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The People's Bank of China (PBoC) held its policy rate steady this Monday - defying the expectation of a 10bp cut - while pumping more cash into the financial system to reverse the selloff and boost asset prices, and eventually growth. But in vain. The Chinese CSI 300 index barely reacted to the news after China posted a third negative CPI read on a yearly basis. China is still expected to hit its official 5% target this year, but the confidence crisis and the slump in property prices are not going to reverse overnight. Outlook for Chinese equities is not bright.  

Taiwan's stock exchange, on the other hand, which diverged positively from the mainland stocks last year, had a cheery start to the week after the ruling DPP's Lai – who is pointed at as a 'separatist' by Beijing - won presidency and his party lost its legislative majority. The latter was seen as a good compromise for relations between China and Taiwan – as the outcome was clearly not over-provocative for

Intraday Market Analysis – USD Seeks Support - 19.10.2021

Intraday Market Analysis – USD Seeks Support - 19.10.2021

Jing Ren Jing Ren 19.10.2021 12:07
The Australian dollar rallied after the RBA expected a return to growth in October’s meeting minutes. The pair has met stiff selling pressure in the supply zone (0.7460) from the September sell-off. And the RSI is once again in the overbought area. Short-term buyers would be eager to take profit, driving the price lower in the process. 0.7380 is the first support and will test the bulls’ resolve. A bounce above the said resistance would trigger an extended rally. On the downside, a bearish breakout may cause a correction to 0.7320. USDCHF sees limited rebound The US dollar recoups some losses supported by recovering Treasury yields. The drop below the demand zone around 0.9230 has put the bulls under pressure. An oversold RSI has triggered the buy-the-dips mentality at the fresh support at 0.9200. The buy-side will need to clear the hurdle at 0.9310 to reclaim control of the direction. Otherwise, the latest rebound may be an opportunity for the bears to sell into strength. A new round of sell-off would send the pair towards the daily support at 0.9100. NAS 100 tests resistance The Nasdaq 100 rallies as investors seem to be feeling confident about the upcoming earnings. A rebound above the psychological level of 15000 suggests strong buying interest in keeping the rally intact in the medium-term. The RSI’s overbought situation has temporarily held the impetus back. A retracement is likely to attract bids in the vicinity of 15050. 15400 is a major resistance from the daily timeframe and its breach may resume the uptrend above 15700. Failing that, 14800 is a key floor on the downside.  
New Year starts with strong Tesla results, OPEC decision | MarketTalk: What’s up today? | Swissquote

Intraday Market Analysis – USD Struggles To Bounce

Jing Ren Jing Ren 27.10.2021 14:08
The Australian dollar rallied after Q3 inflation exceeded expectations. A bullish MA cross on the daily chart indicates an acceleration in the upward movement. Pullbacks are likely to attract a ‘buy the dips’ crowd. The pair has been consolidating its recent gains above 0.7450, a former major resistance that has turned into support. A close above 0.7545 may extend the rally to last July’s high at 0.7610. On the downside, a deeper retracement would test the demand area between 0.7380 and the psychological level of 0.7400. USDNOK maintains bearish trend The Norwegian krone keeps the high ground supported by continued strength in oil prices. Sentiment has remained downbeat after a break below the daily support at 8.4700. Rebounds have so far been checked by solid selling interest. The current sideways action under 8.4100 could be another phase of distribution. Then the bears would be pushing towards June’s low at 8.2400, the last support before reaching this year’s low at 8.1500. 8.4800 near the 20-day moving average would be the second resistance in case of a bullish attempt. UK 100 resumes rally The FTSE 100 breaks higher as confidence grew after fresh highs on Wall Street. The rally above August’s high at 7220 is an indication of a strong commitment from the long side. Breakout candles and a bullish MA cross confirm that the uptrend has resumed. The index is now on its way to the pre-pandemic level around 7550. 7350 would be an intermediate hurdle as an overbought RSI may trigger some profit-taking. 7220 has become fresh support if the bulls need to catch their breath.
Sideways drifts and targets hit

Sideways drifts and targets hit

Jason Sen Jason Sen 28.10.2021 12:21
AUDUSD trades sideways after we warned last week that the rally has ended with Thursday's bearish engulfing candle. We keep holding good support at 7465/55 & held just below strong resistance at 7555/65. We can trade the range while we wait for a breakout. NZDUSD longs at 7140/30 work perfectly again yesterday hitting the target of 7180/90 for profit taking as we remain in the sideways trend. This could be the case for an extended period after Thursday's bearish engulfing candle. AUDJPY also likely to trade sideways for a while after Thursday's bearish engulfing candle for a sell signal. Today's Analysis. AUDUSD longs at good support at 7465/55 work again on the bounce to 7500/05 for profit taking before a high for the day yesterday exactly at the next target of 7530/35. Strong resistance at 7555/65 should be a big challenge. Try shorts with stops above 7580, looking for a double top sell signal. Longs at 7465/55 again today stop below 7445 (so the risk is very small). A break lower is a sell signal targeting 7410/7390, perhaps as far as 7360/50. NZDUSD longs at first support at 7140/30 could work again re-targeting 7180/90 for profit taking & as expected this was a high for the day. If we retest 7200/7220, try shorts with stops above 7240, looking for a double top sell signal. BUT be ready to sell again at very strong resistance at 7255/75. Stop above 7300. Longs at first support at 7140/30 must stop below 7120 so the risk is very small. A break lower is a sell signal targeting 7090/80 probably as far as 7040/30. AUDJPY I would sell at 8620/40 (unfortunately yesterday's high was 8605) with stops above 8660 looking for a double top sell signal. A break higher kills the bearish engulfing candle for a buy signal. First support at 8460/40 in the sideways trend. A bounce targets 8500 perhaps as far as 8540/50. A break below 8420 however is the next sell signal targeting 8370 & 8345/35. To subscribe to this daily report please visit daytradeideas.co.uk or email jason@daytradeideas.co.uk USDJPY longs at support at 113.40/30 were offered 50 pips yesterday. as we topped exactly at first resistance at 113.80/95. EURJPY buying opportunity at at 131.60/40, stop below 131.30. CADJPY shorts at first resistance at 9240/60 keep working this week. https://www.youtube.com/watch?v=wASlHvMEN6g Update daily at 06:30 GMT Today's Analysis. USDJPY meets minor resistance at 113.85/95. Strong resistance at last week's high at 114.50/70. Shorts need stops above 114.80. A break higher is a medium term buy signal. Good support again at 113.40/30. Longs need stops below 113.20 so the risk is very small. A break lower target 113.00/112.90 & 112.60/50. EURJPY buy at 131.60/40, stop below 131.30. A break lower is a sell signal targeting 130.90 then an important buying opportunity at 130.40/20 with stops below 130.00 Longs at 131.60/40 target 131.90 & 132.10 for profit taking. Strong resistance at 132.20/40. Shorts need stops above 132.60. CADJPY shorts at first resistance at 9240/60 work again as we target 9200 & 9175, hit as I write this morning. A buying opportunity at 9120/00 with stops below 9090. Gains are likely to be limited with first resistance at 9240/60. However on a break higher sell at 9280/9300 with stops above 9320. To subscribe to this daily report please visit daytradeideas.co.uk or email jason@daytradeideas.co.uk EURUSD breaks support at 1.1620/00 so this is now working as resistance. It is difficult to trade the pair as the daily ranges are small & we are mostly trading sideways. USDCAD shorts at first resistance at 1.2420/40 this trade worked perfectly on the collapse to 1.2370  & as far as first support at 1.2300/1.2280. Longs here also this trade worked perfectly on the bounce to 1.2370 for an easy 120 pip profit on the day. GBPCAD shorts at first resistance at 1.7050/70 handed a quick & easy 150 pip profit yesterday. Update daily at 06:30  GMT Today's Analysis. EURUSD holding below first resistance at 1.1610/20 targets 1.1580 & 1.1540/30. A break below 1.1520 is an important medium term sell signal. A break above 1.1620 however can target resistance at 1.1665/75.  Next we look for a test of minor resistance at 1.1690/99. Exit longs & try shorts with stops above 1.1720. USDCAD same levels apply for today with first resistance at 1.2420/40. Shorts here stop above 1.2450. Be ready to buy a break above 1.2450 targeting 1.2510/30. Shorts at 1.2420/40 target 1.2370 then support at 1.2300/1.2280. Longs here need stops below 1.2270 for a sell signal. GBPCAD shorts at first resistance at 1.7050/70 worked perfectly on the collapsed to our targets of 1.6950/40 & 1.6910/1.6890 for an easy 150 pip profit yesterday. Ultimately we are looking for the target of 1.6870/60, perhaps as far as support at 1.6800/1.6780. We can try shorts again at first resistance at 1.7050/70 but must stop above 1.7090. A break higher is a buy signal targeting a selling opportunity at 1.7155/75 with stops above 1.7195. To subscribe to this daily report please visit daytradeideas.co.uk or email jason@daytradeideas.co.uk GBPUSD high for the day exactly at resistance at 1.3835/55 so far this week followed by a test of support at 1.3740/30, but we over ran to 1.3707. EURGBP longs at important 200 week moving average support at 8405/8395 worked perfectly on the bounce to first resistance at 8455/65 for profit taking. Shorts here are also working as I write. GBPNZD breaks important support at 1.9180/70 for a sell signal. Update daily at 07:00 GMT Today's Analysis. GBPUSD first support at 1.3740/20 but be ready to sell a break below 1.3700 targeting 1.3670/60, perhaps as far as strong support at 1.3600/1.3580. Any longs at support at 1.3740/20 target 1.3770/80, perhaps as far as strong resistance at 1.3835/55. This remains key to direction in severely overbought conditions. Try shorts again with stops above 1.3875. A break above here is a medium term buy signal. EURGBP longs at important 200 week moving average support at 8405/8395 work on the bounce to first resistance at 8455/65 for profit taking. Shorts need stops above 8475. A break higher targets 8500. Shorts at first resistance at 8455/65 are working as we target 8440 before a retest of important 200 week moving average support at 8405/8395. Longs need stops below 8380. A break lower is a medium term sell signal. GBPNZD break below support at 1.9180/70 is a sell signal targeting 1.9110/00. First resistance at 1.9170/90. Shorts need stops above 1.9210.
Intraday Market Analysis – USD Continues To Soften

Intraday Market Analysis – USD Continues To Soften

John Benjamin John Benjamin 09.12.2021 10:14
USDCAD tests key support The Canadian dollar inched lower after the BOC left its interest rate unchanged as expected. The pair has met stiff selling pressure at the supply zone around 1.2850, a triple top on the daily chart. A drop below 1.2720 has forced out short-term buyers. 1.2580 is the next support and it sits on the 30-day moving average. A bearish breakout would deepen the correction to the psychological level of 1.2500. On the upside, the bulls will need to clear 1.2770 before they could have another attempt at the supply zone. USOIL rebounds from demand zone WTI crude bounces back on signs that the new virus strain has a limited impact on demand. Price action met strong buying interest near last August’s lows at 62.00, a major support from the daily chart to keep the uptrend intact. A bullish RSI divergence in this congestion area indicates a loss of momentum in the bearish drive. Then a rally above 69.30 forced the sellers to exit, opening the door for an extension towards 79.00. The initial surge has pushed the RSI into the overbought territory. 68.00 is an immediate support. GER 40 to test major resistance The Dax 40 recoups losses as fears of the omicron variant start to subside. Last October’s lows near 14900 have proven to be a solid support. The rally above 15520 stirred up volatility as the last sellers rushed to the exit. The bulls are pushing towards 15920, where the index took a nosedive in late November. A bullish breakout could attract more buying interest and turn market sentiment around. Meanwhile, an overbought RSI has caused a pullback, giving time for the bulls to accumulate. 15300 is the closest support.
Tension Beetween Ukraine And Russia Definetely Shaped News In Recent Days

Intraday Market Analysis – AUD Struggles To Bounce - 21.12.2021

John Benjamin John Benjamin 21.12.2021 07:56
AUDUSD sees limited rebound The Australian dollar softens over dovish RBA meeting minutes. The pair has met stiff selling pressure near the 30-day moving average (0.7220). On the hourly chart, a bearish MA cross and a break below 0.7100 indicate weakness in the latest rebound. An oversold RSI may cause a brief rally, but the bears may sell into strength around 0.7160. 0.7050 at the base of the initial breakout is an important support. A lack of bids could send the Aussie to 0.6990 with the reversal attempt at stake. XAGUSD to test demand area Silver drops as the US dollar inched higher across the board. A bullish RSI divergence suggests a loss of momentum in the sell-off. Then the recent surge has broken above multiple levels of resistance, prompting the short side to cover some of their bets. However, the bulls may need to defend their gains after the initial push overextended. The demand zone between last September’s low (21.40) and 21.80 is critical in keeping the rebound valid. 22.65 is now a fresh resistance before a full-blown recovery could materialize. US 30 struggles for support The Dow Jones retreated as major countries imposed curfews ahead of the holiday season. Following a double top under 36200, a drop below 35450 has broken buyers’ attempt to resume the rally. The index is struggling to hold above the base of the December recovery (34800) which coincides with the 61.8% Fibonacci retracement level of the rally from 34000. Buyers will need to lift 35620 before they could attract followers’ attention. 34000 is the daily support to safeguard the bullish bias in the medium-term.
Swissquote MarketTalk: A Look At XAUUSD, Swiss Secrets, Tesla And More

S&P 500, Google Earnings and Bitcoin - Swissquote's MarketTalk

Swissquote Bank Swissquote Bank 01.02.2022 13:41
The S&P500 finished January with a strong two-day rally, but the index is still more than 5% lower than where it kicked off the year, having recorded its worst month since March 2020. Nasdaq closed yesterday’s session up by more than 3% for the second day in a row. Nasdaq is already up by almost 9% from the January dip. Yet, 3-4% gains are often sign of high volatility and stress, and they could easily melt down in no time. What we need to see now is smaller but more sustainable gains to call the end of the January selloff. Good news is that the Federal Reserve (Fed) officials start sending softer messages and the hawkish pricing is mostly done, which could lead to some more recovery in US stocks, especially of the upcoming earnings are strong, and in Bitcoin. Exxon, Google, General Motors, AMD and EA are among the most closely monitored companies due to announce their Q4 earnings. Watch the full episode to find out more! 0:00 Intro 0:23 Market update 1:58 Some factors supportive of a further recovery 4:19 Bitcoin ready to pull out the $40K offers 5:37 Google earnings: what could go wrong? 6:36 Exxon to announce a nearly-doubled revenue 7:23 Sony buys Bungie 8:21 DAX: potential to outperform US peers? 9:09 AUDUSD set for further slide as RBA hints at no rate hike Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020.
Pairs With American Dollar: AUDUSD, USDCAD, NZDUSD - Update

Pairs With American Dollar: AUDUSD, USDCAD, NZDUSD - Update

John Benjamin John Benjamin 02.02.2022 08:31
AUDUSD recoups losses The Australian dollar recovered after the RBA signaled an end to its bond-buying program. The recent sell-off below the daily support and psychological level of 0.7000 further weighed on market sentiment. As the RSI dipped again into the oversold territory, short-term sellers’ profit-taking has driven the price higher. The bears could be looking to fade the current rebound unless the bulls succeed in pushing past 0.7180. 0.7030 is a fresh support and 0.6970 a major floor before June 2020’s lows near 0.6800. USDCAD tests support The Canadian dollar advanced after November’s GDP exceeded expectations. A break above the supply zone at 1.2730 has put the US counterpart back on track. Nonetheless, the rally came to a halt at the daily resistance at 1.2790. The greenback needed a breather as the surge prevented buyers from chasing after volatility. 1.2580 is a key support and an oversold RSI may raise buyers’ interest again. A close above the said resistance could propel the pair to December’s high at 1.2950. NZDUSD sees limited rebound The New Zealand dollar bounced back after the Q4 jobless rate dropped to 3.2%. The pair saw bids over September 2020’s lows around 0.6530. The RSI’s repeated oversold situation has caught bargain hunters’ attention. However, the directional bias remains bearish. The kiwi could find resistance at 0.6700 near the 20-day moving average as trend-followers look to sell into strength. 0.6400 would be the next target if the US dollar makes a comeback across the board.
AUDUSD And NZDUSD Charts Looks Quite Similar... SPX Trades A Bit Lower Than A Few Days Ago

