022 USD rally on pause

Jing Ren Jing Ren 04.10.2022 09:09
USDJPY hits resistanceThe Japanese yen recovered as the Tokyo core CPI beat estimates in September. The price has recouped most losses from the previous sell-off, a sign that sentiment remains upbeat despite a temporary setback. A close above the recent top at 145.80 may attract momentum buying and resume the uptrend in the weeks to come. Then August 1998’s high at 147.50 would be the next target. As the RSI climbs into overbought territory, the lower end of a brief consolidation (143.90) is the first support in case of a pullback.EURGBP struggles for supportThe pound rallied after British Prime Minister Liz Truss backpedalled on her tax cut proposal. A break below the base of the latest rally at 0.8720 mirrors strong demand for the pound across the board. 0.8640 at the origin of a surge above June’s high (0.8700) is a critical support from the daily chart. Its breach would invalidate the rebound and push the euro into a corrective course. 0.8830 is the immediate resistance and the bulls will need to reclaim 0.8970 before they could hope to regain control.XAGUSD tests daily resistanceSilver surged after weaker-than-expected US manufacturing data sent Treasury yields lower. A break above 19.00 has prompted short-term sellers to cover their bets, easing the downward pressure. Then a pop above the psychological level of 20.00 attracted momentum buying. The precious metal is testing the daily resistance at 20.80, giving the bulls a chance to push back. A bullish breakout could pave the way for a reversal in the weeks to come. The resistance-turn-support at 19.50 is the first level for accumulation.
RBA Interest Rate Decision: Another 50bps?

RBA Interest Rate Decision: Another 50bps?

Jing Ren Jing Ren 03.10.2022 13:25
Normally, higher rates would be seen as good for the banking sector. So there is understandably some concern about the financial markets since Australian banking shares are down considerably despite a broad consensus that the RBA will raise rates tomorrow (or late tonight, depending where you are on the globe). There is a global issue, and it might give the RBA a little pause. Rumors circulated on Sunday that a "major bank" was "on the brink" of collapse. This sent global banking shares down. It was also reported that the BOE was looking at Credit Suisse, given the shake up in global markets. The sudden moves in the pound and yen have made things particularly difficult for banks. What it means for the RBA The one thing that could significantly disrupt central banks' plans with regards to monetary policy is the risk of failure of a major bank. That would be equivalent to a "Lehman Brothers" event, but on a global scale. Even if it isn't a bank in the country, the loss of confidence in the financial industry could shake policy, and force central banks to inject liquidity. However, it's just rumors at this point. Putting that aside, the RBA is broadly expected to raise rates by 50bps, and continue tightening. There is a discrepancy with the projections, though. 97% of Australian economists forecast 50bps, but only 75% of international economists do. What it means for the markets In the scheme of practical effects, the solid consensus implies that the rate hike is fully priced in. What level of uncertainty there is around the outlook. A recent survey by Bloomberg showed that a majority of international economists believe this is the last "outsized" hike by the RBA, and that only 25bps will be forthcoming at the next meeting. Australian economists aren't so sure, with more betting on stronger action by the Reserve Bank. They point to inflation still rising and data remaining strong (if the housing situation isn't considered). Another point brought up is that the RBA could go for a one-and-a-half hike, since it is at an "unusual" rate that isn't a multiple of 0.25. Thus, there is a growing call for a "consensus" hike of 40bps at the next meeting, splitting the difference between 25 and 50. It's not all up to them As for the currency, the major obstacle is that the Fed keeps raising rates faster than any of the other majors. Even the most hawkish scenario for the RBA leaves the interest rate gap widening. And with inflation still rising in Australia, while US inflation (at least on the headline) is receding, then the real spread is getting even wider. A post rate rally in the case that Lowe gives clear indications that more than 25bps is likely at the next meeting, might sputter out quite quickly. If the RBA fails to be as hawkish as the Australian economists expect, then the currency could slide even further.
3 October 2022	EUR gains support

3 October 2022 EUR gains support

Jing Ren Jing Ren 03.10.2022 08:35
EURUSD attempts to bounceThe euro recovers as record high inflation in September cements expectations for another large ECB rate hike. An oversold RSI on the daily chart attracted some buying interest, but this could turn out to be a mean reversion trade rather than a sustained recovery. 0.9890 on the 20-day moving average is a resistance and trend followers could be expected to jump in to fade the bounce. In case of a bullish breakout, the single currency may flirt again with parity. Otherwise, 0.9680 is a fresh support should the pair start to drift lower.GBPUSD tests resistanceThe pound bounced back thanks to emergency BoE bond buying. The price is now at a crossroads after it recouped all the losses from the previous liquidation. Selling pressure could be expected around 1.1250 over the 20-day moving average as sentiment remains downbeat in the medium-term. However, its breach could give Sterling some breathing room and turn things around in the coming days. As the RSI returns to the neutral area, the demand zone between 1.0700 and 1.0900 is key in assessing buyers’ commitment.GER 40 lacks supportThe Dax 40 slides over the prospect of a 75 basis point hike from the ECB. A combination of a break below the critical support at 12450 and a bearish MA cross on the daily chart indicates that sentiment has shifted back to the downside, making the bear market official. Sellers may see any rebound as an opportunity to stake in. The demand-turned-supply area around 12500 could keep the buying in check. 11800 might be a temporary support and its breach would trigger a new round of sell-off to October 2020’s low at 11400.
AUD/USD, NZD/USD, Gold And S&P 500 - What Are The Key Levels?

AUD/USD, NZD/USD, Gold And S&P 500 - What Are The Key Levels?

Jing Ren Jing Ren 30.09.2022 15:28
AUDUSD slides over flight to safety The Australian dollar slips as commodities fall amid recession fears. The latest CPI showed annual inflation easing slightly in August, which may convince policymakers that they are on the right track. However, another 50bp interest rate hike by the RBA this week could be sidelined by the market’s pessimism. Nervous traders may continue to hoard the safe-haven dollar amid selling of risk assets. Prolonged weakness in the Chinese yuan, as Australia’s biggest trading partner undergoes an economic slowdown could weigh on commodity prices and the Aussie proxy. 0.6260 is the next support and 0.6660 the first resistance ahead. NZDUSD falls over risk aversion The New Zealand dollar weakens as the risk-off mode prevails. The RBNZ is set to deliver its eighth straight rate hike with another 50bps. Governor Adrian Orr said the tightening cycle is ‘well advanced’ but not over yet. Low unemployment rate and high inflation would still give the central bank leeway to push for tighter conditions. The market expects a further 50bp rate raise in November, taking the official cash rate to 4%. Though pronounced weakness in the kiwi may exacerbate inflation, which may turn into a downbeat spiral. The pair may find a short relief over March 2020’s low (0.5500). 0.5950 is the resistance in case of a bounce. XAUUSD slumps as dollar bounces higher Bullion struggles as the dollar index climbs to a fresh two-decade high. Greater rate hike expectations may maintain a firm support to the greenback at the expense of gold. Renewed hawkish calls from Fed officials make the peak in US interest rates of anyone’s guess. The previously much-speculated 4% seems to be outdated. Policymakers are betting on the low unemployment rate to keep the monetary policy restrictive. A median estimate of all 19 Fed bankers shows interest rates rising to 4.4% by the end of this year. The precious metal would be heading to April 2020’s low at 1570 and 1700 is the closest resistance. SPX 500 tumbles over global hard landing The S&P 500 falls as Fed officials remain vocal about tighter monetary policy. The market is bracing for another 75bp hike at the FOMC in November. There are definitely few good headlines to soothe investors. Property crisis in China and escalation on the Russia-Ukraine front only amplify worries of a concerted global hard landing. Resilience in the US job market may not be investors’ best friend but rather convince the Fed to carry on. With mega caps like Amazon and Apple under pressure, equities may bear the brunt of widespread risk aversion. The index is heading to a two-year low at 3280 and 3800 is a fresh resistance.   Key data release (GMT time) Monday, 3 October 14:00 ISM Manufacturing PMI Tuesday, 4 October 03:30 RBA Interest Rate Decision   Wednesday, 5 October 01:00 RBNZ Interest Rate Decision 12:15 ADP Employment Change 14:00 ISM Services PMI     Thursday, 6 October 00:30 Trade Balance 09:00 Retail Sales 15:35 BoC's Governor Macklem speech   Friday, 7 October 12:30 Nonfarm Payrolls Unemployment Rate
3 October 2022	Temporary relief	Selling in risk assets is yet to end

3 October 2022 Temporary relief Selling in risk assets is yet to end

Jing Ren Jing Ren 30.09.2022 15:27
AUDUSD slides over flight to safetyThe Australian dollar slips as commodities fall amid recession fears. The latest CPI showed annual inflation easing slightly in August, which may convince policymakers that they are on the right track. However, another 50bp interest rate hike by the RBA this week could be sidelined by the market’s pessimism. Nervous traders may continue to hoard the safe-haven dollar amid selling of risk assets. Prolonged weakness in the Chinese yuan, as Australia’s biggest trading partner undergoes an economic slowdown could weigh on commodity prices and the Aussie proxy. 0.6260 is the next support and 0.6660 the first resistance ahead.NZDUSD falls over risk aversionThe New Zealand dollar weakens as the risk-off mode prevails. The RBNZ is set to deliver its eighth straight rate hike with another 50bps. Governor Adrian Orr said the tightening cycle is ‘well advanced’ but not over yet. Low unemployment rate and high inflation would still give the central bank leeway to push for tighter conditions. The market expects a further 50bp rate raise in November, taking the official cash rate to 4%. Though pronounced weakness in the kiwi may exacerbate inflation, which may turn into a downbeat spiral. The pair may find a short relief over March 2020’s low (0.5500). 0.5950 is the resistance in case of a bounce.XAUUSD slumps as dollar bounces higherBullion struggles as the dollar index climbs to a fresh two-decade high. Greater rate hike expectations may maintain a firm support to the greenback at the expense of gold. Renewed hawkish calls from Fed officials make the peak in US interest rates of anyone’s guess. The previously much-speculated 4% seems to be outdated. Policymakers are betting on the low unemployment rate to keep the monetary policy restrictive. A median estimate of all 19 Fed bankers shows interest rates rising to 4.4% by the end of this year. The precious metal would be heading to April 2020’s low at 1570 and 1700 is the closest resistance.SPX 500 tumbles over global hard landingThe S&P 500 falls as Fed officials remain vocal about tighter monetary policy. The market is bracing for another 75bp hike at the FOMC in November. There are definitely few good headlines to soothe investors. Property crisis in China and escalation on the Russia-Ukraine front only amplify worries of a concerted global hard landing. Resilience in the US job market may not be investors’ best friend but rather convince the Fed to carry on. With mega caps like Amazon and Apple under pressure, equities may bear the brunt of widespread risk aversion. The index is heading to a two-year low at 3280 and 3800 is a fresh resistance. Key data release (GMT time) Monday, 3 October 14:00 ISM Manufacturing PMI Tuesday, 4 October 03:30 RBA Interest Rate Decision Wednesday, 5 October 01:00 RBNZ Interest Rate Decision 12:15 ADP Employment Change 14:00 ISM Services PMI Thursday, 6 October 00:30 Trade Balance 09:00 Retail Sales 15:35 BoC's Governor Macklem speech Friday, 7 October12:30 Nonfarm Payrolls Unemployment Rate
Global markets have returned to the downward trend, helped by a series of disappointing data over the last week. Although so far today there is apparently an attempt at a rally, that is likely more technical, related to the end of the quarter

Global markets have returned to the downward trend, helped by a series of disappointing data over the last week. Although so far today there is apparently an attempt at a rally, that is likely more technical, related to the end of the quarter

Jing Ren Jing Ren 30.09.2022 14:39
So, what could potentially turn market sentiment around? Better than anticipated PMIs are one possibility. Preliminary PMIs from the major countries were a disappointment, but there is a (small) chance that they might be revised higher and pleasantly surprise the markets. Of course, if they come in as expected, it could be seen as confirmation of the general downward trend, and affirm the course.What to look out forWith focus turning toward US employment figures at the end of the month, PMIs could set the stage for the whole week. Many of the results are expected very near the 50 level, which separates expansion and contraction, so there could be some shake ups if there is a miss or beat by just a few decimals.Australia: Is expected to confirm the minimum increase in Manufacturing PMI to 53.9 from 53.8 in August. Remember that the RBA will be meeting later in the week, where another 50bps hike is expected.Spain: Might set the tone for Europe, being the first to report from the shared economy. Manufacturing PMI is expected to take a significant dip to 48.5 from 49.9 in August.Switzerland: Is expected to remain broadly upbeat, unlike the rest of the nations on the continent. But a bit of shadow is expected to fall on the Swiss luster, with an even bigger drop than Spain. Manufacturing PMI is expected at 54.5 down from 56.4 prior.France: Is expected to confirm it's fall back into contraction, with one of the worst results expected in the shared economy. It follows rising energy prices after the country had to idle nuclear power plants through the summer, so the drop might be somewhat temporary. Manufacturing PMI is forecast at 47.8 compared to 50.6 in August.Germany: Is off on holiday, but will still report Manufacturing PMI, which is expected to be the same as the prelim at 48.3 compared to 49.1 in August. UK: Despite the concerns over the budget, UK businesses are expected to actually increase their optimism. But, that might be because the Prelim number was from the survey done before Kwarteng's announcement. That might be revised lower with the full survey completed after the budget announcement, but before the BOE's intervention. Prelim Manufacturing PMI was 48.5 compared to 47.3 in August.US: ISM Manufacturing PMI is expected to repeat the preliminary number and remain stable from the prior month at 52.8. Lower retail fuel prices over the period might have provided businesses with some more optimism, but several key companies radically cut their outlook. FedEx removing guidance ahead of an expected drop in deliveries spooked quite a few investors.
30 September 2022	USD in correction mode

30 September 2022 USD in correction mode

Jing Ren Jing Ren 30.09.2022 08:23
USDCHF seeks supportThe US dollar falls as GDP shows a 0.6% contraction last quarter. The pair is consolidating its gains after it rose above the double top at 0.9880. A slide below 0.9850 triggered profit-taking. Medium-term sentiment remains intact though and 0.9720 is the next level to gauge follow-up interest. The bulls may need to accumulate before they could take on 0.9900 and another double top (1.0040) on the daily chart. A close above this major ceiling would release the last bit of selling pressure and extend the rally towards 1.2300.EURJPY bounces off supportThe euro climbed as German inflation shot up in September. The current correction has found support at the base (137.40) of a bullish breakout in late August. This may help the six-month long rally to stay valid. A rise above the psychological level of 140.00 has prompted some sellers to cover their bets, opening the door for a recovery to 143.50. Its breach may put the euro back on track and resume the rally above 144.00. As the RSI ventures into the overbought zone, 139.30 is the closest support in case of a pullback.NAS 100 breaks critical supportThe Nasdaq 100 slips as a resilient labour market supports the Fed's aggressive hikes. A breach below June’s low at 11100 could send the index deeper into bearish territory. The price is testing November 2020’s low at 11000 but the psychological level of 10000 might be at stake. 11700 is the first hurdle ahead and the top of the previously failed rebound at 12070 a key level before short-term sentiment could turn around. The latter also coincides with the 30-day moving average where strong selling pressure could be expected.
China September PMI and Potential Recovery

China September PMI and Potential Recovery

Jing Ren Jing Ren 30.09.2022 08:22
The yuan has been depreciating against the dollar, as have most other currencies. While not as dramatic as the yen, the rise in the USDCNY pair has started to raise concerns from Chinese officials. In the last couple of days, several formal outlets have come out to "warn" that yuan depreciation won't continue. Some analysts have taken this to be something of a prelude to direct intervention. While the PBOC continues to set the reference rate higher in line with market pressures, it can at any moment step in to stop the decline. That might end up being seen as positive for many of the suppliers to China, particularly Australia and New Zealand. But for how long? The weakening Chinese currency makes it harder for Chinese firms to buy raw materials overseas. Should the government step in to shore up the currency, that might help importers. But the underlying reason for the weaker currency would persist, and could mean that imports don't rise as much or for long. Thus, the focus on business sentiment, and whether companies are recovering in the face of covid and the housing crisis. Next week, China goes into a week-long national holiday, which would naturally affect productivity. After that, factories are expected to ramp up to meet demand ahead of the holiday season. With freight rates falling, logistics issues aren't expected to be as much of a problem this time around. So, the main question is whether industries are buying more raw materials ahead of anticipated higher demand (which would increase PMIs). Or is the situation less optimistic, which would translate into lower PMIs and potential pressure on the NZD and AUD. How the data fits together First to report are the official numbers from the NBS, which includes a narrower selection of larger businesses. Bigger firms are in a better position to access the cheaper credits that have been made available as part of the government's economic support program. Additionally, they have more internal market orientation, and are less likely to be impacted by the currency. Caixin measures a larger number of smaller businesses that are more expert oriented. But also they are more dependent on imports for certain raw materials, particularly in the consumer segment. With investors looking to see how Chinese consumer demand is holding up, services PMI might get a little extra attention. What to look out for Official NBS Manufacturing PMI is forecast to improve slightly, but just miss returning to expansion at 49.8 compared to 49.5 previously. Non-Manufacturing PMI is forecast to not only remain healthily in expansion, but to actually improve to 52.8 from 52.6 prior. Caixin Manufacturing PMI is forecast to match the official number at 49.8 compared to 49.5 prior. Also a slight improvement, but not enough to return to expansion. However, given the small difference to 50, for practical purposes, both figures are straddling the expansion/contraction line. It might take the figures from next month to return more confidence to the markets.
29 September 2022	USD pulls back

29 September 2022 USD pulls back

Jing Ren Jing Ren 29.09.2022 08:25
EURUSD attempts to reboundThe US dollar retreats as traders take profits over a crowded trade. The RSI’s oversold situation on the daily chart shows exhaustion past parity and the dollar could use some breathing room. As the bias remains down traders may look for a higher sell point. A bullish RSI divergence suggests a slowdown in the sell-off momentum and a rise above 0.9700 has prompted more sellers to cover. 0.9810 is the next resistance and short-term sentiment would not improve unless 1.0050 is broken. 0.9540 has become the closest support.XAUUSD tests resistanceBullion recoups losses as the greenback softens across the board. Still, the precious metal remains under pressure after the bulls gave up the critical floor around 1680. A brief consolidation was a signal that the path of least resistance had switched to the downside. 1615 has attracted some buying interests but most traders might worry about catching a falling knife. A new round of sell-off may send gold to April 2020’s low at 1570. 1670 has become a fresh resistance where the bears could be looking to sell into strength.USOIL bounces backWTI rallies back as US crude stocks fell more than expected. A fall below 82.00 has renewed the pressure on the buy side by invalidating the recent rebound. Trend followers may take this as a signal to add their stakes. The price is hovering above this year’s low at 75.00 with some bargain hunting off 77.00. An overbought RSI may limit the upside. The support-turned-resistance at 83.40 coincides with the 20-day moving average and could be a congestion area. Further up, stiff selling would be expected in the supply area next to 87.00.
28 September 2022	USD holds high ground