AUDUSD And NZDUSD Charts Looks Quite Similar... SPX Trades A Bit Lower Than A Few Days Ago

John Benjamin John Benjamin 18.02.2022 08:51
AUDUSD attempts to break out The Australian dollar finds support from a low jobless rate in January. The pair has previously hit resistance in the supply zone around 0.7250. This is a daily resistance from the sell-off in late January. Then a recovery above 0.7180 suggests solid buying pressure before a bearish mood could take hold again. A break above the key hurdle could initiate a bullish reversal above this year’s peak (0.7310). Otherwise, a prolonged consolidation may test the demand area between 0.7100 and 0.7150. NZDUSD tests resistance The New Zealand dollar climbed higher as the RBNZ can lift its cash rates next week. Price action came under pressure on the 30-day moving average (0.6730). However, strong support at 0.6590 builds a case for a potential reversal. A break above 0.6690 is an encouraging sign leaving 0.6730 as the last obstacle before a bullish extension. A broader rally would bring the kiwi back to January’s high at 0.6890. In the meantime, an overbought RSI caused a brief pullback towards 0.6660. SPX 500 consolidates The S&P 500 struggles as the Russia-Ukraine crisis persists. The previous rebound has met stiff selling pressure over the 30-day moving average (4590). A pullback has sent the RSI into the oversold territory, triggering some buyers’ interest in racking up the bargain. The rebound is still valid as long as the index stays above the critical area of 4280. A break above 4480 may extend gains to the double top at 4590 which is an important resistance. 4360 is the immediate support if the sideways action lingers.
USOIL (WTI) Increased As Expected. NZDUSD And AUDUSD Went Down

USOIL (WTI) Increased As Expected. NZDUSD And AUDUSD Went Down

John Benjamin John Benjamin 24.02.2022 09:02
USOIL continues to climb WTI crude surged after Russia launched a military operation in eastern Ukraine. The latest market jitters met support over 90.70 which sits next to the 20-day moving average. Sentiment would stay optimistic as long as price action is above this demand zone. A previous horizontal consolidation allowed the bulls to catch their breath and accumulate for the current push. A close above 95.50 would send the price towards the landmark 100.00. An overbought RSI may cause a brief pause if momentum traders take profit. NZDUSD hits resistance The New Zealand dollar jumped after the RBNZ raised rates for the third time in a row. The pair met selling pressure in the supply zone (0.6810) from the sell-off in late January. An overextended RSI led short-term bulls to take profit in that congestion area. However, the rebound trajectory may attract buying interest with the current pullback seen as an opportunity. 0.6680 is the next support after a drop below 0.6730. A deeper correction may test 0.6600, which is important support from the daily chart. AUDUSD seeks support The Australian dollar retreats amid cautious market sentiment. A break above the recent peak at 0.7245 suggests a strong bullish commitment. The pair is heading towards January’s high at 0.7310. A bullish breakout could turn things around in the medium term. After the RSI ventured into the overbought area, the bullish impetus stalled as intraday buyers took profit. 0.7165 is the next support as the RSI swings into the oversold area. Further down, 0.7100 is a key floor to keep the rebound intact.
Intraday Market Analysis – Gold Recovers Slowly

Intraday Market Analysis – Gold Recovers Slowly

Jing Ren Jing Ren 02.03.2022 09:06
XAUUSD grinds rising trendline Gold recovered after the first round of peace talks between Ukraine and Russia ended without a resolution. The precious metal found support over 1885. The rising trendline from early February indicates that the general direction is still up despite a choppy path. The previous peak at 1974 is now a fresh resistance and its breach could send the price to the psychological level of 2000. The downside risk is a fall below the said support. Then 1852, near the 30-day moving average, would be the bulls’ second line of defense. AUDUSD attempts reversal The Australian dollar steadied after the RBA warned that energy prices could flare up inflation. A break above the previous high (0.7285) shows buyers’ strong commitment despite sharp liquidation. Sentiment swiftly recovered and may attract more buying interest. An overbought RSI may temporarily limit the upside. And the bulls could be waiting for a pullback to accumulate. 0.7220 is the closest support. A bullish close above the January peak at 0.7310 could initiate a reversal in the medium-term and extend gains towards 0.7400. CADJPY bounces back The Canadian dollar clawed back losses after the Q4 GDP beat expectations. A jump above 90.70 has prompted sellers to cover their bets, opening the door for a potential reversal. 91.10 is the next resistance and its breach could propel the loonie to this year’s high at 92.00. On the downside, the psychological level of 90.00 is a key support to keep the rebound relevant. Otherwise, a drop to 89.30 would suggest that sentiment remains fragile. In turn, this would place the pair under pressure once again.
AUD/USD, Emini S&P 500 And Nasdaq - Daily analysis by DayTradeIdeas

AUD/USD, Emini S&P 500 And Nasdaq - Daily analysis by DayTradeIdeas

Jason Sen Jason Sen 31.03.2022 09:54
AUDUSD after last week's bearish engulfing candle in severely overbought conditions we now have a small shooting star candle after the retest of last week's high, leaving a potential double top sell signal. Emini S&P JUNE we wrote: We are now severely overbought on the daily chart & short term charts. Although I think we could drop 100 points there is no sell signal so I cannot recommend a short. If we do head lower (as I think we will), look for 4585/80... A perfect call as we reverse to 4575. Nasdaq June beat resistance at 14400/500 for a buy signal targeting 14650/680 then 14820/870 & as far as my ultimate target & strong resistance at 15100/15200. Shorts here worked perfectly we reverse from 15268. Update daily by 05:00 GMT Today's Analysis. AUDUSD shorts at 7500/7530 re-target 7450/45 then 7405/7395. A low for the day certainly possible but longs are now more risky after the potential sell signal. Bulls need a break above 7555 to kill the negative signal from the bearish candles. A break higher targets 7630/40. Emini S&P JUNE reversed from Tuesday's high as predicted to hit the first target of 4585/80, with a low for the day half way to support at 4565/55. Further losses meet very strong support at 4520/10. Longs need stops below 4495. We could have a high for the 2 week recovery in place now. A bounce this morning obviously meets resistance at 4625/30. However a break above 4640 opens the door to 4660/70 & a break above here is the next buy signal. Nasdaq JUNE tests strong resistance at 15100/15200. Shorts need stops above 15350. A break higher is a buy signal targeting 15500/520, perhaps as far as 15650. Our shorts target first support at 14950/900. A bounce from here is possible. However longs may be too risky. If we continue lower look for 14850 then 14750/700. To subscribe to this report please visit daytradeideas.co.uk or email jason@daytradeideas.co.uk No representation or warranty is made as to the accuracy or completeness of this information and opinions expressed may be subject to change without notice. Estimates and projections set forth herein are based on assumptions that may not be correct or otherwise realised. All reports and information are designed for information purposes only and neither the information contained herein nor any opinion expressed is deemed to constitute an offer or invitation to make an offer, to buy or sell any security or any option, futures or other related derivatives.
FX Daily: Eurozone Inflation Impact on ECB Expectations and USD

GBPUSD Has Declined, S&P 500 (SPX) Decreased As Well! AUDUSD After RBA Interest Rate Decision

Jing Ren Jing Ren 06.04.2022 07:49
AUDUSD breaks major resistance The Australian dollar soared after the RBA signaled higher interest rates later this year. The pop above the daily resistance at 0.7550 has put the Aussie on a bullish reversal course for the weeks to come. Solid green candles indicate a combination of short-covering and momentum buying. Last June’s high at 0.7770 is the next target. In the meantime, the RSI’s overbought situation led to a brief pause. Trend followers could be looking to join the rally at pullbacks. 0.7470 is fresh support in this case. GBPUSD awaits breakout The US dollar rallies as traders hoard the safe haven currency. The price is in a narrowing consolidation range as a sign of short-term hesitation. Overall sentiment remained downbeat after the latest rebound hit resistance at 1.3300. The bulls need to lift offers around 1.3220 before they could turn the tables. Otherwise, the path of least resistance would be down. 1.3050 is the closest support and the psychological level of 1.3000 is a critical floor. A bearish breakout could make the sterling vulnerable to a new round of sell-off. SPX 500 seeks support The S&P 500 falls back as yield curve inversion raises concerns of an economic contraction. On the daily chart, a break above the February high at 4590 and a bullish MA cross suggest a steady market mood. A drop below 4580 prompted leverage buyers to bail out but found support at 4510. 4455 on the 20-day moving average would be the second line of defense in case of a deeper correction. Buyers may see short-term retracements as opportunities to stake in. A bounce above 4600 could be a continuation signal.
Forex News: AUDUSD, are sellers setting up a new extension lower?

Forex News: AUDUSD, are sellers setting up a new extension lower?

8 eightcap 8 eightcap 13.04.2022 10:56
Today we are looking at the AUDUSD as sellers look to be pushing at a new extension lower. After yesterday’s rally stalled at resistance so far today, we have seen momentum squarely back with sellers. Overall price remains in a long term uptrend, but since the last April high was put in, buyers have struggled to get momentum going with a charging USD continuing to pressure the AUD. Despite Australian inflation pressure and talk of rates increasing in June, this is overshadowed by 40-year high inflation in the States and Fed members vowing to act. Since that high, we have watched a new downtrend develop with price making its first leg lower, returning to 0.74. Yesterday we did see a fightback, but that was stopped by resistance and supply that remains around the .7450-.7480 area. Today’s rally was also stopped by this supply level and has started to develop into a trigger bar. If sellers can break minor support, we will continue to look for a continuation lower, maintaining the current downtrend. The big test if price makes a new push lower is the long-term uptrend. Will it stop sellers and start a new continuation point for buyers? This could be a critical crossroads for the longer-term picture, and we feel a lot will come down to the current situation with US inflation, their rates policy and demand for commodities. Covid continues to run rife in China, and if the situation continues, this could also have a knock-on effect on demand. First things first, sellers need to beat minor support to get the continuation going. AUDUSD D1 Chart The post Forex News: AUDUSD, are sellers setting up a new extension lower? appeared first on Eightcap.
ECB's Dovish Shift: Markets Anticipate Softer Policy Guidance

(EUR) Euro Power!? (EURUSD) Euro To US Dollar Still Trades Really Low! Does AUDUSD Impose US Dollar Weakening? Shocking USD/NOK Rollercoaster

Jing Ren Jing Ren 15.04.2022 09:03
EURUSD breaks key support The euro fell after the ECB insisted that there is no rush to raise interest rates. The price has given up all gains from the March rebound. Even though a bullish RSI divergence shows a slowdown in the sell-off momentum, a break below 1.0810 put the single currency further on the defensive. A deeper correction would push the pair to 1.0700. 1.0920 is a fresh resistance and those who bought the dip may seek to bail out. Analysts expect more offers around the support-turned-resistance at 1.1000. AUDUSD seeks support The Australian dollar recovers as inflation expectations rise amid a tight labor market. The pair is seeking support after it broke above last October’s high at 0.7550. The pullback came across buying interest near 0.7400 which sits on the 30-day moving average. A bounce above 0.7490 would shave off some selling pressure and the bulls need to reclaim 0.7550 before the uptrend could resume. On the downside, a bearish breakout would force the latest buyers to bail out and trigger a sell-off towards 0.7300. USDNOK consolidates in channel The US dollar rallied as March retail sales came out in line with expectations. A previous break above 8.7900 prompted sellers to cover, easing the pressure on the greenback. The pair is in a rising channel and a series of higher lows indicates improved sentiment. 8.7000 is the current support as traders buy the dips. 8.8000 on the upper side would be the next target in the short term. Its breach could extend the recovery to the psychological level of 9.0000. A bearish breakout would send the pair to the daily support at 8.5600.
Fed Expectations Amid Mixed Data: Wishful Thinking or Practical Pause?

Markets Going To Shock! What To Expect? Nasdaq, Hang Seng, ASX200, (Australian Dollar To US Dollar) AUDUSD, IBM And Netflix Earnings

Saxo Bank Saxo Bank 19.04.2022 09:14
Equities 2022-04-19 06:00 6 minutes to read Summary:  Global growth to slow says the World Bank, Earnings estimates are weaker and markets brace for more rate hikes. So, Traders turn to commodities again. Oil continues its climb from last week, as global mobility picks up while supply remains cut off from Libya. Broad Asian markets are mixed, yet stocks shine in power generation and Ag. While down under in Australia, their share market inches toward its record all time high, beefed up iron ore, oil and fertilizer stocks. What’s happening in equites that you need to know? The major US indices brace for weakness:   The Nasdaq 100 (USNAS100.I), S&P 500 (US500.I) are on the back foot, trading under their 50-day moving averages. Q1 earnings expectations are the weakest since March 2020, plus results so far are showing profit erosion and rising input costs. Traders are digesting World Bank estimates of slower growth for the year, and bracing for more rate hike hints Thursday. Meanwhile, oil giants remain favored, Occidental (OXY) shares trade up 112% this year, Halliburton (HAL) trades up 82% YTD, Marathon Oil (MRO) up 63% YTD, with oil companies likely to see the strongest earnings growth this year. Read next: (UKOIL) Brent Crude Oil Spikes to Highest Price For April, (NGAS) Natural Gas Hitting Pre-2008 Prices, Cotton Planting Has Begun   Asian markets are mixed: The MSCI Asia Pacific, ex Japan Index (FMASM2) is lower. Singapore’s STI Index (ES3) up 0.7% led by power generation firm Sembcorp (S51), travel stocks such as Genting Singapore (G13) and Singapore Airlines (C6L) as well as agriculture stock Wilmar (F34) and banks UOB (U11) and DBS (D05). Japan’s Nikkei (NI225.I) was trading flat, supported mainly by gains in base metals but dragged by Fast Retailing (9983). MSCI Asia Pacific ex-Japan was lower after US stocks closed in the red overnight and gains in oil prices continued. HK equities retreat.  Hang Seng Index (HSI.I) retreated by 2.8% after coming back from the 4-day long holiday weekend.  Investors found the 25 basis point reserve requirement ratio cut by the People’s Bank of China last Friday disappointing as they had been expecting a more typical 50 bp reduction and a 10 bp cut in the policy Medium-term Lending Facility (MLF) rate as well.  Bilibili (09626) lost 11% on rumor that the company was laying off staff in its live streaming department.  E-commerce names declined on report that the Shanghai Administration for Market Regulation had asked e-commerce companies to a meeting and called on the latter to improve on practices on pricing and delivery of necessities to consumers during the lockdown.  Alibaba (09988) and Meituan (03690) fell 4% to 6%. China Merchant Bank (03968) fell 11% following the abrupt departure of the Chinese bank’s president. CSI300 (000300.I) declined modestly.  Coal miners and fertilizer producers gained. The Australian share market is nearing a record all time high. The (ASX200)is up 0.5% on Tuesday, up for the third day and is now just 0.3% away from hitting its record high. The RBA meeting minutes showed that quicker inflation and a pick up in wages growth will bring forward the timing of the RBA’s first rate hike, however that’s not spooking the ASX, as most sectors trade higher. Gold stocks are leading the market today, like Ramelius (RMU) up 5%, Perseus (PRU) up 4% as investors back the safe haven asset as it traditionally rallies when interest rates rise. While shares in fertizlier and explosive company Incitec Pivot (IPL) are up 4%, to their highest level since 2018 after announcing production will kick off again at its ammonia plant. Elsewhere, oil and coal shares are pushing up while, shares in Australia’s biggest iron ore companies, BHP, FMG and RIO trade higher as iron ore sets 2.5 months highs. Crude oil (OILUKJUN22 & OILUSMAY22) continues to move up, extending its uptrend from last week, WTI oil back at $108, Brent up $113.39 as Libya oilfield outage cut off half a million barrels a day, adding to lack of supply from the war in Ukraine. PLUS, global mobility is rising. For example, Moody's (rating agency) expects travel to be back to normality in 12-18 months. More imminently, China Eastern Airlines resumed flying Boeing 737-800 jets from last weekend following the deadly crash Grain prices surge again. Wheat prices (futures) up 3.6% to $11.28 a bushel, forming another uptrend on lack of supply fears, as colder weather (snow) is tipped to slow planting in Canada. Plus, Wheat planting in US is growing slower than last year. USDA’s springs wheat seedings crop progress report shows 8% of the expected area was planted, compared to 18% last year. Wheat is likely to head higher due to warmer summers, colder winters, meaning soil temps in Canada and US are not ideal, so slimmer supply is ahead, which is supporting wheat prices. Meanwhile Corn prices near a record high. And International Rice Research institute forecasts rice yields may drop 10% in the next season - that is 36mn tons. This will continue to get worse if the war continues.   For you: Forex Rates: British Pound (GBP) Strengthening? Weak (EUR) Euro? GBP, NZD And AUD Supported By Monetary Policy? Iron ore (SCOA) trading above $155 for first time in  2.5 months.  Iron ore likely to continue uptrend and also potentially spike if China cuts interest rate again. This is supporting stocks like BHP, RIO FMG. USDJPY pays no heed to Japanese authorities’ verbal intervention, and rightly so given the monetary policy divergence between the Fed and the BOJ widens the yield differential. USDJPY surged to fresh 20-year highs of 127.55 this morning and the next level to watch is 128 but many are calling for 130 in the days to come. After some warnings from BoJ’s Kuroda yesterday, Japanese Finance Minister Shunichi Suzuki expressed concerns about the sharp drop in the yen today. Bitcoin dropped to lowest level in a months, as risk appetite is dropping like a stone.  Bitcoin fell below key level of support, so watch positions and also in stocks like Block (SQ, SQ2), that make 75% of revenue from BTC What you need to consider World Bank downgrades global growth estimates. The World Bank cut its 2022 outlook to 3.2% from 4.1%, dragged down by Europe and Central Asia amid the Russian invasion of Ukraine. World Bank Chief Economist Carmen Reinhart said there is “exceptional uncertainty” in global markets and further downgrades cannot be ruled out. The Australian dollar is rising back up (AUDUSD) as iron ore and oil prices lift.  The AUDUSD not only pushed higher ahead of RBA Meeting Minutes, but also as the Iron Ore price hit its highest level in 2.5 months, while oil rose to its highest in 4 weeks (these are two of Australia’s largest exports). And finally, the AUD is also being supported higher as Australian tourism is picking up, with the First cruise ship docking in Sydney Harbour since covid ban two years ago. Brace for more hawkish Fed talk this week.  We had James Bullard on the wires yesterday, and he planted the seeds of a 75-basis points rate hike given that the Fed needs to get to neutral rate very soon. Base case for the May meeting is still a 50-basis points rate hike, and a final word on that should be watched from Fed Chair Powell on Thursday as he speaks at the IMF conference. Still, brace for more volatility in yields and further gains in the US dollar as Fed continues to raise the bar of its hawkishness. Trading ideas to consider Asian agriculture stocks are on watch. For reasons mentioned above, it could be worth watching grain stocks like Australia's GrainCorp (GNC), Elders (ELD), or ag chemical company Nufarm (NUF), or Incitec Pivot (IPL), or food processing company Wilmar (WIL) listed in Singapore, or Japan's Yamazaki Baking (2212) may be of interest. Singapore reopening theme in focus into the summer.  Singapore Airlines (C6L) has seen a big jump in passenger volumes this year. Air passenger traffic has reached 31% of pre-covid levels last week up from 18% a month ago. That bodes very well with our reopening theme, and stocks to watch will be Singapore Airlines, SATS (S58) and Genting Singapore (G13). Singapore Airlines and SATS are adapting big technology changes to avoid getting trapped in labour shortages, but also still hiring in a big way in anticipation of a rebound in summer travel. US Earnings to watch. Bank of America (BAC) surged on better-than-expected Q1 results but BNY Mellon (BK) slumped. Focus now on mid-tier financial services earnings like Fifth-third (FITB) and Citizens Financial (CFG). Also on watch will be J&J (JNJ), Netflix (NFLX), Lockheed Martin (LMT), IBM (IBM), Halliburton (HAL) and others. Key issues to consider will be inflation and Fed’s aggressive tightening, but also how supply chains and consumer demand recovery is shaping up. Key APAC economic releases this week: Tue, Apr 19: Japan industrial production Wed, Apr 20: Japan March trade, China 1-year and 5-year loan prime rates Thu, Apr 21: HK March unemployment rate Fri, Apr 22: HK March CPI, RBI meeting minutes   For a global look at markets – tune into our Podcast  
Intraday Market Analysis – AUD Is Still Under Pressure

Intraday Market Analysis – AUD Is Still Under Pressure

Jing Ren Jing Ren 04.05.2022 08:35
AUDUSD struggles to rebound The Australian dollar recovered after the RBA raised its cash rate for the first time in over a decade. A break below 0.7100 further weighed on sentiment. Caution still prevails as buyers are wary of catching a falling knife. The RSI’s oversold condition on the daily chart may attract increasing buying interest, notably some short-covering. Nonetheless, the bulls need to lift offers near 0.7170 before a reversal could gain a foothold. This year’s low at 0.6970 is a critical floor and its breach could send the Aussie into 0.68s. NZDUSD becomes overextended The New Zealand dollar steadied after the Q1 jobless rate met expectations. The break below January’s lows at 0.6540 sent the kiwi into a free fall. On the daily chart, a bearish MA cross exacerbated the downward pressure, though the RSI’s incursion into the oversold area may temper the bearish drive. A rebound to 0.6540 may be necessary to recover from the overextension, which could be an opportunity to sell into strength. June 2020’s low at 0.6390 would be the next target when momentum returns. UK 100 grinds resistance The FTSE 100 rallies ahead of the BOE meeting on Thursday. A bullish RSI divergence could be a soothing sign for the bulls as it indicates a slowdown in the sell-off. A bounce above 7490 prompted sellers to cover their positions, further easing the downward pressure. 7580 is the next hurdle and its breach would bring the index back to the double top at 7670, where a breakout could resume the uptrend in the medium-term. 7420 is an immediate support and 7300 an important level to keep the recent rebound intact.
Bitcoin Stagnates at $30,000 Level, Awaits US Bitcoin ETF Update and Fed Meeting

Saxo Bank | FXO Market Update - AUDUSD makes new lows and vols are bid

Saxo Bank Saxo Bank 10.05.2022 19:27
Summary:  Risk continue to trade fairly poor while FX getting some relief from the USD bid. EURUSD and USDJPY been relative stable over the last session while AUDUSD is down from 0.7075 on the opening yesterday to 0.6920 lows today. Vols continue to trade bid and AUD vols are considerably higher after the last days move, 1 month AUDUSD up 2 vol from Friday to 15.25. Saxo Bank publishes two weekly FX Options Market Update reports covering changes and updates on the FX Options and FX Volatility market. They describe changes in FX volatility levels, risk premium and ideas how to trade based on these.FX volatility, source Saxo Bank. Vol column: At-the-money volatility for the given maturity. 1w column: Change of the at-the-money volatility for the given maturity over the last week. Source: Bloomberg, Blue: AUDUSD spot, Black: AUDUSD 1 month vol, Red: AUDUSD 1 month risk premium Risk continue to trade poor with equities another leg lower yesterday. FX trades relative stable with EURUSD holding above 1.0500 and USDJPY trading around 130.00 for the last week. Implied vol trades bid while realized vol starts to come lower in some pairs. AUDUSD traded down to 0.6920 today before data came out and showing strength of retail volumes. AUDUSD vols are turbo bid after spot has dropped from 0.7075 on the opening yesterday to 0.6920 lows today. 1 month is up from 13.25 on Friday to 15.25 now, trading as high as 15.70 earlier in Asia with spot on the lows. 1 month risk reversal has moved from 1.8 to 2.8 for puts in the same time and the risk premium has widen over the last days and currently trades at 2.3 vol. Next big data point is USD CPI tomorrow and consensus is for a move lower to 8.1 from the peak at the last reading at 8.5. If this happens we might get a relief rally in risk and USD to trade lower as we get a first indication of a turn around. The elevated vol and risk reversal makes it attractive to sell AUDUSD puts as a trade for a low CPI reading tomorrow. Sell 1 week 0.6900 AUDUSD putReceive 36 pips Alternative Sell 1 month 0.6700 AUDUSD putReceive 40 pips Spot ref.: 0.6960 Source: Saxo Bank The Top/Bottom charts shows the top 5 and bottom 5 values/changes for at-the-money vol, risk reversal (RR) and risk premium of the 45 currency pairs we are tracking. Risk premium: Implied (Imp) minus realized volatility. A positive risk premium means implied volatility trades above realized volatility, i.e. the implied volatility can be seen as “rich”. Change: The difference between current price/volatility and where it closed 1w ago. FX Options Trading: You should be aware that in purchasing Foreign Exchange Options, your potential loss will be the amount of the premium paid for the option, plus any fees or transaction charges that are applicable, should the option not achieve its strike price on the expiry date If you write an option, the risk involved is considerably higher than buying an option. You may be liable for margin to maintain your position and a loss may be sustained well in excess of the premium received. By writing an option, you accept a legal obligation to purchase or sell the underlying asset if the option is exercised against you; however far the market price has moved away from the strike. If you already own the underlying asset that you have contracted to sell, your risk will be limited. If you do not own the underlying asset the risk can be unlimited. Only experienced persons should contemplate writing uncovered options, then only after securing full detail of the applicable conditions and potential risk exposure. Learn more about FX Options: Forex Options – An introduction Forex Options – Exotic options Forex Options - Webinars
The Commodities Feed: Anticipating LNG Strike Action and Market Dynamics

Philip Morris Buys Match, Fed Members Spills The Tea And Gold Price Nears Quite Low Values | Saxo Bank

Saxo Bank Saxo Bank 11.05.2022 17:29
Summary:  Global equity markets have bounced after the US briefly hit new cycle lows yesterday. One development at the margin that has helped is the sharp decline in longer bond yields, even as a couple of Fed members were out with hawkish comments. A strong 3-year US treasury auction showed strong demand. Elsewhere, gold remains under pressure and is on life support. The data focus today swings to the US and the release of April CPI data.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) - the rebound in US equities succeeded closing above the prior session’s close but met resistance above the 12,500 level in Nasdaq 100 futures. However, this morning Nasdaq 100 futures continue to rally trading around the 12,450-level attempting to break above the 12,500 level again which is needed to close Monday’s selloff range. Sentiment is still weak but a pause in the momentum in US 10-year interest rates is providing some support to US equities in the short-term. Q1 earnings results yesterday confirmed the slowdown in gaming and cryptocurrency trading activity. Hong Kong’s Hang Seng (HSI.I) and China’s CSI300 (000300.I). China’s A shares surged with ChiNext rising 4.3% and CSI300 up 2%. Electric equipment, semiconductors, EV battery, consumer electronics, wind and solar names led the charge higher. EV battery maker, CATL (300750) rose 7.7%. Hong Kong’s Hang Seng Index rose 1.7% and Hang Seng TECH Index gained 4.6% by mid-day.  After reporting better than market expected earnings and margin expansion, Li Auto (2015) surged 11%. The COVID related disruption to logistics and production, plus food and daily necessities stockpiling by households seems to make their impact felt on general price levels. China’s April PPI came at +8.0% YoY and CPI at +2.1% YoY, both higher than market expectations.   AUDUSD and USDCAD – the two key commodity currencies broke through key support against the US dollar this week, but so far the reaction to the development has been restrained and would likely take a further slide in risk sentiment, including in the commodity space for a notable extension lower. As the break levels remain nearby, the pairs deserve watching for the trend status and a possible reversal as well – resistance in AUDUSD is 0.7000-0.7050 and support in USDCAD comes in at 1.2900-50. Read next: Don't Worry Coffee Lovers! The Price Of Coffee Futures Falling Amidst Current Market Conditions, Crude Oil (WTI) Recovers Slightly, Palladium Prices Show Steady Downward Price Trend | FXMAG.COM USDJPY and JPY pairs – global sovereign bond yields have tumbled from their highs at the start of the week and crude oil has corrected sharply lower, two developments that support the Japanese yen, as Japan relies so heavily on energy imports and BoJ yield-curve-control policy means that the currency absorbs weakness when the domestic bond market is not “allowed” to. And yet, the JPY bounce on supportive developments has proven surprisingly muted – an opportunity or indication of further weakness to come? Watching for the reactivity in JPY pairs around the US CPI release today and 10-year US T-note auction later today as USDJPY is often one of the more sensitive currencies to US treasury yields. Gold (XAUUSD) dropped below $1850 support yesterday after several Fed officials backed multiple 50 basis point rate hikes. These comments helped drive fresh dollar strength and a continued rise in US real yields ahead of today’s US CPI print. Recent dollar strength, especially against the yuan and rupee has reduced demand from China and India, the world’s two biggest buyers of physical gold. With gold trading near a three-month low, demand for bullion backed ETFs has also ebbed with total holdings falling to a three-week low on Tuesday. Silver (XAGUSD) meanwhile slumped below previous support at $21.5, thereby adding an additional layer of weakness. From a technical perspective, the next key support level in gold is the 61.8% retracement of the March 2021 to March 2022 high at $1827. Crude oil (OILUKJUL22 & OILUSJUN22) traded higher in Asia with Brent bouncing before reaching key support below $100 per barrel. Catalyst for the move ahead of today’s US CPI print was a decline in the Covid19 infections in China providing some cautious optimism about a pickup in demand from the world’s largest importer. The cost of fuel due to lack of refinery capacity and sanctions against Russia remains very elevated with retail gasoline in the US hitting a record. The EIA meanwhile lowered its forecast for US production in 2022 and 2023 while Saudi Arabia and the UAE oil ministers warned that spare capacity is decreasing in all energy sectors. Developments that may offset any slowdown in global consumption due to lower growth and punitive high inflation. Monthly oil market reports from OPEC and IEA on Thursday. US Treasuries (TLT, IEF) – The US yield curve flattened sharply yesterday as hawkish talk from a couple of Fed members (see below) kept the shorter end of the yield curve elevated, while longer yields continued their sharp retreat ahead of a tone-setting 10-year T-note auction today, with the benchmark yield there trading just below 3.00%. The 3-year notes yesterday saw the strongest demand in over a year. What is going on? Fed officials continue to back rate hikes. Fed speakers are back on the wires backing multiple 50 basis point rate hikes, even as that might mean a bumpy ride for the economy and the markets. Cleveland Fed President Loretta Mester, in fact, also brought 75bps rate hikes back on the table for H2 if inflation doesn’t recede. US earnings recap. The big negative surprise was Coinbase reporting Q1 revenue of $1.17bn vs est. $1.48bn and a dark Q2 outlook expecting lower trading activity. Unity was in line with Q1 estimates but puts out a very low Q2 revenue figure of $290-295mn vs est. $360mn, but the fiscal year guidance is closer to consensus suggesting timing issues. Electronic Arts surprised investors given the weakness in gaming results recently guiding fiscal year 2023 (the company is not following the traditional calendar year) revenue a bit above consensus. Staying with gaming results, Roblox reported a slowdown in user activity (bookings) as so many other gaming companies have done in Q1. Read next: Stablecoins In Times Of Crypto Crash. What is Terra (UST)? A Deep Look Into Terra Altcoin. Terra - Leading Decentralised And Open-Source Public Blockchain Protocol | FXMAG.COM Philip Morris to buy Swedish Match for SEK 106 per share. This is one of Europe’s largest transactions this year worth $16bn in an all-cash deal translating into a premium of 40%. Philip Morris is acquiring Swedish Match to get assets that are less about visual cigarettes to better cope with increasing regulation around the world against cigarettes. Declining Covid-19 cases in China helped boost sentiment across battered stock markets in Shanghai and Hong Kong overnight. The industrial metal sector has seen a sharp correction during the lockdown with the Bloomberg Industrial Metal Index currently up just 5% on the year after hitting a 39% gain on March 7. As lockdowns start to ease the focus across the sector is likely to return to tight global inventories and the prospect of a revival in demand with the Chinese government likely to initiate projects to support an economic revival. Six major mining companies who derive more than 60% of their revenue from copper have slumped between 25% and 50% from peaks achieved during the past year. What are we watching next? US CPI and 10-year T-note auction today. The 3-year T-note auction yesterday showed the strongest demand for 3-year US paper since early 2021. A 10-year T-note auction is set for today, with yields having retreated to near 3.00% from the highs earlier this week near the 2018 cycle high of 3.25%. Liquidity in the US treasury market is at its weakest levels since the pandemic-outbreak panic moment even before the Fed is set to begin reducing its balance sheet (requiring the market to absorb more treasury issuance). Reactivity in the US treasury market and the US dollar is also worth close observation today on the release of the April CPI data, expected to show the headline rising at only +0.2% MoM, but the core rising +0.4% MoM. The YoY expectations are +8.1%/+6.0% vs. +8.5%/+6.5% in March. EU gas prices jumped on Tuesday and may rise further today after Ukraine’s network operator warned Ukraine won’t accept gas at Sokhranivka, one of two cross-border points handling Russian flows, from today after occupying forces disrupted operation at the compressor station. It’s still possible for gas to be rerouted to the second entry point, Sudzha, allowing European contracts to be fulfilled, it said. How Gazprom reacts to these changes will set the tone in today’s trading. Dutch TTF benchmark gas briefly traded below its 200-day moving average support line at €89/MWh yesterday before ending the day near €100/MWH on the Ukraine news.  Earnings Watch. In Europe this morning the focus is on earnings from E.ON and Siemens Energy given the energy crisis in Europe. Genmab is also important to watch being one of Europe’s largest pure plays within the biotechnology industry. Later in the US session the focus is on Walt Disney given the latest weak results from Netflix and more reopening post the pandemic benefitting Disney’s physical entertainment assets. We will also watch Coupang, the largest e-commerce company in South Korea, given the bad Q1 results from most e-commerce companies. Today: Genmab, E.ON, Siemens Energy, Continental, Toyota, SoftBank, Takeda Pharmaceuticals, Delhaize, Mowi, Swedish Match, Walt Disney, Coupang Thursday: Verbund, KBC Group, Brookfield, Fortum, Siemens, Allianz, Merck, Hapag-Lloyd, RWE, Atlantia, Snam, NTT, SoftBank Group, Aegon, Naturgy Energy, Motorola Solutions Friday: Deutsche Telekom, KDDI, Honda Motor, Alibaba Economic calendar highlights for today (times GMT) 0715 – ECB's Nagel to speak 0800 – ECB President Lagarde to speak 0800 – ECB’s Vasle to speak 0830 – ECB's Makhlouf to speak 0850 – ECB's Knot to speak 1220 – ECB's Schnabel to speak 1230 – US Apr. CPI 1230 – US Apr. Real Average Hourly Earnings 1600 – US Fed’s Bostic (non-voter) to speak 1800 – US 10-year T-Note auction 2301 – UK Apr. RICS House Price Balance Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Saxo Bank
Euro-dollar Support Tested Amidst Rate Concerns and Labor Strikes