28 September 2022 USD holds high ground

Jing Ren Jing Ren 28.09.2022 08:52
USDJPY tests key resistanceThe US dollar edged higher after Fed officials reiterated the need to keep tightening. The pair has recouped most of the losses from a previous liquidation, which suggests solid buying interest at 140.50 along the 30-day moving average. The peak at 145.90 is a key resistance and its breach could resume the rally towards August 1998’s high at 147.60. From the daily chart’s perspective, sentiment remains upbeat and the bulls may see pullbacks as opportunities to stake in. 143.60 is the first level should this happen.AUDUSD fails to bounce backThe Australian dollar falls as risk appetite remains subdued across assets. The pair went into a free fall after it broke last summer’s lows near 0.6700. The bearish mood still prevails and may continue to attract trend followers to depress the price action. 0.6300 is the next level to see whether the buy side could make its way back. The RSI’s oversold condition might cause a bounce and 0.6500 would be the first obstacle. The support-turned-resistance 0.6700 on the 20-day moving average could offer strong downward pressure.UK 100 breaks critical supportThe FTSE 100 struggles over UK rate rise worries to support a battered pound. A fall below the critical area and psychological level of 7000 is a strong signal that the market has slipped into bearish territory. After the RSI recovered into the neutral zone, a brief consolidation could be the last chance for the bulls to bail out before another round of sell-off. Waning buying has met stiff selling near the fresh resistance at 7050. A bearish MA cross suggests an acceleration to the downside. Last March’s low at 6770 would be next.
Eurozone: On Thursday, September 29th, Germany Releases Its Inflation Print And It's Quite Important To Keep An Eye On It

Eurozone: On Thursday, September 29th, Germany Releases Its Inflation Print And It's Quite Important To Keep An Eye On It

Jing Ren Jing Ren 27.09.2022 13:09
The ECB has only two more meetings for the rest of the year. Which means that the space to get inflation under control by the end of December is getting tight. The common bank is behind other major central banks in raising policy, which has kept the shared currency relatively weak. Therefore, there is a lot of expectation on what will happen with inflation. Though, it should be noted that the next ECB meeting isn't until late October, meaning that there is still another round of CPI data coming out before they meet. So, that is likely to have a much bigger impact on what the bank actually decides to do. On the other hand, the series of CPI figures expected later in the week are expected to shape interest rate expectations. And that, in the end, is the main driver of the currency. Restoring credibility A series of ECB officials have come out to talk in a way that suggests potentially stronger action. Rumors of a 75bps hike in October are starting to grow. This is because of the going theory among central bankers that inflation is shaped by the "credibility" of the central bank. That is, it's how confident the market is that it will raise rates as needed to get inflation down. Both Nagel and de Cos made comments to that effect yesterday. But they need to be contextualized within the ECB's Chief Economist Lane's views expressed also yesterday. That is, expecting a significant decrease in inflation through the course of next year. In other words, the ECB might be coalescing around the idea of a sharp rate hiking through the next couple of months to force CPI figures to turn around. It's out of their hands The thing is, while the ECB did expand the monetary base by around 10% during the pandemic, a larger chunk of the inflationary effects come from external factors. Higher energy costs, and increased cost of imported goods from China due to lockdowns, are the two main ones. That isn't something monetary policy can fix. On the other hand, China is seen relaxing some of the covid restrictions, and energy prices have been falling (although over fears of a pending global recession). That could contribute to lower inflation next year regardless of what the ECB does. So, it might come down to a matter of whether the ECB thinks it can control prices. What to look out for On Thursday, Germany reports Inflation figures, which are expected to set the tone for the rest of the shared economy. German September monthly inflation is expected to accelerate to 1.1% from 0.3% prior. That would contribute to annual inflation jumping to 9.5% compared to 7.9% prior. Then on Friday we get EuroZone headline inflation rate expected to move up to 9.6% from 9.1% in August. Of course what the ECB pays the most attention to is the core rate, which is also expected to accelerate, though not as sharply. Core September inflation is forecast at 4.7% compared to 4.3% prior.
Nike (NKE) jumped 12.18% and Fedex (FDX) rose 3.43%, as both companies' quarterly earnings exceeded expectations.

Tech Stocks: What Can We Expect From (AMZN) Amazon Stock Price?

Jing Ren Jing Ren 27.09.2022 10:09
AMZN suggests the development of a zigzag, which consists of sub-waves a-b-c of the cycle degree. Perhaps the market has completed the formation of the first major wave a, it is a bullish 5-wave impulse In the last section of the chart, we see a decrease in the price, which may indicate the beginning of a bearish correction b. It may take the form of a zigzag â’¶-â’·-â’¸. Most likely, in the near future we will see a continuation of the depreciation of stocks in the final intermediate wave (5), which may end the primary impulse wave near 93.41. At that level, wave (5) will be at 76.4% of previous impulse (3). After the end of the impulse wave â’¶, the stock is expected to rise in the primary correction â’·. However, it is possible that the market has completed the formation of the primary wave â’¶. According to this markup, the wave â’¶ has the form of a leading diagonal (1)-(2)-(3)-(4)-(5). In this case, in the last section of the chart, we see the price increase in a bullish correction â’·. It is assumed that the correction wave â’· will take the form of an intermediate double zigzag (W)-(X)-(Y), where the actionary wave (W) is also a double zigzag W-X-Y of a lesser degree. It is possible that the correction â’· will be at 61.8% of wave â’¶. Thus, its completion is expected to reach the level of 155.06. An approximate scheme of possible future movement is shown on the chart.
SPX500 mit trendbestätigender Seitwärtskonsolidierung im Abwärtstrend

SPX500 mit trendbestätigender Seitwärtskonsolidierung im Abwärtstrend

Jing Ren Jing Ren 27.09.2022 10:07
Short-term bias: KonsolidierungMajor-Widerstand: 3.730,5 Punkte / 3.766,75 Punkte / 3.786-3.764 PunkteMajor-Unterstützung: 3.660,25 Punkte / 3.649 Punkte / 3.563-3.540 PunkteDer SPX500 konsolidiert seit gestern knapp über seinem Jahrestief bei 3.649. Bisher bleibt es jedoch bei einer reinen Seitwärtskonsolidierung im Abwärtstrend. Momentan befindet sich der SPX500 in einer weiteren Erholungsamplitude innerhalb dieser Konsolidierung. Das nächste Zielthema ist das gestrige Hoch bei 3.730,5. Die Majorthemen, die für einen bullishen Setupwechsel sorgen können, liegen jedoch noch einen deutlichen Stock weiter oben. Es geht dabei um das Kanalpullback bei 3.766-3.762, um den Widerstand bei 3.766,7 und um den Abwärtstrend bei 3.786-3.764. Ein Ausbruch über diese geballte Zone führt zu einem bullishen Setupwechsel. Im Bereich dieses auffälligen Kreuzes gibt es aber auch antizyklische Chancen auf der Shortseite. - Ein erstes Verkaufsignal entsteht mit einem Rückfall unter die Unterstützung bei 3.697. Danach kündigt sich mehr und mehr auch schon ein Ausbruch unter die Majorzone bei 3.649 und 3.660,25 an. Das Anschlusspotential reicht weit bis zum Abwärtstrendkanal bei 3.563-3.540. – Nur ein Fasle-Breakout und Reversal an dieser unteren Ausbruchszone kann dann wieder Erholungschancen zurückbringen.GER40 vorbörslich an ganz wichtiger oberer SchwelleShort-term bias: weiter volatilMajor-Widerstand: 12.383/12.410 Punkte / 12.493-12.423 Punkte / 12.536 PunkteMajor-Unterstützung: 12.339 Punkte / 12.198 Punkte / 12.935-12.865 PunkteDer GER40 hielt sich nach dem Ausbruch auf ein neues Jahrestief am Freitag gestern immerhin stabil. Heute Morgen klopft er auch am ersten Kaufsignal an. Doch es folgen jetzt mehrere Majorthemen, bevor der GER40 über den Tag hinaus ein gesichertes bullishes Setup hinbekommen kann. Die erste und bereits sehr wichtige Ausbruchszone verläuft zur Stunde bei 12.383 und 12.410 Punkten. Die nächsten Widerstands- und Ausbruchsthemen sind später der Abwärtstrend bei 12.493-12.423 sowie die Major-Widerstände bei 12.536 und 12.622. Jeder Ausbruch eröffnet die nächste Etappe nach oben. Jedes False-Breakout bringt aber auch neue Chancen auf der Gegenseite, auch aktuell schon an der ersten Zone. - Das erste prozyklische Verkaufsignal erfolgt mit einem Rückfall unter das kleine unmittelbare Vorgängerhoch bei 12.339 sowie einem gleichzeitigen Bruch des neuen kurzfristigen Aufwärtstrends. Danach sollte der GER40 auch wieder auf den nächsten großen Ausbruch am gestern noch mehrfach bewährten Freitagstief bei 12.198 hinarbeiten. Nach diesem Ausbruch gibt es keine Auffanglinie mehr bis zum Abwärtstrendkanal bei 12.935-12.865.EURUSD ab jetzt nur noch mit begrenztem AbwärtspotentialShort-term bias: KonsolidierungMajor-Widerstand: 0,9674-0,9656 USD / 0,9717-0,9682 USD / 0,9864 USDMajor-Unterstützung: 0,9619/21 USD / 0,9551 USD / 0,9523-0,9518 USDDer EURUSD hat seinen Abwärtsswing mit der Italienwahl noch einmal verstärkt. Und charttechnisch konnte er sich bisher auch noch nicht entscheidend von diesem Schlag erholen. Für erste Kaufsignale muss der Euro bei 0,9674-0,9656 USD in den letzten Abwärtstrend zurückkehren und zusätzlich auch den steileren Abwärtstrend bei 0,9717-0,9682 USD brechen. Nach diesen Kaufsignalen ergeben sich für ein Erholungssetup allerdings auch gute Spielräume. Der nächste Major-Widerstand verläuft letztlich erst wieder am großen Vorgängertief bei 0,9864 USD. – Nach unten gibt es ein neues und zumindest kleineres Verkaufsignal mit einem Ausbruch unter die Unterstützung bei 0,9619/21 USD. Danach erhöhen sich die Chancen deutlich, dass der Euro unter dem Strich und per Tendenz auch wieder auf neue Lows unter 0,9551 USD abdriftet. Dann wird es für die antizyklischen Bullen aber insofern attraktiver werden, da bei heute 0,9523-0,9518 USD nun auch wieder der mittelfristige Abwärtstrendkanal verläuft. Deshalb kann auch ein False-Breakout und Reversal am Low bei 0,9551 USD sehr interessant werden.
Is British Pound (GBP) Benefitting From Rumours About The Bank's Of England Action?

Is British Pound (GBP) Benefitting From Rumours About The Bank's Of England Action?

Jing Ren Jing Ren 27.09.2022 08:41
In this article: British Pound To US Dollar - Bank Of England Is Rumoured To Hike The Rate New Zealand Dollar To US Dollar US 30 - Is Dow Jones "Scared" Of Fed GBPUSD finds limited relief The pound recoups losses over speculations of an emergency rate hike by the BoE. After breaking below March 2020’s lows near 1.1500 Sterling sank to an all-time low at 1.0350. An extremely oversold RSI on the daily chart prompted intraday traders to take some chips off the table. However, strong selling pressure could be expected from trend followers as the pound probes resistance overhead. 1.1050 would be the first hurdle and 1.1350 over the 20-hour moving average a major level that may keep the bounce in check. Read next: British Pound (GBP) May Be Helped With Forex Intervention, But It May Take A While. Bank Of Japan Supported Yen This Way, Swiss National Bank May Do The Same | FXMAG.COM NZDUSD remains under pressure The New Zealand dollar softens as markets remain gripped by growth fears. The fall accelerated following the kiwi’s failure to bounce at May 2020’s low (0.5930). The bearish inertia and pessimism may continue to drive the price south. The RSI’s oversold condition could trigger sporadic bounces. 0.5740 is a resistance where the bears could be eager to sell into strength. A struggle to break higher would show a lack of sustained buying interest and the pair may drift towards 0.5600 and then March 2020’s lows around 0.5500. US 30 breaks critical floor The Dow Jones 30 slips over concerns of a Fed tightening overdose. A break below June’s low at 29800 may have sealed the fate of the index by putting it on a bearish track. The breakout also confirms the bearish MA cross on the daily chart, indicating an acceleration to the downside. 28500 could be the next target. A brief bounce may draw more selling interests as the downtrend resumes its course, while trapped bulls may seek to bail out in the supply zone near the psychological level of 30000, exacerbating volatility in the process.
British Pound (GBP) Amid Fiscal Stimulus. Which Way Did USDCAD Go After Retail Data?

British Pound (GBP) Amid Fiscal Stimulus. Which Way Did USDCAD Go After Retail Data?

Jing Ren Jing Ren 26.09.2022 08:13
In this article: USDCAD EURGBP GER 40 USDCAD breaks major resistance The Canadian dollar slipped after July’s retail data fell short of expectations. The current rally continues to accelerate after the US dollar rose to a fresh two-year high above 1.3420. A lack of selling pressure enables the bulls to push towards July 2020’s high at 1.3640. Though short-term price action could use a little breathing room after the RSI ventured into overbought territory multiple times. 1.3390 would be the first support in case of pullback, and strong interest could be expected from bullish trend followers. EURGBP breaks higher The pound tumbles as Britain’s new fiscal stimulus raises doubts about its debt burden. A previous break above June’s high at 0.8720 had flushed out the remaining selling interest. Following a brief consolidation, the euro’s surge above 0.8780 triggered a runaway rally to a two-year high at 0.9290. The RSI’s extreme overbought condition may cause profit-taking with 0.8930 near the base of the momentum and the 20-hour moving average as a fresh support. Further extension may carry the pair to March 2020’s high at 0.9500. GER 40 falls through critical floor The Dax 40 plunged over wide-spread unease about the direction of inflation and rate hikes. A fall below the double bottom at 12420 invalidated the bounce over the past few months and signalled a return to the bear market. Strong momentum is a sign of liquidation as the last bulls rush to the exit. As the RSI sank into the oversold area, the psychological level of 12000 may see some buying. However, bounces may be capped below 12500 where the bears could double down and push towards October 2020’s low around 11400. Read next: Leaders Must Take Action To Protect The Environment. The Statement By E. Muska Will Cause Confusion| FXMAG.COM
US Dollar (USD) Touched The 20-year High Level! What Makes EUR Less "Attractive"?

US Dollar (USD) Touched The 20-year High Level! What Makes EUR Less "Attractive"?

Jing Ren Jing Ren 23.09.2022 15:14
USDJPY consolidates post-BoJ intervention The Japanese yen clawed back some losses after the BoJ intervened in the FX market for the first time since 1998. The central bank has loaded up on its currency in an attempt to ease the imported inflation pressure. However, this symbolic move may only offer the battered yen relief and is unlikely to reverse the current trend. Policymakers have stuck to the loose policy to support the fragile recovery, in a contrarian move to the global race to tighten financial conditions. Diverging yields between Japan and the US may still favour the latter’s currency. August 1998’s high at 147.50 is the next hurdle and 139.00 the closest support. EURUSD slips as Fed stays hawkish The US dollar soared to a two-decade high after the Fed raised interest rates by another 75 basis points. Officials have signalled more similar hikes by the end of the year. An update on US rates projection shows a 4.4% by year's end, a full percentage point higher than last June’s forecast. In Europe, the economic slowdown, energy strains and an escalation in Ukraine could keep traders away from the single currency. This divergence mirrors the fate of other riskier currencies. In a world full of uncertainties, high yield and safety raise the dollar’s relative appeal. The pair is sliding towards 0.9600 after being capped at 1.0040. UKOIL softens as global growth at risk Brent crude struggles over geopolitical tensions and demand uncertainty. Russia announced a mobilisation of more troops in an escalating move in the Ukraine conflict. Additional sanctions could be expected from the west along with Russia’s retaliation in energy deliveries. Meanwhile, Washington signalled little progress in reviving the 2015 Iran nuclear deal. The stalemate could keep the tight market in check. However, the global race to stifle inflation makes growth a collateral damage. Lower demand and subdued risk appetite may continue to fuel the correction. The price is hovering above 84.00 and 105.00 is an important cap. NAS 100 struggles as rates see no ceiling yet The Nasdaq 100 slips further as the Fed reaffirms its restrictive roadmap. As the economy became second to monetary policy, investors fear that the window for a ‘soft landing’ might be closing. The question would shift from whether the recession is around the corner to how long it would last. The central bank reiterated that growth and jobs would be impacted. A solid labour market may act as a cushion, allowing policymakers to push the tightening agenda aggressively. Growth stock investors will need to remain patient as rate cuts are not expected until 2024. The index is hovering above 11100 with 12000 as the first resistance. Key data release (GMT time) Tuesday, 27 September 12:30 Durable Goods Orders 23:50 BoJ Monetary Policy Meeting Minutes   Wednesday, 28 September 01:30 Retail Sales     Thursday, 29 September 12:00 Harmonized Index of Consumer Prices 12:30 Gross Domestic Product Annualized   Friday, 30 September 06:00 Gross Domestic Product Retail Sales 09:00 HICP
Italian Election 2022: Why Is It Crucial In Terms Of Finance?

Italian Election 2022: Why Is It Crucial In Terms Of Finance?