FX Update: Bond rally supercharges JPY comeback rally. | Saxo Bank

John Hardy John Hardy 12.05.2022 16:01
Summary:  An extension of the rout in risky assets has continued to drive the US dollar higher against the smaller currencies and most G10 currencies as well, but the Japanese yen has not only taken on a new shine, but is even sharply stronger against the strong US dollar as global bonds have suddenly rediscovered their safe haven appeal. Elsewhere, HKD is worth watching as the HKMA intervened for the first time of this cycle to maintain the top of the USDHKD band. FX Trading focus: JPY woke up and smelled the coffee. Watching HKD as USD presses upper level of USDHKD band. The JPY upside potential has been more fully realized since yesterday on the heavy weight of falling yields in global sovereign bond, which are finally serving their function as a go-to safe haven in an environment of generally risk deleveraging. The JPY is even handily outpacing the ongoing strength in the US dollar as the yield focus dominates. And the technical damage in JPY crosses is spreading: NZDJPY and GBPJPY, the latter our focus yesterday, are already trading back into old ranges that preceded the JPY sell-off sparked by the commodity rally in the wake after Russia invaded Ukraine. Now watching AUDJPY and EURJPY for whether the feat is repeated there (key levels around 86.00 and 134.00, respectively), and CNHJPY has come down hard, with more to come. More thoughts on the most important USDJPY pair below in the chart discussion. The JPY can continue higher, but the price is far “fairer” now relative to long term bond yields. Yields must extend lower still, possibly with a helping hand from crude oi and LNG prices for a full reversal of the JPY sell-off since late February.  Chart: USDJPYYesterday, our focus in JPY crosses was on GBPJPY, which took out the 160.00 and 158.00 area supports yesterday. Today we have a look at the big one: USDJPY and what levels might trigger a more notably slide. Arguably, the first of these has already been under strain today in the 128.50 area. Regardless, the direction of the US 10-year benchmark yield is the key coincident indicator, with global energy prices a secondary indicator. The next support area below is the 127.03 pivot low followed perhaps by the 125.00 area, which was a stopping point on the way up. Source: Saxo Group Sterling suffered a sell-off to new lows in the wake of the Q1 GDP data, which showed a +8.7% growth rate, slightly below expectations, but a -0.1% month-on-month figure for March, with weak production figures to boot. The March Trade Balance data was also out and showed a toe-curling negative £23.8B trade balance, a staggering figure. Still, after a run to fresh lows against the G3 currencies, the EURGBP rally reversed rather sharply, in part as EURUSD tipped over to new lows after a couple of weeks of defending the 1.0500 support area. All traders should monitor the crypto situation as a possible aggravator of additional volatility risk across markets. The TerraUSD “stable coin” broke its parity level with the US dollar earlier this week and traded as much as 70% below par. Then yesterday, a key Bitcoin support level at 30,000 broke, possibly inspiring the instability of the Tether stable coin, which is a commonly used as a kind of parking space between going in and out of crypto trades and in and out of the crypo market itself. The Tether coin traded as much as 5% below par against the US dollar this morning before the whole crypto-complex recovered. More directly pertinent to FX, we have to watch the Hong Kong dollar (HKD), as the USD strength has taken the USDHKD exchange rate to the upper limit of its band at 7.85 and has seen the Hong Kong Monetary Authority out intervening for the first time of this cycle overnight. The HKMA will also need to copy Fed policy to avoid the worst of pressure on the HKD, even with Hong Kong’s economy in a funk. The HKD band is one of those legacy set-ups that makes little sense here almost forty years after its creation, but Hong Kong remains a key gateway into and out of the mainland Chinese economy, and China probably doesn’t want to add HKD instability to its long list of challenges. Note the Chinese demand concerns continuing to weigh on the copper price, which has punched to the lowest reaches of the range since early 2021. This in turn weighs on the Aussie, which itself has punched to new lows for the cycle. The CAD has gotten off easy so far by comparison, perhaps as oil prices remain in the higher range here – but after breaking above resistance, if USDCAD loses its tethering to the 1.3000 area it is in danger of a sharp extension higher. Table: FX Board of G10 and CNH trend evolution and strength.We have noted the euro resilience of late, but signs of this crumbling today as EURUSD, EURCHF and especially EURJPY come under pressure. But the development of note here is the strong revival of the JPY momentum and outright positive trend measurement in recent days. Elsewhere, CAD looks too strong with this backdrop, although there is quite a race to the bottom of late among the weakest horses in G10 FX. Source: Bloomberg and Saxo Group Table: FX Board Trend Scoreboard for individual pairs.Note EURJPY and CADJPY trying to join other JPY crosses in flipping to the negative side after the sharp JPY rally today. All G10 currency pairs save for a few GBP pairs (due to Brexit-related events) are in the highest 10% of their ATRs of the last 1000 trading days, as shown in the dark orange shading for the ATR readings. Source: Bloomberg and Saxo Group Upcoming Economic Calendar Highlights (all times GMT) 1230 – US Apr. PPI 1230 – US Weekly Initial Jobless Claims 1800 – US 30-year T-Bond auction 1800 – Mexico Overnight Rate Announcement
US: Drivers Demand Of Oil The Highest This Year! Silver Lost Almost The Half Of Its Recent Gaines

US: Drivers Demand Of Oil The Highest This Year! Silver Lost Almost The Half Of Its Recent Gaines

Saxo Strategy Team Saxo Strategy Team 18.08.2022 10:50
Summary:  US equities traded a bit lower yesterday after the S&P 500 challenged the 200-day moving average from below the prior day for the first time since April in the steep comeback from the June lows. Sentiment was not buoyed by the FOMC minutes of the July meeting suggesting the Fed would like to slow the pace of tightening at some point. Crude oil rose from a six-month low on bullish news from the US and OPEC.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures rolled over yesterday wiping out the gains from the two previous sessions and the index futures are continuing lower this morning trading around the 4,270 level. US retail sales for July were weak and added to worries of the economic slowdown in real terms in the US. The 10-year yield is slowing crawling back towards the 3% level sitting at 2.87% this morning. A move to 3% and potentially beyond would be negative for equities. The next levels to watch on the downside in S&P 500 futures are 4,249 and then 4,200 Hong Kong’s Hang Seng (HSI.I) and China’s CSI300 (000300.I) Shares in the Hong Kong and mainland China markets declined. China internet stocks were weak across the board with Tencent (00700:xhkg) +2.7% and Meituan (03690:xhkg) +1%, being the positive outliers. Tencent reported a revenue decline of 3% y/y in Q2, weak, but in line with market expectations. Non-GAAP operating profit was down 14% y/y to RMB 36.7bn, and EPS fell 17% y/y to RMB 2.90 but beating analyst estimates. Revenues from advertising at -18% y/y were better than expected. In the game segment, weaker mobile game revenues were offset by stronger PC game revenues. Beer makers outperformed China Resources Beer (00291:xhkg) +3.8%, Tsingtao Brewery (00168:xhkg) +1.7%. COSCO Shipping Energy Transportation (01138:xhkg) made a new high at the open on strong crude oil tanker freight rates before giving back some gains. USD pairs as the USD rally intensifies The US dollar rally broadened out yesterday, as USDJPY retook the 135.00 area, but needs to follow through above 135.50-136.00 to take the momentum back higher. Elsewhere, AUDUSD has broken down again on the move down through 0.7000 and USDCAD has posted a bullish reversal, needing 1.3000 for more upside confirmation. The GBPUSD pair looks heavy despite a massive reset higher in UK rates in the wake of recent UK inflation data, with a close below 1.2000 indicating a possible run on the sub-1.1800 lows, while EURUSD is rather stuck tactically, as price has remained bottled up above the 1.0100 range low. USDCNH, as discussed below, may be a key pair for whether the USD rally broadens out even more aggressively, and long US treasury yields and risk sentiment are other factors in the mix that could support the greenback, should the 10-year US treasury benchmark move higher toward 3.00% again or sentiment roll over for whatever reason. Certainly, tightening USD liquidity could prove a concern for sentiment as the Fed turns up the pace of quantitative tightening – something it seems behind schedule in doing if we look at the latest weekly Fed balance sheet data.  USDCNH The exchange rate edged higher again to above 6.80 overnight after a brief spike higher earlier this week as China’s PBOC moved to stimulate with a small 10-basis point rate cut of the key lending rate. There is no real drama in the exchange rate yet after the significant rally this spring from below 6.40 to 6.80+, but traders should keep an eye on this very important exchange rate for larger volatility and significant break above 6.83, as China’s exchange rate policy shifts can provoke significant volatility across markets. Crude oil Crude oil (CLU2 & LCOV2) bounced from a six-month low on Wednesday in response to a bullish US inventory report that saw big declines in gasoline and crude oil stocks as demand from US motorist climbed to the highest this year while crude exports reached a record $5 million barrels per day. The prospect for an Iran nuclear deal continues to weigh while OPEC’s new Secretary-General said spare capacity was becoming scarce. US strategic reserves are now at the lowest level since 1985 and the government has by now sold around 90% of what was initially offered in order to bring down prices. While demand concerns remain a key driver for macroeconomic focused funds selling crude oil as a hedge we notice a renewed surge in refinery margins, especially diesel, supported by increased demand from gas-to-fuel switching Gold and silver Gold has so far managed to find support at $1759, the 38.2% retracement of the July to August bounce, after trading weaker in response to a stronger dollar and rising yields. Silver (XAGUSD) meanwhile has almost retraced half of its recent strong gains with focus now on support at $19.50. The latest driver being the FOMC minutes which signaled ongoing interest-rate hikes and eventually at a slower pace than the current. The short-term direction has been driven by speculators reducing bullish bets following a two-week buying spree in the weeks to August 9 which lifted the net by 63k lots, the strongest pace of buying in six months. ETF holdings meanwhile have slumped to a six-month low, an indication investor, for now, trusts the FOMC’s ability to bring down inflation within a relatively short timeframe   What is going on? Financial conditions are tightening, if modestly. Recent days have brough a rise in short US treasury yields, but more importantly it looks as though some of the risk indicators like corporate credit spreads may have bottomed out here after a sharp retreat from early July highs – one Bloomberg high yield credit spreads to US treasuries peaked out above 5.75% and was as low as 4.08% earlier this week before rising to 4.19% yesterday, with high yield bond ETFs like HYG and JNK suffering a sharp mark-down yesterday of over a percent. Factors that could further aggravate financial conditions include a significant CNH weakening, higher US long treasury yields (10-year yield moving back toward 3.00%, for example) or further USD strength. Adyen sees margin squeeze. One of Europe’s largest payment companies reports first-half revenue of €609mn vs est. €615mn despite processed volume came significantly above estimates at €346bn suggesting the payments industry is experiencing pricing pressures. Cisco outlook surprises. The US manufacturer of networking equipment surprised to the upside on both revenue and earnings in its fiscal Q4 (ending 30 July), but more importantly, the company is guiding revenue growth in the current fiscal quarter of 2-4% vs est. -0.2% and revenue growth for the current fiscal year of 4-6% vs est. 3.3%. Cisco said that supply constraints are beginning to ease and that customer cancellations are running below pre-pandemic levels, and that the company’s growth will be a function of availability. Stale FOMC minutes hint at sustained restrictive policy, but caution on pace of tightening. Fed’s meeting minutes from the July meeting were released last night, and officials agreed to move to restrictive policy, with some noting that restrictive rates will have to be maintained for some time to bring inflation back to the 2% target. Still, there was also talk of slowing the pace of rate hikes ‘at some point’, despite pushing back against easing expectations for next year. The minutes were broadly in-line with the market’s thinking, and lacked fresh impetus needed to bring up the pricing of Fed’s rate hikes. Chairman Powell’s speech at the Jackson Hole Symposium next week will be keenly watched for further inputs. US retail sales were a mixed bag. July US retail sales were a little softer at the headline level than the market expected (0% growth versus the +0.1% consensus) but the ex-auto came in stronger at 0.4% (vs. -0.1% expected). June’s growth was revised down to 0.8% from 1%. The mixed data confirmed that the US consumers are feeling the pinch from higher prices, but have remained resilient so far and that could give the Fed more room to continue with its aggressive rate hikes. Lower pump prices and further improvements in supply chain could further lift up retail spending in August. The iron ore miners are resilient despite price pressures Despite China planning more fiscal stimulus to fund infrastructure investment, the iron ore (SCOA, SCOU2) price paired back 8% this week, retreating to its lowest equal level in five weeks at $101.65, a level the iron ore price was last at in December 2021. Since March, the iron ore price has retreated 37%, with the most recent pull back being fueled by concerns China’s Covid cases are surging again with cases at a three-month high, as the outbreak worsens in the tropical Hainan province. Despite iron ore pulling back, shares in iron ore majors like BHP, remain elevated, up off their lows, with BHP’s shares trading 14% up of its July low, and moving further above its 200-day moving average, on hopes of commodity demand picking up. What are we watching next? Norway’s central bank guidance on further tightening. The Norges Bank is expected to hike 50 basis points today to take the policy rate to 1.75% despite an indication from the bank in June that the bank would prefer to shift back to hiking rates by 25 basis points, as a tight labour market and soaring inflation weigh. The path of tightening for the central bank has been an odd one, as it was the first G10 bank to actually hike rates in 2021, but finds itself with a far lower policy rate than the US, for example, which started much later with a faster pace of hikes. But NOK may react more to the direction in risk sentiment rather than guidance from the Norges Bank from here, assuming no major surprises. The EURNOK downtrend has slowed of late – focusing on 10.00 if the price action continues to back up. Japan’s inflation will surge further. Japan’s nationwide CPI for July is due on Friday. July producer prices came in slightly above expectations at 8.6% y/y (vs. estimates of 8.4% y/y) while the m/m figure was as expected at 0.4%. The continued surge reflects that Japanese businesses are grappling with high input price pressures, and these are likely to get passed on to the consumers, suggesting further increases in CPI remain likely. More government relief measures are likely to be announced, while signs of any Bank of Japan pivot away from its low rates and yield-curve-control policy are lacking. Bloomberg consensus estimates are calling for Japan’s CPI to accelerate to 2.6% y/y from 2.4% previously, with the ex-fresh food number seen at 2.4% y/y vs. 2.2% earlier.   Earnings to watch In Europe this morning, the key earnings focus is Adyen which has already reported (see review above) and Estee Lauder which is deliver a significant slowdown in figures and increased margin pressure due to rising input costs. Today’s US earnings to watch are Applied Materials and NetEase, with the former potentially delivering an upside surprise like Cisco yesterday on improved supply chains. NetEase, one of China’s largest gaming companies, is expected to deliver Q2 revenue growth of 12% y/y as growth continues to slow down for companies in China. Today: Applied Materials, Estee Lauder, NetEase, Adyen, Nibe Industrier, Geberit Friday: China Merchants Bank, CNOOC, Shenzhen Mindray, Xiaomi, Deere Economic calendar highlights for today (times GMT) 0800 – Norway Deposit Rates 0900 – Eurozone Final Jul. CPI 1100 – Turkey Rate Announcement 1230 – US Weekly Initial Jobless Claims 1230 – Canada Jul. Teranet/National Bank Home Price Index 1230 – US Philadelphia Fed Survey 1400 – US Jul. Existing Home Sales 1430 – EIAs Weekly Natural Gas Storage Change 1720 – US Fed’s George (Voter) to speak 1745 – US Fed’s Kashkari (Non-voter) to speak 2301 – UK Aug. GfK Consumer Confidence 2330 – Japan Jul. National CPI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: Financial Markets Today: Quick Take – August 18, 2022
German Business Confidence Dips, ECB's Lagarde Hosts Central Banking Conference in Portugal, EUR/USD Drifts Higher

Fed's Plan Is To Push For More Rate Hikes To Boost Dollar (USD)!?

Saxo Strategy Team Saxo Strategy Team 19.08.2022 10:37
Summary:  Better than expected economic data continued to support sentiment in US in contrast to Europe, where ECB’s Schnabel's warning on the growth/inflation picture aggravated concerns. Fed speakers meanwhile continued to push for more rate hikes this year, aiding dollar strength despite lack of a clear direction in long end yields. EUR and GBP broke below key support levels, but oil prices climbed higher amid improving demand outlook but sustained supply issues. Focus now on Jackson Hole next week. What is happening in markets? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)  In its second lightest volume session of the year, U.S. equities edged modestly higher, S&P 500 +0.23%, Nasdaq 100 +0.26%. As WTI crude climbed 2.7%, rebounding back above $90, the energy space was a top gainer aside from technology. Exxon Mobil (XOM:xnys) gained 2.4%.  Cisco (CSCO:xnas) surged 5.8% after reporting better-than-expected revenues. Nvidia (NVDA:xnas), +2.4% was another top contributor to the gain of the S&P 500 on Wednesday.  95% of S&P 500 companies have reported Q2 results, with about three-quarters of them managing to beat analyst estimates. On Friday there is a large number of options set to expire.  The U.S. treasury yield curve bull steepened on goldilocks hope The U.S. 2-10-year curve steepened 7bps to -32bps, driven by a 9bp decline in the 2-year yield.  In spite of hawkish Fed official comments and the August Philadelphia Fed Index bouncing back to positive territory, the market took note of the falls in the prices paid diffusion index and the prices received index from the survey and sent the short-end yields lower.  Hong Kong’s Hang Seng (HSIQ2) and China’s CSI300 (03188:xhkg) Both Hang Seng Index and CSI300 declined about 0.8%.  Tencent (00700:xhkg) rose 3.1% after reporting results that beat estimates as a result of better cost control and adverting revenues. Other China internet stocks traded lower, Bilibili (09626:xhkg) -4.2%, Baidu (09888:xhkg) -4.5%, Alibaba (09988:xhkg) -2.1%, JD.COM (09618:xhkg) -2.5%. The surge of Covid cases in China to a three-month high and the Hainan outbreak unabated after a 2-week lockdown, pressured consumer stocks.  Great Wall Motor (02333:xhkg) led the charge lower in autos, plunging near 6%.  Other automakers fell 2% to 4%.  Geely (00175:xhkg) fell 3.1% after reporting 1H earnings missing estimates.  A share Chinese liquor names declined, Kweichow Moutai (600519:xssc) -1.2%, Wuliangye Yibin (000858:xsec) -1.6%. Chinese brewers were outliner gainers in the consumer space, China Resources Beer (00291:xhkg) +4.8%, Tsingtao Brewery (00168:xhkg) +1.9%. Chinese property developers traded lower with Country Garden (02007:xhkg) losing the most, -5.2% , after warning that 1H earnings may have been down as much as 70%. The China Banking and Insurance Regulatory Commission (CBIRC) is looking at the quality of real estate loan portfolios at some financial institutions.  EURUSD and GBPUSD break through key support levels Dollar strength prevailed into the end of the week with upbeat US economic data and a continued hawkish Fedspeak which continued to suggest more Fed rate hikes remain in the pipeline compared to what the market is currently pricing in. EUR and GBP were the biggest loser, with both of them breaking below key support levels. EURUSD slid below 1.0100 handle while GBPUSD broke below 1.2000 despite a selling in EGBs and Gilts. USDJPY also broke above 136 in early Asian trading hours despite lack of a clear direction in US 10-year yields and a slide in 2-year yields. AUDUSD testing a break below 0.6900 as NZDUSD drops below 0.6240. Crude oil prices (CLU2 & LCOV2) Oil prices reversed their drop with WTI futures back above $90/barrel and Brent futures above $96. Upbeat US economic data has supported the demand side sentiment in recent days. Moreover, President Xi’s comment that China will continue to open up the domestic economy also aided the demand equation. Supply concerns, meanwhile, were aggravated by geopolitical tension around a potential incident at the Zaporizhzhia nuclear plant in Ukraine. Meanwhile, Shell hinted at reducing the capacity of Rhineland oil refinery due to the lower water level on the Rhine river and said the situation regarding supply is challenging but carefully managed. Gold (XAUUSD) still facing mixed signals The fate of gold has been turned lower again this week with the yellow metal facing decline of 2.5% so far in the week and breaking below the $1759 support, the 38.2% retracement of the July to August bounce. Stronger dollar, along with Fed’s continued hawkish rhetoric, weighed. Silver (XAGUSD) is also below the key support at $19.50, retracing half of its recent gains. The short-term direction has been driven by speculators reducing bullish bets, but with inflation remaining higher-for-longer, the precious metals can continue to see upside in the long run. What to consider? Existing home sales flags another red for the US housing market US existing home sales fell in July for a sixth straight month to 4.81 mn from 5.11 mn, now at the slowest pace since May 2020, and beneath the expected 4.89 mn. Inventory levels again continued to be a big concern, with supply rising to 3.3 months equivalent from 2.9 in June. This continues to suggest that the weakening demand momentum and high inventory levels may weigh on construction activity. US economic data continues to be upbeat The Philly Fed survey outperformed expectations, with the headline index rising to +6.2 (exp. -5.0, prev. -12.3), while prices paid fell to 43.6 (prev. 52.2) and prices received dropped to 23.3 (prev. 30.3). new orders were still negative at -5.1, but considerably better than last month’s -24.8 and employment came in at 24.1 from 19.4 previously. While this may be a good signal, survey data tends to be volatile and a long-term trend is key to make any reasonable conclusions. Jobless claims also slid to 250k still suggesting that the labor market remains tight. Fed speakers push for more rate hikes St. Louis Federal Reserve President James Bullard flagged another 75 basis point rate hike at the September meeting and hinted at 3.75-4% Fed funds rate by the end of the year with more front-loading in 2022. Fed’s George, much like Fed’s Daly, said that last month’s inflation is not a victory and hardly comforting. Bullard and George vote in 2022. Fed’s Kahskari said that he is not sure if the Fed can avoid a recession and that there is more work to be done to bring inflation down, but noted economic fundamentals are strong. Overall, all messages remain old and eyes remain on Fed Chair Powell speaking at the Jackson Hole conference on August 25. Japan’s inflation came in as-expected Japan’s nationwide CPI for July accelerated to 2.6% y/y, as expected, from 2.4% y/y in June. The core measure was up 2.4% y/y from 2.2% previously, staying above the Bank of Japan’s 2% target and coming in at the strongest levels since 2008. Upside pressures remain as Japan continues to face a deeper energy crisis threat into the winter with LNG supplies possibly getting diverted to Europe for better prices. Still, Bank of Japan may continue to hold its dovish yield curve control policy unless wage inflation surprises consistently to the upside. Cisco’s revenues came in flat, beating a previously feared decline Cisco Systems reports July 2022 quarter revenues of USD13.1 billion, down 0.2% YoY but better than the consensus of a 3% decline.  Net income came in at USD3.4 billion, -3.2% YoY but more than 1 percentage point above consensus.  The fall in product order was also smaller than feared.  The company guided the fiscal year 2023 revenue growth of +4% to +6%, ahead of the 3% expected and FY23 EPS of USD3.49 to USD3.56, in line with expectations as gross margin pressures are expected to offset the impact of higher sales.  NetEase’s Q2 results beat NetEase (09999:xhkg/NTES:xnas) reported above-consensus Q2 revenues, +13% YoY, and net profit from continuing operations, +28%.  PC online game revenues were above expectations, driven by Naraka Bladepoint content updates and the launch of Xbox version.  Mobile game segment performance was in line.  Geely Automobile 1H earnings missed estimates on higher costs Chinese automaker Geely reported higher-than-expected revenue growth of 29%YoY in 1H22 but a 35% YoY decline in net profit which was worse than analyst estimates.  The weakness in profit was mainly a result of a 2.6 percentage point compression of gross margin to 14.6% due to higher material costs and production disruption, higher research and development costs, and the initial ramping-up of production of the Zeekr model.  The company maintains its sales volume target of 1.65 million units, an growth of 24% YoY, for the full year of 2022.    For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: APAC Daily Digest: What is happening in markets and what to consider next – August 19, 2022
The GBP/USD Pair's Traders Still Use Every Opportunity To Buy

UK Inflation Is The Highest In Decades!!! China Still Closing Factories, Toyota And Apple Are In Danger?