Jing Ren Jing Ren 23.09.2022 11:43
Italy goes to the polls on Sunday, with results expected through the course of the morning of Monday. Polls are showing a pretty strong lead for Brothers of Italy leader Meloni, so it's unlikely there will be a surprise with the electoral outcome. But, as far as the markets are concerned, a shift in the way Italy's finances are managed and how it relates to the Euro could have an impact on the shared currency. Who is likely to be PM is known, but who will be finance minister is another open question. While the three right-wing parties held a joint rally to close their election campaigns, the leaders put on a show of unity ahead of the polls. But there are still rifts between them, and some rather large egos that have already brought a previous government to a premature end. Negotiations for who will hold which ministers could end up showing the first cracks in the coalition. Possible implications Italy is the third largest economy in the Eurozone, but it's the largest in the so-called "periphery". Italy has had a contentious relationship with Brussels for years now, particularly over the issue of government finance and debt levels. The financial situation has only gotten worse since covid, and accelerated with the gas crisis. For now, the issue of how much money the Italian government is spending has been mostly ignored, but not forgotten. Particularly, apparently, among Italians who seem to be warming to the Euro-skeptic rhetoric of the lead candidate, Meloni. Italy has a debt-to-GDP ratio of 150%, nearly triple the Maastricht criteria. Italy's government deficit last year was 7.2%, well over double the 3% limit of the criteria. Italy's ability to service that debt is increasingly questionable as interest rates rise, particularly in the periphery. Meloni's confrontational attitude towards the EU is likely to further inflame tensions around the issue as well. Will the past repeat? The Euro entered a period of crisis in 2011 driven by a collapse in Greek debt payments. There was substantial worry that it would spread through other periphery countries, such as Spain and Italy. However, a rescue plan was cobbled together, some banks suffered, and the situation was barely averted. The Euro crisis included recessions and talk of a potential breakup of the shared currency. Read next: Cryptocurrency: Bitcoin Up, Ethereum Price Found Support, Ripple Price (XRP) Jumped! | FXMAG.COM Italy's economic situation is worse now than it was then. But not as bad as Greece was at the time. Greek debt lost investor confidence when it was revealed that authorities had misstated economic figures. And the debt-to-GDP ratio was 175%. Greece was not kicked out of the shared currency despite failing almost all the Maastricht criteria, which ultimately allowed more confidence in periphery countries' loose financials. On the other hand, it apparently also meant that the financial leaders of those countries felt they could get away with less fiscal discipline. To the point that even some Italian banks have not been provisioning as much as their American, UK and even German peers under the expectation that if the economic situation gets really bad, they will get a bailout. Just like in 2011. While Meloni might be able to convince voters to support her, getting investors to have confidence in Italy might be a whole different question. And by extension, investors might be worried that at least some of the problems from 2011 might appear again.
FX: Historic Bank's Of Japan Forex Intervention Supported USD/JPY Downward Move!

FX: Historic Bank's Of Japan Forex Intervention Supported USD/JPY Downward Move!

Jing Ren Jing Ren 23.09.2022 08:22
In this article: USD/JPY USD/CHF GBP/USD USDJPY pulls back for support The Japanese yen skyrocketed following the first Japanese currency intervention in 24 years. The pair swiftly reversed its course after flirting with the psychological level of 145.00. A break below 143.50 triggered a liquidation of leveraged positions. 140.50 along the 30-day moving average is a key level to probe buyers’ interest. A bounce would signal that the greenback is merely taking a breather and the uptrend remains intact in the medium-term. A rally back above 145.00 may carry the price to August 1998’ high at 147.50. Read next: Cryptocurrency: Bitcoin Up, Ethereum Price Found Support, Ripple Price (XRP) Jumped! | FXMAG.COM USDCHF tests key resistance The Swiss franc fell after the SNB's hike came short of the 100bp previously priced in. A clean cut above the support-turned-resistance at 0.9690 is a sign of strong interest. The double top at 0.9870 is a major hurdle after the pair went into a four-month long consolidation. Its breach would help the dollar reclaim parity and open the door to the previous ceiling at 1.0050, a step closer to a bullish continuation. In the meantime, the RSI’s overbought condition might cause a limited retracement and 0.9740 would be the first support. GBPUSD takes a breather The pound slipped as the BoE raised its interest rate by a moderate 0.5%. The bearish inertia has taken a front seat after Sterling slipped through March 2020’s lows (1.1420). The RSI’s repeated oversold situations have led to a brief pullback. The former demand zone around 1.1460 has become a supply zone where the bears could be expected to get in at a better price. Sentiment may only turn around if the bulls manage to push past 1.1700, which means that the path of least resistance seems to be towards 1.1100 for now.
Global September Preliminary PMIs and Economic Outlook

Global September Preliminary PMIs and Economic Outlook

Jing Ren Jing Ren 22.09.2022 23:40
After a week in which a dozen central banks around the world either tightened policy or resorted to currency intervention, the focus is now on the economy. Just how much of the move was priced in, and how much will economic growth be impacted going forward. So far, tightening has contributed to a stronger dollar, on top of increased risk avoidance supporting safe havens. Purchasing managers are likely to see the first signs of the effects of monetary policy. Whether that's in lower prices implying potentially less inflation in the future, or lower orders implying less growth in the future. Weaker PMIs could start raising bets that monetary policy will start to level off in the near future. The surveys are still being conducted, so we won't see the full effect on manager's thinking until next month. But central bank action was pretty well telegraphed ahead of the start of the survey. What to look out for: Australia Australia is expected to keep bucking the global trend, with manufacturing PMIs expected to be firmly in expansion, although stumbling a bit. The services sector is expected to remain under pressure through the winter, and slower tourism activity. Australian Manufacturing PMI expected at 53.2 compared to 53.8 prior. Services PMI expected to expand modestly to 50.8 from 50.2 prior. France As usual, France is the first major EU country to report PMIs, and is likely to set the tone for the shared currency unless there is a major deviation with later data. The high cost of energy in France has been weighing on the economic outlook coupled with the ECB recently starting to raise rates. Both are likely to be on the minds of managers when they answer the survey. French September Preliminary Manufacturing PMI is forecast to fall just barely into contraction at 49.8 compared to 50.4 prior. Services PMI is expected to remain just barely in expansion at 50.5 compared to 51.2 prior. Germany Recent positive news in Germany on the energy front isn't expected to lift businesses' spirits all that much. With energy prices still high despite the country well ahead of target on filling up its reserves, executives are worried about which plants will be idled next due to high operating costs. German September Preliminary Manufacturing PMI is expected to fall further into contraction to 48.3 from 49.1 prior. Services PMI is expected to perform even worse, dropping to 46.0 from 46.9 prior. UK The British survey was conducted after PM Truss announced the price cap, so we could see if that has any effect on business optimism. However, the details have yet to be announced, so the impact might be minimal. UK Preliminary Manufacturing PMI is expected to improve modestly to 47.5 from 47.3 prior. Services PMI is expected to fall to 50.0 compared to 50.9 prior.
What Should Gold Bulls Do To Keep XAUUSD Away From $1640 Zone?

What Should Gold Bulls Do To Keep XAUUSD Away From $1640 Zone?

Jing Ren Jing Ren 22.09.2022 08:22
XAUUSD struggles to bounce back Bullion whipsawed after the Fed's rate hike came out in line with expectations. The price’s failure to hold above the critical level at 1680 may have triggered a long journey to the south. The RSI’s oversold condition led to some profit-taking by intraday traders. But stiff selling could be expected in the former demand zone around 1700. The bulls, if there is any left must lift 1735 before a bounce could materialise. Otherwise, the precious metal may drift towards 1640 from the base of a bullish breakout back in April 2020. SPX 500 tests critical support The S&P 500 plunged after another super-sized US rate hike. The break below 3900 has invalidated the recent bounce and put the buy side on the defensive. As sentiment deteriorates, strong selling pressure may continue to prevail. A fall below 3820 at the origin of a bullish breakout last July shows little buying interest left, and the index could continue to sink to the daily support at 3725 which is a critical floor to prevent a bearish reversal. The support-turned-resistance at 3920 is the first hurdle in case of a rebound. USOIL awaits breakout WTI crude weakens over a gloomy economic prospect amid tighter financial conditions. Sentiment has remained fragile after the psychological level of 90.00 proved to be a tough level to crack for now. The current consolidation above 81.50 is temporary, and a breakout on either side would dictate the direction in the days to come. Only a rally above 90.00 could turn the mood around in the short-term. The bearish bias might take over and a breakout would resume the downtrend and send WTI to 78.00.
21 September 2022	USD awaits catalyst

21 September 2022 USD awaits catalyst

Jing Ren Jing Ren 21.09.2022 08:24
EURUSD awaits breakoutThe US dollar consolidates ahead of the FOMC. A tentative break above 1.0190 prompted sellers to cover their bets, easing the downward pressure. The bulls will need to lift offers in this key supply zone before they could hope for a sustained recovery. In the meantime, the price action is consolidating above 0.9930. The narrowing range shows indecision before a catalyst leads to a breakout which would decide whether the euro stays north or south of parity. A fall below 0.9930 may resume the downtrend below 0.9870.USDCAD tests key resistanceThe Canadian dollar retreated as August’s inflation data fell short of expectations. The rally has gained traction after the pair cleared the double top at 1.3200. Diverging moving averages on the daily chart indicates an acceleration to the upside. As the pair hovers under November 2020’s high at 1.3390, the RSI’s overbought condition may trigger some profit taking, driving the greenback lower momentarily. Buying interest could be expected around 1.3200 from the base of the bullish breakout.UK 100 struggles for bidsThe FTSE 100 slips as expectations of a hawkish BoE weighs on the growth prospect. Buyers’ struggle to hold onto their recent gains above 7230 weighs on sentiment. The latest optimism has waned after a bounce failed to secure 7330, leaving the index vulnerable to another round of sell-off if the bulls start to pull out. 7130 is an important support and its breach could attract momentum sellers and extend losses to July’s lows around 7020. There the FTSE would face the risk of a bearish reversal in the medium-term.
US Dollar (USD) May Be Skyrocketing! Fed Decides On Interest Rate Shortly. Why 75bp Variant Is More Likely Than The 100bp Hike?

US Dollar (USD) May Be Skyrocketing! Fed Decides On Interest Rate Shortly. Why 75bp Variant Is More Likely Than The 100bp Hike?

Jing Ren Jing Ren 20.09.2022 13:41
Expectations for what the Fed will do at its next meeting have been on a bit of a rollercoaster. This has created some fluctuations in the dollar, as well as the stock market. But now that Fed officials are sitting down for the two-day policy rate decision, it seems like economists are finally coming to some kind of agreement on what to expect tomorrow. Four fifths of surveyed economists expect a 75bps hike, with the remainder still holding on for 100bps. That's a consolidation of agreement compared to just a week ago, when over a quarter of analysts were predicting a full percentage point hike. Part of that is due to actually digesting the CPI figures that came out last week. Why not 100bps? Last week's inflation figures were a bucket of cold water on the markets, as headline inflation was above expectations and core inflation continued to rise. Both pushed in the direction of the Fed keeping its aggressive hiking stance. But, the thing is, the Fed hasn't met since July, so expectations for what the Fed will do this time have to take into consideration the last two inflation reports. And July CPI figures were substantially better than the August ones. Taking into consideration all the data that has been released since the last FOMC meeting, there is still a bias towards aggressive hiking, but not so much as the last data indicates. Getting expectations in order In fact, one of the reasons that there was such a strong reaction to the CPI data was that it came as a surprise. July data was implying a possibility for the Fed to start moderating the pace of hikes. Prior to the release, the consensus was for 75bps, and dissenters were arguing for 50bps. The latest guidance from the Fed is that rates will be determined on a meeting-by-meeting basis based on the data. Which means now the focus is on whether the Fed will start giving hints for longer-term policy outlook. If the Fed does a "triple" rate hike, the third in a row, the very next question traders will be asking is, what's next? Tracing lines into the future Several Fed officials have said that interest rates are getting near "neutral", which is the point at which the Fed presumably will start moderating its aggressive hiking. It's estimated that it is around 3.5%. Another 75bps would not only push the rate above where it was in 2018, but up to 3.25%. If the Fed were to continue hiking for the rest of the year (there are two meetings left), then it might be in 25bps increments so as not to substantially go above the "neutral" rate. Therefore, there will be a lot of focus on the dot-plot matrix, which is the summary of where FOMC officials expect rates to be in the future. Up until now, rates were expected to remain high for at least the first quarter of next year. A change in those expectations could determine where the market goes after the FOMC meeting.
20 September 2022	USD in consolidation mode

20 September 2022 USD in consolidation mode

Jing Ren Jing Ren 20.09.2022 08:13
AUDUSD consolidatesThe Australian dollar steadied after the RBA minutes hinted at a slowdown in hikes. A lack of support for the recent rebound is a sign that the bulls struggle to hold onto their gains. A drop below the daily support at 0.6680 may have prompted the last buyers to bail out and resumed the downtrend in the medium-term. 0.6600 from May 2020 is an intermediate support and its breach could extend losses towards 0.6510. On the upside, trend followers could be expected to sell into strength in the former demand zone at 0.6760.EURJPY seeks supportThe Japanese yen strengthened after August’s CPI beat expectations. The pair is looking to consolidate its recent gains after rising through June’s highs at 144.20. A bearish RSI divergence suggested a deceleration in the momentum, then a break below 142.70 triggered some profit-taking. However, from the daily chart’s perspective, the directional bias remains up. 141.40 at the origin of this month’s bullish breakout coincides with the 20-day moving average, making it a congestion area. A close above 144.50 could resume the rally.US 30 tests critical supportThe Dow Jones 30 recoups losses ahead of the Fed's policy meeting tomorrow. A bearish MA cross on the daily chart shows an acceleration to the downside and a break below 31000 has certainly put the bulls on the defensive. Last July’s low at 30200 is a critical floor and its breach may expose the index to a sharp sell-off towards 29000, confirming a bear market for the weeks to come. An oversold RSI attracted some bargain hunters. The support-turned-resistance at 31500 is the first hurdle in case of a bounce.
The Bank Of Canada Is Preparing To Announce Its Final 25bp Hike

Canadian Dollar (CAD): Bank Of Canada Decides On Interest Rate Soon And It's Not That Obvious What They're Going To Do

Jing Ren Jing Ren 19.09.2022 11:16
The BOC has taken an even more aggressive rate hike route than the Fed, giving the CAD the fastest rising rate of the majors. This didn't stop the meteoric rise in inflation that most developed countries have been seeing this year, although not as dramatic as in the US. Given the economic interconnectivity with the US, it's not surprising that CPI trends have been similar in both countries. Read next: How High Will The Bank Of England Raise Rates?| FXMAG.COM However, unlike in the US, Canada has been seeing not only a flattening but actual downturn in core CPI, the measure followed by central banks. This opens the question whether the BOC's increased frontloading of the interest rate means they can slow the pace of hikes before other central banks. Particularly as more economists worry that there is a recession on the horizon, if it's not already here. If core rates continue to fall, there would be further arguments for the BOC to not "lead" the Fed higher. The BOC meets again in late October. What to look out for Canada's inflation rate is expected to fall for the second consecutive month to 7.3% from 7.6% prior. This is expected to be supported by a -0.1% monthly rate, compared to 0.1% in July. The figures mirror the results seen in the US, but at a lower level. The drop in global crude prices has contributed to a reduction in energy costs in Canada as well. But what the BOC focuses on is the core rate, which trims off the effects of energy and food prices. And there the situation is a little more complicated, since annual core CPI is expected to rise to 6.2% from 6.1% prior. This is based on an expected acceleration in the monthly measure to 0.6% from 0.5% in July. Putting the pieces together Just like with the US' data from last week, even if the headline inflation rate goes down, the market is likely to react to the core rate. However, the differences that could impact the market here are really small. If the core rate is in line with expectations, it's just a decimal away from the prior. And a variation of a couple of decimal points from expectations is quite common. If the rate were to be at 6.1% or above, it would likely lead to speculation that the BOC will keep its aggressive stance. Because it suggests that a downward trend in the core inflation rate has not been established yet. This idea could get an extra boost later this week if the Fed raises rates by 100bps, which could lead to speculation that the BOC might raise rates by a full percentage point again. What if expectations aren't met? On the other hand, a miss of expectations by just two decimals (or more) would signal that the downward trajectory in inflation is intact. That could return the discussion to how much the BOC will moderate its tightening at the next meeting. And, again, this could be further supported if the Fed hikes by just 75bps on Wednesday. Read next: This Will Be The Highest Rate Level In Five Years| FXMAG.COM As for the Canadian dollar, weakness has been attributed to the expectation that the BOC will "pivot" first. But if headline inflation is coming down, while core inflation signals the BOC will remain aggressive, the upward trend of the USDCAD could get interrupted. Of course, the situation could be reversed if inflation signals the BOC could take a breather in the steep rate climbing.
Forex: What to expect from British pound against US dollar - January 17th

Let's Look At Euro To British Pound, AUD/JPY And GER 40

Jing Ren Jing Ren 19.09.2022 08:22
EURGBP breaks key resistance The pound tumbles as the UK’s August retail data disappoint. The buying pressure has been building up under June’s peak at 0.8720. The breakout prompted the last sellers to cover. As the euro’s rally gains momentum, this could open the door for a sustained climb towards 0.8900, which is a supply area from January 2021’s sell-off. 0.8800 is the intermediate resistance ahead. The RSI’s overbought situation could temporarily trim the buying and 0.8700 would be the first support in case the euro takes a breather. Read next: How High Will The Bank Of England Raise Rates?| FXMAG.COM AUDJPY seeks support The Australian dollar softens as investors shun risk assets. The pair is looking to hold onto its recent gains after rallying above June’s high at 96.60. However, short-term price action may struggle as there is no sign of committed buying yet. A break below 96.70 has forced leveraged buyers to bail out. The daily support and psychological level of 95.00 is a major area to gauge buying interest. A bounce will need to lift 96.40 before it could take hold. Failing that, a bearish breakout would deepen the correction below 94.00. GER 40 tests critical floor The Dax 40 slips as high interest rates prompt investors to take refuge in cash. After hitting the supply zone around 13500, the index has given up all gains from this month’s rally. This is a strong indication of the prevailing bearish bias. 12610 is the next support and its breach would bring the index back to the critical level of 12420. Then a bearish breakout may cause the remaining bulls to abandon the ship, resuming the downtrend towards 11900 in the medium-term. 12900 is a fresh resistance in case of a bounce.
19 September 2022	Dead cat bounce	No signs of bottom yet for risk assets