Saxo Strategy Team Saxo Strategy Team 18.08.2022 09:48
Summary:  U.S. equities took a pause from their week-long advance, with S&P 500 retreating before its 200-day moving average. Target’s Q2 results disappointed as the retailer suffered from high inventories and U.S. consumers shifted from discretionary to grocery items. What is happening in markets? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)  U.S.’s advance higher took a pause yesterday amid higher bond yields and disappointing results from Target (TGT:xnys), -2.7%. Target’s Q2 earnings fell sharply and missed consensus expectations on weaker gross margins due to slower sales in discretionary items and inventory impairments.  Lowe’s (LOW:xnys) reported mixed results, with earnings beating estimates but same-store sales growth weaker than expected. Higher U.S. bond yields triggered by a dramatic rise in U.K. bond yields and reported pension fund rebalancing-related selling added to the equity weakness.  S&P 500 dropped 0.7% and Nasdaq 100 shed 1.2%.  U.S. treasury yields rose from spilling over from a massive rise in U.K. Gilt yields and weak 20-year bond auction U.S. 10-year treasury yields jumped 9bps to 3.05%, taking cues from the sharp move higher in U.K. Gilts and European sovereign bond yields following white-hot UK CPI data. Long-end yields moved further higher on poor results from the 20-year auction.  Short-end yields fell in the late afternoon after the July FOMC minutes signaling that it “would become appropriate at some point to slow the pace of policy rate increases” which reaffirmed the market’s expectation of a 50bps, instead of 75bps on the September FOMC.  Hong Kong’s Hang Seng (HSIQ2) and China’s CSI300 (03188:xhkg) Hang Seng Index bounced modestly by 0.5%; CSI399 gained 9.6%. Meituan (03690:xhkg) rallied 3.3% after a 9% drop yesterday due to a Reuters story suggesting that Tencent (00700:xhkg) plans to divest its 17% stake (USD24 billion) in Meituan. Tencent denied such a divesture plan last night.  Power tools and floor care equipment maker and a supplier to Home Depot (HD:xnys) and Wal Mart (WMT:xnys), Techtronic Industries (00669:xhkg) jumped more than 10% after better-than-expected results from the two U.S. retailers. China Resources Power (00836:xhkg) +5.7% after reporting weak 1H22 results but more wind and solar projects on the pipeline. Other Chinese power producers also outperformed amid power shortages. China Power (02380:xhkg) surged more than 8%. On Tuesday, China’s Premier Li Keqiang visited Shenzhen and held a meeting with provincial chiefs from Jiangsu, Zhejiang, Shandong, Henan, and Sichuan to reiterate the central government’s push for full use of policies to stabilize the economy. Hong Kong Exchanges (00388:xhkg) fell 1.6% after reporting lower revenues, higher costs, and a 22% YoY decline in EPS, worse than market expectations. After the market close, Tencent reported weak but in line with expectations revenues and better-than-feared earnings in Q2. Tencent’s ADR climbed 3.5% overnight from the Hong Kong close. AUDUSD eying the labor market report, GBP will see more pain ahead A mixed session again overnight for the US dollar with FOMC minutes and US retail sales failing to provide any fresh impetus to the markets. AUDUSD was the biggest loser on the G10 board, sliding below 0.7000 to lows of 0.6911 after real wage data for Q2 showed a massive slump. Labor market data due this morning could further weigh on RBA expectations, if it comes out softer than expected. The weakness seen in the commodity markets, especially iron ore and copper, weighed on the antipodeans. GBPUSD stays above 1.2000 despite a 40bps gains in UK 2-year yields after the double-digit UK CPI print. USDJPY tested the resistance at 135.50 but was rejected for now. Crude oil prices (CLU2 & LCOV2) Crude oil prices made a slight recovery overnight, with WTI futures getting back to over $87/barrel and Brent futures close to $94 after data showed US inventories fell sharply. Sentiment was also supported by comments from OPEC’s new Secretary-General, Haitham Al Ghais, who said that world oil demand will rise by almost 3mb/d this year. He also said there is a high chance of a supply squeeze this year, in part because fears of slowing usage in China are exaggerated. This helped to take the focus off the prospects of the Iran nuclear deal for now. What to consider? Stale FOMC minutes hint at sustained restrictive policy Fed’s meeting minutes from the July meeting were released last night, and officials agreed to move to restrictive policy, with some noting that restrictive rates will have to be maintained for some time to bring inflation back to the 2% target. Still, there was also talk of slowing the pace of rate hikes ‘at some point’, despite pushing back against easing expectations for next year. The minutes were broadly in-line with the market’s thinking, and lacked fresh impetus needed to bring up the pricing of Fed’s rate hikes. Chairman Powell’s speech at the Jackson Hole Symposium next week will be keenly watched for further inputs. US retail sales were a mixed bag July US retail sales are a little softer at the headline level than the market expected (0% growth versus the +0.1% consensus) but the ex-auto came in stronger at 0.4% (vs. -0.1% expected). June’s growth was revised down to 0.8% from 1%. The mixed data confirmed that the US consumers are feeling the pinch from higher prices, but have remained resilient so far and that could give the Fed more room to continue with its aggressive rate hikes. Lower pump prices and further improvements in supply chain could further lift up retail spending in August. UK CPI opens the door for another 50bps rate hike UK headline inflation hits 10.1%, the highest in decades and above the 9.8% expected and for the month-on-month reading of +0.6%, higher than the +0.4% expected. Core inflation hit 6.2% vs. 5.9% expected and 5.8% in Jun. That matched the cycle high from back in April. Retail inflation rose +0.9% MoM and +12.3% YoY vs. +0.6%/+12.0% expected, respectively. The Bank of England has forecast that inflation will peak out this fall at above 13%. While the central bank forecasted a recession lasting for five quarters at the last meeting, it will be hard for them to not press ahead with further tightening at the August meeting, and in fact the scope for another 50bps rate hike is getting bigger. Reserve Bank of New Zealand hikes 50 basis points to 3.00%, forecasts 4% policy rate peak The RBNZ both increased and brought forward its peak rate forecast to 4.00%, a move that was actually interpreted rather neutrally – more hawkish for now, but suggesting that the RBNZ would like to pause after achieving 4.00%. RBNZ Governor warned in a press conference that New Zealand home prices will continue to fall. This is actually a desired outcome after a huge spike in housing speculation and prices due to low rates from the pandemic response and massive pressure from a Labor-led government that had promised lower housing costs were behind the RBNZ’s quick pivot and more aggressive hiking cycle in 2021. Australian wages grew at their quickest pace in eight years, but less than expected Australia’s wage-price index gained 0.7% in the second quarter, just shy of estimates further pressuring the Aussie dollar back toward its 50-day moving average against the US dollar. Annual wage growth came in at 2.6% but real wages - adjusted for headline inflation fell 1% QoQ, and was 3.3% lower than a year earlier, eroding consumer spending power. What’s next. All eyes will be on Australia’s Reserve Bank which might be pressured to hike more than expected at its September meeting. Despite Australian wages growing slower than expected, the RBA estimates retail gas and electric prices to rise 10-15% in the second half of the year, so that will be a focus point when they consider their next move in interest rates. Tencent reported weak but in-line Q2 revenues and better-than-feared earnings Tencent reported a revenue decline of 3% YoY in Q2, weak but in line with market expectations.  Non-GAAP operating profit was down 14% YoY to RMB 36.7 billion and EPS fell 17% YoY to RMB2.90 but they beat analyst estimates.  Revenues from advertising, -18% YoY, were better than expected.  In the game segment, weaker mobile game revenues were offset by stronger PC game revenues. Disappointing results from Target and mixed results from Lowe’s Target reported EPS of USD0.39, missing estimates.  The company indicated strength in food and beverage, beauty, and household essentials but weaker in discretionary categories.  Gross margin of 21.5%, down from 30.4% year-ago quarter and below expectations. Lowe’s reported better than expected EPS of USD4.67 (vs consensus USD4.58) but a decline of 0.3% in same-store sales.  Lowe’s inventories grew 11.6% YoY, substantially lower than peer Home Depot.  With a 15% increase in product costs, the inventory volume was in effect down low-single digit. Power crunch in China shut factories Chongqing is limiting power supply to industrial users from yesterday to next Wednesday.  In Sichuan, Foxconn’s Chengdu factory is suspending operations for six days from August 15 to 20 due to a regional power shortage. The suspension is affecting Foxconn’s supply of iPad to Apple.  The company says the impact “has been limited at the moment” but it may affect shipments if the power outage persists.  The Chengdu government is imposing power curbs on industrial users to ensure electricity supply for the city’s residents.  Toyota and CATL are also suspending some operations in Sichuan due to a power shortage. Foxconn has started test production of the Apple watch in Vietnam Foxconn has started test production of the Apple watch in its factories in Vietnam. With the passage of CHIPS and Science Act earlier this month in the U.S., investors are monitoring closely if Taiwanese and Korean chipmakers as well as their customers may be accelerating the building up of production capacity away from China.  World’s biggest Sovereign Wealth fund posts its biggest half-year loss on record   Norway’s oil fund, the world’s biggest owner of public traded companies lost 14.4% in the six months through to June. In currency terms that’s $174 billion. The slump was driven by the fund’s loss in technology stocks with Meta Platforms (owning Facebook and Instagram) and Amazon, leading the decline. However, just like the market, the fund’s energy sector delivered positive share price performance, benefiting from a sharp rise in earnings in the oil, gas, and refined energy product sector. Meanwhile, investments in logistics property helped the fund’s unlisted real estate holdings gain 7.1%, though they account for 3% of its assets. Japan’s inflation will surge further Japan’s nationwide CPI for July is due to be reported at the end of the week. July producer prices came in slightly above expectations at 8.6% y/y (vs. estimates of 8.4% y/y) while the m/m figure was as expected at 0.4%. The continued surge reflects that Japanese businesses are waddling high input price pressures, and these are likely to get passed on to the consumers, suggesting further increases in CPI remain likely. More government relief measures are likely to be announced, while any little hope for a Bank of Japan pivot is fading. Bloomberg consensus estimates are calling for Japan’s CPI to accelerate to 2.6% y/y from 2.4% previously, with the ex-fresh food number seen at 2.4% y/y vs. 2.2% earlier. For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: APAC Daily Digest: What is happening in markets and what to consider next – August 18, 2022
Assessing China's Economic Challenges: A Closer Look Beyond the Japanification Hypothesis"

Strong Economic Data and Soft Inflation Boost Market Sentiment

Ipek Ozkardeskaya Ipek Ozkardeskaya 28.06.2023 08:12
Strong data and soft inflation boost appetite US stocks shrugged off the early week pessimism on the back as of a set of strong economic data released yesterday.   The durable goods orders rose – along with strong jobs data, this is a sign that the US businesses are not in cash-saving mode, Richmond manufacturing index fell less than expected, house prices recovered and house sales beat expectations – in line with the rest of the strong data from US housing market over the past few weeks. US consumer confidence jumped more than expected in June, to the highest level since the beginning of last year.     We would've normally expected sentiment to be dampened by strong data because of more hawkish Federal Reserve (Fed) expectations, but the S&P500 jumped more than 1%, Nasdaq rallied almost 2%, while the Russell 2000 advanced around 1.5%.      Easing inflation is maybe why stock investors are happy with strong data The Australian inflation fell to a 13-month low, and the Canadian inflation fell more than expected, in a sign that the central bank efforts to pull prices lower is paying off. The AUDUSD was sharply sold below its 50-DMA which stands near the 0.6680 level, while the USDCAD rebounded off a fresh low since September on the back of soft inflation and a 2% fall in crude oil prices.   Across the Atlantic Ocean, some encouraging news came in regarding inflation, as well. The British shop prices dipped to 8.4% this month, down from 9% recorded in May. That was the sharpest decline in prices since the end of 2021 – when prices took a lift, and it was not thanks to the Bank if England (BoE) hikes, but it was because Tesco, Sainsbury's, Asda and Morrisons were asked to 'behave' in their pricing to prevent them from passing the higher costs, and higher wages on to their clients more than necessary. So, it is possible that Jeremy Hunt rolling up his sleeves would be more effective to bring inflation down than any BoE hike at this stage.   The good news for the Brits is that, Rishi Sunak and Jeremy Hunt have all the motivation in the world to bring inflation down if they don't want to be minced at next year's election. The bad news is that, if they don't achieve fast results, they will still be minced because the BoE will continue hiking rates and that will leave millions of households facing an enormous rise in their housing costs.   And the Bank for International Settlements, known as the central bank of the central banks, warned that the final stretch of the monetary tightening will likely be the toughest, with some 'surprises' on the way. Another banking crisis, real estate chaos, a financial crisis? We will see. Today, the Fed will reveal the result of its stress test for the banks. If they see no issue, they will keep pushing, until something breaks.     By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank
Market Reaction to Eurozone Inflation Report: Euro Steady as Data Leaves Impact Limited

RBA's Policy Dilemma: Uncertainty Surrounding Future Moves as Markets Anticipate One More Hike

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

The Everything Selloff: Examining Global Market Trends Amidst Growing Concerns

Ipek Ozkardeskaya Ipek Ozkardeskaya 18.08.2023 08:00
The everything selloff By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank   The global selloff intensified yesterday, after the FOMC minutes released Wednesday highlighted that the Federal Reserve (Fed) continues to see significant risks to inflation. And if that's not enough, Atlanta Fed's GDPNow printed an eye-popping growth forecast of 5.8% for Q3 on Wednesday, up from 5% printed a day before. Atlanta Fed computes this number using the data available to them at a time t, therefore the number is not necessarily accurate, but it reflects the positive data released lately, and fuels worries that with such a strong growth, the US inflation could only make a U-turn and take a lift. Yesterday, the Philly Fed index printed a surprisingly strong number, as well. This is why, we continue to see the upside pressure in yields persist, in the US and around the world, though we saw some respite in the US 2-year yield that bounced lower from the 5% mark earlier in the week, and the 10-year yield spiked above 4.30% before falling back to 4.25% this morning.   But note that there is more to this story. Long story short, the US Treasury has been printing a lot of T bills lately, and fell well behind the government bond issuance, and the latter helped keeping US liquidity well contained since the US exited its debt ceiling crisis after which the Treasury started refilling its general account. That was supposed to pull liquidity away from the market. But in the meantime, the Fed was pushing liquidity into the system by reverse repo operations, allowing the money market funds to buy T bills and release cash. The problem is, nowadays, the percentage of T bills approaches the 20% level, which is a self-induced limit for the Treasury, and the Treasury will shift back to issuing bonds, instead of T bills. The latter will increase the amount of sovereign bonds in the system at a time the Fed is decreasing its balance sheet by QT, and the banks don't necessarily want to buy bonds either. So, the increasing supply, and the decreasing demand for US sovereigns will be one major force pushing the US yield curve higher. And if the strong economic data translates into higher inflation, the impact on yields will likely be higher. So, yes, the US 30-year yield is at the highest levels since 2011 and that looks appetizing, especially if the risk sentiment sours – due to multiple reasons ranging from geopolitical tensions to China worries – but the downside risks in the US sovereign bonds market prevails. And Bill Ackman said earlier this month that the 30-year yield could hit the 5% mark.  And the upside pressure in sovereign yields is true for other parts of the world as well, because obviously when the US coughs the world catches a cold. More precisely, higher US yields also translate into a stronger US dollar, and a stronger US dollar is inflationary for the rest of the world. If nothing, the energy and raw material prices that are negotiated in USD terms on international markets simply become more expensive when imports are reverted back to local currencies, and that, alone, is enough to push inflation higher in the rest of the world when the US dollar appreciates. The EURUSD fell to 1.0856, the AUDUSD slipped below 64 cents and the USDJPY spiked above 146.50. The correction is in play this morning and we could see the US dollar retreat further into the weekly closing bell, but the stronger dollar trend is clearly in play and it is worrying. Looking at yields elsewhere the US, the 10-year gilt yield has now surpassed the levels last seen during the Liz Truss induced disaster peak and is headed toward the 5% psychological mark while the German 10-year yield hit 2.70%, a level last seen in 2011 as well. Even the Japanese 10-year yield, which is controlled by the BoJ and should not exceed the 50bp benchmark by 'too much', goes up significantly.  As a result, the selloff in equities deepens. The S&P500 sank to 4370 yesterday and is getting ready to test the minor 23.6% Fibonacci retracement on October to July rally, and the base of that positive trend, while Nasdaq 100 is no more than 8 points from its own 23.6% retracement and already fell below the ascending trend base. The Stoxx600 slumped below the 200-DMA and is flirting with its own 23.6% retracement level, and the Japanese Nikkei, which was one of the rising stars of the year, and which recorded a rally past 30% since January, has fallen below its 23.6% retracement and is preparing to test the 100-DMA.   And note that this simultaneous selloff in stocks and bonds is a sign that the market liquidity is draining. Bitcoin, which is a gauge of market liquidity, slumped more than 7% yesterday and traded close to the $25K level. According to CoinGlass, $1 billion left cryptocurrencies over the past 24 hours and Bitcoin suffered almost half of the liquidations.   
Copper Prices Slump as LME Stocks Surge: Weakening Demand and Economic Uncertainty

Dream JOLTS Data Sparks Optimism and Market Gains

Ipek Ozkardeskaya Ipek Ozkardeskaya 30.08.2023 09:43
Dream JOLTS data By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank     Yesterday was a typical 'bad news is good news' day. Risk sentiment in the US and across the globe was boosted by an unexpected dip in US job openings to below 9 mio jobs in July, the lowest levels since more than two years, and an unexpected fall in consumer confidence in August. The weak data pushed the Federal Reserve (Fed) hawks to the sidelines, and bolstered the expectation of a pause in September, and tilted the probabilities in favour of a no hike in November, as well. $    Note that the latest JOLTS data printed the ideal picture for the Fed: Job vacancies eased, but hiring was moderate and the layoffs remained near historically low levels. The data also suggested that the era of Great Resignation, where quit rates hit a record, could be over, as people quitting their jobs retreated to levels last seen before the pandemic. The US 2-year yield dived 15bp, the 10-year yield fell 8bp, while the S&P500 jumped nearly 1.50% to above its 50-DMA and closed the session at a spitting distance from the 4500 level. 90% of the S&P stocks gained yesterday; even the Big Pharma which had a first glance at which medicines will be subject to price negotiations with Medicare held their ground. But of course, tech stocks led the rally, with Nasdaq 100 closing the session with more than a 2% jump. Tesla was one of the biggest gainers of the session with a more than a 7.5% jump yesterday.    US and European futures suggest a bullish open amid the US optimism and news of upcoming deposit and mortgage rate cuts from Chinese banks.    On the data front, all eyes are on the US ADP report and the latest GDP update. The ADP report is expected to reveal below 200K new private job additions in August, while the US growth is expected to be revised from 2% to 2.4% for the Q2 with core PCE prices seen down from 4.90% to 3.80%. If the data is in line with expectations, we shall see yesterday's optimism continue throughout today. Again, what we want is to see – in the order of importance: 1. Slowing price pressure, 2. Looser, but still healthy jobs market, 3. Slowing but not contracting economy to ensure a soft landing. We will see if that's feasible.     In Europe, however, that slow landing seems harder to achieve. Today, investors will keep an eye on the latest inflation updates from euro-area countries, and business and sentiment surveys. We expect to see some further red flags regarding the health of the European economy due to tighter financial conditions in Europe and the energy crisis. German Chamber of Commerce and Industry warned yesterday that German businesses are cutting investments and move production abroad due to high energy prices at home. The EURUSD flirted with 1.09 yesterday, as investors trimmed their long dollar positions after the weak JOLTS data. The AUDUSD rebounded, even though the latest CPI print showed that inflation in Australia slowed below 5% in July, a 17-month low. In the UK, shop prices fell to a 10-month low. But it won't be enough for central bankers to cry victory just yet, because the positive pressure in energy prices remains a major concern for the months ahead. The barrel of American crude is pushing toward the $82pn level, with improved trend and momentum dynamics hinting that the bullish development could further extend.  
Crude Oil Prices Continue to Rise Amid Tight Supply and Economic Uncertainty