19 September 2022 Dead cat bounce No signs of bottom yet for risk assets

Jing Ren Jing Ren 16.09.2022 15:28
USDJPY hovers under 24-year highThe Japanese yen steadies as the government signals a market intervention. A rapid rise in interest rates across the globe has cut investors’ appetite for Japanese assets. Japanese officials have expressed their concerns over the currency's steep decline lately. The Finance Minister remarked that options are open to stop the yen’s bleeding as imported inflation may dampen consumer and business sentiment. A recent rate check with dealers by the BoJ shows that policymakers are closely watching the market, fueling speculations of a potential intervention. The pair is closing in on the 24-year high at 147.50. 138.00 is a fresh support.GBPUSD slides on stagflation worries The pound weakens over the rising cost of debt. Markets are expecting the Bank of England to raise its interest rate by at least 50bps. The latest data showed consumer prices slowed down for the first time in a year. This may lead the central bank to double down on tightening to stifle inflation. However, even if the BoE joins the 75 basis point club, the currency may find little relief as the fear of stagflation gains ground. Debt burdens from the UK government’s energy support package could weigh on investors’ demand for Sterling-denominated assets. The pair has been capped by 1.1700 and is heading towards 1.1100.XAUUSD struggles over robust US dollar Gold loses its shine as it feels the weight of a firm US dollar. Following hotter-than-expected US inflation traders may reckon that the Federal Reserve would carry on with its shock therapy to bring prices under control. Talks of a 100-basis-point have made their way back among market participants, sending the dollar index back to its two-decade peak. Amid a fast-paced rise in Treasury yields, the appeal of the non-yielding metal would continue to diminish. A hawkish FOMC this week would confirm the recent rally as a dead cat bounce. Bullion has entered bearish territory below 1680. 1580 is next with 1730 as the first resistance.US 500 slips over economic headwindsThe S&P 500 reverses its course as investors brace for a super-sized US rate hike. The market must have realised that recent inflation and retail data gave the Fed no reason to hit the brakes on the tightening. There is little good news to soothe the jittery mood either. Warnings about a global slowdown from both the World Bank and the International Monetary Fund may continue to push investors away from risk assets. Meanwhile, contraction in China’s property sector, which accounts for a quarter of the country's GDP, fans fears of a protracted downturn. The index is drifting to June’s low at 3650 and 4120 is a fresh resistance. Key data release (GMT time) Tuesday, 20 September 01:30 RBA Meeting Minutes 12:30 BoC Consumer Price Index Core Wednesday, 21 September 18:00 Fed Interest Rate Decision 18:30 FOMC Press Conference Thursday, 22 September 03:00 BoJ Interest Rate Decision 06:00 BoJ Press Conference 07:30 SNB Interest Rate Decision 11:00 BoE Interest Rate Decision Friday, 23 September07:30 S&P Global/BME Composite PMI S&P Global/BME Manufacturing PMI08:00 S&P Global Composite PMI08:30 S&P Global/CIPS Services PMI 12:30 Retail Sales
16 September 2022	USD bounces back

16 September 2022 USD bounces back

Jing Ren Jing Ren 16.09.2022 08:12
USDCHF attempts to reboundThe US dollar recovers supported by rising Treasury yields. A previous failure to clear the July peak at 0.9870 has put a halt to the dollar’s rally, possibly triggering a consolidation phase. The latest correction found support over 0.9480 while a bullish RSI divergence showed a loss of momentum in the sell-off. A follow-up break above 0.9620 is an encouraging sign but the bulls need to lift the former support at 0.9680 before a recovery could gain traction. Otherwise, the greenback may slide to the daily support at 0.9400.AUDUSD tests major supportThe Australian dollar struggles as August’s unemployment rate shows an uptick. The bounce hit resistance at 0.6910 over the 30-day moving average. A steep drop is a sign of liquidation and a lack of commitment from the buy side. The RSI’s oversold condition has led to some buying in the demand area near July’s lows (0.6680). If the pair fails to hold onto this critical level, a bearish breakout would extend losses to 0.6500 and resume the downtrend in the medium-term. The support-turned-resistance at 0.6830 is a fresh hurdle.NAS 100 breaks lowerThe Nasdaq 100 tumbles as investors brace for an aggressive move by the Fed next week. The recent rally came under pressure at the origin of a sell-off in late August (12850) which coincides with the 30-day moving average. The sharp liquidation suggests that the mood has swung back to the fragile side. A breach below the psychological level of 12000 shows that the path of least resistance is down. Then July’s lows near 11400 would be the bulls’ last stronghold. 12100 is the first resistance in case of a bounce.
Market Insights Podcast: Craig Erlam Discuss The Speculation Around The Bank Of Japan’s Meeting

Forex: Japanese Yen (JPY) - How Could BoJ's Intervention Look Like?

Jing Ren Jing Ren 15.09.2022 14:27
The yen has been, of course, on a wild ride lately. But there were some surprise moves yesterday which need some explaining, since they could shed some light on whether or not the USDJPY has hit a ceiling. There are some important implications for the future of the yen, and something traders need to be very careful about (hint: make sure stops are in place). The lead-up The yen has been weakening generally because the BOJ isn't raising rates while other central banks are. The BOJ isn't likely to raise rates in the foreseeable future, which makes the currency ripe for carry trading. On Tuesday, the USDJPY spiked higher after US CPI figures came out, because of speculation of an even stronger move by the Fed at the upcoming meeting. After the data, through the rest of the session, the pair drifted higher until it hit the 144.90 level, and then pulled back. That's when currency watchers noted that the BOJ had conducted a "rate check", and further announced a "doorstop" statement later in the day. The pair then pulled back rather dramatically, dropping over 180 pips in the course of a few hours. What is a "rate check"? The important thing isn't the check itself, but that it's something the BOJ does before it intervenes in the currency. Basically, the BOJ calls around to different banks asking what the exchange rate is. Presumably this is in preparation to take action, or to warn Japanese banks that action is likely. Read next: Australian Dollar (AUD): Reserve Bank Of Australia May Choose Less Aggresive Varaint As Unemployment Increased A Bit| FXMAG.COM That's why there was a reaction, but not a major move in the currency just yet. That it happened just as the pair was about to hit the 145.00 somewhat implies that's the level Japanese authorities will hold the line. That doesn't mean the market won't go above it marginally, or for brief periods. In fact, it would be expected that the market would "test" Japanese authorities to see if they actually will go through with intervention. What does intervention mean? It's been a couple of decades since the last time the currency pair moved up to similar levels, prompting a response from authorities. In that case, the pair got up to 147.00 and there was joint action from the US and Japan. The BOJ does conduct the operation, but it's at the direction of the Ministry of Finance, who "pay" for the move. Basically, the BOJ will buy yen on the market in a very large volume, enough to push the exchange rate down by several thousand pips all at once. The move is not pre-announced, and can happen more than once. The idea is precisely to keep the market from trying to push the pair up by "burning" out many of the long positions, and threatening to repeat at any moment. Read next: GDP Growth In New Zealand. Australia Unemployment Rate And Waiting For Initial Jobless Claims Report| FXMAG.COM That's why if you are trading with yen pairs over the next several weeks, as the USDJPY remains close to the 145.00, it's a very good idea to make sure your stops are in place and your portfolio is ready for a sudden, large move in the currency. But, remember, if the market behaves as the BOJ and MOF expect, then it's also quite possible that no intervention happens.
British Pound (GBP) Supported By CPI, What's One Of The Possible Scenarios For GBP/USD?

British Pound (GBP) Supported By CPI, What's One Of The Possible Scenarios For GBP/USD?

Jing Ren Jing Ren 15.09.2022 08:16
GBPUSD finds support The pound bounces back as Britain’s core CPI stayed stubbornly high in August. The sharp decline came to a halt at the base of a previous bullish breakout at 1.1480. The RSI’s oversold condition attracted some bargain hunters in the demand zone. The support-turned-resistance at 1.1620 is the next hurdle where trapped buyers would be looking to exit. However, its breach would send Sterling back to 1.1730 on the 20-day moving average, suggesting that the bulls may not yet have had their last word. NZDUSD breaks key support The New Zealand dollar recovers over upbeat Q2 GDP. The pair came under pressure near a former support (0.6160) over the 20-day moving average. The long bearish candle is a sign of capitulation as the short-term mood tanks. A break below the psychological support of 0.6000 has invalidated the recent rebound and indicated that the path of least resistance is down. May 2020’s lows around 0.5920 could be the next target. An oversold RSI may cause a bounce to 0.6050 where trend followers could sell into strength. USOIL hits resistance WTI crude rallied after a slower increase in US inventories. From the daily chart’s perspective, sentiment remains downbeat after the price broke below the key support at 86.00. The bears may see bounces as opportunities to sell at a better price. The current recovery has met stiff selling pressure at 90.00 which coincides with the 30-day moving average. However, if the buy side manages to push past this supply zone, 94.00 could be next. 84.20 is the closest support and its breach could resume the downtrend below 81.30.
Sturdy Australian Labour Market With Over 13K Full-Time Jobs, AUD/USD May Decrease Further, RBA Decides On Interest Rate On November 1st

Australian Dollar (AUD): How Is Australian Jobs Market Linked With Reserve Bank Of Australia

Jing Ren Jing Ren 14.09.2022 14:48
Jobs figures are back in focus in Australia following some interesting comments from RBA Governor Lowe a few days back. Of course the RBA doesn't care about the employment situation directly. But the theory is that jobs support consumer demand, which in turn supports prices. With the employment situation expected to turn around, particularly going into Australia's spring season, does that mean it's time to start considering a change in RBA policy? The Governor insists that it's not, and that policy will be consistent. The issue is that market expectations seem to not align with the RBA's outlook, pricing in more hikes into next year. In his latest speech, Lowe appeared to be trying to temper expectations. One key point is insisting that Australia did not need to follow the Fed's rate higher, citing the employment situation. What is the employment situation? Australia has relatively low unemployment, which has contributed to upward pressure in wages. However, wages have not kept pace with rising inflation, which means the RBA doesn't have to worry about a wage-price spiral. With housing prices starting to fall, but exports remaining strong, there is a case that the reserve bank might not feel as much urgency to control the market. Healthy appetite for raw materials from China has continued to support the dollar, which in turn puts downward pressure on prices. Given the amount of imports from Australia, this might have a bigger impact on reducing inflation than direct monetary policy. Recently there has been a little weakness in employment, but that was seen as a result of lower participation. Increasing labor force participation would be seen as helping the RBA's objective to bring prices down, as it would help increase production and solve some of the supply side issues. For that reason, the RBA might be wary about going above the neutral rate. Lowe did not give a specific range, just simply said that current policy was "nearer". What to look out for Australia August unemployment rate is expected to stay steady at 3.4%, despite the participation rate expected to tick up a couple of decimals to 66.6% from 66.4% prior. Australian firms have been complaining for months that they have been having trouble enticing workers back. The employment change is projected to turn around, and show 35K jobs created compared to -49.9K in July. These figures are seasonally adjusted to account for Australia coming out of the middle of winter. Chief sector that had been impacted over the last few months was construction as home sales and prices started to fall. Potential market reaction The issue now is whether the RBA will hike another 50bps or just do 25bps at their next meeting at the start of October. So far, there is much consensus, but the market still seems to be betting on a more hawkish option. Better jobs numbers would actually give the RBA more room to maneuver, and could be interpreted by the market as meaning a harsher hike is more likely. On the other hand, if the labor market were to not show the expected rebound, it could shake some of the confidence that policy will be as tight as expected, and weaken the Aussie.
Check EUR To USD Chart! US Dollar Increased Amid The US Inflation Data

Check EUR To USD Chart! US Dollar Increased Amid The US Inflation Data

Jing Ren Jing Ren 14.09.2022 08:22
EURUSD seeks support The US dollar surged after consumer prices rose faster than expected last month. The euro’s rally came to a halt in the supply zone around 1.0190, then a fall below 1.0090 forced leveraged short-term long positions to close out. After the RSI sank into oversold territory, some traders could be tempted to buy the dip between 0.9950 and the parity level. 0.9870 is a critical floor and its breach would invalidate the current rebound and send the single currency below 0.9800. On the upside, 1.0090 has turned into a resistance. XAUUSD tests key support Gold tumbled after hotter US inflation propelled the greenback across the board. The precious metal has been grinding its way up after it stabilised next to the major support 1690. Though it gave up its latest gains and came to a rest on the psychological tag of 1700. The price action is now at a crossroads. A lack of follow-up bids could shift the direction to the sell side. A drop below 1690 might seal its fate and cause an extended sell-off. 1713 is the first hurdle and the bulls need to clear 1730 before they can regain control. UK 100 hits major resistance Global equities tumbled after being wrongfooted by inflation data. The FTSE 100 had recouped most of the losses from the mid-August liquidation but turned south near the previous peak at 7570. Strong selling below 7370 forced more buyers to bail out. 7270 at the origin of a bullish breakout is a key level to see whether there is strong enough interest in keeping the rebound intact. Or 7180 could be the last level to keep the index afloat. 7380 is the first resistance as an oversold RSI may cause a limited bounce.
Will the Northern Ireland Issue Now "Disappear"?

Will the Northern Ireland Issue Now "Disappear"?

Jing Ren Jing Ren 13.09.2022 10:12
With Covid no longer taking up international relations, the Northern Ireland Protocol was back creating tension between London and Brussels. But, over the weekend, a proposal was quietly put forward by EU representative Sefcovic that could potentially put an end to the issue. Which could help improve the risk situation in the UK, and the EU, as well as speed along a trade agreement between the UK and the US. What changed? While Liz Truss was the leading contender to replace Johnson, there was quite a bit of speculation over what would happen in the relationship with the EU. She was the Foreign Secretary, and had been pushing heavily to resolve the remaining issue between the two economies: How to trade with Northern Ireland. Most importantly, she had been publicly threatening to invoke Article 16 over the issue. That would allow the unilateral suspension of a part of the agreement. Were that to happen, it was expected retaliation from Brussels, and an escalation of the dispute. Yet now that Truss is the PM, the issue seems to have stopped being as prominent. Of course the EU and UK are facing an unprecedented energy crisis and need to be on good terms to deal with that. But, there is another issue: Politics. Finding a solution that looks good One of the main issues around the Protocol is that any agreement would likely imply one side or the other offering concessions. And that would be politically unacceptable. However, the current situation is untenable, and the "easiest" resolution might simply be to stop making an issue of it. Which is basically what Sefcovic proposed over the weekend. The main problem is that the Brexit agreement effectively creates a customs border for goods between Northern Ireland and the rest of the UK. This was in order to prevent the customs border being between Northern Ireland and Ireland, a violation of the Good Friday agreement. The EU did not want to have an "open border" with the UK, which would allow British goods into the common market without being checked. Starting a problem, and ending it When Brexit became effective, the EU was draconian in the application of customs rules (to the point of infamously seizing ham sandwiches in the cabs of trucks crossing the Channel). That meant enforcement across the Irish Sea was tedious, leading to supply delays from the UK to Northern Ireland. On top of the supply chain problems due to covid, this meant Northern Irish grocery stores were starting to go empty at times. Naturally this led to a lot of unhappy people, and included the resignation of the government. Sefcovic's proposal would be to drastically scale back the amount of checks on cargo going across the Irish Sea to "a few lorries a day". That would technically satisfy the EU on the basis that a border was still in place, but not create the supply bottlenecks that have made trade difficult. Of course both sides could potentially present this as either having provided concessions to or obtained concessions from the other. Which could be politically costly, depending on how it's perceived, so simply letting the situation "fade" without a formal announcement, might be a solution.
USD/JPY - Why Did Japanese Yen Gain? Euro (EUR) And US30 Go Up

USD/JPY - Why Did Japanese Yen Gain? Euro (EUR) And US30 Go Up

Jing Ren Jing Ren 13.09.2022 08:22
USDJPY consolidates gains The Japanese yen bounced after the government hinted at intervention to support its currency. The dollar gained momentum after it cleared the previous top at 139.30. However, it soon came under pressure at the psychological level of 145.00 and may take a breather. After the RSI soared into overbought territory, a drop below 143.00 led to a round of profit-taking with 141.50 as an intermediate support. Further down, 139.10 is a major level from a bullish breakout and sits on the 20-day moving average, making it an area of interest. EURGBP attempts to break out The euro strengthens as the ECB would reportedly accelerate its rate hikes to bring down inflation. The pair is at a crossroads under June’s high at 0.8720. A combination of profit-taking and fresh selling could weigh on the price action after a fall below 0.8660. The area between 0.8620 and 0.8570 next to the 20-day moving average is a major level to test the bulls’ resolve. A series of higher lows indicates a build-up in buying pressure and a breakout could let off steam and trigger a full-fledged rally towards 0.8900. US 30 grinds towards key resistance The Dow Jones 30 rallies ahead of a new set of US inflation data. The current recovery has gained traction once above 32000, sending the index towards the key supply zone around 33300 at the origin of a sharp sell-off back in late August. Strong selling pressure could be expected from trend followers as the market mood remains fragile. The RSI’s repeated overbought condition may limit the upside range in the resistance area. 32150 is the closest support and a bullish breakout would lift offers to the previous peak at 34300.
US August CPI Ahead of Fed Meeting

US August CPI Ahead of Fed Meeting

Jing Ren Jing Ren 13.09.2022 02:28
Tomorrow is likely to be one of the most important days for the markets this week, because we get some crucial data ahead of the FOMC meeting next week. To make matters more interesting, the Fed is already in its blackout period. Meaning officials are likely to not respond to the data, and provide some context on how it could affect the interest rate decision. The market is pricing in a 75bps hike at the next meeting, based on expectations that inflation will remain high. But this opens the question of what could happen with the data that might change those expectations? Can the Fed be dissuaded from a "triple hike"? What's driving the moves The Fed is looking to restore what it calls "credibility", in order to "anchor" inflation expectations. This is because the economic theory that the Fed is following argues that prices fluctuate primarily based on whether market makers think prices will go up. It's the job of monetary policy, therefore, to "anchor" those expectations at a certain level. How? By ensuring that market makers believe that the Fed will do what it takes to get inflation back to that level. That belief is called the "credibility" of the bank. Which is why there is such a strong push by the Fed at the moment to communicate that interest rates are going to keep rising. But the purpose is to get inflation to go down. So, if inflation has peaked, then it could be understood that inflation expectations are starting to get "anchored" and the Fed has retained its "credibility". Therefore, further aggressive hikes might not be needed. Since bond values are pricing in where the rates will be in a few months, when the Fed will start slowing the pace is the key to markets. If inflation comes down, it might signal that interest rates won't rise as fast, which could continue to weaken the dollar. What's in the data The headline number is what's going to get most of the media coverage, since that's what affects consumers most directly. Annualized August CPI Change is expected to slow down to 8.1% compared to 8.5% prior. That would be the second consecutive months of declines, and might start providing a more convincing case that inflation has peaked. But the Fed cares more about the core inflation rate, which doesn't consider the variation in the cost of food and fuel. We have to remember that food prices have continued to rise, but fuel prices have been declining since June. WTI Crude, the benchmark for US fuel prices, fell below $90/bbl last month, continuing a lower trend due to slowing demand. Potential Fed reaction Core August annualized CPI is forecast to accelerate to 6.1% from 5.9% prior. This would bring it back up to a rate not seen since May, and be more than three times the Fed's target. With crude prices going down, a rise in core rate could imply a more systemic price problem. That would likely make the Fed even more eager to restore "credibility" by hiking rates. If headline inflation falls, but core inflation increases, the Fed is likely to stick to its hiking path. But if core inflation were to unexpectedly come in below 5.9%, it would imply that the trend remains downwards since April, and could lead to a reevaluation of how many hikes we can expect by the end of the year.
According to ING, US Producer Price Index may mean that inflation could decrease earlier

USD: Markets Expect A 75 Rate Hike From Fed. Inflation Data Could Throw Light On Further Moves Of Federal Reserve

Jing Ren Jing Ren 12.09.2022 12:29
Tomorrow is likely to be one of the most important days for the markets this week, because we get some crucial data ahead of the FOMC meeting next week. To make matters more interesting, the Fed is already in its blackout period. Meaning officials are likely to not respond to the data, and provide some context on how it could affect the interest rate decision. The market is pricing in a 75bps hike at the next meeting, based on expectations that inflation will remain high. But this opens the question of what could happen with the data that might change those expectations? Can the Fed be dissuaded from a "triple hike"?  What's driving the moves The Fed is looking to restore what it calls "credibility", in order to "anchor" inflation expectations. This is because the economic theory that the Fed is following argues that prices fluctuate primarily based on whether market makers think prices will go up. It's the job of monetary policy, therefore, to "anchor" those expectations at a certain level. How? By ensuring that market makers believe that the Fed will do what it takes to get inflation back to that level. That belief is called the "credibility" of the bank. Which is why there is such a strong push by the Fed at the moment to communicate that interest rates are going to keep rising. But the purpose is to get inflation to go down. So, if inflation has peaked, then it could be understood that inflation expectations are starting to get "anchored" and the Fed has retained its "credibility". Therefore, further aggressive hikes might not be needed. Since bond values are pricing in where the rates will be in a few months, when the Fed will start slowing the pace is the key to markets. If inflation comes down, it might signal that interest rates won't rise as fast, which could continue to weaken the dollar. What's in the data The headline number is what's going to get most of the media coverage, since that's what affects consumers most directly. Annualized August CPI Change is expected to slow down to 8.1% compared to 8.5% prior. That would be the second consecutive months of declines, and might start providing a more convincing case that inflation has peaked. Read next: Waiting For Important News From Overseas. Forecasts For US Indices| FXMAG.COM But the Fed cares more about the core inflation rate, which doesn't consider the variation in the cost of food and fuel. We have to remember that food prices have continued to rise, but fuel prices have been declining since June. WTI Crude, the benchmark for US fuel prices, fell below $90/bbl last month, continuing a lower trend due to slowing demand. Potential Fed reaction Core August annualized CPI is forecast to accelerate to 6.1% from 5.9% prior. This would bring it back up to a rate not seen since May, and be more than three times the Fed's target. With crude prices going down, a rise in core rate could imply a more systemic price problem. That would likely make the Fed even more eager to restore "credibility" by hiking rates. If headline inflation falls, but core inflation increases, the Fed is likely to stick to its hiking path. But if core inflation were to unexpectedly come in below 5.9%, it would imply that the trend remains downwards since April, and could lead to a reevaluation of how many hikes we can expect by the end of the year.
12 September 2022	USD into correction

12 September 2022 USD into correction

Jing Ren Jing Ren 12.09.2022 08:18
USDCAD tests key supportThe Canadian dollar stalled after a surprise rise in unemployment in August. The pair has met stiff selling pressure at the July peak (1.3200). A fall below the consolidation range at 1.3070 caused leveraged short-term positions to liquidate. The daily support at 1.2900 is a key level to gauge the strength of the current rally. The RSI’s oversold condition has triggered a ‘buy-the-dips’ behaviour but buyers need to lift 1.3100 before the uptrend could resume. A bearish breakout could dent the optimism in the medium-term.XAGUSD bounces higherSilver inches higher as the US dollar falls from profit-taking across the board. On the daily chart, the precious metal found support at the origin (17.60) of the parabolic rise in July 2020. A close above 18.50 has given the bulls more confidence to extend the recovery. 19.40 is a major roadblock ahead and strong pressure could be expected from this former liquidation point. But its breach could extend gains past the psychological level of 20.00. 18.40 has turned into a fresh support in case of a consolidation.GER 40 attempts to reboundThe Dax 40 recoups losses as traders reposition ahead of CPI this week. The bulls are looking to safeguard the summer rebound by keeping it off the critical demand zone around 12450. A surge above 13050 has prompted short-term sellers to cover their bets, easing the bearish pressure. 13340 near the 30-day moving average and the start of a stalled rebound is an area of interest. A breakout may attract momentum buying and lift the index to 13700. On the downside, 12900 is a fresh support if the rally loses steam.
"Private investors will be required to increase their gilt exposure by at least £268bn in FY2023-24"

GBP: Bank's Of England Plans Underwhelms Traders. UK Has To Face Energy Crisis And More

Jing Ren Jing Ren 09.09.2022 15:12
Maximum effort Global super-sized hikes give dollar breathing room GBPUSD hits 30-month low as recession looms The pound suffers from a symptom of high inflation and high interest rates. Expectations of steep rate hikes by the BoE fails to impress traders who tend to shy away from risk assets. Britain is facing strong headwinds in the shape of recession, soaring government spending and an energy crisis. The market fears that a 50bp increase would dampen consumer and business confidence and put growth at risk, a hefty cost for taming inflation. Meanwhile, the US dollar is backed by a sound economy and its safe-haven appeal, meaning that cable could stay subdued. 1.1420 is a critical support from March 2020 and 1.2100 the first resistance. EURUSD steadies on hawkish ECB The euro reclaimed parity following hawkish comments from the ECB. The central bank lifted rates by a record 75 basis points. Speculations run that another super-sized 75bp could be on the table next month. Now that the Europeans are on the same page as their US counterpart, a halt to the widening rate gap could prevent further bleeding in the exchange rate. However, the downside risk remains as the bloc is heading into a tough winter with soaring energy bills and debt burdens. A correction in the greenback may struggle to trigger a sustained recovery. 1.0320 is the first resistance and 0.9800 a close support. USOIL falters over weak demand WTI falls as traders fear that a recession is right around the corner. Lacklustre August trade numbers from China suggest more headwinds for the global economy. Exports lost steam due to softening demand from the US and EU while local lockdowns and weak consumer sentiment weigh on imports. Slower growth in China, the second largest oil consumer, may keep the market on its toes. In the meantime, major central banks’ relentless push for tighter financial conditions to fight inflation could be the straw that broke the camel’s back, making recession a reality. The price could be capped at 97.00 and heading towards 75.00. NAS 100 slips over tighter monetary policy The Nasdaq 100 stalls as the prospect of a prolonged downturn weighs on risk assets. The Fed is expected to raise rates by another 75 basis points at its September meeting. With growing signs of an economic slowdown in Europe and China, investors are wondering whether central banks might push too hard and send the world’s economy overboard. The combination of a global downturn and a hawkish Fed may keep restraining anyone’s enthusiasm in growth-sensitive stocks. The downside risk would be a complete reversal of July’s rally below the critical floor at 11400, thus confirming a bearish market. 13160 a fresh resistance. Key data release (GMT time) Tuesday, 13 September 06:00 ILO Unemployment Rate Harmonized Index of Consumer Prices 12:30 Consumer Price Index Wednesday, 14 September 06:00 Consumer Price Index 22:45 Gross Domestic Product Thursday, 15 September 01:30 Unemployment Rate 11:00 BoE Interest Rate Decision 12:30 Retail Sales Friday, 16 September 14:00 Michigan Consumer Sentiment Index
12 September 2022	Maximum effort	Global super-sized hikes give dollar breathing room

12 September 2022 Maximum effort Global super-sized hikes give dollar breathing room

Jing Ren Jing Ren 09.09.2022 15:02
GBPUSD hits 30-month low as recession loomsThe pound suffers from a symptom of high inflation and high interest rates. Expectations of steep rate hikes by the BoE fails to impress traders who tend to shy away from risk assets. Britain is facing strong headwinds in the shape of recession, soaring government spending and an energy crisis. The market fears that a 50bp increase would dampen consumer and business confidence and put growth at risk, a hefty cost for taming inflation. Meanwhile, the US dollar is backed by a sound economy and its safe-haven appeal, meaning that cable could stay subdued. 1.1420 is a critical support from March 2020 and 1.2100 the first resistance.EURUSD steadies on hawkish ECBThe euro reclaimed parity following hawkish comments from the ECB. The central bank lifted rates by a record 75 basis points. Speculations run that another super-sized 75bp could be on the table next month. Now that the Europeans are on the same page as their US counterpart, a halt to the widening rate gap could prevent further bleeding in the exchange rate. However, the downside risk remains as the bloc is heading into a tough winter with soaring energy bills and debt burdens. A correction in the greenback may struggle to trigger a sustained recovery. 1.0320 is the first resistance and 0.9800 a close support.USOIL falters over weak demandWTI falls as traders fear that a recession is right around the corner. Lacklustre August trade numbers from China suggest more headwinds for the global economy. Exports lost steam due to softening demand from the US and EU while local lockdowns and weak consumer sentiment weigh on imports. Slower growth in China, the second largest oil consumer, may keep the market on its toes. In the meantime, major central banks’ relentless push for tighter financial conditions to fight inflation could be the straw that broke the camel’s back, making recession a reality. The price could be capped at 97.00 and heading towards 75.00.NAS 100 slips over tighter monetary policyThe Nasdaq 100 stalls as the prospect of a prolonged downturn weighs on risk assets. The Fed is expected to raise rates by another 75 basis points at its September meeting. With growing signs of an economic slowdown in Europe and China, investors are wondering whether central banks might push too hard and send the world’s economy overboard. The combination of a global downturn and a hawkish Fed may keep restraining anyone’s enthusiasm in growth-sensitive stocks. The downside risk would be a complete reversal of July’s rally below the critical floor at 11400, thus confirming a bearish market. 13160 a fresh resistance. Key data release (GMT time) Tuesday, 13 September 06:00 ILO Unemployment Rate Harmonized Index of Consumer Prices 12:30 Consumer Price Index Wednesday, 14 September 06:00 Consumer Price Index 22:45 Gross Domestic Product Thursday, 15 September 01:30 Unemployment Rate 11:00 BoE Interest Rate Decision 12:30 Retail Sales Friday, 16 September14:00 Michigan Consumer Sentiment Index
Jing Ren Comments On S&P 500, NZDUSD And EUR/JPY

Jing Ren Comments On S&P 500, NZDUSD And EUR/JPY

Jing Ren Jing Ren 09.09.2022 08:18
NZDUSD tests resistanceThe New Zealand dollar recovers from dips as risk appetite makes its return. The pair came under pressure after it tanked below the daily support at 0.6060. With the RSI in the oversold zone, bargain hunters have been eager to buy the dip at the psychological level of 0.6000. But so far rebounds have been opportunities to sell into strength. The next one could also meet stiff selling pressure at 0.6130. The bulls will need to clear 0.6250 before they could turn sentiment around. Otherwise, the kiwi might drift towards 0.5900. EURJPY keeps high groundThe euro finds support from a surprising 75bp hike by the ECB. The pair has climbed above last June’s double top at 144.20, which indicates strong interest in maintaining the upward trajectory. 145.00 is the closest resistance and another breakout would pave the way for an extended rally to a near 8-year high at 147.00. In the meantime, the single currency could use some breathing room. Should buyers start to take profit, 143.20 would be a first level to expect trend followers. SPX 500 bounces backThe S&P 500 clawed back some losses over a correction in bond yields. A drop below 3920 and a bearish MA cross indicates that the market mood still leans towards the cautious side. The short-term price action has found support at the origin of the July breakout near 3880. 4050 is the first resistance and its breach could attract more buying interest. Then the support-turned-resistance (4120) over the 20-day moving average would be within reach. On the downside, a bearish breakout may extend the sell-off to 3800.
Upcoming China inflation and Commodity Demand

Upcoming China inflation and Commodity Demand

Jing Ren Jing Ren 08.09.2022 14:21
Earlier this week, the PBOC made a "surprise" announcement cutting the reserve requirement ratio (RRR) for banks. The "surprise" is in quotes, because even though it wasn't pre-announced, the economic situation was such that a lot of analysts were speculating that it was just a matter of time. The economic situation in China has been moving in such a way that a move like that was necessary. The yuan has been moving higher, getting close to hitting the 7.0 handle, which hasn't been seen since the middle of 2020. The action by the PBOC could be expected to weaken the currency, potentially leading the exchange rate above that key level. That has potential implications for quite a few other currencies in the region. Why it matters The RRR is the PBOC's main policy tool. Essentially, it regulates how much money banks can loan out by varying the level of currency they must keep in reserve. Because banks create money on debt, this has multiplying effects on the amount of money in circulation. A cut in the rate implies more inflationary pressure; and an increase implies further monetary tightening. Which is why there is increased attention on the data expected tomorrow. China July inflation rate is expected to come in at an annual 2.8% compared to 2.7% prior. But it comes on the basis of a deceleration in the monthly rate to 0.2% from 0.5% prior. Meanwhile, producer prices are expected to slow down to 3.1% from 4.2% prior. The broader effects China's economy has been under pressure due to rolling lockdowns. Just this morning, the second largest city, Chengdu, announced that it would extend lockdowns as the number of covid cases increased. With inflation creeping up and the economy facing challenges, the PBOC has to decide whether it's going to prioritize supporting the economy or keeping inflation under wraps. The latest moves of the PBOC suggest the former. Last month, they lowered the Loan Prime Rate (the other primary policy tool), and last week the China Economic Daily called for another cut. This would make it easier for borrowers to get credit, potentially supporting the economy. But, also increasing the monetary base. What it means for commodity currencies With lower interest rates and rising inflation, naturally the yuan has been weakening. This might help improve the situation for exports, assuming that factories can produce in light of the lockdowns. But it also makes it harder for Chinese firms to import raw materials, because of higher cost. Part of this problem can be mitigated by buying in yuan, such as energy from Russia as was recently agreed. But it might mean that there will be less demand for Australian and New Zealand exports. On the other hand, the increased capital expenditure could help Japanese machinery exports.
Forex: Check The Performance Of EUR/USD, USD/JPY And USD/CAD!

Forex: Check The Performance Of EUR/USD, USD/JPY And USD/CAD!

Jing Ren Jing Ren 08.09.2022 08:42
EURUSD attempts to break out The euro recoups losses as traders expect a 50bp interest rate increase by the ECB. A bearish MA cross on the daily chart following a brief consolidation shows that the mood remains cautious at best. A failure to hold onto 0.9900 was a reminder of a strong bearish bias. However, a break above the first resistance at 0.9980 is an encouraging sign. The single currency will need a solid catalyst to propel it above the supply zone at 1.0090 and to make a recovery sustainable. Otherwise, the fresh support at 0.9870 could be at risk. USDJPY in limited pullback The Japanese yen recoups some losses as the Q2 GDP growth beats expectations. The dollar’s rally gained momentum after it lifted July’s high at 139.40. 145.00 is a hurdle and may see some profit-taking after the RSI soared into overbought territory. Past that, the pair could continue towards its 24-year high at 147.50. As sentiment remains extremely bullish, a pullback would be seen as an opportunity to stake in with 142.70 as the closest support. Further down, the psychological level of 140.00 would be the bulls’ stronghold. USDCAD hits resistance The Canadian dollar found support after the BoC raised interest rates by 75 bps as expected. The pair has been hovering under July’s high at 1.3220. A bullish MA cross on the daily chart and a series of higher lows indicate that the buying pressure has been building up. A breakout would remove the lid and attract momentum buyers. Then 1.3400 near its two-year high would be the next target. The price action is testing 1.3060, a key demand zone from the latest accumulation. Its breach could force the bulls to bail out.
In Times Of Looming Energy Crisis Bank Of England And UK In General Have A Complicated Way Ahead

In Times Of Looming Energy Crisis Bank Of England And UK In General Have A Complicated Way Ahead

Jing Ren Jing Ren 07.09.2022 14:18
In general terms, the economic policy of the UK under the new government is expected to remain very similar. For example, the new Chancellor Kwasi Kwarteng might have had differences in public image with former chancellor Sunak, but in practice, agrees on most major issues. In fact, the argument between them was mostly along the lines of who was most in favor of the policies. That having been said, a change of the occupant of No. 10 is an opportunity to do a bit of a course correction. After all, the prior PM was quite unpopular, and the point of a changing leadership is to find a new direction. So, some changes are to be expected, particularly on the front that could be seen as garnering popular support. But, the question for traders is: How does this affect the markets? The most notable is in respect to dealing with the energy crisis, which took on increasing new dimensions over the summer. That was when Johnson was still in a caretaker role, and therefore wouldn't be announcing any major new policy. Though we should remember that the UK already had an energy emergency a year ago, with petrol stations running out of fuel in some places. While largely fueled by consumer panic, there was an underlying logistics issue. Now, there is a different problem. The new PM is proposing a program to spend as much as £200B in order to keep down energy prices for consumers and businesses. That amounts to a little over 7.4% of the UK's nominal GDP for last year (and could be even higher if the BOE's projections of a recession comes true). With multi-decade high inflation, increased spending (or, at least, the monetary expansion to support it) might have quite a few economists rather worried. In particular, some traders have been speculating that cable could fall down to parity, like the Euro already has. What about the nuts and bolts? Of course there have been other measures announced, such as rescinding the raise in National Insurance. However, since a little over a third of the UK's energy needs come from overseas, that is the issue most likely to impact forex markets. While in general, increasing spending based on debt tends to lead to higher inflation, exactly how the mechanism is implemented could have different kinds of effects. And, so far, the details have not been forthcoming, though more information is expected tomorrow. Getting a handle on the implications So far, the promise has been to cap household energy bills. There are a wide range of mechanisms to achieve that, and they all have different inflation implications. The basic issue is that capping energy prices would allow UK households to have more disposable income, at a time that the BOE is trying to tamp down demand with higher rates. It might mean the BOE takes a stronger position starting at the next meeting to head off inflation. If the price cap mechanism is achieved through some sort of direct subsidy to energy bills, that would imply higher domestic spending by the government. Which would increase inflationary pressure. However, if the price cap was more similar to Spain's, where the government would subsidize input costs for generators, then the inflationary effect might be less. However, if the BOE takes a stronger stance in raising rates, a stronger pound might additionally help offset the cost of energy and lower inflation. Another reason that BOE policy might look more like the US' than Europe's in the near term.
Energy Crisis May Be Too Much For UK Economics, Australian Dollar (AUD) Loses As Risk Is Reduced

Energy Crisis May Be Too Much For UK Economics, Australian Dollar (AUD) Loses As Risk Is Reduced