Tesla's Soaring Surge, Meta's AI Power, Oracle's Cloud Woes: Market Recap

Saxo Bank Saxo Bank 12.09.2023 11:42
Tesla surged 10.2% post a major investment bank's upgrade, while Meta gained 3.3% on its powerful AI system news. Oracle, however, tumbled 9% in after-hours trading due to sluggish cloud sales growth. Strong loan and financing data spurred an intraday Hang Seng Index recovery after a morning dip, alongside gains in iron ore and copper. The weaker US dollar boosted G10 currencies, particularly AUD and JPY. The Yuan strengthened against the dollar, influenced by positive credit data and government support. Additionally, the EU Commission lowered the euro zone growth forecast.       US Equities: Tesla surged 10.2% after a major US investment bank upgrading the stock, assigning an additional USD500 billon to the valuation for a supercomputer that Tesla is developing. Meta gained 3.3% on news that the company is developing a powerful AI system (WSJ). The Nasdaq 100 added 1.2% to 15,461 while the S&P 500 climbed 0.7% to 4,487. Fixed income: The 3-year auction tailed by 1bp (i.e. awarded yield 1bp higher than the level at the auction deadline) and kept traders cautious ahead upcoming hefty supply in 10 and 30-year auctions and corporate issuance and CPI data on Wednesday. The 2-year ended unchanged while the 10-year closed at 4.29%, 2bps cheaper from Friday. China/HK Equities: The Hang Seng Index pared much of the sharp loss in the morning and recovered to end the day 0.6% lower at 18,096. The initial nearly 2% decline was driven by an earnings miss by Sun Hung Kai Properties and departure of the head of the cloud division and former CEO Daniel Zhang from Alibaba. The stronger-than-expected bounce in China’s loans and aggregate social financing data, released during the lunch break, triggered a sharp recovery. Southbound flows however registered a large net sale of HKD10.3 billion by mainland investors. In A-shares, the CSI300 added 0.7%. FX: The retreat of the US dollar brought strong gains across the G10 board, led by AUD and JPY. AUDUSD broke above 0.64 to highs of 0.6449 before settling around 0.6430, while Japanese yen saw strong gains on the back of weekend Ueda comments that brought forward expectations of policy normalization. USDJPY dropped to lows of 145.91, coinciding with fresh recent peaks in JGB yields, before a rebound back to 146.50+ levels as US CPI is awaited. Yuan also strengthened with USDCNH taking a look below 7.30 from highs of 7.36 amid verbal warnings from authorities, better-than-expected credit data as well as the continued appreciation bias in PBoC’s daily fixings.   Commodities: Crude oil held onto its gains near the recent highs with Brent still close to $90/barrel despite a small sell-off in Monday’s session. However, Monday’s price action came despite a weaker USD. With focus still on supply tightness concerns, today’s OPEC and EIA monthly reports will be on watch. Strong performance in metals led by iron ore up 3.5% and copper up close to 2.5% with China credit data boosting sentiment and a strong move in the yuan as well. Gold finding is hard to clear $1930 hurdle and the move in yields remains key with hefty corporate supply and US CPI ahead. Macro: China’s new Yuan loans in August surged more than expected to RMB 1,360 billion. This increase is attributed to greater regulatory encouragement for banks to lend and favorable seasonal factors. This, together with the front-loading of local government bond issuance, brought aggregate social financing to RMB 3,120 billion in August, up from July's RMB 528.5 billion. US NY Fed inflation expectations rose higher for one-year to 3.6% from 3.5%, while the long-term five-year also rose 0.1ppt to 3.0% from 2.9%. However, the three-year expectations dipped to 3.8% from 3.9%. Macro events: US NFIB small business survey (Aug), US 10-year T-note auction ($35 billion), UK payrolls (Aug), Germany ZEW survey (Sep) Company Events: Apple's iPhone 15 launch In the news: China’s PBoC asks banks to get approval for dollar purchases over USD50 million (Reuters) EU Commission cuts euro zone growth forecast as Germany in recession (Reuters) Representatives from eight core member institutions of the China National Forex Market Self-regulatory Mechanism met on Monday to discuss about maintaining the stability of the renminbi (Xinhua). Strong demand pushes Arm to close IPO order book early (FT) Qualcomm strikes new Apple deal on 5G chips (FT) US and Vietnam unveil billions in semiconductor and AI deals (FT)    
Trend Reversal: West Texas Oil's Recent Minor Pull-Back Likely Ended

Apple's iPhone 15 and Apple Watch Series 9 Unveil Disappoints Investors, Nasdaq 100 Falls 1.1%, Adobe's Stock Declines 4% Ahead of Earnings Report, and OPEC Predicts Tight Oil Market: Market Recap

Saxo Bank Saxo Bank 13.09.2023 08:32
Investors were not impressed by the iPhone 15 and Apple Watch Series 9 reveal, causing Apple's shares to drop 1.8% and affecting the Nasdaq 100, which fell 1.1%. Adobe's stock also declined by 4% ahead of its upcoming earnings report. Meanwhile, OPEC's forecast of a tight oil market led to crude oil prices surging to 10-month highs. OPEC anticipates a significant 3.3mb/d supply deficit in Q4, one of the largest in over a decade. CAD outperformed in the G-10, while EUR made gains following an ECB leak about potential inflation forecast increases. Today's focus is on the US CPI report.     US Equities: Investors were not impressed by the iPhone 15 and Apple Watch Series 9 unveiled on Tuesday, seeing the shares of Apple drop by 1.8%. The Apple decline weighed on the Nasdaq 100 which slid 1.1%. Adding to the selling was a 4% decline in Adobe ahead of reporting on Thursday. Another focus in the tech space was Oracle, which plummeted 13.5% on weak cloud sales. The S&P500 shed 0.6%. Fixed income: The curve flattened as the 2-year yield rose 3bps to 5.02% while the 10-year yield slid 1bp to 4.28%. The short end was under some pressure ahead of today’s CPI data while the long ends held firm and absorbed the USD35 billion 10-year auction and around USD20 billion corporate bond issuance well. China/HK Equities: The Hang Seng Index ended a lackluster session with a thin trading volume session, down 0.4%. Energy and pharmaceutical names weighed on the benchmark. The Hang Seng Tech Index shed 0.5% as gains in Xiaomi and EV makers were offset by losses in Internet stocks. FX: Higher crude oil prices made CAD the G-10 outperformer with USDCAD down to 1.3550 from 1.3590 but EUR attempted to catch up in late NY/early Asian hours on ECB leak that inflation forecasts may be raised higher which are seen to be raising the prospect of a hike this week. EURUSD jumped higher to 1.0760 with EURGBP above the 0.86 hurdle as GBPUSD dipped below 1.25 on not-so-hawkish labor market. USDCNH sticking close to 7.30 and AUDUSD around 0.6425. Commodities: Crude oil prices rallied to fresh 10-month highs after OPEC forecast a significantly tight market. In its latest monthly outlook, the oil group said the market may experience a shortfall of 3.3mb/d in the fourth quarter of the year. This would make it one of the largest deficits in more than a decade. OPEC’s estimate was at odds with EIA’s predicted deficit of 230kb/d, and the IEA’s monthly report will be on watch today. Prices eased from the peaks as API reported a crude inventory build after four straight weekly draws although Cushing hub stockpiles declined, and official data will be reported today. Gold dropped below 200DMA as inflation concerns returned, bringing more fear of rate hikes and US CPI will be on watch today.    
RBI's Strategic INR Support: Factors Behind India's Stable Currency Amidst Global Challenges

The Impact of Global Developments on Financial Markets: Oil Prices, Inflation, and Equities

Saxo Bank Saxo Bank 13.09.2023 13:49
 Following on from weakness in the US and Europe, stocks in Asia fell across the board as oil prices extended gains ahead of today’s key US inflation report. The weakness in US stocks was led by technology companies with Apple dropping almost 2%. The potentially tightest oil market in a decade lifted oil prices while raising fresh inflation concerns saw the 2-year Treasury yield back above 5%, while the dollar traded mixed against its G10 peers after seeing broad gains on Tuesday. US CPI the focus today given the current 50/50 split on whether the FOMC will hike rates one more time.   Equities: Nasdaq 100 futures are sliding further this morning to the 15,478 level as Apple’s iPhone event last night failed to muster any excitement, which means that the market is now in a wait-and-see mode ahead of today’s US inflation report. Energy stocks continue to be in focus given the rally in Brent crude on estimated oil supply shortfall due to Saudi Arabia’s oil production cuts. FX: Higher crude oil prices made CAD the G-10 outperformer with USDCAD down to 1.3550 from 1.3590 but EUR attempted to catch up in late NY/early Asian hours on ECB leak that inflation forecasts may be raised higher which are seen to be raising the prospect of a hike this week. EURUSD jumped higher to 1.0770 with EURGBP above the 0.86 hurdle as GBPUSD dipped below 1.25 on not-so-hawkish labor market. USDCNH takes another leg lower below 7.29 but AUDUSD also dipped to 0.64 handle in Asia. Commodities: Saudi Arabia’s ‘stable market’ reason for cutting production rings increasingly hallow after OPEC in their monthly report said the market may experience a shortfall of 3.3m b/d in the fourth quarter. With the EIA meanwhile only predicting a 230k b/d shortfall, OPEC could find themselves being accused of trying to inflate prices to meet big spending plans among its members. IEA’s report will be on watch today ahead of the US CPI print and EIA’s weekly stock report which according to API’s figures may show a rise. Oil’s rally to a fresh 10-month high and the stronger dollar saw gold drop below 200DMA as inflation concerns returned, bringing more fear of rate hikes. Fixed income: European sovereign curves are likely to bear-flatten this morning after Reuters reported that the ECB expects inflation to remain above 3% next year and growth to be downgraded for this and next year. Despite the upcoming forecasts painting the perfect stagflation picture for the eurozone, policymakers will weigh their options carefully and tilt towards a hawkish pause rather than a hike. Yet, they might need to reinforce their message by ending reinvestments under the PEPP facility. That would buy them enough time to wait for rate hikes to feed through the economy instead of adding pressure to the German and Dutch recessions. The focus today is on the US CPI numbers and the 30-year US Treasury auction. Volatility: VIX traded 43 cents higher at 14.23, but more importantly the VIX futures traded 1.31 higher, up to 15.95, indicating there is some uncertainty about the upcoming US inflation report. Adobe, which is scheduled to release its earnings report later this week, closed lower yesterday. Options traders were divided on the stock, with the put/call ratio at 1, indicating that equal amounts of calls and puts were traded. This might suggest that there is no clear consensus on how the earnings report will be received.  Macro: ECB’s new 2024 inflation projection could be raised above 3% vs 3% in June, firming case for interest rate hike. ECB also to cut 2023 and 2024 economic growth projections to broadly in line with market expectations. UK labor report was mixed with headline earnings up 8.5% YoY in July vs. 8.2% expected. For more, read our latest Macro/FX Watch. In the news: Europe's high gas prices hit industrial output – full story on Reuters. Apple unveiled four new iPhone models with a muted reaction from investors in extended trading – full story in FT. Technical analysis: S&P 500 rejected at 4,540 resistance level, expect set back, support at 4,340.Nasdaq 100 rejected at 15,561 key resistance level. USDJPY uptrend eyeing 149-150. EURUSD downtrend, support at 1.0685, Expect short-term bounce to 1.08. Brent oil uptrend potential to 98.50 Macro events: UK Industrial Production (Jul) exp. -0.7% m/m vs 1.8% prior (0600 GMT), US CPI (Aug) exp. 0.6% m/m and 0.2% core vs 02% and 0.2% prior (1230 GMT), US 30-year T-bond auction ($20 billion) Commodities events:  IEA’s Oil Market Report (0900 GMT), EIA’s Weekly Crude and Fuel Stock Report (1430 GMT) Earnings events: Inditex F424 1H results, which have already reported with EPS at €0.81 vs est. €0.80 and a small positive revenue surprise.  
Strong Employment Surge in Australia: Is a Reversal in AUDUSD Imminent?

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

Craig Erlam Craig Erlam 14.09.2023 15:11
Australian employment increased by 64,900 in August (2,800 full-time, 62,100 part-time) Participation hits 67%, a new high Is a double bottom forming in AUDUSD? The Australian jobs data on Thursday was surprisingly good, with the number of new jobs created vastly exceeding expectations, although the bulk were in part-time roles. Participation also unexpectedly improved, hitting 67% for the first time which will be very welcomed by the central bank as it, and every other one around the world, seeks to defeat inflation while achieving a soft landing. That job will be much easier if the tightness in the labour market is eased through more people joining it, rather than people losing their jobs at higher interest rates bite. Despite these promising figures, markets are still positioning for another possible rate hike from the RBA over the coming meetings under the new leadership of Governor Michele Bullock. One more hike between now and the middle of next year is around 40% priced in which is arguably quite high under the circumstances. RBA Interest Rate Probability Source – Refinitiv Eikon   The second is the potential double bottom that’s now formed during that consolidation period. With the neckline around 0.6520, a break above here could be quite a bullish move and, in theory, offer a possible price projection based on the size of the pattern. Obviously, there are no guarantees but a break of the neckline would make things interesting.
Not much relief, after all: Markets React to Political Uncertainties and Hawkish Fed Rhetoric - 05.10.2023

Not much relief, after all: Markets React to Political Uncertainties and Hawkish Fed Rhetoric

Markus Helsing Markus Helsing 05.10.2023 08:31
Not much relief, after all By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank   Relief that came with the news of a temporary avoidance of a potential government shutdown remained short lived. Sentiment in stocks markets turned rapidly sour, both in Europe and in the US, while the US treasury yields didn't even react positively to the no shutdown news in the first place. The selloff in the US 10-year bonds accelerated instead; the 10-year yield hit the 4.70% mark, whereas the 2-year yield remained steady-ish at around the 5.10% level, as the Federal Reserve (Fed) Chair Jerome Powell didn't say much regarding the future of the monetary policy yesterday, but his colleagues continued to sound hawkish. Fed's Michelle Bowman said that multiple more interest rate hikes could be needed to tame inflation, while Micheal Barr repeated that the rates are likely restrictive enough, but they should stay higher for longer. Sufficiently hawkish words combined to a set of still-contracting-but-better-than-expected manufacturing PMI data justified the positive pressure on US sovereigns.   The gap between the US 2 and 10-year yields is now closing, but not necessarily for 'good' reasons. Normally, you would've expected the short-term yields to ease more rapidly than the long-term yields when approaching the end of a tightening cycle, with the expectations of future rate cuts kicking in. But what we see today is bear steepening where the 10-year yield accelerates faster than the 2-year yield. The  latter suggests rising inflation expectations where investors prefer to buy short-term papers and to wait for the rate hikes to end before returning to long-term papers. The US political uncertainties and a potential government shutdown before the end of the year, and an eventual US credit downgrade likely add an additional downside pressure in long dated US papers.   The rising yields do no good to stocks. But interestingly, yesterday, the S&P5500 closed flat but the more rate-sensitive Nasdaq stocks were up. The US dollar index extended gains past the 107 level; the index has now recovered half of losses it recorded since a year ago, when the dollar depreciation had started.   The AUDUSD extended losses to the lowest levels since last November as the Reserve Bank of Australia (RBA) maintained its policy rate unchanged at the first meeting under its new Governor Michelle Bullock. This is the 4th consecutive month pause for the RBA. The bank said that there may be more tightening in the horizon to bring inflation back to the 2-3% range (inflation currently stands at 5.2%). But the fact that Australians biggest trading partner, China, is not doing well, the fact that real estate market in Australia is battered by rising rates and the fact that the Chinese property crisis is now taking a toll on Australia's steel exports toward China are factors that could keep Australian growth below target and prevent the RBA from hiking further. If China doesn't get well soon, Australia will see its iron ore revenues, among others, melt in the next few years, and that's negative for the Aussie in the medium run.  Elsewhere, the EURUSD sank below the 1.05 level on the back of accelerated dollar purchases and softening European Central Bank (ECB) expectations following last week's lower-than-expected inflation figures. Cable slipped below a critical Fibonacci support yesterday, and is headed toward the 1.20 psychological mark. The weakening pound is not bad news for the British FTSE100, as around 80% of the FTSE100 companies' revenues come from abroad, and they are dollar denominated. Plus, cheaper sterling makes the energy-rich FTSE100 more affordable for foreign investors. Even though FTSE100 fell with sliding oil prices yesterday - and this year's performance is less than ideal compared to European and American - London's stock market is closing the gap with Paris, and rising oil prices and waning appetite for luxury stuff could well offer London its status of Europe's biggest stock market, yet again.  Speaking of oil prices, crude oil sank below $90pb level yesterday, partly due to the overbought market conditions that resulted from a more than a 40% rally since end of June, and partly because the 'higher for longer rates' expectations increased odds for recession.    
Not much relief, after all: Markets React to Political Uncertainties and Hawkish Fed Rhetoric - 05.10.2023