Jing Ren Jing Ren 07.09.2022 08:27
AUDUSD struggles for bids The Australian dollar takes a hit as risk appetite continues to recede across markets despite the RBA’s 50bp hike. A bearish MA cross on the daily chart shows a deterioration in sentiment. A fall below the demand zone near 0.6800 has left the aussie vulnerable. A lack of buying interest may send the pair to the recent lows around 0.6680, which is a critical floor to keep the price afloat in the medium-term. 0.6830 is a fresh hurdle but rebounds have so far been opportunities to sell at a better price. USOIL tests critical floor WTI crude weakens due to lingering concerns over demand. The recent bounce has failed to clear the daily resistance at 109.00, given back all its gains instead by retesting the base at 91.50. As sentiment remains pessimistic, the path of least resistance might still be down. A bearish breakout would force the bulls to bail out and attract momentum sellers, exacerbating volatility in the process. A drop below the psychological level of 90.00 could extend losses beyond 85.00. A recovery may be brief with 97.20 as the first resistance.   UK 100 in limited recovery The FTSE 100 struggles as the UK's finances might over-stretch with the energy crisis. On the daily chart, the index is going sideways between two boundaries 7000 and 7640. A breakout on either side would dictate the next direction in the weeks to come. In the meantime, range trading could be the name of the game. The short-term recovery is heading up to 7380, but 7480 from a faded bounce could be a tough level to crack. On the downside, 7180 is the immediate support and 7050 a major level to test the bulls’ resolve.
Eurozone's GDP Is Forecasted To Hit 2.1% For 2022, Inflation Expectations May Be Corrected

Eurozone's GDP Is Forecasted To Hit 2.1% For 2022, Inflation Expectations May Be Corrected

Jing Ren Jing Ren 06.09.2022 15:01
We can expect quite a bit of volatility on Thursday, when the ECB will make its rate decision. Surveyed economists are almost evenly split on whether there will be a 50bps or a 75bps hike. The market has priced in around 68bps, implying a favoritism towards the tighter policy. However, it's still possible to get a bounce in the currency, since the move isn't fully priced in. Though part of the expectations could be influenced by an unusually large amount of debt issuance by Eurozone countries this week. Italy, Austria and Germany are all issuing bonds before the ECB meeting, which could put upward pressure on yields, and obscure how the market is really feeling about what will happen with the rate decision. Putting the pieces together There are good fundamental arguments for both positions, as might be expected. On the one hand, EU inflation is likely to keep rising after Russia cut off supply of gas through Nord Stream 1. Tighter policy might be justified in an attempt to prevent higher energy costs from spreading through the economy. On the other hand, that very possibility of higher energy costs could justify keeping rates on hold. Higher energy costs would contribute to a recession, thus lower prices, and less need for the ECB to take as aggressive attitude. However, the reality is inflation isn't on the "supply side" (that is, because of increased funds) as much as it is due to factors outside the ECB's control. The ECB doesn't control the price of energy, nor the flow of gas from Russia, nor the shutdown of factories because of higher energy and transportation costs. The ECB has one tool, and just because it might not be the most appropriate for the situation, it doesn't mean they won't use it, anyway. The market reaction There is wide expectation that the Fed will also hike rates by 75bps. Meaning that if the ECB goes for only 50bps, the gap between the Euro and the dollar will once again widen. That would put downward pressure on the EURUSD. On the other hand, a 75bps hike would simply maintain the gap, which could help the EURUSD, but would have less buoyancy. The other factor to keep in mind is that ECB staff projections are announced at the same time. This could have a bigger impact on the currency, since forward expectations of rate hikes weigh more on institutional investors. Lately, there have been several ECB members emphasizing that they will push for tighter policy. Some have gone so far as to suggest that rates could go above the "neutral rate" in order to tamp down inflation. That would imply at least another 175bps of hikes over the next four meetings. The future is what matters Those aggressive stances might be tempered if the staff forecasts cut the outlook for the shared economy's growth for this year and next. The last projections showed that the bank expected 2.1% growth for this year, and is likely to be revised downward. Inflation was also projected to be at 2% for next year, something that is likely to be revised upwards.
	 - 06.09.2022

- 06.09.2022

Jing Ren Jing Ren 06.09.2022 14:00
We can expect quite a bit of volatility on Thursday, when the ECB will make its rate decision. Surveyed economists are almost evenly split on whether there will be a 50bps or a 75bps hike. The market has priced in around 68bps, implying a favoritism towards the tighter policy. However, it's still possible to get a bounce in the currency, since the move isn't fully priced in.Though part of the expectations could be influenced by an unusually large amount of debt issuance by Eurozone countries this week. Italy, Austria and Germany are all issuing bonds before the ECB meeting, which could put upward pressure on yields, and obscure how the market is really feeling about what will happen with the rate decision.Putting the pieces togetherThere are good fundamental arguments for both positions, as might be expected. On the one hand, EU inflation is likely to keep rising after Russia cut off supply of gas through Nord Stream 1. Tighter policy might be justified in an attempt to prevent higher energy costs from spreading through the economy. On the other hand, that very possibility of higher energy costs could justify keeping rates on hold. Higher energy costs would contribute to a recession, thus lower prices, and less need for the ECB to take as aggressive attitude.However, the reality is inflation isn't on the "supply side" (that is, because of increased funds) as much as it is due to factors outside the ECB's control. The ECB doesn't control the price of energy, nor the flow of gas from Russia, nor the shutdown of factories because of higher energy and transportation costs. The ECB has one tool, and just because it might not be the most appropriate for the situation, it doesn't mean they won't use it, anyway.The market reactionThere is wide expectation that the Fed will also hike rates by 75bps. Meaning that if the ECB goes for only 50bps, the gap between the Euro and the dollar will once again widen. That would put downward pressure on the EURUSD. On the other hand, a 75bps hike would simply maintain the gap, which could help the EURUSD, but would have less buoyancy.The other factor to keep in mind is that ECB staff projections are announced at the same time. This could have a bigger impact on the currency, since forward expectations of rate hikes weigh more on institutional investors. Lately, there have been several ECB members emphasizing that they will push for tighter policy. Some have gone so far as to suggest that rates could go above the "neutral rate" in order to tamp down inflation. That would imply at least another 175bps of hikes over the next four meetings.The future is what mattersThose aggressive stances might be tempered if the staff forecasts cut the outlook for the shared economy's growth for this year and next. The last projections showed that the bank expected 2.1% growth for this year, and is likely to be revised downward. Inflation was also projected to be at 2% for next year, something that is likely to be revised upwards.
Are There Any Chances That Amazon Will Find Itself Under Another Downward Pressure?

Tech Stocks: (AMZN) Amazon Stock Price Nearing $160?

Jing Ren Jing Ren 06.09.2022 10:10
Could Amazon Stock Price draw a zigzag?  AMZN shares are expected to develop a zigzag, which consists of sub-waves a-b-c of the cycle degree. Perhaps the market has completed the formation of the first major wave a, it represents a bullish 5-wave impulse. Since the end of last year, there has been a decline in the price, which may indicate the beginning of the construction of a bearish correction b. This correction may take the form of a zigzag â’¶-â’·-â’¸. Most likely, in the near future we will see a continuation of the depreciation of stocks in the final intermediate wave (5), which may end the primary impulse wave at 93.41. At that level, wave (5) will be at 76.4% of previous impulse (3). Read next: Russia Suspends Flow Through The Nord Stream 1 Pipeline, Cotton Futures, Gold Prices Increase For The First Time In 3-weeks| FXMAG.COM After the end of the impulse wave â’¶, the stock is expected to rise in the primary correction â’·. Another scenatio for AMZN Let's consider a scenario in which the market has completed the formation of the primary wave â’¶. According to this markup, the wave â’¶ has the form of a leading diagonal (1)-(2)-(3)-(4)-(5). In this case, in the last section of the chart, we see a price increase within the bullish correction â’·. It is assumed that the correction wave â’· will take the form of an intermediate double zigzag (W)-(X)-(Y), where the actionary wave (W) is also a double zigzag W-X-Y of a lesser degree. It is possible that the correction â’· will be at 61.8% of wave â’¶. Thus, its completion is expected to reach the level of 154.91. An approximate scheme of possible future movement is shown on the chart.
Jing Ren Comments On USD/CHF, EURGBP And US 30 (Dow Jones)

Jing Ren Comments On USD/CHF, EURGBP And US 30 (Dow Jones)

Jing Ren Jing Ren 06.09.2022 08:07
USDCHF tests resistance The Swiss franc struggles as the Q2 GDP reading disappoints. The greenback has recouped all losses from its July sell-off and is testing the daily resistance at 0.9880. A combination of profit-taking and fresh selling may limit the upward extension. As the RSI returns to the neutrality area, 0.9740 is the first support and 0.9660 the bulls’ second line of defence. A bullish MA cross on the daily chart shows improved sentiment and may attract more buying in case of a pullback. A bullish breakout would lead to the double top at 1.0050. EURGBP grinds key resistance Sterling finds support as Liz Truss is set to be Britain's next prime minister. As the pair came to July’s high at 0.8680, a bearish RSI divergence suggests a deceleration in the rally. Strong pressure has been building up following the indicator’s repeated overbought signals. 0.8570 is a key support to assess the underlying strength. Its breach would trigger a liquidation towards the origin of a previous breakout at 0.8500. However, a bounce could clear this year’s high at 0.8720, paving the way for a potential bullish run. US 30 struggles for support The Dow Jones 30 slips as the Fed’s hike agenda may find comfort in a robust labour market. A quick bounce came to a halt at 32000 which indicates that the pessimistic mood still prevails. A bounce may only sustain itself if the bulls manage to push through the supply zone around 32000. Otherwise, traders may continue to see rebounds as opportunities to sell into strength. 31100 is the immediate support and its breach could send the index to 30550 near July’s lows, at the risk of putting an end to the summer recovery.
With High Inflation, Why Isn't Gold Rising?

With High Inflation, Why Isn't Gold Rising?

Jing Ren Jing Ren 05.09.2022 23:56
The sales pitch for gold is that it's a hedge against inflation, because it doesn't lose its value. It is a real commodity, unlike fiat currency. Yet, as inflation has skyrocketed around the globe this year, the price of gold has not. In fact, after peaking out in March, it has since trended lower. What gives? Prices are relative One of the things to keep in mind, first, is that gold is priced in dollars. So, sure, there has been inflation in many other currencies (with the notable exception of the yen, which is a whole different story). But the dollar has gotten relatively stronger, despite inflation. Partially, because inflation in other currencies has been even bigger. Take the EURUSD, for example, which popped down to the 0.9900 handle, the lowest in over 20 years. Since the start of this year, the Euro has depreciated over 13% against the dollar, well above the 8.9% annual inflation that was last recorded. In fact, the annual depreciation of the Euro has been almost 17%. That's almost 8% of net benefit for anyone who kept dollars over the last year, despite the highest inflation in the shared currency. Why does this matter? It means that Europeans (and Chinese, Indians, Turks, etc) don't need to buy gold to hedge against inflation in their own economies. Holding dollars was a much better investment than keeping money in the bank. So, what's happening to the price of gold really depends on what's going on with the dollar. But the dollar is worth 8.5% less than it was one year ago. Wouldn't buying gold be an even better option? If we were looking in the past, sure. But when investors decide what to invest in, they are looking to the future. What's the best asset to have in their portfolio going forward, while the inflation readings that we have are for the last year. It's all about expectations One of the reasons that the price of gold rolled around in March is because of increased geopolitical tensions. But the other that has been more long lasting is that's when the Fed started hiking rates. Sure, it was expected that inflation would rise for a while, as it takes some time for monetary policy to take effect. But, eventually, the Fed is going to get inflation under control. Meaning that inflation is expected to go down. More to the point, interest rates are expected to keep rising. People who invest in dollar-denominated fixed income (treasuries, bonds, other securities) would see increasing yields. What that means is that even though inflation is high, in fact, because it's high, there is an expectation of increasing returns for those who hold dollars. Meanwhile, gold doesn't pay dividends or interest. What about the hedge, then? In other words, as inflation rises, the more likely the Fed will be to raise rates and drive down that inflation. That makes the dollar get stronger, so in comparison the price of gold goes down. Gold is a hedge against inflation before it rises. But once there is high inflation, the picture turns around. Assuming the Fed does manage to control inflation. Basically, once inflation is high, it's too late to "hedge" against inflation that already happened.
The Current War Between China And The United States Over Semiconductor Chips Is Gaining Momentum

Tech Stocks: Apple Stock Price (APPL) - Bulls May Reach Almost $190!

Jing Ren Jing Ren 05.09.2022 12:55
  AAPL (Apple Stock): Wave ⑤ is the final leg in a large cycle impulse a. As in the previous review, which was a few weeks ago, AAPL suggests the development of the primary fifth wave, taking the form of an ending diagonal (1)-(2)-(3)-(4)-(5) of the intermediate degree. Wave ⑤ is the final leg in a large cycle impulse a. Most likely, the market has completed the construction of an intermediate correction (4) in the form of a minor triple zigzag W-X-Y-X-Z. Thus, now the price is moving up, in the intermediate wave (5). It is assumed that wave (5) will take the form of a standard zigzag A-B-C, as shown on the chart, where wave A is a minute impulse. It is possible that the bulls in wave (5) will go to 189.34. At that level, wave (5) will be equal to wave (3). Alternative Scenario An alternative scenario assumes that the cycle wave a is fully completed. Thus, in the last section of the chart, we see a downward corrective movement of the stock price in a cycle wave b, which may take the form of a double zigzag â“Œ-Ⓧ-â“Ž of the primary degree. It seems that the first two primary sub-waves â“Œ-Ⓧ have already been formed. There is a high probability that the bears in the final sub-wave â“Ž, in the form of an intermediate simple zigzag, will be able to bring the market to 118.80. At that level, primary wave â“Ž will be at 100% of wave â“Œ. We will add this pair on our watchlist.
5 September 2022	USD sees limited pullback

5 September 2022 USD sees limited pullback

Jing Ren Jing Ren 05.09.2022 08:21
GBPUSD tests major demand zoneThe US dollar rallies as hiring remains strong despite moderate wage growth. As the pair approaches March 2020’s lows around 1.1450, the RSI’ oversold situation prompts sellers to take some chips off the table. Along with ‘buying-the-dips’ in this demand zone, the pound may find some support. 1.1650 is the closest resistance where trend followers could be expected to sell into strength. A fall below March 2020’s lows at 1.1450 would force the last buyers out and open the door for further extension to the south.XAUUSD struggles to bounceBullion finds temporary respite in the wake of mixed nonfarm payrolls. The price action is hovering above July’s low and a critical floor at 1680. This is a decisive moment as a breakout would invalidate the previous recovery and send the precious metal into a bearish spiral. A combination of profit-taking from short-term traders and bargain hunting from medium-term traders may drive the price higher. 1724 is the first resistance and its breach could lift offers to the support-turned-resistance at 1745.GER 40 hits resistanceEquities remain under pressure as investors brace for more aggressive tightening by central banks. A bearish MA cross on the daily chart suggests that sentiment has shifted to the cautious side and the selling pressure might intensify. On the hourly chart, the index found support at the origin of the rally back in mid-July at 12550, but 13040 has proven to be a tough level to crack. The whipsaws could direct the Dax 40 back to the double bottom near 12420 which is the level that separates a recovery from a bearish continuation.
5 September 2022	The euro conundrum 	ECB has little choice but to tighten faster

5 September 2022 The euro conundrum ECB has little choice but to tighten faster

Jing Ren Jing Ren 02.09.2022 15:11
EURUSD falls over gloomy outlookThe euro weakens as traders fret that an aggressive ECB is pushing the bloc to the brink of a recession. Euro zone inflation continues to surge and could hit a double digit soon. Prices excluding volatile food and fuel jumped over 5%, which is a sign that inflation is gaining a foothold across the economy, and cementing expectations of a 50 to a 75bp hike by the ECB at the upcoming meeting. Despite the risk of an economic slowdown, the central bank might count on deflation to put the brakes on consumer price growth. The pair is struggling to defend parity and may head towards 0.9700. 1.0350 remains a tough hurdle. AUDUSD retreats over cautious moodThe Australian dollar falls back as risk appetite takes a backseat. Upbeat retail sales and business investment may encourage the RBA to lift interest rates for a fifth straight month. Another 50 basis points are likely to be on the table this week. However, currencies move in relative terms, and the US Fed’s hawkish stance could overshadow the Antipodean. Markets have switched to a risk-off mode once again and would weigh on growth sensitive assets. China’s predicaments from Covid lockdowns, heat waves and a real estate crisis add another layer of risk to the aussie proxy. 0.6700 is a critical floor and 0.7000 a fresh resistance.USDCAD rallies on growth divergenceThe Canadian dollar retreats over a downbeat economic outlook. Canada’s GDP growth fell short of expectations in the second quarter. The cooling is unlikely to sway the central bank from its normalisation path. Even though inflation eased from its peak in June, it is still well above the BoC’s 2% target. Traders are wagering a 75bp increase this week but it may not be enough to support the loonie in a flight-to-quality environment. While demand for the greenback picks up again, falling oil prices may pull the rug out from under the commodity-linked loonie. The US dollar is testing 1.3200 with 1.2900 as a fresh support.SPX 500 retreats as Fed to stay committedThe S&P 500 struggles over the prospect of more restrictive monetary policy. Fed Chair Jerome Powell’s insistence on raising interest rates as high as needed has poured cold water on those betting on a dovish autumn. Even though policymakers acknowledged that it would be a hard pill to swallow for households and businesses, they are relying on a strong labour market to cushion the impact from tighter financial conditions. The index may lose ground as traders price in another 75bp hike in September and exits from wrongfooted buyers could exacerbate volatility. The price is testing 3900 and 4200 is the closest resistance. Key data release (GMT time) Monday, 5 September 07:00 Gross Domestic Product 09:00 Retail Sales Tuesday, 6 September 04:30 RBA Interest Rate Decision 14:00 ISM Services PMI Wednesday, 7 September 01:30 Gross Domestic Product 09:00 Gross Domestic Product 14:00 BoC Interest Rate Decision 23:50 Gross Domestic Product Thursday, 8 September 01:30 Trade Balance 12:15 ECB Monetary Policy Decision 12:45 ECB Press Conference Friday, 9 September12:30 Unemployment Rate
How Far Can USDJPY Go?

How Far Can USDJPY Go?

Jing Ren Jing Ren 02.09.2022 12:24
The yen has weakened to the lowest level since 1998, with the USDJPY popping above the 140 handle. Through the week, the pair rose 1,9%. In a period of economic uncertainty, usually traders would expect the yen to get stronger on safe-haven flows. Is the yen no longer a safe haven? There's more to the picture. And that could help us understand if there is a correction coming or the trend will continue. The driving forces In the short term, the dollar has gotten stronger ahead of NFP data. This is because traders are banking on the employment data to be strong, well above the "normal" 200K rate seen before the pandemic. With fast growth in jobs, the Fed would have free reign to keep hiking, pushing yields even higher. So, from that we can see a potential source of a correction in the near term: if NFP figures disappoint. After the blow-out figure from last month, investors might be a little overly optimistic about a beat in jobs creation, which means even if the figures come in as expected, it could disappoint the more speculative traders. The bigger picture The short term dynamics are an example of the effects of the long-term situation. The major deviation between the two premier safe haven currencies is, broadly speaking, a difference in monetary policy. The US is facing high inflation, prompting the Fed to raise rates. Japan has relatively low inflation (even though it has poked above target recently), and rates have remained negative. With the Fed pursuing an aggressive hiking policy, the yield spread has widened, making it attractive for carry trading against the yen. The potential for a reversal is that Japan starts experiencing inflation and forces the BOJ to start easing. The weaker yen translates into higher import prices, which in turn implies inflationary pressures. However, the global slowdown could also be translating into lower retail sales in Japan, which in turn minimizes the inflationary pressure. As a result, the BOJ can remain apart from the other central banks desperately fighting inflation, and instead work on promoting economic growth. It's all about the expectations A lingering question might be: Sure, the Fed is raising rates, but inflation is much higher than interest. Doesn't that mean a real negative rate? Yes, it does. However, the inflation that we're seeing now is in the past. It's comparing prices now to prices a year ago. What matters for investors is how much inflation is expected over the next period. Fed tightening implies that inflation should get under control, meaning that holders of US bonds will get the benefit of higher interest rates and lower inflation. Meaning that forward yield expectations are still positive - or, at least, better than what traders might expect to get from yen bonds. While the BOJ is on an accommodative track, inflation would have to increase substantially before rates rise. Meaning there is more inflationary risk in a Japan that isn't actively fighting inflation, than in a US that is actively trying to get prices down. It isn't that the yen isn't a safe haven, it's that the US has moved more into offering a better rate of return on fixed income.
2 September 2022	USD remains up

2 September 2022 USD remains up

Jing Ren Jing Ren 02.09.2022 10:05
NZDUSD continues lowerThe New Zealand dollar softens as risk appetite continues to subside. A bearish MA cross on the daily chart points to an acceleration to the downside. A short-lived bounce to 0.6190 indicates strong headwinds. The bulls would need to reclaim 0.6250 before a sustained recovery could materialise. Otherwise, 0.6060 at July’s low is a critical floor and its breach could trigger a bearish continuation, sending the pair towards the psychological level of 0.6000. 0.6110 is the first resistance where trend followers may look to sell.EURJPY breaks higherThe euro struggles over weaker manufacturing activity across the bloc. A bullish MA cross on the daily chart suggests an improvement in sentiment after the pair bounced off 133.50. The price has consolidated its latest gains after clearing the supply zone around 138.30 and the latter has become a fresh support. The psychological level of 140.00 caused some profit-taking but the directional bias remains up and could attract more follow-ups. July’s high at 142.20 could be the next target when momentum picks up again.NAS 100 grinds critical supportThe Nasdaq 100 falters as the Fed puts price stability as its number one priority. A drop below 13000 has prompted buyers to bail out, exacerbating the selling pressure. The index is hovering above 12000 at the base of a bullish breakout in late July. This is a critical zone to hold the fading optimism together. A bearish breakout would show a lack of commitment from the buy side and turn the previous rally into a dead cat bounce. An oversold RSI attracted some buying interest in the demand zone and 12500 is a fresh resistance.
BABA: Primary Impulse Nears Completion Level, And The Cycle Pattern Will End With It.

BABA: Primary Impulse Nears Completion Level, And The Cycle Pattern Will End With It.

Jing Ren Jing Ren 01.09.2022 09:21
BABA suggests the formation of a bearish corrective trend, which takes the form of a cycle triple zigzag w-x-y-x-z. It is likely that at the moment the market is in the final part of this pattern. We see a completed actionary wave y, which has the form of a primary double zigzag Ⓦ-Ⓧ-Ⓨ, and a second small intervening wave x. It is assumed that the formation of the final actionary wave z is currently taking place, which, apparently, takes the form of a primary standard zigzag Ⓐ-Ⓑ-Ⓒ, as shown in the chart. We saw the completion of the primary wave Ⓐ in the form of an impulse (1)-(2)-(3)-(4)-(5), and also the construction of the correction Ⓑ in the form of an intermediate double zigzag (W)-(X)-(Y) could come to an end. In the near future, stocks may continue to fall in the primary wave Ⓒ in the form of impulse (1)-(2)-(3)-(4)-(5) to 50.55. At that level, primary impulse wave Ⓒ will be at 161.8% of impulse Ⓐ. Another variant shows a situation in which the formation of a cycle intervening wave x continues. It is likely that the intervening wave x will take the form of a simple 3-wave zigzag Ⓐ-Ⓑ-Ⓒ of the primary degree. Perhaps the impulse Ⓐ and correction Ⓑ have already been built. Now the price is in the wave Ⓒ. It is assumed that the entire wave Ⓒ is similar to an ending diagonal of the intermediate degree. This assumption will be confirmed when the final sub-wave (5) is formed in the form of a minor zigzag ABC, as shown in the chart. The final of the ending diagonal should be expected near 150.14. At that level, cycle intervening wave x will be at 38.2% of actionary wave y.
1 September 2022	CAD continues to weaken

1 September 2022 CAD continues to weaken

Jing Ren Jing Ren 01.09.2022 09:02
USDCAD to test key resistanceThe Canadian dollar softens after the Q2 GDP fell short of expectations. A rally above 1.3060 prompted sellers to cover their bets, opening the path for an extended recovery. A series of higher lows indicates solid interest in pushing the greenback back to July’s peak at 1.3220, where a bullish breakout could resume the uptrend in the weeks to come. The RSI’s overbought condition may cap the range on the upside for the time being. The resistance-turned-support at 1.3060 is the first level to probe bids.EURGBP breaks higherThe euro rallies ahead of an aggressive hike by the ECB. A surge above the daily resistance at 0.8580 may have turned sentiment around after a two-month long correction. 0.8680 at the start of the July sell-off is a major supply area. A bullish breakout may lift offers to the daily resistance at 0.8720. As a bearish RSI divergence shows a loss of momentum in the rally, the pair could be subject to profit-taking and renewed selling pressures. 0.8570 at the base of the latest breakout is the first support in case of a pullback.USOIL hits floorWTI crude found support from a larger-than-expected drop in US stockpile. The price met selling pressure in the supply zone around 97.50 and a fall below 93.50 forced short-term buyers to bail out, driving up volatility in the process. 86.50 is a critical floor and its breach would invalidate the recent rebound, leaving the commodity vulnerable to a new round of sell-off. An oversold RSI may lead to some profit-taking, but a rebound could be short-lived as the mood remains cautious. 92.60 is a fresh resistance should that happen.https://orbexmena.com/en/webinars/strong-dollar-becomeshttps://orbexmena.com/en/webinars/strong-dollar-becomes?utm_medium=social&utm_source=facebook&utm_campaign=non-farm-payroll-webinar&utm_term=organic-posthttps://orbexmena.com/en/webinars/strong-dollar-becomes?utm_source=facebook&utm_medium=social&utm_campaign=webinar-strong-dollar&utm_content=organic-posthttps://orbexmena.com/en/webinars/strong-dollar-becomes?utm_source=twitter&utm_medium=social&utm_campaign=webinar-strong-dollar&utm_content=organic-posthttps://orbexmena.com/en/webinars/strong-dollar-becomes?utm_source=facebook&utm_medium=social&utm_campaign=webinar-strong-dollar&utm_content=organic-post
German, Swiss Retail Sales for July, and Potential Improvement

German, Swiss Retail Sales for July, and Potential Improvement

Jing Ren Jing Ren 31.08.2022 14:48
Retail sales are back to the forefront of analysts' minds. Especially now in Europe, with the ECB raising rates. On the one hand, traders would like to be wary of any signs of demand destruction that could mean weaker currency going forward. On the other, tighter policy could be slowing the economy, which could also weaken the currency. But, if retail sales beat expectations, it could help return some confidence in the economic outlook. The markets have already priced in a full 50bps hike by the ECB next week, with over half of economists expecting as much as 75bps. Better economic prospects could support the idea that the central bank has plenty of room to keep tightening. Germany to the forefront German retail sales are particularly important for the Eurozone not just because it's the biggest country in the Area. Germany has been experiencing less inflation than the periphery, despite its dependence on imported energy. The implication is that if retail sales are affected in Germany, they might be even worse in the rest of the common economy, which has higher debt issues. Saving rates in Germany have started to fall, but remain higher than in prepandemic levels. Higher saving rates have correlated with lower inflation. People putting money into savings instead of spending it reduces demand pressure. If savings rates fall, or credit levels increase, it could imply further increases in inflation. That might give the ECB more reason to tighten policy. Interpreting the data The disparate situation between Germany and Switzerland might highlight the market reaction. While Swiss inflation remains above target, but not as bad as Germany, the SNB is under significantly less pressure to raise rates. Retail sales, therefore, have more room for expansion. While this could imply a weaker franc, the reality is that the difference in inflation expectations means real rates in Switzerland are much higher than in Germany. Improving (or less negative) retail sales sends the signal that prices can keep rising, and raise inflation expectations. Coming on the heels of higher than expected CPI figures earlier today, it could increase the bets that the ECB will raise rates. But the calculus for the SNB is likely to remain the same. What to look out for German July monthly retail sales are expected to come in flat, compared to -1.6% in the prior month. Just a decimal higher could push the figure into the psychologically important "positive" category, and might spur a bigger market reaction. On the other hand, that the shorter term figure is improving, might give the impression that the situation in Germany is not as bad as initially feared. Particularly when considering that the annual figure is comparing to last year when there was relief buying during the summer. Annual change in retail sales for Germany is forecast at -6.5% compared to -8.8% prior. Swiss July retail sales are expected to be somewhat the opposite, with monthly figures forecast to drop -0.2% compared to 0.1% growth. Annual change in retail sales is projected to slow to just 0.3% compared to 1.2% reading in June.
31 August 2022	EUR seeks to recover

31 August 2022 EUR seeks to recover

Jing Ren Jing Ren 31.08.2022 08:30
EURUSD tests resistanceThe euro claws back losses as traders price in the likelihood of a large-sized rate hike by the ECB. The single currency has been struggling to hold onto the parity threshold. A whipsaw around 1.0080 suggested stiff selling pressure, but the long side has managed to keep the latest correction contained at 0.9910. A bullish breakout would extend the rebound to the support-turned-resistance at 1.0220 where renewed selling interest could be expected as medium-term sentiment remains pessimistic.GBPUSD breaks lowerThe pound plunges over fears of a pronounced recession as energy bills soar across the UK. Following a brief consolidation in July, a bearish MA cross on the daily chart indicates a continuation to the downside. The RSI’s oversold condition attracted some buying near 1.1650. But buyers’ failure to hold onto their timid gains foreshadows more rooms on the way down. A drop below 1.1600 would open the door to March 2020’s lows near 1.1400. 1.1750 has turned into a resistance and is likely to cap the next bounce.GER 40 hits resistanceThe Dax 40 remains under pressure as a brewing energy crisis compounds a hawkish ECB. The index bounced off the base of a bullish breakout in mid-July (12700). A combination of profit-taking and fresh buying led the recovery after the RSI fell into the oversold area. However, trend followers were eager to sell into strength near 13300 from the last leg of sell-off. The lack of purchasing power may continue to depress the price action. A fall below 12700 would send the index to the double bottom (12400) on the daily chart.
A Breakthrough! Japanese Yen (JPY) Helped By Data, Australian Dollar (AUD) Went Up Post Retail Sales Print

A Breakthrough! Japanese Yen (JPY) Helped By Data, Australian Dollar (AUD) Went Up Post Retail Sales Print

Jing Ren Jing Ren 30.08.2022 08:27
USDJPY hits major resistance The Japanese yen steadied after July’s unemployment met expectations. A close above 138.80 has put the greenback right under last July’s peak at 139.40, hitting a 24-year high. A bullish breakout would attract more buying interests and resume the uptrend in the medium-term. In the meantime, an overbought RSI may cause a limited pullback as intraday traders take profit in the supply zone. Fresh selling as a last attempt by the short side might drive the pair lower. 136.30 is a key support to keep the momentum going. Read next: Apple Stock Price Plunged On Friday! When Is The iPhone 14 Coming Out? iPhone 14 Is Expected To Be Announced Next Week! | FXMAG.COM AUDUSD sees limited rebound The Australian dollar bounced higher after upbeat retail sales in July. Its previous failed attempt to clear the psychological level of 0.7000 led to a new round of sell-off below 0.6850. This is a sign that the bears may have regained control of the price action. A bearish MA cross on the daily chart may further weigh on sentiment. After the RSI sank into oversold territory, some bargain hunting tried to push back. However, stiff selling pressure could be expected near 0.7000. 0.6800 would be the next stop when volatility returns. Read next: Bitcoin price could slide to $17,500 as regulators consider tightening rules around leverage| FXMAG.COM UK 100 breaks lower Equities remain under pressure as investors brace for more aggressive hikes from central banks. The FTSE 100 lost its momentum as it came closer to the triple top (7650) from the daily chart. An initial fall below 7460 triggered some profit-taking. Then a break below 7400 invalidated the latest rebound and forced buyers to bail out. 7310 is the closest support and the RSI’s oversold condition may cause a limited bounce. The index could be vulnerable to another round of liquidation unless the bulls manage to reclaim 7500.
Short-term analysis - Euro to US dollar by InstaForex - 31/10/22

EUR/USD Could Be Shaken This Week! Eurozone Inflation Is About To Be Released

Jing Ren Jing Ren 29.08.2022 15:01
EuroZone CPI and EU Market Turmoil Tomorrow, Germany reports CPI figures for July. That gives us a first look at what to expect from inflation data out of the EuroZone to be released on Wednesday. The consensus is for another increase, which would help firm up the case for another 50bps hike by the BCE at their meeting in two weeks. This is the last major inflation data the central bank will have before they decide on what to do with monetary policy. Last week, the ECB released minutes from their July meeting, showing they intended to keep tightening. That also implies that a "double" rate hike is likely. Unless there is a major shift in the data, that would catch everyone by surprise. The expectation is for inflation to get worse in the shared economy, both in the headline number and core reading. Read more: A Quick Look At Jerome Powell's (Fed) Key Statements At Jackson Hole Meeting| FXMAG.COM Starting with Germany The largest economy in the EuroZone is often seen as a bellwether for the rest of the shared economy. This is particularly relevant around the inflation figure if it is rising, since as a rule, Germany tends to have more fiscal discipline. If German inflation is rising, chances are that inflation in the rest of Europe is rising even faster. If prices were to get under control, most likely that would be seen in Germany first. German CPI change for August is expected to show an annual rate of 7.8%, higher than the 7.5% reported in July. Germany has a more regulated energy sector, and is less likely to see the benefits from lower fuel prices that helped reduce inflation in the US during the same period. At the same time, German regulators also allowed for energy companies to pass on more of the cost to consumers. Where there could be good news is that monthly inflation is expected to slow to 0.4% compared to 0.9% in the prior month. What's driving the market Wednesday could be a pretty lively day for the markets, because we get CPI data and PMI figures through the course of the day. We'll get into more detail on the PMI numbers tomorrow. For now, inflation is likely to have the bigger impact on the EURUSD as it is driving the main divergence between the currencies of the two largest economies. Last month, EU inflation already surpassed inflation in the US. Meanwhile, the interest rate gap between the two economies continues to grow, as the Fed has been more aggressive in taming inflation. That means real yields in the US have been increasing, while real yields in the Euro have been decreasing. The fluctuations in inflation are bigger than the interest rate policy moves, meaning that inflation is driving the yield spread. Which, in turn, drives the relative price dynamics of the EURUSD. As long as real rates are weakening in the Euro, the pair is likely to be under pressure, and find it hard to get back above parity. The data to pay attention to The EuroZone is expected to report a modest increase in CPI change to 9.0% from 8.9% prior. The core rate is expected to rise by a similar measure to 4.1% from 4.0%, double the target rate. To make matters more difficult for the ECB, the monthly inflation rate is expected to accelerate to 0.6% from 0.1% prior. Inflation rising faster on the monthly basis, and the change being seen in the core numbers, implies a more structural problem. The market already expects the ECB to raise rates, so higher inflation likely won't be all that much of a surprise. But if CPI change were below expectations, then it could have some monetary policy implications.
USD/CHF: US Dollar Went Up Thanks To Jerome Powell's Statement About Interest Rates, Which Is Not In Favor Of Gold

USD/CHF: US Dollar Went Up Thanks To Jerome Powell's Statement About Interest Rates, Which Is Not In Favor Of Gold

Jing Ren Jing Ren 29.08.2022 08:27
USDCHF keeps high ground The US dollar rallied after Powell reaffirmed that the Fed would raise rates as high as needed. A rally above the daily resistance at 0.9640 has flushed out short-term sellers. This could be the start of a bullish continuation after the pair went through a deep retracement of its April extension. As sentiment shifts to a more upbeat tone, a close above 0.9740 could attract momentum buyers and carry the greenback to July’s peak at 0.9870. 0.9570 is the closest support and 0.9500 is the bulls’ second line of defence. XAUUSD struggles for support Gold remains overshadowed by the prospect of higher interest rates. The price has been struggling to find buyers after it hit resistance at the psychological level of 1800, which was also a former demand zone on the daily chart. A short-lived bounce to 1765 met stiff selling pressure, suggesting that the bears have doubled down. 1739 is a support-turned-resistance after its breach left bullion vulnerable to a new round of sell-off. 1705 at the base of a breakout in late July would be the next level to see if there is enough long interest left. US 30 breaks lower Equities tumbled after the US Fed shattered hopes that policymakers might dial back the tightening. The Dow Jones 30 lost its momentum after hitting a four-month high at 34300. An initial drop below 33850 led some leveraged positions to close out. Then the selling intensified after the index lost ground at 32800. 31700 could be the next stop. An oversold RSI may cause a temporary bounce and 32900 has become a fresh supply zone where the bears could be expected to fade the next rebound.
US Dollar (USD) Supported By Looming Hiking, Australian Dollar (AUD) Weakens, How Does Brent Crude Oil React To A Possible Cut By OPEC+?

US Dollar (USD) Supported By Looming Hiking, Australian Dollar (AUD) Weakens, How Does Brent Crude Oil React To A Possible Cut By OPEC+?