Not much relief, after all: Markets React to Political Uncertainties and Hawkish Fed Rhetoric - 05.10.2023

Markus Helsing Markus Helsing 05.10.2023 08:31
Not much relief, after all By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank   Relief that came with the news of a temporary avoidance of a potential government shutdown remained short lived. Sentiment in stocks markets turned rapidly sour, both in Europe and in the US, while the US treasury yields didn't even react positively to the no shutdown news in the first place. The selloff in the US 10-year bonds accelerated instead; the 10-year yield hit the 4.70% mark, whereas the 2-year yield remained steady-ish at around the 5.10% level, as the Federal Reserve (Fed) Chair Jerome Powell didn't say much regarding the future of the monetary policy yesterday, but his colleagues continued to sound hawkish. Fed's Michelle Bowman said that multiple more interest rate hikes could be needed to tame inflation, while Micheal Barr repeated that the rates are likely restrictive enough, but they should stay higher for longer. Sufficiently hawkish words combined to a set of still-contracting-but-better-than-expected manufacturing PMI data justified the positive pressure on US sovereigns.   The gap between the US 2 and 10-year yields is now closing, but not necessarily for 'good' reasons. Normally, you would've expected the short-term yields to ease more rapidly than the long-term yields when approaching the end of a tightening cycle, with the expectations of future rate cuts kicking in. But what we see today is bear steepening where the 10-year yield accelerates faster than the 2-year yield. The  latter suggests rising inflation expectations where investors prefer to buy short-term papers and to wait for the rate hikes to end before returning to long-term papers. The US political uncertainties and a potential government shutdown before the end of the year, and an eventual US credit downgrade likely add an additional downside pressure in long dated US papers.   The rising yields do no good to stocks. But interestingly, yesterday, the S&P5500 closed flat but the more rate-sensitive Nasdaq stocks were up. The US dollar index extended gains past the 107 level; the index has now recovered half of losses it recorded since a year ago, when the dollar depreciation had started.   The AUDUSD extended losses to the lowest levels since last November as the Reserve Bank of Australia (RBA) maintained its policy rate unchanged at the first meeting under its new Governor Michelle Bullock. This is the 4th consecutive month pause for the RBA. The bank said that there may be more tightening in the horizon to bring inflation back to the 2-3% range (inflation currently stands at 5.2%). But the fact that Australians biggest trading partner, China, is not doing well, the fact that real estate market in Australia is battered by rising rates and the fact that the Chinese property crisis is now taking a toll on Australia's steel exports toward China are factors that could keep Australian growth below target and prevent the RBA from hiking further. If China doesn't get well soon, Australia will see its iron ore revenues, among others, melt in the next few years, and that's negative for the Aussie in the medium run.  Elsewhere, the EURUSD sank below the 1.05 level on the back of accelerated dollar purchases and softening European Central Bank (ECB) expectations following last week's lower-than-expected inflation figures. Cable slipped below a critical Fibonacci support yesterday, and is headed toward the 1.20 psychological mark. The weakening pound is not bad news for the British FTSE100, as around 80% of the FTSE100 companies' revenues come from abroad, and they are dollar denominated. Plus, cheaper sterling makes the energy-rich FTSE100 more affordable for foreign investors. Even though FTSE100 fell with sliding oil prices yesterday - and this year's performance is less than ideal compared to European and American - London's stock market is closing the gap with Paris, and rising oil prices and waning appetite for luxury stuff could well offer London its status of Europe's biggest stock market, yet again.  Speaking of oil prices, crude oil sank below $90pb level yesterday, partly due to the overbought market conditions that resulted from a more than a 40% rally since end of June, and partly because the 'higher for longer rates' expectations increased odds for recession.    
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Market Musings: Powell's Mixed Signals, Oil's OPEC Struggles, and FX Crossroads

Ipek Ozkardeskaya Ipek Ozkardeskaya 04.12.2023 13:49
Mixed feelings By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank   The Federal Reserve (Fed) President Jerome Powell pushed back against the rate cut bets at his speech given in Atlanta last Friday. He is of course playing the card of 'high for long' rates to tame inflation, yet he hinted that the Fed will probably not hike rates when it meets this month. He said that the US monetary policy is 'well into restrictive territory' and that the fell of effect of higher rates to combat inflation is working its way through economy. 'We are getting what we wanted to get,' said Powell. And indeed, inflation is cooling, people start to spend less, and the job market loosens. But in parallel, the financial conditions are loosening fast, as well. Hence the market optimism and stocks/bond gains become increasingly vulnerable to hawkish Fed comments, and/or strong economic data. The US jobs data will take the center stage this week. Investors expect further fall in US jobs openings, less than 200'000 job additions last month with slightly higher pay on month-on-month basis. The softer the data, the better the chances of keeping the Fed hawks away from the market.   Unsurprisingly, the part of Powell's speech where he pushed back against rate cut expectations went fully unheard by investors on Friday. On the contrary, the Fed rate cut expectations went through the roof when it became clear that the Fed will stay pat again this month. The US 2-year fell to nearly 4.50% on Friday, the 10-year yield tipped a toe below the 4.20% mark. The S&P500 flirted with the summer peak, flirted with the 4600 level and closed the week a touch below this level, while the rate sensitive Nasdaq closed a few points below the 16000 and iShares core US REIT ETF jumped nearly 2.70% last Friday.   The SPDR's energy ETF, on the other hand, barely closed above its 200-DMA, as last week's OPEC decision to cut the production supply by another 1mbpd and to extend the Saudi cuts into next year barely impressed oil bulls – even less so given the apparent frictions at the heart of the group regarding this supply cut strategy when prices keep falling. The decline in oil prices continues this Monday. The barrel of US crude remained aggressively sold near the 200-DMA last week, and we are about to step into the $70/73pb region which should give some support to the market. With the clear deterioration of the positive trend, and the lack of any apparent boost to the oil market following last week's OPEC meeting, there is a chance that we will see oil finish the year below the $70pb mark. An increasingly shaky OPEC unity, record US production, a slowing global economy, deteriorating global demand outlook and efforts to shift toward cleaner energy sources weigh heavier than the supply worries. As such, the $100pb level becomes an increasingly difficult target to reach. And even though the COP28 president Mr. Al Jaber said last weekend that there is 'no science' behind demands for phase-out of fossil fuels – yes 70'000 people flew to Dubai to hear that there is no evidence that fossil fuel is destroying climate – efforts to phase-out fossil fuel continues at full speed with solar panel installation surpassing the most optimistic estimates according to Climate Analytics.  In the FX, the US dollar's positive attempt above the 200-DMA was halted by Powell's speech on Friday – or more precisely by investors' careful extraction of all the dovish elements in that Powell speech. Both the Reserve Bank of Australia (RBA) and the Bank of Canada (BoC) will likely keep their rates unchanged this week, but the RBA will certainly sound hawkish faced with worries of 'home-grown' inflation. The AUDUSD stepped into the bullish consolidation zone following a 6+% jump since the October dip and could gather further strength this week. The EURUSD, on the other hand, remains under growing selling pressure despite FX traders' hesitancy regarding what to do with the US dollar. The pair sank to 1.0830 on Friday and is preparing to test the 200-DMA, which stands near 1.0820, to the downside. The easing Eurozone inflation, along with slowing European economies, boost the dovish ECB expectations. The final PMI data will confirm further contraction in the Eurozone last month, as the Eurozone GDP read will likely confirm a 0.1% contraction last quarter. Coming back to the EURUSD, the pair will likely see a solid support near 1.0800/1.0820, which includes the 200-DMA and the major 38.2% Fibonacci retracement on October – November rebound. And clearing this support should pave the way for an extended selloff toward 1.0730.    
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Soft Australian 3Q23 GDP and Moody's Negative China Outlook Shape Market Sentiment

ING Economics ING Economics 12.12.2023 12:36
Asia Morning Bites Australian 3Q23 GDP comes in soft; Moody's negative China outlook will likely dominate risk sentiment today. Taiwan CPI out later.   Global macro and markets Global markets:  US Treasury markets continued to rally on Tuesday, helped by declines in Eurozone bond yields as one of the ECB’s more hawkish board members (Isabel Schnabel) noted that further hikes were “unlikely”. US yields were then given an additional downward push by some soft JOLTS job opening figures. 2Y Treasury yields fell 5.9bp to 4.577%, while 10Y yields fell 8.8bp to 4.165%. The slightly bigger falls in Eurozone bond yields helped EURUSD to decline to 1.0793 and that has also led AUD to decline to 0.6553, Cable to drop to 1.2593, while the JPY stayed fairly steady at 147.18. As the EURUSD move has more to do with EUR weakness than USD strength, these G-10 moves look unnecessary, and a case could probably be made for these other currencies to appreciate against both the EUR and USD, especially those where rate cuts are not on the agenda (JPY) or will be later and probably less than in the US (AUD). The KRW also weakened on Tuesday, rising back to 1311.20. The IDR was also softer at 15505, as were most of the other Asian FX pairs. There may be a bit of further weakness today, though for the same arguments as for the G-10, the rationale for this is quite weak, and we wouldn’t be totally surprised to see this go the other way. Equities didn’t know which way to turn yesterday, given the weak labour demand figures but the lower bond yields, and the S&P 500 ended the day virtually unchanged. The NASDAQ made a small gain of 0.31%. Chinese stocks were battered by the outlook shift to negative from Moody’s, which pointed to the rising debt levels and higher deficits China is adopting to try to underpin the property sector. Though the decision on Evergrande’s winding up was postponed until January, which could have provided some relief. The Hang Seng fell 1.91% and the CSI 300 fell 1.90%.   G-7 macro:  As mentioned, the JOLTS job openings data showed a large decrease in vacancies, to 8733K in October (for which we already have non-farm payroll data) from 9553K in September. The service sector ISM index was actually a little stronger than in October, rising to 52.7 from 51.8, and the employment subindex rose to 50.7 from 50.2, though this has little correlation with month-on-month directional payrolls trends. After a rare “hit” with its weak reading last month, attention may revert back to the ADP employment data later today.  A 130K  increase is the latest consensus estimate. The consensus for Friday’s non-farm payrolls is higher at 187K, with an unchanged unemployment rate of 3.9%. Outside the US, German factory orders and Eurozone retail sales are the main releases, along with a Bank of Canada rate decision (no change expected to the 5% policy rate).   Australia: 2Q23 GDP slowed from a 0.4%QoQ pace in 2Q23 to only 0.2% in 3Q23, weaker than the 0.5% consensus estimate (ING f 0.3%). A more negative contribution to GDP from net exports in data revealed yesterday was the main clue that the figure was going to undershoot. Yesterday’s RBA no change statement showed no additional sign that the RBA is done hiking rates and merely repeated the previous language. Today’s GDP data slightly increases the probability that rates have peaked – however.   Taiwan:  November CPI inflation should show a further moderation, dropping to 2.80% from 3.05% in October. We don’t see this having any impact on the central bank’s policy rates for the time being though.   What to look out for: Australia GDP and US jobs numbers Australia GDP (6 December) Taiwan CPI inflation (6 December) US ADP employment and trade balance (6 December) Australia trade (7 December) China trade (7 December) Thailand CPI inflation (7 December) US initial jobless claims (7 December) Japan GDP (8 December) India RBI meeting (8 December) Taiwan trade (8 December) US NFP (8 December)
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Decision Week: Analyzing the Impacts of Strong US Jobs Report on Markets and the Fed's Goldilocks Scenario

ING Economics ING Economics 12.12.2023 14:29
Decision week By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank   Friday's jobless report from the US was strong. It could've gone both ways, but it went well. The US economy added nearly 200'000 new nonfarm jobs in November, average earnings were higher than expected on a monthly basis, but stable around the 4% level on a yearly basis. That's twice the Federal Reserve's (Fed) inflation target and sticky, but it didn't bother much, and the jobless rate fell from 3.9% to 3.7%, as the participation rate slightly improved.   The stronger-than-expected jobs data sent the US 2-year yield to near 4.75%, and the 10-year yield recovered to 4.28%, but the stock traders gave a cheerful reaction to the news that the US jobs market is softening, not collapsing. The latest data suggests that the Fed is one step closer to realizing its Goldilocks scenario: it could win the inflation battle without pushing the economy into recession. Is it too good to be true? This week's inflation update and the Fed decision will tell.  The S&P500 traded at a ytd high on Friday, and Nasdaq closed a touch below its ytd high. The US dollar index recovered from the selloff of the day before which was mostly driven by a notable jump in the yen following the Bank of Japan (BoJ) Governor Ueda's confession last week that the BoJ's negative rates would get tougher to maintain from the end of the year. The USDJPY – which fell from above 147 to 142 in a single move – is now consolidating gains around 145 level as traders are out guessing whether the BoJ will exit the negative rates before the year ends. Elsewhere, gold slipped below $2000 per ounce, the EURUSD consolidates near its 100-DMA, near the 1.0760 mark, Cable is losing field on the back of a broad-based USD rebound and tests the 1.25 to the downside, while the AUDUSD hovers around its 200-DMA. The pair is still in the positive trend according to the Fibonacci retracement on the latest rebound, but on the verge of sinking into the bearish consolidation zone, as is the case for the other major peers.      
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Global Market Overview: Mixed Signals from China and Taiwan, Currency Moves Set Tone for the Week

Ipek Ozkardeskaya Ipek Ozkardeskaya 16.01.2024 12:14
Elsewhere  The People's Bank of China (PBoC) held its policy rate steady this Monday - defying the expectation of a 10bp cut - while pumping more cash into the financial system to reverse the selloff and boost asset prices, and eventually growth. But in vain. The Chinese CSI 300 index barely reacted to the news after China posted a third negative CPI read on a yearly basis. China is still expected to hit its official 5% target this year, but the confidence crisis and the slump in property prices are not going to reverse overnight. Outlook for Chinese equities is not bright.   Taiwan's stock exchange, on the other hand, which diverged positively from the mainland stocks last year, had a cheery start to the week after the ruling DPP's Lai – who is pointed at as a 'separatist' by Beijing - won presidency and his party lost its legislative majority. The latter was seen as a good compromise for relations between China and Taiwan – as the outcome was clearly not over-provocative for Beijing. The Japanese Nikkei 225, on the other hand, hit the 36K mark on the back of a softer yen, and waning expectations that the BoJ will be normalizing at a decent speed this year.   In the FX, the US dollar kicks off the week on a slightly negative note, the AUDUSD struggles to find buyers near the lower bound of its October to now ascending channel, as the PBoC could've been more supportive. The EURUSD couldn't clear the 1.10 resistance last week, and the failure to break above the crucial psychological could weaken the euro bulls' hands this week. Across the Channel, Cable remains cautiously bid after Friday's GDP printed a better-than-expected growth number. The UK will release its latest inflation report on Wednesday. UK inflation is expected to have further eased from 3.9% to 3.8% in December, and core inflation is seen slipping below the 5% mark. A softer-than-expected set of inflation figures could prevent Cable from making a sustainable move above the 1.28 level.   

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