Jing Ren Jing Ren 26.08.2022 16:15
US Fed may not yield to market pressure EURUSD weakens over bleak outlook The US dollar remains strong over the prospect of sustained rate hikes. The euro’s failure to defend the parity level has revealed a lack of confidence in Europe’s outlook. An overwhelmingly pessimistic mood may continue to depress the single currency, and the latest consolidation could be a mere pause as dollar bulls search for catalysts to push back. On the other side of the pond, hopes that an economic slowdown might alter the Fed's tightening agenda have waned. Futures markets indicate that traders have raised their bets on a 75bp hike in September, which may send the pair to a 20-year low at 0.9700 with 1.0340 as resistance. AUDUSD struggles over Chinese uncertainty The Australian dollar retreats as markets go risk-off. Risk appetite took a backseat following hawkish comments from US Fed officials. Meanwhile, as a proxy to the Chinese economy, the commodity-linked currency is facing extra headwinds. Beijing is seeking to stabilise its ailing property market and its central bank has cut rates to shore up the economy in the wake of disappointing data. Australia’s retail data may stir up volatility in the short-term, but general market sentiment might continue to drive the exchange rate instead of domestic fundamentals. The pair hit resistance at 0.7130 and 0.6850 is a key support. UKOIL recovers over controlled supply Brent crude recoups losses as OPEC+ may cut output to defend prices. As Iran seeks a compromise in its nuclear deal, an agreement seems remote but not unattainable. A return of Iranian oil to the market could undercut major suppliers and Saudi Arabia suggested that OPEC+ would consider cutting production in response. A larger-than-expected drawdown in US inventories offers extra tailwinds to the recovery. As for now, the prospect of tightly-controlled supply may outweigh concerns that an economic slowdown in China could hinder demand. The price has found support at 92.00 and is looking to reclaim 108.00. NAS 100 softens as Fed remains firm The Nasdaq 100 consolidates as the Fed remains hawkish. Weaker economic data are a double-edged sword. Equity markets see them as good news as they could lead the Fed to lift their feet off the pedal. Still, no one wants to see a recession materialise. Markets have become too comfortable with signs of plateauing in price pressures over the past month. The latest FOMC minutes may have wrong-footed investors with hints of a slower pace in rate hikes. Fed officials might want to address that communication hiccups and rein in expectations of a downshift in policy. The index is hovering above 12600 and 14200 is the first hurdle. Key data release (GMT time) Monday, 29 August 01:30 Retail Sales   Wednesday, 31 August 09:00 HICP 12:00 Harmonized Index of Consumer Prices 12:15 ADP Employment Change 12:30 Gross Domestic Product Annualized     Thursday, 1 September 01:30 Trade Balance 06:00 Retail Sales 14:00 ISM Manufacturing PMI Friday, 2 September 07:00 Gross Domestic Product 12:30 Nonfarm Payrolls  
Potentially Longer Lasting Inflation In The Europe May Cause British Pound (GBP) And Euro (EUR) Being Beaten By US Dollar (USD)

Potentially Longer Lasting Inflation In The Europe May Cause British Pound (GBP) And Euro (EUR) Being Beaten By US Dollar (USD)

Jing Ren Jing Ren 26.08.2022 09:43
As we all know, both the US and Europe (to include the UK along with the EU) are experiencing high inflation. However, how this impacts employees is very different. Employees constitute the bulk of consumers, and therefore drive the economy. The employment culture between these major economies has important implications of how the economy could react to inflation. That, combined with different monetary policy, could be a driving force of currency fluctuations. Last month, EU CPI rose above the US'. The UK's CPI pushed above the US' the month prior. With the Fed acting more aggressively to combat inflation than European central banks, this gap could widen. That could increase the difference in how labor practice and laws affect the economy and currencies. The main differences Generally, the US has "at will" employment, which is often understood that employees can be fired for any reason. But it also means that employees can be hired for any salary, and salary changes are much more flexible. In Europe, employees typically are hired for fixed contracts, often in the framework of collective negotiation. In the US it's rare to have inflation adjustment included in the contract, whereas in Europe (particularly in the periphery) it is almost standard practice. When the cost of living starts rising at an unprecedented rate, the reaction of the labor market is quite different. In the US, employees are more prone to change jobs, looking for better salaries. This has led the BLS to report the highest "churn" rate on record, with as many as 4.6M people changing jobs in a month. Despite this, however, average wages have been declining when adjusted for inflation. Employees who can change jobs are keeping up with inflation, those who cannot are seeing their income erode. Slow and deliberate vs fast and erratic With employees locked into collective contracts, discontent over lower wages translates instead towards industrial action. In recent months, there has been a spate of warnings or outright strikes. Most recently Lufthansa's pilots were unable to reach an agreement, and might go on strike at any time. SAS had to reschedule over 300K passengers because of strikes. One of the key sticking points of these discussions is the inclusion of automatic cost of living adjustments to wages. One of the phenomena most feared by central bankers is a price-wage spiral. That's when higher prices drive workers to demand higher pay, which increases costs to produce goods, causing higher prices, and workers demanding higher pay. An automatic inflation adjustment in labor contracts makes this price-wage spiral easier to develop, and increases the potential for runaway inflation. What does it mean for the future? The theoretical way to head off a wage-price spiral is to aggressively front load interest rates, to prevent inflation rising. However, European central banks have, relatively speaking, not done that. The Fed has acted a lot more aggressively. On the one hand, because of fixed contracts and collective bargaining, wages were likely to rise slower in Europe. On the other, those rises are likely to come along with strikes and be much broader than in the US, which increases inflationary pressure in the long term. Basically, inflation might be further entrenched in Europe than in the US, implying that in the long run, the dollar could outperform the pound and Euro.
S&P 500 Shorts Gain Ahead Of jackson Hole Events, USD/JPY - Yen Affected By CPI And EUR/GBP In Eyes Of A Possible 75bp Rate Hike

S&P 500 Shorts Gain Ahead Of jackson Hole Events, USD/JPY - Yen Affected By CPI And EUR/GBP In Eyes Of A Possible 75bp Rate Hike

Jing Ren Jing Ren 26.08.2022 08:22
USDJPY seeks support The Japanese yen finds support as August’s CPI hits an eight-year high. The trajectory remains up from the daily chart’s perspective and the latest pullback could be an opportunity to accumulate. A rally back above 137.40 at the start of the liquidation in late July is an encouraging sign that buyers are still in the game. However, the price action may stay choppy after a bearish RSI divergence and a fall below 136.70 triggered some profit-taking. 135.70 is the closest support and a bounce above 137.50 may send the dollar to 139.40. EURGBP consolidates The pound steadies over a higher chance of a 75bp rate rise by the BOE next month. The pair came under pressure in the supply area around 0.8510 and a follow-up break below 0.8430 put the bulls on the defensive. The euro is hovering above the daily support at 0.8390 which is a key level to keep last week’s rebound intact. 0.8460 is the first hurdle ahead and a close above 0.8510 may trigger an extended rally towards 0.8600. Failing that, the pair could be vulnerable to a sell-off to this month’s low at 0.8340. SPX 500 attempts to bounce The S&P 500 bounces as the shorts take profit ahead of Powell’s speech. The recent sell-off has stopped short at 4110, which is a daily support at the base of a bullish breakout. The level also coincides with the 30-day moving average, making it a congestion area. A bullish RSI divergence attracted bargain hunters with an initial pop above 4160. The bulls will need to lift the support-turned-resistance at 4210 before the recovery could gain momentum. A bearish breakout could trigger a fall to the psychological level of 4000.
25 August 2022	Gold awaits breakout

25 August 2022 Gold awaits breakout

Jing Ren Jing Ren 25.08.2022 08:16
NZDUSD struggles to bounceThe New Zealand dollar treads water as Q2 retail sales numbers disappoint. The pair is grinding the demand zone (0.6150) from a bullish breakout in mid-July. A bullish RSI divergence shows a deceleration in the sell-off and could pave the way for a rebound. A close above the support-turned-resistance at 0.6240 would act as a confirmation and put the kiwi back on track. A rally above 0.6310 may shift sentiment to the upside once again. On the downside, a fall below 0.6150 could send the price to the critical floor at 0.6070.XAUUSD seeks supportGold consolidates as traders await Fed comments from Jackson Hole. After the precious metal gave up more than half of its recent gains, the bulls are seeking to hold above the major support (1680) from the daily chart as its breach could trigger a bearish reversal in the medium-term. An oversold RSI attracted some buying interest near the origin of a rally in late July. 1730 is an intermediate support and 1705 the bulls’ last stronghold. 1762 is the first hurdle to lift. Only a rally above 1790 could lead to an extended recovery.USOIL breaks higherWTI crude climbed after Saudi Arabia suggested trimming output. Both 20 and 30-day moving averages previously acted as resistance in a month-long retreat. A break above 95.00 and the MAs prompted sellers to cover, easing the downward pressure. 98.00 at the start of the August sell-off could be the next hurdle, which might open the door to the recent peak at 102.00. In the meantime, the RSI’s overbought situation has temporarily limited the range of the bounce. 92.00 is a fresh support to let the price take a breather.
Interest Rates: What Is The Neutral Level About?

Interest Rates: What Is The Neutral Level About?

Jing Ren Jing Ren 24.08.2022 10:47
After a steep rise in interest rates around the world, it's natural to question at what point central banks will stop. This is where bankers start using a technical term: "neutral level". The thing is, what exactly constitutes a "neutral level" is a little more complicated and somewhat deliberately vague. And that can be a bit of a challenge for traders trying to position themselves. The big deal with interest rates reaching a neutral level is that the entire market dynamics would shift. Right now, particularly currencies, are being driven by expectations around interest rates and inflation. That is particularly true of the EURUSD and GBPUSD, as the "real spread" (the differential in interest rates considering inflation) is one of the main explanations for dollar strength. Finding neutral The basic concept of "neutral level" for interest rates is fairly straight-forward. It's when we try to interpret that in the context of policy that things get a bit complicated. So, the general notion is that there is a certain interest rate where the influence from the central bank is "balanced". That is, interest rates aren't too low (which leads to higher inflation), nor too high (which hurts the economy). The issue is that "too low" and "too high" are somewhat subjective and is changes all the time. So, while central bankers like to talk about achieving a "neutral level", they are typically very reluctant to say what that level is. 2.0%? 3.0%? 15%? "Well, we'll have to look at the data." Applying it to trading The problem for traders is that the value of currencies, especially now, are dependent on how much more rates are going to be increased. Take the Euro, for example. The current interest rate is 0%. If the ECB thinks that a "neutral rate" is around 2.0%, that means they will hike rates four times (or less, if by larger amounts) in the very near future. But if they think the neutral rate is 3.0%, then they will have to raise rates six times. And will be more likely to raise by 50 or even 75bps at a time. Obviously, that radically impacts the behavior of Euro pairs. So, trying to figure out where central bankers think the neutral rate is helps with figuring out how markets will behave, and in turn how to position our trades. But typically, central bankers give more vague guidelines, like "still far from neutral", or "getting close to neutral", or "likely to reach neutral in the short term." Putting some empiricism behind it Central bankers are reluctant to give out a precise number, because that becomes a more concrete prediction. It's easier to keep raising rates, for example, if you said, "we're near neutral" at 1.50%; than saying, "neutral is at 2.0%" and then needing to raise rates to 2.25 or 2.50%. The bottom line, however, is that the definition still determines the rate. Central bankers might have opinions on where the neutral rate should be, but all those opinions will converge as the data shows that inflation is starting to line up with the target and the economy is still growing. Or the opinions will start to diverge if the economy suffers, or inflation keeps increasing. While it's worth speculating, unless inflation has a couple of months of concrete reduction, talking about the "neutral" rate is pretty much an academic exercise. But it's likely something central bankers will increasingly talk about as the time for slowing down or outright stopping rate hikes comes around.
Short-term analysis - Euro to US dollar by InstaForex - 31/10/22

EUR/USD: PMI Data Made US Dollar (USD) To Decrease, GBP/USD And Nasdaq Shock

Jing Ren Jing Ren 24.08.2022 08:30
EURUSD sees limited bounce The US dollar retreated after PMI data showed a slowdown in business activity. However, the euro’s fall below parity and July’s low indicates that sellers are in control. As last month’s rally turned out to be a dead cat bounce, the path of least resistance would be down. After the RSI sank into oversold territory, 0.9900 from December 2002 saw some bargain hunting. Though the former demand zone around 1.0040 could be a tough level to crack. Renewed selling would send the single currency towards 0.9700. GBPUSD breaks daily support The pound bounces over upbeat services PMI. The pair had previously failed to clear the supply zone (1.2300) on the daily chart. The bears’ latest push below 1.1770 has invalidated the mid-July rebound. This is a confirmation that the downtrend could resume in the weeks to come, and the price action might be heading towards March 2020’s lows around 1.1400. 1.1720 is an intermediate support in case of a brief consolidation. Stiff selling pressure could be expected at the support-turned-resistance at 1.1950. NAS 100 struggles for bids The Nasdaq 100 feels the pressure from signs of a slowing US economy. A break below the psychological tag of 13000 has put the bulls under pressure. 12800 on the 30-day moving average is another test of buyers’ resolve in the short-term. 13080 has become a fresh supply area, and as the RSI recovers into the neutral area, renewed selling interest could cap a potential rebound. The bulls will need to reclaim 13400 before the index could secure a foothold again. Otherwise, it could be vulnerable to another round of sell-off.
Can US Durable Goods Give US Indices a Push?

Can US Durable Goods Give US Indices a Push?

Jing Ren Jing Ren 23.08.2022 15:08
US indices fell rather dramatically in the last two sessions. There were a couple of factors contributing, but the Jackson Hole symposium later in the week is seen as a risk catalyst. But in early trading today, better than expected PMI in Europe helped bring back some risk appetite. With generalized concerns over the health of the US economy, Durable Goods could prove to be an important point for risk sentiment. Investors and CEOs can talk about where they see the economy going, but it's where they put their money that really counts. What's a stake Durable goods are seen as a barometer of expectations of the economy, because they represent large investments that firms expect to recover over a period of several years. They are also typically more discretionary since a company doesn't have to open a new factory as much as it has to buy supplies. Increasing durable goods, therefore, is generally seen as a sign that businesses feel they have enough funds in the short term and expect growth in the medium to long term. This is particularly relevant in periods of higher interest rates, since a lot of durable goods are bought on credit. With rising interest rates, businesses need a higher rate of return to justify taking out loans to buy more equipment. Consumer sentiment can be a little more fickle, as people respond to headlines. Businesses typically take a more measured and studious approach before spending large amounts of money. What matters in the data Some distortion can enter durable goods orders on two fronts, but the most relevant right now is defense. Increased defense spending because of heightened geopolitical tensions can inflate the durable goods orders number. Defense spending is discretionary on the government, so the ex-defense figure typically is what the market focuses on. Though lately there is more interest in the transportation numbers, because automobile production has been curtailed. But industrial transportation has been increasing. Paccar, for example, reported new truck deliveries up 17% over last year. If the economy is going to recover, and supply chain issues resolved, then more trucks are going to be needed, along with more railcars. On the other hand, economic underperformance could weigh on the sale of aircraft. What to look out for Headline July Durable Goods Orders are forecast to slow to 0.6% growth compared to 1.9% prior. This comes in conditions when monthly inflation was reported as flat. Durable goods excluding transportation are expected to have grown 0.2% compared to 0.3% in June. Durable goods excluding defense are expected to come in at 0.3% compared to 0.4% prior. From the projections, we can see that the largest variable is transportation, with investors expecting firms to have cut back on their spending. This is understandable after major retailers such as Walmart, Target and Home Depot reported having large inventories.
Forex: USDCHF, AUD/USD And XAGUSD Show Some Signs Of Volatility!

Forex: USDCHF, AUD/USD And XAGUSD Show Some Signs Of Volatility!

Jing Ren Jing Ren 23.08.2022 08:26
USDCHF pops resistance The US dollar rallies as Fed officials reiterate an aggressive tightening stance. A bearish RSI divergence as the pair grinded the supply zone at August’s high (0.9650) turned out to be a false alert for lack of confirmation. Instead, a bullish breakout has prompted sellers to cover their positions and might trigger an extended rally towards 0.9740. An overbought RSI could drive the greenback lower temporarily as intraday traders take profit. 0.9580 at the base of the latest momentum is the closest support and 0.9540 a second layer. AUDUSD breaks support The Australian dollar slipped as risk appetite subsided across the board. The pair met stiff selling pressure at the start of the liquidation in June (0.7130). A fall below 0.6950 has put the bulls on the defensive and invalidated this month’s recovery in the process. Then a follow-up dip below 0.6870 could further weigh on sentiment. 0.6800 at the origin of a previous bullish breakout is the next level to gauge buying interest. 0.6960 has become a key resistance where the bears could be expected to sell into strength. GER 40 struggles for support Equities plunge as investors fear that central banks could double down on their fight against inflation. The Dax 40 turned south at the start of a deep correction back in June (13960). As a sign of overextension, a bearish RSI divergence compounded the indicator’s repeated overbought conditions. An initial fall below 13730 forced out short-term positions. Then a dive below 13460 was a liquidation as more buyers bailed out. 13100 is a daily support and its breach could drive bids to 12700. 13530 has turned into a supply area.
Let's Check The US, Australian, French And Eurozone Manufacturing PMI Expectations

Let's Check The US, Australian, French And Eurozone Manufacturing PMI Expectations

Jing Ren Jing Ren 22.08.2022 09:43
For traders looking to see where the markets might be headed for the rest of the month, tomorrow's data might be the sentiment catalyst. PMIs are the freshest data, and they are especially relevant now as investors grade the impact of central bank policy on the economy. If we get a rash of good PMI data, it could propel risk sentiment higher, depress the dollar and support emerging markets. If flash PMIs were to disappoint, then the downturn in the markets seen at the end of last week could accelerate. Keep in mind this is preliminary data, and at the start of next month there could be revisions. What to look out for: Australia: The consensus is for a mixed bag down under, but in general staying in expansion. Commodity prices have been on the back foot, but the major exporter to China appears to continue to outperform its global peers. Australian Manufacturing PMI is expected to slip a bit to 55.0 from 55.7, while services PMI is expected to advance by the minimum to 51.0 from 50.9 prior. France: As usual, being the first to report out of the shared economy, it could set the tone for Europe. With energy prices increasing faster in France than in Germany, worries about industrial performance through the winter have been rising. French Manufacturing PMI is expected to slip further into contraction down to 48.9 from 49.5 previously. Services PMI is expected to remain in positive but decline as well to 52.5 from 53.2. Germany: If the largest economy in the EuroZone has a different result than France's, it could shift market sentiment. However, growing concerns over energy supply is expected to keep optimism under pressure. Just this morning it was announced that Nord Stream 1 would be shut again for 3 days, after German officials confirmed nuclear power plants wouldn't be extended. German Manufacturing PMI is expected to fall lower than France's to 48.3 compared to 49.3 prior. Services is also expected to fall further into contraction at 49.0 from 49.7 prior. EuroZone: Likely won't impact markets unless other countries manage to substantially differ from the two largest economies. Manufacturing PMI is expected to be further in contraction to 49.0 from 49.9, while Services PMI is expected to stay in expansion by barely at 50.5 compared to 51.2. UK: Britain is expected to keep challenging the trend in Europe and stay substantially in expansion despite officials worried that a recession is imminent. While the UK is expected to face cost of living pressure from e